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It can and has been done. My response on the specifics is vague because unless I am being paid there is no reason to give up the method. Any good lawyer, like Akin Gump, will know how.
I am an institutional advisor and own the stock personally. If I bought any of this for a fund I'd be fired. Exploration risk, drilling risk, etc are risks that are understood. Washington, D.C. risk is something else entirely.
I dont disagree, but they have to reason to spend the time doing the DD in the first place. I have no time for a story that isn't easy to get my head around and that I know I'll get hammered by the investment committee for trying to find a needle in a haystack. Any reason to say no is a reason to say no.
It's not as hard as you might think and net beneficial to shareholders.
Getting the word out to small investors is great, but retail investors won't carry this company to $2.00, let alone $5.00. The company has to fix the main problem that prevents institutional shareholders from investing and prevents another oil company from buying - the investigations!
What credible US investment bank would take this company as a client and then to an institutional client/oil company buyer (same conversation); "Hi, Bob, we have a great company trading at an amazingly low price on the OTCBB with fantastic upside, carried by Addax on development of its current asset portfolio in the most prolific part of West Africa. They are looking to raise money to fund further expansion. Sounds pretty good, doesn’t it? Management? Bascially Nigerian, and none that have run an oil company before. History? Someone should write a book. Financial position? Solid – lots of cash in the bank and fully carried by Addax on development of current assets base. I said Addax. A D D A X. Risk? Almost none if you take away investigations by the SEC, DoJ, Senate and IRS." Click. “Can I soft circle you for $1mm? Bob? Bob, you there?”.
If you can't fix the investigations in the US, get the assets out.
I wasn't talking about the sub.
The US authorities are never keen to actually "close" any investigation. Although the SEC did it once before on ERHC and issued a "no action" letter.
TSX beats even AIM on listings of oil & gas companies with ops in off the run parts of the world that have sizable market cap. That's why Addax went there first and trades over 400,000 a day versus 9,000 a day on AIM. Almost all the analysts that cover Addax are Canadian as well.
Follow the money...and Addax is the money.
A good wish, but so long as the investigations remain open we will never be allowed to move up to a better exchange in the US than OTCBB. Unfortunately I cannot see the investigations being closed, ever.
The logical exchange is Toronto. Line up right beside Addax and ride the wave.
...but it really is worth $15...
Probably has alot to do with Addax down $1.60 and the risks of Nigerian production.
We have a number of things going for us that are not understood: 1) we are in the deep offshore, which means too far out for militants to get to, 2) Addax may be targetted now, but their relationships with the governments (federal and state) are the best of any large oil company, so this will get sorted, 3) also, Addax's relationships with the locals is also very good, so Addax just has to figure out what they are mad at and fix it, 4) the problems are like dominoes - if you cause one it drops into another, but if you solve one then the others get solved as well.
Update
By Julie Ziegler and Tony Tamuno
June 9 (Bloomberg) -- An attack by Nigerian gunmen on a
ship operated by Addax Petroleum Corp. was repelled by eight
navy escorts on board, a military spokesman said today.
``The ship was attacked by miscreants,'' Lieutenant Colonel Sagir Musa, a spokesman for the joint military task force, said in an interview. ``The situation is under control now.'' Musa said the incident most likely occurred near Calabar state, in the most southeastern part of Nigeria.
``Although, the incident took place in an area outside our jurisdiction, I can confirm that the militants did not hijack the vessel neither did they capture any navy personnel,'' Musa said. He was unable to provide any details about casualties, saying the incident was still under investigation.
Marie-Gabrielle Cajoly, a spokeswoman for Calgary-based
Addax, didn't immediately respond to calls and an e-mail seeking comment.
No one is immune, but It does how that Addax gets first class treatment when such things do occur.
Suggest that ERHC get Netherland Sewell to prepare a reserve report for us. It'd be much more relevant than the Western Geco report and should be easy to do as they NS has already done one for Addax.
Nigeria Gunmen Attack Addax Petroleum Ship, Military Says
By Julie Ziegler
June 9 (Bloomberg) -- An attack by gunmen on a ship
operated by Addax Petroleum Corp. off the coast of Nigeria was
repelled by eight navy escorts on board, a military spokesman
said today.
