Wednesday, November 30, 2005

Dow Jones: PSC Signings By Christmas, Nigerian Official Source Says; Sao Tome Approval For Block 4 Still Pending, He Says

In news that is sure to bring smiles to most ERHC Energy investors, a Nigerian petroleum official told the Dow Jones Newswire's Vincent Nwanma Wednesday that Production Sharing Contracts for the five blocks offered in the 2004 Licensing Round will be signed before Christmas.

The Nigeria-Sao Tome and Principe Joint Development Authority that oversees the bilaterally-owned Joint Development Zone in the oil-rich Gulf of Guinea had posted two conflicting schedules for the signings before abandoning both when a new contract had to be written to formalize the substitution of Addax Petroleum for Noble Energy as operator in the highly-coveted Block 4 concession originally won by Noble and ERHC.

After Noble ankled the block last month - as revealed exclusively in ERHC On The Move, precipitating a round of public announcements - the JDA then said in a press release that it had approved the substitution of Addax for Noble and provided an earlier date for PSC signings than a previous press release had supplied.

With both PSC schedules and the Addax announcement on its site, the JDA was embarrassed when it was informed by the Joint Ministerial Council composed of Nigerian and Sao Tomean officials that it alone had the power to approve the siubstitution, albeit on the JDA's recommendation.

It promptly did so, according to only a single article by veteran oil writer Mike Oduniyi in the leading ThisDay Online, but until now the issue of the PSC signings had remained very much up in the air.

But, as we suspected, the Oduniyi article was wrong, at least according to the Nwanma report.

In fact, according to the Dow Jones piece, Sao Tome officials have yet to sign off on the substitution, and they told Nwanma "[W]e need certain clearance from the Sao Tomean end."

Getting clearance from the Sao Tome side is usually far more painful and divisive than pulling teeth, and ordinarily leads to long delays in any contemplated project. With presidential elections scheduled for this Spring in Sao Tome, an island nation of less than 200,000 people, and the opposition power in party in the country's Parliament, the PSC approval by the JMC could still be a protracted affair.

The Nwanma article also has an error. It says, "The JDA made the latest block awards last May, with blocks 2 to 6 being offered to a different consortium made up of local and international oil companies." Actually, the other four blocks were offered to different "consortia," the plural of consortium, and each block has an ERHC Energy equity interest of between 15 and 25 percent.

The article should nonetheless improve the share price of ERHC Energy (OTC symbol: ERHE) substantially from today's $0.34 close, as PSCs could well be signed ratifying ERHC's substantial equity in four of the other blocks in the 2004 Round.

Here is the Dow Jones piece:

Nigeria, Sao Tome Oil Pacts Seen Before Christmas
by Vincent Nwanma
Wed, Nov. 30, 2005 16:40 GMT

LAGOS - Production sharing contracts and joint operating agreements in the oil blocks located in the Nigerian-Sao Tome Joint Development Zone will be signed before Christmas, a Nigerian government source told Dow Jones Newswires Wednesday.

The source also said that the Joint Development Authority, which manages resources in the maritime boundary shared between the two countries, has approved "in principle" Swiss energy company Addax Petroleum's role as operator of block 4 in the zone.

"The agreements will be signed sometime in December, possibly before Christmas. We are hoping so," the source said.

Addax, which already has operations in Nigeria, replaced Houston-based Noble Energy Inc. (NBL) after it withdrew this year from a consortium led by ERHC Energy Inc. (ERHE).

"Addax is almost there," the source said. "We have given an approval in principle, but we need certain clearance from the Sao Tomean end."

The JDA made the latest block awards last May, with blocks 2 to 6 being offered to a different consortium made up of local and international oil companies.

Since then, negotiations have been made on joint operating agreements among the consortia members.

The groups have also been negotiating with the JDA on the terms for the production sharing contract, under which the blocks will be operated.

All the agreements are subject to approval by the Joint Ministerial Council, the highest ruling organ of the JDZ, made up of ministers from the two countries.

Tuesday, November 29, 2005

Corrupt Nigerian Governor Profiled In NY Times

The New York Times gives full coverage this morning to a story that has entranced Nigerians for days: the escape from London of the governor of the oil-rich state of Bayelsa in the Niger Delta, who dressed as a woman and disappeared while on bail after British authorities charged him with three counts of money-laundering.

While The Times has paid scant attention to the scandals and their aftermath in the battle of multinational oil companies for some $5 trillion in oil reserves believed to lie deep in the waters of the Gulf of Guinea, it found plenty of space for the adventures of a "princely" politician believed to have stolen millions from his state's treasury, which gets a royal sum from oil revenues derived from Bayelsa state's oil wells.

Here is the Times' engaging report from the Nov. 29 cyber edition:

As Nigeria Tries to Fight Graft, a New Sordid Tale

Published: November 29, 2005

YENAGOA, Nigeria, Nov. 22 - Precisely where in the rogue's gallery of corrupt Nigerian leaders Diepreye Alamieyeseigha will fall is a matter for history to judge. Gen. Sani Abacha, the military dictator who helped himself to at least $3 billion and salted it away in foreign bank accounts, doubtless stole far more.

But General Abacha - who ruled the country from 1993 to 1998 - never fled money-laundering charges in a foreign land by donning a dress and a wig to match forged travel documents, as Mr. Alamieyeseigha, the governor of a small oil-producing state in the Niger Delta, did last week, government officials said.

For their sheer audacity, his antics are likely to earn him a prominent place among the leaders who in the past four decades are believed to have stolen or misspent $400 billion in government money, most of it the profits from Nigeria's oil reserves.

"It is a new low," said Gani Fawehinmi, one of Nigeria's most prominent lawyers and a longtime campaigner for good governance. "And in Nigeria that is saying something."

Mr. Alamieyeseigha is suspected of siphoning millions of dollars in cash and buying an oil refinery in Ecuador along with several houses in London, California and South Africa. He has denied stealing money from the state.

The sordid saga of the governor comes as the federal government has engaged in a broad effort to rehabilitate the country's image around the world.

Long associated with rampant corruption and kleptocratic governments, Nigeria has year in and year out gotten one of the worst scores in Transparency International's world corruption perception index, though this year its rating improved slightly.

Corruption touches virtually every aspect of Nigerian life, from the millions of sham e-mail messages sent each year by people claiming to be Nigerian officials seeking help with transferring large sums of money out of the country, to the police officers who routinely set up roadblocks, sometimes every few hundred yards, to extract bribes of 20 naira, about 15 cents, from drivers.

In the past year President Olusegun Obasanjo has ratcheted up the fight against corruption, and several high officials have been ensnared in criminal investigations.

The president of the Senate was forced from office after he was accused of taking a bribe from the education minister to pass an inflated budget. The inspector general of the national police was charged with stealing $140 million, pleaded guilty to obstruction of justice and was sentenced this week to six months in jail. The government even formed a partnership with Microsoft to crack down on the notorious e-mail frauds.

But the Alamieyeseigha scandal has in some ways eclipsed those gains and led many to wonder whether democracy will ever make government here more accountable.

"Looting from the people is not a new thing," said Kayode Fayemi of the Center for Democracy and Development, an advocacy group. "We are used to that. But for people who claim to be representatives of their own people to commit this barefaced robbery is shameful. Where is the rule of law?"

Mr. Alamieyeseigha (pronounced al-uh-mess-EE-ya) was arrested in London on Sept. 15 and charged by British authorities with three counts of money laundering. He was released on bail but was forced to surrender his passport.

His next court date was scheduled for Dec. 8, but on Nov. 20 he mysteriously materialized in Yenagoa, the capital of Bayelsa state, telling a crowd of supporters who assembled outside the governor's mansion here on Nov. 22: "I cannot tell you how I was brought here. It is a mystery. All the glory goes to God."

Asked for further clarification, his spokesman, a former environmental activist and human rights lawyer named Oronto Douglas, repeated the governor's assertion.

"He told me God brought him home," Mr. Douglas said, sounding a little dazed. Asked if he believed the governor's story, Mr. Douglas said, "As a Christian I believe in miracles."

Mr. Alamieyeseigha has said the accusations against him are politically motivated. He is an ally of Vice President Atiku Abubakar, who hopes to succeed President Obasanjo in 2007 but is locked in a bitter political feud with him. Mr. Obasanjo is barred from running again because of a constitutional two-term limit.

The scandal of Mr. Alamieyeseigha's arrest and flight from London has gripped the nation. At the Ekiti Motor Park bus stop in Yenagoa, men gathered around a bustling newsstand to read breathless newspaper stories printed under banner headlines.

"Can you imagine, dressed as a woman?" one reader, Julius K. Wanami, murmured. "It is a disgrace."

Bishop Anslem, who is 29 and has a university degree in industrial electronics but has never had a steady job, sucked his teeth as he read The Punch, a popular newspaper. "This is what happens when you have leaders who are interested only in themselves," he said. "They take the money and we see none of it."

Mr. Alamieyeseigha is one of Nigeria's 36 governors, a princely class of men who enjoy immunity from prosecution because of a clause in the Constitution. In theory, state legislatures can impeach governors, and in fact a move is under way to remove Mr. Alamieyeseigha. But more often governors are kingmakers who control the legislatures by helping the members get elected, effectively buying their loyalty.

"There is no real system of checks and balances," said Anyakwee Nsirimovu, executive director of the Institute of Human Rights and Humanitarian Law, based in the Niger Delta. "The legislatures owe all their allegiance to the governors, who control state money."

Here in Mr. Alamieyeseigha's state of Bayelsa, that means serious money. Under a Nigerian law enacted to help develop the oil-rich but long-neglected Niger Delta, 13 percent of the revenue generated in any state is returned there for development. Bayelsa produces 30 percent of the country's oil, and with recent sky-high oil prices, the state budget this year ballooned to $560 million, compared with nearly $300 million in 2003.

But the money has not brought widespread development. It has mostly paid for white elephants like mansions for the governor and his deputy. The 2005 budget sets aside $8.5 million to construct those two houses, along with more than $2 million for furnishings.

And that is just this year. Since 2002 the state has spent more than $25 million on the governor's mansion, according to budgets on file in Yenagoa's tiny public library. The fence enclosing the two houses alone cost $5.7 million.

A glossy, mostly wordless booklet issued by Mr. Alamieyeseigha's press office, "A Legacy of Selfless Service," includes artist's renderings of the houses, depicting fantasias of waterfalls, fountains and artificial lakes. At the construction site where the governor's house is nearing completion, workers raced to lay thousands of square feet of imported granite tiles and mahogany ceiling panels.

Meanwhile, the Poverty Eradication Committee, whose purpose is not explained, has a budget of about $23,000, according to the 2005 spending plan, which is posted on the state's Web site, That is a little more than half of what is budgeted for toiletries for state officials.

Monday, November 28, 2005

No Block 4 PSC Until 2006, Dow Jones Reports

In a Nov. 21 story that apparently ran in the Business Day Nigerian newspaper a week ago but never was seen by most investors, Dow Jones News Service reporter Norval Scott says one company in Block 4 believes the PSC won't be signed there until 2006.

The article solves the mystery - it was one to me, anyway - as to why Dow Jones did not do a follow-up on the Reuters story that moved earlier on the same topic.

However, even the Reuters story ran before a story in ThisDay Online on Nov. 17 reported that the Joint Ministerial Council of the Nigeria-Sao Tome and Principe Joint Development Zone had signed off on the substitution of Addax Petroleum for Noble Energy in the Block 4 operatorship consortium. Addax will be the new operator.

