ERHC Share-Price Gain Probably Will Not Last

There's probably nothing I can say that will please all ERHC Energy investors - and one of the things I can't say is that the stock is headed straight up from $0.295, where it ended on Friday. Or, I should say, is not headed up for long.

Two days after the news that CEO Sir Emeka Offor had resigned his posts - but held onto his stock - and sent it leaping from an $0.215 Bid to $0.295, the company has not yet announced its replacement for the irreplaceable Offor, an incredibly astute former truck driver whose tiny firm wrestled away some of the world's most sought-after oil concessions from the biggest oil companies in the world.

And for better or worse, the U.S. Attorney has not yet obtained indictments from a Federal Grand Jury looking into allegations that he bribed the President of Sao Tome and possibly others to gain our lucrative oil concessions in Blocks 2, 3 and 4 of the Nigeria-Sao Tome and Principe Joint Development Zone.

Personally, I think the stock will start sinking again, even if it trades in an upward rush later this morning (I'm writing at 3:12 a.m. EST, 6 hours before the markets open). Whether it takes a day or two weeks, the weight of the the possible pending indictments will continue to exert their gravitational effect on ERHE, probably pulling it back down to the $0.245 level by next Friday.

Painful to think about, isn't it? But not to worry.

I believe that once the indictments are handed down - if indeed they ever are (and dragging them out is the U.S. Attorney's clever strategy) - the stock can seek new levels that are unconnected to the historic price since 1999, when it was around a dollar a share (it was at $6 a share as Environmental Remwediation Holding Corp., its predecessor Colorado entity, back in 1996, but that's another, duller story).

But what if the indictments never come? How long will it take investors to feel confident enough to move the price back up to the levels we enjoyed after the concessions were granted?

And will there be any fallout from Nigeria or Sao Tome if the indictments do come down, now that Sir Emeka Offor is no longer at our helm?

Well, as to the first two questions, the legal issues can weigh down the stock for as much as another year, I think, at which point the foot-dragging would probably be interrupted by a judge, if an honest one can be found in Texas.

As for the second, whatever Sir Offor's current role with the company, so long as he and First Atlantic Bank are substantial stockholders - together they now control slightly more than 51 percent of the outstanding shares of ERHC - there will be no substantial change in the posture - which has been characterized by outrage and indifference, depending on the way the issue is presented - of either government.

No cooperation is likely to be forthcoming from either country, and no evidence is likely to support the U.S. Attorney's effort on behalf of ExxonMobil and ChevronTexaco to redistribute our (potential) wealth. However, Anadarko will be slightly stronger in the event of a Democrat taking the White House, as they are a source for Energy Department appointees, and they may be able to extend the various "investigations" into 2009 and beyond, or until ExxonMobil or Chevron get our rights, which is the goal of the entire charade.

I do have some self-interest here - I own 15,000 shares and last week hoped to buy 200,000 more at $0.245 but was frustrated by the timing rules at E*Trade.
Therefore, I am hoping that the price will sink four or five cents and that I can buy the stock more cheaply.

Yet that is also my expectation; I have seen this stock rise and fall a dozen times, and it seems to me that absent important news about the new CEO, we have no particular rerason to expect a share-price improvement until we begin drilling in 2008. Any old CEO is not going to make much difference; a great one might.

This may outrage those who would boost the stock to get rid of their cheap shares, or disappoint those who have purchased shares at a higher price and are waiting to see some green in their portfolios, but it's my best guess that the stock will slowly sink back to $0.24 or so. I can't guarantee that I'm going to spend my $50,000 at that level - especially if there's no news about the SEC case - but I still like our prospects a whole lot.

This morning, take a look at the share price at the opening, and then take a look at 10:30 a.m EST. If we get an announcement about a new CEO, there may be an additional spike, perhaps worth three or four cents at the close, but failing that the share price will likely turn downward around 10:30 a.m. and dip below the open.

Write me at amreporter@aol.com if you have a different perspective.

FOLLOW UP (08/21/2007):

I was wrong about the stock's behavior on Monday, when it traded up to $0.35 Ask (momentarily) and closed up $0.02 at $0.32. Today, however, my general impression was proved right when it traded back to down to $0.26 Bid and $0.24 Ask. As I write this, it's 3:28 p.m. EST here in Florida, and the bid is $0.265 and the Ask is $0.27. Volume is under 500,000 shares after the big spike to 1.4 million yesterday.

OFFOR RESIGNS

Sir Emeka Offor, the tough, savvy, vastly ambitious Nigerian who has headed ERHC Energy since 2001, today resigned as non-executive director and Chairman of the Board of his company, leaving investors at sea as to the company's future and the ongoing dual SEC and FBI investigations of the company with a moving target, the company said.

It is not known what will happen now to Offor's 42 percent stake in the company, to his hand-picked CEO and longtime friend and associate, Nicolae Luca, who now heads the company, or to the highly prospective concessions in the Nigeria-Sao Tome and and Principe Joint Development Zone known as the JDZ.

Offor said in a statement released by the company at 5:52 p.m. EST that he would stand by his investment.

"I remain committed to ERHC and my investment therein, and want to assure you all that I will continue to support the Company in any way I can," Offor said in a letter to the board.

He was hailed for his many achievements at the helm of ERHC by Luca, a trusted associate of many years.

"ERHC is very grateful to Sir Emeka Offor for his years of visionary leadership," said Acting Chief Executive Officer Nicolae Luca. "Today, ERHC holds valuable assets in what was once an undeveloped oil region of the world, in large part due to the hard work of Sir Emeka Offor, and we pledge to continue to build upon that legacy," Luca was quoted as saying in a PR Newsire release obtained on E*Trade.

The resignation could also mean that an indictment on charges under the Foreign Corrupt Practices Act, which purports to govern cases of bribery by American officials of foreign firms, is imminent. That could further depress the price of the stock, which has been trading in the $0.21 - $0.225 range in recent days, but investors rallied to buy it up to $0.225 before today's close after it traded in a $0.215 - $0.225 range earlier. The last price was $0.225 in extended hours, with the Bid set at $0.22 and the Ask at $0.225. A little more than 421,000 shares traded today, with only two blocks of 25,000 ay the only substantial purchases among some 49 total trades. The company's market value is currently $162 million, yet it has almost a quarter of that amount in cold, hard cash from the sale of some of its rights to Sinopec and Addax in exchange for a "full carry" of costs to production.

It's my belief that Offor resigned to save the company any further grief and to thereby maximize the future value of his holdings. Although it deprives the company of an extraordinary leader who was responsible for all of its sucess, his resignmation also paves the way for long-suffering investors to amass a fortune in any future buyout, merger or other positive development.

At best guess, it will mean a quick sale of the company, with the rights then being its sole asset and its leadership up in the air. Any bidder for the rights will likely include more than one bidder, such as ExxonMobil, ChevronTexaco, Anadarko, Pioneer Natural Resources, Noble Energy and others who have one time or another partnered or opposed ERHC's battle to secure the lucrative rights to Blocks 2, 3 and 4 and to as-yet undistributed blocks in the independent Sao Tome and Principe development zone.

Of the more significant issues, the first is whether the resignation came to protect the company, as both U.S. agencies frequently accept a principal's resignation in lieu of trial on the merits of a complex case in which the outcome is far from certain. In the circumstances that apply to the ERHC matter, both the person who resigns and the agencies save millions in likely legal bills, and the reputations of both are not further sullied. There was no mention of the case in the company's statement today, however.

It was extremely doubtful that either agency could secure a conviction against Offor even if they could persuade a federal grand jury to indict him. The governments of Nigeria and Sao Tome both rejected the attorney general's report and declared their unwillingness to cooperate in a probe, based on its tainted origins. Even the report itself found no evidence of wrongdoing, although it was strongly suspected due to a $100,000 campaign contribution which went to the private account of Sao Tome's current president in 2001.

Moreover, as the ERHC Energy case has become intertwined with the Rep. William Jefferson bribery case by virtue of several bit players who have both in common, the departure of Offor may mean either that he might become an unfriendly witness for the prosecution - presuming he would honor a subpoena from his native Nigeria, if he were to leave his Houston-area home - or a witness of impeachable character for the defense.

Thus, the legal end of the resignation amounts to a lose-lose deal for both sides in the Jefferson case. Jefferson and Offor were not known to be close friends.

However, the resignation will not change the fact that Chrome Energy holds what is tantamount to a controlling stake in ERHC Energy (presuming the support of Nigeria's first Atlantic Bank, whose 8 percent block of shares would likely vote with Offor on any merger or buyout propositions, but it would make the consessions held by ERHC Energy that much more palatable to a suitor looking to move through a deal with clean hands.

That appears to be a paramount condition for any new buyer's interest, given the complex circumstances in which the company's legal future has become mired. The other side of those legal issues, however, is the fact that its rights asre worth billions, and they could never have been pried loose from Offor's grip within the constraints of Nigerian political system, which are determinative. That system, of which Offor is a grand master, has unequivocally supported his role in EDRHC Energy from his earliest days as a major businessman seeking the JDZ rights.

It was Offor's role as a mediator, businessman and trusted associate of President Olusegun Obasanjo and Vice President Atiku Abubakar that led directly to the development of the JDZ, then to the bitter battles over his victory in bidding for the consessions, and to the subsequent investigations ginned up by oil company lawyers using the Sao Tome Attorney General as their pawn, and bankrolled by major Pioneer Natural Resources shareholder George Soros.