``The ship was attacked by miscreants,'' Lieutenant Colonel
Sagir Musa, a spokesman for the joint military task force, said
in an interview. ``The situation is under control now.''
Marie-Gabrielle Cajoly, a spokeswoman for Addax, didn't
immediately respond to calls and an e-mail seeking comment.
For related news:
Today's top oil news OTOP <GO>
Top Africa stories TOP AFRICA <GO>
--Editors: Stephen Cunningham, Will Kennedy.
To contact the reporter on this story:
Julie Ziegler in Lagos at +234-806-013-3372
or jziegler@bloomberg.net
This proves what we already knew...Addax is given far more support from the government and protection from the military than any other international oil company operating in Nigeria. Great partner to have.
The market thinks we're worth 50 cents, so that's what we're worth. There is alot of work to be done by our management to get us to $15. Peter did well yesterday, but he only told us what we already knew about the prospectivity.
You want new and substantiated data interpretation? The company should spend a couple of dollars and get a reserve report done. Netherland Sewell did one for Addax that included the JDZ blocks. Why not call them and get one for ourselves? That would be news!
We wait for drilling (now delayed slightly) and there is nothing we can do about it. We wait for the investigations to conclude (which will NEVER happen), but management can fix this with the right strategy.
Why are you concerned. We dont have oil to sell today, so can hardly move up and down on the daily moves in crude prices.
Yes. All the deals were put in those subs originally. All still owned by US company.
What do you mean?
Ntephe is credible and been running the company anyway. Luca is Romanian with many other business interests who probably spent no time on ERHC matters. Ntephe spends 100% of his time on ERHC. Good move.
The SHM should be interesting and I really hope that management takes time to meet and get to know the shareholders of this company. They have o understand that shareholders want the same things as they do - we're on the same boat (or FPSO). Getting together afterward is a great idea, too. I wish I could be there. All the best to everyone involved.
I appologize. I think you may be correct. Regardless, Addax wouldn't want to pay our costs only to recover them and make a slice of the profit. They'd want it all.
Good and realistic post. Thanks. I believe, however, the one thing we can rely on is that ERHC won't be around if and when oil is pulled from the JDZ.
Our value will continue to rise based on drilling excitement (oil exploration stocks always rise on drilling expectation). Assuming drilling finds recoverable oil, the longer we stay independent, at least until our carries run out, the more valuable we are. The more work is done, the more value accrues to ERHC. For once time and trends are on our side. We will definately have to sell out once we have to start paying our own way.
We know Addax wants to find as much oil in the JDZ as possible and sell out - let someone else do the dirty work. Addax doesn't want to pay to fill ERHC's pockets. I beleive the only things stopping Addax, or anyone else for that matter, from making an offer we cant refuse are the investigations.
When ERHC becomes buyable, we are gone.
From the Toronto Globe and Mail: "Brazil's offshore has become one of the hottest development regions in the global oil business, rivalling the offshore area of west Africa, with which it shares similar geology."
Potentially somewhat more oil than initally thought. I think it's been talked about before on this board, but it's interesting that the talk over there.
Considerable excitement amongst oily people there on the prospectivity of Block 4.
Everyone be careful about patting each other on the back too much. Rallies like this tend to backfill. There's lots of good rumour and chatter, but nothing hard as yet. I've heard a few things out of Nigeria today that sound excellent, Addax up nicely as well. I am thrilled that we have finally seemed to have broken out in an impressive manner and the trend is your friend, but the law of gravity (and technical analysis) says that things don't go straight up. Enjoy the fruits and crack a 1998 Opus 1 tonight.
Double hit. Sorry.
He's saying that Block 2, by his calcs based on Addax's report, has proven and probable risked reserves of 800 million barrels. We own 22%. That's 176 million barrels to us to us without having to spend a dime to find. A fully costed barrel in place is worth about $8. What's a fully carried barrel worth? This is only on Block 2.
He's saying that Block 2, by his calcs based on Addax's report, has proven and probable risked reserves of 800 million barrels. We own 22%. That's 176 million barrels to us to us without having to spend a dime to find. A fully costed barrel in place is worth about $8. What's a fully carried barrel worth? This is only on Block 2.
