Monday, November 30, 2009

ERHC Expands Into Nigerian Coastal Waters

A press release last week told of ERHC Energy's creation of a Niogerian office for exploration with partners of the country's potentially righ coastal waters. Here's the release:

ERHC Energy Plans To Expand In Nigerian Oil and Gas Industry
Published: 24-Nov-2009

ERHC Energy, a company with oil and gas assets in the Gulf of Guinea off the coast of West Africa, has revealed that negotiations have commenced on potential investments to expand its presence in Nigeria's oil and gas industry.
ERHC has signed a non-binding memorandum of understanding with Circle and Excel Exploration and Production to negotiate investment in and acquisition of working interests in the Eremor Marginal Field.

The Eremor Field, which is located in shallow water off-shore Nigeria, was discovered in 1978. The discovery well, Eremor-1, encountered three oil and gas zones, the most prominent of which is the D-03 reservoir with 43 feet of net oil sand. It was re-entered for testing in 2005 with the D-03 reservoir testing 2,200 barrels per day of oil with API gravity of 220, a low gas to oil ratio and no water. Excel was awarded a 100% interest and operatorship of Eremor in 2003.

ERHC, through its locally incorporated subsidiary, ERHC Energy Nigeria, has also entered into a non-binding MOU with WellTest Integrated Services to negotiate the acquisition of a controlling equity interest in WellTest. The company provides well testing, production engineering and procurement services to Nigeria's oil and gas industry.

To coordinate the company's business development in the Nigerian and West African oil and gas industry, ERHC has opened its Nigeria liaison office at Oguda Close, Maitama, Abuja. The company's wholly owned subsidiary ERHC Energy Nigeria operates the liaison office.

Of course, the billion-dollar question is whether Chevron's decision to abandon Block 1 was justified by the failure to find oil in the blocks just explored by ERHC Energy and its partner, Sinopec, which has swallowed our former partner Addax Petroleum whole.

Did all of the investors (admittedly, I made $3,000 on my last trade last January and only have 100 shares now) who stuck with ERHC through thick and thin over the past six-to-10 years end up with the short end of a dry stick? What an irony, if so!

I made plenty of money trading ERHC at all kinds of prices but I always believed there was oil in Blocks 2, 3 and 4 and that we would find it.

In the back of my mind I harbored suspicions that the Nigerian government itself had devised and perpetrated a huge fraud on oil giants and oil pygmies and their investors alike. Now that suspicion has moved to the front, yet it's hard to let go of the idea there's lots of oil there for those lucky enough to find it.

But there were tremendous "flame wars" against anyone, including myself, who raised questions about the prospects of a big find or even the completion of the JDZ oil-sharing agreement. The supposed "smart money" in Texas and Louisiana that swore by and at the company are now probably counting the money they made pumping the stock as they sold it. Some no doubt are counting their losses.

Well, c'est la vie.

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