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Is A $2 Buyout Offer From Pioneer Depressing ERHE's Share Price
on the BLOG .....
Is ERHC Energy's share price falling because Pioneer Natural Resources is proposing a $2 buyout of the company, at or shortly before the signing of our Production Sharing Contracts for Blocks 2, 3 and 4?
That is the tricky question posed by a series of email and telephone exchanges between ERHC On The Move and its readers today that collectively suggest a strong certainty that such a deal is in the offing.
The problem is, if that is the case, why is someone else selling shares in lots of 50,000 to 90,000 shares as though the company has no tomorrow?
As communications now stand, the Nigeria-Sao Tome and Principe Joint Development Authority hopes to conclude the PSCs for Blocks 2 through 6 no later than October 1, and through its spokesman Sam Dimka has said that PSCs for some of the blocks - and presumably those major blocks where the PSCs can be modeled on the Block 1 PSC for Chevron and ExxonMobil - would be signed much sooner.
In the context of the buyout offer, which would amount about $1.4 billion for company that has many billions of dollars worth of oil in its sights, the PSC signings don't seem like an especially opportune momnent to sell itself.
Yet, the email exchanges - with a well-known, often reliable and very respected source on the telling end - reiterate that the signing will bring the $2 offer from Pioneer, and probably some joy to the hearts of ERE shareholders.
The question is, How much joy? The $2-a-share is certainly more than anyone has paid for shares in the past five years, but it seems far less than the company's future worth.
There may be a seller as highly motivated as the one who is unloading hundreds of thousands of shares in today's trading at bargain-basement prices, where most of it is purchased by market makers, or that seller may be sourcing the rumors our well-placed friend has heard. You can't tell.
But there is a lot of talk of a buyout, $2 is the rumored price, and Pioneer - as suggested in print by some of the trade journals - is the rumored buyer.
But you can't take that to the bank.
posted by ...Joe Shea at 1:11 PM
The Seller Strikes Again
Despite a healthy start in this morning's trading that saw the price briefly rebound to $0.41 on about 90,000 shares of Buys, a seller quickly took over and drove ERHC Energy down to $0.38 with Sells in lots as large as 94,500 shares. At 10:34am EDT, the balance stood at 139,000 Buys to 508,500 Sells, and the price was $0.38 after a a quick pair of 50,000 share Sells.
As usual, there is no explanation for the downturn, which comes after a notable 10 percent upturn in last week's trading, which came to a close on Friday with a $0.044 loss.
The best stance for traders right now is none at all. They should not buy or sell, and as demand weakens and the share price falls, remarkable opportunities to load up will emerge.
Thanks Mark, Signing ceremony for each block,
all with in 90 days and Chevron drilling in Oct.
I guess we can expect to see big travel expenses listed on the next filing
all is on track
Big money will come with contracts
ERHE wont be at these low levels for ever
MM NITE continuing his assult on the BID
Maskers what about Blocks 3,5,6 and 9 and STP 2x100% + 2x15%
and is there a different equation for PROVEN vs. UN PROVEN
also BL 3 assume at least 5% full carry
JDA to MEET this week on JOA / PSC
http://ragingbull.lycos.com/mboard/boards.cgi?board=ERHE&read=62053
*Barry Morgan* ERHC Update on Upstream
Devon exits from African venture
Devon Energy has pulled out of a consortium linking Pioneer Natural Resources and US minnow ERHC Energy, walking away from substantial equity interests in the Gulf of Guinea that it considered too small to pursue.
The affected deep-water blocks lie in the Joint Development Zone administered by Nigeria and Sao Tome&Principe.
The Joint Development Authority's executive chairman Carlos Gomes said Devon's decision will not affect the timetable for pushing ahead with last month's licence allocations to production-sharing contracts and that agreement had been reached for Pioneer to take up the slack.
It is understood that both Pioneer and ERHC executives visited the Nigerian capital Abuja last week immediately following Devon's decision to decline its equity share of bid awards for Block-2 (65%) and Block-3 (25%).
Devon was designated as operator for Block-2 but Pioneer will now take that role and pick up Devon's share of the signature bonus.
It is also understood that Pioneer has eased up on earlier reservations about taking on too much equity in either of these prospective blocks and is happy with the lion's share, even though ERHC is being carried on the signature bonus.
