Monday, July 30, 2007

ERHE Falls To $0.25; Seller Dumps 250,000 Shares

A seller dumped 250,000 shares at $0.255 in one fell swoop a minute before 3 p.m. today as ERHE shares fell to their lowest levels in a long time. At 3:27 p.m. EST, the stock was selling at $0.26, with the Bid set at $0.255.

The unknown seller was the only substantial seller of the day, with the next-largest blocks - four of 25,000 each - moving between 2:22 and 2:58, suggesting they were part of the same holding.

A poster named hoehne888 said at 3:29 that he had put in an order for 100,000 shares at $0.26, but it has not yet shown up at 3:35 on the ADVFN trade real-time monitoring system.

Tuesday, July 24, 2007

New Lies From Chevron?

A sharp-eyed Investor's Hub contributor has found an extraordinary - and false - claim from Houston-based Chevron on the company's Website that says Chevron acquired an interest in "Block 11" of the Nigeria-Sao Tome Joint Development Zone, located 150 miles off the Nigerian coast in the Gulf of Guinea, in 2004.

Problem is, there is no Block 11 - the Joint Development Zone has only 10 blocks, and Chevron has rights in only Block 1, where it holds a minority interest to ExxonMobil's majority interest.

Here is the false claim, one of two Chevron has made recently about its limited rights in the JDZ:

Chevron is leading the JDZ. Block 1 was acquired in 2003, and Block 11 was awarded in 2004. A production sharing contract was signed in 2005. The first exploration well in JDZ Block 1, Obo 1, was completed in 2006 and found hydrocarbons. Commercial options are currently being examined to determine the potential for additional drilling.

After letting it slip to a French oil newsletter and then The Wall Street Journal that it had made a huge discovery in Block 1 in 2006, Chevron slowly backed away from the claim and said it had doubts as to the "commercial viability" of the find.

That contretemps may have been a way of embarrassing the Nigerian government of President Olusegun Obasanjo, which had trumpeted the find in hopes of gaining new entrants in the next JDZ licensing round, after Chevron's embarrassing performance in the 2005 Licensing Round. Or it may just be that it's in the company's interest to minimize the find to reduce its royalty load from recovered oil.

Wednesday, July 11, 2007

Once More Unto the Breach of Trust: ERHC is Subpoenaed by the Senate

A Senate subcommittee much like one that studied bribes by ExxonMobil, Chevron, Pioneer Natural Resources and Marathon Oil to West African leaders - and then fell strangely silent - is now turning its gaze towards smaller fry, the four employees of tiny Houston-based, Nigerian-owned oil company ERHC Energy, whose stock rose to $0.31 on the news.

The company won rights to various blocks in the Gulf of Guinea that may be worth countless billions to the Big Oil firms that badly wanted them, but Nigeria's newly-elected President said July 9 that he supports the current rights-holders - including ERHC Energy - and his government and that of Sao Tome have refused to cooperate with the tainted probe that ultimately produced the request.

Until ERHC broke the mold, no Nigerian company had ever been granted substantial rights to Nigerian oil. The country is the world's fourth largest oil producer, capable of more than 3 million barrels per day. But it is miserably poor and many of its citizens have no electricity. The oil revenue flows to Europe and the United States, or is swallowed up in corruption in Nigeria.

The JDZ's Second Licensing Round in 2005 saw a Nigerian-owned firm - ERHC is controlled by Nigerian businessman Sir Emeka Offor and its First Atlantic Bank - shoulder aside the American, French and British oil behemoths competing for six blocks of the Joint Development Zone. That region of the Gulf of Guinea is saidto hold some 14 billion barrels of oil, according to the Houston Chronicle.

ERHC and its partners, Swiss-based Addax Energy and others - have hired a drillship set to begin deepsea oil exploration of the rights in 2008.

The genesis of the Sao Tome probe is compelling.

George Soros, a 6.4% shareholder in Pioneer Natural Resources - a onetime partner of ERHC in the battle for lucrative drilling rights in the Nigeria-Sao Tome and Principe Joint Development Zone - paid tens of thousands of dollars through the Senior Lawyers Project for an investigative report signed by the Sao Tome and Principe Attorney General, but actually written by R. Dobie Langenkamp of the Tulsa U. School of Law, the father of a Nightmare on Elm Street star.

In the report, Langenkamp asked for an SEC and FBI probe of the company and its rights to JDZ blocks 2, 3 and 4, which are estimated to hold some 14 billion barrels of oil. ChevronTexaco and ExxonMobil have already struck oil in their adjoining Block 1, but now say that what the Wall Street Journal said could be a billion-barrel strike is not "financially viable."

