That news ought to move the stock up on Thursday and Friday, as it will definitively clarify the fact that ERHE is a working partner with mid-tier oil giants Noble Energy in Block 4 and Pioneer Natural Resources in Blocks 2 and 3 of the JDA's Joint Development Zone in the oil-rich Gulf of Guinea, where 8 of every 10 exploration wells have struck oil.
In addition, because it had been thought that the negotiations would take much longer - they were hurried up, sources say, because the price of oil that appears to be readily available in the JDZ is priced at record highs, a situation some explorers feel may not last long enough - some short players could be forced to cover substantial positions.
The story made an error, we think, including Devon Energy as one of the winning bidders. But was it an error, really? Devon won rights with ERHE in Blocks 2 and 3, then decided that the three-way split with ERHC Energy and Pioneer Natural Resources made profit margins too tight for the risk, and dropped out of both blocks. They are no longer participating, but Pioneer Natural Resources (PXD) is, and their role goes unmentioned. Maybe that's too fine a point for Reuters.
The story also omits Noble Energy's stock symbol (NBL), and might have noted that its stock rose $1.02 Wednesday. Pioneer was up $0.94.
Here is the Reuters story, released this afternoon:
14 Sep 2005, 03:50 PM EDT
SAO TOME, Sept 14 (Reuters) - Sao Tome and Nigeria hope jointly to earn some $400 million by awarding production sharing contracts for five offshore oil blocks, in talks that could conclude as early as next week, an official said on Wednesday.
Carlos Gomes, chairman of the Nigeria and Sao Tome Joint Development Authority, said talks with five Nigerian and U.S. oil companies began on Monday in the capital of the impoverished West African archipelago.
"The budget for the contract signature bonuses for the five blocks totals $406 million," Gomes told reporters, saying this estimate was made on the basis of proposals made by the interested companies.
"If everything goes as planned the negotiations should end on the 21st (of September)," he added.
A signature bonus is an up-front payment made to a government for the right to develop an oil block, often in addition to guaranteed investments in the field.
The Joint Development Authority, which administers the offshore area in the Gulf of Guinea on behalf of the two countries, awarded five offshore exploration licenses in May after a turbulent five-month selection marred by disagreements and accusations of corruption.
Companies that won the rights to exploration blocks in the second licensing round in May include ERHC Energy (ERHE), Devon (DEV), Noble and Anadarko (APC).
The Gulf of Guinea has become one of the world's exploration hot spots since a series of huge oil finds in the last 20 years.
Signed in February 2001, the joint development establishes a 60 percent stake for Nigeria and the remaining 40 percent for Sao Tome.
(Reporting by Ricardo Neto, writing by Daniel Flynn; editing by Matthew Lewis; Dakar Newsroom +221 864 5076)
Wed Sep 14 19:48:23 2005 -GMT- pnac (nN14363253) = 1 19:48
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