Sunday, June 07, 2009

Will Addax Take Over Block 3 From Anadarko?

We got word from a longtime ERHE investor that Addax will take over Anadarko's present role as operator in Block 3, a development that could finally bring to an end the bitterness that has enveloped that block since it was awarded to the Oklahoma oil giant in a fierce competition several years ago. Nothing has happened there since, even after Chevron hit what the Wall Street Journal mistakenly called a billion-barrel discovery in nearby Block 1, and then hightailed it out of Dodge when the find was deemed commercially untenable.

This change in operatorship is ostensibly set for mid-July, and it could lift ERHE shares at least a little. While the current uncertainty as to when drilling will begin, apparently created by a Platt's Oil & Gas Newsletter article that said later rather than sooner, as we warned here not long before their piece came out - has hogtied the stock price for now in the $0.45-$0.48 range, the Addax-Anadarko deal could temporarily bump it up to $0.55 or $0.60.

But all of these nickel-and-dime share price improvements (admittedly, it's up 400% since January) are going to be a bad memory when drilling begins. There will be a long steady rise during the 45 days or so it will take to determine if there is an elephant field in Block 4, as folks from Exxon, Chevron and every other oil major believed when they bid and lost to ERHC Energy, et alii, in what most have been the bidding saga of the century.

I'm sure our tipster has talked to other readers, and I'm sure all our readers know better than to believe all such tips are good one, or even well-intended. It certainly sound reasonable to me. Good luck!

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