It is about time ERHE comes back to life.
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Midtieroil,
In all honesty, I think you are over thinking or missing the definition of "industry" for ERHE in it's current state. Really.
ERHE is nothing more than a 5 person asset holding company that acquired the legal "rights" to oil blocks in a brand new territory yet explored. It was never intended at the beginning of EHRE to actually drill these rights themselves. Therefore, they absolutely do NOT need a producing oil company executive for a CEO. In reality, they need someone who is politically astute in the GOG region; pretty well connected; a law degree would be the highest qualification needed to steer clear of loosing these valuable legal rights, etc. Look at what has happened over the past 10 years. The legal rights have been more at risk than anything else. ERHE has maintained those legal rights, renegotiated those legal rights and only entered into more legal contracts with other oil companies to do the oil business side. I can't imagine a company that need more legal protection than ERHE.
I honestly think if ERHE would have gone and scalped a leading CEO person (let's say the stole XOM CEO for example) and paid them what they were making at a real oil company (millions more per year than what they have been paying PN), ERHE would be closer to bankruptcy now and probably would have LOST this person due to NO commercial oil discoveries yet. This "real" oil company experience you keep clamoring for IS NOT needed yet IMHO and most likely many other people's HO, including the board.
I know this won't change your mind but I hope you can realize there are other valuable opinions in this world beside just yours. Read these views with an open mind and you might start to get it. All just MHO.
That is precious and timely. Love it!
It is also more compeling given that ERHE is really just an asset holding company.
If ERHE goes down a different path in the future and starts developing into an oil production company etc., I would think we would need different talent at the Helm, but not until then.
Keep up the good work Peter and continue to ignore the 1%.
I hope we all hear Midtieroil celebrating in the streets over this one. I know it is not his ultimate (seeing PN being replaced), but I do agree with the company on this one. It shows accountability and responsibility.
Now we move forward.
TOB,
I could not have said it better. I am very open to reading opposing opinions but I do grow tired of a few here that continually spin EVERYTHING possible to the negative or blame the company.
Thank you for speaking up and at least providing some balance to the constant negativity around here. I look forward to the day when real news from Total or Sinopec or ERHE comes out regarding our oil blocks that will change the sentiment of the discussions. Until then, we wait.
(edit) I see your post has already been delete. It still was good and appreciated.
Voting material and info:
The fact that multiple shareholders have reported receiving material three weeks ago should put to rest any negligence or rumors of misdoings by the company. It would be next to impossible for the company to disseminate the information to some shareholders and not others.
The fact is, we live in an ever changing world. All brokerage houses have been pushing hard for multiple years to "go paperless". For those who did not get their materials, I suspect it is due to one of two issues. Either the account is set up to receive only electronic communication (and then it still could have been caught in spam filters, etc.) or the account settings through your brokerage is set up with some kind of "opt out" or "vote by proxy" service.
I used to get mailings for this type of information and it stopped showing up for ALL of my holdings once I set my accounts to paperless. I also have some of my accounts that are "managed" by my company, set to have all proxy voted through my companies proxy voting service. I suspect I accidently set all my portfolios to act in this manner.
Just some fyi for those who want to look into their own account issues......
Interesting presentation by Afren today at the 10th Annual Acquisition and Divestiture Summit in London:
On their website you can download today's presentation but in a nut shell, they hold 4.41% of Block 1 of the JDZ currently being drilled by Total. On page 16 of their presentation, they have this asset estimated at 15 mmboe of prospective resources. Doing the math, this puts JDZ block 1 at 340 mmboe which is higher that the estimate I heard most recently of 150 - 200 mmboe.
Maybe drilling is proving up nicely.
The other interesting point about this presentation is this looks similar to how I envision ERHE trying to evolve to. Multiple resources and multiple stages of exploration, appraisal, development and production.
Grow ERHE, grow!
I thought the 61 days was extraordinarily long for the depth they drilled and there was some speculation to having some issues during that drilling. I am expecting about 45 days for this hole. I expect little delay to actual news since they are drilling into an already discovered oil source. I also suspect the JDA will have a lot of desire to get positive news out there to get the rest of the blocks rolling again. Keep in mind, the JDA has representatives getting the same drilling results as the operator so I expect to see net pay in a reasonable time.
cimmaron,
Ironic as this may sound, but that is precisely why I have zero concern over where EHRE will come up with the estimated $40 million for Chad development. It is really quite simple but the fear mongers here ignore reality. ERHE either continues down the path of successfully bringing partners in WITH cash, or they don't and the Chad deal falls by the way side. Maximum risk in my estimation is around $1,000,000. If they can't find the right partner to do all the work, they will not pay the other $5,000,000. If they broker a deal then they may invest an additional $5 million themselves to increase their eventually percentage of Chad profit oil and I am ok with that. This is reality.
