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Regarding the signed PSC's. I wonder if they are going to sign one at a time and release them individually. Or are they going to try and get all 5 done at the same time?
Im not either.
Doug understood. But to those who think this is going to be a speedy process to signed PSC's and a speedy process to first oil. I have two words for you. Think again.
Nigeria/Sao Tome aim for new oil deals by end '05
Tue Jun 21, 2005 03:27 PM ET
By Simon Webb
LONDON, June 21 (Reuters) - Nigeria and Sao Tome are aiming to sign five new oil exploration contracts with operators in shared offshore waters by the end of the year, the chairman of the zone's oil administration authority said on Tuesday.
The contracts would allow the winners of the second Nigeria-Sao Tome licensing round to begin drilling exploration wells.
"We hope to have these agreements signed by the end of the year," Carlos Gomes, chairman of the Nigeria and Sao Tome Joint Development Authority, told Reuters on the sidelines of a West African oil and gas conference.
Signing contracts by the end of 2005 would mark a significant reduction in the negotiation time to less than seven months for a contract following the award of an exploration license.
The JDA awarded its first exloration license to a Chevron-led (CVX.N: Quote, Profile, Research) consortium in October 2003, but it did not sign an exploration contract with Chevron until February this year, nearly 18 months later.
Lengthy negotiations over contract details delayed the signing.
A Chevron source involved in the first round of negotiations said the accelerated time scale for the second round was plausible as the JDA would be more familiar with the process after thrashing out the details with Chevron.
"I think they should get these contracts signed more quickly," the Chevron source said.
Companies that won the rights to exploration blocks in the second licensing round in May include ERHC Energy (ERHE.OB: Quote, Profile, Research) , Devon (DEV.N: Quote, Profile, Research) , Noble and Anadarko (APC.N: Quote, Profile, Research) .
The JDA has formally notified companies of their award and the percentage equity share in the blocks this week and companies have two weeks to accept the notification, Gomes said.
The waters are in the Gulf of Guinea, one of the world's exploration hotspots due to several major deepwater oil discoveries in the last 10 years. Big discoveries have been made in Nigerian and Angolan deepwater.
The region is one of the key drivers of global oil supply growth. The United States, the world's largest oil consumer, hopes to import a quarter of its oil from the Gulf of Guinea region in a decade, up from 14 percent now.
The Nigeria-Sao Tome Joint Development Zone was established in 2000 in the previously disputed offshore area. Under the agreement, Nigeria receives 60 percent of revenues while Sao Tome receives 40 percent.
The best thing to do is ignore the two bashers. Wait for gigwoof to come home and he will take care of them by erasing their messages. Dont bother to clutter up the board responding to them.
The rest of us will continue to post both the negatives and positives of our situation. Speaking of negatives, why did it take the JDA until June 9th to send out all of the letters?
How hard is it to type a letter?
Im not long on half my shares until August and the other half of my shares until December. So the short term price dissapointments really shouldnt matter anyway.
Well now we know why Noble stated that PSC's wont be completed until the end of the year.
Look how long it has taken the JDA to get these letters out to the respective winners and get responses back.
If this is any indication of future events then things will continue to move at a snails pace.
I hope they begin to pick up the pace.
1st Ammendment rights does not give you the license to do and say whatever you want if it is purposely injurious to others. There are rules and regulations that must be followed or society would turn into chaos.
Just like the right to bear arms doesnt give you the right to go out and shoot somebody.
People that know that awards are going to take place but claim ERHC will never win awards.
People that know that ERHC has an agreement in place with Pioneer but claim the agreement is all make believe.
That should narrow it down for you.
Here's another hint. His nickname is "Mr. Disingenuous"
I agree that the acceptance of awards probably wont light a fire under the share price.
But at some point I do believe the share price will start to move in anticipation of the announcement of drilling schedules. And it will probably occur when we least expect it and after we are all bored to death watching the stock.
Thst what happens on wall street. They lull you to sleep and then just when you least expect it it pops.
Slojon, not really. I said the stock would be dead money for 6-9 months. So today's type of price movement should be expected. Its nothing to be cranky about. You just have to have a longer range view of the stock. When they start announcing drilling plans the stock will begin to move. Until then, I wouldnt expect much.
I just dont like the few on here who purposely lie and distort things. We can disagree on timelines etc but at least be genuine.
I was being lazy lol. It had nothing to do with you.
Elsie Im talking about mongo and Vetrininsider's posts. They are disingenuous in their posting. So it is a waste of everyone's time to read their posts.
Both claimed ERHC would never win awards when they both knew full well that they would. Neither aplogized later and said that they were wrong.
Mongo claimed there was no agreement with Pioneer. He was also proven wrong on that. But does he ever admit it? Of course not. Because he is not being honest here. He has ulterior motives.
Hence the nickname Mr. Disingenuous.
Disingenuous posts will not be tolerated here.
Gigwoof, start deleting some of the these posts. You are getting too slow on the trigger finger.
EGY should be reaching TD on its next well in around 7 days. It looks as if the stock is trying to climb. We shall soon see.
Rancho I have to agree with the last poster. I dont think there was any orchestrated take down by members of Paltalk. We had a large seller or sellers that sold into the news which effectively put a lid on any pop in share price. This in turn created dissapointment and a sense of panic which triggered further selling. Then additional selling was triggered due to margin calls, debt overload, etc.
Who sold into the news? Was it the MM's playing games? That I dont know. But now we are in a long dead period for news so expect the price to be played with for quite some time. Have a long term perspective and not a short term one.
Here is tryagain from RB. He must have read my post lol.
For those calling ERHE dead money until drilling begans or oil is found, i strongly disagree. From too many years of up close and personal experience with the stock market, i have learned a few lessons well. The most important thing i can tell you is that vastly undervalued companies WILL ALWAYS BE DISCOVERED. Also the only things about the market that can never change is the human emotions of FEAR and GREED. Most of the time undervalued shares once discovered are [over time ] carried to an overvalued status by GREED. This company has plenty of people aware of it so that the discovery process should not take a long period of time to unfold. It is extremely important for the unfolding of the discovery of ERHE that we have well known and respected [ both in the oil patch and on Wall Street] partners as Wall has been pointing out for some time. So my bet is owning ERHE will not prove to be dead money for very long. ALL JMO.
One other thing about ERHC. The amount of oil that is estimated in each of these blocks is so enormous that the average investor just cant get a handle on it. Thats why quotes on Block 4 by Centurion should always be saved. As well as quotes of estimated reserves in each of the other blocks.
We need to compile a list of block by block estimates from the various companies involved. And always have those available as DD.
The problem with ERHC right now is there is no sense of urgency for an investor to buy the stock. Why buy now when they can wait 6-9 months and probably buy in at a similiar price. That is the attitude of the average investor who looks at ERHC.
The stock is going to drift until the drilling begins. We need to find out when first drilling will begin because that is the only true impetus that will drive the share price.
Mongo I thought ERHC wasnt going to win awards? What happened to that prediction by you? You even questioned the authenticity of the arrangement with Pioneer 6 months ago?
Why not admit you were wrong? Your credibility was diminished long ago. You have to be right once in a while to be credible.
By the way how is TGA treating you? Oh I forgot. You thought it was a crappy stock also.
Hate missing out on those 800% gains.
The key thing that will move share price is reserves. We need to find out when the drilling will begin in Blocks 2-6. Between now and then there wont be much impetus to move the stock price.
Unfortunately my guess is no drilling until this time next year. So I think we have about a 12 month wait. That is only a guess though. I know others feel we will be drilling sooner. But my guess is no signed PSC's until late fall. Then additional 3D seismic must be shot. And then hopefully drilling will begin by this time next year.
Drilling in Block 1 could help things if they hit a nice well. I had heard that they will begin drilling in December. So in this one instance we should all be rooting for Exxon.
(Once again I repeat, all of the above is IMHO)
Funding and Financing
In DD'ing ERHE you come back to the same question again and again. How will ERHE finance the exploitation of the assets it has been awarded? If you don't follow the oil patch then your first hunch would be that ERHE will have to issue more equity, or issue some debt. (ERHE has no debt.) However, there are other, non-dilutive methods of raising funds in the oil patch. The posts below describe the awards and rights that ERHE owns and offer insight into funding issues.