Here is Norval's story, well-researched and well-written, as always:

November 21st, 2005

Editor's Note: This story actually ran on the Dow Jones wires on Nov. 15, six days before it ran in ThisDay Online. A Dow Jones piece on the Addax issue had also run on Oct. 28, before the Reuters story, but was not widely seen by ERHC Energy investors.
Nigeria-Sao Tome deal billed for 2006

The petroleum-sharing contract for Block 4 in the Sao Tomean-Nigerian Joint Development Zone likely won’t be signed until 2006, a company involved in the block said.
Norval Scott

"Negotiations to finalize the production-sharing contract and the joint operating agreement are progressing. Signature of the PSC and JOA is expected during 2006," Centurion Energy International, a Canadian company with a 7.5 per cent stake in Block 4, said in a statement accompanying its third-quarter results.

The Joint Development Authority, the JDZ’s operating body, said earlier this year that the PSCs for the region’s most recent licensing round were due to be signed in this month. Five blocks, including Block 4, were made available in the round.

However, negotiations on Block 4 have been delayed by the withdrawal of Noble Energy (NBL) from the block’s operating consortium last month.

Houston-based ERHC Energy (ERHE), which held a joint 60% operatorship of the Block with Noble Energy, has enlisted the Swiss company Addax Petroleum to replace Noble, and the JDA is believed to be considering that switch at present.

Other partners in the block include the Nigerian firms Conoil and Godnic.

The JDZ is an offshore maritime zone, owned jointly by Sao Tome and Principe and Nigeria on a 40:60 basis.

West Africa's Oil Is Golden, Time Magazine Says

In a substantial article tracing the daring and flamboyant career of a Texas wildcatter, Time Magazine's Nov. 28 issue spells out a bright future for prospectors in the Gulf of Guinea.

The article is the most recent to look at the region's oil patch as a whole, doing so through the eyes of billionaire Texas oil prospector Gene Van Dyke, whose independent company Vanco is cahoots with six West African governments and four different majors (ExxonMobil, Shell, Unocal and Total) in a swath of deepwater concessions two-thirds the size of the Gulf of Mexico said to hold 100 billion barrels of oil.

Here's the article. which can be foudn at :

Has This Man Found the Next Gusher?
As the global scramble for oil accelerates, an old-time Texan wildcatter is betting big on West Africa

Nov. 28, 2005

With oil near $60 a bbl., a mystery of geology becomes more and more intriguing: Where will we find the next great oil discovery to rival such gushers as Alaska's North Slope or Britain's North Sea? One might think the giant oil companies have the answer. But the biggest customers of all are turning to a 79-year-old Texan who operates like the Indiana Jones of the oil patch. Gene Van Dyke is one of the last of the wildcatters, independent operators who roam jungles and deserts looking for black gold. He has become the man to see if you need millions of barrels of crude oil a day to fuel a booming industrializing country, which is why the rough-hewn geologist found himself in Bermuda two years ago, hammering out a deal with executives of the Chinese national oil company Sinopec. "They were under pressure," Van Dyke recalls, and they were ready to make a deal. That meeting set in motion a year of negotiations, culminating in a $40 million deal to explore off the coast of West Africa.

That's where Van Dyke believes the world's next great oil field lies. He is now the largest deepwater license holder in Africa, with 20 million acres under license, an area equivalent to 70% of the Gulf of Mexico's deepwater fields. He believes that the region could hold as much as 100 billion bbl., equal to the reserves of such oil powers as Iran or Kuwait. Now wealthy partners are lining up to pay the cost of drilling exploratory wells, which runs into the tens of millions per try. "The Chinese and Indians, they're the ones that are the real, real market for the deals we have," Van Dyke says. "They don't need to make money on the deal itself. They just need the product." The emergence of giant Asian buyers on the market has made Van Dyke's dealmaking much easier. At one point, Sinopec and CNOOC, another Chinese state oil firm, were unwittingly bidding against each other for a single block off the coast of Morocco. CNOOC's failed attempt to buy Unocal for $18.5 billion earlier this year and India's bids against China in deals in Ecuador and Kazakhstan signaled that the two countries are serious about oil. In the process, they have given new life to the risky business of wildcatting.

Van Dyke has always liked to walk on the wild side. Ten years ago, when he started nosing around West Africa, the price of oil was only $20 per bbl. His friends thought he was crazy sinking money into leases with untested, unstable countries. Today, with a barrel of crude at close to triple that price, demand soaring and experts sounding alarms about depleting reserves, the majors are following Van Dyke's lead. In the offices of Houston-based Vanco Energy Corp., of which Van Dyke is chairman, you can see where this wildcatter is placing his bets. African tribal masks and art adorn the lobby and a 6-ft.-high, full-color topographical map of the African continent dominates one wall. Van Dyke has spent more than $100 million looking for oil in his West African patch, and early results were promising enough that ExxonMobil, Shell, Unocal and France's Total have signed up as partners.

These days there are other wildcatters running tiny public companies investing in places like Peru and the Caspian Sea, but no one else is negotiating with sovereign governments for million-acre leases on Van Dyke's scale. On a trip to Libreville, Gabon Van Dyke shook hands with President Omar Bongo, in power since 1967 and one of the most entrenched rulers in the world. Van Dyke has signed similar leases for the right to look for oil with the leaders of Morocco, the Ivory Coast, Equatorial Guinea, Ghana and Madagascar.

What's it like for a teacher's son from Normal, Ill., to deal with the notorious strongmen of Africa? "I've been doing the same thing for 50 years," he says with a shrug. "Just a bigger scale. Same damn thing." Having picked up a degree in geological engineering from the University of Oklahoma, Van Dyke got his start in the dusty fields of Wichita Falls, Texas, in 1951. His mentor, wildcatter S.D. Johnson, taught him the basics: find a farmer with promising land and get him to lease you the rights, then find an oil company willing to drill. Van Dyke hitchhiked to Fort Worth and Dallas to make his first deals. "I had about $500 to my name," he says. "I slept in whorehouses." He had no capital to invest in drilling, so he put the farmers and the oil companies together, typing the contracts on a portable typewriter on the hood of his rental car. His strength was making a deal look good, or as friend and fellow oilman Denny Bartell says, he had an ability to "powder the pig." Van Dyke would often keep a small percentage interest, but he was usually out of the operation before drilling began. "The first year, I made about $40,000, and that was 1952," he says. "I didn't find a barrel of oil."

When West Texas got played out, Van Dyke took that dealmaking skill to the Gulf of Mexico. His finds were modest but rich enough to allow him to play the role of Texas oilman to the hilt. In 1969, when a man might pay $25,000 for a nice house in a decent neighborhood, Van Dyke spent $1 million for a house that he later embellished with a 1-acre man-made "lake."

Wildcatting as he knew it, however, had started to disappear. In the 1970s, wildcatters flocked to places like Idaho, the Dakotas and Appalachia, but left the big plays to the majors. Oil exploration had moved into the open ocean, and the high costs shut out most independents. But while other wildcatters became investors or consultants or began specializing in "strip wells" that draw oil out from nearly depleted wells, Van Dyke decided to go for broke, launching a bid to become an international deepwater wildcatter in the North Sea in 1973. The gamble paid off with another modest find--60 million bbl. off the coast of the Netherlands--and allowed Van Dyke to be part of the development of deepwater exploration technology, such as 2-D and 3-D seismic analysis, during the 1980s and '90s. Most wildcatters operate with a success rate of less than 10%. By pinpointing promising fields with 3-D seismic analysis, Van Dyke thinks he can improve the likelihood of a find closer to 20%.

But ultimately it's the price of oil that will determine Van Dyke's success. Thanks to intense demand for production, the cost of operating a drilling rig is now $400,000 a day; it was half that just a year ago. This year alone, Van Dyke drilled two dry holes off the coasts of Morocco and the Ivory Coast. Next year he'll try again in Morocco and in Ghana. He has just finished a $15 million 3-D seismic program in Madagascar, and he is planning his first well there, 6,000 ft. underwater. "You might spend $20 million on a well, but if you hit on it, it's worth $5 billion to $10 billion," he says.

No wonder Van Dyke isn't getting out. "People say, Van Dyke, why in the hell don't you retire?" he says. "Well, hell, I don't hunt and fish. I don't play golf. My wife won't let me chase girls, so what else is there?" And like any other great oilman, he's still got big dreams. "I'm taking all the properties we have in West Africa, going to make a great big sale, probably to the Chinese, the Indians, going to keep about a 15% interest." A deal like that could make him a billionaire and, of course, set him up for the next big play. "We're looking at the Black Sea, Russia, maybe the Caspian Sea area. We're getting into tar sands--getting into that in a big way," he says. "That's what the next generation of wildcatting will be doing." Van Dyke plans to be there.

Friday, November 25, 2005

Draft PSC For 5 JDZ Blocks Ratified by JMC, Energy Intelligence Reports

A model PSC for Blocks 2 through 5 in the 2004 Licensing Round has been adopted by the JMC, according to a previously unpublished note in the Energy Intelligence publication International Oil Daily on Nov. 18.

Here is the note, provided by stunjamie, a poster on the Investor's Hub board:

Nigeria, Sao Tome Agree PSC

294 words
18 November 2005
International Oil Daily
(c) 2005 Energy Intelligence Group Inc. All rights reserved.

The Joint Ministerial Council (JMC) that oversees the Nigeria-Sao Tome Joint Development Authority on Wednesday ratified a draft of the production sharing contract (PSC) for five offshore oil blocks awarded in May 2005.

The draft model PSC is thought to include revenue sharing of 80-20 in favor of the oil companies. The firms, in turn, are expected to pay a 5% royalty plus 50% in tax. Essentially, the PSC will be structured in the same way as the earlier Block 1 PSC, operated by Chevron.

The winners of the five blocks are now due to sign an agreement by the middle of December. Negotiations were previously expected to conclude in September (IOD Jun.27,p7).

The controversial second round awards were made in May after a five-month delay plagued by political wrangling between the two countries and allegations of corruption. The attorney general of Sao Tome launched an investigation in September. An earlier probe by Sao Tome's National Assembly into found that decisions had been made without supporting documentation or legal opinion, and lacked due process.

Sao Tome's President Fradique de Menezes was quoted on Wednesday as saying he too is under investigation. "No one escapes, not even the president," de Menezes told a local newspaper.

Earlier this month, Noble Energy became the second US upstream independent to pull out of a consortium planning to work in Block 4 in the JDZ, and was replaced by Addax Petroleum (IOD Nov.1,p4). In July, Devon Energy withdrew from Block 2. The firm claimed the small stake it was allocated was not big enough to warrant its participation, but is also said to have resented having to deal with so many block partners.

Upstream Says Chevron To Drill In Block 1 Before Christmas

It's already old news to most investors who read the I-Hub and Raging Bull message boards, where it was widely reported via an article in Rigzone a week ago, but Chevron is planning to sink a drill bit into the deep waters of the Gulf of Guinea on the Block 1 concession it shares with ExxonMobil and two small companies in the Nigeria-Sao Tome and Principe Joint Development Zone, UpstreamOnline has newly reported.

Here is the article from Thursday's editions, courtesy of our friend Ruby 1100:
Chevron takes aim with drillbit

US supermajor Chevron aims to spud its debut well in deep-water Block-1 in the Nigeria-Sao Tome Joint Development Zone next month.

With committed signature bonus payments still an issue bedevilling the final equity breakdown of remaining JDZ blocks awarded under the just-concluded second round, all eyes are focused on this first well to test the potential of the Gulf of Guinea deep.

