Addax Revealed: A Terrific Profile Of Gandur, Addax's Chief and ERHC's Key Partner

This is an absolutely terrific profile of Jean-Claude Gandur, the Swiss businessman whose partnership with ERHC Energy has taken us in so many interesting directions.

Trouble Is My Business
by Christopher Helman
10.15.07, 12:00 AM ET

http://www.forbes.com/free_forbes/2007/1015/099.html?partner=yahoomag

Billionaire Jean-Claude Gandur has braved war and corruption to build an oil empire on the cheap.

Recently a huge explosion shook northern Iraq. Not the usual kind. This blazing fire and billowing black smoke came from a test drill at Taq Taq, an oilfield 30 miles southwest of Irbil in the Kurdish region. With no pipeline or storage tanks in place, Addax Petroleum had little choice but to burn off the oil rather than let it soak into the rocky ground. Opening the well for a few minutes revealed a true gusher: a flow rate of 37,500 barrels per day. Considering the results from three other wells already completed, engineers figure that Taq Taq holds more than 2.7 billion barrels of high-quality crude and could produce as much as 200,000 bpd for ten years.

One small problem: Iraq's parliament still hasn't signed off on a federal oil law, putting the entire $500 million gamble in jeopardy. Jean-Claude Gandur, Addax's chief executive, is pushing ahead anyway. "It is absolutely unbelievable the quality of oilfields untapped in Iraq," he says. Gandur would prefer to have a law and an export license in place. But in a pinch he figures he can sell oil--up to 20,000 barrels a day--to a refinery he'll help build for the Kurds, or hawk it straight out of the ground. "Peace has no value to our assets."

Gandur knows his way around trouble. Most of his business is in restive Nigeria, where Addax produces 100,000 bpd--overshadowed by only Shell, ExxonMobil (nyse: XOM - news - people ), Chevron (nyse: CVX - news - people ), Total and Agip. The company is also pursuing prospects in Cameroon and Gabon. Wherever it ventures, Addax does very well. Over the last 12 months it netted $300 million on revenue of $2.5 billion. Run out of Geneva, Switzerland, Addax is listed on the Toronto and London exchanges; Gandur's 24% stake is worth $1.5 billion. His m.o. has long been buying assets on the cheap--and making nice with strongmen. "Jean-Claude is able to open the doors and negotiate on his feet," says Martin Molyneaux, an analyst at FirstEnergy (nyse: FE - news - people ) Capital, a Canadian investment bank in Calgary, Alta. and an Addax underwriter. "He is very good at interacting with people." People close to Sani Abacha, the late dictator of Nigeria, for example. Gandur has also been dubbed Commander of the National Order in Benin, has a diplomatic passport from Senegal, and for ten years was the honorary consul in Geneva for the civil-war-riven Republic of Congo.

The son of a Swiss pediatrician, Gandur, now 58, grew up in Alexandria, Egypt, where he learned Arabic, fell in love with history and began a lifelong devotion to Egyptian antiquities. He studied law and political science at the University of Lausanne. In 1976 he went to work at the Philipp Brothers trading house in Zug, Switzerland: "the best school in the world," he says. There he became a successor to infamous trader Marc Rich, who had left the company in 1973. Early on Gandur gravitated to francophone Africa and became manager of Philbros' African oil trading operations. After stints at rival trading houses, in 1987 he and three partners set up their own west African trading operation, Addax & Oryx Group, named after two members of the African antelope family.

Soon AOG began acquiring physical assets to backstop trading positions, picking up oil storage tanks, petroleum depots, liquefied petroleum gas and oilfields. The company even branched out into gold mines (Gandur is chairman of Toronto-listed Axmin). In 1996 Gandur made the salmon leap from the downstream activities of oil trading and marketing, which provide thin margins by moving huge volumes of other people's oil, into the upstream, which entails more risk and upfront investment but offers fatter returns. AOG inked its first production-sharing contract with the oil minister of Ivory Coast to overhaul the abandoned offshore Espoir oilfield. That was followed up in 1997 with concessions in offshore Benin.

