The news follows an $0.03 rise in ERHC Energy's share price to $0.54 on the Over The Counter Bulletin Board today on closing volume of 2,213,700 shares. A small block moved a minute after closing at $0.545. ERHC On The Move expects more cautious upward movement in share price tomorrow, to the $0.57 range. Today's movement added $4,321 to our portfolio of 123,040 shares, which have not been traded since November.
In the Daily Independent article the mention of ERHC Energy mistakenly leaves the impression that our rights are in the Exclusive Economic Zone, when in fact they are in six of the JDZ blocks (2, 3, 4, 5, 6 and 9) as well as the EEZ, where the company has second choice of 100 percent of two blocks signature bonus-free, and additional 15 percent options in two other blocks in the EEZ requiring bonus payments, which are a percentage of the winning bid proportional to the rights we are finally awarded there. The EEZ blocks may not be awarded this year.
Here is an excerpt from yesterday's story in the more careful Vanguard which correctly spells out the rights situation:
According to the rules, ExxonMobil has up 30 days from the day it was notified to exercise its preference rights in any blocks of its choice among the five currently on offer. The blocks are 2, 3, 4, 5 and 6.
It was learnt that as soon as ExxonMobil exercised its rights, the JMC would meet to set the final stage for the award of the remaining stakes in the blocks as the case may be. Officials said it was not compulsory for ExxonMobil to exercise the remaining two rights in any of the current five blocks if it wanted another block yet to be put on offer.
ERHC which has a Nigerian business mogul, Sir Emeka Offor, as Chairman, has already fully exercised its preference rights in the six of the blocks in the zone, as provided for in the agreement.
The development of the JDZ recorded a milestone whena Block 1 Production Sharing Contract (PSC) was signed between the oil companies and the JDA on behalf of the governments of Nigeria and Sao Tome and Principe.
Only Block 1 was awarded in the first Licensing Round which was flagged off in April, 2003. there were nine blocks in all originally. Five of the remaining blocks were thus readvertised in 2004 while the remaining three were put on hold pending the generation of further data on them.
With the first PSC in place, it is expected that the entire zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model. Tax regulations in the zone have also been adequately addressed.
The Daily Independentstory also erred in saying that ExxonMobil had preferential rights in three blocks in "the 2004 round," leaving the impression that it has three options in the current 2004 second round; only two of those remain after XOM exercised its first option in Block 1 in the first round, gaining 40 percent of that block.
It was the second important mistake of the day, with the other being a widespread misreading of the last sentence in a story about the upcoming auction of 80 Nigerian blocks, which mentioned the JDZ blocks in passing and said the Nigerian Petroleum Development Corp. had been unable to compete for blocks with multinationals in the "last licensing round."
Many posters on Raging Bull mistakenly took this sentence to mean that ExxonMobil had not partnered with the NPDC in the current licensing round, rather than the "last" - the 2003-2004 round that ended on Oct. 15, 2004. It may still partner with NPDC in this second round.
The five blocks in which ERHC's preferential rights were validated will be awarded after ExxonMobil chooses whether or not to exercise its two 25 percent preferential rights in two of the five second-round blocks on offer, to farm them out to other companies, or to reserve them for exercise in the third-round bidding for Blocks 7. 8 and 9. The company has indicated it would farm the rights out, according to UpstreamOnline, but much has changed since that article was written - including an influx of newly identified bidders.
JDZ officials remain wary of setting a date certain for awards after having missed three successive self-set deadlines, the first of which was Dec. 31.
Here is the article by Bassey Udo, a veteran oil correspondent for the Daily Independent, whose misdirection regarding the preferential rights of ERHC Energy is surprising in light of his earlier, more accurate - or more precisely worded - energy reports:
JDZ bids result out next week
by Bassey Udo
Energy Editor
March 3, 2005
Hurdles in the approval of the result of bids in the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) 2004 licensing round may be removed next week when ExxonMobil exercises its rights in the five oil blocs on offer.
A top management team of the American multi-national giant is scheduled to meet with the Nigeria-Sao Tome Joint Development Authority (JDA) in Abuja to resolve all outstanding issues in pursuit of its preferential rights.
Two weeks ago, following the conclusion of consultations between the Nigeria and Sao Tome authorities on the 2004 licensing round, the JDA notified ExxonMobil to move within 30 days to exercise its rights to pave the way for the final appraisal of the bids and announcement of the result by the Joint Ministerial Council (JMC).
This is contrary to reports that the process was stalled by disagreement by the two countries.
“There is no disagreement whatsoever between any of the parties. The bid is on course. Having notified ExxonMobil to exercise its rights, we have to wait till the expiration of the 30-day deadline. The response might come earlier than expected”, a source close to the JDZ said on Wednesday.
It was learnt that the Abuja meeting will afford all the parties the opportunity to review the 26 bids collated at the end of the exercise last December, to accommodate all interests.
“ExxonMobil may require more information to take a final decision. This might come after a review of the bids. The meeting will enable it (ExxonMobil) compare notes and arrive at a balanced decision”, the source added.
ExxonMobil is already operating in the premier oil Bloc-1 in the zone through its subsidiary, Esso Exploration and Production Nigeria-São Tomé "One" Limited, which partners ChevronTexaco JDZ and Dangote Energy Equity Resources (DEER), a joint venture (JV) between the Dangote Group of Nigeria and Energy Equity Resources AS of Norway.
Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multi-national exploration and production (E&P) companies that operated in the territorial waters in years pre-dating the agreement were assumed to possess pre-emptive rights over the area. The arrangement conferred on them substantial rights of preference on some oil blocs.
While ExxonMobil possesses pre-emptive rights in any three of the blocs on offer in the 2004 round (provided it matched the highest price offered by the bonafide bidders), ERHC has preferential option rights in the Exclusive Economic Zone (EEZ).
[Editor's Note: ERHC has preferential rights in all five of the blocks on offer, and to a sixth block later, all of which it has already exercised, and ExxonMobil has preferential rights of 25 percent each to just two of the five blocks now on offer.]
After the exercise of its rights in the five blocs, the JMC is expected to meet immediately to carry out the final appraisal and announce the bid winners.
3 comments:
"it is expected that the entire [JDZ] zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model."
ERHC has 2-15% blocks in EEZ, not one, as stated in your article.
I have corrected that error in the story. Many thanks for reminding me.
Post a Comment