De Menezes Wins Re-Election By A Landslide

President Fradique de Menezes has won re-election as President of Sao Tome and Principe by a landslide, the Portuguese news agency Lusa reports this morning.

The news almost certainly means that his government won't cooperate with a U.S, Justice Dept. designed to learn if ERHC Energy made illegal donations to his campaign in 2002, and coupled with the same stance in Nigeria, could foreclose any possibility of an indictment against the company.

ERHC Energy (ERHE) stock was up $0.02 in morning trading to $0.43 on 456,117 shares of volume at 11:25 a.m. EST.

STP News: President Menezes crumples opposition for second 5-year mandate

Sao Tome, July 31 (Lusa) - President Fradique de Menezes rolled over opposition challenger Patrice Trovoada in Sao Tome and Principe's presidential election, winning a second term with an advantage of more than 20 points, electoral officials announced Monday.

Analysts suggested de Menezes' overwhelming victory in Sunday's peaceful vote could open the door to a period of political stability, following five years of political gridlock and short-lived governments led by the formerly dominant MLSTP party, in opposition since March legislative polls brought de Menezes' allies to power.

Senior electoral official José Carlos Barreiros announced provisional results of the presidential ballot after midnight Sunday, praising the "maturity and civic spirit" demonstrated by the islands' slightly more than 91,000 eligible voters.

There were no immediate reactions from either de Menezes or Trovoada, a former foreign minister and the son of former President Miguel Trovoada, who was backed by nine opposition parties, including the MLSTP.

Provisional results in the fourth competitive STP presidential poll since the islands opened to democracy in 1990 gave de Menezes a fraction more than 60% of the vote, Barreiros said.

Trovoada took nearly 36.6% and political independent businessman Nilo Guimarães less than 1%.

De Menezes, who purportedly made a fortune exporting cacao and importing cement before becoming president in 2001 with 56% of the vote, won in all island districts, but one, and in three of four foreign countries, including Portugal, where STP emigrants were allowed to cast ballots.

Nearly 37% of voters the impoverished archipelago of about 160,000 people, who anxiously await the start of oil operations in their promising Gulf of Guinea waters, abstained, Barreiros said.

The voting Sunday had run peacefully, he added, with only minor incidents and boycotts of the polls in four precincts where voters stayed away to press demands for roads, electricity and water.

Large numbers waited to the last hour of voting to cast ballots, gathering outside polling stations with their voting cards held aloft as a sign they awaited bids from campaign activists to sell their vote to the highest bidder.

During campaigning, both de Menezes and Trovoada centered their appeals on the issue of political stability.

The incumbent, blaming past policy failures on previous MLSTP- led governments, said a renewed five-year mandate would allow him to work in harmony with the newly elected government of Prime Minister Tomé Vera Cruz, whose MDFM-PCD coalition won the March legislative polls but fell short of an outright majority in the 55-seat parliament.

Trovoada, in contrast, blamed past gridlock on his opponent's penchant for "exacerbated presidentialism" and promised to work for consensus between the government, which controls a minority 23 seats in parliament, and his opposition party backers.

The two-island microstate is Africa's smallest and one of its poorest countries, but it straddles the Equator in the middle of the oil- and natural gas-rich Gulf of Guinea, having as neighbors oil- producing majors Nigeria, Angola and Equatorial Guinea.

US-based Chevron announced in May it had struck oil and gas, in still undetermined quantities, in the first exploratory well to be drilled in the Joint Development Zone (JDZ) Sao Tome shares with Abuja.

The islands and Nigeria have awarded six JDZ blocks since early 2005 after two auction rounds.

SAS/VM.

Lusa

Brandhuber Out At ERHC Energy; New CFO Also Sought After Ihekwoaba Resigns; Reveals He Was Not A C.P.A. As He Said; Luca Takes Over

The short-lived but generally successful tenure of Walter Brandhuber at ERHC Energy (OTC BB symbol: ERHE) is over, the company announced in a press release this afternoon.

He is being replaced temporarily by a longtime loyal associate of ERHC Chairman Sir Emeka Offor, engineer Nicolae Luca, 46.