Earlier reports indicated caution on the part of the supermajor that drillship scarcity could postpone the probe until the second quarter of next year.

However, it is understood that a unit has now been sourced and the 60-day well is scheduled to start before Christmas. Initiates Coverage of ERHE

A new source of daily updates on ERHC Energy has become available at, a site that says it has no financial interest in the performance of our stock (OTC BB symbol: ERHE).

Registration for the site is simple and doesn't require credit card information. No registration is required to read the current article on ERHE, which was apparently posted on Thanksgiving Day.

The advent of the site at least appears to be an indirect response to pleas from investors directed at the company's management and asking that some context be provided for recent events which have sometimes baffled investors. If it proves to be an accurate source of such context, it will be a valuable new tool for ERHC investors.

The initial article is positive and its style looks fairly promising, although the information offered is well-known already and so may be considered vague and disconnected in light of recent news. The writing is a bit odd, but generally clear, and occasionally the author's use of commas is resonant of coverage in Nigerian newspapers. American spellings are used throughout, however.

Here is Day 1's report:

ERHC Energy Inc.


Average Volume: 659,361
52-Week High / Low: 0.94/ 0.32
Shares Outstanding: 710,912,000 will commence coverage on ERHC Energy Inc (OTCBB:ERHE) as it could be an opportune moment for investors looking for a small-cap oil and gas play.

Wednesday was an active day for many investors in ERHC Energy Inc. as trading volume rose to 892,090 which is well over the average. Despite the increased volumes, share prices didn’t budge, and stayed even at market closure. feels ERHC has the potential to be a great equity for those investors looking for a small cap oil and gas play. The reasons behind our speculation, is the overall stability for ERHC versus the oil and gas market, is at a favorable level. It has almost hit its 52 week low and has been on a downward trend for a significant period of time, thus creating a sense of urgency from investors.

ERHC Energy is an independent oil and gas company. ERHC was formed in 1986, as a Colorado corporation, and was engaged in a variety of businesses until 1996, when it began its current operations as an independent oil and gas company. ERHC Energy’s goal is to maximize its value through exploration and exploitation of oil and gas reserves in the Gulf of Guinea offshore of central West Africa. ERHC Energy’s current focus is to exploit its rights to working interest in exploration acreage in the Joint Development Zone (“JDZ”) between Sao Tome & Principe and Nigeria and in the exclusive territorial waters of Sao Tome & Principe (“EEZ”). ERHC Energy has entered into relationships with other oil and gas companies with technical and financial capabilities to assist it in exploiting its assets in the JDZ. will continue our coverage on ERHC Energy over the ensuing weeks, and if the potential sustains, we will bring further research to our members’ attention.

Head Market Prospector, has no vested interest in the above companies and have not been warranted in any way.

Wednesday, November 23, 2005

Daukoru Pledges First Week Of December Non-JDZ PSC Signings

Bringing a key issue sharply into focus, Nigeria's oil minister Edmund Daukoru today revealed to the country's leading newspaper that PSCs for non-JDZ blocks offered this year will be signed in "the first week of December," relieving some of the worry that the all-important contract conclusions would be pushed out into the Spring of 2006.

Daukoru said Conoil, a co-participant with operators Addax Petroleum and ERHC Energy in Block 4, has already submitted proof of payment for its share. In the non-JDZ round, Chinese and Korean bidders emerged with preferntial rights after they committed to building refining and power genweration facilities and a 1200-km pipeline to Abuja.

Daukoru said those with no cash to back their play by the first week of December would lose their equity rights, another positive development.

Here is the article freshly printed in the Guardian:

Daukoru restates transparency in 2005 oil block allocations
By Yakubu Lawal, Asst. Energy Editor

AHEAD of December date for the signing of Production Sharing Contract (PSC) with prospective investors in the 2005 oil block licensing rounds, the Minister of State for Petroleum Resources, Dr. Edmund Daukoru, said transparency would be the watchword throughout the duration of the exercise aimed at enlisting new players into the upstream sector of the industry.

He said for the Chinese and the Korean firms there has not been any review as far as their participation in the bidding exercise was concerned.

A statement issued by the Deputy Director, Press and Public Relations of the Ministry, Mr. Emmanuel Agbegi, said the government welcomed the bold initiative by local entrepreneurs in the downstream sector to enter into partnership with the majors to invest in the industry.

"However, the Honourable Minister is unaware of a review of the understanding entered into with the China National Petroleum Company (CNPCO) and Korea National Oil Company (KNOC) at this point in time", Agbegi stated.

According to him, at early stage in the process, some of the majors had offered consultancy services only, which government found inadequate to address the necessity for a fully committed core investor.

The statement stressed that should there be a review of any strategic understanding with the Chinese and Korean oil companies, all interested parties would be made aware of such an outcome in line with government's commitment to openness and transparency in all its activities in the oil and gas sector.

The Director of Petroleum Resources (DPR), Mr. Tony Chukwueke, had stated that all the PSC agreements for the licensing round would be signed by the Minister of State in the first week of December 2005, noting that any investor who failed to pay the signature bonus by that day would forfeit the offer, adding that only those who can back their bid with cash that will be given the blocks.

According to him, all those who have submitted performance bond must also back it with cash, stressing that government will not rely on promises as it intends to avoid the mistake of 1993 award.

Following the two companies' response to Federal Government's call to establish Independent Power Plants (IPPs) in Nigeria, South Korean and Chinese companies had participated in the bidding round to be able to get more oil blocks to be in upstream sector of the industry.

Koreans investors, comprising the Korea National Oil Company (KPOC), the Korea Electric Power Company (KEPCO), Daewoo Shipbuilding and Marine Engineering Company and POSCO Engineering and Construction Company Limited, signed on Monday a Memorandum of Understanding (MoU) with the Ministry of Petroleum Resources to among others, build an IPP with generating capacity of 2,250 mega watts of electricity and to construct 1,200 kilometers of pipeline that will transport natural gas from Niger Delta fields up to the Abuja network grid.

For the investment, the Koreans are to get two deep offshore blocks and one shallow water block from the 14 acreage the Nigerian government had earmarked for strategic downstream partners.

The China National Petroleum Company (CNPCO) on the other hand, will get four oil blocks for its willingness to invest in the construction of hydropower plant in Mambila, Plateau State, with over 1,000 mw capacity, as well taking controlling stake in the 110,0000 barrels per day (bpd) Kaduna refinery.

Daukoru had told newsmen before the exercise that the MoU signed with the Korean investors represents a milestone in Nigeria's quest for foreign investment to jump-start her economy.

Describing it as one of the achievements of President Olusegun Obasanjo's drive for foreign investments in the last six years, Daukoru said that the investment relationship entered into with the South Korean was one with enormous potential with immediate benefits for Nigeria.

"They are areas where Nigerian needs investment. They (Koreans) come to us and we offer them opportunities for investment on a win-win basis," said Daukoru.

"Korea consumes as much crude oil as we produce in one day. They consume 2.1 million bpd and our production is slightly more than that at 2.4 million bpd. They need access to crude oil, so we are offering them oil blocks in exchange for them building a pipeline of 1,200 km to Abuja.

"They are also prepared to build power plant that will generate 2,250 mw. That is the immediate package," said the minister.

He said further that Daewoo is desirous to setting up a shipyard somewhere in the Niger Delta, as well as partner the Nigerian government to run a crude oil and Liquefied Natural Gas (LNG) cargo fleet, where the Federal Government will retain some equity initially in trust for the Nigerian company and Korean investors having about 49 per cent equity.

"Also with the Chinese, we recently packaged a deal involving operatorship of the Kaduna refinery plus hydro scheme in Mambila to generate thousands of megawatts of electricity. In exchange for that we are offering them four oil blocks. So I hope all these will send a powerful signal to all others who may be just on the fence about making up their minds," Daukoru said.

Nigeria is currently facing energy problem as electricity generation by the Power Holding Company, which stood at around 3,000 mw is just half of the national power demand put at 6,000 MW.

However, at a meeting held in Abuja with applicants in the 2005 Licensing Round, Chukwueke said Korean and Chinese investors would however, be required to also bid for the blocks already dedicated for downstream investors.

The DPR boss said the implication of this while the Koreans and Chinese will have the right of first refusal, other companies can also bid for the 14 oil blocks but would have to bid higher than what these companies are offering to clinch the blocks.

"The Korean and Chinese are participating in the 14 blocks and other blocks in the open bid. It is clear the government will not award blocks outside of this (2005 Bid) process," he said.

Chukwueke said the deadline for payments for the oil blocks have been further extended by two months to December 15. The deadline had earlier been shifted from October 2 to October 14, 2005. Following the criticism that trailed the high prices offered by the winners of oil blocks awarded at the bidding conference held last August in Abuja, the DPR directed the companies to submit performance bond to indicate their ability to pay the signature bonuses offered.

"The response so far has been largely successful. The companies as at close of business (last Friday), posted bonds worth $1.2 billion out of the $2.6 billion that we expected. If you include the 10 per cent LCV that we did not require to post bond, we will come to 50 per cent of the money that was targeted," said Chukwueke.

He listed indigenous oil producer Conoil, fuel marketing company Oando Plc, India's ONGC and the Korea National Petroleum Company as some of the firms that had submitted proof of payment, adding that the Federal Government had also dropped the idea of granting the right of first refusal to participants at the bid round.

"Majority of the serious players pledged the bonds," he said.

"However, government recognised that bond cost money and that some of the new players in the oil and gas sector required a bit more time to be able to find these bonds. Mr. President has directed and the Minister has instructed me that we have to find a way to ensure that genuine investors who have difficulty posting these bonds have enough time to find them.

"So we have decided that we will give those who have asked us more time, not to find the bond but to bring the money. The period of bind is over. What the bond has served us is now to invite those who have pledged the bond to government to come forward for the finalisation of the PSC agreement.

"The minister has agreed to sign all the PSC agreement in one day. So we are trying to put together a signing ceremony around December 15, that time all the people who have posted bond and all those who have asked for extension should be in position to offer the money. By this, no one will accuse the government of depriving them of the opportunity to participate in this round. So we will give an extra two months for all those who have asked for extension," said the DPR chief.

The results of the bid conference showed that 44 blocks out of the 77 blocks on offer were allocated.

Investors snapped up eight blocks in the deepwater region, which was to fetch about $1.0 billion (N128 billion). Investors won five blocks in the Anambra Basin, two in the Benue trough, while four blocks were won in the Chad Basin. All the six blocks put on offer in the onshore Niger Delta were snapped up, as well as the six acreage in the continental shelf.

Tuesday, November 22, 2005

Menezes Part In Sao Tome Probe Discussed

The reporter who broke yesterday's story about a group of 24 bankers who flew to Abuja last Thursday to plead for ExxonMobil and other multinationals' "security" in Nigeria today examines the course of the probe fostered by ExxonMobil against ERHC Energy and other participants in Block 4 through the University of Tulsa College of Law's National Environmental-Energy Law and Policy Institute (NELPI), whose executive director R. Dobie Langenkamp is heading the investigation.

ExxonMobil has six lawyers on the NELPI board, and its would-be partner, Anadarko Petroleum, has four, while the winners of the coveted block, ERHC Energy and Noble Energy, have none. Anadarko senior vice president for governmental affairs, Greg Pensabene of Alexandria, Va., is married to Senate Energy Committee general counsel Judy Pensabene, a recent NELPI honoree, and both are graduates of the Tulsa-based law school.

