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Gralla inadvertently made a critical disclosure when he said they were not sure how many BCF in the field, i.e. he was thinking in terms of GAS and not oil.
The questioner jumped on that and it is very important, you would notice how Gralla tried to back out of saying anyting more about oil and or gas when faced with the statement that gas changed the complexion of past expectations.
Accidentally learned something here.
Otherwise altogether a sorry conference call - but what can one expect from these amateurs and Nigerian promoters.
Data room & buyout: Any one notice how there has always been plenty of talk about a buyout but never any talk of a data room?
Typical practice with public companies in the oil and gas business these days is to open a data room where potential buyers can assess if and what to bid on assets to be sold: protects shareholders in objectively making a market and protects management, showing they are open to best terms, reduces potential for SEC and DOJ criticism for following only the interests of a major stockholder and truly ensuring best available terms and protection for minority stockholders.
It is strange to me that after all the DOJ and SEC attention in the past that ERHE does not take this step.
The fundamental reason for ERHC was to monetize these excellent rights. Now we are ready.
In a few months there will be enough information available to make a divestiture of Block 2-4 assets and operation of a data room workable.
Can anyone explain? Dan? Peter Ntephe?
Art: The concern is far more fundamental and broader than this recently PRd small field, respectfully suggest re-readinig my post.
No, can't help, "don't know nuttin" as the board saying goes.
Best
Below sent to Dan Keeney at ERHC on 27Nov09. If you are of a similar mind, would suggest you similarly contact ERHC.
Subject: ERHC is not an oil and gas company by any normal use of these words in the US
Dan: I read the 24Nov09 press release on the ERHC website that “ERHC Energy Inc. is a Houston-based independent oil and gas company focused on growth through high impact exploration in the highly prospective Gulf of Guinea and the development of undeveloped and marginal oil and gas fields. ERHC is committed to creating and delivering significant value for its shareholders, investors and employees, and to sustainable and profitable growth through risk balanced smart exploration, cost efficient development and high margin production” [Underlining is mine]
ERHC DOES NOT HAVE any exploration or production people, has no track record of these activities. It DOES have a successful track record of getting hold of and keeping the rights it has. It is not as if ERHC can even say it is a non operating oil company. ERHC is a holding company for some excellent prospective assets in the JDZ and EEZ but to say more than that is deceptive. The practical honest solution is instead to emphasize these strengths. Anyone working in a real oil and gas company quickly will confirm that your description is misleading at best and outright lies if viewed carefully against reality.
You can claim to have a caretaker management in place to maintain these assets but I would not go too far in touting ERHC’s management ability as that is fairly nonexistent by oil company standards.
This perspective comes from working in a real oil and gas company that owns and operates many such assets, in planning deepwater field developments of the kind now being drilled, and is reinforced by talking to others similarly placed. More important is credibility with serious oil industry analysts who quickly see through your words for what ERHC really is. You cannot BS them, in fact trying this kind of BS has a negative effect right away on serious people in the oil and gas community!
I would however commend ERHC in the last 2-3 years in taking some trouble to communicate with its shareholders. Now if you can get past the Nigerian promoter perception that your colleagues convey and recognize honestly what a real oil company means . . . . Think for a minute of where in the current management there is anyone to lead the company as an oil company and really has that as his raison d’etre. Compare with other true operating oil companies in West Africa.
In my mind ERHC management is a joke but the assets are potentially outstanding, justifying holding on to some stock. It is an unfortunate combination! FYI, I am a shareholder in ERHC with xxx,000 shares and take seriously what is said on your website and communicated by your company management.
I do respect what you have been achieving, hate to see a US professional being swayed by Nigerian promotion and ask for more reality in ERHC communications.
Best regards
[identity and number of shares withheld in this public forum]
Not sure what you guys are smoking on this page. Have you read this regarding the times ahead in the FPSO market:-
Another disquieting sign in our industry is the current status of the world’s FPSO fleet and the number of FPSOs without contracts. I count 183 FPSOs in the world, either existing or being built or converted in a shipyard, with 83 of these owned by oil companies and the rest of them, 99, being owned by contractors and leased to oil companies. I count 8 FPSOs building on speculation, still without work commitments and then there are 9 more FPSOs currently idle and off location. So there’s 8+9 out of 99 that are out of work: 17%, that’s huge. It’s never been that high a proportion before. And this is not allowing for any FPSOs known to be coming idle very soon but that has not been announced.
