Addax Petroleum (fka AXC)

[nordicroots]

Hi Seek - I'll chime in with some more (hopefully - useful) information that might add something to the discussion. As you read this keep in mind that each project will have their own unique geological, financial and economic considerations that the exploration team will have to consider on its own merits. As you point out there are deepwater wells being drilled now (not by ERHC) and it would stand to reason that those have been deemed to make economic sense given that specific Company's own internal capital budgeting program and their own specific financial risk tolerance. Will ERHC be able to find other such companies willing to farm out some of our deepwater acreage? Time will tell - but I don't think many are holding their breath waiting for it at this point (if for no other reason than the fact oil has dropped below $50 and there is concern of a recession looming ahead for the economy.

Here are some excerpts from recent Seeking Alpha articles of interest addressing the issue of offshore exploration and production that include comments on deepwater drilling.

"HES claims that the lowest cost segment of its portfolio is the offshore segment. Obviously, not all offshore assets are made equal and Bakken has higher costs than most areas of Permian and Wattenberg basins; nonetheless, for HES, offshore is less costly than Bakken."

https://seekingalpha.com/article/3646796-hess-claims-offshore-oil-cheaper-shale

"Oil prices have experienced a significant decline over the last year. Since reaching highs of close to $120 per barrel, prices have fallen significantly to roughly $50 per barrel. This significant decline in prices has greatly affected the deepwater sector."

"Deepwater drilling has long been minimized. The main reason for this is because of the more significant cost attached to extraction of the oil. However, even with the recent oil prices crash, oil prices have been trending upwards over the past decades.

With the desire for new sources of oil, deepwater drilling is starting to become more economic. Major oil companies are starting to look to invest billions of dollars in deepwater drilling."

"Conclusion

Deepwater drilling is an expensive source of production. However, deepwater oil is also extremely expensive - more expensive than other forms of oil.

Still, the world is needing more oil in the future. The overall world oil demand is expected to increase over the coming decades by a significant amount despite the conventional oil the world is so used to running out.

As a result, deepwater represents a significant market with significant growth potential."

https://seekingalpha.com/article/3231866-deepwater-oil-huge-growth-potential

"Deepwater oil has recently become economically and technically feasible. As a result, deepwater production is expected to grow by 250% from now until 2030."

"...[D]eepwater production has grown to more than 5 million barrels today. By 2030, this is expected to increase by another 250%, showing the strength in the deepwater markets.

As a result of the growth, the deepwater markets are the next major source of oil growth."

https://seekingalpha.com/article/4035313-deepwater-drilling-next-major-source-oil-growth