Here is Oduniyi's latest on the probe, dated Nov. 21 but not available on the ThisDay Online site yesterday:

JDZ Oil Blocks: Sao Tome President Faces Probe
By Mike Oduniyi with agency report, 11.21.2005

The President of Sao Tome and Principe, President Fradique de Menezes, said at the weekend that said he is under investigation as part of a probe into alleged corruption in the attribution of oil blocks in the Joint Development Zone (JDZ) being administered by the country along with Nigeria.

Five oil blocks, 02, 03, 04, 05 and 06, were awarded last June after protracted delay since Nigeria and Sao Tome conducted the bid round for the acreage in November 2004.

Legal authorities in Sao Tome were reported to have begun last September investigations of claims that certain oil firms were illegally favoured in the process, which was delayed for months amid a dispute between President Menezes and opposition groups.

“No one escapes, not even the president. From what I have been told, they have been asking people if they have information about the involvement of the president,” de Menezes told a Portuguese daily newspaper, Diario de Noticias.

“There are many accusations, many complaints that are investigated, some go to trial, and then no wrongdoing is found,” he added.

The oil blocks, five in all, were allocated last June for a total of $283 million. The proceeds are to be shared 60-40 between Nigeria and Sao Tome.

Menezes revelation came on the heels of another high profile probe in Nigeria, involving the handling of an earlier signature bonus payment said to have been deposited with Hallmark Bank by the Joint Development Authority (JDA).

The investigation being conducted by the Economic and Financial Crimes Commission (EFCC) is on the signature bonus for block 01 allocated in 2003 to the Chevron/ExxonMobil/EER Consortium in which Nigeria’s share ought to have been paid since August 18, 2005.

Management of the JDZ in the Gulf of Guinea, under a Treaty signed by Nigeria and Sao Tome in 2001, has been through some rough weather, especially at it relates to the allocation of six oil blocks, with the archipelago country always suspicious of Nigeria’s domineering role in the treaty.

Meanwhile, indications have emerged that the signing of the Production Sharing Contract (PSC) agreement for the oil blocks may have slipped into 2006 from the December 2005 target.

Centurion Energy International, a Canadian company with a 7.5% stake in Block 04, said in a statement accompanying its third-quarter results released at the weekend, that "Negotiations to finalize the production-sharing contract and the joint operating agreement are progressing. Signature of the PSC and JOA is expected during 2006."

The JDA said earlier this year that the PSCs were due to be signed before the end of next month. However, negotiations on Block 4 have been delayed by the withdrawal in October of Noble Energy (NBL) from the block's operating consortium.

Houston-based ERHC Energy (ERHE), which held a joint 60% operatorship of the Block with Noble Energy, has enlisted the Swiss company Addax Petroleum to replace Noble, and the JDA is believed to be considering that switch at present. Other partners in the block include the Nigerian firms Conoil and Godsonic.

Monday, November 21, 2005

Exxon's Bankers Badger Nigeria In Ex-Parte Bid For 'Security' And Block 4

A bevy of bankers flew into Abuja last week and met Thursday with President Olusegun Obasanjo to prod Nigeria into revisiting a commitment to Chinese and Korean firms that have promised to build petroleum infrastructure the multinational giant backed out of building. Exxon reneged after losing a belated bid for ownership of the coveted Block 4 in the Nigeria-Sao Tome and Principe Joint Development Zone.

ERHC On The Move could not access ThisDay Online between 1am and 2am EST this morning and so did not see the article earlier. It was posted to Investor's Hub by Homeport on the ERHE message board.

The XOM bid, part of a late-arriving package from Anadarko Petroleum, lost to a consortium led by Noble Energy. Addax Petroleum has since replaced Noble in the operatorship consortium in which ERHC is a significant partner.

While the JDZ and Block 4 are not mentioned in the article asnd the majors have had substantial physical security issues at the onshore facilities in Nigeria, the subtext of the visit was clearly concern about XOM's loss of a hugely valuable entitlement to two 25-percent choices in any of the last five blocks on offer in Round 2 of the JDZ licensing regime.

The oil giant has been unable to move the Nigerian government on Block 4 and apparently sent the bankers to plead its case under the aegis of Total, a sometimes partner.

It appears that their aegis lost, however. It is not known to what extent President Obasanjo may have capitulated, but he has not been pleased with XOM's performance on a number of promises over the past decade.

Here is the article outlining the meeting with more two dozen powerful U.S.- and European banks by Mike Oduniyi, a veteran reporter on his nation's oil business, in ThisDay Online:

Foreign Investors Express Concern over Security
By Mike Oduniyi, 11.21.2005

Foreign investors who have committed huge funds into the country’s oil and gas sector have expressed concern over the growing fears of insecurity in the country and its implication on their investments.

THISDAY gathered that about 24 top flight financial analysts, representing the world’s major investors from countries including the United States, Britain, France, Belgium and Switzerland, were in the country last week and held talks with the Federal Government.

The analysts represented major investment companies who are big lenders to many Nigerian mega oil and gas projects, namely Merrill Lynch, Societe Generale, Bank of America Securities, Credit Suisse First Boston, Morgan Stanley, UBS Investments, Goldman Sachs, J.P. Morgan and Management, and Lehman Brothers.

An official close to the meetings, held with President Olusegun Obasanjo and other senior government officials Thursday in Abuja, disclosed that the investors expressed deep concerns bordering on the safety of their investments already committed into oil and gas projects including the Liquefied Natural Gas (LNG), the Natural Gas Liquids (NGL), the Amenam/Kpono offshore oil field development and the Akpo deep offshore project.

“The investors principally came to evaluate what has been happening to their investments, if they are safe, and also to get the needed assurance to see if they will put more money in future projects in Nigeria. They needed assurance of a stable polity.

“For instance, they have been following the Nigerian government’s pronouncements on full commercialisation of the country’s huge gas resources and also raising oil reserves to 40 billion barrels by 2010. They said that they are worried about the crises in the Niger Delta,” the official added.

Credit Suisse First Boston (CSFB), for instance, signed an agreement with the Nigerian NNPC/ExxonMobil joint venture last year, to lead a consortium of Nigerian banks in raising about $1 billion for the second phase of the Oso Natural Gas Liquids (NGL).

Most of the investors are also on standby to provide funding for the NLNG trains 7 and 8, the Amenam/Kpono gas gathering project, as well as the Usan deepwater project.
A statement from French oil firm, Total, weekend said that it played host to the investors who also visited the Amenam/Kpono oil field, which is contributing 125,000 barrels per day to Nigeria’s total oil production, and the Nigerian Liquefied Natural Gas (NLNG) plant at Bonny, Rivers State.

“The financial analysts had gone to see President Obasanjo in the company of Total’s Chief Financial Officer, Robert Castaigne; President, Exploration and Production Christophe de Margerie; Senior Vice President Africa, Exploration and Production in Africa, Jean Privey; Managing Director of Elf Petroleum Nigeria Limited, Jacques Marraud des Grottes and other top company executives,” the statement reads.
The Total statement quoted Obasanjo as saying that his administration was committed to the enthronement of transparency and accountability in the oil and gas industry, as part of its anti-corruption campaign.

Obasanjo also said his government had pursued the policy of monetisation of gas instead of flaring it, expanded the country’s oil and gas reserves and increased production capacity.

The statement said further that the Minister of State for Petroleum, Dr. Edmund Daukoru who also hosted the investors also assured on the government’s preparedness to provide security in the Niger Delta.

He said that the Federal Government has adopted strategies to expand the playing field and encourage more investors in the oil sector.

Meanwhile, Daukoru, in another statement weekend stated that the Federal Government was not about to review the memorandum of understanding it entered into with the China National Petroleum Company (CNPCO) and Korea National Oil Company (KNOC).

The Nigerian government had come under pressure from oil majors over the grant of preferential rights to CNPCO and KNOC in the recent awards of oil blocks. The two Asian firms had pledged to undertake downstream projects in Nigeria.

“We wish to state for the records, that at an early stage in this process, some of the majors had offered consultancy services only, which Government found inadequate to address the necessity for a fully committed core investor.”

“We would also like to make it clear, that should there be a review of this strategic understanding with the Chinese and Korean Oil Companies, all interested parties would be made aware of such an outcome in line with Government’s commitment to openness and transparency in all its activities in the oil and gas sector,” it added.

Thursday, November 17, 2005

Joint Ministerial Council Approves Addax Deal; Model PSC For Blocks 2 Through 6 Is Presented; Mid-December Signing Is Set

In another gut-wrenching but entirely positive upside revelation, the Nigerian daily ThisDay Online reveals exclusively in Thursday's editions that the Joint Ministerial Council of representatives of Nigeria and Sao Tome met on Wednesday and has successfuly "formalized" the substitution of Addax Petroleum for Noble Energy in the Block 4 operatorship consortium that will get to exploit some 3.5 billion barrels of oil believed to lie waiting in the block's deep offshore waters.

The article says the PSCs for all blocks will be signed in the middle of December. That is as precise as the timing ever seems to get.

The news is gut-wrenching only because no one knew the JMC - the highest authority in the Nigeria-Sao Tome and Principe Joint Development Zone and final arbiter of all its lease awards - was even planning to meet.

It also follows an intense series of events that included the sudden departure of Noble Energy from the Noble Energy/ERHC Energy consortium, the next-day substitution of Addax Petroleum of Switzerland as Noble's successor, a premature JDA aproval of the new consortium, the subsequent withdrawal of a press release announcing its approval from the JDA Website, the posting and then the withdrawal of two contradictory timelines for PSC signings on the same site, the resignation of ERHC Energy's auditors, and the next-day replacement of that firm with another, more impressive one, Houston-based Malone & Bailey, the third-largest auditor of publicly-listed firms after accounting's Big Six.

The events of the past two weeks had paralyzed trading and stunned investors, who saw the stock's share price drop to $0.331 in intraday trading Wednesday. Now, it appears, all bets are on once again and the stock may resume what had been a promising climb.

The JMC's meetings in the past have been followed by political acrimony, with charges and counter-charges and parliamentary hearings trailing in their wake. This meeting was pulled off without a single leak in Nigeria's highly-charged, very political daily press. So far, there has been no political fallout, and none is expected.

Here is the story by Onyebuchi Ezigbo, a veteran energy correspondent:

Nigeria, Sao Tome Meet Over JDZ Oil Blocs
From Onyebuchi Ezigbo, in Abuja, 11.17.2005

The Joint Ministerial Council (JMC) of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ), yesterday met to ratify a prototype of the Production Sharing Contract (PSC) agreement that will govern exploration and production activities in five oil blocks recently allocated.

The meeting, which had in attendance Nigeria’s Minister of State for Petroleum Resources Dr. Edmund Daukoru along with his counterpart from Sao Tome, considered the draft proposals on the PSC.

The PSC is a form of agreement where the operating company funds 100 percent of exploration activities in an oil block up to production level. The winners of the five oil blocks are expected to sign the agreement by mid next month.

The draft model PSC under consideration stipulates a revenue sharing procedure of 80:20 percent in favour of the oil companies while they are expected to pay five percent as royalty as well as 50 percent tax.

THISDAY gathered that the fiscal structure of the PSC is essentially the same as the one adopted for Block 1 being operated by US oil major Chevron.

Sources told THISDAY at the end of the closed-door meeting that the formalization of the choice of Swiss firm, Addax Petroleum, as replacement to US independent oil company, Noble Energy, as technical partner in Block 4 of the JDZ, was also concluded.

At an earlier meeting with officials of Chevron, operator of oil Block 1, JDA officials tried to clear all issues relating to commencement of exploration operation.