Several international companies have expressed dismay at the level and extent of participation awarded to indigenous Nigerian companies in key JDAlicences.
While Block-2 includes a 15% stake for Equator Exploration in partnership with ONGC-Videsh, another 10% went to A&Hatman Resources, 10% to Foby Engineering and 5% to Momo Petroleum.
In Block-3, operator Anadarko and the Devon-ERHC tie-up were joined by Pioneer and Equinox Oil&Gas, which were each awarded 10%.
ERHC president Ali Memon, acknowledged the loss for the consortium but insisted that all remaining members have "confidence in the technical and financial capability of Pioneer Natural Resources to successfully carry on with the work programme."
He said: "I understand Devon's position. They have their own targets and objectives and they just felt the percentage was insufficient, especially for Block-3.
"We had a good working relationship with Devon and were pleased to have them with us."
some new commentary here - all on track
American firm, Devon withdraws from JDZ oil bloc deal
By Yakubu Lawal, Asst. Energy Editor
U.S. oil firm Devon Energy has rejected offers to operate two oil blocs in the Joint Development Zone (JDZ) of the Gulf of Guinea.
Devon, regarded as one of the largest independent U.S. oil company, was part of a consortium of three firms awarded 65 per cent Operatorship of Block 02 and a 25 per cent stake in Block 03 of the JDZ, a maritime zone jointly operated by Nigeria and the Republic of Sao Tome and Principe.
The revenue accruing from the zone will be shared 60:40 per cent in favour of Nigeria and Sao Tome and Principe respectively.
The other partners are Environmental Remediation Holding Company (ERHC), in which Nigeria's indigenous oil company Chrome Energy holds a majority stake and another US-based company Pioneer.
The consortium had appointed Devon as the operator for Block 02. But in the letter of withdrawal sent last week to the Joint Development Authority (JDA), the body administering hydrocarbon resources in the JDZ, Devon stated that the level of interest it was awarded in the block was not sufficient "to warrant going through with the bid."
The three partners were to share equities awarded to the consortium in the two oil blocks, amongst themselves. Although officials declined to reveal how the equities were distributed, Devon was said to have rejected its share on grounds that it did not meet its expectations.
This leaves the other two partners, ERHC and Pioneer to manage as well as provide fund to pay the signature bonuses for the two blocks. The two parties have already agreed to nominate Pioneer as the new operator for Block 02.
"It is a loss for the consortium, as we had an excellent working relationship with Devon," he said.
"However, in Pioneer, ERHC still has a technically and financially qualified partner to work with."
The memorandum pointed to the June announcement by the Joint Development Authority, which operates the JDZ, in which the authority said it expected the negotiations for the JDZ blocks to be finished within three months, as the likely timeframe.
Speaking on the development, the Executive Chairman of the JDA, Dr. Carlos Gomes, said: "We negotiate and signed agreement with Chevron, Exxon-Mobil, Dangote EER for Block 1 and Chevron has 51 per cent and Exxon-Mobil 40 per cent. In this particular case, the consortium was given 65 per cent and we believe that 65 per cent in 2 is a stake big enough for a consortium to hold but again that very much depend on the policy of the consortium. And we respect the desire of the consortium."
He explained further that the authority does not know how the consortium was bound together, the equity structure, we don't know, we only know there is a consortium led by Devon.
"However, those three applied together, there might be a memorandum between them and they share it inside is there internal problem. We look at them as one block," Gomes stated.
He pointed out that the JDZ does not know how the consortium was bound together, the equity structure, we don't know, we only know there is a consortium led by Devon. However, those three applied together, there might be a memorandum between them and they share it inside is there internal problem. We look at them as one block Gomes said that what JDA gave was 65 per cent, we believe that 65 per cent is fairly big enough, but that does not imply that JDA now monitor the internal distribution between them selves. Because the JDA is not capacity to do that we didn't chose the partners, they were the ones we chose themselves and brought themselves to us, but we considered as one unit and we they had 65 per cent.
The Executive Chairman reiterated "I seriously think it is even easier for the consortium now because if you have too many big companies together it is much moirZ difficult to reach an agreement. So I believe that two companies to reach an agreement is probably easier than three.