Chief Financial Officer Franklin Ihekwoaba also resigned after he revealed that he was not a CPA as stated on his resume, and that he had declared personal bankruptcy last December and apparently kept it secret from company officials. That may compromise any documents he submitted to the SEC and others on behalf of ERHC Energy.

Brandhuber was hired from a British firm that specializes in oil industry partnerships and mergers, and his experience served the company well as it sought new relationships to replace those with Devon Energy, Pioneer Natural Resources and Noble Energy.
The partnerships were replaced with new and better ones with China's Sinopec and Switzerland-based Addax Patroleum during his time in the job, from which the company realized more than $43 million in revenues.

All of the U.S. firms walked away from joint venture deals with ERHC in Blocks 2, 3 and 4 in advance of a probe by Tulsa University School of Law professor R. Dobie Langenkamp on behalf of George Soros, whose Earth Institute funded the International Senior Lawyer Project that was used by Sao Tome's Attorney General to conduct the two-month investigation.

The probe came up short of evidence but a plea by the Sao Tome AG to the U.S. Securities and Exchange Commission and Justice Dept. - likely cheered on by majors Anadarko, ExxonMobil and Chevron - to prolong it bore some fruit when the former served a subpoena and the latter served a search warrant on the company's Houston headquaerters just as Brandhuber came into the office on the morning of May 4. He was questioned by Washington, D.C.-based U.S. Atty. Mary K. Dimke at the office before she flew home.

ERHC Energy shares traded at historically low volume of 251,900 today, closing at $0.41, off half a cent.

Here is the press release by ERHC's new p.r. rep, Dan Keeney:

ERHC Energy Announces Changes in Leadership

HOUSTON, July 28, 2006 – ERHC Energy Inc. (OTCBB: ERHE) today announced that its board of directors has accepted the resignation of Walter Brandhuber, chief executive officer and member of the Board. The company’s board of directors has initiated an international recruitment search for a chief executive officer.

Effective immediately, the board of directors has appointed Board Member Nicolae Luca, 46, as interim chief executive officer until a successor is named. Mr. Luca has served as a non-executive director of the company since February 2001.

Since April 1998, Mr. Luca has also served as the technical director for Chrome Oil Services Limited. He has a bachelor of science in mechanical engineering.

“We are pleased to have Nicolae Luca lead this transition process as the board conducts its search for a new CEO,” said Sir Emeka Offor, chairman of the board. “Going forward, our business strategy will be to continue to commercialize our rights in the Joint Development Zone.”

Additionally, ERHC Energy announced that Franklin Ihekwoaba, chief financial officer, vice president and a member of the board, has resigned as an officer and director. Mr. Ihekwoaba resigned after recently informing the Audit Committee that he should not have used the designation “C.P.A.” following his name and that he had initiated a personal bankruptcy proceeding in December 2005. The company has initiated an international recruitment search for a chief financial officer.

Not Drilling in ERHC Blocks Until Fall 2007, JDA Chief Says

In public statements that seem to belie much of the information that has circulated on other message boards, Joint Development Authority Chairman Carlos Gomes told an industry audience at a conference in London yesterday that exploration of Blocks 2, 3 and 4 of the Nigeria-Sao Tome and Principe Joint Development Zone will not begin until the Fall of 2007.

Messages on other boards haver repeatedly claimed that at least one well might be sunk in the Gulf of Guinea by ERHC Energy and its partners Addax and Sinopec in the fall of this year.

Here is the latest:

Sao Tome and Nigeria launch new round of oil licensing in 2008 [ 2006-07-12 ]

London, England, 12 July – Sao Tome and Nigeria plan to launch the next round of oil exploration licenses in 2008 for the countries’ joint development area, officials said.

Carlos Gomes, the president of the Nigeria-Sao Tome Authority for Joint Development, cited by international news agencies, said that over the next year new seismic surveys would be carried out to determine the most attractive areas for international oil companies.

“More seismic data will allow us to evaluate the area before planning the next round,” said Gomes on the sidelines of an oil conference in London.