Section 1: JDZ Awards and Preferential Rights in the Sao Tome EEZ
Summary of Joint Development Zone (JDZ)Awards
http://biz.yahoo.com/bw/050601/15521.html?.v=1
HOUSTON--(BUSINESS WIRE)--June 1, 2005--The Nigeria-Sao Tome and Principe Joint Development Authority (JDA) issued a press statement on May 31, 2005 announcing the award of five blocks on offer in the 2004 JDZ Licensing Round.
ERHC Energy Inc. (ERHC) (OTCBB:ERHE - News) had previously exercised its option rights in all the five Blocks on offer in the 2004 JDZ Licensing Round, and in December 2004 submitted bids as a consortium member for Blocks 2, 3 and 4.
In Block 2, the ERHC/Devon/Pioneer consortium has been awarded 65% interest, which is inclusive of ERHC's 30% signature bonus free interest. The consortium has been designated operator for Block 2.
In Block 3, the ERHC/Devon/Pioneer consortium has been awarded 25% interest, which is inclusive of ERHC's 20% signature bonus free interest.
In Block 4, the ERHC/Noble consortium has been awarded 60% interest, which is inclusive of ERHC's 25% signature bonus free interest. The consortium has been designated operator for Block 4.
In making the awards for Blocks 5 and 6, the JDA confirmed ERHC's 15% interest in each of these Blocks. ERHC's interest in Block 6 is free of signature bonus.
"The announcement of the awards is a significant milestone for ERHC. We look forward to working with the JDA and other participants towards developing the petroleum resources in the JDZ for the mutual benefit of the peoples of Nigeria and Sao Tome & Principe as well as our respective companies," commented Ali Memon, President & CEO of ERHC.
------------
Many potential investors are not aware that ERHE also has secured preferential rights to a second area, the Sao Tomes EEZ. This is above and beyond the JDZ (awards in the article above).
For verification see the latest 10Q, See Note 2: Sao Tome Concession page 9.
http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=3666737&Type=HTML
Under the 2001 Agreement ERHC retained the following rights to participate in exploration and production activities in the EEZ subject to certain restrictions: (a) right to receive up to two blocks of ERHC's choice without the payment of signature bonus, and (b) the option to acquire up to a 15% paid working interest in up to two blocks of ERHC's choice in the EEZ.
Summary of rights in Sao Tome Exclusive Economic Zone (EEZ): (Yes in addition to the JDZ awards already made on June 1).
100% block--signature bonus free
100% block--signature bonus free
15% block---must pay its percentage of the signature bonus
15% block---must pay its percentage of the signature bonus
Any valuation of ERHE should inlcude both the JDZ awards already made PLUS the Sao Tome EEZ rights.
***********************************************************************
Section 2: How does ERHE Fund exploaration and devlopment in the JDZ and the EEZ.
Excerpt from: http://www.investorshub.com/boards/read_msg.asp?message_id=6647315
Posted by: balance_builder
In reply to: None Date:6/12/2005 7:17:05 AM
Post #of 5459
...Financing: Lots and lots of conjecture/thoughts about how we go forward with financing our operations. As it should be, this is a big concern for ERHC'ers. Don't think for a split second that Offor and those in control don't have a master plan for financing our needs. This, of course, is a huge part of a business plan and not one that goes without a plan. I continue to believe that we use our STP EEZ blocks as leverage for full carry's in the blocks AS WELL AS the NEEZ. We tell DVN that if they carry us to first oil, they can operate in one of our STPEEZ blocks and/or we'll bid on block so and so in the NEEZ and win it. Yep....I believe Offor can almost tell our partners which blocks he can win for how much $$$$$ in the NEEZ. Transparent process?????? Nah.....but didn't I hear Nigeria might be facing some correuption issues???????
Nigeria has already been at the forefront of many many articles outlining that smaller thirsty independents will walk away with the prizes in this 61 block dance.......and with that many blocks on auction.....think it's possible that even our block 5 and 6 operators could end up with addional acreage in exchange for financing the JDZ ??? Just a though, but when you have a company/man like Offor in the saddle you'll get your financing. Remember, exploration and significant finds have diminished almost totally in the last decade.....this area (GOG) is one of the final frontiers supporting beliefs of world class oil reserves. These guys/our partners are well aware of this, and just the fact that it's the desired crude adds credibility to going forward in the zones and the desireability of the properties. National security.