Can you imagine how difficult it has been for the company not to spend a few bucks and get a reserve report, not to talk up the company on the back of Addax's persistent discussion on their assets, not to talk up the fact that our valuation reflects the exploration potential of Addax but with NO RISK, to keep Offor quiet, etc? Incredible.
The fact that they got the lawyers to let them have a booth at the conference is a miracle.
When you have 4 packs of wolves lurking in the woods behind your house, you don't have a barbeque party.
The lawyers have determined...
They have access to the same information that Addax used to put out their reserve report in January. All they need to do is call Netherland, Sewell and Associates and have them do one for them. But the lawyers are saying that until we are clean and clear you do nothing or say nothing that might possibly be construed as hyping the stock. No need to give any investigative agency anything to sink their teeth into. you can reverse engineer our reserves from Addax's report anyway. I did.
He's not looking for a legal nightmare. But if EEL attempt to take 100% of the block that contains the discovery, ERHC might lay claim to 15%. It'll only be a problem if EEL and ERHC both want their rights in that block.
In our favour is that these clauses are part of the final arbitral award to ERHC from STP. Unless we agree to renegotiate, we dont have to change them and can hold out as long as we like. EEL's rights are merely an agreement with STP and have no usch strength as being an arbitral award.
These is indeed the conflicting rights of ERHC and EEL that has been discussed here in the past. I agree that the legal entanglement would criple development unless a settlement is agreed. Either way, there is value there for ERHC to exploit.
That's wrong! We've been through this before...
ERHC can choose 15% paid interest in ANY 2 EEZ blocks, including in ones that STP reserves.
It then can choose 100% in 2 more blocks for free. Obviously these cant be in any of the 3 that STP reserves.
If the comments of Obiang are correct, someone has found a field that crosses the boundary into the STP EEZ. We can choose 15% in this block if we want. Let Petrobras be operator. Confirmation of EEZ prospectivity and oil. Excellent.
A seller had an order to sell a certain amount at 22 cents low. The market took his first sales, saw he had more behind and pulled back. It looks like he cleaned up at 21 cents or so and was done before 10am. The market bought his shares!
Trading then quieted down as no other sellers followed. Then look what happened - the bid firmed up and the offer held at 24.
On any other day the stock would not have held and come back as it has.
Magic beat me. the 15% picks are the conflict.
It doesn't matter whose rights are oldest, ours are part of the arbitral award received in 2002. The bits of that award regarding the JDZ were renegotiated to our current rights when Menezes came in. The rights in regard to the EEZ were not touched.
Specifically, ERHC gets 1) 100% of 2 blocks of its choice, without signature bonus, AFTER STP reserves 3 blocks (so we get 100% of the 4th and 5th best EEZ blocks for free), 2) option to acquire up to 15% of 2 blocks of its choice with signature bonus payable (these can and probably will be in 2 of the 3 blocks reserved by STP - assumung that STP reserves the 3 best blocks).
According to EEL's prospectus, it has the option to acquire 100% of 2 blocks of their choice. Their options are not constrained or restricted by any of the 3 blocks STP may reserve. EEL would probably pick the 2 best blocks of the 3 blocks reserved by STP - again assuming STP picked the 3 best blocks.
Therefore, EEL has rights to 100% of the 2 best blocks and ERHC has the right to 15% of potentially the same blocks - assuming everyone knows which blocks are the best.
That, my friends, is a conflict.
I am not inferring at all that the jDZ will be re-negotiated. I would have said it if that's what I meant. STP has a history of not honoring contracts. Could it happen again? Yes. Would we loose? No. Perhaps your vacuuous opinions of what might happen with this company are better kept to RB as well.
Really? Surely you remember how Sao Tome responded to pressure from Exxon and Soros via NGO's and other US puppets telling them that we had too much and that Sao Tome was gettng screwed. You don't think Petrobras is capable of the same pressure and that Sao Tome wouldn't swallow the line. They probably have more credibility with the Sao Tomeans because of the common Portuguese background. I'm not saying they'll be successful, but that there is a chance they'll try.
The Sao Tome EEZ has nothing to do with Nigeria.
That would make a huge amount of sense, wouldn't it? Put the control of the EEZ in the hands of one company and let Petrobras come with their check book.