It is not known what will happen now to Offor's 42 percent stake in the company, to his hand-picked CEO and longtime friend and associate, Nicolae Luca, who now heads the company, or to the highly prospective concessions in the Nigeria-Sao Tome and and Principe Joint Development Zone known as the JDZ.
Offor said in a statement released by the company at 5:52 p.m. EST that he would stand by his investment.
"I remain committed to ERHC and my investment therein, and want to assure you all that I will continue to support the Company in any way I can," Offor said in a letter to the board.
He was hailed for his many achievements at the helm of ERHC by Luca, a trusted associate of many years.
"ERHC is very grateful to Sir Emeka Offor for his years of visionary leadership," said Acting Chief Executive Officer Nicolae Luca. "Today, ERHC holds valuable assets in what was once an undeveloped oil region of the world, in large part due to the hard work of Sir Emeka Offor, and we pledge to continue to build upon that legacy," Luca was quoted as saying in a PR Newsire release obtained on E*Trade.
The resignation could also mean that an indictment on charges under the Foreign Corrupt Practices Act, which purports to govern cases of bribery by American officials of foreign firms, is imminent. That could further depress the price of the stock, which has been trading in the $0.21 - $0.225 range in recent days, but investors rallied to buy it up to $0.225 before today's close after it traded in a $0.215 - $0.225 range earlier. The last price was $0.225 in extended hours, with the Bid set at $0.22 and the Ask at $0.225. A little more than 421,000 shares traded today, with only two blocks of 25,000 ay the only substantial purchases among some 49 total trades. The company's market value is currently $162 million, yet it has almost a quarter of that amount in cold, hard cash from the sale of some of its rights to Sinopec and Addax in exchange for a "full carry" of costs to production.
It's my belief that Offor resigned to save the company any further grief and to thereby maximize the future value of his holdings. Although it deprives the company of an extraordinary leader who was responsible for all of its sucess, his resignmation also paves the way for long-suffering investors to amass a fortune in any future buyout, merger or other positive development.
At best guess, it will mean a quick sale of the company, with the rights then being its sole asset and its leadership up in the air. Any bidder for the rights will likely include more than one bidder, such as ExxonMobil, ChevronTexaco, Anadarko, Pioneer Natural Resources, Noble Energy and others who have one time or another partnered or opposed ERHC's battle to secure the lucrative rights to Blocks 2, 3 and 4 and to as-yet undistributed blocks in the independent Sao Tome and Principe development zone.
Of the more significant issues, the first is whether the resignation came to protect the company, as both U.S. agencies frequently accept a principal's resignation in lieu of trial on the merits of a complex case in which the outcome is far from certain. In the circumstances that apply to the ERHC matter, both the person who resigns and the agencies save millions in likely legal bills, and the reputations of both are not further sullied. There was no mention of the case in the company's statement today, however.
It was extremely doubtful that either agency could secure a conviction against Offor even if they could persuade a federal grand jury to indict him. The governments of Nigeria and Sao Tome both rejected the attorney general's report and declared their unwillingness to cooperate in a probe, based on its tainted origins. Even the report itself found no evidence of wrongdoing, although it was strongly suspected due to a $100,000 campaign contribution which went to the private account of Sao Tome's current president in 2001.
Moreover, as the ERHC Energy case has become intertwined with the Rep. William Jefferson bribery case by virtue of several bit players who have both in common, the departure of Offor may mean either that he might become an unfriendly witness for the prosecution - presuming he would honor a subpoena from his native Nigeria, if he were to leave his Houston-area home - or a witness of impeachable character for the defense.
Thus, the legal end of the resignation amounts to a lose-lose deal for both sides in the Jefferson case. Jefferson and Offor were not known to be close friends.
However, the resignation will not change the fact that Chrome Energy holds what is tantamount to a controlling stake in ERHC Energy (presuming the support of Nigeria's first Atlantic Bank, whose 8 percent block of shares would likely vote with Offor on any merger or buyout propositions, but it would make the consessions held by ERHC Energy that much more palatable to a suitor looking to move through a deal with clean hands.
That appears to be a paramount condition for any new buyer's interest, given the complex circumstances in which the company's legal future has become mired. The other side of those legal issues, however, is the fact that its rights asre worth billions, and they could never have been pried loose from Offor's grip within the constraints of Nigerian political system, which are determinative. That system, of which Offor is a grand master, has unequivocally supported his role in EDRHC Energy from his earliest days as a major businessman seeking the JDZ rights.
It was Offor's role as a mediator, businessman and trusted associate of President Olusegun Obasanjo and Vice President Atiku Abubakar that led directly to the development of the JDZ, then to the bitter battles over his victory in bidding for the consessions, and to the subsequent investigations ginned up by oil company lawyers using the Sao Tome Attorney General as their pawn, and bankrolled by major Pioneer Natural Resources shareholder George Soros.
With the help of corrupt officials in Washington, probably including disgraced Energy Committee chairman Sen. Ted Stevens of Alaska, the Justice Dept. moved against Offor on the flimsiest of grounds - a request from the Sao Tome Attornery General for an investigation.
