Thursday, March 31, 2005

Dow Jones Reaffirms April 9 XOM Deadline

Norval Scott of the Dow Jones News Service, this time writing with Vincent Nwanma of the DJNS, has again weighed in with an important piece that bolsters the belief of ERHC On The Move and many hopeful investors that awards will come shortly after an Saturday, April 9, 2005 deadline set by the Nigeria-Sao Tome Joint Development Authority for ExxonMobil to exercise their two 25 percent preferntial options in any two of the five blocks on offer in the JDA's second Gulf of Guinea licensing round.

The much-delayed awards would immediately follow the exercise and a meeting of the JDA's Joint Ministerial Council, which must approve the awards and reportedly has already decided who will win. That would likely mean sometime between April 11 and April 15, a Friday.

The Dow Jones story was apparently keyed to a press release ostensibly issued by the JDA on March 22 but which only appeared on the JDA Website ( on Wednesday, March 30.

No mention of ERHC Energy appeared in this article. ERHC has the same kind of preferential rights as ExxonMobil but has already exercised them and had them validated by the JDA.

Scott wrote a 1,500-word feature on ERHC Energy's prospects that ran repeatedly ion the Dow ones wire in late January. Here is the latest effort, first posted by mrken11 on Raging Bull's ERHE message board:

Sao Tome, Nigeria Set Deadline on Rights
by Norval Scott and Vincent Nwanma

Wed, Mar 30, 2005 19:56 GMT

LONDON - A firm deadline of April 9 has been set for ExxonMobil Corp. to decide whether it will exercise its preferential rights in the Sao Tomean-Nigerian Joint Development Zone, Sam Dimka, a spokesman for the Joint Development Authority told Dow Jones Newswires Wednesday.

That should allow the JDA to move forward in concluding the drawn-out licensing process, which has been ongoing since April 2003. The licensing round closed on Dec. 15 2004, with 26 bids from 23 companies for the five JDZ oil and gas blocks on offer being received.

However, the round has been delayed somewhat as ExxonMobil has still to decide whether to take up the preferential rights it was awarded as a result of contracts it held in the region before the JDZ was created. The company now has a deadline of April 9 by which it must make its decision, Dimka said.

ExxonMobil can exercise its rights on any two blocks from those on offer, and would gain equity of 25% in each if it does so. It has already taken a 40% interest in Block 1, considered to have the best prospects and awarded by the JDA in 2004.

Tuesday, March 29, 2005

Nigeria Gets Strong Vote of Confidence From IMF

The International Monetary Fund has issued a press release strongly commending progress in Nigeria towards a variety of governmental and economic goals, with strong emphasis on controls and corruption.

The report is a possible harbinger of further reforms in the country that may counter the current tide of anti-multinational sentiment that has threatened future investment there. It ought to have a positive effect on the share price of companies doing business there, including ERHC Energy (OTC BB symbol: ERHE).

Here is the full press release:

March 29, 2005
International Monetary Fund
Press Release No. 05/71

March 29, 2005 International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

Statement by IMF Staff Mission at the Conclusion of 2005 Article IV Consultation Discussions with Nigeria

The following statement was issued today in Abuja by an IMF staff mission:

"A staff team from the International Monetary Fund, led by Mr. Menachem Katz, visited Nigeria during March 8 -25, 2005 to conduct the 2005 Article IV consultation discussions, review performance in 2004 under Nigeria's home-grown program (NEEDS), and discuss the outlook for 2005 and the medium term. The team met with President Olusegun Obasanjo; the Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala; the Governor of the Central Bank of Nigeria (CBN), Professor Charles Soludo; other senior officials of the government; representatives of the private sector, including the banking industry; and members of civil society and the international community. Overall, policy performance in 2004 was commendable. The authorities' macroeconomic policy framework in 2005, which builds on the unprecedented achievements of 2004, is consistent with continued macroeconomic stability.

"In 2004, policy implementation under NEEDS signaled a clear break from past imprudent practices. The key objectives of the 2004 program were achieved, namely to restore macroeconomic stability, enhance predictability and transparency of policies, and reduce the economy's vulnerability to oil price shocks. As a result, foreign direct investment expanded in 2004 and real GDP is estimated by the Federal Office of Statistics to have increased by 6 percent and non-oil GDP by 7.4 percent. Prudent fiscal management and savings by all tiers of government of the significant oil revenue windfall, along with tight monetary policy, contributed to lower inflation, a more stable exchange rate, and a significant build-up of international reserves. Several important reforms have also been initiated to enhance the transparency and accountability of public sector policies and institutions and to address Nigeria's deep-rooted macroeconomic and structural challenges; these reforms include implementation of the Extractive Industries Transparency Initiative (EITI) in Nigeria, the publication of monthly oil revenue distributed to the three tiers of government, a crackdown on corruption, civil service reform, and the passage of the Power Bill and the Public-Private Partnerships Bill.

"The outlook for 2005 remains positive, with real GDP projected to grow by 7 percent on the basis of higher crude oil and gas production and non-oil GDP by 5 percent. The mission stressed the need for the authorities to build on the macroeconomic achievements of 2004 to lay the foundation for faster growth and poverty reduction and to help achieve the Millennium Development Goals. The administration recognizes that the 2005 appropriation bill passed by the National Assembly is highly expansionary and has resolved to ensure that fiscal policy is consistent with the objective of maintaining macroeconomic stability in 2005. The spending increase, which is explained by Nigeria's enormous development needs, will require careful macroeconomic management if it is to be absorbed effectively. In particular, monetary policy will need to continue to be tight, targeting a 15 percent increase in broad money in 2005. In light of the envisaged increase in fiscal spending, more of the burden of consolidating macroeconomic stability will fall on the central bank. Overall, macroeconomic policies are consistent with the objectives of maintaining inflation below 10 percent and continued build up of international reserves.

"On the structural front, the mission agrees with the authorities' focus on improving governance and transparency, enhancing the efficiency of the public sector, strengthening the financial sector and improving the business environment, including plans to institutionalize reforms with several important bills such as the Fiscal Responsibility Bill, the CBN bill, Banking and Other Financial Institutions, procurement, EITI, and tax reform bills. The mission also supports the common external customs tariff scheduled to go into effect on July 1, 2005 in the context of the Economic Community for West African States (ECOWAS), as well as plans to phase out import bans by January 2007 and to re-energize the privatization process.

"The mission encourages the authorities to regularize relations with external creditors. The debt sustainability analysis prepared by the mission suggests that Nigeria's external debt is sustainable at current high oil prices. However, sensitivity analysis shows that the debt situation becomes unsustainable at historical oil prices (US$21 per barrel on average in 2006-25 as compared with US$37 in the baseline).

"The authorities reiterated their intention to continue with the current practice of intensified surveillance by the IMF. Fund staff will continue monitoring the authorities' quarterly fiscal and monetary targets, as well as key structural reform measures. The IMF's Executive Board is expected to discuss the staff's report on the 2005 Article IV consultation with Nigeria within the next few months. Nigeria has no outstanding obligations to the Fund."

Public Affairs: 202-623-7300 - Fax: 202-623-6278
Media Relations: 202-623-7100 - Fax: 202-623-6772

'Hard And Fast' XOM Deadline Looms

Raging Bull poster Markvo10 has once again come through with an update from Sam Dimka of the Nigeria-Sao Tome and Principe Joint Development Authority, which is waiting for ExxonMobil to exercise their two 25 percent preferential options in any two of the five blocks on offer in the 2004 Licensing Round for Gulf Of Guinea oil concessions owned by the two nations.

In this latest message, the JDA spokesman offers a convincing explanation for the failure of the JDA to set a date certain for awards.

Here's the message:


Just spoke with Sam Dimka at JDA. As usual you can call him yourself at 011 234 9 524 1069. I asked him specifically about the April 9th deadline. I asked him to clarify that April 9th was indeed a hard and fast deadline and he said that it was. I asked him what would happen if XOM did not exercise by April 9th and he told me that the JDA would be able to move on and the JMC could convene to announce awards of the 5 blocks. He said that they could do this because at that point (April 9) the JDA would have done everything they could according to the Settlement Agreement. He said that if XOM does not exercise the JDA will assume that XOM is not interested and per the Settlement Agreement the JMC would be able to convene and award the blocks.

I asked him since it is known that April 9th is a hard and fast deadline why can't the JMC go ahead and schedule a meeting date based on the April 9th deadline. He said that the JDA/JMC is so anxious to get this done that they don't want to set a JMC date, for instance, on April 14th or something and have XOM exercise their options today or tomorrow. If XOM did go ahead and exercise thier options today or tomorrow or this week Sam said that the JMC would meet next week. Sam said the JMC would not want to wait any longer than they had to to meet and award these blocks if XOM exericised this week. He said they would want to get this done as soon as possible and not want to wait any longer than is necessary.

Sorry to go over the same point so many times. I just wanted to make sure I got the point across about what he was telling me. Again, ANYONE can call Sam Dimka and get this information for themselves. He is a PR guy and this is information that anyone can get if they want. Call him at 011 234 9 524 1069.

Monday, March 28, 2005

Sumatra Quake Estimated at 8.7 On Richter Scale

An earthquake that struck the large central Indonesian island of Sumatra about an hour ago was estimated at about 8.7 on the Richter scale is being called an aftershock of the December 26th 9.2 earthquake there.

Tsunami warnings have been issued, but it is not known whether one has been generated because it struck after midnight.

The tsunami generated by the large December quake killed an estimated 300,000 people.

There is no immediate word of deaths or drownings, but casualties and substantial property damage should be expected from a temblor of that magnitude.

Oil operations were not notably affected by the December quake, although there are numerous drilling platforms in the nation's offshore waters.

It is unclear whether the temblor will have an effect on oil prices. There was no apparent affect on ERHE's share price, although it did move back to $0.74 in restrained noon-hour trading shortly after news of the quake hit the airwaves.

The aftershock is expected to generate new aftershocks as well.

ERHE Leaps 6.4% At Open

ERHC Energy leapt $0.045 at today's opening and saw volume of 836,000 shares in the first 30 minutes, but fell back slightly.

News from UpstreamOnline that the company has captured two of the oil-laden blocks on offer in the Nigeria-Sao Tome Joint Development Zone brought a raft of buyers to the stock, and a purchase of 100,000 shares was seen in the very first minute.

At 10:00am EST, the company's shares (OTC BB symbol: ERHE) were holding steady at $0.73 bid, $0.74 asked, down from a high of $0.742 x $0.745.

Announcement of awards could come as early as April 9, JDZ officials announced lat week.

As Awards Approach, A Sure Hand Is Needed At ERHE's Wheel

We're more wary than ever of rosy predictions about ERHC Energy (OTC BB symbol: ERHE), and we know that around every corner in the Nigerian press seems to lie a - well, a lie - or at least a well-placed strategic error.

Notwithstanding the country's journalistic failings and propensity for drama, though, we were unable to find even a single article in the 15 news outlets we watch daily that even touched on the Nigeria-Sao Tome and Principe Joint Development Zone (caveat: there are plenty of articles at those sites about the JDZ, but they are all outdated).