Gandur came into the money a year later, in Nigeria, where U.S. oil company Ashland (nyse: ASH - news - people ) and the French major Total were in a 50/50 venture developing four offshore oil blocks. Ashland, in the process of refocusing its business on mining, made a deal to sell its interest to a small French operator. But the Nigerians, insisting change in ownership required government approval, threatened to repossess the assets. Ashland should have known better, jokes Gandur: "I think it was sabotage by some of the executives of Ashland because they wanted to keep it. Otherwise I don't understand why they messed up so much."

Their screwup; his payday. Addax explained to Dan Etete, then Nigeria's oil minister, that killing a contract with a U.S. company would be lousy p.r. and persuaded him to let Gandur negotiate with Ashland for the assets. Events played into his hands. OPEC had boosted output just months before the Asian financial crisis eroded demand for fuel; oil prices plunged from $20 to $12 a barrel. Gandur convinced Ashland and Total to sell the four blocks, with 8,000 bpd of production and 30 million barrels of reserves, for less than $50 million. After investing $1 billion, Addax now produces 100,000 bpd there.

Did charm alone win the day? In 2000 two former Addax & Oryx Group employees were convicted in Switzerland and fined for money laundering of embezzled funds tied to President Abacha. (Abacha, who died in office in 1998, is suspected of stealing more than $3 billion from Nigeria.) Etete is on trial in France on charges of money laundering and receiving kickbacks from Elf Aquitaine (now part of Total). A French trader and former Addax executive, Richard Granier-Deferre, is being tried as an accessory. Etete reportedly bought $19.5 million of luxury properties in France.

Nigeria continues to be a contentious but profitable play for Gandur. In March 2006 Addax signed production-sharing contracts on three blocks in an offshore area shared by Nigeria and tiny São Tome. Its partner is ERHC Energy, a publicly traded company headquartered in Houston but controlled by Nigerian businessman Emeka Offor, a close associate of former Nigerian president Olusegun Obasanjo (Offor says otherwise). Offor and ERHC reportedly got a sweetheart deal on its blocks, despite limited operating experience and insufficient access to the necessary capital. "We are good friends," Gandur says of Offor. "We have checked him out through several channels." The pals cut another deal last November, Addax partnering with Offor's little-known company called Starcrest to develop Nigerian offshore block 291, a very promising prospect in the same geologic trend as Chevron's giant Agbami field and Shell's Bonga. Addax paid Starcrest $35 million for a 72.5% stake, forking over $55 million to Nigeria as a signature bonus and pledging another $75 million in development costs.

When the deal was announced, the Nigerian media exploded with allegations of corruption. The block had been previously awarded to Transcorp, which, according to Addax Chief Financial Officer Michael Ebsary, hadn't come up with either the money or the required international partner within 90 days, as stipulated by Nigerian authorities. Critics claimed Starcrest got the block only through cronyism. The Nigerian feds have been investigating, and in August the press reported that new President Umar Musa Yar'Adua was considering the revocation of some recently granted licenses. Gandur says his request to meet the president in person was recently turned down.

Shareholders of ERHC, meanwhile, are wondering why Offor didn't steer the block 291 deal their way. In August Offor resigned his ERHC chairmanship. "Nigeria has not in the past been particularly good at enforcing rules on oil companies with political ties," says Ebsary. "Now they are really trying to apply the rules." Still, he adds, "In these parts of the world you are invariably going to be dealing with people connected to someone powerful in the ruling elite. That's just the way it is."

In that respect Addax shareholders have little to worry about. Gandur is buddies with powerful Nigerian Oil Minister Edmund Dakouru, having negotiated deals with him for 20 years. Also helping to smooth things out is Addax board member Afolabi Oladele, who handled relations with oil majors for the Nigerian National Petroleum Co. in the 1990s and receives $9,000 a month from Addax for consulting work. Gandur has also recruited Brian Anderson, formerly Shell's leading guy in Nigeria, and James Pearce, who ran Chevron's deepwater operations there.

Gandur is making friends lower down the social scale, as well. Addax hires community representatives from regional tribes and has spent $10 million in the past decade building roads, schools and water projects. The rule in Nigeria, Iraq or anywhere Addax goes is to "make sure the chief of the village knows what you do next," Gandur explains. "Don't move the rig without him knowing." The strategy has worked pretty well, so far. In contrast with Shell--Nigerian civil unrest has disrupted one-quarter of its output for the past 18 months--Addax has had no outages, but several contractors have been taken hostage, and last February one was killed trying to escape.