Supoenas soon followed, all aimed at ERHC. The aim appears to be to get the company to turn over its rights to the likes of ExxonMobil, ChevronTexaco, Pioneer - the Soros investment which unsuccessfully fought ERHC for the rights - and Anadarko, which tried to get a joint bid with ExxonMobil approved after the deadline for bids had passed. That effort was rejected by the JDZ's Joint Ministerial Council, and buttons started getting pushed in Washington with greater intensity than ever.

The industry's p.r. mavens called in all their chits, apparently, as attacks on ERHC soon began appearing in The Wall Street Journal, Houston Chronicle, Harper's Magazine, the New Yorker and most recently, the New York Times, as the evildoer that cheated Sao Tome out of its oil rights.

But ERHC officials had twice rewritten their deal with Sao Tome, and its oil might never have gcome under scrutiny if ERHC had not paid for a $6 million geological study of potential Gulf of Guinea deposits.

Meanwhile, the bribery investigation of the Big Oil firms by the Senate Commerce Subcommittee on Energy remains unresolved.

According to an L.A. Times article that was never followed up, the senators were examining millions of dollars in bribes to West African leaders by ChevronTexaco, ExxonMobil and other companies, including Pioneer and another former ERHC partner, Noble, when the Commerce and Energy subcommittee investigation of Foreign Corrupt Practices Act violations suddenly disappeared.

Back in the day, one ERHC CEO actually denounced Sao Tome leaders at an airport press conference for demanding a bribe, and then left the country. None of the new stories mention Langenkamp, the Pensabenes or the bribery investigation that suddenly stalled.

Senate Energy Committee Republican chief counsel Judy Pensabene, a student of Langenkamp's - as was her husband, former Energy Dept. official Greg Pensabene, nopw the top government lobbyist for Anadarko - was honored by Langenkamp even as he was preparing to write the report. In 2005, he named Pensabene a "Distinguished Visiting Professor" at his Tulsa U. law school, where he trained dozens of the top lawyers in major oil companies (which, notably, would not include ERHC attorneys). Langenkamp serves with many of them on industry non-profit boards.

Meanwhile, Pensabene's boss - 83-year-old Republican Sen. Ted Stevens, until recently the chairman of the Senate Energy Committee - is now under investigation for the taxpayer-funded expansion of his home in Alaska, which doubled the compound's size. He is a strong supporter of ExxonMobil and ChevronTexaco's Arctic drilling projects and plans, and has been royally rewarded by the industry he oversees.

No newspaper has followed up on the twisted origins of the attack on ERHC. No one expects that they ever will. And now, more than 14 months after its offices were raided by the FBI, there is still no sign of an indictment against the company. An ERHC lawyer has agreed to meet with the SEC and provide them with documents on July 18, however.

Here is the Houston Chronicle piece:

July 11, 2007, 12:10AM
Subpoena delivered to ERHC
Senate panel questions payment for energy deals off west Africa

Copyright 2007 Houston Chronicle

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Houston's ERHC Energy has been subpoenaed by a Senate subcommittee looking into possible improper payments related to ERHC's oil and gas holdings around the island nation of São Tomé and Príncipe.

The U.S. Senate Committee on Homeland Security and Governmental Resources Permanent Subcommittee on Investigations sent the subpoena on Thursday asking for documents "in connection with its review of matters relating to the potential abuse of payments made to foreign governments," according to a statement by ERHC Monday.

Senate investigators are particularly interested in information "related to the acquisition of ERHC's interests in the Gulf of Guinea," where ERHC has the right to drill for oil and gas off the coast of São Tomé, the company said.

In the statement, interim CEO Nicolae Luca said ERHC believes development rights it negotiated with São Tomé over the past decade were "legitimately awarded to ERHC."

A spokeswoman for the Senate subcommittee declined comment on the investigation.

In December 2005, São Tomé's then-attorney general called on the U.S. to investigate ERHC's dealings in the region, saying in a report that ERHC and politically connected Nigerian businessman Emeka Offor "may have made improper payments to government officials."

Last year FBI agents raided ERHC's offices in Houston looking for possible "things of value" paid to officials in São Tomé and Nigeria, an FBI affidavit filed in Houston said.

Last month the U.S. Securities and Exchange Commission issued a subpoena to Sugar Land attorney O.J. Chidolue, an employee of a major ERHC shareholder, ordering him to hand over documents and speak with federal investigators.