As far as ERHC On The Move is concerned, that lack of news is good news, indeed, because it leaves uncontradicted the March 22 JDZ press release that promises awards shortly after the April 9 deadline for ExxonMobil to exercise its JDZ rights, and also leaves as the latest news item the highly positive UpstreamOnline piece by Barry Morgan that tells the industry our "minnow" is in the very front of the pack to nab at least two operatorships and has a fairlty good shot at getting a third.

Even better, those operatorships appear to be in the best three blocks of the five on offer, Blcoks 2, 3 and 4. Should those three blocks be awarded to ERHC and its MoU partners Devon Energy, Pioneer Natural Resources and Noble Energy, a mid-April share price in the double digits is a real possibility. A share price of $3 or more is a virtual certainty with two, and a solid $0.50 - $0.60 rise is very likely with the award of just our basic rights in all five blocks.

And even those modest numbers will mean millions of dollars of profit for ERHC longs who have been hanging on to their shares - sometimes bought below a dime - for years.

Many of those longs will continue to hold onto their shares, as will all of those who aren't desperate to take profits from what has surely been a "heart attack" stock, as one recent correspondent called ERHC. The awards will transform us from a "minnow" to a major almost overnight.

That said, we must be more alert than ever this week and next for efforts to scare investors into selling shares that after awards will never again be so inexpensive. Our competitors will also be scrounging for any excuse to change what appears to be a very thrilling agenda for ERHC investors.

We do expect volatility along with gains because that has always been the nature of this stock and the nature of the oil bnusiness in Nigeria and Sao Tome.

There will be shocks, for sure, but a steady hand should steeer your tiller these two weeks: the ship is almost to port, and yes, there is treasure aboard.

Saturday, March 26, 2005

We See Steady Gains Through April 9 For ERHE

With the extraordinary resiliency demonstrated by ERHE's double recovery this week - twice climbing more than 6 percent to close at or near the weekly high despite a raft of confusing news - the Nigeria-Sao Tome and Principe Joint Development Authority's press release clarifying deadlines and suggesting an imminent awards date has reassured some of the queasy investors who got cold feet last week. That seems to augur a good if not brilliant performace by ERHC Energy (OTC BB symbol: ERHE) in the last week of March and the first day of April, next Friday.

The repeated delays and reassurances have probably been good for the share price, which has steadily climbed from the mid-to-high $0.40s of two months ago to a respectable $0.70 by the end of this past week.

Our thinking is that with the arrival of awards, the share price will be on a much higher platform than it would have been had there not ben so much determined testing of its strength in recent weeks. But ERHE has survived and actually triumphed in all those tests, and now appears poised to enjoy modest but steady gains on a daily basis.

For the ERHC On The Move portfolio of 123,040 shares, which now enjoys an appreciation of more than $31,000, the coming two weeks seem likely to produce an additional $0.20, or nearly $25,000. That would put us at the same pre-awards price we enjoyed when it appeared awards would be made last year.

Unlike last year, however, the JDA is communicating, and the appearance is that awards will be made as planned within a few days of April 9, 2005, when ExxonMobil has to exercise its two 25 percent preferntial options on any two of the five blockls on offer, trade them in for future rights, farm them out or lose them.

If UpstreamOnline's analysis is correct, ExxonMobil will continue to try to team with Anadarko Petroleum in Block 4, but it is clearly having trouble getting all its wishes granted by the JDA. The delays occasioned by XOM have been costly to the JDA's image and to its morale as a professional organization.

Should the multinational oil giant get operatorship without having entered a bid for any of the five blocks, all players in the Gulf of Guinea exercises will be forewarned that the agency cannot be relied upon to act fairly in the forthcoming auction of 61 blocks.

With multiple and clear indications from Upstream and others that ERHC and its MoU partners Devon Energy and Pioneer Natural Resources are going to win operatorships in Blocks 2 and 3 at a minimum, and possibly Block 4 as well, daily gains of $0.02 - $0.03 will not be exceptional, we think. First Atlantic Bank of Nigeria Plc has already earned more than $17 million on the 60 million shares it gained on Nov. 11.
That windfall may end up being a pittance by April 9.

Friday, March 25, 2005

JDA Press Release Spells April 9 Deadline for ExxonMobil

The still-unpublished press release offered by the Nigeria-Sao Tome and Principe Joint Development Authority to counter widespread doubts about the integrity of its second licensing round has been made available to several Nigerian newspapers and obtained by ERHC On The Move.

Although it was dated March 22, it still has not appeared on the JDA Website among its other press releases. JDA officials explained that they sent the press release to London to be posted several days ago.

The JDA site is

The limited release of the statement raised questions about whether those who were able to obtain it directly from contacts at the JDA were trading in regulated "insider" information. That would require that those who received the early copies traded on the information and that the information had a material effect on share price. There is no indication it did.

Here is the press release, obtained from the Raging Bull Message Board:



The JDA has observed with a deep sense of appreciation the level of interest its activities, especially the 2004 Licensing Round has generated in the industry, the media and amongst stakeholders.

2. In recent times the media and the industry have been awash with many reports on the status of the awards of the five blocks put on offer under the 2004 Licensing Round.

3. While appreciating the interest shown, it is imperative to state that the JDA as a responsible corporate body is handling issues pertaining to the round with the settlement of third party interest agreements reached with all the parties concerned.

4. For the avoidance of doubt, the agreement with ExxonMobil stipulates when the company is notified to exercise its option, it can ask for additional information. From the date the JDA provides all the materials and information required it has up to 30 days to exercise its options. In this instance, in response to the request made by ExxonMobil, all relevant materials and information were made available to the company on the 9th March 2005.

5. As soon as ExxonMobil exercises its options, the Joint Ministerial Council will convene immediately to approve the awards which will be announced accordingly.

Nigeria-Sao Tome and Principe
Joint Development Authority
22nd March 2005

Thursday, March 24, 2005

Upstream Online: ERHC Set For JDZ Blocks 2 And 3, As XOM Fights ERHC/Noble For Piece of Block 4; JDA Press Release Leaked; Is EER In Trouble?

UpstreamOnline's Barry Morgan has revealed tonight that ExxonMobil's months-long effort to slow awards is aimed at obtaining an operatorship with Anadarko Petroleum in Block 4 of the Joint Development Zone that Nigeria and Sao Tome and Principe are reluctant to give the company.

The veteran oil industry journalist also says that two blocks of the JDZ have already been decided for ERHC Energy and its partners Devon Energy and Pioneer Natural Resources. The trio offered bids in Blocks 2 and 3.

In Block 4, Morgan says, ExxonMobil has tried to wrest operatorship of the block away from the favored combination of ERHC and Noble Energy, which has promised to fast-track three wells in its first year of operation. Anadarko has only promised to dig one well over the next three years, and ExxonMobil never bid on any of the five blocks on offer, where it is entitled to exercise two 25 percent preferential options in any of the five. The choices can also be traded in for participation in Sao Tome's Exclusive Economic Zone, where licensing is expected to begin late this year.

In other news, a JDA spokesperson has leaked a press release to two Raging Bull posters who have not yet disclosed it to other investors, setting the stage for a possible insider information violation of Federal securities laws.

Here is their description of the press release's contents:

Joe we got a hold of the JDA press release from Sam D, prior to its appearance on the JDA website.

It basically says EXXON requested more time and materials and they were provided on March 9th.

There is a 30day period for evaluation and for them to exercise and expect to be finalized April 9th latest and the JMC will immediately convene after for awards.

Here is the Barry Morgan article of this evening:

Tension on the rise off West Africa
00:05 GMT

Tensions mounted among suitors vying for a slice of the Joint Development Zone in the Gulf of Guinea, writes Barry Morgan.

The Abuja-based Joint Development Authority administered by Nigeria and Sao Tome is keen to award blocks 2, 3, 4, 5 and 6, but has been delayed by a last-ditch attempt by ExxonMobil to secure a block in partnership with Anadarko Petroleum.

The supermajor now has until 9 April to decide whether to take up its 25% priority equity in Block 4 or bail out entirely. ExxonMobil had wanted an operatorship but knows it cannot easily achieve this as it did not even bid.

For its part, Anadarko may be prepared to farm in to ExxonMobil's Block 4 if it is guaranteed an operatorship, which Nigeria is loath to give.

The JDA already has a fast-track commitment from Noble Energy to sink three wells back-to-back and that is the kind of action Nigeria wants.

Blocks 2 & 3 are said to have been decided in favour of priority rights holder ERHC Energy and its US partners Pioneer Natural Resources and Devon Energy, leaving Block 4 as the only other key licence undecided.

A second article, this one by oil writer Bassey Udo in Nigeria's Daily Independent, reiterates the information:

JMC awaits ExxonMobil on JDZ acreage
by Bassey Udo, Energy Editor

ABUJA -- The Joint Ministerial Council (JMC) of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) is still awaiting ExxonMobil decision to exercise its rights in the five oil blocs put on offer in the 2004 licensing round.

The American oil firm, by virtue of its operating in the region prior to the 2001 treaty creating the JDZ, has 40 percent rights in one of the five oil blocs and 25 percent each in two others.

Last month, the JDA formally notified the company to move within 30 days to exercise its preferential rights to pave the way for the final appraisal of the bids and announcement of the result.

Following its requests for further information on the 26 bids harvested from 22 prospective investors that participated in the bids exercise, its management met two weeks ago with the JDA to resolve outstanding issues to assist its final decision.

Though a source close to the company last week expressed high optimism that the company was interested in exercising its rights, particularly in Blocs 2 and 4, he said a review of the agreements was on to report to the JDA before the April 8 deadline.

But, Thursday the JDA frowned at recent reports that the 30 days deadline had been extended, pointing out that though all relevant materials and information relating to the transaction were made available to the company on March 9, it was currently handling settlement of third party interest agreements reached with all the parties, adding that as soon as ExxonMobil exercises its options, the JMC will convene to approve the awards.

ExxonMobil is already operating in the premier oil Bloc-1 in the zone through its subsidiary, Esso Exploration and Production Nigeria-São Tomé "One" Limited, in partnership with ChevronTexaco JDZ Limited, the operator of the concession, and Dangote Energy Equity Resources (DEER) Limited, a Joint Venture between the Dangote Group of Nigeria and Energy Equity Resources of Norway.

Meanwhile, ERHC On The Move has learned from a source close to Energy Equity Resources that the firm, which has sold a portion of its rights in Block 1 to Dangote Energy, a Nigerian firm, may have difficulty in meeting substantial financial obligations in an unrelated offshore project.

It is unclear whether the apparent change of heart by ExxonMobil in deciding to pursue active participation in Blocks 2 through 5 is related to a reluctance to pursue the Block 1 project with an ailing partner, or if financial issues may be playing a part in slowing the payment by the partners of $123 million to the Nigeria-Sao Tome and Principe Joint Development Authority for rights to that block, which was won by ChevronTexaco (51 percent), ExxonMobil (40 percent) and Energy Equity Resources (9 percent), now aligned with Aliko Dangote's Dangote group.

Nigeria's This Day Online recently linked that late payment to the delay in anouncing awards.

ERHE Up 6.9% Thursday, Closes Week At $0.70

In a demonstration of its resilience even on low volume, ERHE traded back up to $0.70 today, a gain of 6.87 percent and $0.045 that amounted to $5,536.40 for the ERHC On The Move portfolio of 123,040 shares.

It was only the second time in recent months that the stock has closed at $0.70 or above, and it came after a disappointing series of articles and emails concerning the final decision investors await on the award of oil blocks in the Gulf of Guinea.

