Weeks Ahead Likely To Produce Stunning Gains

The $7,997 gain the ERHC On The Move portfolio of 123,040 shares enjoyed on Friday may seem like small potatoes by the end of next week, when the main dish will likely be meat and potatoes - strong, doubling gains of the kind seen near the hoped-for awards of oil concessions in the Nigeria-Sao Tome and Principe Joint Development Zone in 2004.

Back then, we sold out a smaller cache for $0.90 - $0.93, just below the $0.96 top. We also picked the $0.43 top and sold 175,000 for $0.41 - a $27,000 gain - in October 2003.

Our portfolio's gain since early November 2004 - when we doubled our holdings from about 60,000 and averaged down to $0.4394 - already tops $28,000 and should top $60,000 by next Friday, when awards will have been announced - or at a minimum, scheduled for the following Monday or Tuesday.

While few investors with long-term experience in holding ERHC Energy (OTC BB symbol: ERHE) would argue with this prediction, there is tremendous diversity of opinion regarding a near-term exit strategy for those who want to jump off after a sharp hike to a new all-time high next week or shortly thereafter.

Even long-term holder Ruby1100, whose disappointment with the selling that followed the great Houston Chronicle article last Sunday led him to momentarily lower his sights below a dollar, has already changed his mind and upped his conservative and steady hopes to somewhere between $1.28 and $1.68, in line with my own targets.

Others, however - including some who were very, very wrong in their predictions in the last round - are far more optimistic, believng in exit prices like $3.68 and - as Rolling Thunder dreamed several times, $4.33.

But what can you say about a stock whose oil assets are likely to be valued at tens of billions of dollars a few days from now but today is selling for only $0.67, has only $21,000 in cash and one full-time employee?

Frankly, there's no way to know how widely the news of ERHE's new assets will spread, or how quickly, and how volatile the price may become - and what sellers may jump in to try to ruin the party if they can.

What can be said is that when investors who first hear of ERHE on the morning of the awards and want to run to do their due diligence quickly will have a full plate of solid information from the 1,500-word front-page article in the Los Angeles Times in May 2003, a 1,500-word article from Dow Jones News Service on Jan. 30, 2005, and a 2,000-word front-page piece in the Houston Chronicle on March 13, 2005 - plus roughly 100 articles in the archives of this blog starting back in January (our daily average readership, just 800 a month ago, now tops 1,000).

That amount of good, solid press will make a deep impression on the kinds of heavy hitters that do good DD before investing hundreds of thousands or millions of dollars in a stock they are just now hearing about. And that's why our predictions of $0.60 and $3.00 gains may be all wet.

When a Canadian firm, Ivanhoe Energy (OTC BB symbol: IVAN) shot out of the gate with far less promise a few years ago, new investors qwuickly pushed it above $10 a share.

And given that our oil assets are very conservatively valued at a $53-a-barrel minimum of more than $28 billion, and that we have already partnered with solid mid-tier players Pioneer Natural Resources (NYSE symbol: PXD) and Noble Energy (NYSE symbol: NBL), there is no apparent reason we can't do the same.

And it also can't hurt that we will apparently be doing business in the same blocks at ExxonMobil, or that our MOU partner Pioneer's partner, Devon Energy (NYSE symbol: DVN), is one of the hottest up-and-coming players in the game.

And then there's the matter of those two 100-percent blocks, both signature-free in the Sao Tome Exclusive Economic Zone, to which we are entitlted when the round offering those opens later this year. Since we don't know now what their assets are - but we do know that everything around them is rich in oil - that may be yet another $5 - $10 surprise for this stock. We had predicted a buy-out of ERHE, or at least an attempted buy-out, and it turns out that our prospective fellow explorer in (probably) Blocks 2 and 4 of the JDZ, ExxonMobil, per its press releases and statements in February, is acquisition-minded and has $25 billion in cash.

So, it may be time to take that old, oil-spotted and beat-up tarp off our brand-newly-named, debt-free and precisely positioned oil-pumping machine and look towards the double digits in the day immediately following awards.

Needless to say, that sounds like a "pumper" talking, and I would plead guitly if it were true. But I have hit you squarely with the bad news just as often as I've hit you with the good, and since Jan. 10, 2005m I have not bought or sold a single share for my own account (I did try to buy 3,000 more shares at $0.565 two weeks ago, unsuccessfully) and am wondering right now if I out to sell at all, beyond what I need for my relatively few immediate expenses.

Not selling is not my normal way of doing business, but as one who bought into stocks like HYPD, FEEC and TMXN and sold out only to see them triple, quadruple and sextuple afterwards, I am slowly learning the difficult lesson that you have to stay in some stocks a while to realize their full potential. A while - at least in the case of those players - doesn't have to be three years, either.

Now, this is not a promise not to sell. Like anyone, I salivate at the prospect of walking aways with a newly-minted $200,000 bill in my wallet, and it may be that my greed indeed may overcome my wisdom. I just wouldn't bet on that anymore - and frankly, I am a gambling man.