According to court filings Chidolue and the SEC reached an agreement where he would provide the documents by June 29 and testify on July 18.

It could not be determined Tuesday if those terms have been met. SEC officials declined comment. Chidolue and his attorneys could not be reached.

ERHC has signed partnership deals with Swiss firm Addax Petroleum and China's Sinopec Corp., and said in a statement this week the companies were on target to begin drilling test wells off the west African coast next year.

ERHC Energy stock closed up $0.01 on the news.

Monday, July 02, 2007

Update: NY Times Attack Leaves ERHE Shares up $0.05

The attack on ERHC Energy's CEO Sir Emeka Offor in today's New York Times actually improved the share price $0.05, but momentarily produced buying opportunities at $0.295 - lasting only from 10:15:40 to 10:16:01, or about 21 seconds, when someone put 50,000 shares on the market in seven lots of 5,000 to 10,000 shares each. They were instantly bought up.

In reality, the ask never faltered from $0.305 throughout the day, and despite the story in America's most important newspaper, only 241,659 shares traded all day. The light trading is consistent with that of recent days and the impending July 4th national holiday in the United States.

Speaking of holidays, we are taking the next few days off, and want to wish all our readers - and every American, friend or foe - a very Happy Fourth of July.

ERHC Energy and Sao Tome Front-Page the New York Times; Noreen Wilson Testified To Grand Jury

An attack by the New York Times on ERHC Energy - almost identical in content to several others by Bruce Alpert of the New Orleans Times-Picayune, David Ivanovich of the Houston Chronicle and Ken Silverstein of Harper's - in my view was precipitated by my attack on the dubious informant in the William Jefferson case, Lori Mody, and my near-simultaneous "temerity" in announcing I had again purchased ERHC Energy shares at $0.30.

The female prosecutor in the case, with whom I spoke briefly last year, may have taken her ire to the same people that sponsored these other near-identical stories, or the Axis of Gulf of Guinea Oil (Chevron, Exxon and Anadarko), may have worried too much that the foundation of their case against Jefferson was foundering after the same "insurance" they are probably holding to help control the informant made its way into The American Reporter, impeaching the informant.

And maybe now it's appropriate to remind everyione that a lie does not gain currency for being twice- - or thrice- - told. The Times story, however, introduces a new lie: that Sir Emeka Offor is being investigated for insider trading in Nigeria. That is merely a conflation of facts surrounding the joint FBI/SEC search of ERHC's offices on April 1, 2006, and it's just a once-told lie.

Here is the Times' story, followed by my response to the Times, and then their automated response to me for documentation's sake:

No Oil Yet, but African Isle Finds Dealings Slippery
Armando Franca/Associated Press
Photo: A bicyclist rides near a hotel under construction in São Tomé, which is trying to ensure that its residents benefit from an anticipated oil boom.

Published: July 2, 2007
A decade ago, geologists found signs that one of Africa’s least-known countries, the tiny island nation of São Tomé and Principe, might hold a king’s ransom in oil.

Small Nation, Big Oil Prospects

The first drop of oil has yet to be produced. But these days, little São Tomé may have attracted ample supplies of something else, federal investigators suspect — oil-related corruption.

All of this might not seem unusual in Africa, where oil and corruption often go hand in hand. However, São Tomé, a former Portuguese colony off the coast of Nigeria, was supposed to be different. In recent years, a steady stream of activists like the Columbia University economist Jeffrey D. Sachs have gone there to try to make sure that any energy boom would benefit its 150,000 people, rather than politicians and companies.

“Oil can be a blessing or a bane for a country,” Mr. Sachs said. “The theory was to help São Tomé avoid the resource curse.”

Things, however, have not quite worked out that way.

The recent Justice Department indictment of William J. Jefferson, a Democratic congressman from Louisiana, contends, for example, that he solicited a bribe from a company seeking his help with an oil-related dispute involving São Tomé.

Separately, federal authorities are investigating a small Houston-based company whose only assets are large holdings in São Tomé to determine if it bribed the country’s officials. On another front, a powerful Nigerian businessman who is the chairman of the Houston company, ERHC Energy, is under investigation in his country for possible insider oil dealings.

All those involved — Mr. Jefferson, ERHC, and that company’s chairman, Emeka Offor — deny that they did anything wrong.

