The best part of the long shareholder letter from CEO Nicolae Luca was the news that the acquisition of Godsonic's interest due its failure to pay its bills will substantially boost ERHC's percentage of profit oil in Block 4, and may also mean additional cash due from Addax for the company's profit interest. How much that may be is uncertain, but it could be as much as $1.2 million from my observations.
Here is the latest from Dan Keeney, who was widely ciongratulated on message boards for the company's new, more open approach:
To ERHC Shareholders:
I am pleased once again to provide the September 2007 update on the recent progress of ERHC Energy Inc.
If you were not able to participate in our recent conference call, I hope you had an opportunity to listen to a replay. Corporate Secretary Peter Ntephe did an admirable job of briefly summarizing ERHC’s financial position and its ongoing operations. It was also enlightening to hear from shareholders about their interests and concerns. As Mr. Ntephe described, we intend to offer similar opportunities for investors to ask questions in the future.
We are pleased to report the resolution of our negotiations with Godsonic Oil Company Limited regarding its interest in Joint Development Zone Block 4. As stated in our latest quarterly disclosure, we took action on behalf of our consortium to reclaim Godsonic’s 9.0 percent share of JDZ Block 4 because Godsonic failed to meet certain obligations. Our consortium partner in JDZ Block 4, Addax Petroleum (Nigeria Offshore 2) Limited, claims entitlement under the existing agreements to 7.2 percent out of the recovered 9 percent, leaving 1.8 percent remaining with ERHC. If finalized, this would increase ERHC’s share of JDZ Block 4 from 17.7 percent to 19.5 percent. ERHC and Addax are currently exploring mutual recourse to arbitration or mediation, under amicability, to resolve whether or not additional consideration is due to ERHC from Addax for the 7.2 percent claimed by Addax under the terms of the existing agreements. We believe that the relationship between the two companies remains as good as ever.
Progress continues toward eventual exploration in several JDZ Blocks in which ERHC has a stake. As a carried interest partner in each of JDZ Blocks 2, 3 and 4, ERHC is required to let the operator of each Block make announcements regarding when and where drilling will commence. ERHC Vice President Technical, Jim Ledbetter, is helping to evaluate initial exploration well locations in JDZ Blocks 2, 3 and 4 and we expect to reach agreement on specific locations with the Joint Development Authority and the consortium partners in each of the Blocks in approximately the next six months.
Additionally, after the operators of each JDZ Block complete their review and approval of geological and operational efficiencies, we expect their decisions about drilling schedules at specific locations. It is important to keep in mind that the timeframes for drilling at various locations in all three JDZ Blocks will be based on their evaluations of cost-efficiency and not necessarily to prioritize the highest potential exploration locations.
We are very proud that ERHC has signed on as a sponsor of Nigeria Oil & Gas 2008. The conference, scheduled from February 18-21, 2008, is the premier event on the Nigerian Oil & Gas calendar and is expected to attract more than 4,000 participants, including more than 600 senior delegates. ERHC representatives attended Nigeria Oil & Gas 2007 and were impressed with the quality of the programs and exhibitors, which contributed to our decision to sign on as a sponsor for next year’s conference. Our sponsorship of Nigeria Oil & Gas 2008 is an example of the Company’s efforts to raise awareness about our ongoing operations and the progress being made toward eventual drilling in the JDZ.
Another element of our effort to showcase ERHC Energy’s commitment to contributing positively to the quality of life in the communities in which we operate, is the implementation of a community outreach program in our host communities. Our first initiative was a visit by ERHC Corporate Secretary Peter Ntephe and the Company’s special counsel in Nigeria, Steve Ahaneku, to the Jabi Orphanage Home, in Abuja, Nigeria. ERHC made a small contribution during the visit to help support the orphanage, which takes in abandoned children. It currently is home to 35 youngsters ranging in age from a few weeks to five years old. You can view photographs from the visit at www.erhc.com.
ERHC’s community outreach program is an important part of an integrated program to be more visibly involved with the communities in which we operate and to illustrate the positive things the Company is doing. The program will continue to build momentum with a planned trip by management representatives to Sao Tome and Principe in the fall.
We have heard from a number of shareholders who are excited about attending ERHC’s annual shareholders meeting. While we do not yet have details finalized on the date and location, we can tell you that the meeting will be held in Houston, Texas. We expect to provide the formal notice and documentation to shareholders in time for those coming from out of town to make travel arrangements.
Finally, we would like to clarify that ERHC has agreed to pay its consortium partners in JDZ Blocks 2, 3 and 4 up to 100 percent of the allocation of cost oil plus up to 50 percent of the allocation of profit oil until all carried costs are recovered, subject to certain conditions. ERHC’s Web site has been updated to reflect this clarification.
ERHC Energy remains focused on building positive momentum and values your ongoing trust and support. The management and board look forward to getting together with you in due course at the shareholders meeting.
Acting Chief Executive Officer