Exxon ready To Decide On Blocks, Possibly Today

ExxonMobil has considered its options for its two 25 percent preferential rights allotments in Blocks 2 through 6 of the Nigeria-Sao Tome and Principe Joint Development Zone and may disclose its decision to farm them out or keep them as early as today, according to the usually reliable Bassey Udo of Nigeria's Daily Independent.

"It might be today or tomorrow, but just give it some time,” the source told Bassey, a veteran oil jourbnalist.

In a story from Tuesday's editions, Udo also says the oil giant is would lose its rights if it failed to exercise them by a a 30-day deadline that ends March 18.

Here is Udo's story from the Daily Independent:

ExxonMobil set to exercise JDZ rights
By Bassey Udo
Energy Editor

LAGOS -- ExxonMobil appears set to exercise its preferential rights in the five oil blocs put up for bids in the 2004 licensing round of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).

Last week, top officials of the American oil major and those of the Joint Development Authority (JDA) held talks in Abuja, on the terms that will see ExxonMobil moving to exercise its rights within the stipulated 30-day deadline approved by the Joint Ministerial Council (JMC) last month.

A source close to the company at the weekend raised hope on the prospect of ExxonMobil exercising its rights in some of the plum acreages.

“I can tell you that discussions are still going on in Abuja. A decision is yet to be taken on the issue. There are a lot of issues to be resolved.

“But, right away, I can tell you that there is a high probability that the company will exercise its rights in some of the acreages before the expiration of the deadline. It might be today or tomorrow, but just give it some time,” the source said.

ExxonMobil is expected to “farm in” 25 per cent of its pre-emptive rights in any two blocs of its choice, preferably blocs 2 and 4, considered the most prolific of all the five on offer last December.

It was gathered that ExxonMobil may forfeit its rights in the acreage if it does not exercise them before the expiration of the March 18 deadline as there was no provision allowing a farm out to an interested party.

Nigeria’s Environmental Remediation Holding Corporation (ERHC), which has already exercised its rights, holds 15 to 30 percent stakes in all five blocs as well as exclusive rights to two oil blocs in the Exclusive Economic Zone (EEZ).

ERHC also has in the EEZ and another 15 per cent stake in two of the five blocs that will attract signature bonuses provided they match the highest price offered by the bona fide bidders. The JMC might convene next week to announce the final result and awards if ExxonMobil acts before Friday.
Copyright© 2004. All Rights Reserved

To clarify that last paragraph, ERHC Energy (OTC BB symbol: ERHE) has options in all of the five blocks on offer in the current second licensing round, a 15 percent option in Block 9, which has yet to be offered again after it failed to attract interest in the first round, and two 100 percent and two 15 percent options in the Sao Tome and Principe Exclusive Economic Zine. All of those 15 percent options require signature bonuses, as does another 15 percent option in Block 6, which attracted the fewest bidders in the current round.
.

ERHC At A Turning Point Today

Update 12:25am EST 03/14/05: Since ERHE opened at $0.68, my order wasn't filled. Yes, the stock opened 20 percent higher than Friday's $0.565 close at $0.68, reached $0.697, and is now $0.10 higher at $0.665 bid, $0.67 asked on volume of 3,930,958 shares.

The Los Angeles Times, Dow Jones News Service and Houston Chronicle have all weighed in with major front-page articles on ERHC Energy (OTC BB symbol: ERHE), and under the glaring, critical eyes of reporters and editors our investment has been found not only sound, but ripe for appreciation.

"Tiny player strikes gold in huge oil deal" - the Chronicle's front-page, above-the fold headline yesterday - is a fundamental statement of the truth about this stock.

Now, we have to wait for the world to catch up on its reading.

I became an investor in ERHC, which recently changed its symbol to ERHE, on the Monday following the article in the Los Angeles Times in late May of 2003. The stock rose 21 cents over those three days, and I quickly accumulated 175,000 shares. Just before they topped out at .43 a few months later, I sold my stake for a $27,000 profit.

Today (even though I needed the money then), I wish I hadn't. The 123,040 shares I now own are hardly enough to make up the difference I might have earned had I held those first $.215 shares and held on - but "might have" is a perilous illusion. I didn't.

As we weait for the market to open a few hours from now, I think we are on the brink of a great new wave of buying interest in ERHC, occasioned not just by the Houston Chronicle article and the others, but by a new set of circumstances which uniquely apply to ERHC Energy.

Among these considerations are:

• We have no outstanding debt. While the article points out that we only have $21,000 in cash, that's plenty for now - we only have one employee to pay.
  
  
• We have withstood the scrutiny of some of the best business reporters in the world - Ken Silverstein of the Times; Washington Bureau, David Ivanovich of the Chronicle's Washington bureau, and Norval Scott of the Dow Jones News Service's London bureau. As they have noted, our contracts and our rights are intact after innumerable challenges, threats and charges.
  
  
• We are no longer quite so unknown as we were in the late Spring of 2003. Not only have these reporters studied us, but so also have dozens of reporters for news outlets around the globe from the Financial Times to Forbes to Reuters. And while all these media have examined our bona fides, few have ever speculated about what the effect of awards in the Nigeria-Sao Tome and Principe Joint Development Zone may be on our share price.
  
  
• Unlike in 2003, when awards also appeared to be near, they are near now - they could even come this week, or early next.
  
  
• UpstreamOnline reported two weeks ago that we "are in line" for operatorships in three of the JDZ blocks - a fantasy, perhaps, but perhaps one of the very few that become real.
  
  
• The "launch pad" for ERHC is - thanks to the Chronicle - likely to be far higher than if the article had not come out before awards. It is one thing to go from $0.19 to $0.40 over three days when the stock is unknown, but it is quite another to start at $0.564 when the article came out, probably just a week ahead of awards. We can expect very significant gains just from news of our guaranteed rights being awarded.
  
  
• The Houston Chronicle is the premier voice of America's powerful Oil Patch, and when they examined the issue of reserves in the Joint Development Zone, they came up with an authoritative figure more than 250 percent higher than most investors have used to gauge a possible share price. Our combined rights in the JDZ amount to about 14 percent of the 11 billion estimated reserves the Chronicle found, and at a price of $53 per barrel, they can be valued at more than $81 billion. We probably cannot hope to realize more than $10 billion of that, yet even that gives our $0.564 stock of today a future 1:1 value of $14.10.
  

I put in an order this morning on E*Trade for 3,000 more shares at $0.57. If the rush is anything like the one that followed the Los Angeles Times article in May 2003, even that small investment will be worth it. Let's see where $1,700 goes from here.

Houston, We've Got Ignition! Chronicle Does Us Proud

The Houston Chronicle, America's seventh-largest daily newspaper, today published the story by David Ivanovich suggested by ERHC On The Move - and what a story it is! We can only be grateful to this terrific journalist and great newspaper, the premier voice of America's oil patch.

It's a Page 1 story with a great headline that jumps to a full page inside, complete with color charts and maps.

Need a link? Try:
http://www.chron.com/cs/CDA/ssistory.mpl/front/3082404

Otherwise, here's the story, world!

March 13, 2005, 7:32AM

Tiny player strikes gold in huge oil deal
African nation promises local ERHC Energy a share of profits
By DAVID IVANOVICH
Houston Chronicle Washington Bureau

The impoverished West African nation of São Tomé and Príncipe may soon become the world's newest oil exporter, and its leaders have entrusted the country's great hopes to an obscure Houston company.

The winner of this prize: ERHC Energy, which has one full-time employee, $21,000 in cash and no experience drilling offshore.

This little-known company, based in a Westheimer office building, has been promised a share in a potential crude bonanza in the Gulf of Guinea.

São Tomé and neighboring Nigeria have been evaluating bids from oil companies wanting to drill in waters that are believed to hide more than 11 billion barrels of crude.

Five offshore blocks in a joint development zone are up for grabs. Little ERHC has been guaranteed a cut in each one.

"I've never heard of anything like it, anywhere in the world" — at least not since Africa's colonial days, said Jedrzej George Frynas, a lecturer in international management at England's University of Birmingham.

Exxon Mobil Corp. has been granted rights to claim a stake in two of these blocks. The oil industry is watching to see whether the world's largest publicly traded company will jump in with this strange bedfellow.

ERHC's aggressive, penny-stock investors are all but salivating at the prospects. On Web sites such as www.ragingbull.com or Bradenton, Fla., investor Joe Shea's weblog, erhc.blogspot.com, they trade tips and rumors as they await word that the blocks have been awarded.

"I'm a little disappointed that I'm not already a millionaire," Shea said.

The story of how this small company gained such influence is drawn from interviews with government leaders, company officials, diplomatic sources, human rights groups, Africa specialists, and oil and gas analysts.

Eight years ago, ERHC officials waded out to remote São Tomé before others in the oil industry were willing to give the twin-island nation more than a passing glance.

The company has since negotiated a series of deals its competitors can only envy.

Critics say ERHC took advantage of a commercially naive government with no experience in the oil sector.

But despite successive political uproars over its contracts, threats to jail the company's chief executive officer and revelations of a $100,000 payment — not to mention a coup attempt — ERHC has held on to its prize.
______________________________

RESOURCES

TIMELINE
A short history of ERHC Energy:
• 1986: Colorado-based Regional Air Group Corp. is formed. The company later evolves into an environmental cleanup firm known as Environmental Remediation Holding Corp.
• 1996: The company reinvents itself again as an oil and gas producer.
• 1997: ERHC officials explore oil opportunities in São Tomé and Príncipe, an island nation off the West African coast.
• 1998: ERHC helps establish a state-owned oil company in São Tomé and takes a 49 percent stake in the entity. What's now Exxon Mobil provides technical assistance and earns its own special rights.
• 1999: The deal collapses. ERHC CEO Geoffrey Tirman accuses São Tomé's lead negotiator of demanding bribes. The government cries "sedition," and Tirman is forced to flee.
• 2001: Nigeria and São Tomé sign a treaty to create a joint development zone. Tirman sells his stake to wealthy Nigerian businessman Emeka Offor, who negotiates a new deal. ERHC moves its headquarters to Houston.
• 2002: São Tomé's new president, Fradique de Menezes, again demands a new agreement.
• 2003: ERHC successfully negotiates current agreement. De Menezes acknowledges Offor made a $100,000 campaign contribution. A coup attempt in São Tomé fails.
• 2004: ERHC teams up with Pioneer Natural Resources, Devon Energy and Noble Energy to bid on three offshore blocks.
Source: Chronicle research

______________________________

Known for its stamps

Straddling the equator, the nation of São Tomé and Príncipe is a former Portuguese colony of 150,000 people.

