In what many investors criticized as a too-little, too-late, too-cool press release, ERHC Energy finally announced to the media that it has concluded deals in the Nigeria-Sao Tome and Principe Joint Development Zone for Blocks 2, 3 and 4 that are believed to contain reservoirs totaling billions of barrels of oil - not that the company has ever said so.
The release came out 3:27pm ET and had a slight effect on share price at that hour, possibly due in part to the St. Patrick's Day holiday. Between 3:27pm and the close, 211,521 shares were purchased and 273,308 were sold.
The Ask and Bid both rose from $0.896 x $0.90 at 3:27 to a high of $0.90 x $0.91 by 3:31pm, and then began to fall just four minutes after the release came out. The release brought buying of just 23,240 and sales of 65,000 after the Bid downtick to $0.905, up until 3:39pm, when the selling started in earnest and 125,000 shares were sold and just 74,8712 purchased.
Notably, compared to Tuesday's 1.5 million and Wednesday's 450,000 unidentifiable shares (i.e., traded in between the Bid and Ask), today's full-day total unidentified shares was just 10,500. The closing Bid and Ask were $0.89 x $0.893, and 31,371 shares were bought at the $0.893 Ask in the last 10 minutes. Closing volume was a meager 3,309,327 shares.
By the day's end, selling had accelerated from 45.5 percent before the release to 47.4 percent afterwards, and Buys had decreased from 54.1 percent of the action before the release to 52.6 percent by the close. In simpler terms, the release sucked some people in for four minutes, and then sellers overwhelmed the Ask, as usual.
Earlier, Equator Exploration, which trades on London's AIM exchange and in contrast to ERHC Energy's stock has nearly quintupled in value since it was issued last year, issued a press release Friday noting that there are believed to be between one and two billion barrels of oil in Block 2, where it has a small percentage.
Below are both press releases, with ERHC's following the more complete Equator Exploration one:
Equator Acquires Interest In Block 2 Of Nigeria-São Tomé Joint Development Zone ("JDZ")
March 17, 2006
Highly Prospective Block 2 has one - two billion barrel reserve potential
JDZ Block 2 is adjacent to Nigerian Block OML 130 which hosts the 700 million barrel Akpo discovery and other discoveries with an additional 500 million barrels and several TCF of gas
LONDON, United Kingdom & LAGOS, Nigeria - 17 March 2006 - Equator is pleased to announce that it has together with its co-venturers signed a Production Sharing Contract with the Nigeria/Sao Tomé and Principe Joint Development Authority ("JDA"). A 15% interest in the highly sought after JDZ Block 2 of the Joint Development Zone has been awarded to Equator and its joint bidding partner ONGC Videsh Limited ("OVL").
Based on a 3D seismic survey funded and acquired by Petroleum Geo-Services ("PGS") and Equator in 2003, the block has estimated recoverable reserves of 1 billion barrels. JDZ Block 2 is adjacent to Nigerian Block OML 130 which hosts the 700 million barrel Akpo field and another series of discoveries totalling an additional 500 million barrels and several TCF of gas. Other stakeholders in the block include the consortium of Sinopec, ERHC Energy and Addax Petroleum, who together have 65% with Sinopec acting as operator of the block. In addition, Nigerian firms A & Hatman (10%), MoMo Petroleum (5%) and Foby Engineering (5%) were allocated interests in JDZ Block 2.
Under terms of the JDZ joint bidding agreement between Equator and OVL ("the OVL/Equator Venture"), any allocations will be shared on a 60%-OVL and 40%-Equator basis. This results in a net 6% participation in the block for Equator. The signing bonus for JDZ Block 2 is US$71 million. Equator's share of the signing bonus is US$4.26 million which will be funded from Equator's existing cash reserves.
Mr. Wade Cherwayko, CEO of Equator stated "We are pleased to be among the small number of companies worldwide to be awarded participation in a block in this highly prospective deep water exploration play offshore Nigeria and Sao Tome. The allocation further expands Equator's portfolio of high potential exploration acreage in the Gulf of Guinea, the world's premier deep water basin."
