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Thanks Vine,
It is a dream number, my point to SSC was that no one knows and for him to question everyones credibility was innappropriate. Because as J-Dub so adeqautely said, "No one knows nothing".
SSC,
Go back and read your posts. YOU ARE POSTER DOING THE BASHING, ANY TIME ANOTHER POSTER POSTS NUMBERS ABOVE YOUR $1 TO $2 PER SHARE NUMBER.
From my perspective you are the Jonestown fanatic, telling everyone it is all over you may as well drink and move on to something else.
Why do you think a $10 to $20 price is so inconceivable and requires you to throw out scorn and derision when someone mentions it.
I brought forth three salient issues regarding the uncertainty of price high or low and why it is not imporbbale to suggest that the chinese may be willing to wrap this baby up now before too much is known and you did not touch on nor refute any of them.
Instead, you arm chair quarterback from the back row and heckle anyone that puts forth a positive reason why the share price could be a higher number.
I for one think that SEO's buy-out number (for the whole ball of wax) is $10 billion which equates to about $27.75 share.
DO I know that, no I don't. DO I have verifiable facts that validate that number, no I don't. How do I know that number, the truth it is just my gut feeling having been a part of this stock for 4 years and a member of the energy community for over 35 years.
BUT is my reasoning just as valid as your $1 to $2 per share number? Probably more so, because you only look at the well or wells being drilled and not what the implied valued could be.
Respond to the three reasons I laid out for you on the last e-mail and given them tell me why you still feel anything above $2/share is unreasonable.
Until you do I will ask all posters here to just consider you what you are....another of the M&M "de jour" bashers.
SSC,
Why is it your personal vendetta to argue with all posters on their "valuation POV". If anyone has an optimistic valuation you immediate attack their credibility.
Three things to keep in mind:
a) None of us have any idea what or how much Oil is down there, especially when you consider all four of the zones either drilled or being drilled (1, 2, 3 &4). But according to initial survey estimates it could be as much as 14.4 Billion recoverable across zones 1, 2, 3& 4.
2) The Chinese have demonstrated that they are more than prepared to pay whatever it takes to control their energy future. They have elevated the price for known reserves from above $10 to maybe as much as $15/barrel. Go back and look at the purchase price of the Jubilee field to verify.
3) Can you somehow quantify the potential of ERHC's ownership in zones 5, 6 in the JDZ as well as ERHC's major percentage ownership in two zones (of ERHC's choosing) in the EEZ? As a former commodity trader I have always said their is value in Optionality, the same goes for the oil field, "their is value in prospectively". And if the Chinese believe that the potential for oil is there why would they not make an offer for the package as a whole based on that belief. From a sheer prospectively ERHC is the Chinese best deal. Why would they not pay a premium to get it and to get the advantage of SEO’s connections in both Nigeria and Sao Tome?
Somehow you conveniently or deliberately forget to look at the package as a hole when you start bashing the credibility of any poster that throws up a number higher than your $1 to $2 a share number.
I am not saying I know what the value should be or that anyone here knows that number is. Nor do I or anyone here know what the Chinese or even a US Oil Company may be willing to pay to have the right to own and prospect for the oil in the GOG. None of us do, but we all have the right to discuss it and look at whatever facts we may think we have without a basher discrediting our credibility.
You are beginning to look like a basher. The only new wrinkle here is that the current breed of basher (that would be you) is now bashing our stock at the 1 to 2 dollar level.
That is a significant improvement of where you and your kind were 12 months ago.
Just in my humble opinion, of course.
BayFisher
E. $10 to $12
That "Glut of Crude" has drive the price up by more than 15% in the lat 9 trading days.
When one looks at where the exploration wells are being drilled it looks like they are trying to drill on the margins as if to identify the size and extent of a large reservoir.
BOMU to the far Northeast, LEMBA to the far Southwest, OBO to the far North, and KINA smack dab in the middle.
Very interesting, I had overlooked the geography of the initial drill program until now.
One possible concusion is that the drilling program could have been delayed for 2 years while the "Consortium", worked out the details on exploring and developing this field together?
API and gravity essentially will reference the quality of the oil. The higher the API the higher the quality (and value) of the oil. Diesel has an API of almost 50 whereas most asphalt has an API of around 12 to 13. A higher API means you can break the carbon chain into more products or recombine into more products.
His oilness also stated DHP but I think he meant BHP which means "bottom hole pressure". By itself it does not tell you anything but with other intel will tell you a lot.
11,000 BHP (botom hole pressure) is scary big. It doesn't always correllate to a big field, but is always considered a good indication. Just for everyone's info Prudhoe Bay's BHP was about 2,850 to 3,200 at discovery. I know that i would not want to rig up on a well that had that kind of pressure.
This is speculation but it could mean that some of these zones are interconnected. With one helluva a gas cap to charge this zone.