For generations, its economy was dominated by cocoa and coffee exports, and stamp collectors knew São Tomé for its Elvis Presley and Marilyn Monroe stamps.

But São Tomé also is in the hydrocarbon-rich Gulf of Guinea. And as oil producers pushed out into ever-deeper waters hunting for crude, São Tomé took on a new luster.

Enter ERHC. Founded in 1986 as Colorado-based Regional Air Group Corp., the firm has morphed through several business plans — airlines, environmental cleanup and now oil and gas producer — and has undergone three major management changes.

At fiscal year's end last September, nearly 10 percent of the company's stock was controlled by Nigeria's First Atlantic Bank.

The bank was issued the stock to settle a lawsuit against the company's chairman, Nigerian billionaire Emeka Offor, and his various business interests, including ERHC. First Atlantic, seeking repayment of a $57 million loan, had accused Offor of fraud.

And no one really knows, yet, whether all the great expectations will prove true.

West Africa accounts for 15 percent of all U.S. oil imports, a figure that is expected to rise in coming years. And the Gulf of Guinea has been prolific.

But many of the oil prospects off São Tomé are in waters more than a mile deep. And in such depths, fields holding 100 million barrels of crude may not justify the expense.

"Everybody talks about it as if there's no exploration risk," noted Michael Rodgers, a senior director at Washington-based PFC Energy and an expert on West African oil. "No one's drilled a well there yet."


Company came calling

In 1997, executives and shareholders for what was then known as Environmental Remediation Holding Corp. approached tiny São Tomé about developing its offshore resources.

When approached by ERHC, "we had no experience, no know-how," Luis Alberto dos Prazeres, executive director of São Tomé's National Petroleum Agency, said in an interview.

Longtime ERHC investor Phil Nugent is more blunt: "They didn't know pipe was hollow."

Those talks led to the creation of a state-owned oil company.

With the promise of a $5 million investment, ERHC was granted a 49 percent ownership stake in the company.

This initial deal included a pledge that ERHC would provide college scholarships for São Tomé's youth, with the idea of creating a cadre of homegrown oil and gas experts.

São Tomé's lead negotiator in those talks, Carlos Gomes, sent his son to study in the United States at ERHC's expense, the Los Angeles Times has reported. Gomes also took a position in the new state oil company, the Times said, receiving a $4,000 monthly salary paid for by ERHC.

Gomes now heads the Nigeria-São Tomé and Príncipe Joint Development Authority, responsible for awarding the offshore blocks in the Joint Development Zone.

Gomes could not be reached for comment, despite repeated attempts.

Mobil soon signed on to conduct a feasibility study and perform seismic work to evaluate the country's offshore potential.

But opposition to the agreement quickly grew. Critics accused the government of handing over the country's oil patrimony for a pittance. The political opposition insisted the government seek more money.

Relations between ERHC and the government quickly soured.

During a visit to São Tomé, then-ERHC Chief Executive Officer Geoffrey Tirman publicly accused Gomes of demanding bribes.

The government, in turn, cried sedition. Tirman "was threatened with a jail term, so he fled to the airport and took off," Nugent said.

Tirman could not be reached for comment.

São Tomé's leaders also accused ERHC of failing to pay the full $5 million. The deal was off.


Bleak prospects

ERHC sought international arbitration, but its prospects still seemed bleak.

Nugent sought out Offor, who enjoyed not only great wealth but tremendous political clout in Nigeria.

Offor, who holds the titles chief and sir, had been close to Nigeria's last military dictator, Gen. Sani Abacha, as well as to Atiku Abubakar, the country's current vice president.

Back in 1999, Nigeria and São Tomé had begun discussions aimed at ending a longstanding border dispute. Offor assumed a leading role in helping push those negotiations.

In February 2001, Nigeria and São Tomé agreed to create the joint development zone. The pact called for Nigeria to receive 60 percent of the oil revenues from the zone while São Tomé was to get 40 percent.

The treaty cleared the way for Offor to purchase Tirman's stake in ERHC for $6 million. The company's headquarters was then relocated, from Little Rock, Ark., to Houston.

Three months later, ERHC had a new, favorable deal with the government.

Under that agreement, ERHC gave up its claim to an ownership stake in the national oil company. But the firm was promised a share of São Tomé's oil profits, as well as a portion of the signature bonuses other companies would have to pay for the right to drill.

Again, the company's critics were livid. The World Bank and the International Monetary Fund voiced displeasure.

The following year, Fradique de Menezes, São Tomé's new president, insisted the contract was unconscionable and unenforceable.

De Menezes insisted the company renegotiate once again.

Finally, in April 2003, ERHC reached its current deal with São Tomé and the Joint Development Authority.

The agreement grants ERHC rights to take working interests in six offshore blocks in the joint development zone, as well as offshore acreage in São Tomé's exclusive territorial waters.

That means the company can claim a stake in all five blocks being offered, plus an additional block in the future.

Other companies bidding on the blocks must offer signature bonuses, upfront payments for the rights to drill.

Several of the bids for blocks topped $100 million. But ERHC's deal allows the company to forgo making such payments on certain blocks.

Gerhard Seibert of the Institute for Security Studies, an Africa research group, has estimated ERHC's bonus-free options will cost São Tomé coffers $75 million — comparable to 150 percent of the country's annual gross domestic product.

Though that agreement assures ERHC of a minimal interest in these blocks, the company had the right to join the bidding process to win an even bigger stake.

Three large U.S. independent oil and gas producers, Dallas' Pioneer Natural Resources, Oklahoma City-based Devon Energy and Houston's Noble Energy have teamed up with ERHC to bid on three separate blocks.

The idea is they would provide the resources and technical expertise ERHC lacks.

But the agreement again sparked protests. Political opponents accused de Menezes of accepting a $100,000 payment from Offor sometime before the deal was reached.

De Menezes eventually acknowledged publicly that the money had been received, but he characterized it as a political contribution.

Offor declined to comment for this report.

Ali Memon, ERHC's current chief executive officer, said the issue "has nothing to do with ERHC."

"ERHC has not made any payments directly or indirectly to any member of the São Toméan government," said Memon, a native of Kenya and a longtime Marathon Oil Co. executive.

Three months after the deal was signed, military leaders launched a coup attempt while de Menezes was visiting Nigeria.

The putsch quickly fizzled, but the event demonstrated the precariousness of the São Tomé regime.

Throughout these years of turmoil, Exxon Mobil has reportedly steered clear of ERHC.

"Exxon Mobil wished they would go away," Nugent said.

Exxon spokesman LenD'Eramo declined to comment on "speculation or rumor" about the company's attitudes toward ERHC.

The long-running controversy over ERHC's activities in São Tomé helped prod international experts to help the tiny country protect its natural resources.

A group of international law experts at Columbia University crafted an oil-management law to help ensure any new oil revenues don't end up in the pockets of corrupt officials, as has often been the case in West Africa.

Using this blueprint, São Tomé passed a law hailed as a model for resource-rich, Third World countries. "We are in a position to do better than other countries did," the National Petroleum Agency's dos Prazeres said.

But ERHC's contract remained intact.

"São Tomé would be better off if it could get rid of (ERHC's) claims somehow, but I doubt there is any legal standing to do so," said Martin Sandbu, a research fellow at Columbia's Earth Institute.

Dos Prazeres thinks his country needs to begin a search for oil.

"This is the agreement we have," dos Prazeres said. "That's the way it is."

david.ivanovich@chron.com

ExxonMobil May Farm In, Dimka Says

In the latest missive from markvo10 (aka orangeandwhite0), Nigeria-DRSTP Joint Development Authority spokesman Sam Dimka suggests that ExxonMobil may have to "farm in" to exercise its rights in the five blocks on offer in the second JDZ licensing round.

That news comes after months of speculation and printed reports that the multinational giant will "farm out" its rights to others, probably in Blocks 2 and 4.

The latest information also tends to confirm a report by Barry Morgan, a veteran oil journalist, in Thursday's Upstream Online.
ERHC On The Move has not been updated since Wednesday due to illness that coincided with server problems at Blogger.com.

Below are both posts, first from markvo10 at 9:59am EST Friday on Raging Bull, and then from Morgan at 7:15pm EST yesterday evening on Upstream:

********UPDATE********

Spoke with Sam Dimka. He said that if XOM participates at all it will be on a FARM IN basis. He said it is HIGHLY unlikely that they would farm out. He expects XOM to exercise anytime between now and next Friday. He said again that ALL 5 BLOCKS WILL BE AWARDED. Once again he reiterated the XOM deadline of March 18th, saying this was a "hard and fast deadline" and that if XOM does not exercise by the 18th the JDA will assume that XOM is not interested and the JMC will immediately convene to announce awards.

Also, I asked him if the Nigerian EEZ starting it's road show today has any implications on the JDZ. He said it does and that the Nigerian Govt. wants JDZ done so they can focus on EEZ. He said he attended the EEZ press conference this AM.

An here's the latest from Upstream:

Abuja turns screws on JDZ blocks

00:01 GMT

NIGERIA is increasing the pressure on ExxonMobil to decide what it wants out of the Second Licensing Round currently under way for the Joint Development Zone (JDZ)in the Gulf of Guinea, writes Barry Morgan.

Meetings were set to take place on 9 and 10 March with the Joint Development Authority (JDA)in Abuja, which is jointly run with neighbouring Sao Tome.

JDA officials backed by Nigerian President Olusegun Obasanjo want ExxonMobil to make up its mind on whether it wants to exercise its option to take 25% of two blocks of its choice, notably 2 & 4, or make way for other suitors.

Frustrations are building in Abuja, which wants to get on with Nigeria's own licensing round for the Exclusive Economic Zone and interior basins.

The supermajor will be told the round has closed and that it cannot operate either block with a 25% option.

ExxonMobil did not bid in the first or second rounds but was able to exercise its 40% option for Block 1, which was signed earlier this year.

