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John, it's hard to believe this is the way it works (owners of stock not really being considered shareholders), but it has been brought up before on this board.
If this is the case, then maybe we all should request our brokers to issue a certificate for some of our shares (like 10 or 100) just so we are "shareholders of record". - Longtimer
Good find, Balance! Let's hope the JDZ is among the upcoming pursuits Total announces. - LT
"Do you believe Offor will allow his (our) future value to be raped like that to gain a useless amount of cash now?"
That's assuming Offor isn't the one buying the newly issued stock.
Suppose Offor (indirectly/surreptitiously) is buying these new shares. He would actually increase his ownership very cheaply at minority shareholders' expense.
Not that I necessarily believe this to be the case; but it is a possibility and could be a reason Offor would be "on board with this plan."
Just throwing this out there with all the other conspiracy theories and dot-connecting that are being floated. Just illustrates circumstantial evidence can be bent in numerous ways. - LT
Thanks for the info, Midtier.
Thanks, Kobi, for the facts.
Even though Sinopec has not been communicative, perhaps it was fortuitous that they ended up owning interests in all 4 leased JDZ blocks, because as you sagely point out, "what might not be commercial for [ONGC (which had a minimal percentage in one block)], will more likely than not[,] be commercial for SNP because of SNP's percentages across all the blocks."
And if that is true with SNP, maybe Total will be more likely to step into the other blocks (hopefully Block 2, at the very least) for the same reason. I really believe SNP would strongly desire having Total partner with it in the other JDZ blocks. Maybe this being worked out is why we haven't heard anything definitive about Block 2 Phase I/II negotiations. - Longtimer
Don't know how much it costs or how long it takes to shoot 3D or reprocess 2D to 3D, but it would be nice if ERHC had that for their EEZ blocks as a further enticement/bargaining chip (assuming good shows) for potential partners in the EEZ. - LT
Good find, Homeport! Contains info I hadn't seen before.
This is noteworthy: "Sinopec has drilled five exploration wells since 2009 but found only gas — so far in noncommercial quantities. It declined to enter a second phase of exploration in January, opting instead for an extension to assess the well data. This week it lengthened that extension for a further six months. 'To justify developing deepwater gas you need a lot of it, but the nature of structures in this area means you won’t find it all in one place, so you will need aggregation,' says one of Sinopec’s partners. Chevron and Exxon also declared a 2006 gas discovery in Block 1 noncommercial."
Since the date of this issue of Energy Compass is October 8, 2010, and ERHC informed us of the Block 3 & 4 Phase I extensions on September 30, I wonder if the above is talking about Block 2 Phase I being extended another six months also? The article seems to attribute all the blocks to Sinopec (as opposed to Addax also), so it is possible they are just generalizing what happened thus far in Blocks 3 & 4. Guess we will hear in due time what the disposition of Block 2 is.
This article also confirms what other news sources have reported (and what ERHC has maintained), that the JDZ blocks are considered noncommercial at this point. Not that all hope is lost (remember Akpo), but this report throttles expections of an NSAI report that would report sizeable reserves for ERHC. Might explain why ERHC is going ahead with the stock placements now instead of waiting until the NSAI report is made public.
On the positive side of things, the comment "the nature of structures in this area means you won’t find it all in one place, so you will need aggregation" seems to indicate a willingness to develop the JDZ if a sufficient number of smaller gas-bearing structures are found, not to speak of the possibility of finding oil and/or condensate somewhere along the way. - LT
Tryoty, it does seem like something is afoot. Good catch on finding the Feltang payment in the recently issued prospectus.
Very curious to see how the dust settles in Block 2 re Phase I/II. Maybe that will offer some clues as to where things are heading. - LT
Take a look at this chart:
How long has ERHC management been talking about raising capital? Close to two years, if I recall correctly. They had 9 months out of the last two years that they could have sold stock at 2-3 times (or more) than the price they did this week.
Maybe they thought we'd get better news from the drilling campaign -- I don't know. But waiting until now to sell stock really makes them look like imbeciles.
They must either:
1. See an impending need for capital and cannot wait any longer.
2. Not anticipate any catalyst for share price appreciation in the near to mid term (or else one would think they would hold out a little longer).
