Addax Completes CDN $409 Million IPO To Fund Block 4 Drilling, Bonus Fee, And CDN$18 Million Payment To ERHC Energy

Addax Petroleum has successfully completed its CDN$409 million (US$350 million) initial public offering on the Toronto Stock Exchange that will fund a CDN$18 million payment to ERHC Energy, the Swiss-based firm's drilling costs in Blocks 3 and 4, and a hefty $90 million signature bonus fee for Block 4 in the Nigeria-Sao Tome and Principe Joint Development Zone, the company said in a press release issued Thursday but not released in the United States.

Ironically, the $19.50 IPO ended just as a new chapter of ERHC Energy was being written in Block 2.
ChevronTexaco, according to UpstreamOnline, has discovered oil in a reservoir that is so large it straddles the boundary line between Block 1, where ChevronTexaco and ExxonMobil are operators, and Block 2, won by a consortium of Pioneer Natural Resources and ERHC. Chevron's OBO-1 well was the first one drilled in the JDZ, and was an estimated 12-15 kilometers from the boundary.

Pioneer has dropped out of Block 2 and 3, leaving ERHC free to pick a partner in Block 2, where it has 65 percent of the equity. It had appeared to settle on Chinese major Sinopec, the seventh-largest oil company in the world, but is now reportedly talking to ChevronTexaco about a possible role in the block.

Under the treaty that governs the Gulf of Guinea waters, an oil find that straddles two blocks automatically entitles operators of both to some of the revenues from any oil there - in this case, even before ERHC Energy has acquired a rig or a technical partner to begin drilling in Block 2 on its own.

That news came in the final hour and drove share prices 19 percent higher by the close Friday, and slightly higher afterwards, for an $0.115 gain to $0.725. The stock had traded as high as $0.77 on Friday before settling down in the final minutes as day traders took profits. Volume was a very strong 8,848,600 shares.

Here is the good news from Addax:

Addax Petroleum Completes C$409.5 Million Initial Public Offering

PRESS RELEASE--CALGARY, Feb. 16-- Addax Petroleum Corporation ("Addax Petroleum") announces today that it has successfully completed an initial public offering of 21,000,000 common shares to the public at a price of C$19.50 per share for gross proceeds of C$409.5 million. The common shares trade on the Toronto Stock Exchange under the symbol "AXC".

Jean Claude Gandur, CEO and Director of Addax Petroleum, commented: "We are delighted with the success of the IPO. There has been a great deal of interest from investors in Addax Petroleum with the offering being favourably received in both North America and Europe. Through the IPO, we have further strengthened our financial position to continue the growth of our business and we look forward to sharing the benefits of expected growth with our investors and employees."

Addax Petroleum has granted to the underwriters an option to purchase up to an additional 2,100,000 common shares at the offering price for a period expiring 30 days following the closing to cover over-allotments, if any, and for market stabilization purposes.

The underwriting syndicate for the offering was led by RBC Capital Markets and Merrill Lynch Canada Inc. as joint bookrunners, was co-led by Scotia Capital Inc., and included CIBC World Markets Inc., TD Securities Inc., National Bank Financial Inc., Canaccord Capital Corporation, FirstEnergy Capital Corp. and Peters & Co. Limited.