This large an idle fleet harkens back to the 1990s with drilling rigs and the years of adjusting and consolidating in the industry. But FPSOs are not the same as drilling rigs. Each oilfield is different and each FPSO may need more modification and more investment for the next assignment than typically happens with a drillship or a semi. At today’s shipyard prces it may be economic to build an FPSO conversion rather than adapt one of these idle FPSOs – that’s part of the economic predicament for owners of these idle FPSOs.
Simultaneous with all that equipment being without work, oil company inquiries for FPSOs have slowed way down - other than the amazing world of Petrobras. So tomorrow does not look too
good in today’s FPSO world. It conjures up what the Vince Lombardi the American football coach said about “when the going gets tough the tough get going”. Hey, with FPSOs, the going
is getting tough.
Link is: http://www.lovie.org/fpso_congress09.php
Certainly Petrobras have had the most success in subsalt drilling and so have to be a leader in it, but here in GoM the BP operated Kaskida discovery in 2006 is a big one and there have been other wells drilled in the subsalt in GoM by other US operators.
Operators are getting better at seeing what may be there below the salt. But it is difficult and expensive to drill in adddition to the technical challenges, particularly so in US, e.g. $200+million/well in GoM.
This salt thing is serious, can mean drilling through a mile or two or more of it and the biggest and best rigs can barely just do it in GoM! Then if a discovery, high pressures and rocks that have no history of production.
So it can quite changes the risk/return economic equation in planning field developments and financially.
I don't know anything about presalt prosectivity of EEZ but if this is something being looked at in Angola, obviously needs consideration up the coast.
Offshore well depths are counted by the distance from the rotary kelly busing (RKB). That is on the drillfloor on drillship and is above the sea surface. This way it is straightforward to count all lengths of pipe in the hole down to the drill bit.
Principle is the same as for wells anywhere else in the oilpatch.
So total depth is composed of (1) the distance from RKB to the water surface, plus (2) water depth, plus (3) depth drilled into the seabed (mudline downwards).
For example an appraisal well in abt 6,500 ft. wd going down at the moment in GoM has a target of about 33,000 ft. and so they are drilling about 26,500 ft. of hole. This one is a subsalt well ("presalt" in South Atlantic speak!).
Hope this helps explain.
Now back to the boredom, waiting on well results.
Nah, sneak, you got it all wrong (LOL):
Middy needs to stay inside the box, and with the lid bolted tight shut.
To these of us in the business, SPP119 knows what he is talking about.
Umbra: A brilliant idea.
The FEPARMO preface (For Entertainment Purposes and Rumor Mongering Only) could be advantageously used for many posts!
PBR better but a national oil co. not as good as CVX or XOM.
Emydal: When hundreds of millions start being committed on drilling deepwater, oil cos. certainly do also ramp up the planning on development, just think about NPV10 and the overall game.
Redinvest: With respect, you have no idea of the scope of work involved in planning and executing a major deepwater development such as unitized multiple blocks in JDZ, and few people would unless they have been in the middle of such multi billion projects.
Jeff Schrull I am sure is a competent explorationist and he would know from his days at Chevron what it truly takes for mega projects, and I think would admit to the validity of my statement.
Put it this way, no responsible board would turn that kind of investment over solely to a Jeff Schrull and Addax.
Sidewinder: I think you could be on the right track. Skeptical as I am of the endless oilygrams and dottiegrams, Addax and Sinopec don't have the experience and expertise to plan, manage and develop the JDZ Blocks 1-4 as a unit, but Chevron and ExxonMobil really do and would be able to get it all done for a consortium of owners in a reliable fashion, like they have done on other mega projects.
Sinopec and Chevron have connections going back a long time.
Now is about the right time in the deepwater development process to contemplate this.
Petemantx: Thanks for clarifying so succintly the gas v oil situation for the board - you are obviously in touch with what is going on in the industry, as is sp119.
A rough general feel for what may be found.....
