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Thanks for the update Mark. That is good to hear they are still meeting.
True, but ERHC were the ones that took the initial risk of bringing others into the region. The other companies didnt have that foresight.
There should be a reward attached.
Both countries have plenty of carrots to dangle. If companies got left out in this round then offer them better percentages in the Nigerian or Sao Tome EEZ.
EEL seems to be a real pain in the _ss. Some of our bashers would could probably give us some insight into EEL.
Its funny how ERHC is always the company that gets bad PR. But what exactly has EEL done in the region to deserve any percentages??
ERHC was the company that got this whole ball rolling. Cant say the same for EEL.
If they cant agree on all of the blocks then they should at least award those blocks where there is agreement. (if there are any.)
Fossil fuels will replace oil is the correct answer. As I used to post on RB. By the time they get around to awarding these blocks, oil will be selling for $2 a barrel and people will be driving around in electric cars.
Mark is it true the JMC is meeting today at 1:00 PM Abuja time? If so that would be great news. Keep the lines of communication open.
P.S. Thanks for your updates.
This article is explaining why Obasanjo went to Sao Tome, what took place in Sao Tome and why a second JMC Meeting is currently taking place in Abuja.
It is not a report on the actual JMC meeting itself which is taking place now.
I did enjoy the last paragraph. Its basically saying that Obasanjo felt that the issues that the Sao Tomeans are raising regarding the blocks are not technical in nature but are political in nature. It also sounds like Obasanjo gave them a thorough tongue lashing "badly revealed unpleasantness".
"President Obasanjo considered the problems raised for is -tomenses the return of dossier oil, as being of caracter nontechnical politician and. according to note, Obasanjo guaranteed that the requirements had been observed all technician for the adjudication of the 5 wells of oil. The note underlines on the other hand, that Olusengo Obasango badly revealed unpleasantness and to be, having relembrado that the treated one confers only to the two Presidents them to be able to approve or not to approve the adjudication recommended for the joint ministerial advice, fitting to the authorities of each state member in the treated one to fill its internal requirements. judicial and parliamentary."
Rancho this is who we need to get along. Nigeria and Sao Tome.
Who cares about whether the longs do? I certainly dont.
President of the republic rejects dismissal of the minister of the oil
26.05.2005-J.Vitrina-(S. Tomé) THE president of the republica Fradique of Menezes did not approve the proposal of the two names advanced by the Independent Democrat Action Departure, ADI, for replace the minister of the Natural Resorts and Environment, Arlindo of Oak that in the week past asked to his dismissal of the charge that occupies since September of 2004. The president of the republic, in a communicated of press distributed the social communication, justifies that the minister demissionário should maintain itself in the charge because is in the possession of important enough information about the dossier oil, beyond that is it elapse an inquiry in the Department I Publish that is going to hurry some facts that still concern the public opinion santomense. On the other hand dislocated himself this Tuesday fair the Nigeria four members of the government, that compose the Ministerial Advice of the Joint Authority, nomeadamente the Minister of the Defense, of the Business Foreigners and Cooperation, of the Planeamento and Finances and of the Natural Resorts and Environment. The dislocation the Nigeria of this mission is going to participate in a meeting of the Ministerial Advice that is carried out in this same Tuesday fair with caracter urgent. The Nigeria claims the utilization of the his 60 percent of the 123 millions of dollars that are deposited in the Halmark Bank and the Government santomense has a proposed news for the auction of the remainders 5 blocks.
To what does everything indicate, the own minister should have stayed convinced with the arguments presented by the leader of state, since, second we hurry of spring of his cabinet, is arranged it do goes atras in the decision that took there is a week.
The leader of the ADI, Patrice Thunderstorm, that had reacted immediately it taken of position of the minister of the oil that classified as “one of the most competent charts” of his departure, also looks indifferent the presidential decision, since the own one Arlindo Oak did not react.
The truth, is that this dossier oil, surrounded of so much controversy, is it run demasiada ink for an as much as so delicate business is the exploitation and commercialization of oil.
