ERHC Energy Inc (ERHE)

[TOB]

Chad News, where ERHC has two massive exploration blocks.

This is in the South-Western part of the proven Dobra petroleum basin when ERHC has determined their Focus Area 2 for initial exploration. ERHC's plan is for airborne Gravity Magnetic survey in Q4 2013 over Focus Area 2. This is one of the techniques that Tullow has used with great success in their exploration.

Focus Areas 2 is also right in-trend with the Benoy-1 discovery, estimated net value at $1.6 billion

Griffiths Energy International Inc. Spuds the First Badila Development Well in Chad

Development wells are the next stage after exploration discoveries. They will bring the oil to production via tie-ins to the Chad-Cameroon oil pipeline to the Gulf of Guinea.

The Badila Field is approximately 17 kilometres from an export pipeline to the Atlantic Ocean and the Mangara field is approximately 120 kilometres from the same pipeline. Griffiths is currently building a pipeline connection from both fields to the export pipeline and expects to complete the tie-in early in 2013.

Both the Badila Field and the Mangara Field are located on Griffiths’ DOI / DOB block, which covers an area of approximately 2,744 square kilometers in the southwestern region of Chad. The newly-spudded well, named Badila-2, is expected to be drilled to a depth of 2,100 meters and is targeting Lower Cretaceous sandstone reservoirs. As the first development well in the field, the Company has an extensive coring, logging and flow testing program with results expected during first quarter of 2013.

Note the rather shallow depths of these Lower Cretaceous reservoirs at 2,100 meters. A relatively cheap and quick drill using a simple land rig. Compare with deepwater which requires a hugely expensive rig and may have 2,100 meters of water to penetrate before the bit starts turning.

Twiga South-1 in Kenya for comparison, was drilled to 3,250 meters, and Ngamia-1 to 2,700 meters.

Note also my prior post which discussed the Cretaceous Central African Rift System/Shear Zone which is the focus of ERHC's exploration in both Chad and Kenya, with Kenya also being at the intersection of the Tertiary East Africa Rift System where Tullow has made the Ngamia-1 and Twiga South-1 discoveries.

The Central African Rift System has billions of barrels of proven discoveries, from Nigeria to Sudan. The Chad part is lightly explored but with proven oil discoveries and production, and Kenya is just seeing its first wells and initial discoveries.

As previously disclosed, a prior exploration well, Badila-1, was drilled by a previous operator in 2002 but was not flow tested at the time even though downhole sampling suggested moveable light oil in the Lower Cretaceous horizons. After in-depth analysis of the available information on the Badila-1 well, Griffiths concluded Badila-1 was a potential discovery with an estimated 123 meters of net oil pay in the Lower Cretaceous (C and D sands). The mechanical condition of the well, as abandoned by the original operator, only allowed access to perforate 23.5 meters of the net oil pay in the C sands.

Based on the Company’s internal analysis, in April of 2012 the Badila-1 was re-entered and tested the 23.5 meters of oil pay that was mechanically accessible. The results of the multi-rate well test showed the sandstone reservoirs to be highly permeable with natural flow of light 31-32o API crude oil at rates of approximately 3,000 – 4,000 barrels per day over a period of 24 hours with 0% water-cut. These production rates were constrained by the physical testing and flaring equipment at surface.

The below chart shows the Cretaceous Rift Basins which run from the Central African Shear Zone. Notice the large basin trend at the bottom right running right through ERHE Kenya Block 11A.

And the Basins and the rift itself running right through ERHE 's two southern Chad blocks. (Second chart below notes their location)