Once we are sure that the company in there has technical and financial capability, to operate in deep offshore which is case with either pioneer, Anardako or Devon, anyone of them we believe have technical and financial capability to operate deep offshore. We don't see any problem at all. In all the five blocks awarded, all the companies have written acceptance letters.
On the possible date that the authority expects the Joint Operating Agreement (JOA) and the Production Sharing Contract (PSC) be in place. He said: "We have provisional time bound. First of all we have one model standard contract which was signed with chevron. Our own target is that we could conclude the process by November and signature bonus paid one month later. So by December we hope everything should be completed."
http://www.guardiannewsngr.com/business/article03
Spec, I got a BM e Mail today that states that he stands by his Buy/IN Buy/Out story
he is planning a follow up soon
all interesting developments
buyers and news needed
Wick, "PXD has elected to remain in both blocks" and plans to operate Block 2.
Chris Paulsen
Investor Relations
Pioneer Natural Resources
paulsenc@pioneernrc.com
ERHC on DOW JONES !!!!!
ERHC: Nigeria-Sao Tome JDZ Talks To Proceed Without Devon
7 Jul 2005 14:11 ET DJ
CALGARY (Dow Jones)--The ERHC Energy (ERHE) and Pioneer Natural Resources (PXD) consortium will proceed with negotiations in the Nigerian-Sao Tomean Joint Development Zone, despite Devon Energy's decision to halt discussions, according to ERHC.
Devon Energy, along with Pioneer and ERHC, a Houston-based oil and gas company, was part of the consortium that in May 2005 was awarded 65% operatorship of Block 2 and a 25% stake in Block 3 of the JDZ, a maritime zone jointly operated by Nigeria and Sao Tome that's believed to have considerable oil and gas potential.
However, Devon has since pulled out of the negotiations, saying that the level of interest it was awarded wasn't sufficient to warrant going through with the bid.
In a telephone interview with Dow Jones Newswires, ERHC President and CEO Ali Memon said that while Devon would be missed, Pioneer and ERHC were continuing negotiations on the joint operating agreements and production-sharing contracts for JDZ Blocks 2 and 3.
"It is a loss for the consortium, as we had an excellent working relationship with Devon," he said. "However, in Pioneer, ERHC still has a technically and financially qualified partner to work with."
Memon pointed to the June announcement by the Joint Development Authority, which operates the JDZ, in which the JDA said it expected the negotiations for the JDZ blocks to be finished within three months, as the likely timeframe.
-By Norval Scott, Dow Jones Newswires; 403-531-2912; norval.scott@dowjones.com
getgreen more here .......
http://cgi.wn.com/?SearchString=sao+tome&language=Any+Language&template=nigeriadaily%2Findex...
he is in Calgary, Canada
*********UPSTREAM NEWS*******ERHC*****
ERHC and Pioneer head for JDZ
July 7, 2005 By Upstream staff
Houston-based ERHC Energy and its partner Pioneer Natural Resources are set to accept an offer for Blocks 2 and 3 of the Joint Development Zone between Nigeria and Sao Tome & Principe.
A consortium of ERHC, Pioneer and Devon Energy were awarded interests in the blocks in May.
However, Devon declined the bid award due to the low interest it would receive as one of three consortium partners.
An EHRC spokesman said: "We understand Devon's need for a greater interest in Blocks 2 and 3. Pioneer and ERHC will now proceed to negotiate the joint operating agreements and production sharing contracts."
In Block 2, the Joint Development Authority awarded the consortium a 65% stake inclusive of ERHC's 30% signature bonus free interest, and in Block 3, a 25% interest inclusive of ERHC's 20% signature bonus free interest. Pioneer will be the operator for Block 2.
**********NEWS************
http://ragingbull.lycos.com/mboard/boards.cgi?board=ERHE&read=60352
StockHocker PXD indicates acceptance on their slide show, I dont recall a formal PR on the acceptance except this [below]
http://www.vcall.com/CEPage.asp?ID=92527
listen to the PXD CEO earlier today slide 25 around the 20 minute mark
Says THEY will be drilling several wells, negotiating contracts currently and they
Expecting 300-500 M BBL targets
----------------
Pioneer Offered Exploration Rights in Nigeria – São Tomé and Principe Bid Round
Dallas, Texas, June 2, 2005 -- Pioneer Natural Resources Company (NYSE:PXD) confirmed today the announcement by the Nigeria - São Tomé and Príncipe Joint Development Authority (JDA) that its subsidiary, Pioneer Resources Africa Limited, has been offered the right to conduct exploration activities in Blocks 2 and 3 of the Joint Development Zone (JDZ) in offshore São Tomé and Príncipe and Nigeria. The Company is awaiting official notification from the JDA.