Security is increasingly in the fore of Gandur's mind, especially as his empire and fortune have grown large enough to make him a target. In Iraq the Taq Taq field is protected by U.S. security outfit Vance, which hires peshmerga, armed Kurdish fighters. The Kurdish Regional Government has a huge incentive to protect both Gandur and his investments. After Saddam's fall the KRG began to assert its rights to the oil in the territory under its control; in 2004 it signed a deal with Genel Enerji, a division of Turkey's Cukorova Group, to explore Taq Taq.

Addax began talks with Genel, but months passed, and any hope of a deal seemed bogged down as other suitors tried to woo the Turks. "They were aware they had a nice asset," says Ebsary. Gandur, sensing it was time to close the deal, stepped in. He went to Ankara, met with Mehmet Sepil, chairman of Genel, and poked fun at his larger oil competitors, saying they would try to sideline the Turkish energy giant and take total control of the field. In July 2005 Genel dealt Addax 30%; last year Addax paid $85 million to up it to 45%.

Addax and Genel are also underwriters of Kurdish independence--a scalding potato, politically. They are footing $90 million for drilling this year and expect to invest $1 billion to develop Taq Taq and the adjacent Kewa Chirmila prospect. Yet when Taq Taq starts producing, 90% of the oil will go to the KRG as a royalty. If Taq Taq flows 200,000 bpd and Kewa Chirmila 50,000 bpd, that's more than $15 million into KRG coffers each day.

That also assumes that the fractious parliament in Baghdad will pass a federal oil law. It doesn't help that the U.S. State Department opposes Kurdish oil deals as too much too soon, while the Iraqi oil ministry, led by Shiite Husayn al-Shahristani, condemns any deals as illegal. Until there's a law, Addax cannot build the pipeline that would probably move oil to the Turkish port of Ceyhan. Meantime, Gandur and Genel will likely start construction of a refinery near Taq Taq that would take 20,000 barrels a day and provide a vital supply of indigenous gasoline to the Kurds.

In a visit to Irbil earlier this year Gandur gave his two Serbian bodyguards the slip to visit the ancient citadel there. Built on a hill said to be inhabited continuously for 7,000 years, it houses a small museum where Gandur, an avid collector of antiquities, studied a collection of ancient Sumerian tablets. He reflected on the myriad powers that have come and gone in the Fertile Crescent. Assyrians, Babylonians, Romans, Europeans, Saddam's Baathists. Gandur intends to stay.

By the Numbers
Simply Gushing
West Africa is a black gold mine for Gandur's company. Up next: Iraq.

$1.2 billion Addax Petroleum's capital expenditure this year.

480 million Addax's total reserves in barrels.

$9 Addax's net income on every barrel of oil produced.

Source: Addax Petroleum.

Good News Boosts ERHE 9%

Good news from ERHC Energy brought a quick price boost to ERHE, which rose 9 percent in its wake this morning, giving me a $900 profit on my recent purchases.

The best part of the long shareholder letter from CEO Nicolae Luca was the news that the acquisition of Godsonic's interest due its failure to pay its bills will substantially boost ERHC's percentage of profit oil in Block 4, and may also mean additional cash due from Addax for the company's profit interest. How much that may be is uncertain, but it could be as much as $1.2 million from my observations.

Here is the latest from Dan Keeney, who was widely ciongratulated on message boards for the company's new, more open approach:

To ERHC Shareholders:

I am pleased once again to provide the September 2007 update on the recent progress of ERHC Energy Inc.

If you were not able to participate in our recent conference call, I hope you had an opportunity to listen to a replay. Corporate Secretary Peter Ntephe did an admirable job of briefly summarizing ERHC’s financial position and its ongoing operations. It was also enlightening to hear from shareholders about their interests and concerns. As Mr. Ntephe described, we intend to offer similar opportunities for investors to ask questions in the future.