Yesterday’s meeting of the JMC also intervened in the matter regarding the disagreement between the Noble/ERHC Energy and granted Addax Petroleum Company a stake in the operation of oil Block 4 previously won by Noble/ERHC Energy in the Joint Development Zone, naming Addax Petroleum Company as the new operator.

The approval for the takeover followed disagreement between ERHC, in which Nigerian businessman Sir Emeka Offor owns major equity, and its foreign technical partner, Noble, who won the bid for the operation of Block 4 during the 2004 bid round.

Block 4 was won by the Noble/ERHC consortium. However, trouble began when Noble indicated its unwillingness to continue with the partnership and consequently withdrew from the deal.

Other companies with equity stake in Block 4 include Conoil (20 percent), Hercules Oil (10 percent), Godsonic Oil (5 percent) and Overt Oil (5 percent).

Noble/ERHC, as the operator of the oil bloc, has equity of 60 percent. The winners of the block are to pay a signature bonus of $90 million.

However, due to what officials of JDA described as irreconcilable differences, Noble Oil Company withdrew from the partnership thus paving for the authority to select another firm to take over its place.

Winners of the five oil blocks allocated in the 2004 bid rounds are scheduled to make payment of signature bonuses amounting to $283 million by December 2005.

During the 2004 bid round, Devon/Pioneer/ERHC as the operator with 65 percent equity, won Block 2. The signature bonus for the block is $71 million. Others who got equity in the block were Equator Exploration/ONGC Videsh, 25 percent; A&R Hatman, 10 percent; Foby Engineering, 5 percent and Momo Oil & Gas, 5 percent.

Anardako is the lead operator for Block 3, with 51 percent equity and a signature bonus of $40 million. Others who won equity include Devon/ERHC, 20 percent; DNO/EER, 10 percent; Equinox, 10 percent and Ophir/Broadlink, 4 percent.

ICC/OEOC Consortium is the lead operator for Block 5 with a signature bonus of $37 million. Its equity is 75 percent. ERHC has equity of 15 percent while Sahara has 10 percent.

For Block 6, the lead operator is Filtzim-Huzod Oil & Gas with equity of 85 percent. ERHC has equity of 15 percent in the block.

Of the successful bidders, Devon/Pioneer/ERHC, Devon/ ERHC and Noble/ERHC won the bids as operators including their existing rights. ERHC won their equity for Blocks 5 & 6 plus their existing rights in Blocks 2, 3 and 4.

The first process of acreage allocation in the JDZ began on August 23, 2003. That opened the 2003 JDZ Licensing Round for nine blocks (Blocks 1 to 9).

The first oil block, Block 1, with a surface area of 704 sq. km, was awarded to Chevron as the operator with 51% interest; ExxonMobil and Dangote Equity Energy Resources (DEER) won participating interests of 40 percent and 9 percent, respectively.

Wednesday, November 16, 2005

Lisbon Daily Interviews Sao Tome President; Admits He Was Questioned in Langenkamp's Probe

A potentially far-reaching trove of information emerged this morning from a Lisbon, Portugal, daily newspaper's interview with Sao Tome head of state President Fradique de Menezes.

Menezes spoke about the failure of one successful bidder to appear with its technical partner, about the ongoing probe - in which he was apparently questioned - being conducted by ExxonMobil/Anadarko stand-in R. Dobie Langenkamp of the Tulsa School of Law, and the sensitivity, difficulty and complexity of negotiations of Producstion Sharing Contracts for the five blocks currently on offer.

There was no mention of ERHC Energy in the interview, althought the exit of Noble Energy from the Noble/ERHC consortium than won the coveted Block 4 of the Nigeria-Sao Tome and Principe Joint Development Zone and the quick substitution of Addax Petroleum seemed to be addressed in his quite temperate remarks.

The newspaper interview was made possible by poster Homeport, a Portuguese-speaking observer of the West African region:

Posted by: Homeport
In reply to: None Date:11/16/2005 7:50:25 AM
Post #of 13608

STP News: FYI, Lisbon daily Diario de Noticias (DN) carries 2-pg interview today with President Fradique de Menezes apropos of islands’ 30th independence anniversary. I’ve translated the portions I think of most interest to ERHCers:

DN: When will a decision be taken (on the five blocks)?

FM: The decision already exists. The negotiations are now under way, as there are various phases. That’s why, when one makes comments, it’s necessary to be careful. In this phase, there’re still things that can be called into question. There are firms that can desist or the commission that is dealing with these issues could decide to cease negotiations with this or that group. There was, for example, a Nigerian group that formed a partnership with an Indian oil company and, when it came time to negotiate, only the Nigerians showed up. The commission asked them to bring the Indians because they were the ones that guaranteed the technical part. What I want to underline is that this kind of thing may still crop up and lead to the removal of a company that appeared to have won the deal.

DN: Much suspicion and many accusations have been made (about the awards process).

FM: Let me take this chance to disclose something. I want to be the first to do so, in part to conform to my personality: At this moment there is an American, a professor at a US university, who is helping the Attorney General’s office in discovering whether or not there was any corruption in this last auction of blocks.

DN: Is this good or bad?

FM: It’s good. That’s why I’m revealing it. This gentleman is there, he’s even interrogated people as if it were a court. No one escapes, not even the President of the Republic. From what I’ve been told, he’s even asking people if they have any information on the involvement of the President. So, we hope that if there’s been any wrongdoing. Now, there are many accusations, many complaints that go to investigation, others go to courts and, then, nothing is cleared up. Months go by, other matters arise that divert our attention, and one never again hears about the issue. There you have it.
….Cases get put away in drawers. This shouldn’t be the case.


On other issues of interest:

- Menezes confirms STP has gotten its 40% share of B-1 sig bonus;

- Declines to confirm, but indicates he will stand for re-election next year and that he wants a referendum on power-sharing system ahead of the vote; and

- Says future oil revenues should be used as “lever” to diversify the economy – especially tourism, fisheries, agriculture and service sectors.


France's Agence France-Presse followed up with an ill-written story based on the Portugal interview:

Sao Tome president says under investigation in oil corruption probe

The president of the west African island nation of Sao Tome and Principe said Wednesday he is under investigation as part of a probe into alleged corruption in the attribution of oil prospecting blocks in an offshore zone shared with Nigeria.

Legal authorities in the former Portuguese colony began in September to look into claims that certain oil firms were illegally favoured in the process, which was delayed for months amid a dispute between President Fradique de Menezes and opposition groups.

"No one escapes, not even the president. From what I have been told, they have been asking people if they have information about the involvement of the president," de Menezes told Portuguese daily newspaper Diario de Noticias.

"There are many accusations, many complaints that are investigated, some go to trial, and then no wrongdoing is found," he added.

The blocks were allocated in June for a total of 283 million dollarsmillion euros) to be shared 60-40 between Nigeria and Sao Tome.

A US-registered Nigerian-funded company, EHRC Energy Inc, was the main beneficiary, with shares in each block ranging from 15 to 65 percent.

De Menezes said a US university professor, who he did not name, was helping Sao Tome's attorney general office carry out their probe.

"This man is there, he was questioned people as if it was a court," he said.

The tiny archipelago is home to fewer than 200,000 people and has yet to feel the results of an expected oil boom, while Nigeria's 130-million-strong population still languishes in poverty more than four decades after their country became Africa's biggest exporter of crude.

16/11/2005 14:50 LISBON (AFP)

What? No Seller?

Today's opening of ERHC Energy may be a rarity, or even unique: In the first 20 minutes of trading, there were no Sells among 41,200 Buys, according to the reporting service ADVFN.

The opening price (and yesterday's closing high) of $0.35 held firm from 9:30 to 9:50, as I write this.

In a stock where good news lately has been rare, an even rarer event like this one helps a lot.

Tuesday, November 15, 2005

No Block 4 PSC Until 2006, Centurion 3Q Report Says

In an unaudited third quarter financial report released today, Block 4 participant Centurion Energy - an experienced oil and gas explorer in the Middle East - said it expectes to see a Production Sharing Contract and Joint Operating Agreement signed for the block of the Nigeria-Sao Tome Joint Development Zone in 2006.

The statement is the first by any participant regarding the revised time schedule for PSC signings following withdrawal of two earlier schedules by the N-DRSTP Joint Development Authority after Noble Energy left the ERHC Energy operatorship consortium and was replaced by Swiss mid-tier player Addax Petroleum.

Here is the statement, which was part of a breakdown of its worldwide operations issued by Centurion this morning:


Joint Development Zone

Negotiations to finalize the Production Sharing Contract (PSC) and the Joint Operating Agreement (JOA) are progressing. Signature of the PSC and JOA is expected during 2006.

Block 4 is an extension of the prolific Nigeria deep water play where a number of significant oil discoveries have been made. Interpretation and mapping of the 3D seismic indicates the presence of several large potentially oil bearing structures. The Centurion and Hercules Petroleum consortium were awarded a 10% interest in Block 4 of the Nigeria-Sao Tome and Principe JDZ. Centurion holds a 7.5% equity interest in Block 4 with an option to increase to a 10% working interest.

The statement can be read in its entirety at:

Monday, November 14, 2005

ERHC Energy Gets New Auditor

Malone & Bailey of Houston has been selected as the auditing form by ERHC Energy, a post to their Internet site revealed moment ago.

The site is at

The company also audits Hyperdynamics, a small firm that is also doing business in West Africa and is frequently compared to ERHC. On the Malone & Baily list, ERHC is listed among Development Stage Entities audited by the firm.

Malone & Bailey also audit many other publicly-held, small energy firms. A full list of its clients appears here, below the press release.

Here is the release, fresh from ERHC Energy's Website:


HOUSTON (November 14, 2005) -- Houston-based ERHC Energy (ERHE.OB) announced today the appointment of Malone & Bailey, P.C. as the company’s independent auditor.

“Because Malone & Bailey has emphasis on small public companies, we believe the firm will bring a unique understanding of small-company public accounting and a high level of client service to bear on behalf of ERHC Energy management and shareholders as we pursue our goal of exploring for oil and gas in West Africa,” said Ali Memon, ERHC Energy President and CEO.

Malone & Bailey, based in Houston, Texas, provides audit and tax accounting services to both public and private companies. The firm’s website address is

Based in Houston, Texas, ERHC Energy Inc. is an oil and gas company focused on exploration in the Gulf of Guinea offshore West Africa. For more information, visit the company’s website at

The statements in this document are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements and the business prospects of ERHC are subject to a number of risks and uncertainties that may cause actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties are described on Forms 10-Q and 10-K filed with the Securities and Exchange Commission.