3. Be lacking in business acumen and foresight, and thus be incapable of formulating and executing a growth plan at strategic points in time.
I am getting fed up with the sophomoric way this company is being run. - LT
P.S.: Boy, I felt like Midtier writing this.
The junior partner interests that are now available were not free carries. Anyone that takes them up will be liable for future costs (and likely prior costs for partners who defaulted).
Does not seem wise for ERHC to acquire any of the available interest percentages unless they can flip them in short order. - LT
This is not to say I like the idea of selling a clump of stock at $.25 and $.28. But at this point, I'll trust that management had a good reason for doing it, and reserve judgment for later.
Obviously they would have known the placement would not be popular with current shareholders; so surely they plan to use the capital in a way that will enhance shareholder value. Time will tell. The shareholder discontent meter is rising. - LT
That's what I'm thinking also, Kobi.
There must be some acquisition they are targeting and the window of opportunity is nigh, so they are raising capital pronto.
They hint at this in the press release: "The Company anticipates that the additional capital from this investment will be used for general corporate purposes, which may include, but are not limited to potential acquisitions."
It is prudent for them to maintain a "cash cushion." - LT
Wow! If I were an investor looking to make my first investment in ERHC, reading that prospectus would make me think twice about doing it.
The prospectus has very little positive information that would make me want to invest in ERHC; in fact, just the opposite--there are a lot of negative factors (4 investigations [SEC, DOJ, Senate, & IRS], no proven reserves, only biogenic gas found to-date, no revenue from on-going operations) to gulp down.
(Of course, those of us who have been following this stock know that the investigations (aside from the IRS) are moribund and that exploration has just begun.)
So I truly hope the reason ERHC is getting all the legal underpinnings for a stock offering in place is that they are anticipating a very positive development happening in the near future that will catapult the stock and overshadow the negative elements. - Still a Longtimer
Tryoty, that's what I'm hoping.
If what they reportedly said at the shareholder meeting about officers/board members not being able to buy stock according to company policy (which I found hard to believe), then maybe this filing signals a change in policy.
It's time that particularly officers put their money where their mouth is and buy a meaningful number of shares of the company on the open market. Besides giving them a vested interest in the company with other shareholders, it would be a bullish thing to see on a prospectus.
I guess time will tell how confident they are in the company's future. Ante up to the bar, boys! - LT
STL, I would not disagree with your prediction that AOG will be proven wrong (again).
I lost some respect for them as a well-grounded news source after they back-peddled on their initial 3 Tcf gas report for the JDZ.
So when their articles are posted, let the reader use discernment. - Longtimer
Confusing and confounding, is it not?!
Regardless of all the static, we know that it is going to take more than five holes to get a more complete picture of what we have in the JDZ.
On the positive side, Addax is looking to continue with Phase II in Blocks 3 & 4 (as opposed to throwing in the towel). The outcome in Block 2 will cast more light on matters. My highest hopes are that they commit to Phase II, with Total taking on the relinquished interests in that block. That would be a very bullish signal indeed. The fact that Block 2 negotiations seem to be separate and taking longer could indicate a different outcome than Blocks 3 & 4.
All has been quiet in Block 1, which is strange because, that consortium must complete their Phase II well commitment by 2/1/2011 (at least we've heard nothing to the contrary). That means they have less than 4 months left to get a drillship & drill a hole! So something might be afoot also in Block 1 as far as an extension goes.
This investment is not for those who don't have patience or a longer investment horizon. We'd all like to see Akpo-like reserves conclusively declared; but that, if it ever happens, is going to take time. - Longtimer
And again, for emphasis: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45045621
Seek, I rejoiced when I first saw that article from EIU and I posted it on this board back on March 3:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=47358568
But thereafter AOG came out with these articles:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48920842
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55111120
So what do we believe? Were the first reports accurate, and now the Chinese are trying to hide the results? Or were the first reports overzealous or embellished, and now the Chinese are trying to reign in expectations?