Pioneer is part of a consortium with Devon Energy (NYSE: DVN) and ERHC Energy Inc. (OTCBB: ERHE) which was offered 65% interest in Block 2 and 25% interest in Block 3. Upon receipt of the official notice of the offer, the Company will determine its next steps regarding the negotiation of a joint operating agreement with the other offerees and an acceptable production sharing contract with the JDA.
Pioneer is a large independent oil and gas exploration and production company with operations in the United States, Argentina, Canada, Equatorial Guinea, Nigeria, South Africa and Tunisia. Pioneer’s headquarters are in Dallas. For more information, visit Pioneer’s website at www.pioneernrc.com.
PXD Speaks in London http://www.vcall.com/CEPage.asp?ID=92527
BM just E-mailed me to say DVN is "NOT" RELEVANT to ERHC/PXD
lets hope he is correct
I asked if he believes this may be tied in to his buyout story -
I will post any reply
I'm guessing this sweetheart deal was contingent of Noble getting operator and additional acerage
imagine the deals in BL 2,3
ERHC offer causes shift in the deep
ERHC Energy is considering an offer by a US player to purchase a controlling stake in the company, which could alter the balance of corporate power in a recently concluded deep-water licensing round in the Gulf of Guinea, writes Barry Morgan.
US-listed ERHC Energy's chairman Emeka Offor, the Nigerian businessman who also heads up Nigerian independent Chrome Energy and is a major stakeholder in ERHC, convened a board meeting last week in which directors voted to "consider the offer on the table".
ERHC, which has acquired substantial acreage positions with partners Devon Energy, Pioneer Natural Resources and Noble Energy in the Joint Development Zone (JDZ) organised by Sao Tome&Principe and Nigeria, has similar ambitions in the Exclusive Economic Zone (EEZ).
Contact has been established with a mid-sized US company angling to take control of the company.
Despite a possible name change, it is understood ERHC's ambitions to become a regional player will survive any possible deal and that Nigerian interests will retain some of the equity as the JDZ and EEZ deals go forward.
Offor's stake has been reduced in recent weeks and is now believed to be around the 43% mark. Offor, along with other Nigerian shareholders, could collectively decide to maintain a controlling interest, but indications are the temptation to sell is gaining ground among major shareholders, most of whom are private US investors.
It is believed Devon or Pioneer both could be first in line if an ERHC stock sale is considered, given their existing partnership in the JDZ.
The Joint Development Authority this week reiterated its intent to sign PSCs before September for all five blocks, although indications are it would wish to get blocks 2, 3 and 4 to signature before then.
Signs are that technical difficulties over Block 5 may take some time to resolve and officials are loath to let signatures slip on the other licences.
Farther south, Sao Tome&Principe had aimed before the end of the year to license acreage falling under its part of the EEZ, but growing political tensions amid calls for early polls may cause delay.
Moreover, several parties are poised to defend mutually contradictory preferential rights claims in the EEZ.
Equator Exploration and its subsidiary Aqua Exploration claim the sole right to acquire 100% working interest in two blocks of its choice in the EEZ.
This appears to fly in the face of claims by ERHC Energy to have a similar exclusive deal for a 100% stake in blocks 4 and 5 along with rights to a 15% stake in EEZ blocks 1, 2&3.
got a response on time frames ....
September is possible, [for Signing contracts as per JDA] but
I was thinking more like six months.
I haven't given thought to a press release.
JDZ is high risk exploration, so I doubt
we'd make an announcement on a PSC. [JDZ BL 4]
what is the meaning of "could take quite some time".
I have asked for clarification of potential time frames for PSC and drilling
from Noble Energy re, JDZ,
I am responding to your E-mail of 6/27 regarding the JDZ. We are now in negotiations to operate Block 4.
We do not have a definitive agreement, and negotiations could take quite some time.
