ERHC Energy Inc (ERHE)

[TOB]

Absolutely there was.

Was there any mention of potential jv partners for either chad or kenya! thanks also for those that went to the meeting!

As I mentioned in my ERHC Shareholders Meeting report

They intend to raise about $45 million, enough to cover the first two years exploration in Kenya and Chad. Not all in one tranche however. This is also a fallback amount as the entry of a Farm-in partner to either or both of Chad and Kenya could reduce greatly the need for ERHC to raise funds. But as I’ve stated in the past, ERHC wants and needs to be negotiating with potential farm-in-in partners from a position of strength, fully able to go it alone. The terms will be much better as a result should ERHC choose to have a farm-in. -TOB

Discussions are ongoing in Chad, and have only just started about a week ago for Kenya. Keep in mind that block was only just signed.

Every block in Kenya is now licensed, and all of the blocks around ERHC's Block 11A now have attractive farm-ins on variable terms, including full carries, good operators, etc. Including Block 11B just adjacent.

As Sylvan emphasised, the fund raising targets and the work schedules are conservative. Meaning they are what ERHC can do if they go it entirely alone, which is entirely possible and may even be the best choice in some of the blocks.

But should a Farm-in occur in Kenya, Chad or the EEZ, then the schedules could accelerate quickly and ERHC will require less money. Or if that money is already raised, it can go to new acquisitions.

I can tell you that when I mentioned to the Exploration Manager Gertjan van Mechelen that considering the reported bidding war for a farm in to the adjacent Block 11B, ERHC may consider delaying the process a bit until some specific targets are identified with new seismic and gravity studies and exploration advances in other area blocks, and potentially get a much better deal. I got a big smile and agreement.

ERHC is really in the catbird seat in Kenya, and also in Chad, and this fund raising will put them in a powerful negotiating position. It will be take it or leave it, not ERHC begging and desperate for a JV farmi-in at any cost.

Note that while potential basins have been identified by previous ground and aerial gravity studies, and some prior seismic has been done, it is not at the refined and advanced levels using newer technology that will be used to zero in on the highest probability targets in those large basins.

In particular, as I mentioned before, the existing seismic is thin, and rather noisy due to the volcanic geology of the area. The game will really change as we get updated gravity and seismic work done during the initial two year work program. This will, however, be very targeted and not block wide as the prior work indicates where the best basins are.

This by the way is a big advantage, as the blocks are huge and having this advance data gives not only direction on were to concentrate the expensive studies, but also suggests what parts of the block should be relinquished at each deadline. This advantage in Chad is even greater due to the more favourable PSC terms negotiated, as I'll discuss in a later post.

We also discussed the possibilities for rig and crew sharing with all the increased exploration in Kenya and Chad, as is standard in the business. Also much work these days are done by contractors and sub-contractors, not necessarily in-house teams. This is true even for the majors, although they do much more work such as seismic analysis in-house.

It is certainly true for small exploration companies. Everything is for hire, and a great deal of equipment is being deployed in Kenya and Chad.