ERHC Energy Inc (ERHE)

[midtieroil]

I was just looking at the production data for ERHC's acquisition in Jackson Co, TX. Looks like the production dropped to 175 bbls in the month of December. It was producing 700 bbls in June. This is a very steep decline curve and it appears that ERHC bought at the peak. What else is new? ERHC always buys high and sells low. I would expect the production to keep declining.

At the current production rates and price of oil the gross revenues for the month with oil at $53 would be $9,275. I doubt ERHC would net 50% of that after royalties, severance taxes, operating costs and marketing costs. But let's say they net $5000 a month. They paid about $500,000. That would indicate a 100 month payback. Would you spend over half of your remaining cash to get repaid over 8 years? I sure wouldn't.

Even if they plan on drilling a well there, which they don't have the money to do, I don't think the payback on that well would be much better than on this one. So, why did ERHC do this? Or was it just a transfer of the remaining cash?