The JDA is unlikely now even to allow ExxonMobil to farm out its options since that would prompt further delays, something the company is loath to do for fear of blotting its copybook in the EEZ round.

The Nigerian government is also keen to make space for serious independents in both the EEZ and the JDZ.

It is believed that under guidelines yet to be released, indigenous indies will be allowed 20% of new blocks, double the level allowed by recent domestic legislation confining indies to 10% or less of deep-water blocks.
barry.morgan@upstreamonline.com

That news has made poster Ruby 1100 positively ebullient about ERHE's prospects. "Just imagine the PR," he says, if XOM and ERHE - which is guaranteed rights in all five blocks if indeed all are awarded - are partnered in two of them.

ERHC Energy (OTC BB Symbol: ERHE) has been especially volatile on relatively low volume today, ranging between $0.59 and $0.556 in the past hour on volume of 759,612 shares.

JDA Meetings With XOM End; Choices, Awards Are Next

Raging bull poster Markvo10 has spoken again with Nigeria-Sao Tome and Principe Joint Development Authority spokesperson Sam Dimka, and while it no longer looks like awards will come before the end of next week, they do appear to be forthcoming soon after, and possibly as soon as March 21.

Here is his latest post to RB:

*******Update*******

Just spoke with Sam Dimka at the JDA. I asked him how the meetings with XOM went. He said they went "very very well." He said XOM has left and that they must "report back to their principles." Sam said that they will hear from XOM anytime between now and next Friday. Sam said he expects XOM to exercise their options and that "they would not have sent people from Houston if they were not interested." Sam reiterated that if XOM does not exercise by the March 18th deadline (next Friday) that the JDA will assume that XOM is not interested and the JMC will convene to announce awards. He said next week is the time everything gets done since next Friday is the deadline. Sam said we will know for certain by next week. He said that the JMC is very eager to meet and get this done and he must have said this at least 3 times how eager they all were to get this done.

Also, I sent him a copy of that Indian article that was posted yesterday. He said that no awards had been announced and that "some people are just trying to play smart." He ended the conversation by saying once again that this would all be done very soon and that everyone was eager to see this finished.

It's not precisely clear what Sam Dimka meant by "playing smart" in the context of the online Business-Standard article saying ONGC Videsh / Equator Exploration "has emerged a winner" in their bids for a block of the JDZ, but my take is that Dimka used the phrase as in the American version, "He was too smart for his own good."

Whatever the purpose, the article has not improved Equator's share price on London's Alternative Investment Market (AI), where the price remained .85 pence, the same as yesterday's close and well below the intitial IPO pricing of 1 British Pound in December.

Indian Website Says ONGC/EEL Has Won A JDZ Block, But Doubts Persist

A bylined story in the online Business Standard of India says an Indian firm partnered with EEZ preferential rights holder Equator Exploration (EEL) has won a block in the bidding for five oil concessions in the Nigeria-Sao Tome and Principe Joint Development Zone, but the writing in the article was so imprecise it is difficult to tell if it is true.

If so, EEL shareholders were not buying on the news; the company's stock fell half a cent to 84 pence on volume of 91,000 shares on London's AIM exchange, well below the IPO in December of 1 British Pound.

Here is the story:

ONGC bags oil block in Nigeria
Jyoti Mukul
March 10, 2005


NEW DELHI -- Oil and Natural Gas Corporation (ONGC) has emerged a winner in the race for an oil block in Nigeria’s joint development zone. This will be ONGC Videsh Ltd’s (OVL) debut in Nigeria, the world's eighth largest oil producer and a major oil supplier to western Europe and the United States.

OVL, the overseas arm of ONGC, had in December entered into an agreement with Equator, the London Stock Exchange listed oil and gas exploration company, to jointly bid for oil blocks in West Africa.

ONGC and Equator had placed bids for blocks 2 and 4, which are in the joint development zone. The zone is estimated to hold reserves of 11 billion barrels and when fully operational could yield up to 3 million barrels a day.

Nigeria’s Environmental Remediation Holding Corporation (ERHC) holding 15-30 per cent in each of the Blocks 2, 3, 4, 5, 6 and 9, sought potential partners last year.

What the pairing may have won is not the only mystery. There is no source offered for the information, and it came out of New Delhi, far from the action in Africa.

The Indian half of the pair is a quasi-official arm of the coutry's largest corporation, Reliance Industries, while the Equator half is a creation of gold magnate Sam Jonah of Ghana and Nigerian oil executive Wade Cherwayko, a friend of ERHC Energy's Sir Omeka Offor.

The EEL bid is based on funds raised in its IPO and the fact that it has a substantial stake in Sao Tome's Exclusive Economic Zone, where it gets first dibs on two full blocks of its choice when bidding opens. ERHC Energy's rights then kick in and entitle it to two full signature bonus-free blocks and 15 percent of two fee-paid blocks.

Links between two paid bashers, Mongo and Monkeytrots, who have dogged the Raging Bull ERHE message board for months, and South Africa's onetime oil minister, Pik Botha, have led to suspicions here that their bashing is tied to Jonah's bid.

There have been at least two incidents in recent weeks of newspaper articles about the awards having been bolloxed up, and this may have been a third.

Yet the Indians and the Jonah group may well have won an operatorship, or a smaller part of a block, or simply may have claimed to have won a block in hopes of pumping Reliance, EEL or ONGC shares on the British or Bombay markets tomorrow in advance of a more disappointing result.

It is believed that all winners have already been notified by the JDZ, which is expected to award blocks within a few days and no later than March 18.

Here is the incomplete list provided by the JDA of bidders for Blocks 2 through 6 in Round 2:


JOINT DEVELOPMENT ZONE ROUND 2 BIDS*

Block 2 (7 bids)

Vintage Oil & Gas ($135 million)
Continental Oil & Gas ($120 million)
A & Hatman ($80 million)
Foby Engineering ($73 million)
Momoh Petroleum ($65 million)
Equator Exploration / ONGC Videsh ($65 million)
Devon Energy / Pioneer Natural Resources / ERHC Energy ($50 million)


Block 3 (6 bids)

Energy Equity Resources ($41 million)
Devon Energy / Pioneer Natural Resources / ERHC Energy ($40 million)
Anardako Petroleum Corporation ($40 million)
Sahara Energy Fields ($37.5 million)
Ophir Energy ($36 million)
Equinox Oil & Gas ($35 million)


Block 4 (10 bids)

ECL International of Nigeria ($175 million)
Conoil Producing ($150 million)
Anardako Petroleum Corporation ($90 million)
Hercules Oil / Centurion Energy / Stratar Energy Consortium ($81 million)
Atlas Petroleum ($70 million)
Energy Equity Resources ($67 million)
Overt Ventures and Equator Exploration Limited ($60 million)
ONGC Videsh and Godsonic Oil ($60 million)
Noble Energy / ERHC Energy ($57.285 million)


Block 5 (2 bids)

ICC-OEOC Consortium ($37 million)
Sahara Energy Fields ($35 million)


Block 6 (1 bid)

Filtim Huzod Oil & Gas ($45 million)



*Incomplete list. Source: Nigeria-DRSTP Joint Development Authority

ExxonMobil Meeting Now With JDA On Block Choices

ExxonMobil executives are meeting now in Abuja to discuss and perhaps put forward its two 25-percent preferential choices in any of five blocks offered in the Nigeria-Sao Tome Joint Development Zone, a spokesman for the Joint Development Authority told Raging Bull ERHE message board poster orangeandwhite0 Tuesday.

The message:

By: orangeandwhite0
09 Mar 2005, 09:29 AM EST Msg. 8481 of 8488

****UPDATE*****
Just spoke with Sam Dimka. JDA is in Meetings with XOM as we speak. All he would say is that things are going well. He again reiterated that March 18th is a "hard deadline" and that XOM could exercise their options anytime between now and then. He sounded very positive. Almost giddy. ...

With another meeting scheduled for Thursday at 10am Abuja time, the choices will be the trigger for a meeting of the Joint Ministerial Council and the announcement of awards, according to JDA spokesman Sam Dimka.

ExxonMobil was given 30 days to declare its choices in a letter from the JDA in late February, and that period ends on or about March 18. There is considerably less doubt this time around that further delays will occur, and the possibility remains open that the announcements could come as early as Friday or over the weekend.

Signs that the meetings have also encouraged investors came in Tuesday's trading, where the share price of ERHC Energy (OTC BB symbol: ERHE) moved up $0.02, a gain of $2,460 for the ERHC On The Move portfolio of 123,040 shares.

Volume, however, while well ahead of the hiostorice 495,000 daily average, was well off last week's pace, failing to top 1.5 million. The stock closed at its high of the day, $0.615. Most observers expect a gain of at least several more cents, perhaps to $0.65, tomorrow.

ExxonMobil's relationship with the JDZ was established in the 1990's, when it helped underwrite the creation of the JDZ by shooting imagery of its oil deposits in the Gulf of Guinea, and entitled the company to certain preferential rights that it has been unable to exercise until now.

ERHC Energy, the former Environmental Remediation Holding Corp., had similar rights it has already exercised in Blocks 2, 3, 4, 5 and 9, and in the Sao Tome Exclusive Economic Zone, where it can choose 100 percent of two blocks without paying a signature bonus and 15 percent of two more blocks by paying a bonus fee of 15 percent of the winning bid for those blocks. That licensing round may be delayed for up to three years, news reports have said.

The Joint Development Zone is believed to hold between 4 billion and 14 billion barrels of crude oil. As a percentage of the whole JDZ (exclusive of the EEZ), ERHE has about a 14 percent interest in the oil, or rights to about 560 million barrels at the 4 billion-barrel estimate. At Tuesday's closing crude oil price of $54.59 per barrel, that stake would be valued at US$30.5 billion.

At Last! JDZ Block Awards This Week, Guardian Says ... But.

Nigeria's most professional newspaper, the respected Guardian, says in Tuesday morning's editions that the long-delayed award of oli concessions in the Gulf of Guinea by the Nigeria-Sao Tome and Principe Joint Developmnent Zone may come this week.

The news indicates an end at last to months of waiting for ERHC Energy's preferential rights - specifically mentioned in the article - to be awarded. The company has exercised its rights in all five of the blocks on offer in the current licensing round.