We are pleased to report the resolution of our negotiations with Godsonic Oil Company Limited regarding its interest in Joint Development Zone Block 4. As stated in our latest quarterly disclosure, we took action on behalf of our consortium to reclaim Godsonic’s 9.0 percent share of JDZ Block 4 because Godsonic failed to meet certain obligations. Our consortium partner in JDZ Block 4, Addax Petroleum (Nigeria Offshore 2) Limited, claims entitlement under the existing agreements to 7.2 percent out of the recovered 9 percent, leaving 1.8 percent remaining with ERHC. If finalized, this would increase ERHC’s share of JDZ Block 4 from 17.7 percent to 19.5 percent. ERHC and Addax are currently exploring mutual recourse to arbitration or mediation, under amicability, to resolve whether or not additional consideration is due to ERHC from Addax for the 7.2 percent claimed by Addax under the terms of the existing agreements. We believe that the relationship between the two companies remains as good as ever.

Progress continues toward eventual exploration in several JDZ Blocks in which ERHC has a stake. As a carried interest partner in each of JDZ Blocks 2, 3 and 4, ERHC is required to let the operator of each Block make announcements regarding when and where drilling will commence. ERHC Vice President Technical, Jim Ledbetter, is helping to evaluate initial exploration well locations in JDZ Blocks 2, 3 and 4 and we expect to reach agreement on specific locations with the Joint Development Authority and the consortium partners in each of the Blocks in approximately the next six months.

Additionally, after the operators of each JDZ Block complete their review and approval of geological and operational efficiencies, we expect their decisions about drilling schedules at specific locations. It is important to keep in mind that the timeframes for drilling at various locations in all three JDZ Blocks will be based on their evaluations of cost-efficiency and not necessarily to prioritize the highest potential exploration locations.

We are very proud that ERHC has signed on as a sponsor of Nigeria Oil & Gas 2008. The conference, scheduled from February 18-21, 2008, is the premier event on the Nigerian Oil & Gas calendar and is expected to attract more than 4,000 participants, including more than 600 senior delegates. ERHC representatives attended Nigeria Oil & Gas 2007 and were impressed with the quality of the programs and exhibitors, which contributed to our decision to sign on as a sponsor for next year’s conference. Our sponsorship of Nigeria Oil & Gas 2008 is an example of the Company’s efforts to raise awareness about our ongoing operations and the progress being made toward eventual drilling in the JDZ.

Another element of our effort to showcase ERHC Energy’s commitment to contributing positively to the quality of life in the communities in which we operate, is the implementation of a community outreach program in our host communities. Our first initiative was a visit by ERHC Corporate Secretary Peter Ntephe and the Company’s special counsel in Nigeria, Steve Ahaneku, to the Jabi Orphanage Home, in Abuja, Nigeria. ERHC made a small contribution during the visit to help support the orphanage, which takes in abandoned children. It currently is home to 35 youngsters ranging in age from a few weeks to five years old. You can view photographs from the visit at www.erhc.com.

ERHC’s community outreach program is an important part of an integrated program to be more visibly involved with the communities in which we operate and to illustrate the positive things the Company is doing. The program will continue to build momentum with a planned trip by management representatives to Sao Tome and Principe in the fall.

We have heard from a number of shareholders who are excited about attending ERHC’s annual shareholders meeting. While we do not yet have details finalized on the date and location, we can tell you that the meeting will be held in Houston, Texas. We expect to provide the formal notice and documentation to shareholders in time for those coming from out of town to make travel arrangements.

Finally, we would like to clarify that ERHC has agreed to pay its consortium partners in JDZ Blocks 2, 3 and 4 up to 100 percent of the allocation of cost oil plus up to 50 percent of the allocation of profit oil until all carried costs are recovered, subject to certain conditions. ERHC’s Web site has been updated to reflect this clarification.

ERHC Energy remains focused on building positive momentum and values your ongoing trust and support. The management and board look forward to getting together with you in due course at the shareholders meeting.

Sincerely,
Nicolae Luca
Acting Chief Executive Officer

The Price Is Right - For Me

As I had predicted several weeks ago - although my time frame was a week off - the share price of ERHE came back down from $0.32 to the $0.24 x $0.25 region, and I snapped up 45,000 shares at $0.245.

Right now, oddly, on my ADVN monitor, the Bid is $0.243 but there are no shares being offered; that makes a lot of sense, since the SEC and DOJ investigations are apparently going nowhere and there's nowehere to go but up for this stock.

The purchase puts my holdings at 60,000, and while I had planned to add another 55,000, that's on hold for now as I wait for some of my other dogs to perk up.