Still, the experience of São Tomé, a poor country that supports itself by selling cocoa and commemorative stamps featuring celebrities like Elvis Presley and Brigitte Bardot, shows how just the hint of oil can set off a scramble for riches. Along with Mr. Sachs, those who sought to help included George Soros, the billionaire turned philanthropist, and a high-powered Washington lawyer, Gregory B. Craig, who defended President Bill Clinton during the Monica Lewinsky scandal.

“In West Africa, the scent of oil alone may be enough” to produce corruption, said Joseph C. Bell, another Washington lawyer who has traveled to São Tomé to work on new oil laws.

At the center of the São Tomé story stands ERHC, a tiny company whose ranks have included a collection of characters and politically connected entrepreneurs like Mr. Offor. According to a 2005 report by the attorney general of São Tomé, Mr. Offor is one of the largest donors to Nigeria’s ruling political party and a close ally of Olusegun Obasanjo, who until recently was Nigeria’s president.

São Tomé’s unusual journey through the backwaters of the oil industry traces back to the mid-1990s, when ERHC arrived there. Large underwater oil deposits had been found nearby, off the coast of Nigeria, and ERHC believed that the tiny island might be the next big prize in west Africa.

At that time, the Texas company was owned by some wildcatters and an enterprising Florida businesswoman named Noreen Wilson. Over the years, she has been involved with several penny stock companies including a short-lived enterprise called Pizza Group Inc.

In 1997, Ms. Wilson signed a $5 million contract that gave ERHC, which was then known as the Environmental Remediation Holding Corporation, exploration rights in São Tomé for 25 years. The contract was soon described by some outside experts as extremely lopsided.

Soon afterward, Ms. Wilson resigned from ERHC during an investigation of the company by the Securities and Exchange Commission. But she appeared to retain an interest in the island’s future; in 2001, for instance, she apparently reached out to Mr. Jefferson for help there, his indictment suggests. At that time, São Tomé’s new president was threatening to break a number of oil-related deals, including ERHC’s.

Ms. Wilson, who declined through her lawyer, Joseph A. Artabane, to be interviewed for this article, is not named in that indictment. But the filing describes how two unnamed people, a business executive and a lobbyist, went to see Mr. Jefferson about an oil-related dispute on São Tomé. In return for a promise of help, Mr. Jefferson demanded that a family member receive benefit, a demand that was met, the indictment states.

Mr. Artabane, who said that Ms. Wilson testified before the Jefferson grand jury, declined to confirm that she was the executive involved, but he did not dispute it either. The lobbyist involved was James P. Creaghan, according to his lawyer, E. Barton Conradi, who said his client has cooperated throughout with authorities. Mr. Creaghan worked with Ms. Wilson during that time. (Neither of them has been accused of wrongdoing.)

Meanwhile, wheels were already spinning in São Tomé when activists like Mr. Sachs, the economist, arrived. Their mission: To prevent it from following in footsteps of other African countries where corruption and waste typically follow oil. In Nigeria, the continent’s largest producer, most people live on less than $2 a day while politicians have stolen or squandered billions.

Initially, hopes were high. Soon after his election as president, Fradique de Menezes, a cocoa plantation owner, vowed that his country would be different. And he turned for help to outsiders like Mr. Craig, the Washington lawyer who represented President Clinton during his impeachment trial.

But Mr. Craig, like others who followed him, found himself facing some powerful adversaries: Nigeria and Mr. Offor. In 2001, Nigeria had jumped in the picture when it signed an agreement with São Tomé to share oil revenues from waters between the two nations. Mr. Offor, the ally of Nigeria’s president, bought ERHC, which was then near bankruptcy, just a few days before that agreement was signed.

Mr. Craig said that while he successfully renegotiated contracts with other oil companies in São Tomé, Mr. Offor would not budge. “The metaphor of David versus Goliath doesn’t quite capture the relation between São Tomé and Nigeria,” he said. “It’s more like an ant.”

In time, ERHC did agree to some changes in its contract, but the company retained extremely favorable terms, including the right to choose among the best oil blocks without paying the type of special one-time fee that governments typically demanded.

Mr. de Menezes continued to seek assistance; in 2003, for instance, he reached out to Mr. Sachs.

“He called and said, ‘Look we’ve found some oil and the sharks are swimming around us now, and I’d like some help to manage this properly,’ ” Mr. Sachs recalled in a recent interview.

As part of that effort, a Columbia University team and others helped draft a new oil law that contained safeguards to make sure São Tomé spent its oil-related revenue properly. The team then traveled around the country, holding meetings on cocoa plantations and in churches, where they explained to residents how the new statute would protect their interests.