Now, let's talk about just a few of the ignored accomplishments (again):
ERHE did what they do best - They politically won the Chad blocks in the area of the world that they have, maintain and utilize their political "pull". Think about it for a moment - logically speaking, why in the world would Chad award blocks to ERHE? Seriously, how many wells has ERHE drilled themselves? None! They politically won this bid because they have a sales pitch that works. What does ERHE really bring to the table, or to put it in the fear monger's words: what accomplishments has Ntephe done? The real answer is that ERHE is a deal broker in the GOG and they are expanding. They started with JDZ & EEZ. They turned the JDZ into MORE rights percentage wise than what they started with by bringing in the real oil companies. They exchanged part of these INCREASED rights in exchange for $50,000,000. and a FREE carry (cash flow wise) to production! Please keep in mind here that SEO paid $5,000,000 originally for his part ERHC. Then he cash flowed them by loans from Chrome and paid those loans completely back with interest with shares of stock (at a higher price than the current share price by the way) before they negotiated for their $50,000,000 cash.
Not only did ERHE broker real oil companies to partner with them on increased bids in the JDZ auction, they had to go out and broker another deal when Pioneer and Noble decided against the PSC negotiations AFTER winning the bid. ERHE has proven themselves multiple times. They brokered Sinopec and Addax which then carried out a successful 5 well drilling campaign. Although they have not discovered commercial oil YET, and Sinopec has since bought out Addax, they are still working with the JDA trying to come to an agreement for continued drilling AFTER 5 dry wells! Seriously think about that. If there was no remaining perceived future value, Sinopec and their purchased Addax division would be GONE. Now, Total (another major and very successful deep water driller) is drilling multiple holes in block 1.
Then there is the EEZ which is in the beginning of the next phase to monetize and begin a planned drilling program there but ERHE needs to complete the deal for a partner. Until, ERHE either gives up those rights or successfully brings in a partner, we can't prove one way or another if Ntephe and gang are successful or not on that front. Like it or not, it takes time but it is moving forward right now. We just aren't privy to the degree of success they are currently sitting on.
During this time, ERHE has brokered a deal with Chad and won more drilling rights. They will not and can not drill this themselves. They must bring in a partner or forfeit the rights. My money is on ERHE successfully finding another partner. Yes, we have not heard who they are yet. Yes, it is taking more time that we all hoped for but it is being worked on.
Now we are hearing from third party sources that ERHE is a serious contender in the running for other possible oil rights in Imo state and Kenya (and possibly other unknown places). They have hired top notch geologist consultants in this part of the world to do what they do best - politically broker a deal.
Bottom line, ERHE has multiple "irons in the fire" so to speak and they are not sitting on their butts reading a penny stock investment board or worrying about some OTC small time shareholders (myself included) trying to armchair direct a company. The entire ERHE management team (yes, Ntephe included) is successfully working hard to broker deals while we wait.
The fear mongers here will continue to ignore successes and claim they could have done a better job (in hind sight, I sure could have done something different that would look more successful too. Hmm? lets put $40,000,000 in Apple stock 4 years ago...... yes, I win... I should be CEO!). They will continue to only speak of future worst case scenarios to justify screaming for management's head on a platter. Heck, some will even look at the proven failure of another "oilman" CEO and claim success (why can they see the positives in this "other" company yet fail to see the positive's in ERHE?????).
Everyone here has a choice: continue to look and see the positives (my reality) or succumb to the negativity (the fear mongers perceived reality).
For now, I am still confident of continued success for ERHE and I will remain invested. As I see it, the entire investment world has priced in the extreme negative sentiment and at less than .10 it won't take much to turn that around.
Good luck to all on your choices of perceived reality
Tryoty, amj23, midtieroil and other long term (and patient) shareholders, I truly hope you participate in the upcoming shareholder meeting. Either in person or questions through someone else going or at least vote your shares.
I feel your pain just as much as you as I have been here over 10 years now too. I have been through the ups and downs, the hype and disappointments, the "insiders and or p&d'ers", the coop on STP, the multiple runs to .90+ (without selling a share), and the scorn of now two wives (ha!), etc.
