Strong gains are near for ERHC Energy (OTC BB symbol: ERHE), now that most of the money needed for higher signature bonus payments to the Nigeria-Sao Tome and Principe Joint Development Authority has been raised and the stock is near its strongest resistance levels at $0.539, Monday's close. Between $0.50 and $0.51, most technical analysts say, the stock is likely to rebound sharply, as much as 20 to 25 percent in a single day of trading.
Here is how the latest chart looks:
http://stockcharts.com/def/servlet/SC.web?c=ERHE,uu
[h,a]waolyyay[df][pb50!b200!f][vc60][iUb14!Ua12,26,9]&pref=G
This anticipated turnaround comes after five days of trading following the company's winning of vast swathes of oil-rich ocean acreage in the Gulf of Guinea has taken the share price down more than 25 cents from recent highs. Most of the selling is attributed to the need to pay some $29 million in higher signature bonus fees agreed upon by ERHC Energy and its Block 2 partners, Devon Energy amd Pioneer Natural Resources, and Block 4 partner, Noble Energy.
Update, 11:40am EDT. 6/7/05: Close to the lunch hour, the price is $0.50, the Ask, and the Bid is $0.497, with volume cresting to 4,752,600 shares. We had been in the green for a short time at $0.54, but fell again. Our guess is the company is continuing to raise the substantial cash it needs to pay bonus fees and start drilling. We econtinue to expect strong gains before the end of the week, perhaps to the $0.79 range. We hesitate to call the botttom of the current decline, but it appears to be in the present $0.50 range.
Update, 9:50am EDT. 6/7/05: The price is $0.48, the Bid $0.47 and the Ask is $0.49 as volume soars to 1,803,600. Much like the impeachment brouhaha, the effort by both parliaments to gain JDA oversight would thwart the purpose of the Abuja Declarations and probably fall victim to inertia.
Update, 9:44am EDT. 6/7/05: The volume has shot up to 1,367,900 as the price moves back to $0.515, the Ask, with the Bid at $0.51.
Update, 9:38am EDT. 6/7/05: The price is $0.495 as ERHE loses $0.034 out of the box on a brisk 786,915 shares. The Bid now moves back $0.495 and the Ask $0.496. Overnight news from Nigeria indicates the parliaments of both Nigeria and Sao Tome want an oversight role in the Joint Development Authority's dealings, including the right to review block awards just made. That's yet another indication ExxonMobil is using its financial and political muscle to undo the round two awards of five blocks to ERHC Energy, its partners, Anadarko and a bevy of Nigerian independent operators.
Update, 7:58am EDT. 6/7/05: The Bid is $0.537 and $0.539 is the Ask as 8am extended hours of trading open.
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2 comments:
When you have no evidence, Mabenn - and I acknowledge that those who said you were a lawyer were wrong -
you proceed from the most likely cause. What you do not do is assume someone else will pay your debts and obligations but that you will have to undertake doing so yourself. I believe if there was good reason to believe the partners would pay our fees - or just those that were increased over their original budget - ERHE or the partners would have said so by now.
I would expect to see one. At these prices, ERHE is an absolute steal. However, the price remains at $0.50 and I think that's a stable bottom, as I posted this morning. A lot of people are unaccustomes to the volatile behavior of this stock, but these declines and rebounds are very familiar to me after two years of them. Many thanks for your note.
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