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From the same Caracal presentation (slide 11), the map below shows how the EARS tertiary rift basin extends into the southern part of ERHC's Block 11A:
We may be surprised by what ERHC finds there.
TOB, I wholeheartedly agree with your post. ERHC management has accomplished a tremendous amount with very limited resources.
I really do think Chad presents the highest probability of success (in terms of finding oil), with the data that is known presently.
Two of Caracal's (now Glencore) top exploration drills (Maku [42 MMBOE unrisked] and Tega [201 MMBOE unrisked], shown green in map below) are next to ERHC's focus area 1 exploration targets.
The slide below shows how close ERHC's focus areas are to Caracal's targets and pipeline.
100 million barrels of oil (Lead A + Lead B) is nothing to sneeze at.
Caracal (Glencore) is following the same strategy in Chad as ERHC in drilling the rift margin. See slides 20 & 21 of this Caracal presentation.
Yes, there is much to be excited about when considering Chad ...not to mention Kenya, and eventually the EEZ. - LT
That is my thought also.
I'm hoping that Block 11A seismics looking so good (presumably) was at least a contributing factor to CEPSA's letting Block 12B go.
Being that Tullow is confident enough to drill, it makes one wonder if there wasn't some other factor at play in Block 12B, other than risk. Maybe CEPSA didn't like how the working relationship with the other partners was shaping up. I mean, with a company the size of CEPSA, what's 10-20 million dollars?
The second exploration period for Block 11A will be commencing no later than September, so we should find out how CEPSA feels about ERHC's block shortly.
If Block 12B is any indication of CEPSA's conservatism however, it may augur that CEPSA will opt for 3D seismic in Phase II of Block 11A instead of going straight to drilling.
We should know in a couple months.
A further thought on the JDZ...
The latest ERHC FAQs has this to say about the JDZ:
Dan has stated what the problem was with the JDZ blocks. As illustrated on this ERHC slide, the faults don't go deep enough in the JDZ to allow the mature oil to migrate upwards into traps (left side) like it does to the north (right side, dark lines). The white dotted line is where mature oil is thought to be.
That doesn't leave a lot of hope. But maybe someone will be interested in extracting the gas. We'll see what happens.
Nice update on Ghana, King.
Looks like ERHC and Star have been in the game since at least 2012:
Lots of good news recently.
Should be lots more to come for ERHC longs.
The boyish look is gone, replaced with an enforcer (don't mess with me) visage.
Very interesting. Thanks for the link. (Don't know how you ever found this!)
Great shareholder update from ERHC!
There has been a lot of discussion on the board as to when ERHC will announce a partner for EEZ Block 11. But aside from the announcing of the PSC signing for the block, I think the presentation on the prospectivity of Block 11 posted last week is the other major noteworthy item of recent, and I am surprised there has not been any discussion about it.
If the interpretation shown on slide 24 is anywhere near reality, Block 11 could hold possibly billions of barrels of oil:
When you are talking about a block in which you can fit ALL of ERHC's JDZ blocks more than twice over, that means a lot of oil.
Peter has gone on record saying:
Nice to see evidence of continued interest in the JDZ. My opinion is that ERHC has continued to work under the covers to facilitate development of the JDZ. That is how they got into the JDZ and stayed in the JDZ.
Good find, King!
Based on the reference to the SPU (Special Protective Units), it sounds like the case study is about work done in Somaliland.
Good find. It shows Bridgeporth is up to the challenges that exist in unstable, infrastructure-sparse regions of Africa. A good choice by ERHC for their Chad work.
Yeah, I'm hoping he was being cautious in laying out time frames. Peter has been roasted in the past when he made some overly optimistic statements.
As they say in business, it is better to under promise and over deliver, than the other way around.
Tryoty, in line with your timeline... some select comments from Peter's April interview:
As it turns out, Scotforth has looked at the Lotikipi Basin. I e-mailed the company, and got the reply include below. I have forwarded this to Dan, along with a link to my post regarding Scotforth, and he has passed it on to management.
Now that ERHC has CEPSA as operator, maybe this is something they could afford to take advantage of. Their track record in Lokichar has been really good. - LT
--------------------------------------------------------------
From: peter@scotforth.com
To: XXXXXXXXXXXXXXX
Subject: RE: Lotikipi Basin, Kenya RSDD-H analysis
Date: Thu, 22 May 2014 10:02:13 +0100
XXXXXXXXX,
Many thanks for your enquiry. Yes, we have examined Lotikipi Basin and could provide prospects/surveys.