ERHC Media Contacts

Shanta Mauney,
or Deborah Buks,
Telephone: 713-869-0707

Here is the list of current Malone & Bailey clients, from their Website:


Abazias, Inc. ABZS Gainesville, FL
Acies Corp. ACIE.OB Brooklyn, NY
ATSI Communications, Inc. ATSX.OB San Antonio, TX
Auto Underwriters of America, Inc. San Mateo, CA
Aztec Oil & Gas, Inc. AZGS.OB Houston, TX
Blackstocks Development Corp. Charlotte, NC
Blast Energy Services, Inc BESV.OB Houston, TX
Bluegate Corp. BGAT.OB Houston, TX
Capco Energy, Inc. CGYN.PK Houston, TX
Cybertel Capital Corp. CYBT.OB San Diego, CA
Desert Health Products Inc. DHPI.OB Scottsdale, AZ
Diamond I Inc. DMOI.OB Houston, TX
Dune Energy, Inc. DENG.OB Houston, TX
Earth Biofuels, Inc. MDWS.OB Dallas, TX
Earth Search Sciences, Inc. ESSE.OB Kalispell, MT
East Delta Resources Corp. EDLT.OB Montreal, CAN
Excalibur Industries, Inc. EXCB Conroe,TX
GiveMePower, Inc. GMPW Calgary, CAN
Hesperia Holding, Inc. HSPR.OB Hesperia, CA
Hyperdynamics Corp. HYPD Houston, TX
Isramco, Inc. ISRL Israel
Maverick Oil & Gas, Inc. MVOG.OB Houston, TX
Megola, Inc. MGOA.OB Corunna, CAN
Nutracea NTRZ.OB Sacramento, CA
OCG Technologies, Inc. OCGT New York, NY
Paperfree Medical Solutions, Inc. PFMS.OB Kokomo, IN
Pharmafrontiers Corp. PFTR.OB Houston, TX
Public Company Management Corp. PURC.OB Las Vegas, NV
Robcor Properties, Inc. Lexington, KY
Stellar Technologies Inc. SLLR.OB Naples, FL
Systems Evolution, Inc. SEIVI.OB Houston, TX
Systems Management Solutions, Inc. SMSN.OB San Antonio, TX
True Health, Inc. TRHL Kent, England
Veridien Corp. VRDE Pinellas Park, FL
Westside Energy Corp. WEGC.OB Houston, TX
Wherify Wireless, Inc. WFYW.OB Redwood Shores, CA


American Security Resources, Inc. ARSC.OB Houston, TX
Arch Management Services, Inc. Vancouver, CAN
Ardent Mines Ltd. ADNT.OB Vancouver, CAN
Biomoda Inc/NM Albuquerque, NM
Blackhawk Fund BHWK.OB Carson City, NV
Cascade Coaching Corp. Vancouver, CAN
College Oak Investments, Inc. COKV.OB San Antonio, TX
Echo Resources, Inc. ECHR.OB Toronto, CAN
Empyrean Holdings, Inc. EMPYR.OB Houston, TX
Enerteck Chemical Corp. ETCK.OB Houston, TX
ERHC Energy, Inc. Houston, TX
Exobox Technologies Corp. Houston, TX
Finity Holdings, Inc. FNTY Mason, OH
GL Energy & Exploration, Inc. GEEX Toronto, CAN
Golden Chief Resources, Inc. GCHR Dallas, TX
Gridline Communications Holdings, Inc. Houston, TX
Iguana Ventures, Inc. ISTG.PK Vancouver, CAN
ISSG, Inc. Van Nuys, CA
ITIS Holdings, Inc. ITHH.E Houston, TX
Jackson Rivers Company JKRI.OB San Diego, CA
Mac Filmworks, Inc. Shreveport, LA
Mass Megawatts Wind Power, Inc. MMGW.OB Worcester, MA
North Coast Partners, Inc. Denver, CO
Otish Resources, Inc. OTRS.OB Vancouver, CAN
Pathogenics, Inc. Hingham, MA
Power Technology, Inc. PWTC.OB Houston, TX
Pride Business Development Holdings, Inc. Encino, CA
Tally - Ho Ventures, Inc. TLYH.OB Dubai, UAE
Terax Energy, Inc. TERX.OB Austin, TX


Companies in process of becoming public or updating reporting status with registration statements in process or delinquent.


Natrient, Inc. Beverly Hills, CA
Dorado Exploration, Inc. Dallas, TX, Inc. ETLC Duncanville, TX
Millennium Technologies, Inc. British Columbia, CAN
Primecare Systems, Inc. New Rochelle, NY
Sputnik, Inc. San Francisco, CA
YaSheng Group Redwood City, CA
Z Yachts, Inc. Alpharetta, GA


Fleurs De Vie, Inc. Boerne, TX
Golden Valley Development Inc. Bakersfield, CA
Imperial Petroleum Inc. IREC Houston, TX
Instachem Systems, Inc. Kenneshaw, GA
JK Acquisition Corp. Houston, TX
Pebble Beach Enterprises Inc. Bakersfield, CA

Friday, November 11, 2005

Dow Jones Says ERHC/Addax Deal 'Likely" By End Of Year

In a story this morning from Vicent Nwame of the Dow Jones News Service in London, the financial news agency says a deal between ERHC Energy and Addax Petroleum "will likely be approved" before the end of year.

Update, 9:34am EST, 11/11/05: Nearly 294,000 shares traded - all but 663 of them sales - in the first three minutes after the opening bell today, but the selling then came to an abrupt halt, apparently as news of the Dow Jones story moved across the wires.

The news comes amid turmoil that sent the stock one cent lower yesterday and has nibbled away at its share price since last week. It has fallen 14 percent this week, but appears likely to recover ground with today's news.

The current imbroglio includes the placement and withdrawal of conflicting timelines for Production Sharing Contracts in the Nigeria-Sao Tome Joint Development Zone and of a press release from the N-DRSTP Joint Development Agency saying it had approved the substitution of Addax Petroleum for Noble Energy, ERHC Energy's early consortium partner that walked away from operatorship in Block 4 last week. The final development before today's announcement concerned the abrupt resignation of ERHC's auditors yesterday without a statement why but without any suggestion of improprieties.

Here is the Dow Jones piece released today:

DJ Addax, Sao Tome Oil Rights Deal Seen By Yr's End - Source

Dow Jones News Services
(Copyright © 2005 Dow Jones & Company, Inc.)

LAGOS (Dow Jones) -- Swiss energy company Addax Petroleum and Nigerian authorities won't this week sign an oil drilling rights deal as expected, though the pact will likely be approved by the end of the year, a government source said Friday.

A source at the Nigeria-Sao Tome and Principe Joint Development Authority told Dow Jones Newswires that negotiations were "progressing at a steady rate" despite the delay. The source declined to comment on the reasons for the delay.

The negotiations are over a production sharing agreement for a set of blocks in the Joint Development Zone, or JDZ, in the Gulf of Guinea between Nigeria and Sao Tome and Principe - the island neighbor of the West African oil producer.

Addax, which already has operations in Nigeria, replaced Canada-based Noble Energy Inc. (NBL) after it withdrew this year from a consortium led by ERHC Energy Inc. (ERHE).

Houston-based ERHC, which has drilling rights in the area, enlisted Addax in the consortium after Noble pulled out.

ERHC requested that Addax replace Noble on Block 4 and authorities "are considering it," the source said.

Once outstanding issues are resolved and a deal is signed, the production-sharing agreement will be sent to the joint ministerial council for approval.

That is expected to happen by the end of the year, the source said.

-By Vincent Nwanma, Dow Jones Newswires, +234-1-723-3156;

(END) Dow Jones Newswires

11-11-05 0811ET

Copyright (c) 2005 Dow Jones & Company, Inc.

ERHC's Auditor Abruptly Resigns

In yet another sign of the pressure being brought to bear on ERHC Energy by ExxonMobil and Anadarko Petroleum, ERHC Energy's auditor abruptly resigned Thursday, offering no reason for doing so, according to a company press release that followed the closing bell.

The news came shortly after the rumored dissolution of a deal between Addax Petroleum and ERHC Energy to replace Noble Energy in the consortium that won operatorship of the Nigeria-Sao Tome and Prncipe Joint Development Zone's coveted Block 4. The rumor, fed to Platts, has not been confirmed.

Behind the scenes, we believe, the majors who want to control Block 4's estimated 3.5 billion barrels of petroleum brought pressure to bear on the accounting firm that threatened them with loss of their other clients.

The two oil giants, who are under investigation by the U.S. Senate Commerce Committee for racketeering and bribery in Equatorial Guinea, were contenders for Block 4 who lost out to the Noble Energy/ERHC Energy consortium in the awards made on May 31, 2005.

Anadarko had tried to brng in ExxonMobil as a partner after bidding deadline had passed and was rebuffed by the Joint Development Authority set up under a 2003 treaty between Nigeria and Sao Tome.

Failing that, the companies went to Sao Tome and put forward their favored Tulsa School of Law professor R. Dobie Langenkamp, a former U.S. Dept. of Energy official, as an investigator in a "six week" investigation of the block awards that was initially oposed by Sao Tome's attorney general.

Meanwhile, company lobbyists secretly used the proposed forgiveness of $300 million in debt to the World Bank as leverage to influence the outcome of the investigation, which will put Anadarko and ExxonMobil back into the block. There is little likelhood any longer that they can be stopped except by forceful intervention by Nigerian President Olusegun Obasanjo.

In what was seen as a none-too-veiled warning to Obasanjo, his wife was apparently murdered during minor plastic surgery at a clinic in Spain, and a plane carrying Nigerian officials and Martin Grieves, a former fraud investigator working as an instructor on fraud with Nigerian banks, was brought down in Nigeria, killing all 128 souls aboard, on the same day two weeks ago.

Since that time, Noble Energy has pulled out of the block and the JDA has posted and then withdrawn a press release saying that it had approved and accepted Addax Petroleum as a substitute operator for Noble Energy in Block 4. The JDA also abandoned what had been a disciplined timeline for signing of Production Sharing Contracts for all five blocks offered in late 2004. ERHC Energy won rights in each block under a treaty establishing the zone in 2003.

Here is the ERHC Energy release about their auditor's resignation:

ERHC Energy Announces Resignation of Independent Accounting Firm
Thursday November 10, 5:36 pm ET

HOUSTON--(BUSINESS WIRE)--Nov. 10, 2005 -- ERHC Energy (ERHE.OB) announced today that Pannell Kerr Forster of Texas, P.C. ("PKF") has resigned as the company's independent auditor. No reason for the resignation was specified in the PKF resignation letter. The company has commenced the process of interviewing candidates to serve as successor auditor.

PKF's report on the financial statements for the fiscal years ended September 30, 2004 and 2003, contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.

During ERHC Energy's fiscal years September 30, 2004 and 2003, and the subsequent interim periods preceding PKF's resignation, PKF advised us that there were no disagreements between the company and PKF on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved, would have caused the company to make reference to the subject matter in the Form 8-K filed with the SEC.

Based in Houston, Texas, ERHC Energy Inc. is an oil and gas company focused on exploration in the Gulf of Guinea offshore West Africa. For more information, visit the company's website at

ERHC, Houston
Shanta Mauney, 713-869-0707
Deborah Buks, 713-869-0707

Thursday, November 10, 2005

Murder In The Gulf

Addax Denies JDA Deal With ERHC Is Off; Platts Says Source Told Them Otherwise

Addax Petroleum has been rejected as a partner to replace Noble Energy in the Noble/ERHC Consortium, according to an unnamed source who spoke to the Platts intelligence service, removing the final obstacle to Anadarko - probably in a tie-up with ExxonMobil, whom it earlier tried to bring into its bid after bids were sealed - to get operatorship of the much-disputed Block 4 in the Nigeria-Sao Tome and Principe Joint Development Zone.

The rejection was disputed by an Addaz executive in his statements to Platts, which broke the story, and is the latest in a series of hard blows against ERHC Energy, which has rights guaranteed by treaty in all five of the blocks offered in the 2004 Licensing Round.

Anadarko's chief of governmental relations, whose wife is general counsel of the Senate Committee on Energy, has apparently used a $300 million debt reduction plan proposed by the World Bank to persuade the tiny nation-state of Sao Tome to probe the award of Block 4. The first casualty of the probe was Noble Energy, and Addax is lined up to be the second.

The probe is headed by an R. Dobie Langenkamp, a two-time Dept. of Energy official and an old college classmate of the couple, Greg and Judy Pensabene.