Greg Panagos
[Noble]
Phone: 281.872.3125
Claudealain a buyout of a company with 15 Million Proven and 33 Million probable for $2.5 Billion
vs ERHE at current Mkt cap of $350 Million / $0.50 share
if JDZ BL 2&4 have 3 Billion Barrels ...
ERHC assumes a 15% ave. carried interest = 450 Million Barrels
450/33 = 13.636 x $2.5 = $34.09 Billion
$34.09 / 710 MM S/O = $48 a Share
-----------------------
this is only a comparison for BL 2&4
doesnt inlclude BL 3,5,6,9
doesnt include any Gas Properties
assumes current OIL at $60 [good chance to go higher]
doesnt assume EEZ rights
doesnt assume N-EEZ [potential]
looking out 1-3 years are we undervalued ???
=
*****DOW JONES NEWS******ERHC*****
Sao Tome Says Oil Field Negotiations To Wrap Up In 3 Mos
24 Jun 2005 10:17 ET DJ
LONDON (Dow Jones)--Negotiations for operating agreements and production sharing contracts on five Sao Tome oil blocks should be finished within three months, the agency overseeing talks said Friday.
The five oil blocks were awarded May 31 after protracted talks between the Nigerian and Sao Tome which jointly govern the offshore fields believed to hold billions of barrels of oil.
The talks were marred with accusations of corruption and rocked the tiny island-state of Sao Tome with a series of high profile resignations from government.
The Joint Development Authority said in a statement that all the awardees of the bidding round have accepted the offers.
The statement said the agreements would be modeled on the contracts signed for block 1 which was granted earlier to Chevron (CVX) and ExxonMobil (XOM) in February.
Winners in the second round include Devon Energy Corp. (DVN) and ERHC Energy Inc. (ERHE) on block two.
Block three went to Anadarko Petroleum (APC). Block four was awarded to a consortium of Noble Energy Inc. (NBL) and ERHC. Block five was given to Nigerian independents I.C.C-O.E.O.C.
Nigerian independent Filtim-Huzod won block 6.
-By Shai Oster, Dow Jones Newswires; +44-20-7842-9357; shai.oster@dowjones.com
(END) Dow Jones Newswires
June 24, 2005 10:17 ET (14:17 GMT)
Menezes stirs hornets' nest **UPSTREAM**
A rift over oil policy has inflamed latent political rivalries in prospective Sao Tome&Principe, putting the president in a precarious position ahead of upcoming elections for the top job
President Fradique de Menezes may soon face re-election if the political turmoil in the twin-island archipelago of Sao Tome&Principe deepens. To lose a special adviser may be considered unlucky, but then to lose one's oil minister and prime minister in quick succession, just as you conclude a ground-breaking lease sale in West Africa's hottest oil patch, smacks of carelessness.
His autocratic style in pushing through six awards under a licensing process administered by a treaty provision with neighbouring Nigeria in the Joint Development Zone offended the local elite, several of whom stood to gain from alternative selections. Ministers cited disagreement over oil policy as reasons for resigning.
Labour unrest in the civil service testifies to a growing sense of frustrated expectation among a 140,000-strong population demanding quick gains from the promised oil bonanza. However, World Bank constraints prohibit sharp pay rises, despite the $160 million in signature bonuses heading for Sao Tome's coffers Sao Tomeans owe a whopping $320 million in foreign debt.
About $50 million is already on its way from the Chevron-led consortium, in which ExxonMobil holds a 25% stake, that landed Block-1 in the first round in February.
The drillbit will go down before the end of the year and observers predict Noble Energy, Devon Energy and Pioneer Natural Resources, in tandem with Texas-based ERHC Energy, will swiftly follow suit if the remaining five production sharing contracts are signed within 30 days as expected.
Signs are the 55-member parliament will also be forced back to the ballot box rather sooner than November 2006 alongside a presidential poll, mainly fielding yesterday's men to a jaundiced electorate desperately seeking new faces. New blood is thin on the ground and the parties are in disarray.
Nonetheless, "Sao Tome is a functioning democracy and we would encourage it to remain so", the US State Department stated this week. A proposed military facility on the islands, along with other measures to help shore up regional stability in the Gulf of Guinea, where the US expects to source 25% of its oil and gas in the coming years, is also "under review", according to US Defense Department officials.