Offor Will Not Divest ERHC Holding, Chrome Says

Putting a damper on rampant rumor-mongering that suggested Sir Emeka Offor would divest or merge his 42 percent holding in ERHC Energy, the Chrome Group today issued an unusual statement declaring the former ERCH chairman and CEO would maintain and perhaps "enhance" his holdings. The news, however, dampened the share price, and while only 54,950 shares traded before 11:30 a.m. EST this morning, the price dropped from yesterday's close to $0.27 Ask and $0.275 Bid.

Here is the Chrome Group press release:

Securities Alert

PR Newswire and BusinessWire News
ERHC Energy Inc ERHE:OTC BB

No Plans to Divest Interest in ERHC - Sir Emeka Offor
PR Newswire
6:59 AM ET

Sir Emeka Offor, the former Nigerian chairman of Houston-based ERHC Energy has said that he has no plans to divest his interest in ERHC. Indeed, he is currently consulting on enhancement of that holding. In a statement released to the press in Abuja, Nigeria, by the Group Chief Communications Officer, Mr. Val Oji confirmed that the holding of the billionaire businessman who voluntarily resigned as chairman and director of ERHC recently to concentrate on growth plans for Chrome Group, remains intact. "ERHC remains a healthy and viable business; our commitment to the company is total; therefore the issue of divesting does not in any way arise", the statement concluded.

In another development, the group informed journalists that it has repositioned its operations to meet the ever-changing challenges of doing business in a developing economy. Under the new arrangement, the oil and gas giant has rolled out a robust Corporate Social Responsibility (CSR) program aimed at affecting the lives of Nigerians positively, and other host communities where it operates. To be fully integrated into its corporate strategy in line with emerging best-in-class global practices, the main thrust of the CSR program is uplifting the well-being and living standards of the host communities where it operates and Nigerians in general.

Chrome Group will in the immediate future give more back to society. The CSR-centric strategy as envisaged will in the next two years focus on two key areas of intervention, namely: youth empowerment and promotion of a renewab i.e., sustainable and more conducive environment.

Explaining the reason behind the new strategy, Mr. Oji said, "Chrome Group in line with the philosophy of its founding fathers has made considerable inroads in Nigeria and countries outside Nigeria and, in most of these places has left a positive mark on the business landscape and continues to do so to date. The time has come to re-strategize and reposition with a view to remembering all those that are contributing to the success story that the group has become today. Today is the beginning of a whole new chapter in the life of the group - an era of total alignment of the group's Corporate Social Responsibility (CSR) programs with its corporate strategy."

About Chrome Group

Chrome Group is a leading multibillion dollar regional conglomerate based in Abuja, Nigeria with vast interests in oil and gas, insurance, destination inspection services, bio-fuels energy production, petroleum products trading, the power sector, real estate, logistics and dredging services. Chrome Oil Services Limited, the pioneer company in the group has been doing business since the early 1990s and has handled key projects (as part of a consortium) like the turnaround maintenance (TAM)for the Port Harcourt refinery- Nigeria's largest refinery. In addition to its commercial business activities, the group is committed to its Corporate Social Res ponsibility (CSR) programmes through which it intervenes strategically in key areas of youth empowerment and promoting and sustaining a renewable and greener environment. The group employs over 800 staff worldwide. Chrome Group is also a non-racial and equal opportunity employer.

SOURCE Chrome Group

ERHC Takes Steps To Bolster Independent Board, But Share Price Slips

A press release about the Aug. 24 Board of Directors meeting in Nigeria said the company's directors acted to bolster inedendent directorship[s on the company's board to gain better comp.liance with SEC regulations, but the company's share price nonetheless slipped from yesterday's 4 p.m. close to the after-hours Bid of $0.285 on about 43 trades totalling 537,502 shares. About 53 percent were Buys totalling 287,795 as of 2:56 p.m.

Here is the press release, which makes no mention of Sir Emeka Offor's departure twe weeks ago:

Aug 27, 2007 17:41 ET
ERHC Energy Inc. Board Adopts New Committee Charters, Approves Management Recommendation to Reformulate Business Plan
Management Meets With Leaders of Joint Development Authority to Reaffirm Commitment

ERHC Energy Operations
HOUSTON, TX--(Marketwire - August 27, 2007) - ERHC Energy Inc. (OTCBB: ERHE), an independent oil and gas company, today announced actions taken by its board of directors at its August meeting in Nigeria.

