Morgan, writing in the subscription-only energy trade magazine, reported:
ExxonMobil must decide whether to retain or farm out its 25% priority rights to two additional blocks and is unlikely to get an extension beyond its mid-month deadline.
The story is at http://www.ragingbull.lycos.com/mboard/boards.cgi?board=ERHC&read=90775.
While it seems unlikely that XOM would surrenders its choices without either a choice or a fight, its behavior - and that of the Joint Development Authority (JDA) administering the zone - has increasingly suggested that, as ERHC On The Move has predicted, that the PSC for Block 1 will never be signed.
That would undoubtedly cast some shadows of doubt over the entire bidding process, bringing with it the prospect of legal wrangling that conceivably could delay the other rights awards, but the regulations governing the bid are certain to prevail in the short term.
Those regulations call for a rebidding of the block if the winning bidder fails to perform, although the JDA could also opt to divide the block - thought to be the richest in the zone - among the two other winners, ChevronTexaco and Energy Equity Reseources - or seek a third or more bidders to complete a bid offer of the original $123 million magnitude.
Using language that investors have learned to fear, Morgan quoted a spokesman as saying said the JDA was
"optimistic that the Joint Ministerial Council will reconvene very soon" while Nigeria's presidential advisor on petroleum and energy affairs Dr. Edmund Daukoru also indicated a meeting was likely before the end of January.
The unavailability of principals and use of vague terms like "soon" and "likely" for future dates has characterized the process thus far, and has always presaged months-long delays in decision-making.
On the plus side, frustrated investors can take some solace that the preferential choices awarded ExxonMobil as a concession for work that preceded the bidding process may not be decisive (if they are not farmed out), or may be announced and be very decisive tomorrow (if they are).
It is precisely the situation some hedge speculators enjoy, where great uncertainty - in this case surrounding the recipients of those rights - will be resolved within a very short time frame. It should produce some volatility in ERHC share price, which closed at $0.46 and is expected to open at that price today.
2 comments:
Don't you realize that you also use vague terms a lot? I use them quite often, too. It's the unwritten future we are dealing with. No one can be definitive. I wouldn't make a big deal about it.
It's my understanding ExxonMobil used their "Rights" to take 40% of Block 1, They did not "BID" on any Block.
Ruby Martin.
"ExxonMobil, which has been slow to sign a Production Sharing Contract (PSC) after its winning bid for Block 1 "
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