In May, Chevron announced an oil strike, at a depth of 1,720 meters in Bloc 1 of the joint development area, the first in the archipelago.

Exploration of blocs 2, 3 and 4 will begin in the third quarter of next year, Gomes said.

ChevronTexaco has a 51 percent stake in the blocs in partnership with Exxon Mobil, with 40 percent, and Dangote Energy Resource, a Nigerian-Norwegian consortium, with 9 percent.

Bloc 1 cost ChevronTexaco and its partners US$123 million in signing bonuses.

According to Gomes, the fund obtained for the four blocs totaled US$270 millions.

The joint exploration treaty signed between Sao Tome and Principe and Nigeria in February 2001, states that Nigeria receives 60 percent of revenues while 40 percent goes to Sao Tome.

The US Energy Department estimates that oil reserves in the area total 14 billion barrels. (macauhub)

What's Ahead With The Feds?

What will happen down the road with respect to the Federal investigation now underway to determine if ERHC Energy broke the law in making certain payments to West African officials several years ago?

That's a key question, and one that has been much on my mind these days as I try to determine where I might re-enter the stock and what kind of position to seek.

My thinking is that whether innocent or not, and whether there is strong evidence or not, ERHC will get indicted, probably in or by October.

Why so long a wait?

I think that there is a cycle in which the U.S. Atty. asks Nigeria and Sao Tome for evidence, which they will then consider. They will probably respond at a speed that is helpful to their separate agendas.

Sao Tome will share whatever evidence it has to back up the unsupported suspicions in their report, and will probably take a few months to do so. Nigeria will probably respond quickly, and probably by citing the finding of the Joint Ministerial Council on the Sao Tome Attorney General's report, which the JMC deemed an insult to Nigeria.

Then the matter goes to a Federal grand jury, which will usually indict anyone the US Atty. wants to indict (the saying is, the grand jury would indict a ham sandwich if asked).

The real problem is not the indictment or the trial, but the uncertainty extended for political reasons over the longest possible time as all the detailed steps in the cycle are accomplished. I would expect that would require a minimum of six valuable months, and easily as long as a priceless year.

Right now, I am of the opinion that ERHC Energy will not be rushed or pushed into any agreement to sell the company or its rights in the Joint Development Zone.

But there is one exception: I believe ERHC would probably, in the interest of saving time and eliminating uncertainty and to restore and enhance the share price, accept a settlement without admitting guilt that would involve a fine in the $300,000 - $2 million range.

At the instant I suspect a settlement would occur, I will certainly buy if I am able.

If that kind of settlement is offered, I believe it will be accepted after some negotiation, since the uncertainty of cooperation on the side of Nigeria and Sao Tome is a great element in ERHC's favor.

However, if the months ahead end in an indictment, our share price will then be at its nadir regardless of the price of oil, as with it the rights can be compromised under the treaty and all JDZ agreements on the basis of "character" issues once guilt is found.

However, a trial and acquittal will send the share price soaring over several weeks to the appropriate levels, perhaps as much as $3 if oil prices continue to rise or stay above $0.73 - especially if more news on the Block 1 find is released by Chevron, which seems unlikely.

It is my own belief that no jury would find ERHC Energy guilty in the environment that exists and within the parameters of the knowledge we have now.

But what buying and selling in the near term?

Good question.

As I told readers a month or so ago, I think the price will hover around $0.55 with drops as low as $0.38 while things remain unsettled. That call was met at precisely those numbers.

The dramatic rise from $0.40 to $0.55 two weeks ago may re-occur several times, and I think it's generally wise to get in anywhere close to $0.40, and even as high as $0.48 if the cntemplated purchase is a large one, so that you can exit at $0.55 again and recapture your position down in the $0.43- $0.45 range a few days or weeks later.

It appears to me that much of the movement I am predicting can be laid to punters who prime the pump and take advantage of slower, weaker players, which makes it all the more likely to happen unless the SEC end of this investigation steps hard on a couple of the major players.

That would take a lot of steam out of the erratic engine that drives our share price, and probably lend it a consistency at or close to the optimum levels we can expect, after a period in which what looks like delirium tremens resolves itself as naked fear. It might take a month to sort out the sakes, and then three to four months to climb and settle well above $2 for several years to come.

OUR DAY WILL COME

Joe Shea/The American Reporter

Chron Weighs In On ERHC Woes

Coming a little late to the party, Washington-based investigative reporter David Ivanovich of the Houston Chronicle penned a brief report running in Sunday's editions on the investigation of ERHC Energy's ties to political figures in Sao Tome and Principe and Nigeria, almost a month after the excitement started.

Unlike his counterpart at Harpers.org, Ken Silverstein, Ivanovich makes no attempt to tie the investigation to embattled Louisiana Congressman William Jefferson.

You'll probably remember that ERHC On The Move proposed an article to Ivanovich's editors last February which ran on the front page above the fold, declaring that the company had struck dold in the Gulf of Guinea by securing rights to equity in Blocks 2, 3 and 4 of the immensely attracftive Joint Development Zone.

The front-page mention of this blog in the thick Feb. 8 Sunday edition brought thousands of visitors to our page.

The article that ran in February took careful note of the issues concerning ERHC's self-declared $100,000 election contribution to Sao Tome & Principe President Fradique de Menezes in 2002.

Both the Sao Tome and Nigerian governments have rejected the underlying probe that fostered the Justice Dept. and SEC investigation. The entire mess was fostered by rival oil companies seeking to obtain ERHC Energy's lucrative rights in the JDZ, most observers believe.

A high-powered Tulsa Law School professor tied to the majors wrote the attorney general's report, which was paid for by ERHC partner Pionerr Natural Resources insider George Soros, the noted Hungarian billionaire and convicted inside trader.

All this, of course, went unmentioned in Ivanovich's article, as it has in other stories recounting the search warrant served May 4 on the Company's Houston headquarters.

ERHC On The Move has learned in a conversation with the ERHC prosecutor, U.S. Atty. Mary Kit Dimke, that she is based in Washington, and traveled to Houston to be there during the search. She reportedly questioned CEO Walter Brandhuber and the company's chief accounting officer. ERHC Energy attorneys objected, but they appear to have done so after the fact since they arrived as Dimke's interview with Brandhuber was apparently breaking up..

Copies of everything seized by the FBI during the search have been returned following a June 29 hearing in Houton Federal Court.

Here is the Chronicle story:

African drilling under scrutiny
Investigators seize documents of ERHC Energy

By DAVID IVANOVICH
Copyright 2006 Houston Chronicle Washington Bureau

WASHINGTON - Federal investigators are examining Houston-based ERHC Energy and its efforts to drill for oil off West Africa, company officials revealed.

Justice Department officials have seized company documents in connection with a probe into ERHC's activities in an offshore zone jointly controlled by Nigeria and the tiny island nation of São Tomé and Príncipe, the company said in a statement released Thursday.

"We are working to minimize potential distractions and focus on commercializing the company's interests" in the Joint Development Zone, ERHC Chief Executive Officer Walter Brandhuber said in a prepared statement.

A company spokesman declined to offer further details.

Little-known ERHC — whose largest shareholder is Nigerian billionaire Emeka Offor — holds some potentially lucrative rights to working interest acreage in the Joint Development Zone. Earlier this year, an ERHC unit signed production-sharing agreements with operators on three blocks of the zone.

But in December, São Tome's attorney general raised questions about ERHC's licenses and called on the U.S. to investigate.

On May 4, the U.S. Attorney's office in Houston served the company with a search warrant seeking "various records including, among other matters, documents related to correspondence with foreign government officials or entities in São Tome and Nigeria," ERHC said in a filing with the Securities and Exchange Commission.

Five days later, the SEC issued its own subpoena, the company said.

A spokesman for the U.S. Attorney's Office in Houston declined to comment.

ERHC has hired the law firm Akin Gump Strauss Hauer & Feld to assist the company. An attorney for that firm could not be reached for comment.

david.ivanovich@chron.com