With the help of corrupt officials in Washington, probably including disgraced Energy Committee chairman Sen. Ted Stevens of Alaska, the Justice Dept. moved against Offor on the flimsiest of grounds - a request from the Sao Tome Attornery General for an investigation.

His 1996 report on the matter was written by a close friend and teacher of Sen. Steven's Republican chief counsel on the Senate Energy Committee, who is married to Anadarko's chief government lobbyist, and the effort was bankrolled by Soros through the Senior Lawyer's Project, at one time a reputable organization with altruistic aims.

The oil companies that developed the conspiracy to gain ERHC Energy's rights probably included ExxonMobil, ChervonTexaco and Anadarko, which wanted the rights to Block 4 and Block 2, respectively but lost out to ERHC in the bidding. Pioneer and Noble were both partnered with Offor at one time but felt pressure to withdraw from their agreements with ERHC Energy about four months before the Sao Tome report.

The company is now partnered with Addax Petroleum, a mid-sized Swiss player with a clean reputation, and Sinopec, the Chinese energy giant that is the sixth largest oil company on earth and China's second-largest. They are on the inside track as buyer candidates, and the loss of ERHC's American leadership is likely to lead to significant new deficits in the U.S. drive for energy independence if either or both are the ultimate buyers.

Sinopec, in particular, is said to be loaded with cash and willing to buy any major oil prospects if the price is right; the ERHC rights could encompass some 6 to 10 billion barrels of oil, while the overall JDZ is said to contain 14 billion barrels, and the entire JDZ is significantly insulated from troubles in either nation, being 150 miles oujt at sea in waters some 10,000 to 14,000 feet in depth. ERHC and Addax and Sinopec have secured a drilling rig to begin prospecting in the third quarter of 2008.

So far, Chevron, partnered with Exxon, is the only company that has said it has struck out in the JDZ after what the Wall Street Journal, in a story that was fundamentally dishonest, broadly hinted was a discovery of a billion barrels of oil in a test well in Block 1, its sole holding.

Major media fell hook, line and sinker for the carefully engineered operation, which I believe waslikely run in part by a law firm headquartered in Houston in which presidential candidate Rudolph Giuliani is a named partner. The company's servers have frequently visited this blog in recent years.

Here is the company's announcement. We will update this site frequently with any additional news.

ERHC Energy Inc. Board Accepts Resignation of Chairman

HOUSTON, TX, Aug 15, 2007 (MARKET WIRE via COMTEX) -- ERHC Energy Inc. (ERHE), an independent oil and gas company, today announced the resignation of Sir Emeka Offor from his positions as non-executive director and chairman of the Company's board of directors to concentrate on his diverse business interests. The ERHC board accepted his resignation and has begun the process of identifying a successor.

"I remain committed to ERHC and my investment therein, and want to assure you all that I will continue to support the Company in any way I can," Offor said in a letter to the board.

Sir Emeka Offor has been on the board of ERHC since 2001, when a company he controls acquired a controlling interest in ERHC. He has served as a non-executive director and chairman during a period of important accomplishments.

"ERHC is very grateful to Sir Emeka Offor for his years of visionary leadership," said Acting Chief Executive Officer Nicolae Luca. "Today, ERHC holds valuable assets in what was once an undeveloped oil region of the world, in large part due to the hard work of Sir Emeka Offor, and we pledge to continue to build upon that legacy."

2007 marks the 10th anniversary of ERHC Energy's exclusive joint venture with the Democratic Republic of Sao Tome & Principe. ERHC sought that agreement because it identified the possibility of significant offshore oil reserves years before others and was willing to undertake the hard work necessary to realize the value of these assets.

ERHC holds assets in the Joint Development Zone (JDZ) between Sao Tome & Principe and Nigeria, and in Sao Tome's Exclusive Economic Zone (EEZ). The Company has signed participation agreements with subsidiaries of Addax Petroleum Inc. and Sinopec Corp., which have announced plans to begin exploration in JDZ Blocks 2 and 4 as early as the third quarter of 2008. Additionally, ERHC continues to pursue other potential oil and gas acquisitions, where feasible.

Here's the UpstreamOnline story on Sir Emeka Offor's resignation. It ran at the very top of the page - the "minnow" is again Upstream's lead story. by its veteran oil writer, Barry Morgan.:

Offor quits ERHC

By Barry Morgan


Houston-based ERHC Energy has accepted the resignation of its controversial Nigerian chairman and non-executive director Emeka Offor and has begun the process of looking for a successor.

Offor, who took control of the minnow in 2001, said he would remain committed to ERHC and his investment in the company, which signed a potentially lucrative joint venture with the government of Sao Tome & Principe back in 1997.

ERHC is currently under investigation by a US Senate sub-committee concerned with the US Foreign Corrupt Practices Act.

The Securities & Exchange Commission is also enquiring into payments allegedly made by the company to officials in Sao Tome.

ERHC holds assets in the Joint Development Zone between Sao Tome and Nigeria where it has signed participation accords with Swiss explorer Addax Petroleum and with Chinese giant Sinopec.

Deep-water exploration in the JDZ is set to start in the third quarter of 2008.

ERHC also has preferential rights to acreage in Sao Tome’s Exclusive Economic Zone. The company was the first to raise the possibility of oil exploration with the government there and orchestrated Sao Tome's efforts to demarcate its offshore claims under the United Nations Law of the Sea Treaty.

ERHE Falls To $0.25; Seller Dumps 250,000 Shares

A seller dumped 250,000 shares at $0.255 in one fell swoop a minute before 3 p.m. today as ERHE shares fell to their lowest levels in a long time. At 3:27 p.m. EST, the stock was selling at $0.26, with the Bid set at $0.255.

The unknown seller was the only substantial seller of the day, with the next-largest blocks - four of 25,000 each - moving between 2:22 and 2:58, suggesting they were part of the same holding.

A poster named hoehne888 said at 3:29 that he had put in an order for 100,000 shares at $0.26, but it has not yet shown up at 3:35 on the ADVFN trade real-time monitoring system.

New Lies From Chevron?

A sharp-eyed Investor's Hub contributor has found an extraordinary - and false - claim from Houston-based Chevron on the company's Website that says Chevron acquired an interest in "Block 11" of the Nigeria-Sao Tome Joint Development Zone, located 150 miles off the Nigerian coast in the Gulf of Guinea, in 2004.

Problem is, there is no Block 11 - the Joint Development Zone has only 10 blocks, and Chevron has rights in only Block 1, where it holds a minority interest to ExxonMobil's majority interest.

Here is the false claim, one of two Chevron has made recently about its limited rights in the JDZ:

Chevron is leading the JDZ. Block 1 was acquired in 2003, and Block 11 was awarded in 2004. A production sharing contract was signed in 2005. The first exploration well in JDZ Block 1, Obo 1, was completed in 2006 and found hydrocarbons. Commercial options are currently being examined to determine the potential for additional drilling.

After letting it slip to a French oil newsletter and then The Wall Street Journal that it had made a huge discovery in Block 1 in 2006, Chevron slowly backed away from the claim and said it had doubts as to the "commercial viability" of the find.

That contretemps may have been a way of embarrassing the Nigerian government of President Olusegun Obasanjo, which had trumpeted the find in hopes of gaining new entrants in the next JDZ licensing round, after Chevron's embarrassing performance in the 2005 Licensing Round. Or it may just be that it's in the company's interest to minimize the find to reduce its royalty load from recovered oil.

Once More Unto the Breach of Trust: ERHC is Subpoenaed by the Senate

A Senate subcommittee much like one that studied bribes by ExxonMobil, Chevron, Pioneer Natural Resources and Marathon Oil to West African leaders - and then fell strangely silent - is now turning its gaze towards smaller fry, the four employees of tiny Houston-based, Nigerian-owned oil company ERHC Energy, whose stock rose to $0.31 on the news.

The company won rights to various blocks in the Gulf of Guinea that may be worth countless billions to the Big Oil firms that badly wanted them, but Nigeria's newly-elected President said July 9 that he supports the current rights-holders - including ERHC Energy - and his government and that of Sao Tome have refused to cooperate with the tainted probe that ultimately produced the request.

Until ERHC broke the mold, no Nigerian company had ever been granted substantial rights to Nigerian oil. The country is the world's fourth largest oil producer, capable of more than 3 million barrels per day. But it is miserably poor and many of its citizens have no electricity. The oil revenue flows to Europe and the United States, or is swallowed up in corruption in Nigeria.

The JDZ's Second Licensing Round in 2005 saw a Nigerian-owned firm - ERHC is controlled by Nigerian businessman Sir Emeka Offor and its First Atlantic Bank - shoulder aside the American, French and British oil behemoths competing for six blocks of the Joint Development Zone. That region of the Gulf of Guinea is saidto hold some 14 billion barrels of oil, according to the Houston Chronicle.

ERHC and its partners, Swiss-based Addax Energy and others - have hired a drillship set to begin deepsea oil exploration of the rights in 2008.

The genesis of the Sao Tome probe is compelling.

George Soros, a 6.4% shareholder in Pioneer Natural Resources - a onetime partner of ERHC in the battle for lucrative drilling rights in the Nigeria-Sao Tome and Principe Joint Development Zone - paid tens of thousands of dollars through the Senior Lawyers Project for an investigative report signed by the Sao Tome and Principe Attorney General, but actually written by R. Dobie Langenkamp of the Tulsa U. School of Law, the father of a Nightmare on Elm Street star.

