Saturday, March 15, 2008

Mysterious Dealings, Major Gains

ERHC Energy's largely unwanted reputation for mysterious dealings won another notch yesterday as the share price defied the "perfect economic storm" that hit U.S. markets Friday and rose 13% - as much as Lehman Bros. fell - and a huge trade of 357.000 shares hit the tape 14 minutes after the close and then - what else? - mytseriously disappeared.

I had purchased about 6,000 shares over the past 10 days as the price retreated slightly, picking up some as low as $0.205, and unexpectedly found myself in the black at the end of the day on my 81,000 shares.

It was one of those days when every single other one of the 35-odd very diverse stocks I monitor closely declines.

The only development of the day was talk of an announcement of the company's annual shareholder meeting, which has not been noted by a press release or an SEC filing yet. I'll be in Miami that day, unfortunately, but I doubt that significant news will come out of the meeting. It never has in the past.

Scuttlebutt on one board suggested that the 357,000-share trade was a purchase order that was then cancelled. Final volume on my ADVFN tally was about 566,000 shares, with 273,000 purchased, 272,000 sold and 44,000 indeterminate. The numbers, however, do not add up.

I warned recently that only those who are anxious to get cheated out of substantial gains should sell at this time, but that didn't stop a seller seconds before the final bell from selling 50,000 at $0.25; and 16 seconds after the bell, someone painted the tape to a $0.251 close with a 100-share purchase.

What are we to make of these events? Someone might have dared to enter the huge order - it apparently went in after 3 p.m. - in order to create the illusion of greater demand, and then cancelled it before execution could occur (at an average of $0.2381). But that $85,000 play looks pretty risky to me. If so, the player would have been whoever sold 50,000 at the close and cashed in on their daring move.

I had a similar thought when I reported that the $300 million in funding for the Kosmos drilling that will be done by the Aban Abraham might be in trouble due to the problems of Blackstone Capital Partners, with the possibility then arising that we could drill much earlier than expected. I was startled to see someone suddenly opost a note warning, oh, no, that can't happen, they don't have the equipment they need!

A few posters quickly responded that this suggestion was patently ridiculous because both of our Block 4 partners, Addax and Sinopec, have mountains of equipment all over the Gulf of Guinea region. That seemed like such a manufactured response that I felt that whoever is trying to keep the price down so Addax might mount a $1.6 billion buyout (the budget has increased about as much as our share price) is actively manipulating the board to allow the buyer to soak up hundreds of thousands of cheap shares while they are still available.

For my part, I think those shares are precious now more than ever. Investigations or not, indictments or not, ERHC's day is coming and I plan to be there.

No comments: