Where Are All The Sellers?

Yestersday's blockbuster announcement that Addax has set a firm date to begin drilling in Block 4 of the Nigeria-Sao Tiome Joint Development Zone was expected to start a wave of selling this morning, but just the opposite has happened. Buyers are coming in, although in modest numbers, apparently attracted by the lure of certainty at last on an issue that has long inspired doubt.

While one Investor's Hub poster suggested the share price might fall to $0.12 today, it actually jumped two cents - which can be many thousands of dollars for a large number of ERHE investors, before settiling back near yesterday's close.

The two biggest trades of the day have been an 82,000 sale literally 3 seconds after the open at 9:30:03, and then what appear to be paired buys of 15,000 and 65,000 three minutes later at 9:33:05 and :026, respectively. Four SEC Form T sales also went off in the three minutes off before the open, probably all from the same person, in two buys of 10,000 and two buys of 20,000. The buyers and sellers are likely to be the same person in at least two of these trades.

The net effect has been to raise the Ask to $0.19, slightly down from a high generated by the 65,000 buy at $0.195. What's not to like?

I contemplated selling some of my 75,000 $0.25 shares, but strong gains in Rite-Aid (RAD) leave me in the flowers for now. That stock dropped like a rock over the holidays from a high over $5 to under $2, but it fell way too far for a consumer basics retailer with lots of new stores that's just started selling a do-it-yourself paternity kit! They've bought out the Thrifty chain and closed the losing stores, so they've grabbed more revenue and dumped some downside, giving me better than a 15% gain with quite a bit yet to come.

So, poised as I was to push the panic button, I decided that with a date certain - June 2009 for drilling in Block 4 with a newly refitted Adan Abraham, the drillship, the longer-term investors who like this stock will probably stick around and I will, too.

But there remains the worry over indictments; that bears looking at. However, since my sources tell me ERHE will play no role in he Rep. Jefferson case, and that's the major play for the Justice Dept. insofar as West African oil for now, I'm not that worried. They've got as lot of FBI agents out scouring the subprime market and better minnows to fry, I think.

Certainty also has one other boon: any potential bidders for the company now have something to sell their own investors on. There's lots of oil down there,. folks, and we're sitting on it.