The ERHC board of directors approved revisions to the Board Committee Charters for ERHC Energy's Governance and Nominating Committee, and Compensation Committee. The revised Charters, adopted voluntarily by ERHC's board, subscribe to the NASDAQ Stock Market LLC standards of independence for independent directors. Independent directors serving on the Compensation Committee will, in addition, continue to be required to meet the standards of the relevant Internal Revenue Service and Securities and Exchange Commission rules.

Acting Chief Executive Officer Nicolae Luca explained that the board of directors of ERHC will evaluate future candidates for positions on the board to determine whether they satisfy these independence standards.

"We believe that independent directors play a crucial role in ensuring that the board of directors carries out its responsibilities in a manner consistent with its duties to shareholders," said Mr. Luca. "In coordination with the adoption of these revisions to the Committee Charters, efforts are underway to recruit three additional board members."

ERHC's board also approved a new Charter for the Audit Committee, as well as Corporate Governance Guidelines to supplement the Board Committee Charters and the Company's corporate governance policies.

Additionally, the board approved management's recommendation to reformulate the Company's business plan. The reformulated plan will permit ERHC's management to expand the Company's business focus beyond the Gulf of Guinea. Under Mr. Luca's leadership during the past year, ERHC's management has reaffirmed the Company's rights in the Nigeria-Sao Tome & Principe Joint Development Zone (JDZ), strengthened relationships with governments and regulators in the region, stabilized the Company's finances and put strict controls in place to keep expenses in check.

In coordination with the board meeting, ERHC's management met with leaders of the Joint Development Authority (JDA), which oversees activities in the JDZ. During informal discussions with the JDA Chairman Ado Wanka at the JDA's offices in Abuja, Nigeria, ERHC's representatives reiterated the Company's commitment, in conjunction with its technical partners, to fulfill its obligations in terms of exploration and production activities and community relations initiatives. ERHC representatives left with an expectation of the JDA's continuing cooperation with ERHC and other holders of rights in the JDZ. ERHC holds rights to participate in exploration and production activities in six of the JDZ Blocks.

At least part of the SEC case against ERHC Energy is dismissed

The entire case has been dismissed, and a note from pr whiz Dan Kenney says the issue is not with ERHC Energy at all, but it seems like the one straw at which the Justice Dept. grasped has been blown away much like the Attorney General himself, who resigned this morning.

Here is the document, and we'll update you as soon as we can get in touch with the SEC's counsel, Dean Conway.

Update - Here is Conway's response:

From: "Conway, Dean"
Date: 2007/08/27 Mon PM 06:36:30 EST
To: Investor's Hub poster
Subject: Re: Plaintiff SEC Notice of Dismissal

I cannot comment on nonpublic investigations. I can say, however, that the dismissal cited below pertains to a subpoena enforcement action against the named respondent. Thanks

Sent from my Blackberry wireless device (Securities and Exchange Commission)

Meanwhile, ERHC Energy shares sank $0.03 this morning to $0.29 Bid at $0.30 Ask despite renewed buying interest.

By the end of the day, the price stood at $0.285 Bid and $0.30 Ask, but the Bid moved up to $0.29 after hours, when 111,663 shares were sold in three trades, two at $0.29 and the last at $0.285. Volume overall hit 725,738 for the day, which is healthier than usual, and the number of trades - including those after hours - totaled 80.

Posted by: Fishdog
In reply to: None Date:8/27/2007 10:13:51 AM
Post #of 106592

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S NOTICE
OF DISMISSAL OF THE APPLICATION FOR AN ORDER TO SHOW CAUSE

Plaintiff Securities and Exchange Commission (“SEC”), pursuant to Rule 41(a)(1)of the Federal Rules of Civil Procedure, hereby dismisses its Application for an Order to Show Cause and An Order Requiring Obedience to Subpoena Duces Tecum against
respondent O. J. Chidolue without prejudice.

Respondent Chidolue has filed neither a response to the Application nor a motion for summary judgment as to this pleading.

Dismissal under Rule 41(a)(1) is therefore
appropriate.