Tryoty: Agree the idea of seismic is old, but the petroleoum industry has been advancing it rapidly and the interpretation even faster. So the eight years from the early Western Geco work DO make a difference.
More important, in doing their assessment, the reservoir gurus at Netherland Sewell have the benefit of multiple analogues that were not available 8 years earlier.
So it's a no brainer that their work will be a more realistic guess in 2009 on what may be there in the blocks they looked at.
The Anadarko WA drilling announcement in the last week, what they said last year, plus the actions of Exxon and Chevron are all fitting together now with NSAI, in my view.
No Ghawars but still a pretty decent outlook!
Mrogop: Thank you for the explanation.
Perhaps your way of projecting the extra to be ultimately produced would work in some deepwater parts of the world as a rough comparable for JDZ. I do know it does NOT work in Gulf of Mexico deepwater where there have been multiple instances of initial expectations on recoverables that were used to sanction developments but which turned out to produce significantly less, i.e. initial "proven" recoverable figures OVER estimated the field.
Do you/anyone have data to validate this kind of trend guideline for developments near the JDZ?
Absent any such validation I have to conclude that there really is no rational basis for believing in anything seriously more than NSAI levels of recoverables in ERHE's blocks.
What say you, Redinvest and Fishdog?
Operators can spend vastly more effort and talent on such estimates but very unikely we board people will ever know their views.
But hey, in 104 degreee Houston this week, spreading around some cold water is welcome!!!
Red: What scientific data exists to indicate, as you allude to today, that reserves may turn out to be more than the P50 figures from Netherland Sewell (NSAI)?
Firms like NSAI prepare their estimate calculations so they are sound whether on the buying or selling, e.g. farming in or farming out side of the table.
There seems to be a continued general belief on the board that reserves will turn out higher but I can not remember seeing anything to properly substantiate that view.
Do we have anything better, other than anecdotes from rig hands or someone who maintains he/she saw some of the logs?
I do appreciate your thoughtful posts.........
Best,
Can anyone here reconcile how these tables of data on size of stockholdings don't show all the accounts that posters have here, so many of them being more than 250,000 shares for example and therefore about the same or larger than the "institutional" and company official shareholders (aside from SEO)?
Seems like E*Trade and the likes don't show up either as house holders or other nominees for privacy purposes.
Hence there are so many omissions that these listings are rendered virtually meaningless.
Midtieroil: You are RIGHT about Addax drilling 11 wells in a quick string.
Addax may never drill them all.
You are WRONG about drilling deepwater wells hoping for their production to finance them, and not drilling other prospects in the same region in the same time frame. Ask your deepwater operating oil company friends in the Woodlands and Houston about Kaskida, Cascade, Jack St. Malo etc in GoM. Your words "If you knew about the oil industry you would know" therefore come to mind, also "That is how the oil industry works".
It will also be a big time stretch (financial risk) for Addax just to drill up these prospects far less both drill up and develop these deepwater resources, hence a reason for an Addax buyout. Mmmmm... that might start a good board debate to keep us going until well results (LOL).
Dadd, Walldog: I have no links to substantiate my statements! But I do appreciate your efforts to maintain some civility on the board.
But first we have to get to the first discovery!
Best,
Tamtam: Was not sure what you were getting at. Start of drilling and spudding ARE the same as makes no practical difference. Where I work, spudding is when drilling starts once the conductor pipe is set. Sometimes people count spudding as when the conductor starts being drilled in or jetted in.
As far as ERHE goes, seems folk hope to know the day the drilling of the first well starts where ERHE has an interest and that cannot be predicted accurately far in advance. Some posters will fuss that no one knows, but that's the oilpatch!!! And on this board we are removed from operations.
If you meant to say "the start of drilling" is when the drillship goes on the Addax payroll after being released from the prevous well, then that is before spud date and that is the date that counts for the well costs.
OT, thanks for all your dedication and patience in posting and moderating, often in the midst of abrasive ignorance.
Best
Thank you for the important secret!
It now becomes obvious that posters need to drink Krombacher before hitting "Submit Public Post" - necessary for their projecting true wit and wisdom.
Krombacher also helps for sharpening one's vision to see through the GOG FOG that we all have to deal with in this stock and in that part of the world.