**************************************************
http://ragingbull.lycos.com/mboard/boards.cgi?board=ERHE&read=55553
By: hdotmycom
13 Jun 2005, 10:45 AM EDT
Msg. 55553 of 55591
(This msg. is a reply to 55551 by SloJon.)
Jump to msg. #
ERHE is carrying US companies to bid wins and strong connections for local content vehicle qualification - while the US partners are in return carrying (fronting) the cash for exploration - ERHE wil pay it's way with oil.
I expect very good deals for erhe on up-front costs based on ultimate cost recovery model and additional acreage wins for our partners.
One angle here is that the cost of carrying erhe financially is more than offset by the increased % sharing versus new deals being sought on other acreage.
ERHE has VERY valuable rights in good prospective territory - with the terrific 50% split which may not be available in the future on other deals.
****************************************************
http://ragingbull.lycos.com/mboard/boards.cgi?board=ERHE&read=55570
By: Larry030458
13 Jun 2005, 11:12 AM EDT
Msg. 55570 of 55592
Jump to msg. #
On the subject of carry-over from a logical point of view, you have to go back in time to when Offor brought the deals to our jv partners. At that time Pioneer, Noble and Devon had no chance of getting in. Remember, this was suppossed to be XOM's ballgame. Offor held all the cards and it's highly unlikely that he would have got a bad deal. When you deal from a position of strength, your damn sure gonna get the best deal that you can get. The odds are very high that our partners carry us to oil. I don't think looking at other previous deals between other companies can be helpfull, cause I don't beleive any situation like this has ever happened before. It's unique that a small company with nothing could have these kind of rights and pull off this kind of deal imho.
**************************************************
http://ragingbull.lycos.com/mboard/boards.cgi?board=ERHE&read=55594
By: WALLDOG
01 Feb 2005, 08:24 AM EST
Msg. 96350 of 102200
Jump to msg. #
ERHC Eyes Nigeria, Sao Tome Jackpot
FWN Select Monday, January 31, 2005
Excerpt from
http://www.rigzone.com/news/article.asp?a_id=19905
Hurdles
However, the company must overcome some huge hurdles - namely its lack of revenue and debt load - before achieving those ambitions. But these hurdles shouldn't prevent the company from meeting its post-award obligations, shareholders say.
"It's not hard to structure a deal whereby a company's partners can carry it until first oil production," shareholder Nugent said. "I think that will happen with ERHC."
ERHC's Memon also indicated that such an avenue may be open. "It is our intention to form relationships with entities to maximize the value of our assets," he told Dow Jones Newswires. He added that the company "would be participating in each block according to our interest."
**********************************************
Here is an example of a commonly used practice called a farm-out or farm-in. In a farm-in/out arrangement one company agrees to cover a partner's costs associated with exploration and/or development in exchange for a portion of the partner's oil rights.
http://www.oilvoice.com/m/uploadDetail_public.asp?upload_ID=3236
Austral Carried in US$6 Million Farm-Out
Papua New Guinea
PPL 235
Austral Pacific has now entered into a formal agreement with Rift Oil PLC (a UK company) whereby Rift will contribute the first US$6M of expenditure on the Douglas-1 exploration well in Papua New Guinea (PNG). In return, Rift will earn a 65% interest in Petroleum Prospecting License 235 in PNG's Foreland Basin. Austral Pacific will continue as operator of the joint venture with a 35% interest in Douglas-1 and the PPL 235 license.
CEO Dave Bennett said "We are delighted to have finalized this agreement, which ensures the drilling of the highly prospective Douglas-1 well this year. The Douglas Prospect is situated in a lightly explored area of the foreland basin, where earlier wells have clearly demonstrated that oil and gas is generated".
The Douglas Prospect is mapped as covering an area of some 15,000 acres (60 sq km), with PPL 235 incorporating this and several other identified drilling targets within a total area of 720,000 acres (2,900sq km). Success at Douglas-1 will enhance the likelihood for further discoveries within the license area.