The parliamentary inquiry in course still is not concluded, is not known what about him will leave and that effect is going to produce. Each day that passes stayed-itself it know news given elements it know for the part involved and many of them contradictory.
It is information shackle that the 123 millions of dollars deposited in the Nigerian bank Halmark Banc Plc is it run interest, calculated in around five millions weekly and that deeds you count them, since the day 25 of April that the money I enter in this bank up to present date, alone of this interest S. Tomé and Prince already should benefit of 8 millions of dollars.
But the ambassador of the Nigeria believed in S. Tomé and Prince does not confirm neither desmente this information, revealing barely that of fact the money is guarded in this bank “agreement with you practice them bancarias international, awaiting directive of the part”.
That revelation is contained in his vast communicated of press divulged the week past, where also accused the MLSTP/PSD and the ADI of “excessive negative posture” relativamente to the Nigerian investment in S. Tomé and Prince. Manuel Clays
I have to say that this is the only dictatorship in the world that I support. Keep deleting garbage messages. You have my full support. lol
Magic I am aware of the order of the selection and who has what. But I took Yemens post to mean that 4 of those 5 blocks have already been assigned (meaning they have selected which blocks they will drill in).
I guess he didnt mean what i thought. Sorry for the irrational exuberance.
Signed, Alan Greenspan
I cant post on RB. I got Tossed a long time ago. You ask him lol. Gigwoof if this is true this is absolutely huge news. This is not a minor issue.
The following information was provided by Yemenoil on RB. He claims 4 out of the first 5 blocks in the Sao Tome EEZ have already been assigned. That is the first I have heard of this. Can anyone confirm that 4 of the first 5 blocks in the Sao Tome EEZ have already been selected? And find out the source for that information. If so that would be huge news.
"30crappie-I'd guess $10 plus after EEZ. Funny thing is that ERHE already knows what it has in the EEZ. First 4 out of 5 blocks are already assigned."
We will know something by the end of the day or by early tomorrow morning at the latest. I would be skeptical of all reports prior to that time. The bottom line is the Nigerians dont know if the Sao Tomeans will sign off and the Sao Tomeans dont know if the Nigerians are willing to make an changes.
So nobody knows anything at this point IMO.
And that is why it is beneficial to own stocks in companies that are involved in "offshore" drilling. It provides a safe haven and makes the platforms much more difficult to get to.
By the way, what oil producing region isnt politically unstable? Maybe Canada and thats about it. Oil leads to instability and greed. Thats the nature of the business.
Mongo what do you know about EEL? How dissapointed are you in the miniscule percentages they have? What do you think of Travoado?
Correct me if I am wrong but I seem to recall that the reason the Sao Tome Oil Ministry and Parliament had to get involved was because there wasnt full agreement on the part of the Sao Tome JMC delegation. Apparently one member of the JMC Sao Tome delegation didnt agree with the award setup. That is why it had to go before the Oil Ministry and Parliament.
If there is unanimity on the part of all Sao Tome JMC members then it would go directly to de Menezes for signature and most of the political haggling would be bypassed.
That is why they are reconvening the JMC.
*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.
I dont buy into the the possiblity that they might cancel the second round and do a rebid. There is too much at stake for both countries.
The bid amounts would probably be much lower with falling oil prices as well as displeasure over the way the current round has been hamdled. What reputable oil company would bother to bid again and put themsleves though more misery. There is an opportunity cost to committing resources to an event only to see delay after delay after delay.
I believe the countries will get it done. Not getting it done and announcing the complete cancellation of the round would not only be a PR nightmare but it would be a complete embarrassment to both countries and it will harm their ability to attract oil companies in future bidding rounds.
My question has always been. If they cant agree on all 5 blocks, why not release the blocks they are in agreement with such as Block 2?
Spec I hadnt thought of that but you are probably correct.
These two quotes from the BM article regarding EEL were quite interesting IMO:
"Block 2 with 10% going to Bermuda-registered Equator Exploration (EEL), recently listed on London's Alternative Investment Market, which also enjoys entitlement to a share of licensing fees from JDZ seismic data sales under a joint operating agreement with Petroleum Geo-Services."
