Chrome Group and ERHC - analysis and impressions.
1. ERHC affiliate Chrome Group is indeed making efforts, and spending money, to raise its international image and provide more information about its operations. This will help ERHC’s AIM listing effort, when that is attempted. While it is popular to repeat “No AIM listing” as a management criticism, we see that ERHC is in fact hard at work on this project, and having success in convincing its affiliates to spend money and make efforts to assist this project.
An AIM listing could be of great benefit to ERHC. They could raise the additional $48million authorized through an IPO, as shares can be moved between the dual listing, and AIM could support a higher share price valuation for ERHC, and further fund raising, as the AIM participants are more familiar and comfortable with companies doing business in Africa.
With many of those countries being former colonies and retaining ties. Americans are a bit more skeptical of Africa, not without reason, and have more of an island continent mentality. Regardless, the OTC:BB is highly volatile and not very liquid, so ERHC does need to keep working on additional listings, and eventually moving off of the OTC:BB.
2. Chrome Group remains well connected politically and active in Nigeria. It appears well positioned to prosper from the pending PIB, which is being pushed for passage in the 7th session, and is already prospering from the existing. Local Content Act. (I’ll expand upon this further)
3. Chrome has considerable business, so remains in a position to assist ERHC financially, as it has in the past, should that be required again. However, as Chrome is also primed for growth, and with Shell and ConocoPhillips in particular selling off assets, Chrome needs money to fuel this growth. This could encourage Chrome to monetize ERHC assets ahead of production, as these acquisitions could prove the larger, and sooner prize. Or involve affiliate ERHC in other beneficial ways.
This could mean selling off the JDZ, for example, which is something I hadn’t considered likely in the past. This could play in various ways, with the money raised being used to have ERHC acquire assets, in partnership with Chrome. Or Chrome selling off some of its holding, to use the money directly. This later would also help the AIM listing, as it would reduce the Chrome’s ownership and influence.
What I don’t see is an end game for ERHC in the JDZ, it remains a crown jewel in the Chrome Group as it is a US listed company able to raise funds on the markets. Now that it has received full clearance from the DOJ/SEC, it is game-on again for ERHC which is now out of the penalty box, and its potential is far greater than just the JDZ, which so far has had disappointing drilling results.
Yes ERHC was greatly held back by the now closed DOJ/SEC actions, and by the disappointing Phase 1 JDZ exploration results. Now the DOJ/SEC saga is over with ERHC achieving full closure and clearance! We eagerly await what ‘Phase 2’ will look like in the JDZ, and make no prediction regarding this short-term news event, which could affect the ERHE share price. Though, I do have a changed opinion and prediction on the subject.
But the JDZ does not equal the be-all and the end-all for ERHC. There is also the EEZ, Chad, and several pending interests.
Game on, go ERHC!