********************************************
More info on ERHE DD from IHUB:
http://www.investorshub.com/boards/read_msg.asp?message_id=5721853
OT: Balance, I wasnt aware you were having problems with kidney stones. I am in Michigan and have stones also so it must be the water lol. I have a 9mm stone. Its too deep in the kidney to get to. I might have to have the procedure done where they put a hole in your kidney and crush it. Is that the procedure you had done?
If I need to contact you I will let you know. Right now they are just going to leave it in there.
Dont forget the 2 100% and two 15% blocks in the EEZ that Exxon would get if they were to buy out ERHC. That pust the value well over a billion.
Having said that, Im not sold on the possibility of a buyout only because Im not sure why Offor would go along with it.
Balance you da Man! From a fellow Michigander have a speedy recovery.
Someone needs to mark that post. Because that is what people are going to want to know going forwards. Great info thanks.
Does anyone have any information on reserve breakdown per block? Does that even exist? I know the 14.4 Billion estimate for the nine blocks total. But was wondering if there was an actual breakdown per block.
On the EEL website they and PGS estimated reserves of over 1 Billion barrels recoverable in Block 2 based on 3D seismic. I wonder what the reserve potential is in block 4?
If that does occur what kind of time frame are we looking at? Would they wait until the selections are complete in the Sao Tome EEZ? Why would Offor want to sell?
Spec29, is it your understanding that the stock swap would be for the whole company or just for the rights in the JDZ and not the EEZ?
Joe should state what the expected timeframe was that Mutwadadi said in his note to Joe.
She probably was just a secretary who was filling in for Coleman and has nothing to do with Public Relations. Having said that her language is not acceptable.
As far as the company being mum on everything. Just remember, awards have NOT even been accepted by our partners yet. They are still within the two week period. So ERHC probably cannot comment on arrangements until all parties have accepted those arrangements. And to my knowledge that has not occurred yet. So unfortunately we just have to be patient.
I know the last week has been difficult on everyone. But try and take a longer term perspective on things.
If the price gets that low then the company should start a stock buy back program to reduce the outstanding share count. That share price would be a steal.
nh, I never said ERHC was responsible for driving down the share price. Im just saying that if it continues to drop that at some point insiders might start buying. They probably have enough shares already but it was just a thought.
Well if the share price goes low enough maybe some of the insiders will begin to buy. Either that or maybe the company will start a stock repurchase program to reduce the number of outstanding shares. If only they had the capital.
Does anyone believe that ERHC might have given up some percentages in the Sao Tome EEZ to its partners in order to be carried to first oil in the JDZ? Point is, they also have some chips to play with outside the JDZ.
cut and pasted a previosu message.
Guys Ive got to go for awhile. Am battling kidney stones.
*ERHC Valuation (from Mabenn)
Several new posters have asked for valuations of ERHC after awards.
Others and I have posted many valuation models over the past two years. I can say that over that period of time, the valuations of the informed longs seem to have converged into a reasonable range.
In determining a valuation there are several key questions:
How much oil is there?
How much is a barrel of oil worth?
Here’s my opinion.
First we have to realize that any valuation model can only predict a range. It is ridiculous to presume that with the level of information we have that we can predict a precise price.
There have been two 2D, and one 3D seismic studies done in the JDZ. Go to http://www.nigeriasaotomejda.com/ and click on “Multi-client Data”. You will notice that the Veritas 2D study and the PGS 3D study only cover blocks 1-4 and parts of blocks 5 and 6. The WesternGeco 2D study covers all 9 blocks.
"Interpretation carried out by WesternGeco has enabled the identification of fifty-six prospective structures within Blocks 1 to 9, of which seventeen were defined as prospects and thirty-nine as leads. Of particular interest to ERHC, however, is the recoverable reserve potential of Blocks 1, 2 and 4. WesternGeco identified six High Confidence prospects in these three blocks alone with estimated cumulative recoverable reserves potential of 4.5 billion barrels of oil. WesternGeco used reservoir parameters similar to those known from nearby fields in Nigeria and Equatorial Guinea. Combined recoverable reserves potential of the seventeen prospects was estimated by WesternGeco to be 14.4 billion barrels of oil. WesternGeco partitioned these reserves on a block-by-block basis for ERHC’s exclusive use in the bidding and option selection process relating to the JDZ licensing round.
