ERHC Energy Inc (ERHE)

[TOB]

ERHC Exploring for Elephants in Kenya!

Recent exploration news next to ERHC’s Kenya Block

(Keep scrolling down till the end)

Adamantine Energy has Block 11B, directly adjacent with ERHC’s Block 11A. ERHC's block is 2.95 million acres.

"The block seems to be on the same trend which has been proven-out with Tullow’s 2 [Billion] bbl discovery in block 10BB; Ngamia-1, which is to the South of 11B and the multi-billion bbl fields of South Sudan. 11B also benefits from the fact there is a proposed oil pipeline which will flow from South Sudan through 11B out to the Kenyan coast at Lamu. Clearly being on the pipeline route improves the economics considerably."



"Farm-out Options"

"As Kenya is “hot” at the moment and 11B appears to be on the trend established by Ngamia-1, it is not surprising that we have been approached by 5 medium/big oil companies seeking to farm-in to 11B. Initial terms have been agreed, based on a 100% carry through to testing and $1m back-costs, in return for 50% equity. A mini-auction appears to be developing and discussions are progressing well."

Yep, Kenya is hot, and just a few months after the above comment Adamantine has already agreed a Farm-out for 50% of their Block 11B interest to BowLeven who, as part of a full carry, will fund an initial work programme of geophysical and 2D seismic, expected to cost around $10 million.

“Bowleven has entered into a farm-in agreement to acquire a 50 percent equity interest in onshore exploration block 11B, Northwest Kenya, from Adamantine Energy Ltd (‘Adamantine’). Block 11B covers an area of approximately 14,000 square kilometres covering the Loeli, Lotikipi, Gatome and South Gatome basins. The basins are to the north of the Lokichar Basin where a significant oil discovery has been made in recent months with the Ngamia-1 well. Analysis of the existing gravity and magnetics and seismic datasets suggest the basins in block 11B are of similar form to Lokichar and analogous geological plays and petroleum system elements are expected.”

Yes the existing gravity and magnetics and seismic datasets cover ERHC's Block 11A as well.

"UK junior BowLeven has added a new region to its African portfolio as it snapped up a large slice in an onshore Kenyan play."

"The Aberdeen-based company has farmed into Block 11B by taking 50% from local player Adamantine Energy."

The “extensive and highly prospective exploration acreage position” gives BowLeven exposure to a new hydrocarbons province, following on from its position in Cameroon.

"The block covers about 14,000 square kilometres encompassing the Loeli, Lotikipi, Gatome and South Gatome basins."

“The basins are to the north of the Lokichar Basin where a significant oil discovery has been made in recent months with the Ngamia-1 well,” BowLeven said on Monday.

“Analysis of the existing gravity and magnetics and seismic datasets suggest the basins in Block 11B are of similar form to Lokichar and analogous geological plays and petroleum system elements are expected.”

Of course there are significant discoveries to the North in Sudan's proven petroleum basins, "over 6 Billion barrels of oil discovered along trend in Sudan in a similar geologic setting which runs right through ERHC's Kenya Block 11A and Adamantine's 11B.



This has ERHC's massive Kenya Block 11A surrounded by active exploration by Tullow, the company with the industry's leading success rate, and also proven Elephant sized discoveries to the South, West and North in what is believed to be similar geology. Tullow's theory, proven by the massive Kenya discovery Nagamia-1 just south of ERHC's Block which is believed to be bigger than their Uganda elephant discovery!

Note the red outlined blocks in the chart below are all Tullow operated exploration blocks. Tullow has made significant discoveries of over 1 Billion bbl of recoverable oil to the West of ERHC's Block in Uganda.



A bit about Tullow's recent Exploration Success.

"In 2009, Tullow drilled a total of 15 exploration and appraisal wells, achieving an industry leading 87% success rate. The information contained in these tables records all the exploration and appraisal drilling results since 2008.

In 2011, 26 of the 35 exploration and appraisal wells drilled discovered hydrocarbons giving a success ratio of 74%. This was slightly lower than the 2010 figure when there was an 83% sucess ratio with 24 of the 29 wells locating hydrocarbons.

To date in 2012, 17 of the 22 exploration and appraisal wells drilled have discovered hydrocarbons."

Yes, having Tullow drilling to the North, South, West and East of ERHC's Block, having already made massive discoveries to the East and South, gives great evidence that the East African Rift basins of Kenya are highly prospective.

In fact, Tullow's exploration farm-ins to Blocks 10BA, 10BB, 10A,12A and 13T are six times the size of Tullow's licences in Uganda where they made an elephant sized discovery. That is not including the recent Tullow farm-in to 12B or Tullow's operated interest to the North in the South Omo Block in Ethiopia.