Very much looking forward to seeing what comes out when the Operators start to release info.
IMO: People need to understand that the better these fields are the longer it is going to take for us to hear anything specific.
A zone is usually defined or identified as an oil bearing strata. An intelligent guess would be that they are already seeing signs of oil after only 200 meters. This really could mean anything, but is at least shows that the area has hydrocarbon potential.
If this is validated I would have to take this as a very good sign that at the very least they picked a very promising location to punch this hole.
Cross your fingers.
No that message was reflective of MidTear and the Puff.
I cannot base this on anything other than my gut feeling. I have been in this stock for 4 years (after I was contacted about ERHC's Director of Finance position) I then started buying. My gut feeling is that SEO has a price of 10 Billion for his shares alone.
If Blocks 2,3 & 4 in The JDZ have less than 4 Billion barrels proven it is a decent deal. If over the next one-year they prove more than 4 Billion Barrels in these three blocks Offor will not take it.
Mark,
As many of us I appreciate your contibutions to this board and I am looking forward to seeing where we are in 40 to 60 days.
But I want to add a thought that has been bumping around in my brain. For some reason the value has been passed around this board and seems to be accepted is that SEO is looking for $10/share for his ERHC stock. I keep looking at that number and I just don't see it. In my opinion SEO is looking for more like 10 Billion dollars for his share.
I came to that high level for two reasons: first at that value it insulates SEO from anything that could possibly happen in Nigeria. It essentially puts a financial blanket around him, his family and his close allies.
Second: if you look at the original Western Geophysical survey of a 14.4 Billion barrel barrel potential in the JDZ then based on ERHC having close to 20% of that (roughly 2.8 billion barrels) at a confirmed reserve rate of $7.50/Bbl. I think you have to give ERHC reserves a premium because there is no associated lifting cost. At those numbers that values ERHC's reserves at 21.6 Billion or $30/share.
I know a lot of people are going to question this logic but it fits the equation as I see it.
One more thing the market valued the 3 Billion barrel BP discovery in the Gulf of Mexico at $3.50 barrel when BP jumped 4% on the news. That is just the first day. It will be inetresting to see where they end up when that news is fully digested.
IMHO
BayFisher
Dane,
I think you hit the nail on the head. There is a vested interest in keeping this stock below $1.00/share. And some of that could stem from institutional investing policy that does not allow them to trade in stocks under $1.00. If we go past the $1.00 mark then all of a sudden our stock is available to a very large market that has not had access to it. It could go up significantly just on institutional investing.
If I was managing a fund would I drop a $100k into this stock, depending on my Risk policy, you bet I would.
Bay
That is correct and that is out of the market's control, but what it does imply is that if the Chinese do seriously intend to lock up the GOG then who knows what they will pay. But remember they will be paying for the "Prosectivity" of ERHE's rights. And that could be beyond what EXCEO, RAYANK or even MARKY-G could fathom.
Not to be tautological but "Prospectivity is King".
Bay
I understand Mike, and I agree. But to put any kind of dollar figure on it implies we have some idea of what and how much is down there. In reality we do not know....BUT....if there are any kind of significant discoveries in this first phase of drilling and a high percentage of hits, the sp could go through the roof.
Rayank,
I cannot say, but markets are set up to value future earnings and somehow the market will value ERHE's.
What that is....who knows.
Bay
Mike,
These are rough numbers but if proven reserves are roughly valued at $8 per barrel, your price would indicated you feel that that after the first wave of drilling will confirm around 6 Billion recoverable.
Here is the pricing conundrum. If we have at least a 50% proven drilling report meaning that half of the formations we drill are proven, how can anyone value the probability of drilling the remaining 14 locations. And just to make it even more difficult throw the EEZ in there.
IMO....If there are any significant finds during this first wave of drilling the markets are going to have a hard time finding an equitable price for ERHE and its reserve potential.
It's a problem but of course not a bad one to have.
Bay
The die is cast.
Oily:
Operibus Credit et non verbis.
Yes.
Total targeted string depth just at 17,000 feet
There are several tests that can be run after the initial well that give solid indications as to the size and extent of the field. Flow rate tests against a specific choke size and a BHP "Bottom Hole Pressure" build up test.
The tests described above will not give you everything but they could give youa a solid indication that you have an elephant on your hands. As Platina states you would have to drill several more wells and run the above tests on each well to determine with any kind of specificity.
Sage Advice DB.
I agree with both you and Oil Cowboy and my frustration level is high as well. But I don't want to sell out too quickly as i feel we may short ourselves.
I am not in agreement with your blithe statement sell it to the Chineeses and move on. As a stockholder I would like to see the shareprice fully reflective of the intrensic energy value in all blocks of the JDZ we have an interest in as well as the EEZ. If we quiclkly sell out for a quick buck we may not maximize that value.