There has been a great deal of discussion over the past two years regarding the above statement. Note particularly that they identified 17 prospects and 39 leads. The estimated 14.4B in RECOVERABLE reserves only relates to the 17 prospects, and does not include additional potential reserves in the other 39 leads. Also, many have concluded that the 4.5 B bbl number for for blocks 1, 2, and 4 does not imply that this is the total reserve amount for these blocks, only that there are six specific high confidence prospects that total 4.5 B bbl.
So, it has been generally accepted that 14.4B bbls is a conservative estimate of recoverable reserves in the JDZ. It could very well be significantly more!
So how much of the 14.4 B bbls will belong to ERHC? There are several methods that have been used to estimate this. The easiest is to assume that the oil is equally distributed across the JDZ.
ERHC made the following selections:
Choice 1 Interest 15% working interest in Block 6 Signature Bonus Free
Choice 2 Interest 15% working interest in Block 5 Signature Bonus Payable
Choice 3 Interest 20% working interest in Block 3 Signature Bonus Free
Choice 4 Interest 30% working interest in Block 2 Signature Bonus Free
Choice 5 Interest 25% working interest in Block 4 Signature Bonus Free
Choice 6 Interest 20% working interest in Block 9 Signature Bonus Payable
So ERHC has rights to 1.25 blocks. 1.25 blocks divided by 9 blocks equals 14% of the JDZ. 14% of 14.4 B bbls equals means that ERHC could have rights to 2B bbls of oil.
I have previously proposed a model that allocates reserves across the various blocks based on the level of signature bonus bids. This method also results in estimated ERHC reserves of about 2.2B bbls. http://f1.grp.yahoofs.com/v1/gG6SQrk0GPcjy18p7Z-ARMGjzZ2vcfMMAPzLA0V1kk1NxPoylAsqMTeZOJHDplh9Rs5pcdG....
So we can be fairly confident that ERHC will have UNPROVEN reserves of about 2 B bbls after awards, but how much is a bbl of oil worth. It is my understanding that an unproven bbl is worth between $1 and $3. Where you fall in this range depends on a number of factors like recovery costs and the quality of the oil. I would think being in deep offshore zones would put you toward the low end of the range, and having light sweet crude would move you back up the range. To be conservative, I have always assumed we would be in the $1 - $2 range. One poster on RB raised the very good point that oil companies have been using this range since oil was $30/bbl. Oil is now in the $50 range, so maybe we should consider $1.50 - $3 to be reasonable.
Many people are really excited about ERHC and its partners getting operatorships in blks 2 and 4. Many believe this will have a positive influence on ERHC’s share price. I honestly don’t think it will have that much impact, but let’s say it could provide a 10% premium.
Finally, other posters have said that the natural gas reserves in the GoG are typically worth another 50% of the oil reserves.
So, what PPS could we expect after awards::
Low end = 2B bbl x $1/bbl / 710M shares = $2.81 pps
Mid range = 2B bbl x $2/bbl / 710M shares = $5.63
Wildly optimistic = (((2B bbl x $2.5/bbl) x 1.5 for gas) x 1.1 operator premium) /710M shares = $11.6 pps
I will personally be amazed if we do not exceed $2.50 after awards, and will be ecstatic, but not totally surprised if we exceed $5. I we see $8 – I’ll be retired!!
Keep in mind that PROVEN reserves are valued at $6 - $9 per bbl. So once exploration wells are drilled and reserves can be proven, ERHC should be worth between $17 and $25/sh. The time frame for this could be 1-3 years down the road.
In addition to its rights in the JDZ, ERHC also has two 100% block selections in the Sao Tome EEZ which are signature bonus free, and two 15% selections on which signature bonuses are payable. The EEZ is estimated to have 24B bbls of recoverable reserves. We have heard statement that STP could move forward with the EEZ as early as the end of this year, and since several companies have 100% preemptive selections, we have speculated that there is no reason to execute a bidding round before allowing these companies to make their picks. The key element possibly constraining progress on the EEZ is the completion of good seismic studies. I am not certain of the current status of the seismic work in the EEZ.
Im glad to see some new blood in this stock. Thats what we need. The more the merrier whether a trader or a long term holder.
EGY appears to be starting a nice uptrend.