The ride from @0.11, where it was mired for months until January, now holds promise to finally reach the $1 mark that for so long has been its upper limit under even the best and most exciting of circumstances.
At the same time, there's roon for concern that drilling is again faced with uncertainty. A June 9 letter from EWRHC Energy CO Peter Ntephe crystallized the doubts when he announced that the drilling rig contracted for exploring the blocks has been summarily removed from the picture due to unspecified problems that had early kept ir in a Singapore dry dock long past its anticipated departure date.
We don't think the drillship issue is going to be much of a drag on share price, and indeed, Ntephe still maintains in his letter that drilling may come in Block 2 as soon as six weeks from now, and in Block 4 by the end of July. They plan to use the drillship Deepwater Pathfinder, Peter Ntephe said.
We're looking for another $0.30 over the next week if talks confirmed by Addax stay on track.
Ntephe also addresses what apparently were several disgruntled shareholders who feared we'd let our capital dwindle with new acquisitions or devalue our stock by paying for new projects with new issues. He promised to segregate those acquisition costs to insulate our capital status but didn't indicate where the new money would come from. With the real payday still years away and the Sao Tome-controlled EEZ still in our sights, I'm not sure it's a great idea.
Here's his letter:
June 9, 2009
Chief Operating Officer Updates ERHC Energy Shareholders
4:08 PM ET | Market Wire
ERHC Energy Inc. (OTCBB: ERHE), a publicly traded American company with oil and gas assets in the highly prospective Gulf of Guinea off the coast of West Africa, today issued the following update on Company activities from Peter Ntephe, chief operating officer.
To ERHC Shareholders:
I am happy to update the ERHC Energy family on the company's recent progress.
Development of our assets in the Joint Development Zone (JDZ) remains the principal focus of this Company and we continue to concentrate our time, energies and resources on accomplishing that objective.
This spring has been a very busy period in the JDZ filled with blockbuster developments. We have been required by contract and regulation to keep a lot of the detailed information on evolving plans in the JDZ confidential. Only the operator and the Joint Development Authority (JDA) are allowed to make initial announcements on such matters. They decide when the time is right for relevant announcements.
However, we have authorization to update you broadly on what has been happening.
First, drilling is very close -- possibly less than six weeks away -- in JDZ Block 2 in which ERHC holds a 22 percent interest. As previously disclosed, the JDA has approved the Bomu-1 Prospect as the first drilling location in Block 2. Based on the latest schedule, Sinopec might spud the well as early as July.
Addax is the operator of JDZ Block 4 in which ERHC holds a 19.5 percent interest. Addax currently plans to use the Deepwater Pathfinder to drill three wells in Block 4, starting with the Kina-1 Prospect. The second and third drilling locations will be determined based upon the Kina-1 exploration results. Addax expects to take possession of the Deepwater Pathfinder early in the third quarter, possibly as early as July.
Also, in the past, we have highlighted the Aban Abraham deepwater drill ship, so I wanted to update you on that as well. After enduring repeated delays on the ship, Addax has announced that it has cancelled the contract for the ship and it is no longer part of our plans for the JDZ.
There are also substantial and positive developments in JDZ Block 3 in which ERHC holds a 10 percent interest. Current plans are to spud the Lemba Prospect before the end of the third quarter. We expect significant announcements from the operator of the Block shortly.
The pace of development in the three blocks justifies our strategy of aligning with highly capable and experienced technical partners, Addax and Sinopec, to whom a great deal of credit is due. We could not be happier with the outcomes of their hard work and determination to make exploration in the coming months a reality.
We are exploring possibilities for strategic alliances with our technical partners on future initiatives in the JDZ and elsewhere. These discussions are at a very early stage, but we are hopeful that we will be able to extend upon our mutually beneficial partnerships.
A year ago we described our plan to independently grow the Company through acquisitions. The credit crisis considerably constrained our ability to secure funding for the planned acquisitions. The acquisitions were to be funded mainly from sources other than the Company's current cash assets. We have resumed work on the acquisitions aspect of the growth strategy, looking at potential targets in North America and West Africa, but it is important to understand that we continue to proceed cautiously.
Several shareholders have expressed their strong objection to any acquisitions on the grounds that they will devalue the JDZ assets or weaken the Company by depleting current cash reserves. Be assured that we do not intend to jeopardize our financial position. Our approach to investment continues to be prudent rather than cavalier. It is important to ensure at all times that the Company's ability to meet operational commitments and regulatory requirements are not adversely affected.
Growth through acquisitions is well advised. We are creating the subsidiary structures necessary to keep those acquisitions separate from the JDZ assets. While this has always been the intention, we hope that specifying it clearly here will allay the fears of those shareholders who oppose acquisitions because they do not want the JDZ assets to be thereby 'diluted' or 'devalued.'
As drilling gets closer, we are making plans to re-intensify delivery of the ERHC message to the wider investment community. Vice President Corporate Development, David Bovell, is slated to present tomorrow at the Growth Company Investor Show in London. He will give an overview of the Company's assets, the NSAI estimates of our prospective resources and the revised growth strategy. We are tying revamp of market outreach to the commencement of drilling in the JDZ so that the message we deliver has greater potency and the resources committed to the effort are optimized.
These are exciting times for the ERHC Energy family, given the fast-paced developments in the JDZ where our core assets are located. We are closer than we have ever been to finally actualizing those assets after years of hard work and perseverance. I thank you all for your continued interest in the Company and your trust and support.
If you have questions, please submit them to Dan Keeney, our investor relations representative, at email@example.com.
Chief Operating Officer