I do not think any of us foresaw what is going on now. Literally days away from drilling and we are seeing no volume and no news.
I cannot fathom what is going on but it seems clear to me that both news and price are being controlled. The question that strikes me is how is this advantageous to SEO. Why would holding the price as low as possible until the last possible moment be beneficial to SEO or Chrome? Anyway one way or another we will see something happen very soon.
Thanks BOB!
Mid-
You are on a roll. Again you show how little you know. No one can look at a well log and determine where the gas head starts and ends. You can generalize due to the formation topography. But even then you can only make an educated guess.
Bay
Thanks Never!
As succinct, salient and perfect an observation as you will find!
Bay
Mid- You can't remember what you wrote 30 minutes ago:
......there will be no bidding war by the US. They have not been in the game for years and with the present administration they will be sitting on the bench for the forseeable future. There are no incentives for American companies to find oil in the current political climate.
Mid-
You are way of base. Not even sure where this diatribe came from. Stay with what you think you know and not with what you do not know.
BayFisher
Let's hope that in about 8 to 10 weeks we can all buy our own personal instructors.
correct
That question cannot be anwered until you know what daily production volumes will be. In Prudhoe Bay lifting costs alone were a little over $6/bbl when they were producing close 1 Million barrels per day. Prudhoe Bay is one of the more expensive fields in the world.
The major portion of those lifing costs will be the amortization the 'Production Platform(s)' that will have to be built. An offshore platform is not labor intensive just very high upfront capital costs.
Almost zero volume, price opens a penny down. and we have word of two rigs that will be spudded in within (guestimate) 3 weeks.
I am at a loss to explain this unless you assume the price is being closely controlled.
SSC,
no one can say where this stock will end up or what (if it happens) a buyout price would be. But it cannot be disregarded that this stock could have an exponential rise in share price if an unusually large reservoir is found in one of the first 3 or 4 drilling portfolios.
Let me ask you a question, If an elephant size reserve was discovered in Block 2 (this is only hypethetical), where do you think our share price would end up at? Do you think that ERHC at that point having production rights to 2 Billion barrrels of proven Oil would only have a 113% gain or even a 200% gain. At 2 Billion Barrels the share price could quickly run to $14 or more or close to 2100%.
Point being you cannot disregard a significant runup any more than we can disregard an average premium of 113% to quote you.
BayFisher
TamTam,
In the end it gets down to what SEO is trying to accomplish. All we can do is go along for the ride and thank our lucky stars that ERHC is an American Registered company.
In the end I do think he will try to maximize share value (not for our benefit but for his). For some reason I have a 10 Billion dollar number for ERHC's interests in the JDZ alone. That number is pure swag but after hanging on to this stock for 4 years and listening and researching that is the number my instincts tell me he is looking for..BWHK's.
Bayfisher
Fish, I hope you are correct that would be a big boon for those of us that are erhc holders
Topshelf, Generally after 3 to 4 delineation wells have been drilled the Production company can state with some certanity a proven number (usually conservative) as the field is further developed these numbers change.
In my opinion it will be interesting to see where these companies drill. The Geophysicists have a good idea of where they should drill to confirm the most pay, but by drilling on the peripheral of the formation they can get a good idea of what could be there and not have to go public with a huge find. Does OBO-1 ring a bell.
Obviously as holders of ERHE, we would like to see them drill right in the dead top of KINA and come back with fantastic numbers. That may not happen, but either way ERHC will have access to the data and should be able to confirm for us that the well was off-center and maybe give us a limited understanding of the potential in The reservoir.
The game gets tricky here and we have to be smart and not over-react to any info (good or bad).
Thanks Fish. Let's keep holding and pray that all these companies have very smart and very good geologists working for them.
Even if Rig Hands had access to all the logs they would not know what to do with it. BUT rig hands do know what the bit pressure is and what they are seeing coming back in the mud pits. While they cannot tell you everything regarding the well (size, recoverability, etc.) they do have a good idea of the quality of a reservoir. They also talk with the "Company Man". A drilling rig (especially an offshore rig) is a like a small town. Everybody knows everybody's business. If the Company engineer gets excited then they know it.
I have been on too many rigs, we know when we hit a duster and we know when we hit something signicant.
BayFisher
Pete,
It is not just logs that these estimates are calculated from.
Generally to determine the viability of a field the exploration company will drill minimally 2 to as many as 4 wells at each well they will run a flow test (how much oil is produced in a 24 hour period with a certain choke), then they shut the well in with a pressure monitor sitting at the perforations and run what is called a BHP (bottom Hole pressure build-up) from this information and more they can predict the potential reserves in a given formation. WHile not always exact the predictions should not vary much between different different engineer/geophysicist groups.
Bay