JDA Spells Out Timelines; They Are Still On Track; Drilling Program Is Stated Differently

In a press release issued this afternoon, the Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Zone has spelled out the terms of their conditional acceptance of the new partnership in the JDZ's promising Block 4, which was briefly roiled last week by the decision of Noble Energy to end its consortium with ERHC and withdraw from the block.

There are two surprises in the release: The JDA revealed that the work program involves four wells in three years, not three wells in one year as widely believed Noble promised and as often stated here. It also moved up the deadline for the signing of PSCs one week; rhe new timeline, covered in a separate JDA press release, calls for the Block 4 PSCs to be signed on November 9, and the Block 2 and 4 PSCs to be signed on Nov. 7 and 8, respectively.

The new timeline, which lost its formatting in transition, is below the JDA press release.

The JDA release went out of its way to reassure stakeholders that all is well in the much-disputed Gulf of Guinea concession. For instance, it noted Addax's technical partnership with Overt Ventures in five percent of the block; the significance of that is that as operator, Addax gets 40 percent of the block, not the 35 percent Noble enjoyed as operator - or perhaps did not enjoy. That will make for a happier partner.

The second significance is that Addax and Overt Ventures already have an agreement in part, which makes the task of blending the interests of ERHC Energy, Conoil, Centurion and Godsonic that much less difficult.

The release states that the new consortium must "jump-start" the talks between the smaller partners and the operator, implicitly suggesting that Addax/ERHC can succeed where Noble/ERHC could not. The "stalled" talks among contractors was a major issue snagging the JDA's resolution of the PSC in Block 4. The release also emphasized the strong interest the agency has in avoiding any further delays, if only to assure timely receipt of some $400 million in signature bonuses.

That reassurance strengthened ERHC Energy's share price in OTC Bulletin Board trading Tuesday afternoon, with a long string of buys approaching 200,000 shares immediately following the announcement.

In another development, ERHC On The Move received a brief note from Mutwadadi on the coming PSC approvals by the JDA's Joint Ministerial Council made up of representatives from Sao Tome and Nigeria. Noting that the JDA had quickly approved the substitution for Noble in the ERHC consortium, he advised that "the pscs can be negotiated by the jda, but, as with block 1, they have to be approved by the jmc. that meeting may be some way off, so there is time, but the lobbying will be hard work...."

Here is the full text of the JDA press release:

PRESS RELEASE

ADDAX PETROLEUM AND ERHC FORM
NEW OPERATING CONSORTIUM FOR JDZ BLOCK FOUR

Following the withdrawal of Noble Energy from the Noble Energy/ERHC operating consortium in the JDZ Block 4, and the request by ERHC to replace Noble Energy with Addax Petroleum in the consortium, the JDA has since reviewed and accepted this request.

However, the JDA’s acceptance is subject to the fulfilment of the following conditions:

i) That Addax will be designated Operator in the consortium.

ii) That the consortium accepts all the commercial and technical terms of the award of 35 per cent equity interest to the Noble/ERHC consortium, which include:

a) the payment of US$90,000,000 (Ninety million US dollars) signature bonus;

b) a minimum work programme commitment of 3 wells during the first exploration phase of 4 years.

iii) That the ERHC-Addax consortium accepts to be committed to the present JDA Production Sharing Contract (PSC) timeline, which the former consortium has been working towards, and also an immediate commitment to jump-start JOA discussions with the other equity holders in Block 4.

It will be recalled that Addax Petroleum has a subsisting Memorandum of Understanding with Overt Ventures as a technical partner for which they were assigned a five per cent equity interest in Block 4 in the 2004 JDZ Licensing Round.

The JDA wishes to assure all stakeholders that the PSC/JOA discussions are very much on course in all the blocks, pursuant to the conclusion of JOA/PSC negotiations within the timeline.


Nigeria-Sao Tome and Principe
Joint Development Authority
31st October, 2005

Here is the new timeline:

TIMELINE FOR ACTIVITIES PURSUANT TO THE
SIGNING OF THE PSCs FOR
BLOCKS 2-6

S/N) ---------- ACTIVITY ------------- DATE


1. Submission of Blocks 2-6 Standard PSCs for JMC Approval. 8th August 2005

2. JMC considers and approves Blocks 2-6 Standard PSCs. 9th – 22nd August 2005

3. PSC Negotiation Meetings between JDA and Operators:

Block 2: 12th – 13th September 2005;
Block 3: 14th – 15th September 2005;
Block 4: 16th & 19th September 2005;
Block 5: 20th September 2005;
Block 6: 21st September 2005.

4. Harmonization of all divergent views arising from negotiation between JDA and
Operators. 22nd September – 6th October 2005.

5. Preparation of DRAFT PSCs for Blocks 2-6. 7th – 11th October 2005.

6. Approval of the DRAFT PSCs by the JDA Board. 12th October 2005.

7. Submission of DRAFT PSCs to the JMC. 14th October 2005.

8. JMC Approval of the DRAFT PSCs. 14th – 21st October 2005.

9. JDA informs Operators of JMC decision. 25th October 2005.

10. Further harmonization of PSCs as may be required. 26th October – 2nd
November 2005.

11. Submission of JOAs to JDA by Operators. 3rd November 2005.

12. Signing of PSCs:

Block 2: 7th November 2005;
Block 3: 8th November 2005;
Block 4: 9th November 2005;
Block 5: 10th November 2005;
Block 6: 11th November 2005.

13. Payment of Signature Bonuses:

Block 2: 7th December 2005;
Block 3: 8th December 2005;
Block 4: 9th December 2005;
Block 5: 12th December 2005;
Block 6 13th December 2005.