The latest sign of trouble came Monday, when the Joint Development Aithority, which administers the JDZ under the direction of a joint ministerial council with representatives from both nations, removed its Website a press release saying it had accepted and approved a Memorandum of Understanding between Addax and ERHC under which Addax would replace Noble.

It then removed two "timeline" documents, each of which carried a different timeline for the same events.

Then ThisDay Online revealed late Monday that Hallmark Bank, whose CEO is under arrest, had been unable to produce the Block 1 signature bonus paid to Nigeria, some $58 million.

Behind these machinations are the powerful oil companies that control the National Energy-Environment Law and Policy Institute (NELPI) at the University of Tulse College of Law.

The NELPI advisory board and executive committee are heavily peopled by ExxonMobil and Anadarko executives, with six Exxon and four Anadarko attorneys currently serving.

The Pratts "leak" of the JDA developments may be authentic information, but there is a good chance that the information is designed to further disrupt the awards process and stop the Joint Devel;opment Authority from completing the awards process and obtaining some $400 million in signature bonus fees.

Anadarko offered $90 million for operatorship of Block 4, where it tried to bring in ExxonMobil as a joint venture partner but was rebuffed. The JDA found the slow-go drilling schedule of Anadarko unacceptable, and gave the block to ERHC/Boble Energy on condition that they pay the same fee and mount a much more vigorous effort, requiring them to drill three wells in four years.

Then Langenkamp went and took control of the Sao Tome probe, contradicting the Atty. Ge. of Sao Tome, the ostensible person in charge when reporters asked if there was any evidence of wrongdoing. The attorney general said there was not, but Langenkamp said there had to be an investigation. The Sao Tome government was powerless to stop it as virtually all the principals in the Sao Tome government are potential subjects of the probe.

Then President Olusegun Obasanjo's wife was apparently murdered at a plastic surgery clinic in Spain and a plane with key fraud investigators was brought down in Nigeria, both on the same day; neither bodies nor the black box and cockpit voice recorder from the plane were recovered. Those events have apparently moved President Obasanjo to make peace with ExxonMobil, which has been quietly warring with his anti-corruption government, and developments in the JDA followed soon thereafter.

Most Nigerian and all American news organizations have shied away from the huge changes going on as majors and minnows fight over 3.5 billion barrels of oil said to be waiting in the tranquil waters of Block 4. The JDZ's nine blocks may contain a total of 14 billion barrels of oil, according to the Houston Chronicle.

Here is the limited account of these events from Platts, posted on Raging Bull:

Posted by: ztock (the poster is a well-known ERHC "basher")
In reply to: None Date:11/9/2005 10:55:58 PM
Post #of 13145

JDA rejects Addax replacement of Noble - source.
8 November 2005
11:03 AM

Platts Commodity News
Copyright 2005. Platts. All Rights Reserved.

Cape Town (Platts)-8Nov2005/1058 am EST/1558 GMT The Abuja-based Nigeria-Sao Tome Joint Development Authority managing a deepwater licensing round in the Gulf of Guinea has rejected Addax Petroleum's bid to replace Noble Energy as Houston-based ERHC's partner and operator in Block 4, an industry source told Platts Tuesday.

Addax Petroleum managing director Jim Pearce said he had "heard something about that," and would know more later in the day. A spokesman for Addax said he was unaware of the decision, while the JDA's spokesman said he had not yet seen "anything official." The JDA accepted a Memorandum of Understanding signed by Addax Oct 25 to replace Noble as a partner in the block, subject to certain conditions, including the consortium's commitment to pay its $90-mil signature bonus and to drill three wells during the first exploration phase of four years.

Pearce Monday said the JDA had "officially approved" its replacement in the Block 4 consortium but that details were still being worked out.

"At this point of time we just have a memorandum of understanding between ourselves and ERHC. But we do have official approval from the JDA to replace Noble as operator," Pearce told Platts on the sidelines of a Global Pacific oil and gas conference in Cape Town. ERHC, which enjoys preferential rights without the obligation to pay any part of the signature bonus, was awarded a 60% equity stake and operatorship of Block 4 with Noble in May. The other partners, Nigeria's Conoil (20%), the pairing of Nigeria's Hercules and Overt (10%), Centurian and Addax (5)% and Nigerian minnow Godsonic Oil and Gas (5%), agreed to pay a signature bonus of $90-mil for the block.

The JDA last awarded five blocks in June last year after several delays due to wrangling and accusations of corruption between the countries.

The JDA has since been criticized for stalling talks on production sharing contracts for Blocks 2, 3, 4, 5 and 6 in a second licensing but last week said the PSCs would be signed off before the end of the year.

Addax Petroleum, which is strongly focused on Africa and whose principal upstream operations are in Nigeria, expects to raise its production from 80,000 b/d to 100,000 b/d by mid 2006, Pearce said. Proven and probable reserves of Okwori, which it acquired in 1998 after Ashland pulled out of Nigeria, are estimated at between 69-to -186-mil bbl, while operating costs have dropped from $12/bbl to $5.4/bbl in 2003, he said. The company's CEO Jan Evert Mulder, who was scheduled to give a speech at the Cape Town conference on Thursday, quit his position last week.

NIGERIA ARRESTS HALLMARK BANK BOSS Nigeria's Economic and Financial Crimes Commission last week arrested Hallmark Bank's chairman and chief executive, Marc Wabara, in connection with $58-mil in funds belonging to the Joint Development Zone, Nigeria's ThisDay newspaper reported Monday. Hallmark Bank has been shut down by Nigeria's central bank. "The money, Thisday gathered, was placed in fixed deposit account with Hallmark Bank by JDZ but could not be produced on demand," it said.

Officials at Hallmark Bank, a founding member of the First Consolidated Bank, confirmed that Wabara was being quizzed for what they described as "some operational issues," the newspaper said. The twin-island state of Sao Tome and Principe, which has a population of about 170,000, signed an agreement with Nigeria in 2001 to split the revenue from any oil found in their shared offshore waters.

-Jacinta Moran, jacinta -

Tuesday, November 08, 2005

JDZ Funds Entangled In Busted Bank

Some $58 million of funds belonging to the Nigeria-Sao Tome and Principe Joint Development Zone are hung up in a bank whose chief executive was arrested this week "in connection with" the JDZ funds shortly after the bank itself was shut down by Nigeria's central bank.

It's a tangled tale, and it's by no means clear that it will not have consequences for developments in the JDZ.

Here it is, as posted on Raging Bull this morning without a link to ThisDay Online, the Nigerian daily Websitewhere it first appeared:

EFCC Arrests Wabara, Hallmark Bank's Managing Director
By Ayodele Aminu, 11.07.2005

The Economic and Financial Crimes Commission (EFCC) has arrested Chairman and Chief Executive, Hallmark Bank Plc, Mr. Marc Wabara in connection with about $58 million (N7.5bn) belonging to the Joint Development Zone (JDZ) trapped in the bank.

The money, THISDAY gathered, was placed in fixed deposit account with Hallmark Bank by JDZ but could not be produced on demand. Nigeria and Sao Tome and Principe shares the resources in the JDZ. While Sao Tome and Principe holds 40 per cent of JDZ, Nigeria owns 60 per cent.

It was based on this development, THISDAY checks revealed, that the EFCC was invited to help recover the JDZ funds. Wabara has been in custody of the EFCC since Friday, last week.

Sources disclosed that when the EFCC officials moved into Hallmark they discovered that the bank also had some questionable dealings with one state in the Southeast.
Hallmark Bank, according to sources, had an Irrevocable Standing Order (ISO) from the Southeast state said to have borrowed from it some billions of naira. In order to recover its loans, when federal allocation is released every month, Hallmark Bank makes direct deduction a certain percentage of the loans it gave to the said state including interest.

Last Friday, EFCC officials were said to have collected print outs of the financial transactions between Hallmark Bank and the said Southeast State from 1999 till date. Thereafter, the EFCC was said to have initially attempted to arrest one of the Executive Directors of Hallmark Bank, Mr. Edward Ajayi, before eventually picking up Wabara.

Contacted, officials of Hallmark Bank who craved anonymity, confirmed that Wabara was being quizzed for what they described as “some operational issues.”

Hallmark Bank and two other banks – Broad Bank and Universal Trust Bank- recently sealed a merger deal with Union Bank of Nigeria Plc after the latter had concluded due diligence and valuation of the three banks.

Hallmark Bank, a founding member of the First Consolidated Bank (the first merger group to emerge in the wake of the consolidation exercise announced by the Central Bank of Nigeria, CBN Governor, Prof. Charles Soludo last year) however, opted out of the merger.

Just a couple of weeks ago, Central Bank of Nigeria (CBN) wielded the big stick by sacking the entire board and management of Allstates Trust Bank Plc over alleged financial malpractices.

The Chairman of the bank, Chief Ebitimi Banigo, was arrested by the EFCC based on the recommendation of the CBN, which had earlier met with the bank’s board in Abuja.

Monday, November 07, 2005

JDA Wants It Both Ways; Investors Do, Too

The Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Zone has done it again: They have posted two "Timeline" statements for PSC signings with two different dates for the event.

In one, newly located on the site's homepage ( they say the signings will be next week; in the other, on the Press Releases page, they say it will be this week.

They have also removed the press release concerning their acceptance of the Addax/ERHC Energy consortium to replace the Noble Energy/ERHC Energy partnership that won operatorship in Block 4.

It is our intuition that there is trouble in River City, but that's just us.

Like reading tea leaves at the fortune teller's or chicken entrails at the Temple of Apollo, the JDA Website is the product of a Sphinx-like mentality that aims to keep the truth from investors by providing them with utterly ambiguous information that cannot be relied on for accuracy or meaning.

It may be that the transAtlantic dealings required to change the Website (which is controlled from London) have accomplished part of a task but not all of it, or that the entire Addax deal has fallen out of bed. All we can know is that we do not know.

In response, the market carved $0.03 out the share price in early trading Mionday morning, but gave it back before 10am and then started taking it again, albeit more slow.

The stock is currently at $0.385 Bid and $0.399 Ask, up from the $0.36/$0.38 open of $0.365. Purchases totalled 76,375 shares and sales totalled 180,000 shares at 10:24:52am. Note: We inadvertently recorded sales from Friday's trading here in an earlier version of this post at 10:08. We regret the error.

Volume stands at a healthy 531,921.

PSC Signings This Week Raise Investor Hopes; First Atlantic Shares Enjoy Huge Volume

The scheduled signing this week of Production Sharing Contracts, usually known as PSCs, between the Nigeria-Sao Tome and Principe Joint Development Authority and the companies including ERHC Energy (OTC symbol: ERHE) that won rights in the five Gulf of Guinea deepwater blocks on offer in its 2004 Licensing Round has raised investors' hopes that the share price, now at $0.40 after a long sojourn even lower, will finally begin to reflect the company's likely value when oil is discovered in any of the five blocks where ERHC has rights.

The blocks have been the center of a long and tempestuous series of negotiations that have embarrassed both Nigeria and Sao Tome and left the hopes of many bidders wrecked at the bottom of the Gulf's tranquil seas. The signing of the PSCs on the current schedule would no doubt go a long way to restoring the once-bright image of the Joint Developmnent Zone, a region between Nigeria and Sao Tome that is thought to contain as many as 14.5 billion barrels of oil in nine separate blocks.

So far, the only successful result of three years of negotiations and two bidding rounds has been the award of Block 1 to a conasortium of Chevron Energy, ExxonMobil and Energy Equity Resources, which has sold half its rights to a fourth firm. The two countries split a signature bonus fee of $119 million when negotiations on their PSC closed after two difficult years last Spring.