In the report, Langenkamp asked for an SEC and FBI probe of the company and its rights to JDZ blocks 2, 3 and 4, which are estimated to hold some 14 billion barrels of oil. ChevronTexaco and ExxonMobil have already struck oil in their adjoining Block 1, but now say that what the Wall Street Journal said could be a billion-barrel strike is not "financially viable."

Supoenas soon followed, all aimed at ERHC. The aim appears to be to get the company to turn over its rights to the likes of ExxonMobil, ChevronTexaco, Pioneer - the Soros investment which unsuccessfully fought ERHC for the rights - and Anadarko, which tried to get a joint bid with ExxonMobil approved after the deadline for bids had passed. That effort was rejected by the JDZ's Joint Ministerial Council, and buttons started getting pushed in Washington with greater intensity than ever.

The industry's p.r. mavens called in all their chits, apparently, as attacks on ERHC soon began appearing in The Wall Street Journal, Houston Chronicle, Harper's Magazine, the New Yorker and most recently, the New York Times, as the evildoer that cheated Sao Tome out of its oil rights.

But ERHC officials had twice rewritten their deal with Sao Tome, and its oil might never have gcome under scrutiny if ERHC had not paid for a $6 million geological study of potential Gulf of Guinea deposits.

Meanwhile, the bribery investigation of the Big Oil firms by the Senate Commerce Subcommittee on Energy remains unresolved.

According to an L.A. Times article that was never followed up, the senators were examining millions of dollars in bribes to West African leaders by ChevronTexaco, ExxonMobil and other companies, including Pioneer and another former ERHC partner, Noble, when the Commerce and Energy subcommittee investigation of Foreign Corrupt Practices Act violations suddenly disappeared.

Back in the day, one ERHC CEO actually denounced Sao Tome leaders at an airport press conference for demanding a bribe, and then left the country. None of the new stories mention Langenkamp, the Pensabenes or the bribery investigation that suddenly stalled.

Senate Energy Committee Republican chief counsel Judy Pensabene, a student of Langenkamp's - as was her husband, former Energy Dept. official Greg Pensabene, nopw the top government lobbyist for Anadarko - was honored by Langenkamp even as he was preparing to write the report. In 2005, he named Pensabene a "Distinguished Visiting Professor" at his Tulsa U. law school, where he trained dozens of the top lawyers in major oil companies (which, notably, would not include ERHC attorneys). Langenkamp serves with many of them on industry non-profit boards.

Meanwhile, Pensabene's boss - 83-year-old Republican Sen. Ted Stevens, until recently the chairman of the Senate Energy Committee - is now under investigation for the taxpayer-funded expansion of his home in Alaska, which doubled the compound's size. He is a strong supporter of ExxonMobil and ChevronTexaco's Arctic drilling projects and plans, and has been royally rewarded by the industry he oversees.

No newspaper has followed up on the twisted origins of the attack on ERHC. No one expects that they ever will. And now, more than 14 months after its offices were raided by the FBI, there is still no sign of an indictment against the company. An ERHC lawyer has agreed to meet with the SEC and provide them with documents on July 18, however.

Here is the Houston Chronicle piece:

July 11, 2007, 12:10AM
Subpoena delivered to ERHC
Senate panel questions payment for energy deals off west Africa


By TOM FOWLER
Copyright 2007 Houston Chronicle

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Houston's ERHC Energy has been subpoenaed by a Senate subcommittee looking into possible improper payments related to ERHC's oil and gas holdings around the island nation of São Tomé and Príncipe.

The U.S. Senate Committee on Homeland Security and Governmental Resources Permanent Subcommittee on Investigations sent the subpoena on Thursday asking for documents "in connection with its review of matters relating to the potential abuse of payments made to foreign governments," according to a statement by ERHC Monday.

Senate investigators are particularly interested in information "related to the acquisition of ERHC's interests in the Gulf of Guinea," where ERHC has the right to drill for oil and gas off the coast of São Tomé, the company said.

In the statement, interim CEO Nicolae Luca said ERHC believes development rights it negotiated with São Tomé over the past decade were "legitimately awarded to ERHC."

A spokeswoman for the Senate subcommittee declined comment on the investigation.

In December 2005, São Tomé's then-attorney general called on the U.S. to investigate ERHC's dealings in the region, saying in a report that ERHC and politically connected Nigerian businessman Emeka Offor "may have made improper payments to government officials."

Last year FBI agents raided ERHC's offices in Houston looking for possible "things of value" paid to officials in São Tomé and Nigeria, an FBI affidavit filed in Houston said.

Last month the U.S. Securities and Exchange Commission issued a subpoena to Sugar Land attorney O.J. Chidolue, an employee of a major ERHC shareholder, ordering him to hand over documents and speak with federal investigators.

According to court filings Chidolue and the SEC reached an agreement where he would provide the documents by June 29 and testify on July 18.

It could not be determined Tuesday if those terms have been met. SEC officials declined comment. Chidolue and his attorneys could not be reached.

ERHC has signed partnership deals with Swiss firm Addax Petroleum and China's Sinopec Corp., and said in a statement this week the companies were on target to begin drilling test wells off the west African coast next year.

tom.fowler@chron.com

ERHC Energy stock closed up $0.01 on the news.

Update: NY Times Attack Leaves ERHE Shares up $0.05

The attack on ERHC Energy's CEO Sir Emeka Offor in today's New York Times actually improved the share price $0.05, but momentarily produced buying opportunities at $0.295 - lasting only from 10:15:40 to 10:16:01, or about 21 seconds, when someone put 50,000 shares on the market in seven lots of 5,000 to 10,000 shares each. They were instantly bought up.

In reality, the ask never faltered from $0.305 throughout the day, and despite the story in America's most important newspaper, only 241,659 shares traded all day. The light trading is consistent with that of recent days and the impending July 4th national holiday in the United States.

Speaking of holidays, we are taking the next few days off, and want to wish all our readers - and every American, friend or foe - a very Happy Fourth of July.

ERHC Energy and Sao Tome Front-Page the New York Times; Noreen Wilson Testified To Grand Jury

An attack by the New York Times on ERHC Energy - almost identical in content to several others by Bruce Alpert of the New Orleans Times-Picayune, David Ivanovich of the Houston Chronicle and Ken Silverstein of Harper's - in my view was precipitated by my attack on the dubious informant in the William Jefferson case, Lori Mody, and my near-simultaneous "temerity" in announcing I had again purchased ERHC Energy shares at $0.30.

The female prosecutor in the case, with whom I spoke briefly last year, may have taken her ire to the same people that sponsored these other near-identical stories, or the Axis of Gulf of Guinea Oil (Chevron, Exxon and Anadarko), may have worried too much that the foundation of their case against Jefferson was foundering after the same "insurance" they are probably holding to help control the informant made its way into The American Reporter, impeaching the informant.

And maybe now it's appropriate to remind everyione that a lie does not gain currency for being twice- - or thrice- - told. The Times story, however, introduces a new lie: that Sir Emeka Offor is being investigated for insider trading in Nigeria. That is merely a conflation of facts surrounding the joint FBI/SEC search of ERHC's offices on April 1, 2006, and it's just a once-told lie.

Here is the Times' story, followed by my response to the Times, and then their automated response to me for documentation's sake:

No Oil Yet, but African Isle Finds Dealings Slippery
Armando Franca/Associated Press
Photo: A bicyclist rides near a hotel under construction in São Tomé, which is trying to ensure that its residents benefit from an anticipated oil boom.

By BARRY MEIER and JAD MOUAWAD
Published: July 2, 2007
A decade ago, geologists found signs that one of Africa’s least-known countries, the tiny island nation of São Tomé and Principe, might hold a king’s ransom in oil.


Small Nation, Big Oil Prospects

The first drop of oil has yet to be produced. But these days, little São Tomé may have attracted ample supplies of something else, federal investigators suspect — oil-related corruption.

All of this might not seem unusual in Africa, where oil and corruption often go hand in hand. However, São Tomé, a former Portuguese colony off the coast of Nigeria, was supposed to be different. In recent years, a steady stream of activists like the Columbia University economist Jeffrey D. Sachs have gone there to try to make sure that any energy boom would benefit its 150,000 people, rather than politicians and companies.

“Oil can be a blessing or a bane for a country,” Mr. Sachs said. “The theory was to help São Tomé avoid the resource curse.”

Things, however, have not quite worked out that way.

The recent Justice Department indictment of William J. Jefferson, a Democratic congressman from Louisiana, contends, for example, that he solicited a bribe from a company seeking his help with an oil-related dispute involving São Tomé.

Separately, federal authorities are investigating a small Houston-based company whose only assets are large holdings in São Tomé to determine if it bribed the country’s officials. On another front, a powerful Nigerian businessman who is the chairman of the Houston company, ERHC Energy, is under investigation in his country for possible insider oil dealings.

All those involved — Mr. Jefferson, ERHC, and that company’s chairman, Emeka Offor — deny that they did anything wrong.

Still, the experience of São Tomé, a poor country that supports itself by selling cocoa and commemorative stamps featuring celebrities like Elvis Presley and Brigitte Bardot, shows how just the hint of oil can set off a scramble for riches. Along with Mr. Sachs, those who sought to help included George Soros, the billionaire turned philanthropist, and a high-powered Washington lawyer, Gregory B. Craig, who defended President Bill Clinton during the Monica Lewinsky scandal.

“In West Africa, the scent of oil alone may be enough” to produce corruption, said Joseph C. Bell, another Washington lawyer who has traveled to São Tomé to work on new oil laws.