However, the source for the Guardian story apparently misrepresented himself - or was muisunderstood - by the Nigerian reporter as being an ERHC Energy spokesperson.

In the original version available at the Daily Independent, the source said the 30-day period ends "this week," but it ends March 18. The source also is quoted as saying "we gave" ExxonMobil 30 days to exercise its rights, while that period was granted by the JDA.

The source also leaves the impression that ERHC Energy would presume ExxonMobil has no interest in the blocks if it does not exercise its rights by March 18, when in fact that is a decision for the JDA to make.

Finally, ERHC Energy is represented as an American multinational oil firm when it is, in fact, a Nigerian-owned firm with no other assets than its rights in the Nigeria-Sao Tome and Principe Joint Development Zone and the Sao Tome Exclusive Economic Zone.

In other words, there's a fly in the soup, and it may cost extra.

It is the second time that someone has approached editors and bolloxed a story on ERHC in recent days. Last week, an ERHC On The Move reader named Arthur Krauser, Ph.D., of Miami, sent a note to Houston Chronicle editors declaring that I had said the paper was running a 2,000-word story on Sunday; that sentence forced editors to look at my article - which suggested the confluence of two articles would raise the share price 27 cents - and they then killed the piece.

While the sentence was accurate, it was ill-thought. On the Internet, I found other letters from the same person asking for investigation of stock scandals and the Depositary Clearing Trust. The author, a psychologist, is associated by Google with a strange Website called corrupted-justice.com.

But today's news, if true and if JDA officials are not enraged by it, could easily mean our share price breaks $1 for the first time since the in recent years. Last year's high, on similar news that led to more delays, was $0.96.

A $1 share price would mean a gain of more than $45,424 for the ERHC On The Move portfolio of 123,040 shares, which has gained more than $19,000 since November 15.

The stock closed Monday down $0.035 at $0.595 on volume of 1,561.702 shares, a substantial dip from last week's trading level.

Here is the Guardian story:

Joint development authority may announce winners of oil blocs this week
by Sulaimon Salau

ABUJA -- Strong indications have emerged that the Nigeria-Sao Tome and Principe Joint Development Authority (JDA) may announce the winners of five oil blocks put on offer in the Joint Development Zone (JDZ) before the end of this week.

Other bidders from the zone had been expecting ExxonMobil to exercise its rights in the five oil blocks put on offer since November 2004.

After exercising its rights in the blocks, the Joint Ministerial Council (JMC) is expected to meet immediately to carry out the final appraisal and announce the result of the bids.

However, the JDZ authorities had weeks ago notified ExxonMobil to make moves within 30 days to exercise its rights to pave the way for the final appraisal of the bids and announcement of the result by the JMC.

According to a source from ERCH, a Nigerian-owned multinational oil firm, "We are waiting for ExxonMobil to exercise their pre-emptive right on any two blocks of their choice and theJDA has given them 30 days to do that," adding that "the 30-day period will expire by the end of next week."

He continued: "If by the end of the period, ExxonMobil does not exercise those options, the JDA will assume they are not interested," he said.

The Joint Ministerial Council, according to him, would meet afterward and decide the next line of action.

Reports showed that a top management team of the American oil giant is scheduled to meet with the Nigerian Sao-Tome Joint Development Authority in Abuja to resolve the outstanding issues in pursuit of its preferential rights.

In this view, the sources said, "ExxonMobil may require more information to take a final decision. This might come after a review of the bids. The meeting will enable it compare note and arrived at a balanced decision, " he said.

ExxonMobil possesses pre emptive rights in any two of the blcoks on offer, while ERHC has preferential option rights which, according to the source, have already been exercised and validated by the JDA.

Editor's Note Certain errors of fact and grammatical and spelling errors have been corrected in this exclusive version of the Guardian story. The source for the story was likely an investor, not an ERHC Energy employee.

$60 Oil 'Soon,' Former Energy Secretary Richardson Says

New Mexico Gov. Bill Richardson - the former Clinton Administaration Secretary of Energy said "I think [we'll see] $60 oil soon" in an interview tonight with former White House communications director-turned-newsman George Stephanopoulos. If true, the statement could soon have a powerful impact on ERHC Energy's (OTC BB symbol: ERHE) share price.

ERHC On The Move has more than 123,000 ERHE shares in its portfolio valued at $73,208, and would benefit substantially if such a price rise occurs.

Richardson, a Democrat who was rumored to be a strong contender for the vice-presidential nod from Democratic presidential candidate Sen. John F. Kerry last year, blamed a White House filled with "oil people" - both President George W. Bush and Vice President Dick Cheney have long histories with the oil industry - for a failure to effectively lobby OPEC oil-producing nations to raise quotas and bring prices down.

Particularly worrisome, Richardson said, is the fact that 30 percenrt of America's oil comes from Saudi oilfields, and that they are vulnerable to terrorism that could disrupt supply.

"One attack on Saudi fields and the price goes right to $80," said Stephanopoulos.

"I think $60 soon," Richardson responded.

The exchange on the ABC late-night television news magazine "Nightline" focused on ways to understand and perhaps alter America's dependence on foreign oil. The comments came as top Chevron executives in Nigeria are said to face imminent arrest on tax evasion charges and the closure of the company's Lagos headquarters after a Federal High Court decision upheld a ruling by a state attorney general seekimng the arrests and closure, according to the Nigerian Daily Independent newspaper.

That is only one small facet of an all-out political assault on multinational oil companies doing business in Nigeria. Some others are:

• Demands that the taxes on oil produced be raised to 85 percent; that the companies build huge multibillion-dollar LNG plants; that they pay billions of dollars in fines for environmental damage; that they refine much of their production in Nigeria; that they hire more Nigerian workers; and that they give up leases to oilfields not yet exploited.
  
  
• There have also been a number of violent incursions by armed ethnic guerillas who have overrun and badly damaged oil processing facilities and killed workers, including Americans, and until recently a widespread custom of theft from oil pipelines amounting to more than 100,000 barrels of crde oil per day.

Porter Goss, the new head of the Central Intelligence Agency, recently told a U.S. Senate committee that Nigeria is in danger of becoming unstable, and multinational oil companies undoubtedly face the risk of losing concessions, refineries, flow stations, pipelines and harbor faciltiies in the event of a change of government or a breakup of the nation.

That extreme measure is favored by some influential figures in both the north and south of the country, which has traditionally accused the wealthier north of exploiting the southern Niger Delta region's oil wealth, and is part of the reason for an historic dialogue on Nigeria's future among all sides. The National Dialogue was organized by President Obasanjo and it is now taking place in Abuja. Obasanjo has been a global leader in the effort to restrain price increases and raise OPEC quotas.

It is difficult to assess the value of ERHC Energy's Nigeria-Sao Tome Joint Development Zone preferential rights in the context of $60 oil and Nigerian instability, because the awards of concessions there have been repeatedly delayed and when they come, it is unknown whether they will encompass just the 560 million barrels of oil conservatively estimated to be in the five blocks where the company has rights, or even more, if the JDA grants ERHC and its partners one or more 51 percent allocations of the oil-rich blocks in the Gulf of Guinea.

ERHC Energy also has rights to two 100 percent bonus-free block allocations in the Sao Tome Exclusive Economic Zone and two more 15 percent allocations in other blocks for which signature bonuses must be paid.

The possibility that Nigeria may undergo dramatic changes would not alter a 2002 treaty between Nigeria and Sao Tome and Principe that ensures ERHC's rights - as well as those of ExxonMobil, which has no mainland exposure in Nigeria - nor its entitlements from Sao Tome and Principe, an island nation of 150,000 people.

Under those circumstances, and given U.S. government claims that about a quarter of America's oil needs will be met by the Gulf of Guinea oil in coming years, a valuation of shares of ERHE becomes almost prohibitively optimistic.

Moreover, the fact that slightly more than half of ERHC Energy's stock is held by two Nigerian companies, Chrome Energy and First Atlantic Bank Plc., makes the company substantially less vulnerable to nationalistic claims against clearly foreign-owned firms.

The positioning of ERHC Energy relatively to its multinational rivals may make the company's shares attractive to larger firms who want a greater presence in the region with stronger claims to Nigerian participation.

Top Chevron Nigeria Execs Face Arrest In Tax Evasion, Paper Says

Nigeria's Daily Independent today said that top executives of Chevron Nigeria Ltd. face imminent arrest and the shutdown of their Lagos headquarters over alleged tax evasion of more than Na. 4.1 billion, or US$380 million.

The report comes as the New York Times today praised Nigeria for its efforts to combat corruption that wastes 65 percent of its national budget and as the government of President Olusegun Obasanjo cracks down on tax evaders, mail fraid, customs cheats and the theft of more than 11,000 barrels daily of its major natural resource, crude oil.

Disclosure: A family trust holds substantial quantities of Chevron stock.

Lagos may seal Chevron headquarters over alleged N4.2 billion tax evasion

The Corporate Headquarters of the American multi-national oil company, Chevron Nigeria Limited in Lagos may be shut and its senior officials arrested by the Lagos State Government over tax liability amounting to N4.2 billion.

The coast appears clear for the action, following the striking out of a suit instituted by the management of Chevron at a Federal High Court against the Attorney-General of Lagos State, Lagos State Board of Internal Revenue and the Economic and Financial Crimes Commission (EFCC), claiming that its fundamental rights to acquire and own property and to fair hearing were being infringed upon.

The state government had served demand notice of N4.2 billion on Chevron as tax deductible from its Employee Home Ownership Scheme introduced in 1996.

The state sought the assistance of the EFCC when it became apparent that Chevron was unwilling to pay the said amount.

However, on September 30, 2004, Chevron went to the Federal High Court, Lagos, seeking, among others, the enforcement of the fundamental right to fair hearing and the enforcement of its fundamental right to acquire and own immovable property anywhere in Nigeria as guaranteed by the 1999 Constitution.

Among the reliefs sought by the company were that the payments made under the scheme were loan, which matured with a gratuity supplement as a retirement benefit of the employees as such, no tax deduction was liable to be made under the personal income Act 1993.