The inherent value of ERHC Energy's assets won out today over the lassitude and incompetence of the Nigeria-Sao Tome and POrincipe Joint Development Authority, which failed to post a promised press release on newly-revealed delays of its JDZ block awards and frustrated investors who drove the price down to $0.645 earlier this week.

Most of the gain came late in the session, when the price moved quickly from near the day's low of $0.65 to $0.665, $0.67, $0.68, $0.685, $0.69, and finally to $0.70 on a burst of quick trades that ecnompassed close to 80,000 shares. The final volume was a low 919,871, which is still about double the one-year average.

Despite repeated promises, the promised press release had now shown up on the JDA homepage ( at 5:45pm. JDA spokesman Sam Dimka told Raging Bull poster orangeandwhite0 the press release had been sent to London for posting on the Website yesterday.

A Monday evening report from The Punch of Nigeria quoted a mid-level JDA official as saying that ExxonMobil had been given until April 19 to decide its two 25 percent preferential options in Blocks 2 through 6 of the Joint Development Zone.

A series of emails, however, indicated that date was wrong but was April 9 instead. An article in This Day Online on Tuesday morning said awards might come next week. The confusion took a toll on ERHC Energy's share price, but it turned out to be-short-lived.

The stock, which had closed up at $0.705 on Monday, fell to $0.645 Tuesday morning, and then reversed itself on the later news and climbed back to $0.69. It slipped on Tuesday to $0.675, and then to $0.65 on Wednesday, before dipping briefly this morning to $0.628 and then climbing back to $0.70 in the late afternoon.

The strong performance on Thursday ahead of a stories three-day weekend appeared to bode very well for what some investors are touting as "breakout week," when the price will finally rise to reflect some of its post-awards value. ERHC Energy has rights in all five of the JDZ blocks on offer in this current second licensing round, and the most conservative estimates suggest the company will capture a minimum of 560 million barrels of oil with those guaranteed rights, and possibly far more if it wins one or more operatorships in the blocks.

A note of thanks: Your 69 clicks on the ads at right yesterday produced $12.70 in income, marking only the second time our daily income from this site has risen over $1. The average has been 3 a day, producing an average of $0.60 per day. We now are averaging 1,079 readers per day.

We will be publishing all weekend, and we wish all of you a happy Easter and a wonderful week ahead.

Wednesday, March 23, 2005

Words Of Wisdom From Oiljunior

One of the most eloquent posts anyone has seen in a long time appeared on the Raging Bull ERHE message board, from regular contributor "Oiljunior," also known as Tony. I have no argument with any of it, and so I recommend his words to all who may be considering or already have an investment in ERHC Energy and are wondering about our future.

Here it is:
Some interesting banter going on. If we cannot bash or pump what would we have to talk about here? The weather?

I suppose we could all stick to facts, but we have witnessed that news articles cannot be taken as facts.

The phone conversations and the emails from from Sam Dimka cannot be taken as facts.

Any mention of a date for awards if one week or less is a pump, if 2 weeks or more is a bash.

Any newbie is automatically considered a basher, and most longs are considered pumpers.

We sure do have all types in here. The realists, the back seat drivers, the believers, and the non-believers.

But basically we all believe in one form or another or we would not be here.

It has been a long long haul for some, a short haul for others, and a daily flipping routine for others.

But if we cannot talk about our different opinions without being labeled one or the other, then it would be a bit boring.

Most of us know all the facts, so I won't bother boring anyone with what we already know.

Too many different personalities in here for everyone to get along, and I would not expect that.

We are all here to make money. Some want it yesterday, some made it yesterday. Some want it within hours or days, others will wait 7 more years.

As long as the weak hands keep falling by the wayside as we jerk up and down, giving up their shares to stronger hands we will get stronger and stronger.

We have been on an uptrend since the closing of round one and the opening and closing of round 2 around 28 OCT 2004.

About .28 cents back then.

We have been on a steaper uptrend since 18 Feb when XOM was notified to make there remaining rights selections by the JDA. (Whether that was a fact or not).

The strong hands and the new money are buying the dips, keeping the dips smaller and higher than the previous dip.

The news articles help provide fuel for the new highs. 5 new highs this year within the last 19 trading days. Thanks to the Houston article, and the Barry Morgan articles.

We will all have our day of celebration sooner or later, at whatever PPS you chose to celebrate at. Breaking .60 and .70 most would agree is only the beginning.

I wish us all the best of luck in one of the best stocks I will ever hold, and perhaps one of the best you will ever hold. When the round two awards finally come, I think we will all put our differences aside and be happy for each other for being smart enough to hold or accumulate the wealth we all deserve for putting up with each other during all these self induced delays.

Pumper, fact finder, believer, basher, sceptic, realist, and soon to be well off.

Thanks, Tony. And as they say on RB, "Long and Strong, ERHE!"

A Spectacular Dive, And A Stunning Swift Climb

The extraordinary performance of ERHC Energy (OTC BB symbol: ERHE) on Tuesday will become folklore as this company moves forward. A massive selloff sparked by a news article in The Punch of Nigeria was dramatically stopped and then almost completely reversed, in one of the most stunning, action-filled spikes investors have ever seen - and resilient ERHE investors have seen it all.

The events began with the appearance of an article early Tuesday evening New York time in the Nigerian daily The Punch. The two authors reported on a statement purportedly from Nigeria-Sao Tome and Principe Joint Development Authority chairman Carlos Gomes of Sao Tome, relayed to them through a mid-level JDA official named Sam Obiora, whom investors had not heard of before.

Obiora told the two reporters, they said, that ExxonMobil had been granted an extension of time to April 19 in which to make two choices in the five blocks on offer to exercise their 25 percent preferential rights in the JDZ. Based on that report, ERHC On The Move, lacking other information, decided that it was wiser to sell and recover profits before buying back in at a lower price, and well after midnight we entered a sell order for 50,000 shares at $0.685.

Staing up all night, we searched Nigerian newspapers and magazines for more information, and finally found it buried in a short article not accessible from the main page or even the main business page of This Day Online.

There, according to reporter Mike Oduniyi, we heard a differing account that originated with the JDA over the weekend in which awards would only be delayed until next week by the apparent failure of ExxonMobil to exercise their rights within a supposed 30-day deadline.

This informaion was found well after 3am EST, and the search went on until dawn. At about 9am, we got a call from a regular reader who informed us that an email was waiting for us that had originated with the JDA's official spokesman, Sam Dimka, in which Dimka stated flatly that the article in The Punch was wrong. Based on that, at about 9:05am EST we cancelled all our sell orders, and waited for the opening bell with some confidence and a lot of anxiety.

Here's the way we saw it: First, we believed the article in The Punch was essentially correct, although perhaps not about the April 19 date when ExxonMobil had to make its choices. In fact, Sam Dimka's notes affirmed, the actual date was April 9.

To our mind, both dates were a disappointment after the high expectations that awards would come this week, but the psychological impact of a new 30-day delay was far more harsh than that of the new "official" deadline, April 9. We felt that the new evidence produced by orangeandwhite0 and ArtK4K when coupled with the article by Oduniyi and a new conversation between orangeandwhite0 and a different JDA official would blunt the impact of The Punch article.

It also raised a bright new possibility: With a two-week delay until April 9, the strong buying interest that has characterized ERHE trading for more than a week would be allowed to continue and carry the share price to a substantial high before the awards. We cancelled our sell order with some trepidation, but by then we believed that the plunge would be short-lived and somewhere in the $0.06 range.

The opening bell brought an immediate and dramatic selloff, with more than 500,000 shares selling in the first minute. The price fell rapidly, hitting $0.645, a loss of $0.06 and $7,380 for our portfolio of 123,040 shares.

As the morning progressed and the four new pieces of information from This Day and the JDA became available, they began to have the desired effect. The price started recovering, and by 3pm EST a trend towards yesterday's highs was becoming pronounced. At the end of the day, the ERHE stood at $0.695, just a cent off after one of the worst scares investors have gotten so far. Volume topped 3.3 million shares, about two-thirds of it on the down side.

As wiser heads have opined, newspaper articles should not be uncritically accepted, and according to Sam Dimka's notes the Punch article was substantially closer to the truth than the This Day article. In fact, I see little that bars ExxonMobil from delaying as long as they like, despite all the protests, and yet I am persuaded that the initial legal terms of the licensing round are still intact.

But the underlying message of Tuesday's incredible performance is that ERHE is a winner. It has solid rights guaranteed by treaty, and it has no debt. It will be awarded its options and possibly one or more operatorships, and a few weeks here or there - or even a few months in an investment that still will take years to mature, is nearly meaningless beside the prospect of stunning gains over the coming months.

One other note: For the first time on Monday, and then again on Tuesday, ERHC On The Move welcomed more than 2,000 readers each day. Yesterday's deep anxiety was evident in the fact that only two readers took time to click on ads, earning us a total of $0.07 for a day and night of hard work. Nonetheless, with the help of Sam Dimka, and especially the efforts of orangeandwhite0 and ArtK4K, we saved our investments and won the day - and that's what really counts.

Tuesday, March 22, 2005

Punch Article Is Wrong, JDA Spokesman Dimka Says; JMC Scheduler Expects Awards Soon

Sam Dimka, the official spokesman for the Nigeria-Sao Tome and Principe Joint Development Authority has again written investor orangeandwhite0, the Raging Bull poster said, and countered an article in this morning's The Punch of Nigeria, saying it was wrong and that ExxonMobil nonetheless has been given an extension to April 9 to decide which JDZ blocks in the second round to option.

While ERHC On The Move believes that the award is delayed and will probably not be made before April 19, the combination of this note, the article from This Day Online and the appearance of significant new buyers has persuaded us to cancel all sell orders on our portfolio of 123,040 shares.

Update: 9:34am EST ERHE dropped $0.05 in the first two minutes of trading on volume of more than 600,000 shares. At 9:32am EST, the bid stood at $0.652 and the ask at $0.655.

Update: 10:28am EST As the first hour of trading comes to a close, the share price has bounced back from its $0.645 low and is trading at $0.665 bid x $0.67 ask on high volume of 2,099,953 shares.

Update: 2:37pm EST Volume has slowed dramatically as the share price has risen from earlier lows. At 2:36pm EST, the price stood steady at $0.67 bix x $0.675 asked on volume of 2,800,845 shares, with most sales at the ask.

The confusing saga of The Punch and a contradictory story in This Day Online continues, however. The new information is almost as disheartening as the last, except for the fact that if new buyers continue to emerge as in recent days, the delay gives the share price of ERHC Energy (OTC BB symbol: ERHE) more time to rise.

Here is the note from Sam Dimka, official spokesman of the JDA:
From: Sam Dimka []
Sent: Tue 3/22/2005 4:02 AM
Subject: RE: Urgent Sam Dimka

The Punch gave an in accurate report. Nowhere in Mr Gomes's presentation did he mention any deadline for XOM to exercise their rights.

For the avoidance of doubt, the JDA is operating strictly according to the terms of the settlement agreement. When the company is notified to exercise their rights and they request for additional information they have up to 30 days to respond. XOM was given additional informatiom on the 9 March in which case they have up to 9 April to exercise their rights.