At the center of the São Tomé story stands ERHC, a tiny company whose ranks have included a collection of characters and politically connected entrepreneurs like Mr. Offor. According to a 2005 report by the attorney general of São Tomé, Mr. Offor is one of the largest donors to Nigeria’s ruling political party and a close ally of Olusegun Obasanjo, who until recently was Nigeria’s president.

São Tomé’s unusual journey through the backwaters of the oil industry traces back to the mid-1990s, when ERHC arrived there. Large underwater oil deposits had been found nearby, off the coast of Nigeria, and ERHC believed that the tiny island might be the next big prize in west Africa.

At that time, the Texas company was owned by some wildcatters and an enterprising Florida businesswoman named Noreen Wilson. Over the years, she has been involved with several penny stock companies including a short-lived enterprise called Pizza Group Inc.

In 1997, Ms. Wilson signed a $5 million contract that gave ERHC, which was then known as the Environmental Remediation Holding Corporation, exploration rights in São Tomé for 25 years. The contract was soon described by some outside experts as extremely lopsided.

Soon afterward, Ms. Wilson resigned from ERHC during an investigation of the company by the Securities and Exchange Commission. But she appeared to retain an interest in the island’s future; in 2001, for instance, she apparently reached out to Mr. Jefferson for help there, his indictment suggests. At that time, São Tomé’s new president was threatening to break a number of oil-related deals, including ERHC’s.

Ms. Wilson, who declined through her lawyer, Joseph A. Artabane, to be interviewed for this article, is not named in that indictment. But the filing describes how two unnamed people, a business executive and a lobbyist, went to see Mr. Jefferson about an oil-related dispute on São Tomé. In return for a promise of help, Mr. Jefferson demanded that a family member receive benefit, a demand that was met, the indictment states.

Mr. Artabane, who said that Ms. Wilson testified before the Jefferson grand jury, declined to confirm that she was the executive involved, but he did not dispute it either. The lobbyist involved was James P. Creaghan, according to his lawyer, E. Barton Conradi, who said his client has cooperated throughout with authorities. Mr. Creaghan worked with Ms. Wilson during that time. (Neither of them has been accused of wrongdoing.)

Meanwhile, wheels were already spinning in São Tomé when activists like Mr. Sachs, the economist, arrived. Their mission: To prevent it from following in footsteps of other African countries where corruption and waste typically follow oil. In Nigeria, the continent’s largest producer, most people live on less than $2 a day while politicians have stolen or squandered billions.

Initially, hopes were high. Soon after his election as president, Fradique de Menezes, a cocoa plantation owner, vowed that his country would be different. And he turned for help to outsiders like Mr. Craig, the Washington lawyer who represented President Clinton during his impeachment trial.

But Mr. Craig, like others who followed him, found himself facing some powerful adversaries: Nigeria and Mr. Offor. In 2001, Nigeria had jumped in the picture when it signed an agreement with São Tomé to share oil revenues from waters between the two nations. Mr. Offor, the ally of Nigeria’s president, bought ERHC, which was then near bankruptcy, just a few days before that agreement was signed.

Mr. Craig said that while he successfully renegotiated contracts with other oil companies in São Tomé, Mr. Offor would not budge. “The metaphor of David versus Goliath doesn’t quite capture the relation between São Tomé and Nigeria,” he said. “It’s more like an ant.”

In time, ERHC did agree to some changes in its contract, but the company retained extremely favorable terms, including the right to choose among the best oil blocks without paying the type of special one-time fee that governments typically demanded.

Mr. de Menezes continued to seek assistance; in 2003, for instance, he reached out to Mr. Sachs.

“He called and said, ‘Look we’ve found some oil and the sharks are swimming around us now, and I’d like some help to manage this properly,’ ” Mr. Sachs recalled in a recent interview.

As part of that effort, a Columbia University team and others helped draft a new oil law that contained safeguards to make sure São Tomé spent its oil-related revenue properly. The team then traveled around the country, holding meetings on cocoa plantations and in churches, where they explained to residents how the new statute would protect their interests.

“Imagine what would happen if there was a big flood that hit us,” stated a cartoon-like booklet that they handed out to residents. “The oil law creates a dam.”

By late 2005, however, a report by the attorney general of São Tomé delivered a dose of reality. Among other things, it found that some companies that won blocs in the zone controlled jointly by São Tomé and its neighbor were headed by Nigerian businessmen with political ties but no oil experience.

The bidding process “was subject to serious procedural deficiencies and political manipulation,” the report concluded. In addition, the report found some large multinational oil companies were so suspicious of ERHC that they decided not to bid and added that ERHC “may have made improper payments to government officials.”

ERHC has disputed those findings and said in a statement that it received its rights legitimately and that it has also made numerous concessions to São Tomé.

“We care about perceptions of ERHC Energy and we have been working to fully understand any concerns expressed about our activities,” the company said.

The attorney general’s report may have precipitated last summer’s raid on ERHC’s Houston offices by the F.B.I. Among other things, F.B.I. agents took a file marked “William Jefferson,” a reference to the Louisiana congressman, a publicly filed subpoena shows.

Dan Keeney, a spokesman for ERHC, said that the company was not aware of “any facts to suggest that the U.S. government investigation of ERHC is in any way related to the ongoing investigation of Congressman Jefferson.”

Whatever the case, ERHC has emerged thus far as the biggest winner in São Tomé. Over the last year, it has sold off various rights to its holdings in São Tomé, making tens of millions of dollars in the process.

As for the reform effort by Mr. de Menezes, the country’s president, he has been far less publicly vocal over the last year, outside consultants said. Mr. de Menezes, who met on several occasions with Mr. Jefferson, did not respond to repeated requests to be interviewed for this article.

Despite earlier predictions of vast oil finds, it is unclear whether waters off São Tomé will ever produce oil in commercial quantities. Last year, Chevron drilled the first exploration well there but failed to find much oil and, for the moment, has no immediate plans to drill again. ERHC said that it and a partner planned to drill next year.

The new oil and anticorruption statutes drafted by consultants like Mr. Bell, the Washington lawyer, have become law. But with all the obscurity and intrigue that has now descended onto São Tomé, he, like others, question if it will make any difference.

“The game is not lost yet,” Mr. Bell said. “But it is a very uphill game.”

----- Original Message -----
From: "Joe Shea"
To: "NY Times"
Sent: Monday, July 02, 2007 4:27 AM
Subject: Error in Sao Tome story

My Response to The Times

Sir Emeka Offor is not under investigation
in Nigeria for insider trading, and there is no
evidence other than your statement to suggest he is.
The SEC was part of the FBI warrant that
led to the search of ERHC'soffices in Houston. That
occurred over a year ago and no such information
has been forthcoming since then. A newspaper
clipping was the sole content of the "William Jefferson"
file in ERHC Energy's Houston office. Indeed,
while ERHC is a small player, it is that
fact and not the unsubstantiated charges you
aired that ought to be examined in light of
the many big players ERHC competes with.

I write a blog about ERHC Energy called
"ERHC on the Move." As far as I am
concerned, you missed the forest for the trees.
The fellow who did the investigation that led to the
Sao Tome Atty. Heneral's report was R. Dobie
Langenkamp, who as head of the Tulsa U School
of Law is closely associated with corporate counsel
for all of ERHC's competitors in the Gulf of
Guineau. It was paid for by George Soros, who
took a major position in ERHC's former partner in several
Gulf of Guinea blocks, Pioneer Natural Resources.
Chevron, ExxonMobil and Anadarko were the big losers in
the licensing round, and they have exerted all their
collective influence behind the scenes to get the
awards revisited. That has been assisted by Dobie
Langenkamp's close friends (and former students), Judy
Pensabene - chief Republican counsel for the Senate
Energy Committee - and Gregory Pensabene, her husband
and chief government lobbyist for Anadarko. The
big oil boys have called all the shots on this story, and
you are either too slow or too scared to see it. The
reason this story is coming out now is because of my piece
on the informant in the William Jefferson case, which
dramatically undercut the probative value of her testimony.

Cordially,

Joe Shea
http://erhc.blogspot.com

The Times' (Automated) Response to Me:

----- Original Message -----
From:
To:
Sent: Monday, July 02, 2007 4:28 AM
Subject: Message Received
Thank you for your message to The New York Times. This automatic response is necessary because of the volume of mail we receive.

Your message will be evaluated and passed promptly to the appropriate editor. In some cases, we are able to follow up with individual replies, and we will certainly write or telephone if we need further information.

Thank you for contacting the Metro Desk.

China's Largest Oil Producer Goes For Canadian Oil Sands

Sinopec's fellow Chinese explorer, China National Petroleum Corp. (CNPC), has joined it and CNOOC in moves into hard-to-get Canadian oil sands, the Wall Street Journal reoorted today:

China CNPC Buys
Exploration Rights
To Canada Oil Sands
By SHAI OSTER
June 29, 2007 7:23 a.m.

BEIJING -- In a sign of the expanding international ambitions of China's oil companies, China National Petroleum Corp. has bought the rights to explore for oil in Canada.

The state-owned parent of Hong Kong- and New York-listed PetroChina Co., will develop an oil sands field, which is estimated to contain some two million barrels of an extremely thick, and hard-to-process form of oil called bitumen.

CNPC will join China's other two biggest oil companies, Sinopec Group and Cnooc Ltd., in investing in Canada's oil sands.

An official at CPC subsidiary China National Oil and Gas Exploration and Development Corp. confirmed that the company would explore for oil in Canada, but declined to offer any more details. According to a statement the Chinese Ministry of Commerce posted on its website Friday, officials at the Canadian province of Alberta granted the company exploration rights for 11 fields covering a total area of about 260 square kilometers in January. Financial terms were not disclosed.