The company also said that Lagos did not make use of the machinery set up for redress by an aggrieved tax payer by the Personal Income Tax Act 1993, and instead sought the intervention of EFFC.

“The provisions of the Personal Income Tax Act 1993 are outside the purview of the Economic and Financial Crimes Commission Act 2004,” it said.

It also called the attention of the court to the fact that its premises and head office are in jeopardy and senior staff under threat of arrest.

But Lagos State Government, through its counsel, Ade Ipaye, argued that payment under the scheme is a grant rather than a loan and therefore is subject to tax under the Personal Income Tax Act 1993.

It accused the company of concealment of facts, non-disclosure of information and tax evasion. The state also claimed that Chevron’s action could not be brought or maintained under the Fundamental Rights Enforcement Rules.

It also claimed that Chevron’s action was frivolous, embarrassing and an abuse of court process.

NY Times: Hope For Change Stirs In Nigeria

A powerful editiorial in the New York Times this morning rips Nigerian corruption and praises efforts by President Olusegun Obasanjo to get the country on a better path.

There's no mention made of the specific corruption investigations underway nor any wrongdoing in the Nigeria-Sao Tome and Principe Joint Development Zone.

In all, it's a well-written, intelligent and forceful plea for more U.S. help and attention to a nation of 137 million people whose squandered wealth and lost opportunities are typified by the email fraud known as the Nigerian Advance Fee scam.

Indeed, Nigeria has moved on many fronts in recent months to correct tax evasion, customs fraud, the daily theft of huge amounts of oil and unchecked greed and theft on the part of its powerful politicians and generals. The Times said the ongoing investigations have left many of the most powerful pols "terrified."

Here's the piece, posted this morning on the Raging Bull ERHE message board by The Dane:

March 7, 2005
EDITORIAL
Hope in the Land of Dashed Hopes

For more than 40 years, the epitome of wasted potential and squandered opportunity in Africa has been Nigeria. From the time it gained independence from Britain in 1960, that behemoth of 137 million people has seemed to do its level best to fritter away every natural advantage. Given the second-highest proven oil reserves in Africa, Nigerian officials spent oil income on lavish estates in Europe instead of decent schools and water systems back home. The country that produced the Nobel laureate Wole Soyinka and arguably Africa's best author, Chinua Achebe, was better known for the cruel, thieving dictator Sani Abacha.

Now, "Nigeria is changing," says Ngozi Okonjo-Iweala, the country's finance minister. She suggested thinking of America and the West as the parent and Nigeria as the child: "If your child has been doing bad things - drug abuse or alcohol - and they come to you and say, 'My mother, I want to change; please help me,' would you say, 'No'? Would you say, 'You are hopeless; you can't change'?"

It's a tough question for anyone who has ever been assaulted at the airport in Lagos just trying to enter Nigeria, or hit up for a bribe by Nigerian government officials, or struck dumb at the sight of orphaned children drinking dirty water on the street. But if America and the developed world are serious about their stated intent to tackle poverty, most of which is in Africa, then they cannot ignore the home of 20 percent of sub-Saharan Africa's people.

Hard as it is to believe, there are hopeful signs in Nigeria. The Nigerians, through two, albeit flawed, democratic elections, have given themselves a reformist government with the right intentions. President Olusegun Obasanjo has taken up the mantle of anticorruption - or, at least, slightly reduced corruption. He established an Economic and Financial Crimes Commission, whose chairman, Alhaji Nuhu Ribadu, at risk to his life, has been terrifying current and former officials with his investigations. Already, two rear admirals have been convicted of helping to steal 11,000 barrels of oil. Some 130 customs officials have been fired.

Bunkering, the quaint term Nigerians use to describe outright stealing of crude oil by members of the armed forces or the government, has been reduced to a mere 20,000 barrels a day from 100,000 barrels a day, according to Dr. Okonjo-Iweala. And finally - this should please all of us who have received e-mail supposedly from Idi Amin's son or Charles Taylor's wife offering untold riches if we'd only provide our checking account numbers - three purported e-mail crime leaders have been arrested.

Beyond the fight against corruption, Nigeria has made huge strides in promoting regional security. Nigerian peacekeepers are in Liberia, Sudan and Sierra Leone. Last month, when Togo installed the son of the country's longtime strongman as president, it was Nigeria's Mr. Obasanjo who led the fight that ultimately forced Faure Gnassingbé to step down. We can't help but notice the difference between Mr. Obasanjo and the leader of black Africa's other regional power, South Africa. Thabo Mbeki has largely thrown up his hands in the struggle to force Zimbabwe to hold honest elections that could rid it of the odious despot Robert Mugabe.

What's missing is for America to take Nigeria more seriously, to do much more than simply treat the country as a gas station. The United States has made some strides with H.I.V.-AIDS treatment in Nigeria, but that should be expanded to include prevention as well. The country isn't anywhere close to qualifying for aid under President Bush's Millennium Challenge Account, which ties money to good governance. But that approach, while worthy, condemns the 80 million Nigerians who subsist on barely anything. America should supplement the Challenge Account program with something that encourages countries like Nigeria to press ahead with reforms, and find ways - perhaps through private aid groups - to funnel money to the desperately poor. Nigeria is too big to ignore. If it doesn't succeed, it's hard to imagine that the rest of Africa has much of a chance.

A Precipitous Plunge

I awoke from a powerful dream Saturday morning.

I had been on a long journey, accompanied much of the time by many people, among them a very special woman, and near the end I boarded a bus full of people whose faces I could not see, and I got off on a high stone bridge, overlooking a pond far below. Then I seemed to be riding in a pushcart or something, but as I crossed the bridge I was suddenly pushed in the cart over the edge to the pond far below.

Immediately, I freed myself from the cart and prepared myself to hit the water. I knifed deep into the pond, afraid I would smash into the bottom, and just as skulls and bones on the floor of the pond came into view I finally stopped plunging, reversed, and headed towards the surface. As I did that I became aware that the water was as greasy as a soul food kitchen sink.

I burst back into the air dripping with oil.

At the side of the pond was a high wall of boulders like those of a jetty at the seashore, and I swiftly climbed them back to the top. There I met my oldest brother, or someone like him in a wheelchair, and he gave me something odd - it was a square, shallow box with what looked like a tongue stretched out and caught in a mousetrap, and then he pointed me ahead, across another walkway, and told me to follow that down along the river.

As I mulled it over later on, I kept trying to recall the woman, and I could remember dreaming of her before, of her lush breasts and warm embrace and making love to her several times, of loving her and not wanting to leave her, but as in the dream, I was swept along in the tide of humanity down the old cobbled streets.



Years ago, my heart wrote a poem that said,

All desires rise and fall;
At the low ebb of desire
the ocean waits;
The current pushes outward,
attachments fall.

Life sweeps us away, sooner or later, from the things we love. But it doesn't have to drown or diminish us, not if we struggle for the light, for reason, for purpose, and not if we have the humility to listen, to be gently guided by the friends and other currents in our lives.

I face a gentle denouement as events surrounding ERHC Energy come to an inevitable turning point. Soon we will know what we have won, if we have won. We will see where this fierce and loving journey of change and challenge will leave us.

In a few days, like many of my fellow travelers whoses faces I can only know from their hastily written words and comments here and on the message boards, I will likely disembark at a high, distant place and head for a new one. That is the way the current is pushing me, and I would be a fool not to let it do so.

All good things come to an end, do they not? And so will come an end, high or low, to my journey with ERHC.

Through coups and catastrophes, through peaks and plunges and valleys and plains, we have traveled a path through a world new to us, and arrived in a far, far safer place than the one we left.

As we part, a few days or weeks or months from now, I will remember many people fondly, for small favors and fine compliments, and have bad memories of just one or two - and even those I will forgive and forget, because doing otherwise would only slow my journey.

I have far to go, and much to do, and I will always miss you, all of you, very much. Thank you for sharing this perilous and very promising journey with me.

Angered By Blog Report, Houston Chronicle Kills ERHC Story

A senior editor at the Houston Chronicle, apparently angered by our speculation that the confluence of stories in Upstream and the Houston Chronicle would improve the share price, has killed the story.

"That is not something we want any part of," said the assistant business editor who initially proposed the story to Washington bureau senior writer David Ivanovich.

Ivanovich told an ERHC On The Move reader Arthur Krauser, known as ArtK4K, "Actually, the story has been held up, probably for one week."

Our estimate is that the share price will be unaffected by the absence of the article, and will still move to $0.90 by Monday's close.

Ivanovich also told ERHC On The Move, "I do not know when the story will run. That's my editor's call."

It's great to know that the Chronicle bases its editorial decisions on our predictions of price movement. We didn't know they cared!

ERHC Set For Three Operatorships, Barry Morgan Says

Incredibly good news came tonight from the respected Barry Morgan at UpstreamOnline, the premier daily Website of the petroleum industry. Morgan, a veteran, prizewinning reporter who has had the Gulf Of Guineau beat for years, says ERHC Energy is "in line" to get not only its preferential rights in "a raft of blocks", but operatorships in Blocks 2, 3 and 4 with its partners Noble Energy (in Block 4), and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3.

If true it is astounding news, and may account for an unusual statement from the owners of First Atlantic Bank today that said they guarantee a new offering of shares from the bank, which holds 60 million shares of ERHC Energy, will quickly appreciate in value when they hit the market.

The bank's ERHE stock has risen by $12 million since it was acquired in November from ERHC Energy chairman Sir Emeka Offor.

Given the proximity of the awards - late next week, according to the latest estimates - and the confluence of this article with a 2,000-word story Sunday in the Houston Chronicle, the share price could easily reach $0.90 or more by Monday's close. Investors should expect busy trading through the day on Friday.

This was the article published on UpstreamOnline tonight:

Gulf of Guinea hopefuls eye mid-March awards
by Barry Morgan
March 3, 2005, 00:09 GMT

SUITORS tired of the protracted delays in the deep-water licensing round in the Gulf of Guinea between Nigeria and Sao Tome & Principe, hope the way will be cleared for awards by mid-March, writes Barry Morgan.

ExxonMobil has blown hot and cold over its rights to exercise a 25% option in blocks 2 and 4 in the joint development zone and is affecting the timetable for Abuja's plans to licence its own waters.

