Earlier, at 2:47pm EST, Pioneer shares were down $2.63 at $50.16, while ERHC Energy at $0.47 were up $0.005. 2/47 - Get it? :)
Here's ab excerpt from the latest Dow Jones story at 2:34pm EST (for the rest of it, see the very end of this post):
"It had to do with an inability to negotiate an acceptable agreement with our partner," said a Pioneer spokeswoman.
ERHC President and CEO Walter Brandhuber said Pioneer was "unable to meet the timeline set for executing the various agreements" with the Joint Development Authority (JDA).
Brandhuber, who is in Nigeria, told Reuters ERHC had a new partner lined up for block 2, in which it and Pioneer had a 65 percent stake and were the operators. He said he could not yet identify that partner because the plan had not been submitted officially.
An industry source familiar with the Joint Development Authority said China's Sinopec Corp. (0386.HK: Quote, Profile, Research) (SNP.N: Quote, Profile, Research) was aiming to replace Pioneer but this had not yet been approved.
...
Asked whether he thought Pioneer's withdrawal from the partnership with ERHC could be linked to the allegations Brandhuber said "absolutely not." He called the attorney-general's report "a concocted story ... a political hatchet job against a small Nigerian company."
He said ERHC intended to finalize joint operating agreements this month with its consortium partners for the Nigeria/Sao Tome blocks, and go on to sign production sharing contracts with the authority.
Sinopec (NYSE ADR symbol: SNP), with a $60-billion market cap - nearly 10 times as large as Pioneer's - is the seventh-largest oil company in the world and had revenues of $75 billion last year. Its stock was trading at $59.72 at 1:15pm today, and at $50.10 at 3:01.
Pioneer IR spokesperson Frank Hopkins said the company left its rights behind after being unable to make a deal with ERHC as strong as the full carry, $18-million payment it got from Addax Petroleum in Block 4, he told a poster on one message board. Pioneer (PXD) shares dropped sharply on the NYSE after the news broke.
The rational conclusion one would reach as a result is that Sinopec offered Sir Emeka Offor and ERHC Energy a better deal.
Stay tuned for updates. Here is the Platts story, which will be published momentarily:
Pioneer Natural Resources Company Tuesday said it has notified the Nigeria-Sao Tome and Principe Joint Development Authority that it is withdrawing from participation in blocks 2 and 3 of the Joint Development Zone in offshore Nigeria, Sao Tome and Principe.
The Dallas-based company was awarded a 65% stake in block 2 and 25% stake in block 3 as part of a consortium with Devon Energy and ERHC Energy Inc. Devon later withdrew from the negotiations.
ERCH Energy Monday told Platts that the company was taking on Chinese firm Sinopec as operator block 2 and 3. "ERCH and Sinopec have agreed in principle (on a deal to) operate blocks 2 and 3 in the JDZ," the ERHC official told Platts in Lagos.
"Sinopec, which will be the operator, is joining the ERCH/Addax consortium to replace Pioneer, which pulled out of the group last year."
The official said ERHC picked Sinopec "based on its financial capability, technical knowledge and above all, its knowledge of the local terrain and risk factors here."
The JDZ was established in 2001 and is administered by a bi-national authority based in the Nigerian capital Abuja. The authority is due to meet Tuesday to vote on Sinopec's involvement and set an official date for the signing of the production sharing contracts for blocks, 2, 3, 4 5, and 6.
Here is some useful background on Sinopec:
China Petroleum and Chemical (Petrochemical) Corporation (SINOPEC)
Sinopec is the largest producer and marketer of refined oil products in China and in Asia. This state-owned company is also the largest producer and distributor of petrochemicals in China, and the country’s second-largest oil and gas explorer and producer.
In 1995, Sinopec initiated a cleaner production program in an effort to reduce wastewater discharge, carbon-dioxide emissions and solid waste with good results at the 42 refinery plants in the program. Even with production increasing, there were reductions in wastewater discharge, chemical oxygen demand in the discharged wastewater, and solid waste. China’s State Economy and Trade Commission has named Sinopec as a National Clean Production Showcase Enterprise.
In July 2000, Sinopec began producing and distributing unleaded gas. Since then, it has made further progress in providing cleaner fuels, including diesel fuel.
Sinopec pays great attention to pollution control and clean production and has a program for implementing it according to China's 10th 5-year plan. Selected plants (starting in 2001) will have clean production audits. Clean production demonstrations (among Sinopec subsidiaries) will be promoted during 2002 and 2003.
China Petrochemical Corporation -- http://www.sinopec.com and http://english.sinopec.com/
Sinopec Profile -- http://bjm.p5w.net/wszb/sh/english/company5.html
Update, 2/7/0612:57pm: Pioneer has officially told the Dow Jones newswire that it was unable to conclude a deal with ERHC Energy, and that was the reason it dropped out of the Joint Development Zone blocks where it had acquired operator interest in Block 2 and minority interest in Block 3 with us.
Here is the Dow Jones report:
Pioneer Withdraws From 2 Offshore Blocks
Tuesday February 7, 11:53 am ET
Pioneer Natural Can't Strike Favorable Deal With Partners, Withdraws From Two Offshore Blocks
DALLAS (AP) -- Pioneer Natural Resources Co. on Tuesday said its Africa subsidiary won't drill in two blocks offshore Nigeria and the island country of Sao Tome and Principe, after the company couldn't negotiate a favorable agreement with its partners.