...

Developing Canada's tar sands can be very costly because of the complicated process needed to pull it out of the ground and then upgrade it into something more easily refined into fuel. But the continued high level of international oil prices -- plus China's growing demand for oil -- is making them more economical to develop.

--Renya Peng in Beijing and Ellen Zhu in Shanghai contributed to this article

I'm Back In

I've just spent $4,500 on 15,000 shres of ERHE - just couldn't resist at this price!

I notice there is at least one strong buyer, too, who looks to have gone for about 170,000 shares. Trading is modest, as usual in June, and the price is off $0.02 at $0.30.

I may have to hold it a while to make money, and through some further drops if an injunction hits, but it's going to be hard to separate this stock from big cash when drilling starts late next year.

It's probably a better time to buy than most we will see - as I've said before, while I expect a climactic drop if an injunction comes down, I believe that drop will be short-lived - possibly only a matter of hours.

It would probably take the stock close to $0.22, from which it would probably rebound to $0.28 before the end of the trading day it becomes effective (i.e., if the injunctrion is announced after 4p.m., the drop would occur in after-hours and early trading the following day, and the opening would be at a very low price from which it would likely recover all but two cents or so before the day is out).

I would certainly buy on that opportunity if I have cash available that day, and I would probably try to go for 50,000 at a minimum and perhaps far more (if my wife lets me!) After all, $0.06 on the rebound with 50,000 shares is $1,500 for a day's work.

An AR Exclusive on the William Jefferson Case

I have posted an exclusive report on the informant in the Rep. William Jefferson case today on The American Reporter Website.

Joe Shea in Cuba: Castro Lives!

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Joe Shea in Cuba: Castro Lives!

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Back Home From Cuba

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I Made It To The Top!

I have been playing the CNBC Million-Dollar Stock Challenge for the last seven or eight weeks, and after a long struggle I have finally made it into the "Top 1%" of the 1.2 million players with a gain of 42 percent on my original $1 million capital.

But the unusual thing is that I made it to the top rank with the same four stocks I started out with - I never made a single trade.

So what were those magical stocks?

• 2,870 shares of CSX.
  
• 25,000 shared of Ford.
  
• 10,000 shares of Foster Wheeler.
  
• 5,000 shares of IIT (Indosat, an Indonesian satellite company I've followed all the way from $4, starting 11 years ago.
  

Had I sold at $93 when FWLT hit that number in its meteoric rise, I would be $60,000 better off - but all prices are as of the end of the day's trading, so it wouldn't have mattered. As it is, my profit has been $399,0000 as of the close of business yesterday. I've also won $23,000 in Bonus Bucks, giving me a total of $1,422,000.

Update for Shareholders: 'Plenty Of Excitement,' But Drilling Dates 'Could Change'

Update for Shareholders Issued by ERHC Energy Inc. Interim CEO

HOUSTON, TX -- (MARKET WIRE) -- April 18, 2007 -- The following update on Company activities was issued by Nicolae Luca, interim chief executive officer of ERHC Energy Inc. (OTCBB: ERHE), prior to the market opening on Wednesday, April 18, 2007.

"To ERHC Shareholders:

"I am pleased to again update the ERHC Energy family on the company's progress during the past two months.

"You may have read that ERHC's consortium partners in the Joint Development Zone (JDZ), Addax Petroleum and Sinopec Corp., have jointly secured the deepwater drill ship Aban Abraham to start exploratory drilling operations as early as mid-2008 in Blocks 2 and 4 of the JDZ. These are exciting developments for ERHC shareholders and have resulted from years of planning and preparation.

"There is plenty of excitement about the extensive exploration and appraisal program that is planned. The goal is to realize value from our asset base in the JDZ in order to have a positive impact on the Company's profitability for the benefit of its shareholders. That said, I want to continue to caution that there are many contingencies that affect operations of this nature and guidance for when exploratory drilling may commence could change. We will continue to look to the operators of each of the Blocks to make the relevant announcements when the time is right.

"A number of shareholders have asked about the status of JDZ Block 3, in which ERHC has a 15 percent carried working interest and a production sharing contract with Addax. Another oil and gas company, Anadarko, which has a 51 percent working interest, is the operator of that Block and will be the source of any updates related to drilling timelines.

"Last month, ERHC's Vice President, Technical, James Ledbetter, was in Nigeria on an intensive working tour. He had positive and productive discussions with Addax and Sinopec. He also participated in meetings of the Operating Committee and the Technical Committee for each of the Blocks in which ERHC has an interest. We remain positive about the progress being made.

"While in Nigeria, Mr. Ledbetter also participated in meetings with the Joint Development Authority to build trust and strengthen ERHC's bonds with the organization. He has also been exploring prospects in the region for ERHC and met with several parties who might have interesting opportunities for investment by ERHC. Nigeria, as many shareholders are aware, has announced it will soon auction exploration licenses for 45 offshore and onshore oil and gas blocks. In addition, marginal fields which might provide good investment for companies of ERHC's size and capacity are starting to become available. ERHC is seriously looking at all available opportunities right now and assessing them for feasibility of participation.

"The Board of Directors has appointed the national law firm of Duane Morris LLP, which is one of the 100 largest law firms in the world, as ERHC's corporate securities counsel. The Company's corporate-securities legal work had previously been handled by a local Houston firm. Going forward, Duane Morris will handle matters relating to ERHC's corporate securities, including compliance with the federal reporting requirements. Meanwhile, the law firm of Akin Gump Strauss Hauer and Feld LLP continues to interface with U.S. Department of Justice and the Securities and Exchange Commission investigators and respond to their requests for information.

"We have fully settled into our new and expanded Houston headquarters. With more than double our previous space, we are prepared for an acceleration of business operations in the months and years ahead. While the Board continues its efforts to identify the appropriate CEO and CFO, the Company remains confident in the capabilities of the interim leadership to maintain our positive momentum.

"Thank you for your continued interest and please know that everyone associated with ERHC Energy values your trust and support."


Sincerely,
Nicolae Luca
Acting Chief Executive Officer

AR News Update: Shootings at Virginia Tech

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AR NEWS update: 34 Dead, 15 Wounded In Va. Tech. Campsu Rampage

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AR News for March 28, 2007

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A-R News Update On Hong Kong Flu Passengers

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AR News for 3/26/07 - Insurers. Cheat On Long-Term Care

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$0.33 Close Marks Beginning Of Buying Spree

Given all the risks that an investment in ERHC Energy entails - and the company is frank about them in every one of its SEC filings - the risk/reward ratio reached parity Friday at $0.33, I believe. It's time for a modest buying spree to begin, and I believe investors can look forward a price in the low $0.40s very soon.

While I still plan a major investment in ERHE (OTC BB), I get antsy when I have to pay very much to buy into a stock that is facing two federal indictments for Foreign Corrupt Practices Act violations and for SEC violations that if handed down are likely to allege major fraud.

I have said on quite a few occasions that I don't believe the evidence is there to support an indictment in the bribery matter because the government of Nigeria is not cooperating in the probe; I think the SEC indictment has a better chance, since someone - probably the big players we all know - almost certainly were manipulating the stock through nominees (I don't use the term in its formal sense here) on I-Hub's ERHC Energy board and Raging Bull's ERHE board.

Anywhere between $0.28 and $0.33 is a great place to buy this stock, I believe. That takes into account my own belief that momentarily, in the event of an indictment, the share price may well fal to $0.18. But you'll hasve to have ready cash and be fast on the trigger to buy it there.

Once the indictments are handed down, if they ever are, the issues then becomes a known and manageable set of facts that will entail a finite amount of risk for the possibility of substantial reward when drilling begins in 2008. I feel like I would like to have 200,000 shares by then, but that's just a pipe dream today.

It's heartening in some ways (and I know it must be painful for some investors, who paid too much at some point) to see a decent bottom for this stock, and to be able to look forward not only to a major buying opportunity if the indictments arrive, but for a modest one now that the risk has been subtracted from the price.

A caveat, however: any investor wanting to get in for a substantial block of shares should ask themselves how long they are willing to sit on their investment, waiting for an oil strike in the Gulf of Guinea. If the same money might be used for other plays (like FSTR or CUP, if you're looking), it may not be available for a year or so.

Not To Worry...

The stock market will bounce back with unusual strength by Thursday afternoon, I believe, and the losses and turmoil that were so prevalent around the globe yesterday - and in Asian markets, today - will recede.

It's not that the global or American markets are healthy - they're all underpinned with mountains of debt that will crumble, probably soon - but that yesterday's losses have already been absorbed in China - whose stock market seems as never before to be leading the world - and the big fall on Wall Street was partly occasioned by a failure of the Dow Jones & Co. software that supports the new "hybrid" stock exchange.

Yesterday's fall took advantage of the timing of Alan Greenspan's remarks coupled to the China shakeout, as well as continuing nervousness about the ability of subprime lenders, banks and brokerage houses to stay afloat when their own risky lending practices come home to roost.

ERHC Energy may have been a microcosm with respect to the bounce we expect. It fell as low as $0.33 before buyers leapt in and took it back to $0.37. The stock at $0.33 was an irresistible temptation. However, it will probably resume its steady but very slow decline until drilling starts and the SEC/DOJ investigations come a cropper (go bust, in Aussie).

While there's no strong reason not to buy ERHE at this level if you are a long-term player, patience will probably be rewarded with a discount up to another 5 cents. I have been hoping for another shot at $0.27 shares like those that made me so much money last year.