Now, with $400 million in fees at stake and elections looming in Sao Tome - and Anadarko hoping to manipulate the political process there to get rights in Block 4, which was taken away from it by ERHC and Noble Energy after the consortium offered a more attractive drilling schedule and agreed to match Anadarko's $90 million bid - the signing of the PSCs would be a major advance. Not every observer expects it to happen, but many do.

The successful signing of PSCs for Block 2 today, for Block 3 tomorrow and Block 4 Wednesday, Block 5 Thursday and Block 6 Friday would be likely to drive ERHE's share price higher if someone - as yet unknown - did not keep selling into every rally since the May 31, 2005, awards to ERHC of rights in all five of the blocks offered in the second round. The seller has managed to denude the value of the anticipated oil income and of reported buy-ins coming true, and has repeatedly felled the mighty oak before it could grow much past acorn stage.

There is no indication this phenonemon is about to change, and investors who have not yet loaded up would probably be unwise to do so now, when the stock stands at $0.40, a recent high, just two weeks after a gut-wrenching drop to $0.33.

The likelihood is that the seller(s) will strike hard in the $0.45 range when it is momentarily reached today or tomorrow, and sell down to the $0.36-$0.38 range after delays and new doubts arise toward the end of the week.

But this prognosis is susceptible to change. Should the JDA, against all odds, conclude the PSC for Block 4 on Wednesday, the share price could reach the $0.73 range, I believe. It would be a short-lived phenomenon, but a juicy and tempting one for day traders, who can be expected to drop the price again to $0.50 range.

It's our considered opinion that trying to scope out the Block 4 development via posts on Raging Bull is a fool''s game; posts are a lot more likely to be reliable when they appear on the lightly but carefully moderated Investor's Hub.

ERHC On The Move also hopes to hear again from its informants in the region prior to any signing on Block 4, so keep your eyes on this site in case we do.

The JDA was unable to respond quickly to a request for a progress on today's scheduled signing of the Block 2 PSC; it has never been able to respond quickly to any requests, so that's nothing to worry about it in itself.

In any case, we are unable to tell you anything other than that today, and every day this week, is a sensitive moment in the life of our company, and we must be vigilant on its behalf if share price gains are to be realized after so many days of despair. It's not a dark night of the soul, but it's not a bright day yet, either.

Update, 3:12am, 11/07/05EST: One key to divining the potential of ERHC Energy shares is the action on the Nigerian Stock Exchange in shares of First Atlantic Bank, which is believed to own some 63 million shares of ERHE that become eligible for sale by the bank early next week (so far as can be determined in observing an extremely murky situation).

With that many shares, each cent of improvement in share price translates into some $630,000 of income for the bank. While many believe the bank has already sold many of its shares, updates filed with the SEC have indicated no material change in its ownership.

It well may be that bank was a big seller and then a substantial buyer again after the share price fell below $0.41, its ostensible acquisition price last November 10, when it won the shares as a settlement of an outstanding loan to Chrome Energy, which like ERHC Energy is controlled by its founder, Sir Emeka Offor of Nigeria.

In either case, though, the bank couldprovide either a floor for an upward surge in share price or a drag on it in seeking to realize long-term gains made possible by share price movement.

Recalling, too, that there are only a handful of truly honest players in Nigeria, it is also possible that the signing of the PSCs was scheduled to coincide with the ability of First Atlantic Bank to sell its shares, which its U.S. transfer agent should not have made available for sale until next week. That would suggest a sharply higher price on new of the PSC signing, followed by a flood of shares being sold into the surge.

The significance of this discussion lies in the behavior of the bank's stock over the past week as tracked in the following article from today's Vanguard, a leading Nigerian daily. If investors are indeed wise to the bank's potential to gain many millions of dollars in a few days, the extraordinary demand for its stock may be no fluke. Wise readers will also question the fact that so many shares trades in just 15 deals, suggesting that a small number of insiders know something big is coming.

Here is the Guardian story:

Capital Market: First Atlantic Bank, Fidelity Bank boost market turnover
By Jide Ajia
Posted to the Web: Monday, November 07, 2005

The Banking sub-sector emerged the most active stock on the floor of the Nigeria Stock Exchange (NSE) last week.

The sector recorded a turnover of N95.3 million ordinary shares worth N5.7 billion exchanged by investors in 2,224 deals. Trading activities in the sub-sector was largely driven by activities in shares of First Atlantic Bank Plc and Fidelity Bank Plc.

Specifically trading in the shares of Fist Atlantic Bank Plc accounted for N20.4 million ordinary shares worth N69.6 million exchanged by investors in 15 deals, while Fidelity Bank boosted the market turnover during the week accounting for N17.8 million ordinary shares worth N57.9 million traded in 75 deals.

A turnover of 340.4 million shares worth N3.24 billion in 15,643 deals was recorded this week, in contrast to a total of 602.3 million shares valued at N6.55 billion exchanged last week in 26,465 deals. The market closed for two days (i.e. Wednesday and Thursday) in commemoration of the Eid eI Fitri holiday.

There were no transactions in the Federal Government Development Stocks, State Government Bonds and Industrial Loans and Preference Stocks sectors.

The Banking sub-sector was the most active during the week (measured by turnover volume), with 252.05 million shares worth N1.6 billion exchanged by investors in 6,772 deals. Volume in the Banking sub-sector was largely driven by activity in the shares of Fidelity Bank Plc and First Atlantic Bank Plc. Trading on the shares of the two banks accounted for 114.8 million shares, representing 45.5% of the sub-sector’s turnover. As in the preceding week, the Insurance sub-sector followed on the weeks activity chart with a turnover of 23.1 million shares valued at N46.3 million in 639 deals.

The All-Share Index rose by 1.2 per cent. Thirty stocks appreciated in price during the week, lower than the forty-two in the preceding week. Cadbury Nigeria Plc led on the week’s gainers’ table with a gain of N5.68 to close at N72.00 per share while Nigerian breweries Plc followed with N2.96 to close at N49.2i per share. Other price gainers in the Top 10 category include: Oando Plc N2.05, Flour Mills Nig. Plc N2.03, UACN Plc N1.49, Glaxo Smithkline, N1.49, Presco Plc, N1.41, Okomu Oil Palm Plc, N114, Mobil Oil Nigeria Plc N0.99, Julius Berger Nigeria Plc, N0.90.

Thirty—Five (35) stocks suffered price depreciation; higher than the thirty that suffered the same fate in the preceding week. Total Nigeria Plc led on the decliners’ table dropping by N7.99 to close at N192.01. Texaco (Nig) Plc followed with a loss of N3.99 to close at N126.01 per share. Other price losers in the Top 10 category include: Guinness Nigeria Plc N3.80, Conoil PlcN2.O0, Ashaka Cem Plc N0.91, Nig Bottling Company Plc NO.50, Nestle Nigeria Plc N O.45, John Holt Plc NO.38, Unilever Nigeria Plc NO.35 and United Nigeria Textiles Plc depreciated by NO.31.

You will probably have noted by now - if you got this far - that no share price was given for First Atlantic Bank, a remarkable oversight if you're an investor. If the stock dropped precipitously, the insiders may have wanted to unload in anticipation of the bank unloading its ERHE shares all at once; if they added to their holdings and drove the price up, the prospects are good for a healthy appreciation of ERHE's share price.

If the price remained essentially unchanged, they may have just been trading in shares of First Atlantic Bank for shares in the newly-created First Inland Bank following the final approval of a recent merger between First Atlantic and Indland Bank that takes effect on Dec. 1, 2005.

We also noted that Mobil Oil Nigeria, an XOM subsidiary, was among the week's biggest gainers, while Conoil, a JOA partner ion Block 4, and several other oil firms lost ground.

We will appreciate any help we get in determining how the price of First Atlantic shares moved last week. Respond by clicking on the envelope icon at the bottom of this post.

Update, 3:49am EST, 11/07/05: We did find this Nov. 6 report at ThisDay Online, which indicates that the bank has substantially increased itswealth, whether through the sale of shares or the acquisition of new investors:

First Inland Shareholders’ Funds Hit N28bn


Shareholders’ funds of First Inland Bank Plc, the merger of First Atlantic Bank and Inland Bank have increased to N28 billion, following the approval of over N8 billion of the First Atlantic Bank Public offer and N7.15 billion of the Inland Bank public offer by the Central Bank of Nigeria (CBN), a statement from the two banks have disclosed.

As part of strategic moves to enhance its competitiveness in the post consolidation era, First Atlantic Bank made an offering of 3,000,000,000 ordinary shares at N2.50 per share between February 21 and March 31, 2005. This was aimed at raising a total of N7.5 billion. Although investors staked a total of N8.7 billion in the offer, amounting to 116 per cent subscription level, the CBN affirmed a total of N8.01 billion. This according to the statement, means that the offer was over subscribed by about 7 per cent, in spite of the litany of offers in the market at that time and growing investors’ fatigue.

The approval was communicated to the bank via a letter BSD/G5.T13/FAB-SEC/BAN-CON/2005 of October 13, 2005 titled -Re: First Atlantic Bank Capitalization Through Public Offer 2005 addressed to the Managing Director, First Atlantic Bank Plc. Mr. G.A. Oladejobi, on behalf of the Director of Banking Supervision of the CBN, signed the letter. However, the bank could only absorb N7.5 billion subscriptions following a change to the rule hitherto allowing absorption of over subscription by SEC on the eve of the offer. Added to the bank’s pre-offer capital base of about N4.5 billion, First Atlantic’s shareholders’ funds, according to the statement is now in excess of N12 billion.

Inland Bank on its part offered 16,000,000,000 ordinary shares at N1.50 per share in April 2005. At the end of the exercise, investors’ subscription amounted to N8.7 billion, out of which N7.15 billion was approved by the CBN. With pre-offer shareholders’ funds of N3.8 billion, the statement noted that Inland Bank’s shareholders’ funds has risen to N10.9 billion.

The approval of the public offers of both banks lifts the capital base of First Inland Bank above the N25 billion-capitalization benchmark with a consolidated shareholders’ funds in excess of N28 billion, including the N5 billion deposits for shares of the bank by its core investors. The merger which is in its final stages has received Approvals-in-Principle from both the CBN and SEC as well as shareholders approval at Court-Ordered Meetings of both banks held simultaneously in Lagos and Abuja on Wednesday, October 26, 2005. The Group according to the statement is now awaiting the final approvals of the CBN and SEC, which are expected shortly.

“As part of the strategic focus of the new bank, it plans to increase its shareholders funds to over N40 billion before the end of the second quarter of 2006. Already, a number of banks have approached the group for possible acquisition and merger and are under serious consideration. The plan to further enhance the shareholders funds is informed by its strategic initiatives to play a leading role in the post consolidation banking industry,” the statement said.

It would be recalled that the merger bank has already inaugurated an Interim Board of Directors with Alhaji Muhammadu Danmadami as Chairman and Olorogun O’tega Emerhor as Vice Chairman. Mr. Okey Nwosu has been named Managing Director/CEO of the new First Inland Bank, while Lamba Alhaji Zannah is the Deputy Managing Director.

The new bank, according to the statement intends to begin operations on December 1, 2005 with about 103 branches, an asset base of over N105 billion and total deposits of about N65 billion. “With strong presence in both the Southern and Northern markets, it would emerge immediately as a truly national bank positioned to assume a pre-eminent position in the global financial market,” the statement added.