I tend to think a little bit of both are happening. - Longtimer
Ewing, please see the current version on the board of the reply I just sent you... had to correct one of the links. (My message prior to this one.) - LT
Hey, Ewing, actually no. But I did remember that AOG had first reported very good results and then not-so-good results. So I decided to see (after posting) if they had more current articles related to the JDZ, and found those two that had not been posted on the board (to my knowledge).
You will notice that in the last sentence of my original post, there was a link from my words "Not exactly commercial" to these prior AOG articles (the not-so-good report vs the earlier very good reports).
Here is the url in plain text of those earlier articles: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48920842
As you can see, I was perturbed at the time that AOG was reporting something different than what they first reported.
So it wasn't meant to be a trap. Just an attempt to get the board to step back and view all angles of this thing. It is frustrating that there seems to be a lack of transparency in what the current state of affairs is in the JDZ, with all the conflicting signals. - Longtimer
30/09/2010 - JDZ partners decide to put toes back into deepwater (Africa Oil and Gas)
Sinopec and subsidiary Addax are negotiating on extending their time in the Joint Development Zone (JDZ) despite the disappointing five well exploration programme.
Last year's programme only turned up an uncommercial 1 Tcf of gas (see AOG 25 March 2010) in the zone shared by Nigeria and Sao Tome & Principe (STP), and the governments had feared that they would not renew Blocks 2, 3 and 4.
However, partner ERHC said that they are currently negotiating the terms for entry into Exploration Phase II with the Joint Development Authority (JDA).
"Natural gas was discovered in at least three wells. The operators' analyses of the well outcomes, while still ongoing, are informing the parties' negotiations with the JDA on terms for entry into Exploration Phase II (or a further extension of Exploration Phase I)," ERHC said, adding that: "An agreement could come at any time."
The negotiations will also address the issue of "...a number of small interest holders in each block either defaulting on their financial obligations or choosing not to proceed with Exploration Phase II. The interests of the defaulting or withdrawing parties will be available in the first instance to the remaining parties and thereafter to interested new players in the blocks".
16/09/2010 - Sao Tome extends exclusive round (Africa Oil and Gas)
As previously revealed by AOG (see 25 March 2010), the five-well drilling campaign by Sinopec and subsidiary Addax Petroleum last year in the joint development zone gave disappointing results, not only due to the fact that it was gas rather than oil but also because of the quantities discovered - only 1 Tcf. This has had a negative effect on interest in the EEZ. The companies are currently deciding whether to extend the production sharing contracts or give up the acreage.
http://web.africaoilandgas.com/websitenet/iisstart.aspx?action=search
Ewing, whatever the case may be, Sinopec seems excited about it! - LT
Dan says, "the Sinopec website statement about the Bomu well was not translated to English correctly."
It is hard to believe that when we have 3 different translation sources (one of which was human) that basically convey the same information from the original Chinese text. (See attached post below.)
However, here's a question: Can a well achieve a "commercial flow" rate and yet not be deemed commercially producible (not enough producible reserves indicated)? Notice all 3 translations below describe the flow as commercial, not the well.
Maybe we are reading more into what Sinopec is saying than they really are. Here is a good reminder post for us all: Link
I really think Dan is being upfront with us, based on the information ("what we know" as he puts it), that ERHC has been given. The last unofficial estimate for BOMU-1 I can find was 250 Bcf. Not exactly commercial for a gas well. - Longtimer
ERHClongtimer
Wednesday, September 08, 2010 8:38:45 PM
Re: mz157 post# 221707 Post 221711 of 224296
"We are confident that the meaning of what Sinopec originally posted in another language was lost when it was translated from that original language to English." - Dan Keeney
So it would seem ERHC has no reason to believe BOMU-1 was commercial, based on the information they have or on the interpretation of the data they have been given.
Whether that is the case or not, it is hard to believe that three different translations (one from the operator itself!) managed to bobble the meaning of the real message being conveyed. After reading Steelwundrin's translation, it is easy to see that Sinopec meant "achieved" where it used "gains".