His 1996 report on the matter was written by a close friend and teacher of Sen. Steven's Republican chief counsel on the Senate Energy Committee, who is married to Anadarko's chief government lobbyist, and the effort was bankrolled by Soros through the Senior Lawyer's Project, at one time a reputable organization with altruistic aims.
The oil companies that developed the conspiracy to gain ERHC Energy's rights probably included ExxonMobil, ChervonTexaco and Anadarko, which wanted the rights to Block 4 and Block 2, respectively but lost out to ERHC in the bidding. Pioneer and Noble were both partnered with Offor at one time but felt pressure to withdraw from their agreements with ERHC Energy about four months before the Sao Tome report.
The company is now partnered with Addax Petroleum, a mid-sized Swiss player with a clean reputation, and Sinopec, the Chinese energy giant that is the sixth largest oil company on earth and China's second-largest. They are on the inside track as buyer candidates, and the loss of ERHC's American leadership is likely to lead to significant new deficits in the U.S. drive for energy independence if either or both are the ultimate buyers.
Sinopec, in particular, is said to be loaded with cash and willing to buy any major oil prospects if the price is right; the ERHC rights could encompass some 6 to 10 billion barrels of oil, while the overall JDZ is said to contain 14 billion barrels, and the entire JDZ is significantly insulated from troubles in either nation, being 150 miles oujt at sea in waters some 10,000 to 14,000 feet in depth. ERHC and Addax and Sinopec have secured a drilling rig to begin prospecting in the third quarter of 2008.
So far, Chevron, partnered with Exxon, is the only company that has said it has struck out in the JDZ after what the Wall Street Journal, in a story that was fundamentally dishonest, broadly hinted was a discovery of a billion barrels of oil in a test well in Block 1, its sole holding.
Major media fell hook, line and sinker for the carefully engineered operation, which I believe waslikely run in part by a law firm headquartered in Houston in which presidential candidate Rudolph Giuliani is a named partner. The company's servers have frequently visited this blog in recent years.
Here is the company's announcement. We will update this site frequently with any additional news.
ERHC Energy Inc. Board Accepts Resignation of Chairman
HOUSTON, TX, Aug 15, 2007 (MARKET WIRE via COMTEX) -- ERHC Energy Inc. (ERHE), an independent oil and gas company, today announced the resignation of Sir Emeka Offor from his positions as non-executive director and chairman of the Company's board of directors to concentrate on his diverse business interests. The ERHC board accepted his resignation and has begun the process of identifying a successor.
"I remain committed to ERHC and my investment therein, and want to assure you all that I will continue to support the Company in any way I can," Offor said in a letter to the board.
Sir Emeka Offor has been on the board of ERHC since 2001, when a company he controls acquired a controlling interest in ERHC. He has served as a non-executive director and chairman during a period of important accomplishments.
"ERHC is very grateful to Sir Emeka Offor for his years of visionary leadership," said Acting Chief Executive Officer Nicolae Luca. "Today, ERHC holds valuable assets in what was once an undeveloped oil region of the world, in large part due to the hard work of Sir Emeka Offor, and we pledge to continue to build upon that legacy."
2007 marks the 10th anniversary of ERHC Energy's exclusive joint venture with the Democratic Republic of Sao Tome & Principe. ERHC sought that agreement because it identified the possibility of significant offshore oil reserves years before others and was willing to undertake the hard work necessary to realize the value of these assets.
ERHC holds assets in the Joint Development Zone (JDZ) between Sao Tome & Principe and Nigeria, and in Sao Tome's Exclusive Economic Zone (EEZ). The Company has signed participation agreements with subsidiaries of Addax Petroleum Inc. and Sinopec Corp., which have announced plans to begin exploration in JDZ Blocks 2 and 4 as early as the third quarter of 2008. Additionally, ERHC continues to pursue other potential oil and gas acquisitions, where feasible.
Here's the UpstreamOnline story on Sir Emeka Offor's resignation. It ran at the very top of the page - the "minnow" is again Upstream's lead story. by its veteran oil writer, Barry Morgan.:
Offor quits ERHC
By Barry Morgan
Houston-based ERHC Energy has accepted the resignation of its controversial Nigerian chairman and non-executive director Emeka Offor and has begun the process of looking for a successor.
Offor, who took control of the minnow in 2001, said he would remain committed to ERHC and his investment in the company, which signed a potentially lucrative joint venture with the government of Sao Tome & Principe back in 1997.
ERHC is currently under investigation by a US Senate sub-committee concerned with the US Foreign Corrupt Practices Act.
The Securities & Exchange Commission is also enquiring into payments allegedly made by the company to officials in Sao Tome.
ERHC holds assets in the Joint Development Zone between Sao Tome and Nigeria where it has signed participation accords with Swiss explorer Addax Petroleum and with Chinese giant Sinopec.
Deep-water exploration in the JDZ is set to start in the third quarter of 2008.
ERHC also has preferential rights to acreage in Sao Tome’s Exclusive Economic Zone. The company was the first to raise the possibility of oil exploration with the government there and orchestrated Sao Tome's efforts to demarcate its offshore claims under the United Nations Law of the Sea Treaty.
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