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How could these big, ugly, dumb oil cos all use FPSOs up and down the coasts of West Africa, of late with Akpo, Agbami and Bonga with design lives of 30+ years...
Lot of nonsense on these boards, how and when fields get developed, the time it takes to plan, manage and develop and so on.
It is amazing the perceptions that investors cling to and how things ultimately play out. ERHE will be intriguing, how underlying values may come through AND WHEN despite the odds.
The board seems to think the first wells all will come in as barn burners and that would be rare.
One million barrels per day....... OMG .. must come from oceans of oil, and rivers of oil, maybe even a Ghawar or a Tupi is down there.... How could these big, ugly, dumb oil cos have ever missed out on that potential .... The elephants in this circus must be humongous. Would be a world first, a million bopd going through one offshore platform....
Your spar is good for 0.13 million barrels per day, south of the border Pemex has done around 0.70 million per day with FSO, plans about the same with their new KMZ FPSO.
Seismic looks like some smaller reservoirs of gassy oil, continuing the Akpo trend that was pooh poohed at SGM. Heck, must be a mix up, cannot be JDZ. LOL, LOL
Too many folk with too much time on their hands. I don't know nuttin' either.
Can you explain, substantiate why you think it "most likely"?
The spar in the picture is for Shell's Perdido development in Gulf of Mexico where there is generally plenty of pipeline infrastructure and in that instance it was necessary to get back into the wells fairly frequently.
Over in JDZ with the crudes and reservoirs expected it would seem to be ideal territory for an FPSO.
You know something of JDZ reservoirs the rest of us don't?
Nice picture.
I have to disagree with you guys, Balance Builder's posts were one of reasons I quit posting much on this board, these P0001 to P01 pyramids of far fetched speculations were a waste of time.
I happen to work for a large E&P and so anything between P10 and P90 gets my attention, the rest is I am sure well meant but far from practical doable oilfield reality and IMO is misguided and a waste of time as regards investment in ERHE.
But hey, if you enjoy oilygrams, it's a free country and the right to enjoy dottygrams has to be equally covered under the Constitution, LOL.
We still have to drill the exploratory and development wells to find and produce.
Spec29: It's about leadership and vision and making a start on being an "independent oil and gas company". Takes a while to get there, build value for stockholders, build credibility as partner.
Agree, it would be crazy to immediately staff up like a big independent.
But making a modest start . . . Here, with respect, I have to disagree with you. After 2 years with funds, ERHE is NOT "doing exactly what they should currently" by standards of many in the 'patch. Pattern was there before.
But hey, reality check: always been a Nigerian run holding co.!
Tryoty, Pup: You ever talk to Devon and Pioneer to hear first hand their thinking on ERHC and the JDZ?
Lot different from your posts. They "Did not want to mess with Emeka Offor", to mix up the meaning of Walldog's words (LOL).
Hetherb: You do have a point, I went back and looked at the website and see the words "independent oil and gas company" used to style ERHC Energy.
Despite multiple opportunities in last 5 years, been no move to fit that commonly understood description - Dan Keeney is stretching it!
Where is the oilfinding leadership to make a start? The landmen, reservoir engineers, petroleum engineers, drilling engineers, geologists, geophysicists and so on, to acquire, divest, farm in, farm out, explore, drill, produce???
Leads me to conclude ERHE remains a good pure play in JDZ, likely to pay out in maybe 2-4 years if these fabled sands do indeed contain producible oil. US listed, but no oil company!
In same time while a stockholder here, holdings in Afren, Addax and Tullow multiplied 2-4 times, but ERHE is stagnant. Even the evil XOM has grown (LOL)!!! Tarting up the website is an advance but some fundamentals are lacking and could be improved if ERHE chose......
. . . A rare semi annual post, just in time for SHM . . . .
Truth in advertising:
ERHE does now have its token oilfield hand but still not the oilfinding leadership and supporting team like an Addax, Afren, Kosmos or Tullow, to name other independent oil and gas operators active in the region. To other real independents ERHE is a joke when they describe themselves as “operator” on their website. I have in mind to ask a question at the SHM “What is the action plan is to become a true independent oil and gas operator - and thereby add value to the shareholders’ interests, beyond that of the current asset speculation?”
I don’t buy the “vision” on the website – “opportunism” more like it. The true vision was Phil Nugent et al seeing the potential in what is now the JDZ, at the beginning of the game a decade ago.
BOD:
A related question is: “When will we see serious E&P oil company directors in ERHE, beyond the Nigerian Names currently selected by Emeka Offor?” Unfortunately the DOJ investigation hangs over ERHE as if any association with the company might bring on malaria, tending to deter serious oil industry leader from associating with ERHE.
If there is no change, then at least we will all know that this is a play that will reach maturity after appraisal of whatever finds are made in the ERHE blocks.
Oilygrams and dottiegrams:
It’s pretty tough even with heavyweight talent on board to calculate what would be a optimal values for acquisition of all the ERHE properties, far less within ERHE as it is today. Risks too huge, for ERHE and for a buyer. That practical reason is a deterrent in my mind to anything happening until appraisal is well along and we get multiple operators clamoring for the properties – sort of like PetroKazakhstan a few years ago. So the oilygrams and dottiegrams are far fetched, a waste of time to me - but perhaps entertainment to some posters.
SHM:
Hope to meet many of you there!
Best wishes
Stay the Course - a characteristic in demand for this stock!
Rare, semi annual post……..
1. Drilling Schedules
It is not unusual for an oil company to adjust priorities and timings in its drilling schedule as more information comes available on a particular prospect(s) in the portfolio. Wells themselves in new areas can have problems in drilling causing delays, causing shifts in spud dates for later in the program. In the current market, rebuilding a MODU (like the 30 year old drillship for Addax’s contract) can easily be seriously late beyond promised delivery. And although it is not talked about, the lack of experienced hands means that a rebuilt MODU coming out of a yard often does have delays in the first 1-3 wells as equipment and drilling teams shake out. Long story to say that the first wells on ERHC blocks could quite easily be in 2009 and today we just cannot predict that closely.
2. Conjectures and probability
The oil industry is famous for its P10, P50 and so on. Suppose four independent factors each have an even shot of happening (probability of 0.50) and it takes them all to reach the conjectured outcome, then the probability of the conjectured outcome is 0.5 x 0.5 x 0.5 x 0.5 or 0.0625, i.e. no longer a 50% shot but a 6% shot! Add a couple more factors and it goes to a 1:64 bet! I risk the possibility of boring you all with what you already know but mention it as I admit to getting weary with the dot connecting on the board when they often don’t connect, felt it appropriate to add a little balance to the situation, pun intended. The fact is with ERHE we just don’t have a basis to know what is going on most of the time.
But hey, I understand all the conjectures and oilygrams provide entertainment for some, to while away the boredom, it’s a free country!
3. ExxonMobil
It was revealing to me that with all their talent, time and money and full knowledge of OBO 1 that XOM bailed. Had it really looked like a probable huge find at OBO 1 as the boards chatter indicated at the time, then XOM could have just done nothing and waited for the elephant to mature, then sold or kept the interest. But they bailed and salvaged what they could, moved on. I got my intel wrong 1-1/2 years ago!
[Not the only guy from Texas that that happened to, LOL]
4. Indigenous oil cos.
IMO, these guys can be an FCPA trap, don’t have resources to follow through, need carries, don’t really understand the game, oftentimes are basically traders. Hence ERHC’s past potential partners - and XOM - did not bail like petulant children as some posters would have you to believe, just chose a route of sensible business. Anyone remember the grief of Texaco and Famfa? It does not take away from the value astute traders can create (which is why investors are here) but does argue for buyout at the right time.
5. ERHC PR
ERHC is a holding co., not even a royalty trust, so IMO it’s nonsense to imply being an operating oil co., e.g. don’t have the directors, leadership and staff to be taken seriously as a non op. But still a juicy buyout target.
6. What’s ahead
Despite the dose of FPCA leprosy bestowed by DOJ, that cannot go on forever IMO and ERHC may rise from its sickbed, maybe crippled and maybe not. IMHO the SP is about right for all the uncertainties. Anticipating the squeals from the cheerleaders, please relax. It seemed to me that a voice of caution from the oilpatch was again in order. I apologize being a month late in posting – said last time I’d post in six months. Last posts remain valid, timing has now slipped. Cannot rely on buyout miracles - geez, underwater and I have to keep all this stock for another two or three years for payout..….
Thus wondering about changing my IHUB ERHC handle from Stay the Course to Rip van Winkle……..
It does seem there’s more realism on the board now, and I do wish to thank posters for their wisdom.
Best to all
REALITY CHECK for time from discovery to first oil near the JDZ: Akpo takes about 8 years, 2000 discovery to production late 2008. Egina also in OML 130 is 12 miles away and after discovery Dec03 and 5 wells drilled, now merits a standalone development, i.e. 3 years to appraise value fairly reliably. Source: Offshore magazine, April 2007, pp.14-15.
Why will timing for JDZ be any different? Took from 2000 to 2005 for value of Akpo to become apparent, little quicker for Egina, both would seem to be something of an analogue for ERHE stock value.
In the ERHE blocks, neither Addax nor Sinopec is a Total with its capability to develop an Akpo and Egina, but Anadarko might carry it off (cf. Independence Hub in GOM).
Favorable 2007 well results in adjacent OPL 256 or JDZ Block 1 might goose our SP a little but as many others say, 2008 looks earliest for any good news from blocks 2-4, assuming shows in first wells.
Sorry, cheerleaders if my cold water is just not as entertaining as this last week’s banter on astrology, the Oilphant juvenile riddles and Balance’s conjectures!!!
Semi annual post and a word of caution.
Despite all the latest technology and 3D seismic, dry holes have occurred offshore Nigeria, e.g. were two in OPL 256 adjacent to JDZ block 3. There is no guarantee that the first holes in 12-18 months will be commercial discoveries. They could be (1) dry, (2) obviously non commercial, (3) maybe commercial after more drilling, (4) BINGO Major oil new discovery, or (5) accidental gas discovery.
I thus have to wonder about these “we’re golden” postings of late.
Our HOLDING CO. may one day have an “Akpo” but takes a discovery in the first place plus several wells drilled to get to that value. The asset based upside for SP certainly is better with a starting timeline now roughly in place.
There have been multiple opportunities for ERHC to become an oil company in the last 3-4 years but it has not happened. No interest in building a Nigerian oil co. like say Afren. Ledbetter a strange commitment, maybe Emeka needed an oilfield hand to cover him in partner meetings. The “operating oil company” upside thus not there for ERHE’s SP.
But combine the holding company’s assets plus a serious operating oil company, now there would be a sight to behold in a 2-3 years, with SP rising in anticipation of the effects of true operating management. Then bsk’s dream comes true!
No reason to sell, believe targets may take longer than the board generally communicates. The “Stay the Course “ alias is no accident for this stock!!! I have no inside track other than a career in deepwater E&P business. All is JMHO. So back to other things this beautiful Sunday afternoon in Houston. I have appreciated the many informed viewpoints on this board, the humor and the humanity.
GLTA. Might post again in October.
Addax not being traded in the US does not stop any of us in the US calling our broker and placing an order to buy (or sell) on the Toronto Exchange and holding Addax stock.
That's fact, no opinion.
OT AFTER THE LAST FEW DAYS WE NEED TO LIGHTEN UP, BOARD!
Time for another joke . .
A beautiful young lady from England wearing a tight mini skirt is waiting for a bus.
As the bus stopped she realizes her skirt is too tight to allow her leg to come up to the height of the first step of the bus.
Slightly embarrassed and with a quick smile to the bus driver , she reached behind her to unzip her skirt a little, thinking that this would give her enough slack to raise her leg.
She tried to take the step, only to discover that she couldn't.
So, a little more embarrassed, she once again reached behind
her to unzip her skirt a little more, and for the second time
attempted the step.
Once again, much to her chagrin, she could not raise her leg.
With a little smile to the driver, she again reached behind to unzip a little more and again was unable to take the step.
About this time, a large Texan who was standing behind her picked her up easily by the waist and placed her gently on the step of the bus.
She went ballistic and turned to the would-be Samaritan and yelled, "How dare you touch my body! I don't even know who you are!"
The Texan smiled and drawled, "Well, ma'am, normally I would agree with you, but after you unzipped my fly three times,I kind 'a figured we were friends".
Electick: You have put your finger on the reality, IMHO! Right on. No comparison with assets of comparable minnows.
Our oil won't evaporate so back to watching grass grow in this fine Houston fall day. Well, monitoring other oilfield opportunities.
But he did not clarify if "soon" was Geological time scale, African Fortnights or what . . .
And the oil is there . . . .
Geez.
For Messr. Dan Keeney and Nicolae Luca: Here is an African minnow that is trying to tell the world about its oil company abilities and future prospects, albeit the latter are not (IMO) the caliber of ERHE:-
http://www.afren.com/
This ERHE stockholder would like to see you do better.
Will be intersting to see if other posters are of a similar mind.
Brez63: Well said It is not "us" vs "them" on this board its a "post your opinion without being offensive" board.
IMHO The views of the future for ERHE from Dest golf has just as much chance of being accurate as Balance's more optimistic one based on his pyramid of reasoned out conjectures.
Which I suppose is why people read message boards. This one does attract some good minds.
Free expression.
Nightdaytrader: That Motley Fool article is really good - thanks for posting this, makes me think of taking a position in CNQ.
Crazy (Chief Fruitcake Officer of the Board): Thank you for the explanation on low volume.
Seems VERY low volume, e.g. 61,000 shares as I write this at 1300 CDT versus around a million for the day several months ago.
Quite beyond me.
Balance: IMO this is an example of unknowns spurring conjecture by creative imaginations (paranoia?) that can get a bit much. The guy is a Canadian, smart, located closer to time zone rather than home office in Switzerland, handling investor relations. Been a connection with him which meant I chose not to get into what he was saying weeks before Tuneman brought it into the open in his post.
Similarly lots of things COULD happen in JDZ, we are in the normal figuring out plans stage. We in the board are not in the partner meetings, do not know.
Back to watching snails sleep (good metaphor that, whoever posted it!) for more "fortnights".
Not to spoil the fun, conjectures (i.e. Bobwill9's "making up ****") and sirens and so on are rather entertaining IMHO!
More serious for the tradering gurus on board: Can anyone explain why the extremely low volume in the last week or two?
Amj23 and Balance: Thanks, positive signal that institutional ownwership is at least one of decent size and others sniffing at ERHE.
Balance: Nothing to add beyond my post 717478 of 29Aug06 and past comment that we may be reading too much into this.
Amj23: How do you know that?
BB: Look at the numbers - many of us on this board are far bigger holders than these institutions listed that have microscope holding by institutional standards.
Not significant argument.
ND9: I had a similar impression when I last talked to Addax 3+ weeks ago. I see a lot of movement of people among the deepater operators the last few months, doubt if can read too much into it.
e e bass: I owe you an answer from your question a couple of days back - why no valuation of ERHE prospects like for example ECL's study for Afren that has often been cited on this board? Part of a broader matter I think.
Compare ERHC with fledgling oil cos. active in West Africa like (say) First Africa, Equator and Afren. All AIM listed, they promote themselves, have a board and slate of officers - both composed of credible oil co. people, obvious each intends to build an oil co. None have the potential of ERHC, IMO.
ERHC is quite different, all Chrome's henchmen. ERHC's PR non existent, still prefunctory, minimal. ERHC could at any time do a study that shows wonderful potential value - but have chosen not to. Brandhuber appeared headed in the Afren style. Best I can tell Emeka Offor does not want to go the oil co. route like others. He has had other chances to do so but no. Seems does not want to promote what he has in ERHC.
So like Bobwil9's brisket today, we'll just have to have faith and wait patiently until it is properly cooked, i.e. ERHE becomes juicy with proven oil, because in the meantime they don't understand meat thermomenters in Emeka Offor's camp!
And thinking of Gran Habano's cigars and Bobwil9's brisket, conjures up fine ways to celebrate Labor Day!!!
BB: You have a perfectly valid conjecture.
Could equally also be at face value - that a major area wide development may be one possible path in view of the possible number and magnitude of reservoirs and so information sharing and rig sharing is mutually beneficial among stake holders and a way of making it easier to eventually arrive at such an are wide development. If it does not come to pass, parties still ahead. Many courses of action are possible.
Please recall I had posted does not necessarily look like any skullduggery as alluded to on the board recently.
I did not conjecture one way or the other.
We on this board don't know, IMO. Or I can say for sure that I do not know!
But hey it is a free country and a somewhat democratic board and these conjectures and conspiracy theories can be good board entertainment!
Blance Builder: What is your point?
Gran Habano: Greatly enjoyed reading "The Betrothed" all again, thanks.
You do recognize we run the risk of being branded by certain respected posters on this board as prime Male Chavinist Pigs! I am sure Rudyard would have a better expression. There was a reason why he was the people's poet and so popular when he was alive.
I tried to post a picture alongside the snippets of his work I posted but was unable to do so, maybe someone can educate me how to do that.
Bayfisherii: Thanks for your positive comments - my post yesterday intended to convey good faith views as I see it from my industry perspective. Nothing can be all cut and dried, particularly at this stage in the game.
This board has the potential of being a valuable forum bringing together the many different talents that read and post here.
Valuing on the basis of future cash flows would be reaching really far into time, and reaching even further to project associated risks. However some idea of recoverable reserves and a stock value that way could be more doable, IMO. An independent petroleum consulting firm, of which there are many skilled at this in Houston, could examine the seismic that ERHC has, plus any available well logs of neighboring areas, and arrive at a rational risked set of numbers for possible, probable and proven reserves. They do it all the time. Same process used a lot in weighing property acquistions, farmins, outs etc. That could become a basis for an acquirer to use with comparables and its own assessment of the potentials to choose a dollar figure.
All of which sort of echoes what you are saying in your post.
I am disappointed that ERHC did not do something like this, like Afren did about a year ago, to provide some rational basis for potential reserves and hence stock market value perceptions, albeit preliminary, in contrast to the lack of information on ERHC potentials.
OT: Dedicated to Gran Habano
Some years ago before current bans I had some fun with an ashtray on my desk that read:
"A woman is just a woman
But a good cigar is a smoke"
Learned later that the words are a quotation from Rudyard Kipling!
OT: This board seems to like Rudyard Kipling's IF. Here is something else from Kipling, this time about global competitiveness, but written in 1894, words from a shipowner of the time. It is from "The Mary Gloster" about 5 pages long:-
Steel and the first expansions, It paid, I tell you it paid,
When we came with our nine know freighters and collared the long-run trade!
And they asked me how I did it, and I gave them the Scripture text,
“You keep your light so shining a little in front o’ the next!”
They copied all they could follow, but they couldn’t copy my mind,
And I left then sweating and stealing a year and a half behind.
A little more DD from Houston . . .
1. Addax have a information sharing agreement with Chevron hence the move of 2-3 key guys over from Chevron does not necessarily look like any skullduggery as alluded to on the board recently.
2. Exxon’s 2.5 years exploration well to first oil was achieved by their prior construction of “generic” FPSOs that could be quickly be moved onto a field. They have had a wide range of prospects that could use their 3 or 4 “precooked” FPSOs, so reasonable bet for XOM. But cannot be taken as applicable cycle time for ERHE unless one of ERHE’s partners has an available FPSO like this. Industry chatter a few months ago was about XOM moving/selling their Falcon FPSO in Nigerian waters – would take that kind of good luck for ERHE after blocks 2-4 have first had a commercial exploratory well drilled, to speed up the cycle time. However 2-3 years is delivery time on FPSOs when ordered from scratch today and the 4-5 year cycle remains sensible for planning purposes, even lengthening in today’s boomtime.