I also wonder if the term "petrochemical gas" could actually be referring to condensate. - Longtimer
"In 2009, one of our main activity is on BOMU-1 well in JDZ-2 Block, Nigeria, including drilling-geology designing, engineering designing, analysis-while-drilling and researching on post-drilling reserve appraisal. The well gains a commercial oil & gas flow. It was the first breakthrough in oil and gas exploration in SINOPEC’S oversea deep water drilling operation." - Sinopec's own translation
"2009, mainly carried out in Nigeria JZD-2 block BOMU-1 well drilling geology, engineering design, analysis, and drilling with the drilling reserves after the evaluation of research work, the well was commercial oil and gas flow, deep water drilling is the first overseas petrochemical gas breakthrough;" - Kingpindg's Google translation
"In 2009, main expansion includes the project in Nigeria JDZ block 2 BOMU-1 where work began on evaluation on drill geology design, engineering design, analysis and reserve estimation. This well achieved commercial drilling “flow”, and is the first breakthrough for Sinopec’s deep sea drilling exploration." -
steelwundrin's Singapore translation
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54203239
O/T... Goodluck Jonathan: The Facebook president
http://www.cnn.com/2010/TECH/social.media/10/01/goodluck.jonathan.facebook.profile/index.html
Interesting populist/political move by Mr. Jonathan, as he jockeys for the 2011 presidential election.
It was the JDA that opted to go with an additional 6-month extension to Phase I. Who says the consortiums couldn't opt to commit to and enter into Phase II before the expiration of the extension, if they get all their ducks in a row?
But don't hold your breath!
The shoe in Block 2 is yet to drop. Waiting with keen anticipation on the outcome there; hopefully a Total solution. - LT
From ac hotfries' spreadsheet, it appears Total could easily obtain interests of up to 26% in Block 2, 20% in Block 3, and 10% in Block 4 from relinquishments--if the remaining interest holders were open to it.
Of these blocks, it would seem that Block 2 (coincidentally the one with the highest interest % up for grabs) would be the most attractive to Total due to its proximity to the Akpo block. Might that be the reason Block 2 negotiations are still ongoing? Seems like now (with relinquished interests available) would be the perfect entry point for Total to come into Block 2.
That would be a very bullish sign, a most welcome one. Let's see what happens! - Longtimer
P.S.: Perhaps Total is not ready to bite on Blocks 3 & 4, and that is the reason why the JDA opted to extend Phase I. The extension gives more time to line up/negotiate with taker(s) of the relinquished interests.
Today's update from ERHC contains some very positive comments, despite the postponement of Phase II:
"[T]he Joint Development Authority (“JDA”) has approved a 6-month extension of Exploration Phase I in Joint Development Zone Blocks 3 and 4. The extension will enable the contracting parties to complete all studies needed for further exploration in the Blocks."
"Earlier this month, ERHC supported Addax Petroleum ... in applying to enter into Exploration Phase II pending the completion of the studies. Instead, agreement was reached with the JDA to further extend Exploration Phase I to enable completion of the studies before commencement of Phase II."
(Some have pointed out various aspects of this already, but it's worth repeating.)
From what is stated, it seems evident that Phase II in Blocks 3 & 4 will happen. That is very good news. It just means more patience on our part. - LT
Sounds like things are going according to plan. Drill some not-so-great holes, drag exploration out long enough, and run up the costs high enough... the minnows are scared off. Just in time for someone like Total to opportunistically scoop up the abandoned interests.
We'll see if this is the way it plays out. We couldn't hope for anything better, given the situation as it stands now.
Thank goodness ERHC is being carried and can't be forced out. - Longtimer
Curious, thanks for your insight on the gas situation and the dependency on testing to determine an actual discovery.
I thought the same thing about the statement of "natural gas." Since biogenic and thermogenic gas are both "natural" (as I understand it), it seems to me that ERHC was just being less specific in its latest update.
Very noteworthy comments regarding reasons for the possible extension of Phase I. The consortiums do have to relinquish 25% of their concessions upon commencement of Phase II. Maybe they are not ready to do that.
I just wonder if the main reason an extension to Phase I is even on the table is to buy time for the disposition of the minority interests formerly held by defaulters and withdrawers to be resolved. Seems like it would be requisite to get that worked out before negotiations for Phase II could really proceed. If the extension was to do further analysis, I think we would have heard about a continuation of the Phase I extension already.