GOG FOG is a persvasive phenomenon, impairing the the minds of many, particularly when they try to understand the GOG business world. In that part of the world in generations past it used to be called the "WAWA effect", but now the phenomenon is identified on this board - and the antidote for is now identified too (drink Krombacher).
Your clever and funny post that got this current string going was great, I really enjoyed it, almost as much as Umbra did, but not quite in the same way.
LOL
Spec29: That's consistent with what I heard while visiting with Addax at OTC earlier this month, spudding Sep/Oct.
Pepsiman: Yes, hit the nail on the head, nuisance and ultimately have to get bought out to get rid of them, delivered virtually no value to the well location and campaign planning like any normal non op partner.
Your view was very clear to anyone in the business who was at the SHM a year ago.
Petemantx: Obviously since I am an ERHE stockholder and have been in it for a while I believe the odds of commercial oil in the ERHE blocks are good.
What the first well brings, who is to say. One in three chance of commerciality is an often cited guideline these days. Been a lot of success adjacent to JDZ area, so "closeology" as people like to say is important too. It's normal to reprocess and use all technology you can when these wells cost what they do.
I must say too that Jeff Schrull's comments that got quoted on this board on OBO-1 were very unusual. In his time at Chevron (IMO) they would have caused very serious angst in Corporate Communications and maybe contributed to his move to Addax. Normally it is known taht such talk is carefully NOT tolerated but I'd guess Addax won't mind as much in their context.
I was surprised that XOM bailed in block 1 the way they did, they are very astute, to me meant it was NOT a "river of oil". But may still be good for Addax & ERHE. However we are not yet at the develop and produce game and that is beyond Addax IMO and argues for a buyout then.
Hey, Petemantx, we all have to wait and see, I don't know (LOL)!
Like the song goes, "know when to hold 'em, know when to fold 'em, know when to walk away and know when to run. I'm holding!!!!
No, the best prospect(s) usually get drilled first and depending on results and what is learned some of the next best are drilled.
Does not mean at all that ALL prospects are worth drilling.
It sounded to me that that was what spp was trying to say.
Plus ca change plus la meme chose, from 2 years ago:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=18791893
Your comment is unwarranted and suggest you cut the guy some slack, this is West Africa, things are not as methodical and reliable as other parts of the world and he has a history of providing as trustworthy info as one can reasonably get for a board like this.
Umbra: Meaning that the Bowser newsletter alerts people to stocks that are really big dogs?
Or am I barking up the wrong tree?
Serious stuff here.........
Fishdog: What took you so long? Oily's been due for "plug and abandoning" for a long time, and Chicago style "plug and abandon" at that.
While we're at it, an oilfield P&A for Balance Builder too (i.e. no useful production or prospects for same despite a lot of oilfield attention).
And a Kina seabed water shower for board cheerleaders.
Homeport: Many thanks, appreciate your honest assessment!
And thank you too for keeing us all steadily informed here.
Homeport: Can certainly understand how stories get misquoted in that Lusaphone circle and I defer to your judgment in that respect. However it would make great sense for PBR to do that 3D and establish knowledge and relationships so they can work into a preferred position in EEZ anyway, with possible presalt upside potential as a bonus.
After PBR's generations offshore, to suddenly hit the jackpots with the presalt, and considering how tremendously fast they reacted on it, e.g. changed the bid rounds, contracted for drilling and production, seems to be an obvious deal to chase and snap up in STP.
What do you think? Is what might be obvious in Houston unlikely in the islands?
It seems to me that "EEZ in 2009" is to ERHE like "JDZ in 2004" was back then, pre PSCs.
So we do have a new upside in sight: EEZ and maybe presalt. Certainly the big SP action is still obviously from the drilling plans in the year ahead.
The petroleum world has progressed in 2008-9: a little googling on "subsalt" and "presalt" confirms what these in the game already know, billions are being committed on these presalt plays today. It's certainly not 10-15 years out, Midtieroil!
Interesting in this board how one can detect the balance and frame of reference of posters from their posts!!!!
You're confusing the poor guy!!!