AS SOON AS THEY EXERCISE THEIR RIGHTS which could be before 9 April, JMC will meet to finalise the awards. NO one is pushing the JDA and no one can push the JDA. As a responsible corporate organisation we must operate within the terms and conditions that are legal and professional. Let's wait and see what the next couple of days have to offer.



A second note from Dimka has been received by ERHC On The Move reader ArtK4K, reiterating the earlier information in a slightly more succinct form (Editor's Note: We do correct obvious misspellings and grammatical errors in any communications we post).

Here is the note as posted on the ERHE message board on Raging Bull:

Thanks for your mail. Carlos was quoted out of context. The JDA is operating srictly in line with the settlement agreement. No extension has been granted to ExxonMobil. The company, according to the agreement have up to 30 days from [when] they are given additional information. In this case [that was provided on] 9 March, 2005. Therefore, they have up to 9 April 2005 to exercise their rights. If they do [so] before, JMC will convene to finsalise the awards.

Thank you

Sam Dimka

According to the recipient of the first note, orangeandwhite0, writing on the RB ERHE board, the Joint Development Authority may update its Website with accurate information concerning any deadlines within the next day.

Here is the note from orangeandwhite0 on that issue:

Called the JDA and spoke with the Secretary of the JDA. I don't know his name but his phone number is 011 234 9 524 1064. He said there will be PR on the JDA Website by tomorrow morning and perhaps within next couple of hours. He said that XOM asked for more information on March 9 and that they have 30 days from that date to exercise (April 9th). He said to me "since you have called me I will tell you that XOM met with JDA this week and meetings went well and we expect them to exercise at any time." He also said that he thinks that JMC will meet before end of this month and perhaps very soon. He told me that he is responsible for scheduling the JMC meeting and that it will occur a few days after XOM exercises. Again, he reiterated that XOM will most likely not take the full time to exercise since they have now been given all the information that they needed and that everything was pretty much ironed out in the meeting with XOM and JDA this week. He also told me that they are very sensitive to the media and they want to give out accurate information. I think that it is a good sign that he made this comment and still said that he expects JMC to meet by end of this month and that could even be in next few days. I am sure they received a ton of complaints last night by email regarding the Punch article.

Everything is on course, folks. This could happen at any time.

Tax Hikes Put US$19 Billion Investment In West Africa At Risk, Shell Official Says

Multinational oil companies plan $19.2 billion investments in Nigeria and nearby West African countries, but the Nigerian component could be come to a screeching halt if existing oil contracts are broken open to force higher tax rates into them, the head of Shell's Nigerian operation told the Offshore West Africa conference in Abuja on Monday.

The threat of broken contracts looms large on the Nigerian investment horizon, The Punch of Nigeria reported. The latest assault on multinationals follows a series of violent attacks on refineries in the Niger Delta that have killed both American and Nigerian workers, multibillion-dollar fines, demands that 25 percent of their crude be refined in Nigeria, that far more Nigerian nationals be hired on oil projects, and that they pay for expensive independent power plants and multibillion-dollar natural gas processing plants; multinationals oil company executives also face tax evasion charges and threats of arrest, are facing charges that they have built dozens of illegal airstrips, and have lost up to $500 million in single incidents of rampages by ethnic activists; meanwhile, criminal syndicates working from as many as 50 vessels at a time are stealing up to 100,000 barrels of crude per day from refineries, pipelines and flow stations. CIA Director Porter Goss recently warned Congress that Nigeria may become unstable. The strains of ethnic violence, secession movements, widespread corruption and profound poverty have only made the investment situation more perilous.

As a result of the concerted effort to undermine international investment in Nigeria, many companies are avoiding further investment onshore and are looking to trouble-free international waters as a more promising place to plunge their enormous cash reserves, several Nigerian dailies have reported in recent weeks.

As much as $10 billion of that investment could take place in the Gulf of Guinea, where ERHC Energy has substanrtial stakes in the Nigeria-Sao Tome and Principe Joint Development Zone and the Sao Tome and Principe Exclusive Economic Zone, which is estimated to hold some 11 billion barrels of oil. ERHC Energy is entitled to 14 percent of that by right, and has proposed joint ventures with Devon Energy, Peioneer Natural Resources and Noble Energy in three of the five blocks offered in Round 2.

Awards of concessions in five of the JDZ blocks are expected later this week or early next after a 30-day deadline for ExxonMobil to nominate its two 25 percent allotments in any two of the five blocks currently on offer, which like the five allotments ranging from 15 to 30 percent given to ERHC Energy were earned for services performed before the creation of the zone.

Block 1 was recently awarded to a consortium of ChevronTexaco, ExxonMobil and Energy Equity Resources, which has sold part of its 9 percent stake to a Nigerian independent for an undisclosed sum.

An Agence France-Presse report Monday, meanwhile, offered a powerful counterpoint to the Shell executive's statement at the conference. That report is available at

Contradicting Another, Newspaper Says Awards May Come Next Week

Citing the "anxiety" stirred among oil companies by delays in the award of block concessions in the Nigeria-Sao Tome and Principe Joint Development Zone, This Day Online said Monday that awards "may" come "next week."

If true, it would be an enormous relief to investors - but as it is, it merely adds a new layer of doubt and confusion to the awards process. That may even have been its purpose.

This Day is a publication whose oil writer, Mike Oduniyi, is thought to be close to the Nigerian company Conoil. His article, dated March 21, contradicted a report dated March 22 by The Punch of Nigeria, which also came out Monday, March 21. See the post preceding this one for that article.

It raised a simple question: How could the This Day report, if it was deliberate, contradict The Punch report a day ahead of its appearance?

That problem can be resolved by the fact that both reports actually came out on Monday, when they were first seen by ERHC On The Move.

We saw the piece from The Punch in the late afternoon, and the piece from This Day Online late Monday night. The latter article was tucked away in an area called "Companies and Markets" that could be linked to only from the main Business page, which is not frequently updated.

The Punch post-dated its account of a conversation with Samuel Obiora, a deputy to JDA chief Carlos Gomes, who told The Punch at an oil conference in Abuja Monday that awards would be delayed until April 19.

This Day Online does not time-date its reports, but no alert investor had spotted it earlier than March 22. Oduniyi's articles do not have a strong record of accuracy, while the writer of The Punch report has no track record in our experience.

The report in This Day Online also refers to a statement made by the JDA "at the weekend" and may therefore be out of date.

Oduniyi is obviously wrong when he says ERHC Energy has exercised "one" of its rights in the five blocks, when in fact it exercised rights in all five blocks ahead of ExxonMobil, which gets the final two choices.

As in the past, as awards grow near both rumors and facts fly wildly about, leaving investors deeply uneasy about the future. Based on The Punch article, ERHC On The Move entered a substantial sell order early Tuesday morning. It may yet have to be cancelled.

The This Day report also says ExxonMobil was given a "mandatory" 45-day period to choose in which two of the five blocks currently offered it would exercise its rights to 25 percent allotments. No other reporting has suggested a 45-day period.

In fact, ExxonMobil was given no deadline at all in the original announcement of the terms of this round, published on the Nigeria-Sao Tome Joint Development Zone Website on February 1 at, where an official press release states:

3. As soon as Exxon Mobil exercises its options, the JMC will be convened to approve the final structure of the award of the blocks put on offer in the 2004 JDZ Licensing Round. This is expected to be done before the end of the month.

The statement merely said ExxonMobil has to choose before awards can go forward. No deadline was given. The deadlines were a subsequent invention and have not been stated in an official document even though JDA spokesman Sam Dimka offered them via Raging Bull ERHE message board poster orangeandwhite0 over the past several months.

Thus, there really is no written hard-and-fast deadline, 30-day, 45-day or otherwise, provided in any official statement of the JDA.

Here is the This Day Online report by writer Mike Oduniyi:

JDZ Oil Blocks: Winners May Emerge Next Week
by Mike Oduniyi, 03.21.2005

ABUJA -- Winners of the five oil blocks in the Joint Development Zone (JDZ) of the Gulf of Guinea, put on offer last November, may emerge next week.

This followed indications that US oil major, ExxonMobil, will exercise its pre-emptive rights on any two blocks of its choice before the end of this week.

Officials of the Joint Development Authority (JDA), the body managing hydrocarbon resources within the zone on behalf of Nigeria-Sao Tome and Principe, said at the weekend that once ExxonMobil exercised its rights, the Joint Ministerial Council (JMC) will call a meeting to decide on the winners.

The mandatory 45 days period allowed for ExxonMobil to exercise its 25 percent rights on any two blocks among the five blocks on offer also expires this week.

The JDA has the right to go ahead with the award if ExxonMobil fails to exercise its right. But officials of the US firm told THISDAY that the company would surely meet the deadline.

It was gathered that another company, Environmental Remediation Holding Company (ERHC) in which indigenous firm, Chrome Energy, has a major stake, had already exercised its own preferential rights to one of the blocks and accepted by the JDA.

Anxiety had mounted, especially among Nigerian indigenous oil companies that bidded for the oil blocks named 02, 03, 04, 05 and 06, over the delay in the award, which, according JDA, should have been announced mid-January.

ExxonMobil has the right to first exercise rights in three of the nine blocks in the zone. The oil firm exercised its rights by claiming 40 percent interest in Block 01, awarded last year by the JDA.

Although ExxonMobil sources refused to disclose the block of choice, it is already widely speculated that the company would end up exercising its 25 percent interest in the much sought after Block 04, leaving indigenous oil company, Conoil, to battle for the remaining 75 percent shares in the block, with five other companies.

Nigeria and Sao Tome last month, received $123 million for awarding Block 01 to ChevronTexaco (operator), ExxonMobil and Dangote Energy Equity Resources.
Conoil led the pack of local firms seeking to grab one or two of the licenses, offering to pay a signature bonus of $150 million (N20 billion) for Block 04.

Also in the race for the Block 04 with, seen as the most prolific of the acreages, is Environmental Remediation Holding Corporation (ERHC) in which another indigenous company Chrome Energy holds 50 percent stake, which will exercise a preferential right in the block.

Other indigenous oil companies bidding for the same block are Anardako Petroleum and Hercule Oil/Centurion Energy which offered $90 million and $81 million, respectively, as well as two US firms, ECL International, which offered a signature bonus of $175million and Vintage Oil and Gas, offering $135 million.

A total of 26 oil companies submitted bids for the five oil blocks in the JDZ as at the close of the 2004 Licensing Round.

Details of the applications showed that the companies offered various amounts totaling more than $1.8 billion as signature bonuses for the blocks. Nigeria and Sao Tome will share the proceeds from the licensing on 60:40 ratio.

For Blocks 03, 05 and 06, had Energy Equity Resources, I.C.C.-O.E.O.C. consortium and Filtim Huzod Oil and Gas Limited offering $37 million, $41 million and $45 million respectively.

Special Adviser to the President on Petroleum and Energy matters, Dr. Edmund Daukoru had actually cautioned at the opening of the bids last December that signature bonus alone might not confer automatic victory to any of the biding companies.

JDZ Awards Delayed to Late April As ExxonMobil Fails To Exercise Rights, JDA Deputy Says

The daily newspaper The Punch of Nigeria reported minutes ago that ExxonMobil has failed to exercise its two 25 percent option rights in the Nigeria-Sao Tome and Principe Joint Development Zone, necessitating a new delay of awards until at least April 19.