3. Information sharing and rig sharing have been discussed among the block 2-4 operators. Rig sharing got lot more common in last year or two in the industry. All quite advantageous for all at this stage and maybe this had got construed as “unitization” that was debated on this board a while back - we are long way from that.
4. If a partner or operator comes up with an early rig slot, good luck for everyone, but still seems like 2008 according to Addax as Tuneman reported accurately. Bear in mind JDA (like this board) wants to hear early drilling dates and may latch onto any indications in that direction!
5. My instinct from talking to Addax is that they recognize they can quickly get out of their depth in the JDZ (pun intended), certainly by the time JDZ gets into full blown development. IMHO, XOM and CVX would be great for getting JDZ into production pronto. Idea not so wild, witness Tengiz and partners there with CVX in a lead role. Big picture, wholesale buyouts could then be on the cards at some future date.
[Great fodder for board conjecture!!!]
6. Like Electick, I prefer not to debate all this. Like several others like to say on this board, the oil is still there, value gets slowly closer.
And now back to other things while ERHE matures.
All about FPSOs for deepwater. Numerous presentations from leading lights in the FPSO business. Lot relevant to JDZ:-
http://www.lovie.org/16701/17022.html
Kobiashi 2000: You are right there is profit oil to start but it is small, but after say 5 years when facility paid off and R ratio is better it does indeed get large. I tried LFG's figures times say Akpo expected 225,000 bopd, assuming on all three blocks (Optimistic!!!), divided by 711 million shares times a PE multiple of 10, get around $15 SP in say 14 years' time, a quarter of that in 6-7 years. Ignores expectations effects.
LFG wondered about the cost oil figure, I'd hazard a guess that each block development could be 4-5 $billion, extrapolating from GOM (e.g. CVX Tahiti) with the radically higher costs than industry saw a year ago. Amortizes over 5 years per JDA rules.
That SP calculation is not too meaningful (read WAG) but right now we don't have any idea of production and reserves.
Really need ERHC to spend a $50-100K on a study like ECL did for Afren a year ago, to get an independent thought out estimate of ERHE's portfolio value. Good outfits to do that here in Houston. Would be great for a road show. Dan, Nicolae: you reading this?
Balance: Before you all work yourselves into a lather in the expectation of new found wealth, that same article also said . . . It took four wells before the full extent of the Akpo field had been proven.
From the discovery well it is common for some rearrangement of plans to drill the appraisals and say 90 days each, maybe one to two years to reach the point that Akpo development plans might be firmed up. I do not know the details of Total's actions, but you get the idea.
Then sanction to proceed with the development, and maybe 4-5 years to first oil in a major ultra deep water development like this.
In ERHC's context, an earlier post today reiterated how ERHC is obligated to let its partners recoup their costs from "cost oil", e.g. Sinopec and Addax are entitled to the Company's share of cost oil until they recover the Company's costs
Which means more time until revenues show up in a 10Q from ERHC.
All of this assumes that the exploratory wells in ERHC's three blocks to be drilled in the next 12-18 months show commercial results. That is optimistic, even tho seismic is good might take a while, and more wells, before showing commerciality in any one block.
Back to watching my grass grow . . . and I hope watching a lot of green grow.
And enjoying reading the content and often valuable insights and source documents on this board, plus chuckling at the bickering and flashes of humor.
Important observation Spec29 . . . Many posters feel these "board pundits" are all quacks . . .
Nostradamus: Timely idea.
AXC is a real oil co. that takes a quite different local strategy than the big US independents and majors, much different to the ERHE, HDY and EEL crowds.
Been long this one since just after the IPO, have tracked AXC activities thru day job interests in offshore E&P.
Look forward to reading and I hope contributing to this board, and wish you every success in what you have undertaken.