ERHC's acknowledgement about these negotiations going on and an announcement being "immenent" makes it sound like they are very close to resolution. I'm thinking the JMC is loathe to extending Phase I any further and would strongly prefer to have the clock begin ticking on Phase II, and will exert pressure on the consortiums to get their act together to commence Phase II ASAP.
I guess we will find out which way it goes... in a fortnight or two. - Longtimer
Midtier, I'm in the same camp, given ERHC's current cash and non-revenue-generating situation. They have enough irons in the fire as it is.
Unless... they find a way to market those extra interest percentages. - LT
Midtier, none of the above.
I think the reason we have not heard anything from ERHC is because sensitive negotiations are going on. The whole situation is in flux, so there is nothing solid on which ERHC can report at the moment. But I bet we will all be pleasantly surprised when the smoke clears. The last thing ERHC wants to be is a loose canon.
Balance Builder astutely brings a lot of the pieces together here. I differ in opinion with BB regarding a buyout of ERHC, but the case is certainly arguable. However, I think ERHC is in this thing until reserves are proven up.
After all that we have seen transpire, is it really that surprising that an announcement regarding the disposition of Phase II has not happened?
Good things come to those who wait. - Longtimer
Don't think Sinopec's mission in life is to shaft ERHC. I think their primary concern is to make a success of their investment in the JDZ and to bring home petroleum product.
That being the case, it would stand to reason that they would be interested in having Total involved in as many of the JDZ blocks as possible, since Total has the expertise and the infrastructure that can make it happen. Perhaps some of the time that is transpiring is to facilitate working out the dynamics to make that happen.
The JDZ is a complex, deep-water play; it is not a Texas plains oil field. It is going to take a good deal of time to explore and develop. Don't think too many investors here understand or want to accept that.
I really think the paranoia, alarmist fervor, and armchair quarterbacking on this board has gotten out of hand. - Longtimer
Nice doses of reality from Kobi and Jim Long today, in face of the paranoia that has been running rampant on this board. - LT
"We are confident that the meaning of what Sinopec originally posted in another language was lost when it was translated from that original language to English." - Dan Keeney
So it would seem ERHC has no reason to believe BOMU-1 was commercial, based on the information they have or on the interpretation of the data they have been given.
Whether that is the case or not, it is hard to believe that three different translations (one from the operator itself!) managed to bobble the meaning of the real message being conveyed. After reading Steelwundrin's translation, it is easy to see that Sinopec meant "achieved" where it used "gains".
I also wonder if the term "petrochemical gas" could actually be referring to condensate. - Longtimer
"In 2009, one of our main activity is on BOMU-1 well in JDZ-2 Block, Nigeria, including drilling-geology designing, engineering designing, analysis-while-drilling and researching on post-drilling reserve appraisal. The well gains a commercial oil & gas flow. It was the first breakthrough in oil and gas exploration in SINOPEC’S oversea deep water drilling operation." - Sinopec's own translation
"2009, mainly carried out in Nigeria JZD-2 block BOMU-1 well drilling geology, engineering design, analysis, and drilling with the drilling reserves after the evaluation of research work, the well was commercial oil and gas flow, deep water drilling is the first overseas petrochemical gas breakthrough;" - Kingpindg's Google translation
"In 2009, main expansion includes the project in Nigeria JDZ block 2 BOMU-1 where work began on evaluation on drill geology design, engineering design, analysis and reserve estimation. This well achieved commercial drilling “flow”, and is the first breakthrough for Sinopec’s deep sea drilling exploration." -
steelwundrin's Singapore translation
Bayfisherii, excellent posts by you today, including your responses to one. Your posts had sound reasoning.
Nice to hear of your background in the oil industry.
BTW, I love the IHub ignore feature. : )
- LT
30 days until Phase I extension for Blocks 2, 3, & 4 expires.