Please let me know who you are, what company etc and what Scotforth service / product you might be interested in then we can discuss.
Regards
Peter Hutchison
Managing Director
Scotforth Limited
--------------------------------------------------------------
From: XXXXXXXXXXXX
Sent: 19 May 2014 22:00
To: peter@scotforth.com
Subject: Lotikipi Basin, Kenya RSDD-H analysis
Dear Mr. Scotforth:
Greetings. I was looking at the your website (Scotforth Ltd) and noticed you have products for several basins in Kenya, such as the Lokichar and Turkwel. Would you also have RSDD-H analysis for the Lotikipi Basin in northwestern Kenya?
Thank you,
XXXXXXXXXXXX
Yep. Tullow is marching northward, with sights on Etom in the string of pearls, after reporting "100 metres of net oil pay in good quality sandstone reservoirs" with Agete-1:
Haha... those lavender dots are showing where the faults terminate in comparison between the JDZ and north of the JDZ. If I'd just have looked at the entire image again.
That's what posting late at night will do to you. :)
I agree with you about the corroboration, OC.
I think ERHC has been working quietly behind the scenes to promote the furtherance of work in the JDZ. In fact, I would conjecture that they are the best resource that the JDA has in the JDZ to that end. Everyone else seems to have thrown in the towel.
In that e-mail I referred to earlier, Dan also remarked:
OC, that's basically what Dan said (my interpretation) in his e-mail here:
I wouldn't be surprised if they sweetened the profit-sharing or cost-recovery regime for the JDZ.
While Bowleven/Adamantine had a head start in Block 11B, they are just now getting around to awarding their 2D seismic contract ("2D seismic tender process at an advanced stage and award imminent").
In contrast, ERHC announced they had awarded the contract for Block 11A's 2D seismic survey back on January 13, 2014. How's that for management being proactive.
We can also be glad ERHC chose a farm-in partner with deep pockets over someone like Bowleven:
Just read the whole thing through. That's what I get out of it too, King.
Dan's guidance was pretty much straight on... "don't expect boatloads of cash" (if I recall correctly).
A little disappointed about the 75% carry for the second exploration period (referred to as the "first additional exploration period"); don't know why that wasn't 100%. But no doubt management negotiated the best possible deal.
Man, this negotiating stuff takes a long time. The Confidentiality Agreement was dated October 10, 2012 and the Farmout Agreement was concluded October 7, 2013. ERHC announced completion of the farmout on February 10, 2014 (waiting for government approval). Think of all the needless hand wringing that took place on this board during that time.
What this shows is a lot can be going on behind the scenes even before we know about it. There could be the same sort of work going on with Chad and the EEZ; it just may be that things have not progressed to the point that they can be announced. (In fact, we do know things are cooking for EEZ Block 11, per Peter's latest interview.)
Here's to finding oil in Lotikipi! - LT
Thanks for posting, King. Especially like these paragraphs:
"Mr. Gertjan van Mechelen has left the Company effective March 31, 2014, by mutual agreement."
Interesting phraseology. Sounds like Gertjan has fulfilled his purpose at ERHC... getting Kenya and Chad exploration off the ground.
My first impression was disappointment, because Gertjan seemed very proactive, a go-getter. But could this mean that ERHC has found an operating partner for Chad as well now? If so, Gertjan's role would be greatly diminished. Hopefully there is more to this than cost-cutting.
Time will tell. - LT
The 2D seismic will identify prospects and leads. Of course, with all oil exploration, nothing is certain until spudding occurs, to see what actually lies below. But we have reason to be optimistic due to existing seismic, the FTG results, the regional geology, and the success of Tullow/AOC.
Naysayers seem to forget that ERHC was not bargaining from a position of weakness when it came to Block 11A.
For one thing they had this interpretation of one of the seismic lines across the Lotikipi basin (including the tantalizing signatures in the western 2/5's of the line):
Secondly, Kenya was heating up as an exploration area after Tullow/AOC's major discovery.
The supply of Kenyan blocks was limited, whereas the demand was ramping up. We all know what happens when there is more demand than there is supply.
Perhaps it went something like...
ERHC: "Thank you for your offer; we'll consider it. Next..."
Well, this blows my theory of EEZ Block 4 being signed first. Great to hear news of palpable progress being made in the EEZ by ERHC.
