Time To Place Your Bets

Only 45,900 shares have traded in the first 90 minutes of business today - more than 1.3 million traded all day yesterday - and the lull is notable, I think, because it is less inspired by worry than by watchful waiting.

And what are we waiting for?

Rumors attributed to the Nigeria-Sao Tome and Principe Joint Development Authority about a meeting next week of the JDA's ruling Joint Ministerial Council are once again circulating, and this time I find them believable.

I also think that at the meeting there will be a final ratifaction of Production Sharing Contracts for at least four blocks; whether Block 4 PSCs will be ratified is the important question for ERHC Energy investors.

With some 3.5 billion barrels of oil at stake in Block 4, achieving final approval of the contracts and making payment of the signature bonus fees for the block would decisively move our share price upwards, I believe, and I strongly believe - based on all the statements from Nigerian and Sao Tomean officials - that such a result is indeed possible.

It is probably time to place your bets on this stock (OTC BB symbol: ERHE), knowing that if just four blocvks are signed, we will still have a significant victory, and that if five blocks are signed, we will have a triumph on our hands.

Regrettably, given the long-term nature of this play in terms of $1 multiples, I am not expecting it rise much above $0.70 this time around. I will likely sell my gains and re-buy lower, perhaps around $0.45 - $0.46, if it does reach the $0.70 level.

My explanation for my relatively low post-PSCs share price is this: No matter whether we have contracts in hand or not, as OPEC President Edmund Daukoru has said, Sao Tome can apparently still choose to cancel our rights if they are willing to go into court for several years or more to do it. That makes our investment always a risky one that won't be as attractive to

I don't believe they will do that, but I do believe they are conditioning us to expect far more severe problems when we get around to the STP Exclusive Economic Zone blocks. They have complete control over that process, and I have no doubt they will use all their wiles to cancel our free participation in those. Anyone who thinks we can look ahead to clear sailing in the STP EEZ is pulling your lef or pumping.

I hope, in fact, that the trade-off for getting STP to sign off on Block 4 will be our agreement to renegotiate our STP EEZ rights, not give them up. That might be the very best we can hope for under these circumstances.