The delay was revealed by one Samuel Obiora, a deputy to JDA chief Carlos Gomes, who was scheduled to address the Offshore West Africa oil conference in Abuja at noon Monday but sent Obiora in his place. In our view, Gomes would have been ashamed to make the announcement and thus would have sent an underling to do it, lending credence to the account provided by The Punch.

The delay would be the fourth since Dec. 31, 2004, when the Joint Development Authority failed to award the five blocks on offer as planned, creating massive losses of confidence and investment along the way. It may permit some investors a last-chance opportunity to buy ERHC Energy at $0.50 or below, however.

ERHC On The Move is strongly considering an immediate sale of our entire portfolio of 123,040 shares in order to lock in profits and repurchase in two to three weeks at a more attractive price. In preparation, we have entered a sales order we may yet cancel. Our decision will be determined by trading levels and activity tomorrow morning. We would sell on any substantial rapid dip in price, and likely maintain our position if prices remain within a decent range of $0.705 or if they rise.

The described delay, however, defers the awards much further than already expected. The newspaper seemed to take pains to tie the delay to the failure of the consortium that won the Block 1 concession in Round 1 to pay the signature bonus fee. That had been waiting on resolution of a boundary dispute regarding the Nigerian Block OPL 246, which overlapped with part of Block 1 of the JDZ and required concessions from multinational operators there.

The JDA resolved that issue last week, however, UpstreamOnline reported this past Friday. That publication has also been wrong rather frequently, as when it reported that ExxonMobil faced a March 18 final deadline. The reports also again tests the credibility of JDA spokesman Sam Dimka, who repeatedly assured investors the awards would come shortly after the XOM deadline expired. It is uncertain whether there any longer is a single credible source for JDZ information other than Nigerian President Olusegun Obasanjo and DRSTP leader President Fradique Menezes.

The new report put to rest for good the protests of some investors that ExxonMobil had little or nothing to do with the delays. Today's statement by Gomes clearly lays all the blame on ExxonMobil, as ERHC On The Move had asserted last December. The company controls the process due to its extreme size and vast investment in the country. "Nigeria may soon become an Exxon subsidiary," one angry investor remarked.

It had been anticipated that formal announcement could come by next Tuesday, and now the earliest they would come - if the newspaper is correct, which is not often the case - is a day or two after April 19.

An earlier report appearing exclusively in ERHC On The Move suggested that ExxonMobil could obtain a seven-day extension from the March 21 deadline date, leading to a March 28 deadline and an announcement a few days afterwards. But the
revelation by Obiora today at the Offshore West Africa conference gives ExxonMobil an additional 30 days to decide.

The oil giant could easily obtain another extension after that, given the past history of non-awards.

Delays have frequently extended for many months in the region so that companies and officials can reposition themselves under evolving circustances. Those in the first licensing round lasted close to a year. ERHC On The Move, in a pessimistic mood during the announcement of new delays in February, said that awards may actually be four or five months away.

That assertion was denounced by readers and rapidly countered by Nigerian officials, who nonetheless have never offered a date certain for awards since national petroleum advisor Dr. Edmund Daukoru said they would occur on Dec. 31, in a speech he gave in Abuja at the opening of the second round on Nov. 15, 2004.

Here is the latest report from The Punch of Nigeria:

JDZ: Winners of five oil blocks to emerge in April
by Michael Faloseyi and Clara Nwachukwu

ABUJA -- Failure of ExxonMobil, the global oil giant, to exercise its pre-emption rights has delayed the announcement of winners of five oil blocks in the Nigeria and Sao Tome Principle Joint Development Zone.

Nevertheless, winners of the five oil blocks placed on offer last December will finally be announced next month.

Indications to this effect emerged on Monday at the ninth edition of the Offshore West Africa held in Abuja where the Chairman of the Joint Development Authority, Mr. Carlos B. Gomes, explained that the delay in the announcement was caused by ExxonMobil.

He said that the oil major had not expressed its pre-emption rights in any of the two oil blocks of its choice.

Gomes, who was represented at the forum by the Executive Director, Monitoring and Inspection, JDA, Mr. Samuel Obiora, said that the oil company has up till April 19, 2005, to express its rights and that as soon as that is done, a meeting of the Joint Ministerial Council would be hold to ratify the winning bids.

The oil company has already expressed its 40 per cent pre-emption rights in block one, but failed to express its interest in any of the two blocks out of the five blocks placed on offer in December, a development that has delayed the announcement of the winners in those bids.

The JDA had last December, received 26 bids from 22 companies for blocks 2 to 6, which were declared open then.

Gomes said that the winners of the five oil blocks would be expected to drill at least, two wells in three phases within the first eight years of the announcement, which would be indicated by the work schedule submitted with their bids.

He said that biddable signature bonus; production bonus and social projects would be major determinants of the eventual winners in the bid exercise.

The other indigenous oil company with pre-emption rights, Environmental Remediation and Holding Company, has exercised its initial pre-emption rights of 30 per cent in oil block 2 and 20 per cent in blocks 3.

Contrary to the procedure in the block 1, where ExxonMobil expressed its interest before EHRC, the authorities had given the rights of first pre-emption to the indigenous company, contrary to the normal procedure.

However, indications are that the governments of both countries have not received the signature bonus of $123 million placed on block one by the consortium of ChevroTexaco with 51 per cent equity, ExxonMobil with 40 per cent and Dangote-Energy Equity Resources with 9 per cent.

The Punch, Tuesday, March 22, 2005

Saturday, March 19, 2005

Weeks Ahead Likely To Produce Stunning Gains

The $7,997 gain the ERHC On The Move portfolio of 123,040 shares enjoyed on Friday may seem like small potatoes by the end of next week, when the main dish will likely be meat and potatoes - strong, doubling gains of the kind seen near the hoped-for awards of oil concessions in the Nigeria-Sao Tome and Principe Joint Development Zone in 2004.

Back then, we sold out a smaller cache for $0.90 - $0.93, just below the $0.96 top. We also picked the $0.43 top and sold 175,000 for $0.41 - a $27,000 gain - in October 2003.

Our portfolio's gain since early November 2004 - when we doubled our holdings from about 60,000 and averaged down to $0.4394 - already tops $28,000 and should top $60,000 by next Friday, when awards will have been announced - or at a minimum, scheduled for the following Monday or Tuesday.

While few investors with long-term experience in holding ERHC Energy (OTC BB symbol: ERHE) would argue with this prediction, there is tremendous diversity of opinion regarding a near-term exit strategy for those who want to jump off after a sharp hike to a new all-time high next week or shortly thereafter.

Even long-term holder Ruby1100, whose disappointment with the selling that followed the great Houston Chronicle article last Sunday led him to momentarily lower his sights below a dollar, has already changed his mind and upped his conservative and steady hopes to somewhere between $1.28 and $1.68, in line with my own targets.

Others, however - including some who were very, very wrong in their predictions in the last round - are far more optimistic, believng in exit prices like $3.68 and - as Rolling Thunder dreamed several times, $4.33.

But what can you say about a stock whose oil assets are likely to be valued at tens of billions of dollars a few days from now but today is selling for only $0.67, has only $21,000 in cash and one full-time employee?

Frankly, there's no way to know how widely the news of ERHE's new assets will spread, or how quickly, and how volatile the price may become - and what sellers may jump in to try to ruin the party if they can.

What can be said is that when investors who first hear of ERHE on the morning of the awards and want to run to do their due diligence quickly will have a full plate of solid information from the 1,500-word front-page article in the Los Angeles Times in May 2003, a 1,500-word article from Dow Jones News Service on Jan. 30, 2005, and a 2,000-word front-page piece in the Houston Chronicle on March 13, 2005 - plus roughly 100 articles in the archives of this blog starting back in January (our daily average readership, just 800 a month ago, now tops 1,000).

That amount of good, solid press will make a deep impression on the kinds of heavy hitters that do good DD before investing hundreds of thousands or millions of dollars in a stock they are just now hearing about. And that's why our predictions of $0.60 and $3.00 gains may be all wet.

When a Canadian firm, Ivanhoe Energy (OTC BB symbol: IVAN) shot out of the gate with far less promise a few years ago, new investors qwuickly pushed it above $10 a share.

And given that our oil assets are very conservatively valued at a $53-a-barrel minimum of more than $28 billion, and that we have already partnered with solid mid-tier players Pioneer Natural Resources (NYSE symbol: PXD) and Noble Energy (NYSE symbol: NBL), there is no apparent reason we can't do the same.

And it also can't hurt that we will apparently be doing business in the same blocks at ExxonMobil, or that our MOU partner Pioneer's partner, Devon Energy (NYSE symbol: DVN), is one of the hottest up-and-coming players in the game.

And then there's the matter of those two 100-percent blocks, both signature-free in the Sao Tome Exclusive Economic Zone, to which we are entitlted when the round offering those opens later this year. Since we don't know now what their assets are - but we do know that everything around them is rich in oil - that may be yet another $5 - $10 surprise for this stock. We had predicted a buy-out of ERHE, or at least an attempted buy-out, and it turns out that our prospective fellow explorer in (probably) Blocks 2 and 4 of the JDZ, ExxonMobil, per its press releases and statements in February, is acquisition-minded and has $25 billion in cash.

So, it may be time to take that old, oil-spotted and beat-up tarp off our brand-newly-named, debt-free and precisely positioned oil-pumping machine and look towards the double digits in the day immediately following awards.

Needless to say, that sounds like a "pumper" talking, and I would plead guitly if it were true. But I have hit you squarely with the bad news just as often as I've hit you with the good, and since Jan. 10, 2005m I have not bought or sold a single share for my own account (I did try to buy 3,000 more shares at $0.565 two weeks ago, unsuccessfully) and am wondering right now if I out to sell at all, beyond what I need for my relatively few immediate expenses.

Not selling is not my normal way of doing business, but as one who bought into stocks like HYPD, FEEC and TMXN and sold out only to see them triple, quadruple and sextuple afterwards, I am slowly learning the difficult lesson that you have to stay in some stocks a while to realize their full potential. A while - at least in the case of those players - doesn't have to be three years, either.

Now, this is not a promise not to sell. Like anyone, I salivate at the prospect of walking aways with a newly-minted $200,000 bill in my wallet, and it may be that my greed indeed may overcome my wisdom. I just wouldn't bet on that anymore - and frankly, I am a gambling man.

Friday, March 18, 2005

ERHE Up Sharply On Good Block News

With more assurance that block awards are imminent in the Nigeria-Sao Tome Joint Development Zone, ERHC Energy (OTC BB symbol: ERHE) moved sharply higher in steady trading Friday, adding $0.055 or about 9 percent to $0.66 on volume of 2,940,100 shares at 3:30pm EST.

The day saw more investors moving to capture a piece of the prized blocks in the Gulf Of Guinea, where ERHC has rights to five option allotments ranging from 15 to 30 percent in a zone that is said to contain more than 11 billion barrels of oil in deep offshore waters.

ERHE is guaranteed rights to more than $81 billion worth of oil at current prices, although only a fraction of that - possibly 10 to 15 percent - is likely to be realized.

Those rights apply only to the current licensing round; ERHE has additional rights in the next JDZ round and rights to two full signature bonus-free blocks in the Sao Tome Exclusive Economic and to 15 percent allotments in two additional blocks of the EEZ, where officials say a licensing round will begin this year.