“Imagine what would happen if there was a big flood that hit us,” stated a cartoon-like booklet that they handed out to residents. “The oil law creates a dam.”

By late 2005, however, a report by the attorney general of São Tomé delivered a dose of reality. Among other things, it found that some companies that won blocs in the zone controlled jointly by São Tomé and its neighbor were headed by Nigerian businessmen with political ties but no oil experience.

The bidding process “was subject to serious procedural deficiencies and political manipulation,” the report concluded. In addition, the report found some large multinational oil companies were so suspicious of ERHC that they decided not to bid and added that ERHC “may have made improper payments to government officials.”

ERHC has disputed those findings and said in a statement that it received its rights legitimately and that it has also made numerous concessions to São Tomé.

“We care about perceptions of ERHC Energy and we have been working to fully understand any concerns expressed about our activities,” the company said.

The attorney general’s report may have precipitated last summer’s raid on ERHC’s Houston offices by the F.B.I. Among other things, F.B.I. agents took a file marked “William Jefferson,” a reference to the Louisiana congressman, a publicly filed subpoena shows.

Dan Keeney, a spokesman for ERHC, said that the company was not aware of “any facts to suggest that the U.S. government investigation of ERHC is in any way related to the ongoing investigation of Congressman Jefferson.”

Whatever the case, ERHC has emerged thus far as the biggest winner in São Tomé. Over the last year, it has sold off various rights to its holdings in São Tomé, making tens of millions of dollars in the process.

As for the reform effort by Mr. de Menezes, the country’s president, he has been far less publicly vocal over the last year, outside consultants said. Mr. de Menezes, who met on several occasions with Mr. Jefferson, did not respond to repeated requests to be interviewed for this article.

Despite earlier predictions of vast oil finds, it is unclear whether waters off São Tomé will ever produce oil in commercial quantities. Last year, Chevron drilled the first exploration well there but failed to find much oil and, for the moment, has no immediate plans to drill again. ERHC said that it and a partner planned to drill next year.

The new oil and anticorruption statutes drafted by consultants like Mr. Bell, the Washington lawyer, have become law. But with all the obscurity and intrigue that has now descended onto São Tomé, he, like others, question if it will make any difference.

“The game is not lost yet,” Mr. Bell said. “But it is a very uphill game.”

----- Original Message -----
From: "Joe Shea"
To: "NY Times"
Sent: Monday, July 02, 2007 4:27 AM
Subject: Error in Sao Tome story

My Response to The Times

Sir Emeka Offor is not under investigation
in Nigeria for insider trading, and there is no
evidence other than your statement to suggest he is.
The SEC was part of the FBI warrant that
led to the search of ERHC'soffices in Houston. That
occurred over a year ago and no such information
has been forthcoming since then. A newspaper
clipping was the sole content of the "William Jefferson"
file in ERHC Energy's Houston office. Indeed,
while ERHC is a small player, it is that
fact and not the unsubstantiated charges you
aired that ought to be examined in light of
the many big players ERHC competes with.

I write a blog about ERHC Energy called
"ERHC on the Move." As far as I am
concerned, you missed the forest for the trees.
The fellow who did the investigation that led to the
Sao Tome Atty. Heneral's report was R. Dobie
Langenkamp, who as head of the Tulsa U School
of Law is closely associated with corporate counsel
for all of ERHC's competitors in the Gulf of
Guineau. It was paid for by George Soros, who
took a major position in ERHC's former partner in several
Gulf of Guinea blocks, Pioneer Natural Resources.
Chevron, ExxonMobil and Anadarko were the big losers in
the licensing round, and they have exerted all their
collective influence behind the scenes to get the
awards revisited. That has been assisted by Dobie
Langenkamp's close friends (and former students), Judy
Pensabene - chief Republican counsel for the Senate
Energy Committee - and Gregory Pensabene, her husband
and chief government lobbyist for Anadarko. The
big oil boys have called all the shots on this story, and
you are either too slow or too scared to see it. The
reason this story is coming out now is because of my piece
on the informant in the William Jefferson case, which
dramatically undercut the probative value of her testimony.


Joe Shea

The Times' (Automated) Response to Me:

----- Original Message -----
Sent: Monday, July 02, 2007 4:28 AM
Subject: Message Received

Thank you for your message to The New York Times. This automatic response is necessary because of the volume of mail we receive.

Your message will be evaluated and passed promptly to the appropriate editor. In some cases, we are able to follow up with individual replies, and we will certainly write or telephone if we need further information.

Thank you for contacting the Metro Desk.