The supermajor was put on notice last month to exercise its options within a specific time frame. It is believed a quid pro quo deal might yet be forged if ExxonMobil agrees to farm out its rights to make room for independents in exchange for preferential treatment in Nigeria's Exclusive Economic Zone.

US minnow ERHC Energy also has a sliding scale of preferential rights, some free of signature bonus, on a raft of blocks and has bid again on others.

At this stage in the talks, it appears that ERHC would be in line to operate blocks 2, 3 and 4 in joint ventures with its partners, notably Pioneer Natural Resources and Devon Energy on Blocks 2 and 3, and Noble Energy on Block 4.
barry.morgan@upstreamonline.com

ERHE Booms Again, Up Nearly 15% on 2.5 Million Shares

Gaining strength as it goes into what may be the final week befor awards, ERHC Energy shares outpaced expectations today as they soared 14.81 percent to close at $0.62, a gain of $0.08 on volume of 2,568,266 shares.

The strong performance was at least partly due to former investors revisiting the company's shares as they learn it has become debt-free and as Nigerian newspapers openly suggest the company will be awarded all of the preferential rights it sought and perhaps one or more operatorships with partners Noble Energy in Block 4 and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3.

The share price had an early and rather odd run in the late morning as just four or five lots moved it up in half- and then full-cent increments to $0.60, where it immediately stalled and fell back to $0.57 in the range of the anticpated gains we advised this morning.

Investors now look forward to a strong opening on Friday, especially after apparent day-traders tried to knock the price down in the last 15 minutes, and succeeded in taking it from $0.63 to $0.60, only to find stronger hands guiding the price back to $0.62. The ERHC On The Move portfolio of 123,040 shares purchased at an avergae of $0.4394 enjoyed a gain of $9,843.20, giving us a total gain of $22,221.03 since our last substantial purchases in November, when the stock briefly toyed with a low of $0.38.

There was a great deal of news propelling today' momentum, although none of it produced a day certain for awards. A clarification from Nigeria-Sao Tome Joint Development Authority spokesman Sam Dimka addressed to markvo10, now known on the Raging Bull message board as orangeandwhite0, resolved a ticklish phrasing in one story that suggested ExxonMobil might get more time to exercise its rights after the JDA met with them next week so that the company could seek clarification of unnamed issues relating to their two 25 percent preferential choices in any of the five blocks on offer in this second JDA licensing round. Dimka said that process would not extend the March 19 deadline for XOM to make its choices.

Those choices seem to remain three: first, to till the fields itself, as it apparently does not want to do; to partner with other bidders to whom it would "farm out" the rights, much as landlords and sharecroppers do; or to reserve their choices for three blocks yet to be offered - Blocks 7, 8 and 9 - or possibly for rights in Sao Tome's Exclusive Economic Zone.

Either or a com,bination of two could prove a judicious play if, as expected, vast reserves are verified in the Gulf of Guinea blocks controlled by the government of Sao Tome and Principe and those now offered by the JDA.

For investors, however, having some assurance that the months of delay must end on March 19 is a relief likely to encourage more buying even before the market opens on Friday.

Awards Due Next Week After Hurdle Is Overcome, Nigerian Paper Says

Under the optimistic headline "JDZ bids result out next week", the Nigerian Daily Independent reports tomorrow that Nigeria-Sao Tome and Principe Joint Development Authority officials will meet with ExxonMobil executives next week to answer any questions the company has and finalize awards of Blocks 2 through 6 in the Gulf of Guinea Joint Development Zone.

The news follows an $0.03 rise in ERHC Energy's share price to $0.54 on the Over The Counter Bulletin Board today on closing volume of 2,213,700 shares. A small block moved a minute after closing at $0.545. ERHC On The Move expects more cautious upward movement in share price tomorrow, to the $0.57 range. Today's movement added $4,321 to our portfolio of 123,040 shares, which have not been traded since November.

In the Daily Independent article the mention of ERHC Energy mistakenly leaves the impression that our rights are in the Exclusive Economic Zone, when in fact they are in six of the JDZ blocks (2, 3, 4, 5, 6 and 9) as well as the EEZ, where the company has second choice of 100 percent of two blocks signature bonus-free, and additional 15 percent options in two other blocks in the EEZ requiring bonus payments, which are a percentage of the winning bid proportional to the rights we are finally awarded there. The EEZ blocks may not be awarded this year.

Here is an excerpt from yesterday's story in the more careful Vanguard which correctly spells out the rights situation:

According to the rules, ExxonMobil has up 30 days from the day it was notified to exercise its preference rights in any blocks of its choice among the five currently on offer. The blocks are 2, 3, 4, 5 and 6.

It was learnt that as soon as ExxonMobil exercised its rights, the JMC would meet to set the final stage for the award of the remaining stakes in the blocks as the case may be. Officials said it was not compulsory for ExxonMobil to exercise the remaining two rights in any of the current five blocks if it wanted another block yet to be put on offer.

ERHC which has a Nigerian business mogul, Sir Emeka Offor, as Chairman, has already fully exercised its preference rights in the six of the blocks in the zone, as provided for in the agreement.

The development of the JDZ recorded a milestone whena Block 1 Production Sharing Contract (PSC) was signed between the oil companies and the JDA on behalf of the governments of Nigeria and Sao Tome and Principe.

Only Block 1 was awarded in the first Licensing Round which was flagged off in April, 2003. there were nine blocks in all originally. Five of the remaining blocks were thus readvertised in 2004 while the remaining three were put on hold pending the generation of further data on them.

With the first PSC in place, it is expected that the entire zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model. Tax regulations in the zone have also been adequately addressed.

The Daily Independentstory also erred in saying that ExxonMobil had preferential rights in three blocks in "the 2004 round," leaving the impression that it has three options in the current 2004 second round; only two of those remain after XOM exercised its first option in Block 1 in the first round, gaining 40 percent of that block.

It was the second important mistake of the day, with the other being a widespread misreading of the last sentence in a story about the upcoming auction of 80 Nigerian blocks, which mentioned the JDZ blocks in passing and said the Nigerian Petroleum Development Corp. had been unable to compete for blocks with multinationals in the "last licensing round."

Many posters on Raging Bull mistakenly took this sentence to mean that ExxonMobil had not partnered with the NPDC in the current licensing round, rather than the "last" - the 2003-2004 round that ended on Oct. 15, 2004. It may still partner with NPDC in this second round.

The five blocks in which ERHC's preferential rights were validated will be awarded after ExxonMobil chooses whether or not to exercise its two 25 percent preferential rights in two of the five second-round blocks on offer, to farm them out to other companies, or to reserve them for exercise in the third-round bidding for Blocks 7. 8 and 9. The company has indicated it would farm the rights out, according to UpstreamOnline, but much has changed since that article was written - including an influx of newly identified bidders.

JDZ officials remain wary of setting a date certain for awards after having missed three successive self-set deadlines, the first of which was Dec. 31.

Here is the article by Bassey Udo, a veteran oil correspondent for the Daily Independent, whose misdirection regarding the preferential rights of ERHC Energy is surprising in light of his earlier, more accurate - or more precisely worded - energy reports:

JDZ bids result out next week
by Bassey Udo
Energy Editor
March 3, 2005

Hurdles in the approval of the result of bids in the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) 2004 licensing round may be removed next week when ExxonMobil exercises its rights in the five oil blocs on offer.

A top management team of the American multi-national giant is scheduled to meet with the Nigeria-Sao Tome Joint Development Authority (JDA) in Abuja to resolve all outstanding issues in pursuit of its preferential rights.

Two weeks ago, following the conclusion of consultations between the Nigeria and Sao Tome authorities on the 2004 licensing round, the JDA notified ExxonMobil to move within 30 days to exercise its rights to pave the way for the final appraisal of the bids and announcement of the result by the Joint Ministerial Council (JMC).

This is contrary to reports that the process was stalled by disagreement by the two countries.

“There is no disagreement whatsoever between any of the parties. The bid is on course. Having notified ExxonMobil to exercise its rights, we have to wait till the expiration of the 30-day deadline. The response might come earlier than expected”, a source close to the JDZ said on Wednesday.

It was learnt that the Abuja meeting will afford all the parties the opportunity to review the 26 bids collated at the end of the exercise last December, to accommodate all interests.

“ExxonMobil may require more information to take a final decision. This might come after a review of the bids. The meeting will enable it (ExxonMobil) compare notes and arrive at a balanced decision”, the source added.

ExxonMobil is already operating in the premier oil Bloc-1 in the zone through its subsidiary, Esso Exploration and Production Nigeria-São Tomé "One" Limited, which partners ChevronTexaco JDZ and Dangote Energy Equity Resources (DEER), a joint venture (JV) between the Dangote Group of Nigeria and Energy Equity Resources AS of Norway.

Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multi-national exploration and production (E&P) companies that operated in the territorial waters in years pre-dating the agreement were assumed to possess pre-emptive rights over the area. The arrangement conferred on them substantial rights of preference on some oil blocs.

While ExxonMobil possesses pre-emptive rights in any three of the blocs on offer in the 2004 round (provided it matched the highest price offered by the bonafide bidders), ERHC has preferential option rights in the Exclusive Economic Zone (EEZ).
[Editor's Note: ERHC has preferential rights in all five of the blocks on offer, and to a sixth block later, all of which it has already exercised, and ExxonMobil has preferential rights of 25 percent each to just two of the five blocks now on offer.]

After the exercise of its rights in the five blocs, the JMC is expected to meet immediately to carry out the final appraisal and announce the bid winners.

Oil Majors Fight Back On Tax Hike, Threaten To Halt Offshore Exploration

The draconian tax hike proposed by a committee of the Nigeria House of Representatives has met united opposition not only from multinational oil firms doing business there but also President Olusegun Obasanjo and national petroleum advisor Dr. Edmund Daukoru.

The proposed 35 percent tax hike on oil revenues from 50 percent to 85 percent was reported by ERHC On The Move last week.

Here is the in-depth story of the oil majors' revolt from Thursday morning's editions of This Day Online, a leading Nigerian news site:

Oil Majors Threaten to Halt Offshore Investment
By Mike Oduniyi
March 3, 2005

ABUJA -- Multinational oil companies operating in Nigeria’s deep offshore oil region, have threatened to halt further investment in protest against plans to significantly amend the tax laws governing operations in the area.