JDZ Awards Next Week, UpstreamOnline Says

Barry Morgan, the prize-winning reporter for UpstreamOnline who has covered the Gulf Of Guinea block auctions by the Nigeria-Sao Tome and Principe Joint Development Zone since its inception, reported shortly after midnight GMT that all outstandng issues regarding ExxonMobil's rights in the five blocks of the zone that are now on offer have been resolved, setting the stage for awards next week - and he again indicated that ERHC Energy (OTC BB symbol: ERHE) may be a big winner, perhaps at XOM's expense.

Here is the story from last night's editions of the highly-regarded petroleum industry's insider journal:

The JDZ issue is finally resolved

00:18 GMT

EXXONMOBIL has finally decided where it stands in the Gulf of Guinea licensing round, jointly managed between Nigeria and Sao Tome & Principe, writes Barry Morgan.

The company will likely take up its priority rights to 25% of Block-2 and 25% of Block-4 in the Joint Development Zone (JDZ), as agreed under an international protocol signed before the current licensing round.

After weeks of agonising over whether to pull out following abortive attempts to muscle into an operatorship for Block-4, the company opted to cut its losses and take its due. Meetings will resume with Nigerian authorities on 21 March.

ExxonMobil already exercised its right to 40% of Block-1 under Chevron-Texaco's operatorship but failed to bid on either first or second round blocks, therefore rendering it impotent to stake its claim for a larger role.

Just how ExxonMobil managed to play its hand so badly in this political game is a question many observers are asking, as minnows in league with mid-sized companies look set to win the big prizes. Following months of procrastination, the Abuja-based Joint Development Authority set up to manage natural resources in the zone, finally forced the supermajor to take action.

ExxonMobil is understood to have sought operatorship of its own interests through the backdoor based on its relations with Sao Tome and the clout it wields with the Nigerian government. Yet the municipal and international law governing the JDZ enabled Nigerian petrocrats to stand firm, allowing only those bidding to emerge.

ExxonMobil had until 18 March to make its pitch but is understood to have elected under pressure to put bidding suitors out of their misery ahead of deadline. Equity breakdowns on all blocks, including operating stakes, will still have to be approved by the JDA and ratified by a meeting of the Joint Ministerial Council.

It is envisaged that junior equity positions will be decided for second round offerings (blocks 2, 3, 4, 5, 6) before the end of next week, along with the operators. US minnow ERHC Energy has priority rights to several blocks but also bid for operatorship with US partners Pioneer Natural Resources and Devon Energy (blocks 2 & 3) and Noble Energy (block 4).

Nigeria recently relaxed its rule restricting local independents to 10% of equity in deep-water offerings in this year's round to licence the Exclusive Economic Zone (EEZ), raising the bar to 20%. However, it remains unclear how this would play with the JDZ where the round, governed by international treaty, is close to closing.

Sao Tome also wants to launch its own EEZ round this year, competing with Nigeria.

Morgan has suggested in earlier stories that ERHC may take as many as three operatorships in this round, and that possibility seems to gleam through the klines of today's report.

Is First Atlantic Selling Shares?

There is little doubt that anticipation of the coming awards will drive the share price upwards, as many longs have hoped, and may reduce some of the apparent insider selling that has depressed the price in recent days despite strong support from a front-page Houston Chronicle story last Sunday.

The selling,in my opinion, may originate with First Atlantic Bank of Nigeria Plc, which has vastly increased its asset base in the months following a transfer of some 63 million shares from ERHC Energy chairman Sir Emeka Offor, who was sued by the bank in Houston federal court over an unpaid loan and settled the matter with the shares on Nov. 10. 2004.

While the First Atlantic Bank shares are supposedly restricted for a year, the bank has made no SEC filings concerning them despite being a 9 percent owner of ERHC, and it is unclear how U.S. securities laws would impede the bank's transfer agent from selling the shares if it wished. The only statement of the bank's ownership has appeared in ERHE's own SEC filings.

There is little other explanation for the massive 10 percent sell-0ff that investors saw after the highly positive Houston Chronicle story, headlined "Tiny Player Strikes Gold In Huge Oil Deal."

Buoyed by the story, the price soared $0.115 for a 20 percent gain before a wave of selling drove it from a high of $0.695 to $0.63. As in another instance in December when the share price soared, many long-term holders have asked, "Where are the shares coming from?" The answer, again in my opinion, almost certainly seems to be the First Atlantic Bank shares.

The bank, which did not have enough assets to remain viable under Nigeria's newly-enacted bank-capitalization laws, saw its own stock rise and its assets soar from less than Na. 25 billion to Na. 32.7 billion, with little evidence of corresponding new depositors.

If indeed they are the bank's shares that are being sold, it is uncertain whether anyone but the stock's transfer agent would have committed an SEC violation, and there is currently no certainty that the transfer agent is located in the United States or subject to U.S. regulatory regimes.

The issue is a vital one for investors who fear that the long-awaited awards may be robbed of their benefit by massive selling aimed at taking profits for the bank. A major ERHE investor known as Ruby1100 has cut his forecasts for a post-awards high in recent days from well over a dollar to the $0.78-$0.95 range, prompting some other investors to follow suit in formulating their own exit strategies.

Much surely depends on whether Barry Morgan's optimism about the operatorship awards is borne out by the announcements expected next week. A trio of operatorships would surely clear the decks, and possibly lead to prolonged buying that would exhaust even the bank's cache of shares in a matter of days.

Thursday, March 17, 2005

ERHE Goes Green Again As Awards Near

ERHE, battered by doubts and the frustrating prospect of an additional one-week delay if ExxonMobil fails to exercise its 25 percent preferential rights in the Nigeria-Sao Tome and Principe Joint Development Zone, nonetheless went back into the green for St. Patrick's Day this afternoon, turning around a dismal performance on low volume as some buyers leapt in to take advantage of what will likely be the last "low" prices before awards.

At 2pm EST, volume stood near 715,000 shares and the price was $0.61, up better three
cents from today's low of $0.58.

Traders still don't know if the 30-day deadline set by the Joint Development Authority expires for sure on Friday, Saturday or Sunday, nor whether the 7-day extension is in fact likely should the company fail to notify the JDA of its choices.

That uncertainty has helped depress share price in the past two days, but it is wearing thin as an excuse to keep selling when awards are not more than 10 days off.

The share price ended at $0.605 at the market's New York close, a gain of $615.20 for the ERHC On The Move portfolio of 123,040 shares, which has an average price of $0.439 and is $20,350 ahead for the year.

Wednesday, March 16, 2005

ExxonMobil May Get 7-Day Grace Period, Reader Says

A reader has written to take issue with my editorial "Signs of Change," on this site, and in doing so left behind what reads to me as useful inside analysis.

If correct, the comment by muktawdadi indicates that XOM could get an additional seven-day grace period if it fails to exercise its 25 percent preferential options in Blocks 2 through 6 of the Nigeria-Sao Tome and Principe Joint Development Zone.

Muktadawdi also indicated that ExxonMobil is not the key reason the awards have been so long delayed, and that the PSC for Block 1, which has been signed but but not paid for, is held up due to boundary changes that were required - and adjustments in acreage holdings by several majors that in turn were affected.
He (or she) writes:

As for the PSC on block 1: the delay relates solely to the time it has taken Nigeria finally to sign into law and gazette boundary changes with the JDZ, and to secure waivers from Total, Petrobras and South Atlantic for acreage previously in Nigerian block 246 and now in JDZ block 1.

That process was complete last week. Chevron Texaco, ExxonMobil and Energy Equity Resources/Dangote (or perhaps Afren, which claimed in its London IPO on Monday to have a deal on half Dangote's stake and tripled in a day) have until second week of April to pay the $123m signature bonus.

On the 2004 JDZ licensing round - ExxonMobil's 30-day notice for exercising its options closes on 18th March. It is very likely they will receive a further 7-day grace period. If by then the company has not indicated a choice, the JDA will conclude that Exxon has chosen not to exercise and call a JMC meeting - which, depending on logistics, may happen before the end of the month.

Signs Of Change

We are beginning to see, thankfully, a stirred-up multinational oil industry that recognizes the radical nature of the threats it is facing in Nigeria from several states and a "runaway" House of Representatives - whose latest great idea, by the way, is to renounce all of the nation's foreign debt even while there's a budget surplus due to the booming price of oil.

The same kind of nonsense is cropping up again in Sao Tome, too, where a last-minute change to the Production Sharing Contract so widely hailed a few weeks ago at its signing has held up payments forthcoming from it.

As the redoubtable stockhocker70 put it on the Raging Bull ERHE message board, "These people are their own worst enemies."

There is a lot of truth in that statement. If Nigerians and Sao Tomeans sincerely believe they are getting a raw deal when they risk nothing and reap billions from hard-to-reach oil that once found is stolen by admirals, attacked by insurgents and taxed to death by the government - where corruption ends up denying the royalties to those who need it most - they will love having China as a partner.

China promises money as though they printed it from mid-air, and China signs contracts that offer such wealth as only long-ago emperors once enjoyed. But take it from the United States: a deal with China is a deal that will benefit China first, last and always. The promised payments become mired in political problems; the deal-makers get replaced; the production schedule slides backwards as other priorities take its place.

Meanwhile, you have lost some of your reliable Western partners, who at least can be shamed into paying up; you don't have standing as a human being equal to a Chinese - at least in their eyes - so you can't shame them. You can't push them, you can't prod them, you can't get them to move on any schedule but their own - they're sort of like ExxonMobil on steroids. Then they start to nibble at you, a little here, a little there, and steadily more and more, pleading the vast poverty of their 2 billion people and ignoring the vast wealth of their 20 million; and you have no place to go. Not only do they steadily suck up all your natural resources, they flood your markets with their goods and make your economy dependent on theirs. There is no honor in a Chinese deal; that is only possible between Chinese.

Nigerians, who don't know they are backing themselves into the welcoming arms of China, have exactly one asset, as we see it: A man named Olusegun Obasanjo, who is quite a bit smarter, tougher and fairer than anyone expected him to be. He has won respect on the world stage, and has taken on the Augean task of cleaning up Nigeria's corrupt democracy. It doesn't even seem like a battle that can actually be started, much less won, but he has started it and is actually making progress.

The profound African tendency towards decentralization and tribalism is working overtime to defeat him, but has failed to do so. President Obasanjo may indeed be something new on the African map: a leader who wants to leave a legacy of progress and achievement behind him, and who leaves lining one's pockets with corrupt cash to others. If so, he comes forward at a critical time in his nation's history, prepared to lead and tough enough to make a vital difference in its history.

Part of that difference will be in beating back the idea that is gaining such resonance in Nigeria these days, that its own oil companies can take over its reserves and exploit them and produce the same or more wealth. That denies the vast investment in experience, technology and administration that huge oil companies bring to bear on every oil prospect they examine. But partnerships that are fair and not forced, as some indigenous companies prefer, will eventually provide that capacity to the Nigerian downstream sector, but they will have to earn, not steal it.

Great companies, just like great people, don't allow themselves to be blackmailed, brow-beaten and falsely accused for very long. They don't like shakedowns, and they don't respect those who have to be bribed to do what is right. The weak, importuning player in such relationships always ends up the loser, as do those who proceed directly from demands to force, bypassing negotiation.