"The combined acreage covers the Turkana Rift Basin which is similar in character to the Lake Albert Rift Basin [Uganda 1 Billion bbl proven oil reservoirs] and also a south-east extension of the geologically older Sudan rift basins trend. [6 Billion bbl Proven oil reservoirs]"

And how is 2012 exploration going in Kenya for Tullow just south of ERHC's block?

"The first well in the basin, Ngamia-1, in Block 10BB, commenced drilling in January 2012 and by June 2012 the well had discovered over 100m of net oil pay opening up this entire onshore region as a potential major oil province."

There is talk of this potentially being the largest land-based discovery of 2012. We'll know more once they return the rig for flow testing.

"East Africa has emerged in recent years as one of the more interesting new oil provinces in the world with the discovery of over 1 billion bbl of recoverable oil in Uganda’s Block 1 (EA1), the Ngamia-1 oil discovery in Kenya, which is estimated to be bigger than the Ugandan discovery, and large gas discoveries, including the recent Zafarani find, offshore Tanzania."

Depending on usage, an Elephant field is in the range of 100 - 500 million producible barrels. Clearly a land based discovery of light oil is vastly cheaper to explore, develop and produce than an ultra-deepwater field like Akpo, which requires an FPSO to produce condensate, with the gas either piped to shore for LNG or re-injected as their is more than can be used. Due to the depth, heat and high pressure, the light oil of the Akpo reservoir separates into gas and condensate when produced and was nine years from discovery to first production.

Yes ERHC is now exploring for Kenyan Elephants as well. A good thing as so far the smaller ultra-deepwater JDZ targets have been small gas discoveries. It is 2012, not 2008, things change and ERHC has diversified to include highly prospective onshore exploration blocks that are cheaper and faster to explore, develop and bring to production!

Yes ERHC did not discover elephants in the JDZ as many expected. Thus the share price fell to 13 cents. Get over it already, this is old news.

Yes the Kenya block is quite obviously highly prospective and massive. Yes there is existing seismic and gravity studies to guide additional studies. Yes ERHC wants to authorize more shares so they can raise money to explore this block, and the virgin EEZ, and the highly prospective Chad blocks which are adjacent to proven oil reservoirs and an existing pipeline.

Yes ERHE could still be purchased for 13 cents a share on Friday because Kenya, Chad and the EEZ are not yet priced into the ERHE share price. The new ERHC story is not well known. Yes, ERHC has an oddball management stalker. Yes, weird but true.

There is a great deal already known about the geology in Chad and Kenya, with ongoing drilling providing a wealth of additional data to correlate with existing research, and existing Airborne surveys and existing seismic studies of the Lotikipi basin(11A)...

"Geosoft Oasis montaj and the geophysical modules employed enabled Long and Njuguna to integrate all the disparate data. “We brought together a variety of data sources for comparative interpretation prior to the modeling stage,” relates Long. “We had available the reconnaissance airborne gravity survey, a previously published 1:50,000 geological map, 2D time seismic lines, the 1980s gravity interpretation, satellite gravity, and of course the previous literature studies undertaken by primarily Morley and latterly Dr. Tiercelin and Dr. Peter Thuo at NOCK.” He says the deep seismic surveys conducted in the late ‘80s and through to the ‘90s helped to constrain deep crustal structure down to the Moho interface. “This structure is required to be modeled, when we are working with Bouguer gravity,” Long says.

"The software facilitated the integration. “Geosoft provides processing QC tools which we could use to understand the gravity measurements we were working with,” says Long. He outlines their process. “Once we proceeded to the modeling exercise, we were able to re-calculate 3D terrain corrections and apply them to produce a Bouguer response to model the 2D seismic line. We used GM-SYS Profile to model the gravity in 2D, in tandem with the seismic profile across Lokitipi, and imported depth source solutions for density contrasts derived from Euler and Werner methods. We used shadow cursor linking to honor geological contacts and surrounding topography in the profile model and displayed in Oasis montaj on regional plan maps.”

"The final model, as Long reports in a conference paper, consists of five distinct lithological units defined by previous identification of seismic facies and geological interpretation, and suggests that the inter-bedded sediments and basalts unit could be up to 2 km thick, with the potential reservoirs in situ below them. “As well, the basin thickness could be revised down following our modeling exercise,” he says. “The maximum depth to Precambrian basement is approximately 4 km.”

Below Lotokipi seismic (ERHC Block 11A)



Below Lotokipi plain Precambian basement (ERHC Block 11A) using Geosoft integration of seismic and gravity studies.



Below Lotokipi plain Bouger using Geosoft technology for integration. (ERHC 11A Lotikipi plain.)



Below basins in Northwest Kenya and South Sudan (ERHC 11A Lotikipi plain.)




There is much, much more… but being busy with several research projects I have limited time to post.