ERHE's Grand Diagonal

  

CNN's Dramatic Encounter With MEND

In an In an extraordiary exclusive, CNN has successfully acquired videotape of Nigerian rebels in the Niger Delta region known as MEND, and it leaves little doubt that the group is a force to be reckoned with now and in the future.
The story speaks for itself:

Koinange: Big guns, big oil collide in Nigeria
POSTED: 1:54 a.m. EST, February 8, 2007
By Jeff Koinange
CNN

Editor's note: In our Behind the Scenes series, CNN correspondents share their experiences in covering news and analyze the stories behind the events. CNN Africa correspondent Jeff Koinange recently met with Nigerian militants, and here he describes what he saw and learned.

WARRI, Nigeria (CNN) -- Splashing across the murky waters of southern Nigeria in a speedboat, I suddenly found myself in one of the scariest positions of my journalistic career: masked militants firing machine guns at me and my crew.

We hit the deck, shouting, "We are press! We are press!" Eventually, the bullets stopped flying and the gunmen approached our boat, demanding to know who we were.

As I stared down the barrels of some very big guns, being held by angry young men, I began to have doubts about our trip here. (Watch menacing rebels try to intimidate CNN crew )

The waters are so dangerous in these parts that the Nigerian navy doesn't even dare patrol the region. In a word, it's a no-go zone for outsiders.

"How many times do you people come here with your cameras and nothing is done? We don't want you guys to come here again," one of the gunmen shouted.

But we weren't about to leave so easily.

I had been given permission to come to the region from the militants themselves to find out what is happening in the Niger Delta, where the well-armed militants have been fighting Nigeria's beleaguered armed forces over oil. (Read more about the militants' battle)

These guys in their intimidating black outfits and matching black ski masks looked like any army's worst nightmare. And that's exactly what they've become: Nigeria's worst nightmare.

They call themselves the Movement for the Emancipation of the Niger Delta, or MEND. They insist what they're trying to do is mend what they say is the unequal distribution from the profits Nigeria gets from its oil bonanza. (Gallery: See what the militants look like up close)

Nigeria is Africa's largest oil producer. In 2005, it was the world's sixth largest exporter of oil, but the conflict there has cut distribution by an estimated 500,000 barrels per day, the U.S. Department of Energy said in November.

Very little of the profits makes it back to Nigeria, and even less makes it down to the mangrove swamps of the Niger Delta.

As a result, MEND in recent months has escalated its struggle, kidnapping expatriate oil workers at an alarming rate (more than 30 in the last month alone), indiscriminately killing Nigerian military forces, and carrying out attacks on oil installations in the region that cut the flow of oil dramatically.

Hostages paraded before my eyes
Now, as guns pointed at me, I explained we had been given permission for them to take us to their leader. They laughed me off, saying their leader doesn't talk to anyone, especially journalists.

But they agreed to take us to one of their hideouts and show us something no Western journalist had seen: dozens of MEND militants in black dancing and chanting themselves into a trance. Some pointed their guns menacingly at us; others simply tried to intimidate us.

It was MEND military might for the whole world to see. And they told me this is just a fraction of their forces. They claimed to have more than 200,000 troops spread across an area the size of Texas. (Interactive: See where the Niger Delta is located)

As the militants danced, they displayed their latest hostages: 24 Filipino sailors captured on January 20 as their cargo ship tried to take turn into the port of Warri. (Watch the rebels show off their hostages )

It is the largest number of foreign hostages ever captured here at a single time. The Filipinos seemed dazed and confused, their nerves wearing thin as they struggled to come to terms with a fight they said they have no clue about.

The militants fired into the air. The hostages flinched. I thought there was going to be an execution in front of us -- and I'm sure the hostages thought the same thing.

'Our fight is against everybody'
After about an hour, the militants agreed to take me to their leader. They said that due to his superstitions, we could only interview him out in the middle of the creeks and they took us back out into the water.

A short while later, he appeared, accompanied by a small army of heavily armed bodyguards.

He described himself as "Major General Tamuno," the field commander of MEND. He spoke softly through the slits of his black ski mask.

"MEND is a struggle for the liberation of the Niger Delta, the most devastated and the most threatened region in the world," he said.

"Our fight is against everybody -- every institution that don't want the people of the Niger Delta to have their fair share."

I learned this militant leader has a degree in political science from a local university, but he couldn't find work after college. Many of his men are the same -- educated and frustrated.

He told me foreigners working in Nigeria's oil sector should get out now.

"We will take lives, we will destroy lives, we will crumble the economy," he said bluntly.

And with that, the interview was suddenly over.

We were escorted back out into open waters by a convoy of speedboats. As we were about to leave, one of the masked gunmen reissued his group's threats.

"If they don't listen, well, maybe Nigeria will go into pieces. We don't know how many pieces it will go into, but the federal government will not be in peace unless they listen to us," he said.

And just like that, they were off -- speedboats spluttering in the water, gunfire echoing into the crisp afternoon air and, before we'd even put down our gear, the militants were gone.

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Oil Falls, But ERHE Rises (And Falls)

ERHC Energy shares today showed strong buying support throughout most of Tuesday on low volume, but as the 3 p.m. witching hour arrived the share price fell back to where it started the day. At 3:38pm EST, volume stood at 366,354 and the last sale was $0.448, slightly below the $0.45 start.

Meanwhile, the price of oil continued to fall despite alleged threats from Iran to shut the Straits of Hormuz (attributed to "a foreign office official" in the Jerusalem Post) and the continuing issues with MEND in Nigeria. A barrel of crude for Feb. 7 delivery fell below the $54 mark to $53.88 in early trading Tuesday, but closed off just $0.35 for the day at $55.74.

A trade of 15,000 shares at $0.395 at 1:07pm EST baffled the kibitzers on the message boards, and there was no explanationfrom ADVFN, either, except that it was a standard NASDAQ trade and could not be identified as either a Buy or Sell. Buys outpaced sells 255,372 to 125,668, with 44,414 trades unidentified.

The last trade for the day went off at $0.455, a half-cent gain on the open.

'Hundreds' Of Bodies In Lagos After Latest Gas Line Explosion

A huge gasoline pipeline explosion in Nigeria's unofficial capital city, Lagos, came hours after people started collecting gas from a rupture in the line that later exploded.

Despite its immense wealth in oil and gasoline resources, Nigeria has been experiencing chronic shortages of both as those resources are exploited by mostly foreign oil companies and Nigerian politicians.

It remains one of the few countries in the world where tens of thousands of people often risk their lives to get a few quarts of gas.

Today's tragedy is yet another failure of the Nigerian government to recognize and correct its official greed and to start sharing its natural resource income with ordinary Nigerians. By all indications, it will not be the last - if the government last that long.

"Hundreds of mangled bodies" fused with one another in a grisly heap were visible in the flames, observers reported. There is no indication of when the fire will be controlled.

Here is the awful story:


Pipeline Explosion in Nigeria Kills More Than 200

By THE ASSOCIATED PRESS
Published: December 26, 2006
Filed at 7:57 a.m. ET

LAGOS, Nigeria (AP) -- At least 200 people were killed Tuesday when a gasoline pipeline exploded in Nigeria's biggest city of Lagos, a Red Cross official said. The death toll was expected to rise.

Ige Oladimeji, a senior official for the Nigerian Red Cross, said his workers had documented "over 200 and still counting."

"We can only recognize them through the skulls, the bodies are scattered over the ground," he said. Workers "can't get close enough because the fire is still burning."

Witnesses said the pipeline ruptured shortly after midnight and that people had been collecting leaking fuel in plastic cans for hours before the explosion. It wasn't clear what caused the initial rupture in the pipeline or the later explosion.

Hundreds of bodies could be seen jumbled and fused together in the raging flames at the blast site. Intense heat kept rescue workers back as smoke billowed over the heavily populated Adule Egba neighborhood.

The blast shook the neighborhood after dawn, Nigerian Red Cross spokesman Umar Mairiga said. He said 16 bodies had been taken to the morgue, but raging fires were hindering further recovery. Many people had been injured, he said.

Nigerians often tap into pipelines carrying refined fuel, scooping up the raw product in buckets or plastic bags. Spilled fuel spreading in pools sometimes ignites, immolating people nearby.

In May, more than 150 people died in a similar explosion in Lagos.

Nigeria is Africa's largest oil producer, but corruption, poor management and limited refining capacity often leave the country short of fuel for vehicles and stoves.

Shortages in recent days have prompted hours-long lines at Lagos filling stations.

ERHC's Search For New Chief Tech Officer Is Over

ERHC Energy's long search for a replacement for its former Chief Technical Officer - a demanding post now that there are actually rights to explore and immense challenges ahead in exploring them - has ended with the selection of former Aramco technology coordinator James Ledbetter, the company announced in a press release issues just after the market closed Tuesday.

Update, 5:30pm EST, 12/20/06: The good news lifted ERHE shares 9.5 percent by Wedbesday's close to $0.46 Bis and ).47 Ask on double our average volume - more than 1.5 million shares. The stock hit $0.50 for the second time during trading, as we predicted it would back on November 4.

Here is the release, courtesty of publicist Dan Keeney:

FOR IMMEDIATE RELEASE

ERHC Energy Inc. Appoints Vice President Technical

HOUSTON, December 19, 2006 – ERHC Energy Inc. (OTCBB: ERHE), an independent oil and gas company with assets in the Gulf of Guinea, has announced the appointment of James Ledbetter to the position of Vice President Technical. Mr. Ledbetter begins his duties with ERHC Energy immediately.