"Hardest to convince was Houston-based Patrice Trovoada, the son of former Sao Tomean President Miguel Trovoada and until last week Menezes' Special Adviser on Oil Affairs. Patrice Trovoada was ousted from office last week after pushing hard for EEL and its partner ONGC Videsh to operate Block 4, but to no avail."
Gigwoof I completely agree about your comments regarding a "fierce and coordinated attack against ERHE". And I also agree they probably have ties to competing companies as well as high ranking officials in Sao Tome.
EEL seems to be right in the thick of things and I wouldn't be surpised if some of the bashers have ties to them or other competing companies not to mention Trovaodo. Of course that is only opinion and conjecture on my part. In fact some reports make it seem as if Offor has a positive realtionship with EEL and Trovaodo so who really knows?
The people trying to harm ERHE will stop at nothing to get their way. They will do so before awards and they will continue to do so after awards IMO. They probably have millions of shares they will try and dump on the market to depress the share price.
I would love to see Emeka Offor take some proactive steps against some of these people, whoever they are. Im sure they would like the award process dragged out as far as possible in the hopes that ERHC will fold up and go away.
Here is a post from seedmoney regarding Travoada, EEL and ERHE.
HDOT: Saw Trovoada info in recent article
But here is an old article well worth a read to understand the odd dynamics in STP:
http://www.newyorker.com/printables/archive/030728fr_archive02
Note that at this time, the Trovoadas had strong ERHE ties. That, and the Chewayko ties with Offor, lead me to believe that the real battle is not EEL vs ERHE, but EEL vs Nigerian Indies.
Counter to what Cardinal says, Patrice is wealthy, connected, and he is the one who chose Menezes to be the next president and ran his campaign! It is silly to say he is nothing in this discussion.
Are you Nigerian? You seem to have a condecending attitude toward all things Sao Tomean lol. I hope you are correct. You probably have much more insight than me anyway.
If he is what you say, then why dont we have awards yet?
And thats precisely why Trovoada should not have been involved in the decison making process. Because he is allowing his personal interests to cloud his judgement.
Too many decision makers in one process is never a good thing.
Trovoada is probably hoping to stall this entire process out through the Presidential Elections. Then he will run and if he wins he will be the main decision maker in this process.
Here is a post from Seedmoney from RB. He thinks EEL is the real problem:
"Things to think about
STP holds the cards now, but they have to realize that Nigeria can scuttle any further deals in the JDZ. If Nigeria proceeds with their own rounds and gets irritated with STP and allows the JDZ to collect dust, then STP will NEVER see a dime from the JDZ, and without quick resolution in this round, the EEZ for STP is nearly worthless.
The only chance STP has of saving face and realizing oil revenue any time in the near term is to wrap this up quickly.
In the face of all this criticism of the selfishness of Nigeria to throw in independents, it is ironic to realize that the real problem appears to be that EEL was sidelined in this. If EEL had gotten major percentages, Trovoada would have sent this through like a greased pig, and MonkeyTrots and Mongo would have been quite happy"
Thats a great post. If the Nigerian Indies are the hold up I dont understand why they couldnt offer these companies an improved position in future licensing rounds such as the JDZ, Sao Tome EEZ and Nigerian EEZ. That to me would be the logical explanation to make everyone happy.
"Sao Tome politics is making ERHE's third and fourth EEZ block choices less attractive in that the third choice is to be made by the Sao Tome government. This could be a delay fiasco similar to what is happening now and completely stop ERHE from picking their blocks until indecisive Sao Tome decides."
Sideeki the way I understand it Sao Tome has the third choice and ERHC has the 4th and 5th choice. So Sao tome would not be selecting for ERHC.
Having said that you are correct. Sao Tome could stall in selecting Block 3 which would delay ERHC from selecting their blocks.
The problem is they would be cutting off their nose to spite their face because it would delay the entire EEZ. And Im not sure Sao Tome, with all of their financial difficulites is in any position to do that.