Dated: August 24, 2007 Respectfully submitted,
s/ Dean M. Conway
________________________________
Dean M. Conway (DC Bar No. 457433)
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-4010
(202) 551-4412 (Direct)
(202) 772-9246 (Fax)
conwayd@sec.gov
Attorney for Applicant

Time To Eat Crow - ERHE Soars 19% on Anticipation Alone

Weary investors in a wild stock market got a break today when ERHE - contrary to my very wrong prediction that it would end the week at $0.25 or below - drove the price back up 23% from $0,26 to $0.32 Ask and $0.311 Bid on volume of 831,376, as of this posting at 3:44 p.m. EST Friday. Buying outpaced sales by a margin greater than 3:1. Much of the early action came from a single purchaser who said he bought 154,000 shares at $0.27 or thereabouts in the first 15 or so trades of the day. There were 127 trades as of the close, when the Bid slipped to $0.305 but the Ask held steady at $0.32.

Of particular note was the resistance at $0.3299. First, what appeared to be related trades of 8,000 and 5,000 shares went off at $0.3299. In the five minutes between an 8,000-share purchase at 2:57 and and a 5,000-share buy at 3:02 p.m. EST, with no intervening trades, the Bid went from $0.32 $0.329, while the Ask went (one trade earlier) to $0.3299. Rather than hit $0.33 - the high purchase of the day - the $5,000 shares at 3:02 p.m. went off at $0.329 Bid and $0.3299 Ask. The Ask dropped to $0.329 five minutes later, and the bid dropped to $0.32. Rarely in the history of this stock has there been a gap of just 9/10,000ths (that ten-thousandths) of a cent.

However, six minutes later, at 3:14:17 p.m., with the Bid back at $0.32, the Ask bumped up to $0.33 for two trades just a second apart - a buy of 5,000 at $0.33 (the single trade at $0.33 for the day), a buy of 10,000 at $0.3299 at 3:14:18 p.m.- followed by a sale of 1,000 at $0.32 11 minutes later.

Someone seemed very determined to keep it from hitting $0.33. If that determination reasserts itself on Monday, we may see some slippage that should soon be offset by the naming of a new CEO.

Wrong, wrong, wrong! We need to see ERHE move beyond this range to persuade ourselves the worst is over for our minnow, but today's volatility is encouraging. Many posters have noted that they took advantage of the deep price discounts engendered by concern over possible indictments stemming from a joint SEC-FBI probe by a Houston Federal Grand Jury and by the sudden, unexpected departure of the company's longtime champion and chairman, Sir Emeka Offor.

There is little to do now but wait and hope for the best, but that investors are rethinking and stocking up would suggest better times are ahead before planned drilling starts in the third quarter of 2008.

Personally, I'm the big loser as I bet that the stock would go to $0.24 Bid and that I could load up around there. I am more reluctant to do so at these levels, although they are historically attractive going into the Fall months. I'll let you know if I increase my 15,000-share stake, acquired at an average of $0.30. At least I'm back in the black!

Offor's Chrome Energy To Issue New Shares On Foreign Exchanges

In an unexpected but logical move, Sir Emeka Offor's wholly-owned Chrome Group is branching out into ethanol production and offering shares on two exchanges far from the purview of the U.S. Securities Exchange Commission, the official Chinese news agency Xinhua reported yesterday.

Nigerian industrial giant lists two subsidiaries on oversea bourses
+ - 21:34, August 22, 2007

Nigeria's industrial giant Chrome Group has announced plans here to list two of its subsidiaries on the European and Middle East Stock Exchanges.

In a statement signed by the Group's Chief Communications Officer, Val Orji, and made available to the media in Lagos on Tuesday, Chrome said that the listing "was part of a comprehensive growth strategy which they intend to implement in the next two years".

It said that to achieve the growth target, it had signed a multidimensional Memorandum of Understanding (MOU) with some international partners including Nigeria's state-owned NNPC on joint ventures on exploitation of ethanol.

The company said that with a vision of becoming one global producer of ethanol fuel, it had commissioned feasibility studies on sugarcane and ethanol production.

The Group, owned by Sir Emeka Offor, is into in oil and gas, insurance, port inspection services, bio-fuels energy production, petroleum products trading, real estate, logistics and dredging services.

Chrome Oil Services Ltd., the Group's pioneer company commenced business in early 1990's and has handled key projects like Turn Around Maintenance of the Port Harcourt refinery, Nigeria's largest oil refinery.

Source: Xinhua

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.