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.