Looks like the EEZ may be the area from which we receive the next bit of good news from ERHC.
That's just about the response I would expect. When and if the company has something consummated for EEZ Block 4, they will make it known publicly.
It would not be wise to divulge anything prior to signing a contract, as nothing is for sure until that happens.
I still consider it a good sign that Block 4 disappeared from the "continuing" negotiations paragraph. The prettiest daughters usually get married off first (but of course it's what lies beneath the skin that matters the most).
King, good eyes. I'd side with your latter assessment and be willing to bet that the omission of Block 4 in the EEZ Operations Update from the 10-Q is an indication ERHC has selected a partner and is in final negotiations. Consequently, it would not be on the "auction block" for negotiations anymore.
My reasoning for this conclusion is based on what is pointed out in this post. Block 4 is no doubt the more attractive of the two blocks, since it has more seismic and is in shallower water. So I would expect it to go first.
Indeed, the news we've heard recently concerning the EEZ has been regarding the lower-numbered blocks. - LT
If what happened in Block 11B is any indication, we could hear something this month about the farm-out approval, but note the caveat below.
From Bowleven's Interim Report for 2012, p.11 (their p.8):
Yeah, had ERHC been an investment in a single lease that turned out to be dry, we would all be out of our money, endgame. The JDZ was not the hole-in-one everyone thought it was going to be; had it been, we all would be financially in another realm. But that is the nature of the business; wildcats are a gamble.
Fortunately, ERHC is an investment in a company, not a lease, and management did not just throw in the towel. After recovering from this blow to the gut, they pulled themselves together and got busy. Like the phoenix, ERHC has re-emerged with two good shots at finding oil (not to mention prospects in the EEZ and a possible second go in the JDZ).
It is sad to hear of folks that are faced with the possibility of being outlived by the fruition of their investment. I've been invested for 16 years, and had I known then what I know today, I would have invested my money elsewhere.
But take courage, within the next year or two, if not before, we should gain an idea of what has been dealt in this latest hand. We have not reached a dead-end; we have good prospects for success.
But in life, there are other things that matter so much more than an investment.
Touché!
I second everything you stated, Strategy. This year will be a pivotal year for ERHC. We have much to look forward to in the next 18 months. There is much potential for more good news.
I'd like to see ERHC announce a partner for Chad and start drilling there, where chances for finding oil seem higher (albeit in perhaps more modest quantities). - LT
You can Google to find out who did the seismic. It was not ERHC.
From this close-up image from the ERHC site, there seems to be quite a bit of seismic (relatively speaking) already available for EEZ Block 4:
(Note: The jpg file is misnamed as "EEZBlock11.jpg"; but it is actually EEZ Block 4.)
Of the two blocks, I would expect Block 4 to go first, due to the more extensive seismic coverage (assuming good seismic shows).
EEL has already identified 31 prospects and leads from the seismic they have for their blocks, 5 & 12.
Yes indeed, nice find.
ERHC must be satisfied enough with the farm-out arrangement in Block 11A that they are "not currently entertaining farm-in offers from any other party."
Perhaps this also speaks to their current finances, post-farm-out. If they were desperate for cash, they'd be looking to sell another piece of the pie in Block 11A. - LT
That Business Daily Africa article just blenderized what was conveyed in the 10-K filing and news releases for the most part. There is nothing new in the article.
So I would not put credence in any nuance of language in that article. They couldn't even get the location of Block 11A correct:
Adamantine signed its PSC on May 30, 2012, so they have one month less left in their initial 2-year exploration period, if their PSC has the same terms as ERHC's.
That would put their 2 years ending on August 29.
I bet they'll be taking a peek at that southern basin too, if there were shows in the FTG. Would not want to relinquish a play closer to the string of pearls.
It is great to see ERHC moving things right along.
I think this does bode well both as far as ERHC's confidence in the farm-out deal being consummated and the likelyhood of very favorable terms of the deal.
I think though by necessity they have to get moving pretty quickly on the seismic, because the initial exploration term expires no later than 9/26/2014, if I read the 10-K correctly (6/28/2012 + 90 days + 2 years):
John, I noticed that too.
The western 20% of the seismic seems to have more clarity, which makes sense, since there appear to be no volcanics above.
But even under the margins on either side of the apparent rhyolite blob (volcanics), there are some interesting looking areas.
The signatures above the rhyolite blob must be the aquifer sediments UNESCO found recently?
Can't wait to see what they get when they shoot localized 2D seismic.