It will not be an easy ride, despite the islands' ethnic, religious and cultural homogeneity. Sharp factional divisions, similar to the politics of the more restive East Caribbean states, persist and the country remains coup-prone as last year's abortive putsch, in which Menezes was restored to power through Nigerian mediation, clearly demonstrated.
Best equipped to salvage electoral sympathies is the Movement for Liberation&Social Democratic Alliance (MLSTP), which has a well-oiled machinery to fall back on but who will run for the top job remains an open question.
Menezes benefited from MLSTP malcontents along with factional support from the Independent Democratic Action Party (ADI), the party of his predecessor Miguel Trovoada. However, Menezes has effectively split the ADI, weakening his own power base.
It is understood former head of state Pinto da Costa will not stand but that former foreign affairs minister Posser da Costa, who was prime minister under Trovoada, will run. Meanwhile, Trovoada's son, Patrice, who resigned as Menezes' special advisor on petroleum, is likely to fight a spirited campaign against those he believed let him down in the JDZ debacle. Houston-based Patrice Trovoada is understood to have backed Anadarko's bid for Block-4 and opposed the five-block deal that Menezes eventually agreed to break the gridlock on the long-delayed round.
Yet to declare his interest in the race is Carlos Gomes, the current head of the Nigeria-Sao Tome Joint Development Authority and one-time point man for ERHC.
Providing subtext to the political discourse over the next few months will be the vexed question of how to proceed with licensing of the Exclusive Economic Zone, set to kick off in six months' time, against World Bank advice.
With JDZ awards barely done and dusted, the attraction of leasing acreage over which Sao Tome exercises exclusive control will be seized by politicians keen to pin down a fresh source of patronage.
Both ERHC and BVI-registered Equator Exploration are touting preferential acreage deals in the EEZ. Lawsuits have yet to fly, but it is understood the government of Sao Tome has already been served notice by lawyers acting for the Texan company that it will not compromise on rights it claims are secured by treaty.
And if that is not enough to chew on, there is fresh secessionist talk in the even more sparsely populated and socially depressed island of Principe, in which practically all JDZ/EEZ prospects are concentrated.
It is going to be acrimonious.
Scarce rigs delay JDZ work By Upstream staff
A shortage of drilling rigs could delay Chevron from drilling its first exploration well in Nigeria and Sao Tome's shared offshore region until next year.
"We will probably drill the first well next year," said a company spokesperson. "We may get a slot this year but I doubt it. Rig supply is tight."
The delay extends a prolonged wait for the oil industry to see if the Nigeria-Sao Tome waters will yield the types of significant discoveries previously mad in the Gulf of Guinea.
Rig rates have been boosted by an increase in drilling activity in West Africa, leaving rig availability scare, the Chevron source said.
Nigeria and Sao Tome signed an historic oil exploration deal with a Chevron-led consortium in February, marking the first exploration deal for Sao Tome.
The production sharing agreement pertains to a block in the Joint Development Zone, an area created in 2000 to administer the previously disputed waters between the two countries.
The consortium won exploration rights to the block with a $123 million bid in an October 2003 bidding round.
Chevron holds 51% of the block's equity, ExxonMobil has 40% and Dangote Energy Resources owns 9%.
Scarce rigs delay JDZ work 21 June 2005 19:16 GMT
Upstream Online
A shortage of drilling rigs could delay Chevron from drilling its first exploration well in Nigeria and Sao Tome's shared offshore region until next year.
DS1, new Participation Agreement[s] in the N-EEZ would be very welcome
we know our partners picked up Bid Packages
it's Offor's home town
Chrome has their own resources such as a refinery operations etc.
We are told bidders must be prepared to hook up with locals
ERHC BoD has influencial members on the Nigerian Petroleum Board
Not sure what ERHC brings to the table here except connections
Financing would have to be addressed [perhaps we trade JDZ BL 5,6 or %'s of STP EEZ Blocks
DS1 - doesn't everyone already assume ...
a] ERHC and Partners were already awarded the blocks
and
b] ERHC and Partners will accept the awards
Hence the official letter is a non issue
However the going forward PSC's would be a new development,
one in which any hedge funds may take notice
HOPE OBJ cracks the Menezes whip already EM