Mr. Ledbetter brings more than 25 years experience in exploration and production projects to ERHC Energy. He has an international background, having worked on projects in more than 20 countries, including work in Australia, Europe, the Middle East, North and South America, and the Pacific Rim.

In addition to managing the Company’s relationships with consortium partners and various regulatory agencies in this new position, it is expected Mr. Ledbetter will play a key role in helping ERHC Energy expand its asset base and diversify beyond the Joint Development Zone.

“We are very pleased to have James join us and anticipate he will be pivotal in implementing a focused acquisition strategy that targets a credible portfolio of low- to medium-risk properties,” said Sir Emeka Offor, chairman of ERHC Energy’s Board of Directors. “We sought a person who could help to identify, acquire and manage prospects in which we discern a competitive advantage, and I believe James has the right background for the job. The Board’s goal is to build a significant revenue base that will have a positive impact on ERHC’s profitability for the benefit of its shareholders.”

Most recently, Mr. Ledbetter served as a technology coordinator for Saudi Aramco’s Research & Technology Division, where he coordinated more than 200 technology initiatives. Prior to that, he developed and evaluated the worldwide exploration portfolio for Occidental Oil & Gas Corporation as its chief of strategic planning & economics, worldwide exploration.

Prior thereto, Mr. Ledbetter worked for International Economic & Engineering Consultants, Inc., Kuwait Foreign Petroleum Exploration Company, Capitol Steel & Iron Company, Kerr-McGee Corporation and Cities Service Company.

“As operations are initiated in the Joint Development Zone (JDZ), the depth of experience and international perspective that James offers will be very valuable for ERHC Energy,” said Nicolae Luca, acting chief executive officer for ERHC Energy. “We are very pleased to welcome James onto our management team and look forward to his contribution to the exploration and exploitation of ERHC Energy’s rights.”

ERHC Energy holds exploration rights in six JDZ blocks, consisting of a 22 percent participating interest in JDZ Block 2, a 10 percent participating interest in JDZ Block 3, a 17.7 percent participating interest in JDZ Block 4, and a 15 percent working interest in JDZ Blocks 5, 6 and 9. Additionally, subject to certain restrictions, ERHC holds the right to receive up to two blocks of ERHC’s choice in Sao Tome’s Exclusive Economic Zone (EEZ) and holds the option to acquire up to 15 percent paid working interest in up to two additional blocks of ERHC’s choice in the EEZ.

Mr. Ledbetter earned a Bachelor’s Degree in Petroleum Engineering from the University of Tulsa.

More Fallout Over Starcrest/Addax Deal Touches Chukwueke

Tony Chukwueke, the former Chrome executive and close associate of ERHC Energy chairman Sir Emeka Offor, may be at the center of a new firestorm following his ouster as the head of the Petroleum Ministry last week. A report in an industry intelligence journal, Petroleum Africa, says Chukwueke is being seconded to the Dept. of Petroleum Resources, a former berth, to find out why billions of past-due payments due for non-JDZ blocks awarded in 2005 and 2006 have apparently not been made.

At another angle, however, the story appears to be yet another effort by majors working through Petroleum Africa to indict Offor, a Nigerian billionaire who has been decidedly unpopular with ExxonMobil, Chevron and Anadarko ever since he won a substantial cluster of rights concessions in the JDZ in open bidding last winter and then walked away with choice rights in OPL 291, outside the zone (see my December 1, 2006 post).

In fact, since the story is unsourced - as was the Barry Morgan story in UpstreamOnline that hinted at the same scandal - it is likely that someone from the majors' back office is peddling the story to a variety of publications. There is no indication that doing so has made the least bit of difference, however.

Here's the latest unsourced hit piece:

Nigeria’s DPR in $2.7 Billion Oil Scandal
© Petroleum Africa. All rights reserved.

http://petroleumafrica.com/read_article.php?NID=2798

Petroleum Africa has learned through inside sources that a scandal is about to break in Nigeria’s petroleum industry in regard to $2.7 billion in oil revenue that has yet to be collected from the 2005/2006 bid rounds.

Apparently a special meeting of high level government officials was called last Friday that included President Olusegun Obasanjo, Petroleum Resources Minister Dr. Edmond Daukoru, and Tony Chukwueke, the former head of the Department of Petroleum Resources (DPR). At the meeting Obasanjo was informed that many of the 2005/2006 bid round winners had not yet made payments for their respective blocks; 25 oil blocks were awarded in the 2005 round and 13 in the 2006 mini bid round.

The shocked president directed high-level officials at the meeting to set up a committee to look into the extent of default, and other problems associated with the bid rounds.

An excited Obasanjo gave both Daukoru and Chukwueke a firm directive to recover the money. “Where is my money, where is my money? You have to pay this money. It was in the budget and people are watching,” a panicked Obasanjo reportedly said.

Last month Chukwueke was re-assigned to the Petroleum Ministry over what was commonly believed to be related to the Starcrest/Addax deal for OPL 291. Earlier speculation had it that Chukwueke was to be reinstated, but at this time it does not appear a full re-instatement to DPR is likely for Chukwueke, but rather a return to the DPR to get the accounts in order, so to speak. He will be working with the Acting Director of DPR, Mrs. Chioma Njoku, while he carries out the President’s directive.

Our source postulated: “Industry watchers are beginning to wonder if Chukwueke’s removal last month from the DPR was solely as a result of the controversial Addax/ Starcrest $35m deal on OPL 291, or it is a case of a Pandora’s Box about to be blown open?”

Upstream's Barry Morgan Floats Buy-In Rumor

Barry Morgan, the veteran industry reporter whose hit-or-miss record on ERHC stories is passable but not high, ran another one up the flagpole Thursday night suggesting that a Dubai company called Millennium - where former ERHC CEO Walter Brandhuber is charged with building Millennium's energy portfolio - is interested in "a stake" in the rights that might be acquired by buying some of Chairman Sir Emeka Offor's 300 million shares.

The story offers no supporting information at all, so you have to take it with a grain of (sea) salt. Admittedly, there's been a lot of talk - almost exclusively confined to one Investor's Hub message board - about buy-ins and buy-outs as investors drove the share price up $0.12 on rumors several weeks ago. Nothing came of those rumors, which were similar in most respect to today's, other than some of the smarter players pocketing bundles of cash on the sale of their multimillion-share hoards.

That's a common ploy with the group of players that dominate the board and drive out unbelievers who may demur. Its moderator is a woman who has been ERHC co-founder Phil Nugent's Houston CPA for decades, and it's hard to imagine any rockets getting launched over there without his matches.

If it is more than a plan to snatch your Christmas money, it has eluded our sources. We continue to urge caution, at least until the SEC and FBI wind up their probes.

Here is Barry Morgan's article:

Players in chase for JDZ stake

By Upstream staff

An unidentified US oil player is said tro be among an assortment of investors trying to enter the Nigeria&Sao Tome Joint Development Zone in the Gulf of Guinea by acquiring the shares of Emeka Offor, the Nigerian chairman of Colorado-registered ERHC Energy, writes Barry Morgan.
ERHC holds substantial equity in the play, including preferential rights to blocks 2, 3 and 4 alongside operators Sinopec, Anadarko and Addax Petroleum.

The financial manoeuvre is being undertaken through the Dubai-based Millennium Finance Corporation, where former ERHC chief executive Walter Brandhuber is now fund manager with a brief to build up the energy portfolio.

Investors and Millennium Finance may be angling to take a stake in ERHC, drawn from stock sold by Emeka Offor, the company's largest single shareholder, who is in talks to offload at least half his 43% equity in ERHC.

Offor is facing legal threats by shareholders preparing individual and class-action lawsuits.

Their complaints range from compensation for unpaid fees to the alleged usurpation of corporate opportunity arising from a deal he struck with Addax Petroleum for deep-water acreage through Nigerian independent Starcrest Energy, another company he controls.

ERHC Narrows Loss In 2rd Quarter

A press release form ERHC Energy says that the company narrowed its losses in the 3rd Quarter of 2006 ended Sept. 30, and that year-to-year expenses are also sharply down.

The release follows a November update from CEO Nicolae Luca telling investors that despite the company's cooperation with probes mounted by the FBI and SEC, those continue to eat away at resources better used in developimng its Gulf of Guineau rights.

The Luca shareholder letter last week said the company is looking to exploit opportunities in the GoG as its steers toward budget decisions for its drilling program in 2007. He repeated that theme in Thursday's release.

"Though our successes were overshadowed at times by various challenges, this has been a year in which we made significant strides toward exploiting our assets in the JDZ," Luca said.

Shares on the Pink Sheets lagged yet another day on Thursday, with just over 409,000 traded in a range of $0.40 to $0.42. ERHE closed in the black on a gain of one cent to $0.42.

Here is the press release, courtesy of ERHC publicist Dan Keeney of Houston:

FOR IMMEDIATE RELEASE

ERHC Energy Inc. Reports Fourth Quarter and
Year End Financial Results

HOUSTON, December 14, 2006 – ERHC Energy Inc. (OTCBB: ERHE), an independent oil and gas company with assets in the Gulf of Guinea, today announced its results for the fourth quarter and year ended September 30, 2006.

As of September 30, 2006, ERHC reported cash assets totaling $41 million.

During the three months ended September 30, 2006, ERHC had a net loss of $1,039.670, compared to a net loss of $2,786,906 for the three months ended September 30, 2005. General and administrative expenses during the fourth quarter totaled $1,569,158, a reduction of $1.2 million compared to the same period a year earlier.

