ERHC Energy Gets 6-Month Extension on Block 2 Development

ERHC Energy has announced that it's gotten a 6-month extension on its efforts to develop the as-yet unproducing Block 2 offshore Nigeria concession in the Gulf of Guinea's Nigeria and Sao Tome Joint Development Zone, a stock tip letter has reported.

Here's the report:

ERHC reports extension of Exploration Phase I in JDZ Block 2
EBR Staff Writer
Published 14 October 2010

ERHC Energy, a US based oil and gas firm, said that the Joint Development Authority (JDA) has approved a six-month extension of Exploration Phase I in Joint Development Zone (JDZ) Block 2.


The extension will enable the operator of the block, Sinopec, to complete all studies needed for further exploration.

Last month, ERHC supported Sinopec, ERHC's technical partner, in applying to enter into Exploration Phase II pending the completion of the studies.

Instead, agreement was reached with the JDA to further extend Exploration Phase I to enable completion of the studies before commencement of Phase II.

A similar decision to extend Exploration Phase I in JDZ Blocks 3 and 4 was reported in September.

ERHC has 22% interest of JDZ Block 2, 10% interest of JDZ Block 3 and 19.5% interest of JDZ Block 4.

It's hard to say whether another 6 months will make a difference in Block 2, which at one time was highly prospective and sought after by ExxonMobil, Chevron and other suitors of the JDZ joint ministerial council that made the block awards.

The positive element of this news if that ERHC brings the resources of Sinopec to the table in this effort. If the oil is there, as believed, Sinopec has the resources to find it. Let's hope, for investors' sake, that they do!

UPDATE: Investors Warned to 'Stay Away' From ERHC;Placement Agent Says Deal Will Close Oct. 12

A stock tipster today told investors to "stay away" from ERHC Energy shares after the company sold $2 million of its stock at a $0.08 offset to Wednesday's share price, putting "massive" pressure on the stock. The deal is set to close Oct. 12.

Immediately below is the Thursday, Oct. 7, 2010, stock tip. An Oct. 8 update from the brokerage that handled the deal follows:

ERHC ENERGY INC. (OTCBB: ERHE) – Management has announced that they have done an agreement with an institutional investor for the purchase of approximately $2.0 million of common stock at a price of $0.22 per share from ERHE. The arrangement price is less than the last day closing price of $0.29. This news has put massive pressure on the stock and it has declined sharply by 12% to trade at a price level of $0.26. Investor should expect more pressure and further decline in the ERHE price is inevitable. Investor should stay away from ERHE and look for better opportunity in other undervalued stocks available in the sector.

Shares of ERHE closed off 13.45% at $$0.251 on Thursday, down $0.039 on an unremarkable 373,441 shares, according to Scottrade

We got an update on this transaction this Friday morning from the firm that handled the placement. Here's what they had to say:

Rodman & Renshaw handles ERHC Energy USD2m stock placement
Posted on: Fri, 08 Oct 2010 02:44:12 EDT

Symbols: ERHE, ERHEE

Oct 08, 2010 (M2 EQUITYBITES via COMTEX) -- 8 October 2010 - Rodman & Renshaw LLC, part of Rodman & Renshaw Capital Group (NASDAQ: RODM | PowerRating), served as the exclusive placement agent for ERHC Energy Inc's (OTCBB: ERHE | PowerRating) USD2m (EUR1.4m) stock sale, the Houston-based oil and gas firm said on Thursday.

The company has agreed to issue to an institutional investor 9,090,910 common shares at USD0.22 per share. In addition, ERHC Energy will issue warrants, entitling the investor to buy shares of the company, which would result in extra gross proceeds of USD1.9m, if the warrants are fully used. The five-year warrants have an exercise price of USD0.28 per share.

ERHC Energy will use the money from the offering, which is part of an existing shelf registration, for general corporate purposes, including potential acquisitions.

The transaction is expected to close around 12 October.

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