Having said that nothing would surprise me at this point.
Rancho I dont think that is even a consideration. Equator is not in the running to win Block 4 IMO. Might there still be some posturing so they can get a small cut? Possibly.
I highly doubt that the World Bank felt Equator's bid was as good as some of the others including ERHC/Noble.
I think its a non-issue. Unfortunately Trovado looks to have backed the wrong horse and now must try and "save face".
That is the problem with having too many decision makers. Nothing ever gets decided and someone always feels as if they have been wronged. Thats why the whole process is a joke.
It should be one person from Sao Tome making the decision.
Menenez.
They might not be controlling the process but the bottom line is nothing happens until they sign on the dotted line. Like it or not those are the facts and there is nothing, you, I, ERHC, Nigeria, Sam Dimka, or the JDA can do about it.
So no, they are not controlling the process but in a sense they are controlling the process.
It was kind of said in jest balance so I apologize for the confusion. Im beginning though to take a more "hard line" approach to evaluating this situation. I want to take the emotion out of it so it doesnt cloud my opinion.
I might as well be from Missouri at this point. "Show me dont tell me" is my new mantra. The JDA, Sao Tome, and Nigeria need to prove to me they can get this thing done. Right now I am highly skeptical. Hoping is not good enough at this point.
Mark I second balance's post. I appreciate you taking the time to call the JDA and give us the updates. People criticizing you for that are way off base IMO.
You do such a great job you should be the next PR guy for the JDA after Sam Dimka gets promoted lol.
I wouldn't go that far Rancho. I dont think ERHE was purposely trying to decieve. I dont think ERHE longs were purposely trying to decieve. I dont think the JDA was purposely trying to decieve.
I think the JDA really believed awards would occur and communicated that to the respective oil companies. And ERHC PR'd it.
The JDA doesnt have any control over Menenez. They must have believed he was going to sign off by now. And as I said earlier I tend to think that the JDA tends to be overly optimistic and wants to provide a positive spin on a difficult situation. Maybe they felt that by stating these timelines that it would put a little more pressure on Sao Tome to act. Unfortunately that hasnt worked yet.
I tend to think it is option number 1. No one really knows what is really going on inside the mind of Menenez and the Sao Tome officials. And the JDA is trying to keep everyone calm by putting a positive spin on it.
As Mutweadadi said a week or two ago. No one really knows when this will be resolved. Its all speculation at this point. Its difficult to read someones mind.
What if there is no "very very good news"?
"Trovoada, the leader of junior ADI governing party, told RDP-Africa that "no decision" on awards had been taken at the Sao Tome meet Friday.
But, he added, "the process may be getting back on track,"
Oiljunior with all due respect (and I definitely respect your opinion) I would have to disagree with your assessment.
"The process may be getting back on track" sounds to me like we have another delay. But I appreciate your optimism. I believe we have a long ways to go.
Maybe he is just taking an extended vacation after the meeting. How do we know he is actually working today? He could be playing golf at the Sao Tome Country Club. He could be hanging out at the beach. He could be attending a soccer game.
Lets not jump to conclusions just because he is in Sao Tome today. Jumping to erroneous conclusions is how we always seem to get ourselves into trouble.
One thing I will say for Sam. He definitely deserves an extended vacation for all of the problems he has had to put up with.
Looks like Joes Blog was terminated.
My favorite part of the Barry Morgan article was the fact that the World Bank even advised them that the operators they selected put together the best deals.
After the shredding the JDA and ERHC had taken in the Sao Tomean press (and even in earlier US write-ups) its nice to see that some common sense and good reporting prevailed.
The truth eventually gets out.
And major congratulations are in order for Emeka Offor for having the foresight and leadership to bring in companies like Pioneer and Noble and put together the offers they did on the blocks.
If anyone doubts his brilliance after what the way he has navigated this company over the last 12 months then you are missing the boat.
This guy is a brilliant leader.
I hope Barry turns out to be correct. Obviously for selfish reasons. But also because he has ahad to endure all of the twist and turns and it would be great if he were the one to call it correctly.