So... a reminder of upcoming events that are either imminent or on the horizon as very possible:
1. EEZ blocks obtained by ERHC. - DONE
2. Total's possible buyout of Chevron's Block 1 interest (as reported by Dow Jones). - DONE
3. Release of NSAI resource estimates (commissioned by ERHC).
4. JDZ Phase I drilling results revealed (likely to be scant in detail).
5. Phase II exploration commitment for JDZ Blocks 2, 3, & 4 announced.
6. Dispensation of block interests of smaller players who have defaulted on their share of operating costs (and possible buyouts of others).
7. Drillship contract announcement by JDZ operators. (Remember the Block 1 consortium must complete their Phase II well commitment by 2/1/2011,
so they only have about 6 months left to get a drillship & drill a hole.)
8. EEZ block farm-out MOUs/PSCs signed w/more $$$ headed to ERHC's coffers.
9. Sale of ERHC stock per shelf registration. (Anticipation on the part of management of an elevated/favorable stock price?!)
10. Follow-through on MOU's related to marginal oil fields.
11. Resolution of JDZ Blocks 5 & 6 disposition.
Many of these events could happen at any time, and with each day that passes by, the probability of their happening increases. - Longtimer
Krom, as much as I would like to have new information, I think (based on what DK reported straight from the Quest CEO) that most if not all of what is in these spreadsheets is either from publicly-available information (Africa Oil + Gas, etc.) or extrapolation on the part of Quest staff based on publicly-available information.
I really don't see much of anything new in these documents.
Be that as it may, here is the July version of the March report. - LT
For what it is worth, here is a link to the August 2010 spreadsheet:
August 2010
But keep in mind the caveat stated in the message to which this is replying. - LT
PLEASE NOTE THIS ABOUT THE QUEST DATABASE:
We discovered the Quest Offshore Resources site toward the end of last year:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44417886
I suspect all the information in these spreadsheets are gathered from publicly available sources or estimates from their staff. Dan Keeney gave us the following information regarding Quest (see bolded text below):
Posted by: Art2004 Date: Wednesday, December 16, 2009 8:32:06 PM
In reply to: ERHClongtimer who wrote msg# 191240
At the CC, I asked a question about the data from a Quest Offshore table be that showed FLNG opportunities in the GOG, posted by ERHCLongtimer.
Dan Gralla responded that he could not comment because he had not seen the data, though I had forwarded them to Dan Keeney, last week.
Dan explained that he had not forwarded the data to Dan Gralla. After a back and forth, Dan K. did show the Emailed data to Dan G. who wondered about the source.
Dan Keeney then sent me the following Email:
"Art:
I have spoken with John Chatterton, the CEO of Quest Offshore. He clarified that the information you have cited comes from their team’s tracking of events and NOT from Addax Petroleum. This data reflects his team’s expectation, based on the information publicly available. It is not based on any actions by Addax."
As discussed a couple of weeks ago re: a post by Pup, Addax could be looking for six floaters or some FLNG's and an FSPO, but according to the Quest data they are opportunities and Addax has not publicly ordered any.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44606886
Based on the length of time being taken to analyze Phase I results and Total coming in on Block 1, I have no doubt that Phase II will be entered.
I would like to think drilling in Phase II will be aggressive, due to China's growing energy needs. I'm hoping for at least 2 or 3 more wells in Blocks 1, 2, & 4 and at least 1 or 2 in Block 3.
With the EEZ bid having been past, buying out of junior partners, and the resolution of Blocks 5 & 6 settled, I am hoping China will be more open about releasing results. But I am not holding my breath.
At the conclusion of Phase I, the consortia have to give up 25% of their contract areas. Looking at the prospect map, this doesn't look to be too risky without further drilling. At the conclusion of the exploration period (after Phases II & III -- 4 years total) or upon converting to an OML (at which point they can proceed on development and production), the consortia have to give up an additional 25% of the contract area.
In Blocks 2 & 3, this doesn't look too difficult. For Blocks 1 & 4, it might be more risky without probing all the prospects. So this (having to give up contract area) might provide further impetus to an aggressive drilling campaign. Note that if they want to fast track development & production, they have to convert to an OML first, and they will likely want to be comfortable about what contract areas they are relinquishing in that second 25%. - Longtimer
Nice find, Southern Man!