Friday, April 21, 2006

Addax Deal Confirmed In Upstream For Double The $5 Million Reported Earlier

A deal between mystery minnow Overt Ventures and Addax Petroleum, ERHC Energy's operating partner in Block 4, and for Overt's 5 percent of the block has been confirmed by UpstreamOnline today with one major detail added: Overt is getting $10 million in cash, not $5 million as first reported.

The Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Zone also gets a $5 million fee, as reported earlier, but the amount going to Overt is doubled.

The significance of the deal is that it places a cash value on acreage/equity in Block 4, and for the time being it appears to be twice as much as thought.

ERHC shares (OTC BB symbol: ERHE) responded sluggishly, if at all, falluing as much as $0.014 to $0.855 on tepid volume of 437,981.
The Upstrream article could be in error, yet the unreported Chevron find in Block 1 could have doubled the price before the deal was signed. Portions of Block 4 are believed to be directly south of the Block 1 find in Chevron's Obo-1 test well in a prospect designated A1.

Here is the Upstream article with a good mention of ERHC Energy:
Addax lifts its JDZ standing

By Upstream staff

Addax Petroleum has boosted its stake in the Joint Development Zone managed by Nigeria and Sao Tome&Principe in the Gulf of Guinea, writes Barry Morgan.
The Swiss explorer increased its interest in Block 4, where it recently secured operatorship through a partnership with Houston minnow ERHC Energy.

Last week, Addax acquired the 5% participating interest of Nigerian independent Overt Ventures, thereby raising its own stake to 38.3%.

Last year, Noble Energy walked away from the blocks, partly on the grounds that it could not secure sufficient equity to justify operatorship and because of unresolved question marks against local independent participants.

Addax will pay $10 million to Overt, with which it already had a technical partnership deal, and another $5 million to the Abuja-based Joint Development Authority to cover the administration fee and an additional signature bonus of $4.5 million.

21 April 2006 12:35 GMT | last updated: 21 April 2006 12:35 GMT

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