What the hell is going on?
There's this little company in Houston with three employees and no debt that was granted some oil rights a few years back and now it appears that ChevronTexaco has struck a huge reservoir of oil in a block immediately adjoining one of theirs, and word is that the reservoir runs under theirs, too, requiring payments to them. So for no cost, this little company seems to be about to hit oil without ever having to drill a well. The Wall Street Journal, which has reported the find in a misleading way, said the news will come out "any day now." The price has gone from $0.72 to $0.89 in three days, and looks to be headed a whole lot higher. if the big find that Chevron is supposed to have gets announced. Chevron has said it won't have anything to say until April.
What is ERHE?
ERHE is the symbol for ERHC Energy, the little company that can. It owns rights in three of the most promising blocks of the Nigeria-Sao Tome and Principe Joint Development Zone, a region of the Gulf of Guinea where the tiny island nation of Sao Tome and Principe (pop. 160,000) and the important African nation of Nigeria (population 116 million) share ownership and split royalties on a 40:60 basis. The JDZ, as it's known, was formally set up in early 2002.
Who says there's oil?
A huge cast of characters say there's oil, starting with the Western Geco division of Schlumberger, the United States Dept. of Energy, ChevronTexaco, ExxonMobil and Anadarko Oil, which have already paid some $184 million to find out if they're right. The United States expects to import a quarter of all its oil needs from West Africa by 2010, up from 15 percent now, and most of that would come from these blocks in the Gulf of Guinea.
So what's the deal?
Supposedly, if you buy in to ERHC Energy now, while shares are under a buck, you'll become wealthy in a few years as their rights are exploited in the form of oil and gas. But be forewarned: there are dozens of different people and several different "forces," shall we say, that spread all kinds of misinformation, rumors and lies about the stock. It's hard to really know what's true. But you can say that the people who bought cheaply have made a lot of dough. So far this year, by buying and selling the stock I've made more than $31,000.
And who are you?
I was living in L.A. when I picked up the L.A. Times in May 2003 and read a long front-page story by Ken Silverstein about ERHC, which back then was called Environmental Remediation Holding Corp., because they used to clean up old oil wells in Louisiana and Texas. I got in touch with Ken and asked him if he thought an investment in it would make money, and he said that if all goes well "you should." So I started buying and made $25,000 that year when it went from $0.22 to $0.45.
What's with the blog?
After the L.A. Times story, I felt like there was too much going on in Africa with respect to the JDZ and ERHC Energy's founder Sir Emeka Offor that wasn't being reported anywhere. Conveniently, I got booted off the Raging Bull board when I started posting some of what I found and in response, I started ERHC On The Move. We have anywhere from 1,400 to 2,200 readers a day.
What's with all the obscene messages in old posts?
If you go back seven or eight months, you'll find hundreds of obscene posts in the Comments section of many posts. Most of those were from a woman named Norma Reynolds, known as chcr on the Investor's Hub board, where she is the Moderator. She is an accountant for a Houston oilman named Phil Nugent, whose son Phil Jr. lives in New Orleans. He apparently got pissed off at me when I wrote about him in connection with GEECF, in which he was a major investor and which has turned out to be a big scam.
Who is Phil Nugent?
He introduced the controlling shareholder of ERHC, Emeka Offor, to Gregory Tirman and Sam L. Bass, among other owners of ERHC back in the late '90s, and is one of the company's largest shareholders - he's said to have 20 million shares. Anyway, when Offor took the company over, he hired a p.r. man named John Coleman, who it now turns out was also Nugent's accountant at one time. Like the present p.r. people, Coleman was notorious for refusing to provide any information whatsoever about the company to shareholders - another reason I started this blog.
Where did ERHC's bad reputation come from?
Gregory Tirman, the CEO in 1999, went to Sao Tome to work out a deal with officials there but couldn't. As he was leaving, at the airport, he held a press conference and announced that Sao Tome officials had demanded bribes from him. That got ERHC in such hot water they had to go to arbitration at the International Chamber of Commerce in Paris over the issue of how they would be paid for the seismic data they'd shot for Sao Tome at a cost of $6 million. Just before the decision, though, Tirman - introduced by Nugent - sold his interest to Sir Emeka Offor for $6.1 million. Offor now has some 307 million shares of his own and reportedly controls another 200 million or so of the 710.9 million shares outstanding through his family and extended clan. He is a tribal chieftain and was a political "godfather" in Anambra state, in southern Nigeria, in addition to being a very rich and politically-connected man. In 2002, he donated $100,000 to the presidential campaign of Sao Tome cocoa grower Fradique de Menezes, who then became President of Sao Tome and is up for re-election right now. Offor also engaged various high-ranking Sao Tome officials, including the former Secretary of State, the Minister of Natural Resources and others in employment roles, and paid for the education of the man who later became chairman of the JDZ's operations arm, the Joint Development Authority. The Sao Tome Attorney General, apparently inspired by Anadarko Petroleum and ExxonMobil - who had lost major blocks to ERHC - hired a Tulsa professor of oil law to investigate. He said there were all kinds of irregularities but no evidence to prove wrongdoing, so the President of Sao Tome and the country's delegation to the JDZ's ruling Joint Ministerial Council rejected the attorney general's report. By that time, though, the smear had spread around the world and nothing could be done about it. As ERHC perfected the preferential rights it was guaranteed by the Nigerioa-Sao Tome treaty in 2002, and then was awarded equity in 2005 and finally got contracts to exploit its rights for in March 2006, all of that became irrelevant. Before it did, however, we lost three American partners - mid-tier players, Noble Energy, Devon Energy and Pioneer Natural Resources - and our stock slipped all the way back to $0.26 on Dec. 27, 2005, when Pioneer, the last of those, hit the road (and was replaced by Addax the same day). The three were replaced by Addax Petroleum, a Swiss firm with a lot work in Nigeria,in Blocks 3 and 4, and state-owned Sinopec, the world's sixth-largest oil company and the second largest in China, working with Addax in Block 2.
Where does it go from here?
Up. Personally, I think it's going to about $9.30, but that's just me. A lot of folks would be happy with less. But after the first of some $45.9 million in payments was received on Friday from Addax and Sinopec for some of our equity, there may not be any money at all coming in until we have paid back their costs of exploration to first oil. The big "unless," of course, is "unless" someone wants to shell out about $6 a share for our rights.
Who pays you?
I make all my money trading; no one pays me - not even the government!
How many shares do you own?
None at the moment, but I hope to buy some in the morning.