An analysis like the Netherlands Sewell (NSAI) report starts with a calculation of oil in place based on best availale data and judgments, proceeds to recoverables unrisked and then a risked value of the resource (still a VOLUME in bbl) that allows for contingencies, e.g. chance of no oil at all being in the formation.
It's a bit like Balance Builder's conjectures: if each factor has a 50-50 shot of happening and there are three things that have to happen to make the conjecture come true, then the end result has a 0.125 chance of happening (i.e. a billion becomes 125 million risked).
The discipline of working up such risked and unrisked values is useful in deciding which prospect to drill in a company portfolio and whether it is really worth the risk of doing so. Most everyone recognizes it is certainly not a reliable quantification of what's there, only drilling will tell, but still a worthwhile signal.
And for your ongoing encouragement on this Sunday afternoon, I am aware of two prospects of "Kina like" potential which were $100+million wells to drill and both were busts.
Another poster wisely indicated that people in the industry don't get carried away with the idea of billions and billions of barrels at this stage just waiting to be drilled and ready to be profitably produced!!! It does not always happen that way. LOL. And we have not yet talked yet about producibility, e.g. how apparently big reservoirs sometimes are compartmented and the the field never produces like thought initially.
All just to hose a little more cold water down on the "we are golden" cheerleaders..........
But is is VERY VERY unlikely that ERHE has nothing at all in all its blocks.
I have much appreciated the professional posts from spp119, hope he continues as he does seem to know what he is talking about, is well immersed in the WA scene. IMHO the squabbling with him on this board has been juvenile, just serves to deter further constructive inputs.
"Presalt" wells not always so remote a possiblity these days - recall the pop in the stocks of BP, Chevron and Devon a couple of years ago when the Kaskida discovery in GoM was announced.
"Presalt" wells are tough to drill and wells often appear difficult to produce but the potential is pretty good and success rate been good if one has the stomach / deep pockets for it.
All is moving fast and would not rule it out (even at 62, LOL).
Homeport: My thoughts too, positive shifts on the board.
Midtier generally knows what he is talking about in the 'patch, adds value.
If you read this announcement it sounds to me like an estimated possible total figure of $16Billion and not a firm commitment like a construction contract, e.g. it says "one of the biggest commitments by any block of the world to look into what is happening in Africa". Not unlike other announced big plans that don't quite come to pass in that part of the world.
Next if you count up the events BB postulates there's nine of them.
Suppose there's a 50-50 chance of each happening and affecting ERHC.
Then the probability of them all happening when these dots are connected is 0.5 to the ninth power or 0.1953 percent.
In E&P and investing worlds of P90 and P50 and P10 possible reserves that ERHC might have, what value does connecting these dots really bring this board?
Dots gone mad........
Right on midtieroil.
Umbra might say "dottiness"
Here in the US on this board, believing in oilygrams and dottiegrams, does that constitute "being in one's dotage" ?
In your Perdido example all kinds of development solutions were looked at, gets down to weighing all the production requirements, need for servicing the wells and so on, not a clear cut deal, takes lot of studies.
But fairly obvious in JDZ that unless formations are lot different from nearby and rest of WA, FPSO the most likely solution. But lot first needed in figuring out the field development plans.
TopShelf: Thanks the kind words and enjoyed your pictures.
Yes, more boring waiting until well results, and tehse may not neceessarily be conclusive initially.
Regret slowness in replying - several hours after posting had a 25 in pine come crashing in the house, but nothing as bad as these people along the coast.
I do appreciate the perspective of you serious investors on the board.
Best
Probably is good, just that these wonderful prospects often turn out less wonderful, why exploratory and appraisal wells are drilled.
You remember that Trident discovery in GoM in 2001, how it was heralded as the new world out there in Alaminos Canyon, how Wood McKenzie wrote of the reserves there, how FPSOs would start in Gom etc? Today it is not yet committed for development.
Just a call for caution, you might be right.
Apologize the delayed response to you, due to hurricane damage at home and work.
No intent to "beat up on you", but if you as a leading poster on this board is obviously heading in a direction at odds with industry practice, getting it right is important in my book.
Has to do with growing up in the oilpatch, something about knowing thin schitt from shinola.....
...petroleum industry culture and sophistication.....
(LOL)
hurricane disrupted delayed response!