For the fiscal year ended September 30, 2006, ERHC had net income of $23.2 million, compared with a net loss of $11.3 million for the fiscal year ended September 30, 2005. The improvement in net income was the result primarily of a $30.1 million net gain from sale of participating interests in Blocks 2, 3 and 4 of the Joint Development Zone (JDZ) and a conversion of $5.7 million in debt to common stock and income tax expenses. For the year, general and administrative expenses were up 29 percent over fiscal year 2005, mostly due to an increase in legal costs.

“Though our successes were overshadowed at times by various challenges, this has been a year in which we made significant strides toward exploiting our assets in the JDZ,” said Nicolae Luca, acting chief executive officer. “With a solid financial position and strong relationships with strategic partners Addax Petroleum and Sinopec, we believe that we are positioned well for the coming year.”

ERHC Energy holds exploration rights in six JDZ blocks, consisting of a 22 percent participating interest in JDZ Block 2, a 10 percent participating interest in JDZ Block 3, a 17.7 percent participating interest in JDZ Block 4, and a 15 percent working interest in JDZ Blocks 5, 6 and 9.

ERHC Shares Up 38.89 % On No News; Beware Of Buyout Scenario

Shares of ERHC Energy have rocketed upward on stronger-than usual volume from the opening bell this morning, possibly in anticipation of the announcement I said on Friday that coukld come from the Justice Dept., SEC or the company regarding its issues under the Foreign Corrupt Practices Act.

What some investors are being told, however, through the made-up entity "S. Freed" on the subscriber-based, pumpers-only Elephant Fields board, is that Sir Emeka Offor has decided to sell 20 percent of the company for somewhere in the range of $2 per share. This hidden-source rocketry may cost some investors dearly, as the information is almost certainly false, I believe, and their willingness to buy in anticipation of such a deal will be used to clean them out once again.

With the share price at 3:12pm standing $0.50 - now up $0.14, or 38.89 percent, the real certainty to me is that the Justice Dept. has, as we have said all along, found no evidence of wrongdoing by ERHC Energy and will not seek an indictment.

Upstream Article Roils Waters; Some Investors Wary, But Deal Holds Promise

An article in UpstreamOnline that talks about a complex deal involving a company called Starcrest and ERHC Energy and the dilution of ERHE shares has left investors in an uproar - most of them angry at Upstream for what they say is an unfounded new attack on the company.

As we said in our last post, the company was due a $0.05 share price hike after good news on drilling rigs and schedules leaked from the Nigeria-Sao Tome and Principe and Joint Development Authority. The new revelation set off a small wave of selling this morning at the bell, though, with 28,000 shares trading before a buy was made and the price falling from the opening Bid of $0.385 and Offer of $0.39 to $0.365 and $0.375 at 10:08am EST, respectively. Trading is light. Note: We had mentioned a downside in our last column, too.

The article was written by Barry Morgan, who has written frequently about the company in the past. While he is often praised, yesterday's missive - or missile, more like it - detonated a growing stockpile of anger among shareholders who have seen their investment languish for endless months of low volume as the company awaits the next step by the SEC and the Justice Dept. in the Foreign Corrupt Practices Act probe of the company that began last April.

The problem, in short, is that the aticle says ERHC Energy CEO Sir Emeka Offor owns both companies, and by issuing new ERHE shares to acquire all of Starcrest he would then reap those shares, as well, increasing his stake in ERHE from 43 percent to 70 percent.

The deal as outlined is a stroke of genius that may leave his critics awed yet angrier than ever. The prospects of OPL 291 are the caveat in any criticism, though. If ERHC Energy ends up as owner of Starcrest and its rights in OPL 291, and the block as expected pays off in a big strike, the company's fortunes could again soar overnight. The dilution issue would evaporate in that case.

The positive side of the article is that Offor is not sitting on his thumbs while the majors mount their political attacks through the U.S. Justice Deopt. and SEC; instead, he is seeing opportunities and taking them, appearances be damned. That is how billionaires are made.

Here is the article:

Nigeria defiant over its awards Ministry says round followed 'routine practice' but potential future bidders stay wary

By Upstream staff

THE Nigerian Ministry of Petroleum has defended the way it awarded deep-water blocks outside of procedures dictated for last May's mini-round, suggesting "routine oil industry practice" was followed.

Majors bidding for the blocks remain unconvinced, clouding plans to hold another licensing exercise before the end of the year.

The acquisition by Addax Petroleum of Nigerian independent Starcrest's interest in OPL 291 was defended as "in line with the open and transparent bidding for acreage allocation in the 2005 round", according to ministry spokesman Peter Ogbonnaya. The same process will be adopted in future rounds, he said.

Minister of State for Petroleum Edmund Daukoru insisted Starcrest, in partnership with Taiwan's Chinese Petroleum Corporation, qualified to participate in the mini-round, winning OPLs 226 and 294 while Transcorp won OPLs 281 and 295.

India's Oil & Natural Gas Corporation/Mittal Energy tie-up won right of first refusal to OPL 291 but did not submit any bid, leaving the acreage stranded, Daukoru said.

This justified a request by both Transcorp and Starcrest/CPC to swap their own blocks for OPL 291, but Transcorp failed to pay the signature bonus, leaving the way clear for Starcrest/CPC to find $55 million and secure the block.

When CPC withdrew, Starcrest applied to replace its operating partner with Addax. Daukoru's explanation has left industry observers wondering why, if everything was above board, the director of the Department of Petroleum Resources (DPR) Tony Chukwueke was forced out of his job so abruptly two weeks ago.

Neither Transcorp nor Starcrest indicated interest in OPL 291 at the time, nor did they later apply on the floor of the conference to swap their own blocks for the acreage, said a senior executive present during proceedings.

Both companies are alleged to be associated with close business allies of the presidency and to have benefited from secret post-bidding manoeuvres, unwitnessed by other participants.

Faith in the ability of Abuja to conduct fair and open tendering before next April's elections has collapsed, as has morale at the DPR.

Junior assistant director of finance Chioma Njoku has been appointed acting director of the DPR, over the heads of more senior directors such as veteran upstream petrocrats Billy Agha and Olutoye Ibikunle who were deemed to be too close to Chukwueke.

Starcrest is owned by Ibo business magnate Emeka Offor and is under investigation by Abuja's Economic & Financial Crimes Commission.

Starcrest tried its luck with Sinopec after the deal with CPC fell through but the Beijing giant was unhappy with the tight time frame for concluding an agreement on OPL 294.

Addax persuaded Starcrest to instead pursue OPL 291 and in partnership with Starcrest managed to secure terms from the DPR exactly similar to the deal Addax had earlier signed with ERHC Energy in the Joint Development Zone.

At least 43% of ERHC equity is also owned by Offor, who has angled to acquire Starcrest by issuing additional ERHC shares - a move that at one fell swoop would land him about 70% of ERHC stock in the most prospective frontier oil province in west Africa. Minnow ERHC enjoys a key position with Addax in JDZ blocks 2, 3 and 4.

Offor also came under fire this week from Colorado-registered ERHC shareholders for appearing to commit a breach of fiduciary duty by diverting a commercial opportunity for his own benefit, preferring to press the interests of Starcrest rather than ERHC in Nigeria's Exclusive Economic Zone.

Burgeoning disquiet among ERHC shareholders may yet result in a class action derivative lawsuit under US federal jurisdiction designed to prompt Offor to revaluate his acquisition strategy in the Gulf of Guinea.

A spotlight thrown on the world of Nigerian licence allocations at this juncture could dissolve all confidence in the country's upstream policy until a new administration takes charge next May.
--------------------------------------------------------------------------------
01 December 2006 00:01 GMT | last updated: 01 December 2006 00:01 GMT.

What is fascinaing is how incredibly agile Mr. Offor is when it comes to making deals. He had set his eye on two other non-JDZ blocks and won them, but was apparently persuaded by his JDZ partners at Addax to swap them for OPL 291 instead. The winning bid for OPL 291 was from India's ONGC, another crafty player, but ONGC couldn't pay the hefty $55 million licensing fee.
Starcrest's original partner in the bid for the two other blocks (collateral for the swap), Chinese Petroleum Corp., dropped out, and Offor tried to link with Sinopec, a government-owned Chinese company, but it couldn't make a quick decision and Offor replaced them with Addax. With Addax, he got the identical good deal he got from the Swiss driller in their JDZ partnership.

Once again, as other companies faltered, Offor seized the day and came out on top.

That has always been the pattern: In Blocks 2 and 3, he replaced Pioneer and Devon with Sinopec and Addax in a heartbeat, just as he'd earlier replaced Noble Energy with Addax in Block 4. The process, from the outside, looked seamless and brilliant; investors shocked by the Noble defection sold out, and the ERHE share price shot up almost instantly; the same occurred in Blocks 2 and 3, with sharp price drops followed by sharp rises when the malefactors were replaced.

But is that in the cards today and tomorrow?

We're dealing, if you'll permit me to abuse the paradigm of myth, with a many-footed Hydra, and there are thus more than two shoes that may fall. My suspicion is that an announcement on the SEC and Justice Dept. probes is near, perhaps within a business day or two. I expect it to be a positive announcement, but I am not urging investors to bet that I am right. To me, the place to be right now is on the sidelines, watching a fabulous football game in which all the players but one wear sunglasses. If the ball disappears in the sun, he's fried; if the skies cloud over, they are blind.