ERHC Energy Inc (ERHE)

[TOB]

It was clearly stated that the offerings would be in stages over an 18 month period. With a conservative estimate of a maximum of $45 million raised.

This was called conservative, as it assumes that ERHC would not bring in a JV farm-in partner on either Kenya or Chad, and would pay the first two year work program entirely.

Kenya is so desirable, with all blocks acquired by PSCs and all blocks around ERHC already having farm-ins with excellent terms, that it is all but certain that ERHC could bring in a farm-in partner if they so desire.

Kenya has a more aggressive exploration commitment with first year expenses estimated at $12,151,000 and the second year at $15 million.

Chad has a more relaxed financial requirement of only $4,504,614 for 2013 and 12,764,006 for 2014.

Chad is also desirable, with ERHC having an adjacent block acquired by Griffiths Energy, who just completed a farm-in agreement with Glencore for 25% working interest that will have Glencore funding $300 million of the costs, at a maximum of $100 million per year. (Carried costs)

Glencore also will pay Griffiths about $31 million on closing.

Griffiths was also able to raise an additional $173.6 million.

Griffiths also secured a Pre-IPO Convertible Bond due 2017 for $173.6 million.

So we know there was a bidding war by 5 companies eager to farm-into the Kenya block adjacent to ERHC, block 11B, and we know of very favourable farm-ins with carried costs and even cash for farm-ins to other Kenya blocks in the area of ERHC.

We also saw Marathon farm-in to Kenya Block 9 in the same Cretaceous trend as ERHC's Block for 50% working interest, and 15% of Block 12A, with an "entry payment of $35 million to Africa Oil " and a carry of Africa Oil's interest up to $43.5 million anticipated to be spent over the next three years.

We see also that Griffiths was successful in raising a sum far higher than ERHC's first two years estimated exploration costs, covering Development and Production stages. They are, of course, a couple years ahead of ERHC and in the Development and Production stages, so their costs are higher.

So in either, or both of Kenya and Chad, Farm-ins are occurring in blocks adjacent to ERHC.

ERHC may never need to raise the full $45 million for first two year Chad and Kenya exploration program. It is a conservative estimate and even if ERHC does raise the full amount, it does not have to involve only Rights Offerings. There is the possibility of Farm-ins, Private Placements to strategic investors, an IPO, and other debt instruments.