The threat, if carried out, may affect the $15 billion expected to be invested in exploration and drilling in Nigeria’s deep offshore over the next five years.
The oil majors under the aegis of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, in a joint statement of response to the ongoing review of the Production Sharing Contract (PSC) Decree by the House of Representatives, oppose plans to raise the Petroleum Profit Tax (PPT) regime from 50 percent to 85 percent.

However, the presidency has washed its hands off the proposed amendment to the PSC law, as such a move could erode investors’ confidence, and leave Nigeria’s strategic oil sector without the multi-national alliances which have been instrumental to many of the successful projects so far achieved.

The House Committee on Petroleum Resources last week, began a public hearing on the planned review of the Petroleum Act and the Deep Offshore and Inland Basin Production Sharing Contract Act, with the objective of increasing the PPT from 50 percent to 85 percent.

The first generation PSCs agreements were signed for 12 oil blocks between 1991 and 1993, yielding major discoveries as Bonga field, 1.2 billion barrels of crude; Erha, 600 million barrels; Abo field, 500 million barrels; Akpo, 800 million; and Agbami, 1.0 billion barrels.

Total reserves booked till date from fields explored under the PSC agreement now being reviewed, represent some 25 percent of Nigeria's total reserves put at 35 billion barrels as at the end of 2004.

The OPTS members namely Shell, ChevronTexaco, ExxonMobil, Elf, Agip, ConocoPhillips, Addax and Petrobras, said an upward review in the PSC tax rate, would not only affect investment already committed to deep offshore operations but stall future investment in the deepwater oil industry.

The OPTS in the position paper, contended that reviewing the tax regime would be a breach of contract by the Nigerian government after the companies had committed well over $10 billion to hydrocarbons exploration in the region.
Under the PSC agreements, all the risks of exploration, appraisal and development are absorbed by the contractor (the oil firms). Consequently, PSCs universally require the State to contractually bind itself (through the national oil company) to guarantee the fiscal terms at the onset of the PSC.

"This is the arguments marshaled in the OPTS position paper," said a source close to the group.

“Increase of the tax burden to 85 percent will negate the deepwater cost structure and risk…Current projects would not be sustainable and new projects will be terminated,” the official added.

According to official figures from the Ministry of Petroleum Resources, the Federal Government forecast is to rake in a total of 15 billion barrels by 2010, from discoveries in the deep offshore.

The firms have proposed a joint appearance before the committee by the middle of this month.

Implementation of the PSC law has been a subject of heated debate recently, with government officials arguing that the agreement weighed against Nigeria’s interest.
Under the existing PSC law, the country would not earn revenue from oil exported from fields in deep offshore at least in the first five years of production, as the companies are allowed to first recover fully their investment in developing the fields, before subsequent sharing of the profit with the government.

According to the Chairman of the House Committee on Petroleum, Hon. Cairo Ojougboh, the agreement posed a threat to revenue generation by the Federal Government. By next year, deepwater fields would account for about 40 percent of Nigeria’s total crude oil production and exports.

Industry officials, however, told THISDAY that given the high risk nature of deepwater offshore operations as well as the sophisticated and high-cost nature of technology to be deployed, the terms agreed under the existing PSCs were in recognition of the necessity for long-term investment.

“How would you tell Shell, which has committed $3.5 billion on developing the Bonga or ExxonMobil with $2.5 billion on the Erha field that they cannot recover their costs?” asked an official.

“Any reasonable change in the PSC at all, should apply to new contracts especially those that will evolve from the 2005 bidding round and not for existing contracts,” the official said.

However, mindful of the implications, the Federal Government has cautioned against tampering with any of the parameters in the PSC law by the National Assembly without proper consultation with appropriate agencies.

Speaking to THISDAY yesterday on the controversy over the deepwater regulations, the Special Advisor to the President on Petroleum and Energy, Dr. Edmund Daukoru, said care must be taken not to scare away investors from the nation’s oil industry which is lately facing stiff competition from emerging regions including the Gulf of Guinea.

According to Daukoru, the PSC had really been packaged to take care of the interest of the investor as well as the interest of the nation. Noting that although the National Assembly has constitutional right to make laws for the good governance of the country, he advised lawmakers to seek expert advice on technical issues on which they need to be fully briefed so that they can make more effective laws.

“If you structure it (PSC law) in a way that the end result leaves too little for the investor, you will not just get that investor. He will take his money elsewhere,” warned the Special Advisor.

“And unfortunately in the Gulf of Guinea we are not alone, there is Angola, Gabon, Equatorial Guinea and there is Cameroon. We are competing, especially Angola which is coming up strongly, we need to be competitive.

“In a world where opportunities abound for alternatives for most of the investments, we need to get a good slice of that investment.”

Daukoru said that while he would hope that the National Assembly did not intend to make retroactive laws in business related investments, he assured the oil majors that the Federal Govern-ment would respect agreements entered into with multinational investors.

A Useful Post From Markvo10, And A Solid Upturn

Two useful bits of data from orangeandwhite0, the former markvo10, were posted today on Raging Bull's ERHC Energy (ERHE) message board. The first told us that Nigeria-Sao Tome Joint Development Authority (JDA) spokesman Sam Dimka confirmed that the 30-day period for ExxonMobil to notify the JDA of its exercise of 25 percent preferential rights is "hard and fast," and the second that PXD Investor Relations spokesman Greg Panangos had confirmed that information.

ERHE's share price improved slightly this morning, with the opening $0.51 moving to $0.53 briefly. At 10:12am EST, the bid stood at $0.519and the best ask at $0.525, and $0.15 gain. A fair number of large blocks, ranging from several 25K buys to 35K, 50K and 100K, moved volume to 683,815 in the first 45 minutes of trading, a little ahead of yesterday's relatively slow pace.

Update, 2:45pm EST: The upturn we anticipated in last night's advice has materialized. At 2:53, the price was .545, an improvement of $0.035 from yesterday's close at $0.51. Volume was pushing yesterday's peak, with 1,748,145 shares traded.

According to markvo10's post, XOM now has just 18 days left to exercise its rights or lose them. Dimka indicated that the JDA will meet with ExxonMobil next week, and that the meeting could be followed very shortly by a meeting of the Joint Ministerial Council to make the formal awards.

Here is the post from orangeandwhite0:

PART 1. I just spoke with Sam Dimka. I asked him if the XOM 30 day deadline was a hard deadline. He said "it is Definitely a hard deadline, a contractual obligation. If XOM does not exercise within the 30 day deadline we will assume that they are not interested and the JMC will immediately convene to announce awards." Just to clarify with him I stated that there are only 18 days left for XOM to exercise their options and he said that this was true and that this should all be done very soon. I asked Sam if JMC would meet this week and he said not sure and that next week looks more likely. He said "unofficially" that XOM is coming to meet with them next week and that is why he thinks next week is more likely. You can call Sam Dimka yourself at 011 234 9 524 1069.

PART 2. Yesterday I posted the details of a conversation that I had with Susan Spratlen, IR PXD. After I spoke with her I sent an email to NBL IR, Greg Panagos. Below is the correspondence that I had with Greg:

My email to Greg Panangos, IR NBL:

Hello Greg,

I spoke with someone at the JDA and also someone at PXD (also bid in JDZ). They both said XOM has 30 days starting 2/18/05. So, XOM has 18 days left to exercise their options. XOM must do this within the 30 day period.

Both said they expect awards within the next 2-3 weeks since that's the amount of time XOM has to exercise its options. Both also said that XOM most likely would not take the full 30 days. So, awards could happen any time between now and 18 days. Is this what you hear? Is this accurate? Please reply.

Thanks,

Mark

Greg Panagos, IR NBL Reply:
You are correct and accurate.

Greg Panagos
Phone: 281.872.3125
Fax: 281.872.3121

Also, today's SEC filings show that one insider has registered some 220,000 shares to sell. We have not seen many such Form 144 registrations recently, even though a sharp price increase is expected with awards.

Here is that filing:

SOURCE: Form 144

ISSUER: ERHC ENERGY INC
SYMBOL: ERHE


FILER: VERTICAL VENTURES
TITLE: No Relation
BROKER: BERNARD HEROLD & CO
RESTRICTED SHARES TO SELL: 220,000 DATE REGISTERED: 02/28/05
APPROXIMATE DATE OF SALE: N/A

The Form 144 is filed with the Securities and Exchange Commission to reflect the ontention of any holder of restricted stock to sell those shares. After the 144 is mailed to the S.E.C., the filer is permitted to sell the shares, or any fraction of them, within 90 days.

Form 144 Data Source: Washington Service (info@washserv.com or 301-913-5100)


(END) Dow Jones Newswires

03-01-05 2237ET

22:37 030105

Downdraft Drags ERHE Down To $0.51

Fallout from new delays in the award of five oil blocks offered in the second licensing round of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) dragged ERHC Energy (ERHE) shares down to $0.51 from Monday's opening high of $0.65, a loss of 21.5 percent so far this week.

The volume was 1,932,500 shares, about 40 percent of yesterday's action.

ERHC On The Move on Monday said "we recommend that investors who want to make short-term gains do so now and reposition themselves as the share price slips below $0.50." We now think that recommendation has been fulfilled, and that price slippage below $0.51 will present very limited and brief buying opportunities; the stock should be largely static today and start to gain on Friday once again, as Nigerian sources become more explicit about a near-term date for announcement of the JDZ awards.

There may also be some interest generated over the weekend by a long, in-depth report on ERHC Energy by a senior writer for the Houston Chronicle that is scheduled to appear on Sunday. That story may also be available in some of the paper's early Weekend editions. The story was suggested to the Chronicle by ERHC On The Move.

Houston Chronicle Story On ERHC Scheduled

A 2,000-word story exploring the history and prospects of ERHC Energy will appear in Sunday's Houston Chronicle, America's most oil-savvy newspaper, the senior writer preparing the story said today. The story was suggested by ERHC On The Move.