The way of patience, fairness and mutual trust is what works in business in the long run, and is what produces not only strong partnerships but strong friends; often, in the heat of world-shaking crises that threaten to undermine whole nations and continents, whether from natural disaster or war, from economic disaster or disease, it is friends and not money who count the most when help is needed.

We appreciate every day that we see the Federal Government of Nigeria trying to forge honest, productive partnerships by playing fair, being patient, and earning the trust of their partners in business and world politics. Those days point the way to a better future for all Nigerians, and we pray that day will come soon.

Nigerians Strive To Assure Oil Majors On Tax Hikes

A series of articles in Nigerian daily newspapers in recent days have sought to reassure foreign oil investors that huge tax hikes proposed by the country's House of Representatives will not go forward before the Nigeria-Sao Tome and Principe Joint Development Zone blocks are awarded, and that they will not be a stringent as proposed in the 63 blocks now being offered by Nigeria alone.

While ERHC On The Move has reported for weeks on the proposed tax hikes, other publications who missed the first beat of the story, including Reuters, have now followed up and prominently reported the comments of both national petroleum advisor Dr. Edmund Daukoru and Nigerian President Olusegun Obasanjo suggesting that the House is, as they say, all wet.

Indeed, our stories have stirred responses from the multinationals themselves, who generally don't like to admit they read blogs.

They have banded together to present a united front in opposition to the tax hikes, and have also counter-attacked on charges that they were running a large number of illegal airstrips. We expect to hear soon that they deny en masse having evaded Nigerian taxes, a charge that has some states seeking hundreds of millions of dollars from majors.

Days Away, Doubters Dally

Just days from the award of lucrative oil concessions in the Gulf of Guinea, investors continue to teeter back and forth on the merits of ERHC Energy (OTC BB symbol: ERHE), while in Abuja officials of the Nigeria-Sao Tome Joint Development Authority put the finishing touches on an announcement that will bring the company more than $81 billion worth of undersea oil and a share price that is likely to double and then some.

Despite the front-page headline in last Sunday's Houston Chronicle that presented the awards as a fait accomplis - which by all indications it is - sellers in the last 15 minutes of trading moved more than 450,000 shares to leave the price where it started the day 1.7 million shares earlier: at $0.63.

The process of pushing the share price up the hill to $0.65, only to watch it roll down again to $0.61 before the final burst of trading, was exhausting to watchers who were aware of the last-minute preparations in Abuja and the looming Friday deadline for ExxonMobil to make its move on the 25 percent allocations it holds.

Repeatedly assured at the highest levels that awards will immediately follow XOM's decision, one would think investors would be striving mightily to firm up their positions before the announcement, which ERHC On The Move expects will come after the closing bell on Monday. But in the last five minutes of trading, several blocks of 100,000 and one of 90,000 shares were asserting that some holders didn't know what to believe - and some buyers did.

The Chronicle article proved to be too attractive for day traders, who swung in and out of the stock on Monday as it first climbed 20 percent and then fell back to settle for an 11 percent gain. Admittedly, the day traders made out like bandits - in the very short run. But those who have held on until payday and beyond will make those daily profits look like chump change, we feel. ERHE's share price by the end of next week could well be over $2, and even far higher, we believe, and we have staked our $123,040 shares on that prospect.

There is an interesting parallel to the day-traders and the longs at the craps table. Smart craps players sometimes make a lot more money on their side bets - getting odds that someone will roll a six or right or nine, for instance - than they do at the line, especially when the shooter is hot, hitting lots of 7s or shooting 10 or 15 times before he makes his number or craps out. Day traders make lots of side bets, while the high-rolling longs play the front line, the main chance, the Come line.

Over the years that we high rollers have played ERHE (and its predecessor symbol, ERHC), we've seen a lot of those side bets go very, very bad, very, very suddenly. One day there's a coup; one day a contract written in stone has to be renegotiated; one day the awards process is indefinitely postponed; one day the Los Angeles Times or the Houston Chronicle comes out with a major front-page article. For the day traders, the sudden turnabouts have thrown a wrench into their carefully polished strategies time and again; for patient longs, no loss was involved, just more days of waiting. And we are nothing if not patient.

That's why it is hard to understand such the short-sighted strategies so evident on Tuesday. A half-dozen major and many minor newspapers and wire services, and some very high-level officials, have assured the world that when the awards come, ERHC Energy's rights to about 14 percent of 11 billion barrels of oil will be awarded; those rights today at about $81 billion, and after exploitation and all associated costs and taxes, about $10 billion, or aroundt $14 a share. The awards are imminent, meaning they will be here within 10 days, and probably much sooner.

So who in their right mind - if not a prospective takeover artist that wants to get shares cheap and so plays the weak bid against the strong askto drive his price down - would sell 100,000 shares today? We don't know, but we sincerely doubt their sanity.

Tuesday, March 15, 2005

Exxon ready To Decide On Blocks, Possibly Today

ExxonMobil has considered its options for its two 25 percent preferential rights allotments in Blocks 2 through 6 of the Nigeria-Sao Tome and Principe Joint Development Zone and may disclose its decision to farm them out or keep them as early as today, according to the usually reliable Bassey Udo of Nigeria's Daily Independent.

"It might be today or tomorrow, but just give it some time,” the source told Bassey, a veteran oil jourbnalist.

In a story from Tuesday's editions, Udo also says the oil giant is would lose its rights if it failed to exercise them by a a 30-day deadline that ends March 18.

Here is Udo's story from the Daily Independent:

ExxonMobil set to exercise JDZ rights
By Bassey Udo

Energy Editor

LAGOS -- ExxonMobil appears set to exercise its preferential rights in the five oil blocs put up for bids in the 2004 licensing round of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).

Last week, top officials of the American oil major and those of the Joint Development Authority (JDA) held talks in Abuja, on the terms that will see ExxonMobil moving to exercise its rights within the stipulated 30-day deadline approved by the Joint Ministerial Council (JMC) last month.

A source close to the company at the weekend raised hope on the prospect of ExxonMobil exercising its rights in some of the plum acreages.

“I can tell you that discussions are still going on in Abuja. A decision is yet to be taken on the issue. There are a lot of issues to be resolved.

“But, right away, I can tell you that there is a high probability that the company will exercise its rights in some of the acreages before the expiration of the deadline. It might be today or tomorrow, but just give it some time,” the source said.

ExxonMobil is expected to “farm in” 25 per cent of its pre-emptive rights in any two blocs of its choice, preferably blocs 2 and 4, considered the most prolific of all the five on offer last December.

It was gathered that ExxonMobil may forfeit its rights in the acreage if it does not exercise them before the expiration of the March 18 deadline as there was no provision allowing a farm out to an interested party.

Nigeria’s Environmental Remediation Holding Corporation (ERHC), which has already exercised its rights, holds 15 to 30 percent stakes in all five blocs as well as exclusive rights to two oil blocs in the Exclusive Economic Zone (EEZ).

ERHC also has in the EEZ and another 15 per cent stake in two of the five blocs that will attract signature bonuses provided they match the highest price offered by the bona fide bidders. The JMC might convene next week to announce the final result and awards if ExxonMobil acts before Friday.
Copyright© 2004. All Rights Reserved

To clarify that last paragraph, ERHC Energy (OTC BB symbol: ERHE) has options in all of the five blocks on offer in the current second licensing round, a 15 percent option in Block 9, which has yet to be offered again after it failed to attract interest in the first round, and two 100 percent and two 15 percent options in the Sao Tome and Principe Exclusive Economic Zine. All of those 15 percent options require signature bonuses, as does another 15 percent option in Block 6, which attracted the fewest bidders in the current round.

Monday, March 14, 2005

ERHC At A Turning Point Today

Update 12:25am EST 03/14/05: Since ERHE opened at $0.68, my order wasn't filled. Yes, the stock opened 20 percent higher than Friday's $0.565 close at $0.68, reached $0.697, and is now $0.10 higher at $0.665 bid, $0.67 asked on volume of 3,930,958 shares.

The Los Angeles Times, Dow Jones News Service and Houston Chronicle have all weighed in with major front-page articles on ERHC Energy (OTC BB symbol: ERHE), and under the glaring, critical eyes of reporters and editors our investment has been found not only sound, but ripe for appreciation.

"Tiny player strikes gold in huge oil deal" - the Chronicle's front-page, above-the fold headline yesterday - is a fundamental statement of the truth about this stock.

Now, we have to wait for the world to catch up on its reading.

I became an investor in ERHC, which recently changed its symbol to ERHE, on the Monday following the article in the Los Angeles Times in late May of 2003. The stock rose 21 cents over those three days, and I quickly accumulated 175,000 shares. Just before they topped out at .43 a few months later, I sold my stake for a $27,000 profit.

Today (even though I needed the money then), I wish I hadn't. The 123,040 shares I now own are hardly enough to make up the difference I might have earned had I held those first $.215 shares and held on - but "might have" is a perilous illusion. I didn't.

As we weait for the market to open a few hours from now, I think we are on the brink of a great new wave of buying interest in ERHC, occasioned not just by the Houston Chronicle article and the others, but by a new set of circumstances which uniquely apply to ERHC Energy.

Among these considerations are:

  • We have no outstanding debt. While the article points out that we only have $21,000 in cash, that's plenty for now - we only have one employee to pay.

  • We have withstood the scrutiny of some of the best business reporters in the world - Ken Silverstein of the Times; Washington Bureau, David Ivanovich of the Chronicle's Washington bureau, and Norval Scott of the Dow Jones News Service's London bureau. As they have noted, our contracts and our rights are intact after innumerable challenges, threats and charges.

  • We are no longer quite so unknown as we were in the late Spring of 2003. Not only have these reporters studied us, but so also have dozens of reporters for news outlets around the globe from the Financial Times to Forbes to Reuters. And while all these media have examined our bona fides, few have ever speculated about what the effect of awards in the Nigeria-Sao Tome and Principe Joint Development Zone may be on our share price.

  • Unlike in 2003, when awards also appeared to be near, they are near now - they could even come this week, or early next.

  • UpstreamOnline reported two weeks ago that we "are in line" for operatorships in three of the JDZ blocks - a fantasy, perhaps, but perhaps one of the very few that become real.

  • The "launch pad" for ERHC is - thanks to the Chronicle - likely to be far higher than if the article had not come out before awards. It is one thing to go from $0.19 to $0.40 over three days when the stock is unknown, but it is quite another to start at $0.564 when the article came out, probably just a week ahead of awards. We can expect very significant gains just from news of our guaranteed rights being awarded.

  • The Houston Chronicle is the premier voice of America's powerful Oil Patch, and when they examined the issue of reserves in the Joint Development Zone, they came up with an authoritative figure more than 250 percent higher than most investors have used to gauge a possible share price. Our combined rights in the JDZ amount to about 14 percent of the 11 billion estimated reserves the Chronicle found, and at a price of $53 per barrel, they can be valued at more than $81 billion. We probably cannot hope to realize more than $10 billion of that, yet even that gives our $0.564 stock of today a future 1:1 value of $14.10.

I put in an order this morning on E*Trade for 3,000 more shares at $0.57. If the rush is anything like the one that followed the Los Angeles Times article in May 2003, even that small investment will be worth it. Let's see where $1,700 goes from here.

