Uncertainty Grips ERHE Investors As Oil Falls Below $50, Dollar Recovers And Nikkei Drops 3.25%; JDA News Release Awaited

World markets were in turmoil Monday morning as the price of oil briefly slipped to an 8-week low below $50 in Australia, the dollar recovered ground as Asian stock markets fell and Japan's Nikkei index fell 3.25 percent at mid-session to a four-month low.

For Japan, oil is at the center of a Sino-Japanese dispute that has grown to a scale that worries both countries and world observers. The dispute was generated by Japan's efforts to lease concessions in the disputed Spratly Islands but is fueled by its refusal to admit wartime atrocities that still rankle ordinary Chinese.

Three large demonstrations have erupted as a result, and the prospect of a confrontation between the two economic giants of Aisa has worried diplomats and investors while sending the Nikkei lower today.

In this context, the prospects for upward share price movement for ERHC Energy (OTC BB symbol: ERHE) seem dim, although the stock often shrugs off world events and behaves independently of both oil prices and gglobal political concerns.

On the good news front is a newly-drawn pie chart from Thomson Financial posted by balance builder showing that institutional investors have finally become involved in the stock. The chart, available at http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=ERHE&range=0&mgp=20050415&i=3&hdate=20050415&x=7&y=8, shows that 18 percent of the volume last week was attributable to institutions - large pension funds, venture capitalists, mutual funds, insurance companies, etc. - who have been absent from the stock until very recently.

A key factor to watch today will be whether the Nigeria-Sao Tome and Principe Joint Development Authority provides a news release stating a date certain for the meeting of its Joint Ministerial Council, a body composed of political leaders from Sao Tome and Nigeria which can authorize awards of Joint Development Zone concessions in the Gulf of Guinea.

But investors have become accustomed to the fact that even a simple news release - promised last week in emails to oiljunior and orangeandwhite0, posters on the Raging Bull ERHE message board by JDA spokesman Sam Dimka - can take the JDA up to 10 days to produce on its Website.

Early copies of the JDA's last release on March 22 were obtained by some investors, who initially declined to provide it to others and in one instance deleted the then-distant date of the proposed deadline for a decision by ExxonMobil on its preferential rights in the second licensing round, apparently hoping to avoid a negative reaction from investors. The information was quickly restored and provided to all investors with permission from Dimka, however.

Any JDA news release that might come out today would probably help boost the stock. The key element of good news would be a substantive reaffirmation of the JMC's proposed April 18-26 meeting date from which investors could construe a possible date for awards.

An ovverreaction to Nigerian lawmakers' effort to raise the tax on oil from 50 to 85 percent could also depress the price. The tax hike is opposed by Nigerian President Olusegun Obasanjo, who would have to sign off on any hike and could only be overridden by a vote of two-thirds of the Nigerian Senate and House of Representatives, an unlikely scenario.

The bottom line is that investors will be looking for a share price improvement this morning after Friday's 25 percent selloff and subsequent 9 percent recovery that left the stock down 11 cents, or 16 percent. That is because the selloff is believed - without factual basis - to be the result of a 2.6 million-share sale by Cranshire Capital LP, which registered its intention earlier this month with the Securities Exchange Commission.

There were 812 trades in ERHE on Friday, nearly eight times as many as on any day earlier in the week. That included a total of 2,382,929 Sell orders and 1,860,467 Buy orders, with 237,604 whose type could not be identified. Five of the final six after-hours sales of 31,000 shares went off at $0.56 (one went at $0.565), a cent lower than the official closing price of $0.57.

The fact that the sale was a one-time event unrelated to news developments - although in the context of a sharp drop in all U.S. stock markets - encourages many to believe that the price will quickly move towards the higher levels of preceding weeks.

To the extent those levels were inpired by high oil prices, that may not happen, but positive news from the JDA and the firm prospect of an end to the delays that have characterized the awards process will be welcomed by investors.

An editorial Note: We recommend an article on "peak oil" to readers at www.american-reporter.com by Bob Gelfand that outlines the reasons oil prices are likely to rebound.