In June, Pioneer Natural -- in a consortium with Devon Energy Corp. and ERHC Energy Inc. -- was offered exploration rights by the Nigeria-Sao Tome and Principe Joint Development Authority on two offshore zones. At the time, Pioneer said it would attempt negotiate a joint-operating agreement.
The withdrawal "really has to do with the inability to negotiate an acceptable joint-operating agreement with our partner," said spokeswoman Susan Spratlen in a telephone interview.
Sao Tome and Principe is located in the Gulf of Guinea off Africa's west coast.
Shares of Pioneer Natural Resources fell $1.80, or 3.4 percent, to $50.99 in midday trading on the New York Stock Exchange. The stock has traded in a 52-week range of $36.67 and $56.35
http://biz.yahoo.com/ap/060207/pioneer_natural_nigeria.html?.v=1
And the action today - dizzying by any standard - has been reflected in the readership of ERHC On The Move. Here are the current statistics from Site Meter, with just a little over half the day elapsed:
VISITS (at 1:45pm)
Total 57,024
Average Per Day 1,160
Average Visit Length 2:46
Last Hour 172
Today 1,439
This Week 8,123
PAGE VIEWS
Total 79,057
Average Per Day 1,572
Average Per Visit 1.4
Last Hour 322
Today 2,457
This Week 11,003
And here's an updated Dow Jones story on Pioneer's exit that only at the end acknowledges our side of the breaking story:
UPDATE 1-Pioneer withdraws from Nigeria/Sao Tome oil zone
Tue Feb 7, 2006 2:34 PM ET
(Recasts, adds details on companies, reasons for withdrawal, comments from Piorneer, ERHC, background, adds byline, adds dateline, previously NEW YORK)
By Ben Berkowitz and Estelle Shirbon
FACT BOX
PXD.N (Pioneer Natural Resources Co)
Last: $50.38
Change: -2.41
Up/Down: -4.57%
UPDATE 1-Pioneer withdraws from Nigeria/Sao Tome oil zone
Pioneer to withdraw from African offshore zone
UPDATE 1-Parker Drilling to sell 8.9 million shares
NEW YORK/ABUJA, Feb 7 (Reuters) - Pioneer Natural Resources Co. (PXD.N: Quote, Profile, Research) is exiting two exploration blocks in Africa's Gulf of Guinea, the U.S. oil independent said on Tuesday, noting that it had failed to agree to terms with its local partner.
Pioneer's exit from the deal with ERHC (ERHE.OB: Quote, Profile, Research) was the latest blow to an oil exploration licensing round conducted last May by the Joint Development Authority of Nigeria and Sao Tome, which has yet to see any contracts signed.
"It had to do with an inability to negotiate an acceptable agreement with our partner," said a Pioneer spokeswoman.
ERHC President and CEO Walter Brandhuber said Pioneer was "unable to meet the timeline set for executing the various agreements" with the Joint Development Authority (JDA).
Brandhuber, who is in Nigeria, told Reuters ERHC had a new partner lined up for block 2, in which it and Pioneer had a 65 percent stake and were the operators. He said he could not yet identify that partner because the plan had not been submitted officially.
An industry source familiar with the Joint Development Authority said China's Sinopec Corp. (0386.HK: Quote, Profile, Research) (SNP.N: Quote, Profile, Research) was aiming to replace Pioneer but this had not yet been approved.
The licensing round was repeatedly delayed before the blocks were finally awarded. The process of negotiating the contracts has also been delayed, with companies pulling out, allegations of bribery and wrangling between the partners bogging it down.
SAO TOME TENSIONS
The Gulf of Guinea, where the joint development zone is located, is a prime exploration hotspot but political tensions in Sao Tome have risen as the tiny twin island nation prepares to enter the world of big oil.
Pioneer is the second company to pull out of a partnership with ERHC in block 2. Devon (DEV.N: Quote, Profile, Research) ducked out last year.
In block 4, ERHC also lost its initial partner when Noble Energy withdrew in October and was replaced by Swiss-based Addax Petroleum.
ERHC, listed in the United States but controlled by private Nigerian firm Chrome, has sparked controversy in Nigeria and Sao Tome since it emerged as the big winner of the licensing round despite having little exploration experience.
It was the only company to gain stakes in all five blocks awarded last May. It was named operator, along with other companies, in two of the blocks.
The authority says ERHC had been granted preferential rights on stakes in the blocks in return for exploration investment in Sao Tome in the 1990s, before the joint development zone was set up. Details of those investments have not been made public.
Late last year, the Sao Tome attorney-general said the awards of the oil blocks may be void because of indications that ERHC made improper payments to Sao Tome officials. The company has denied any wrongdoing.
Asked whether he thought Pioneer's withdrawal from the partnership with ERHC could be linked to the allegations Brandhuber said "absolutely not." He called the attorney-general's report "a concocted story ... a political hatchet job against a small Nigerian company."
He said ERHC intended to finalize joint operating agreements this month with its consortium partners for the Nigeria/Sao Tome blocks, and go on to sign production sharing contracts with the authority.
(Additional reporting by Estelle Shirbon in Abuja)
http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060207...
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