The in-depth examination comes after the Washington bureau senior writer on the story contacted dozens of figures throughout the world, including President Fradique de Menezes of Sao Tome, Nigeria-Sao Tome and Principe Joint Development Authority executive director Carlos Gomes, and ERHC CEO Ali Memon in order to limn the story of a tiny Louisiana firm that nearly went broke before it became a major player in the JDA's Joint Development Zone, a region of the Gulf of Guinea where studies suggest there may be anywhere between 4 billion and 12 billion barrels of untapped crude oil to satisfy the hungry petroleum markets of the world.

Block awards by the JDA for Blocks 2, 3 4, 5 and 6 of the JDZ are pending a decision by ExxonMobil to either exercise preferential rights to 25 percent allocations of any of the two blocks on offer, to farm them out to other explorers, or to forgo them for later choices in future JDA rounds.

Also on the news front, Nigeria's The Guardian reported on comments from national petroleum advisor Dr. Edmund Daukoru to the News Agency of Nigeria in which Daukoru again promised that the twice-delayed start of a bidding round on 80 Nigerian blocks is moving into an "advanced stage," but he did not give a date for the event, which is generally thought to be virtually the same date that the winners of the JDZ blocks are announced.

Here is the article from The Guardian:

Investors await presidential nod on 2005 oil block award

ABUJA (NAN) -- PRESIDENTIAL adviser on petroleum and energy Edmund Daukoru says preparations have reached advanced stage for the 2005 bidding round.

Daukoru confirmed to the News Agency of Nigerian (NAN) in Abuja that the exercise would be conducted once the technical details were put in place.

"I have just submitted the bidding round documents to the President last Friday and he needs time to study them before opening the bid," he said.

He said 80 oil blocks would be put on offer both in the inland basin, onshore and deep water offshore for every player big or small to benefit.

The presidential aide expressed optimism that the exercise would attract multinationals as well as indigenous oil companies and that it would be conducted in a transparent manner.

Daukoru denied reports that lack of presidential approval delayed the bid round from opening in February as earlier scheduled.

"I will like to make it abundantly clear that presidential approval not delaying the process leading to the 2005 oil blocks bidding round," he said.

He said there was need for the government to be flexible on the timing due to the complex and technical nature of the exercise.

He gave the assurance that the exercise would soon be conducted with minimum delay.

Two New Articles Suggest Awards Are Near, Or Nearer

Two new articles Tuesday morning in the Nigerian press suggest awards in the Nigeria-Sao Tome and Principe Joint Development Zone are closer than April 15, but still offer no date certain.

After yesterday's 12 percent selloff, they may bring a slight boost to the price, which is otherwise expected to continue to fall.

During Monday's big day-long selloff that took the price down from a high of $0.65 at opening to a $0.56 close on high volume, traders suggested fears of a long delay in awards - as has become customary with the JDZ - will tie up funds for the next several months.

At a minimum, both articles corrected yesterday's erroneous reports from This Day saying "ExxonMobil has 45 days from the time of the notification to exercise its rights or forfeit same," and The Punch of Nigeria that also said ExxonMobil has 45 days in which to exercise its preferential rights. The company has only 30 days to select its rights, which would trigger the convocation of the Joint Ministerial Council to award the blocks. If ExxonMobil used the full 30 days, the earliest awards could be held would be the first week of April.

In a new wrinkle added in the Vanguard article, ExxonMobil can reportedly forego its two 25 percent choices in any of the five blocks on offer in the current round for blocks on offer in any future round. This is the first time that the possibility has been suggested that ExxonMobil would neither exercise its rights nor farm them out, but use them instead in a third licensing round or in the Sao Tome and Principe Exclusive Economic Zone licensing rounds that follow.

But without spelling out a new award date, or even suggesting one, the two new articles from the Vanguard and the Daily Independent - the latter paraphrasing remarks allegedly made by Sir Emeka Offor, who has not been quoted directly in recent years - by their very timing suggest awards may be closer than ERHC On The Move, and more openly state that ERHC is in line to receive its preferential choices in five blocks, or that at least ERHC officials want the process to bear "fruit," as the Independent article put it.

The second article, paraphrasing Offor and quoting ERHC Energy CEO Ali Memon, says Offor believes the company may "grab an operatorship" in one of the blocks, and also recycled outdated information about Mr. Offor's holdings and a quote from investor Phil H. Nugent that last appeared in the Dow Jones News Service Report by Norval Scott on Jan. 24.

Hopes had been high that the company could even sweep three of the blocks with its strong mid-tier partners, Devon Energy and Pioneer Natural Resources in Blocks 2 and 3 and Noble Energy in Block 4. There was no hint of that optimism in Tuesday's news reports.

The first article is from Vanguard:

Nigeria-Sao Tome: JDA asks ExxonMobil to exercise preference rights
by Emma Ujah
Tuesday, March 01, 2005

ABUJA -- The Nigerian-Sao Tome and Principe Joint Development Authority (JDA) has formally requested ExxonMobil to exercise its preference rights on the five blocks in the Nigerian-Sao Tome and Principe Joint Development Zone (JDZ) for which licensing rounds commenced in November last year.

ExxonMobil has the third party right to exercise the right of options in any two of the affected blocks, to the level of 25 percent.

JDA letter to ExxonMobil, which sources said was sent last weekend, followed the approval obtained from the "highest levels" by the Joint Ministerial Council (JMC) in order to fast track the licensing round which was originally planned to have blocks awardees announced at the end of last year.

Nigeria’s Presidential Adviser on Petroleum and Energy, Dr. Edmund Daukoru had announced at a press conference in November last year, that the results of the round were to be announced on December 31, 2004, but officials said ""certain factors"" made the initial date unrealistic.

According to the resolution of the agreements, ExxonMobil and the Environmental Remediation Holding Corporation (ERHC), a company quoted on the New York Stock Exchange, were to have the privilege of investing in any block they may so choose before the award of the remaining stake to other oil companies bidding for the blocks. [Editor's Note: The company's name is now ERHC Energy, Inc., and it is traded on the Over The Counter Bulletin Board, not the NYSE, under the symbol ERHE.]

ExxonMobil has three such rights to exercise. It has already exercised one of such rights in Block 1 in which it took 40 percent. Other companies to jointly develop Block 1 are ChevronTexaco with 51 percent and the operator, as well as Dangote/Energy Equity Resources with 9 percent.

According to the rules, ExxonMobil has up 30 days from the day it was notified to exercise its preference rights in any blocks of its choice among the five currently on offer. The Blocks are 2, 3, 4, 5 and 6.

It was learnt that as soon as ExxonMobil exercised its rights, the JMC would meet to set the final stage for the award of the remaining stakes in the blocks as the case may be. Officials said it was not compulsory for ExxonMobil to exercise the remaining two rights in any of the current five blocks if it wanted another block yet to be put on offer.

ERHC which has a Nigerian Business mogul, Sir Emeka Offor, as Chairman has already fully exercised its preference rights in the six of the blocks in the zone, as provided for in the agreement.

The development of the JDZ recorded a milestone when Block 1 Production Sharing Contract (PSC) was signed between the oil companies and the JDA on behalf of the governments of Nigeria and Sao Tome and Principe.

Only Block 1 was awarded in the first Licensing Round which was flagged off in April, 2003. there were nine blocks in all originally. Five of the remaining blocks were thus readvertised in 2004 which the rest three were put on hold pending the generation of further data on them.

With the first PSC in place, it is expected that the entire zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model. Tax regulations in the zone have also been adequately addressed.

Here is the article from the Daily Independent:

ExxonMobil, ERHC may secure equity in five JDZ oil blocs
by Bassey Udo, Energy Editor
and Charles Okonji, Senior Business Correspondent
March 1, 2005

ABUJA -- ExxonMobil and Environmental Remediation Holding Corporation (ERHC) may be granted equity to participate in the operation of the five offshore oil blocks offered in the 2004 Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) licensing round.

Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multi-national exploration and production (E&P) companies that operated in the territorial waters in years predating the agreement were assumed to possess pre-emptive rights over the area, an arrangement that conferred on them substantial rights of preference on some of oil blocks in the zone.

While ExxonMobil is said to possess pre-emptive rights in any three of the blocs on offer in the 2004 round provided it matched the highest price offered by the bona-fide bidders, ERHC has preferential option rights in the country’s Exclusive Economic Zone (EEZ).

Last week, in a bid to round off the proceedings on the 2004 licensing round Exxon Mobil was notified to move within 30 days to exercise its preferential rights in the five blocs in line with the decision of the Joint Ministerial Council (JMC) of Nigeria-Sao Tome and Principe to revalidate revalidated options already exercised by the ERHC following the 2003 Licensing Round.

ExxonMobil’s response is expected to pave the way for the meeting of the JMC to carry out the final appraisal and announce the winners out of the 26 bids collected at the end of the bids opening exercise last December.

Daily Independent, however, gathered that ERHC might eventually emerge one of the major players among the companies that will develop the six to 14 billion crude oil reserve capacity JDZ and an important supplier of crude to the United States of America.
The United States, the world's largest crude oil consumer, meets about 12 percent of its crude needs with supplies from the West African region, hopes to increase the volume to about 20 percent in 2010 and 25 percent by 2015.

ERHC’s Chairman, Mr. Emeka Offor, with 34.98 percent controlling shares said the company might grab the operatorship status of one of the blocks in the zone. ERHC submitted joint bids with established US companies (Devon Energy and Pioneer Natural Resources) for Blocks 2 and 3, and Noble Energy for Block 4. [Editor's Note: With the recent issuance of 73 million shares to cancel all outstanding debt of ERHC Energy, Mr. Offor's stake has rise to 43 percent.]

Offor, who is also Chief Executive, Chrome Energy, said though ERHC had endured a painful wait to allow for the resolution of the dispute with Sao Tome, which almost made it lose its rights in the zone, its preferential rights of between 15 and 30 percent in all five blocks stands it in good stead to reap the fruits.

“When the awards in the current JDZ bid round are finalised, it will be a significant step forward,” ERHC Chief Executive Officer, Mr. Ali Memon, said, pointing out that the conclusion of the licensing process has been continually delayed, leading to some disquiet among shareholders and keeping ERHC's stock price range-bound near the 50 cent mark.

A Houston-based oil and gas consultant and long-time ERHC shareholder, Mr. Phil Nugent, had said: “We're due our day in the limelight. At some time the dust will settle and ERHC will be recognized as a viable entity in one of the most prospective oil and gas regions in the world.”