The JDZ was created through an agreement between the governments of Nigeria and Sao Tomé and Principe in 2001 whereby revenues derived from the JDZ will be shared 60:40 between these governments respectively. The JDZ is governed by the JDA who also signed Blocks 3 and 4 this week. Block 3 was allocated to Anadarko (51%) who was designated as operator. Other participants in Block 3 are ERHC, Addax and several Nigerian firms. Block 4 was allocated to a consortium led by ERHC and Addax, who together have 60% and operatorship. The additional equity in Block 4 was allocated to Nigerian firms and Hercules, a company partnered with Canadian-based Centurion Energy. JDZ Block 1 was signed in early 2005 to a consortium which comprised ChevronTexaco, ExxonMobil and Dangote Energy Equity Resources, for a signature bonus of US$123 million. Drilling of the first well in JDZ Block 1 is currently underway.
For further information, contact:
Wade Cherwayko, Chief Executive Officer
020 7235 2555
Philip Dimmock, Chief Operating Officer
020 7235 2555
Bobby Morse / Ben Willey, Buchanan Communications
020 7466 5000
And here's the ERHC release:
ERHC Energy Inc. Announces Production Sharing Contracts in JDZ Blocks 2, 3 and 4
Business Wire News Release
ERHC ENERGY INC
HOUSTON, Mar 17, 2006 -- Walter Brandhuber, President and CEO, of ERHC Energy Inc. (OTCBB:ERHE) announced today that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum (Nigeria Offshore 2) Limited ("Addax"), several oil and gas companies, and the Nigeria-Sao Tome and Principe Joint Development Authority ("JDA"), to conduct petroleum operations in Block 4 of the Joint Development Zone between Sao Tome & Principe and Nigeria ("JDZ"). Mr. Brandhuber also announced that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum Resources Nigeria Limited ("Addax Sub"), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 3 of the JDZ, and on March 15, 2006, a subsidiary of the Company entered into a production sharing contract with Sinopec International Petroleum Exploration and Production Corporation Nigeria ("Sinopec"), Addax Energy Nigeria Limited ("Addax Ltd."), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 2 of the JDZ. Addax, Addax Sub, Sinopec and Addax Ltd. are required to pay all of the Company's future costs in respect of all future petroleum operations in Blocks 2, 3 and 4 of the JDZ. They are entitled to the Company's share of cost oil until they recover the Company's costs.
The Company's CEO Walter C. Brandhuber commented by saying, "The entering into production sharing contracts in Blocks 2, 3 and 4 of the JDZ represents an important step in our goal of commercializing the Company's interests in the JDZ and increasing shareholder value. The Companies' interests in the JDZ blocks represent the cornerstone for the Company's future growth strategy."
In November 2005, the Company entered into a participation agreement with Addax with respect to Block 4 of the JDZ where Addax paid the Company $1.35 million, and will be required to pay an additional $16.65 million on or before March 24, 2006. In February 2006, The Company entered into a participation agreement with Addax Sub with respect to Block 3 where Addax Sub paid the Company $500,000, and will be required to pay an additional $7 million on or before March 24, 2006. Further, on March 2, 2006, the Company entered into a participation agreement with Sinopec and Addax Ltd. with respect to Block 2 where Sinopec will pay the Company $13.6 million on or before March 25, 2006, and Addax Ltd. will pay the Company $6.8 million on or
before March 25, 2006.
The JDZ lies approximately 200 km. offshore Nigeria and is adjacent to areas offshore Nigeria where several large petroleum discoveries have been made. The JDZ was established in 2001 following ratification of a formal bilateral treaty between Nigeria and Sao Tome and Principe. The JDZ is administered by the Joint Development Authority.
Safe Harbor Statement
This press release contains "forward-looking statements," including statements about ERHC Energy Inc.'s future operating milestones, financing plans, as well as other matters that are not historical facts or information. These forward-looking statements are based on management's current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to the Company's ability to exploit its commercial interests in the JDZ and the exclusive territorial waters of Sao Tome and Principe, that may cause the Company's actual results to be materially different from any future results expressed or implied by such forward-looking statements. The Company undertakes no
obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, nor is there any assurance that the contemplated financing will be effected, Page 1 under the terms set forth herein or any other terms.
SOURCE: ERHC Energy Inc.
ERHC Energy Inc., Houston
Jane Barker, 713-626-4700