Sunday, March 13, 2005

Houston, We've Got Ignition! Chronicle Does Us Proud

The Houston Chronicle, America's seventh-largest daily newspaper, today published the story by David Ivanovich suggested by ERHC On The Move - and what a story it is! We can only be grateful to this terrific journalist and great newspaper, the premier voice of America's oil patch.

It's a Page 1 story with a great headline that jumps to a full page inside, complete with color charts and maps.

Need a link? Try:

Otherwise, here's the story, world!

March 13, 2005, 7:32AM

Tiny player strikes gold in huge oil deal
African nation promises local ERHC Energy a share of profits

Houston Chronicle Washington Bureau

The impoverished West African nation of São Tomé and Príncipe may soon become the world's newest oil exporter, and its leaders have entrusted the country's great hopes to an obscure Houston company.

The winner of this prize: ERHC Energy, which has one full-time employee, $21,000 in cash and no experience drilling offshore.

This little-known company, based in a Westheimer office building, has been promised a share in a potential crude bonanza in the Gulf of Guinea.

São Tomé and neighboring Nigeria have been evaluating bids from oil companies wanting to drill in waters that are believed to hide more than 11 billion barrels of crude.

Five offshore blocks in a joint development zone are up for grabs. Little ERHC has been guaranteed a cut in each one.

"I've never heard of anything like it, anywhere in the world" — at least not since Africa's colonial days, said Jedrzej George Frynas, a lecturer in international management at England's University of Birmingham.

Exxon Mobil Corp. has been granted rights to claim a stake in two of these blocks. The oil industry is watching to see whether the world's largest publicly traded company will jump in with this strange bedfellow.

ERHC's aggressive, penny-stock investors are all but salivating at the prospects. On Web sites such as or Bradenton, Fla., investor Joe Shea's weblog,, they trade tips and rumors as they await word that the blocks have been awarded.

"I'm a little disappointed that I'm not already a millionaire," Shea said.

The story of how this small company gained such influence is drawn from interviews with government leaders, company officials, diplomatic sources, human rights groups, Africa specialists, and oil and gas analysts.

Eight years ago, ERHC officials waded out to remote São Tomé before others in the oil industry were willing to give the twin-island nation more than a passing glance.

The company has since negotiated a series of deals its competitors can only envy.

Critics say ERHC took advantage of a commercially naive government with no experience in the oil sector.

But despite successive political uproars over its contracts, threats to jail the company's chief executive officer and revelations of a $100,000 payment — not to mention a coup attempt — ERHC has held on to its prize.


A short history of ERHC Energy:

• 1986: Colorado-based Regional Air Group Corp. is formed. The company later evolves into an environmental cleanup firm known as Environmental Remediation Holding Corp.
• 1996: The company reinvents itself again as an oil and gas producer.
• 1997: ERHC officials explore oil opportunities in São Tomé and Príncipe, an island nation off the West African coast.
• 1998: ERHC helps establish a state-owned oil company in São Tomé and takes a 49 percent stake in the entity. What's now Exxon Mobil provides technical assistance and earns its own special rights.
• 1999: The deal collapses. ERHC CEO Geoffrey Tirman accuses São Tomé's lead negotiator of demanding bribes. The government cries "sedition," and Tirman is forced to flee.
• 2001: Nigeria and São Tomé sign a treaty to create a joint development zone. Tirman sells his stake to wealthy Nigerian businessman Emeka Offor, who negotiates a new deal. ERHC moves its headquarters to Houston.
• 2002: São Tomé's new president, Fradique de Menezes, again demands a new agreement.
• 2003: ERHC successfully negotiates current agreement. De Menezes acknowledges Offor made a $100,000 campaign contribution. A coup attempt in São Tomé fails.
• 2004: ERHC teams up with Pioneer Natural Resources, Devon Energy and Noble Energy to bid on three offshore blocks.
Source: Chronicle research


Known for its stamps

Straddling the equator, the nation of São Tomé and Príncipe is a former Portuguese colony of 150,000 people.

For generations, its economy was dominated by cocoa and coffee exports, and stamp collectors knew São Tomé for its Elvis Presley and Marilyn Monroe stamps.

But São Tomé also is in the hydrocarbon-rich Gulf of Guinea. And as oil producers pushed out into ever-deeper waters hunting for crude, São Tomé took on a new luster.

Enter ERHC. Founded in 1986 as Colorado-based Regional Air Group Corp., the firm has morphed through several business plans — airlines, environmental cleanup and now oil and gas producer — and has undergone three major management changes.

At fiscal year's end last September, nearly 10 percent of the company's stock was controlled by Nigeria's First Atlantic Bank.

The bank was issued the stock to settle a lawsuit against the company's chairman, Nigerian billionaire Emeka Offor, and his various business interests, including ERHC. First Atlantic, seeking repayment of a $57 million loan, had accused Offor of fraud.

And no one really knows, yet, whether all the great expectations will prove true.

West Africa accounts for 15 percent of all U.S. oil imports, a figure that is expected to rise in coming years. And the Gulf of Guinea has been prolific.

But many of the oil prospects off São Tomé are in waters more than a mile deep. And in such depths, fields holding 100 million barrels of crude may not justify the expense.

"Everybody talks about it as if there's no exploration risk," noted Michael Rodgers, a senior director at Washington-based PFC Energy and an expert on West African oil. "No one's drilled a well there yet."

Company came calling

In 1997, executives and shareholders for what was then known as Environmental Remediation Holding Corp. approached tiny São Tomé about developing its offshore resources.

When approached by ERHC, "we had no experience, no know-how," Luis Alberto dos Prazeres, executive director of São Tomé's National Petroleum Agency, said in an interview.

Longtime ERHC investor Phil Nugent is more blunt: "They didn't know pipe was hollow."

Those talks led to the creation of a state-owned oil company.

With the promise of a $5 million investment, ERHC was granted a 49 percent ownership stake in the company.

This initial deal included a pledge that ERHC would provide college scholarships for São Tomé's youth, with the idea of creating a cadre of homegrown oil and gas experts.

São Tomé's lead negotiator in those talks, Carlos Gomes, sent his son to study in the United States at ERHC's expense, the Los Angeles Times has reported. Gomes also took a position in the new state oil company, the Times said, receiving a $4,000 monthly salary paid for by ERHC.

Gomes now heads the Nigeria-São Tomé and Príncipe Joint Development Authority, responsible for awarding the offshore blocks in the Joint Development Zone.

Gomes could not be reached for comment, despite repeated attempts.

Mobil soon signed on to conduct a feasibility study and perform seismic work to evaluate the country's offshore potential.

But opposition to the agreement quickly grew. Critics accused the government of handing over the country's oil patrimony for a pittance. The political opposition insisted the government seek more money.

Relations between ERHC and the government quickly soured.

During a visit to São Tomé, then-ERHC Chief Executive Officer Geoffrey Tirman publicly accused Gomes of demanding bribes.

The government, in turn, cried sedition. Tirman "was threatened with a jail term, so he fled to the airport and took off," Nugent said.

Tirman could not be reached for comment.

São Tomé's leaders also accused ERHC of failing to pay the full $5 million. The deal was off.

Bleak prospects

ERHC sought international arbitration, but its prospects still seemed bleak.

Nugent sought out Offor, who enjoyed not only great wealth but tremendous political clout in Nigeria.

Offor, who holds the titles chief and sir, had been close to Nigeria's last military dictator, Gen. Sani Abacha, as well as to Atiku Abubakar, the country's current vice president.

Back in 1999, Nigeria and São Tomé had begun discussions aimed at ending a longstanding border dispute. Offor assumed a leading role in helping push those negotiations.

In February 2001, Nigeria and São Tomé agreed to create the joint development zone. The pact called for Nigeria to receive 60 percent of the oil revenues from the zone while São Tomé was to get 40 percent.

The treaty cleared the way for Offor to purchase Tirman's stake in ERHC for $6 million. The company's headquarters was then relocated, from Little Rock, Ark., to Houston.

Three months later, ERHC had a new, favorable deal with the government.

Under that agreement, ERHC gave up its claim to an ownership stake in the national oil company. But the firm was promised a share of São Tomé's oil profits, as well as a portion of the signature bonuses other companies would have to pay for the right to drill.

Again, the company's critics were livid. The World Bank and the International Monetary Fund voiced displeasure.

The following year, Fradique de Menezes, São Tomé's new president, insisted the contract was unconscionable and unenforceable.

De Menezes insisted the company renegotiate once again.

Finally, in April 2003, ERHC reached its current deal with São Tomé and the Joint Development Authority.

The agreement grants ERHC rights to take working interests in six offshore blocks in the joint development zone, as well as offshore acreage in São Tomé's exclusive territorial waters.

That means the company can claim a stake in all five blocks being offered, plus an additional block in the future.

Other companies bidding on the blocks must offer signature bonuses, upfront payments for the rights to drill.

Several of the bids for blocks topped $100 million. But ERHC's deal allows the company to forgo making such payments on certain blocks.

Gerhard Seibert of the Institute for Security Studies, an Africa research group, has estimated ERHC's bonus-free options will cost São Tomé coffers $75 million — comparable to 150 percent of the country's annual gross domestic product.

Though that agreement assures ERHC of a minimal interest in these blocks, the company had the right to join the bidding process to win an even bigger stake.

Three large U.S. independent oil and gas producers, Dallas' Pioneer Natural Resources, Oklahoma City-based Devon Energy and Houston's Noble Energy have teamed up with ERHC to bid on three separate blocks.

The idea is they would provide the resources and technical expertise ERHC lacks.

But the agreement again sparked protests. Political opponents accused de Menezes of accepting a $100,000 payment from Offor sometime before the deal was reached.

De Menezes eventually acknowledged publicly that the money had been received, but he characterized it as a political contribution.

Offor declined to comment for this report.

Ali Memon, ERHC's current chief executive officer, said the issue "has nothing to do with ERHC."

"ERHC has not made any payments directly or indirectly to any member of the São Toméan government," said Memon, a native of Kenya and a longtime Marathon Oil Co. executive.

Three months after the deal was signed, military leaders launched a coup attempt while de Menezes was visiting Nigeria.

The putsch quickly fizzled, but the event demonstrated the precariousness of the São Tomé regime.

Throughout these years of turmoil, Exxon Mobil has reportedly steered clear of ERHC.

"Exxon Mobil wished they would go away," Nugent said.

Exxon spokesman LenD'Eramo declined to comment on "speculation or rumor" about the company's attitudes toward ERHC.

The long-running controversy over ERHC's activities in São Tomé helped prod international experts to help the tiny country protect its natural resources.

A group of international law experts at Columbia University crafted an oil-management law to help ensure any new oil revenues don't end up in the pockets of corrupt officials, as has often been the case in West Africa.

Using this blueprint, São Tomé passed a law hailed as a model for resource-rich, Third World countries. "We are in a position to do better than other countries did," the National Petroleum Agency's dos Prazeres said.

But ERHC's contract remained intact.

"São Tomé would be better off if it could get rid of (ERHC's) claims somehow, but I doubt there is any legal standing to do so," said Martin Sandbu, a research fellow at Columbia's Earth Institute.

Dos Prazeres thinks his country needs to begin a search for oil.

"This is the agreement we have," dos Prazeres said. "That's the way it is."