Sometimes I feel very frustrated with the perceived progress or lack thereof, of ERHE. I don't have a good answer for why the share price has been depressed so long or why we haven't seen the success we all hoped for when we invested. I think there are legitimate complaints or questions to bring up to management and the shareholder meeting is the right venue for just that. I thought ERHE would have had much better success at this point and maybe some adjustments to it's course are due (or overdue in some peoples opinion). I may not agree with all the points that some bring up on this venue, but I do think people and companies make mistakes and it is how they react to those mistakes that will have the most effect on their share price of the future.
On the flip side, I still see great potential now and maybe even the best potential ERHE has had in all of it's history but the share price is surely not reflecting that. The negative pressure on the share price is over weighing the perception of the future. I strongly feel the only thing to change that around is some kind of real and measurable positive news (on any one of their multiple fronts). This news must be met with timetables (like future drilling dates, or partnership signings, etc) and they must turn around their track record for communicating progress (no more Chinese secrets). I do give management credit for attracting some good key talent in the past 6 to 12 months. These people are knowledgeable and experienced oilmen (and geologists) so I have to think they are in a better position to evaluate the future potential of ERHE's assets compare to us street shareholders. I also have to give management their props for the Chad deal, the EEZ block signings, Sinopec drilling 5 holes, etc. BUT I also realize the share price won't start reflecting progress until we can see a meaningful milestone accomplished. I would like to see more drilling rigs headed to the JDZ, EEZ, Chad etc. I would like to hear of a partner signing with ERHE for either the EEZ or Chad. Not just talk about interested parties in discussion. This, I think all shareholders should be expecting of our current management and yes, I do think they should be held accountable. Where we differ is when and how do we hold the management accountable.
I still think Ntephe has a chance to see this current set of shareholders to all time high share prices. I have confidence that this will occur in the next year to two years or I would be selling my shares now. I continue to see positive signs which keeps my long term confidence up. I don't know about you but I expect to share in the success of ERHE with current management and their stock options with an 800% - 1000% gain from here.
GLTA
kingpindg, thanks for posting that clip. Wow, this is kind of interesting recent news... and by ERHE's old news follower Barry Morgan.
ERHC....having just poached senior National Oil Company of Kenya geologist and exploration team leader Peter Thuo as its local technical consultant......
Peter Thuo worked for National Oil Company for nearly 26 years. He has a Masters from University of St. Andrews, Geological and Earth Sciences/Geosciences and more recently a PhD from Universite de Bretagne Occidentale, Brest, France in Sedimentologic evaluation of Cretaceous-Paleogene potential reservoirs of northern Turkana, Kenya
Sounds like a pretty knowledgable geologist working with ERHE
Does anyone have an Upstream membership that could post the rest of that artical?
Now that is a hilarious reply. Thanks for the laugh
OMG! I couldn't stop laughing when reading your post.
Thanks for popping up and putting a smile on most people's faces. At least the jokes can lift the sentiment of the board compared to the constant negativity as we languish through non-news worthy time.
BTW, do share. How many holes are being drilled by Total now?
Oh, and can you provide us with net pay already hit by the current drilling hole(s) or let us know YHO on when we will hear?
Might as well have some fun while we wait.
Good post Midtieroil.
I do agree that the false rumor and bad information has done damage to the share price. I would also like to add that when the negative posts go beyond factual debate and stoop to the slander of company executives, this too damages the share price.
thank you for a balanced post.
Double thanks for your efforts on digging up info and sharing it when you are confident with the factual basis.
mz157,
I agree. I am pretty sure that Total is speaking for the whole consortium as to spending 200 million as a group. They are the operator so they are the only ones to be making those statements at this time. Notice how ERHE made statements as to how much was spent on the 5 well drilling program. ERHE didn't spend a dime. They just spoke for the whole project as Sinopec wasn't saying a thing.
The 200 million, I feel is just a good rough estimate of the full costs for the 2 well program. Day rates plus materials plus post ananlysis etc... It makes no sense to back into the cost to figure out the number of days they will drill each well. They will be paying the same day rate while the rig travels between locations and sits and waits for preparation.
The great news is that we have solid confirmation of the 3/25 spudding date (start of drilling). I would say we should be watching for rumors to start brewing in about 3 to 4 weeks around the Afren board.
I fully expect better numbers than OBO-1. Remember how TOTAL pr'd their original purchase of block 1 rights.... something about their more advanced technology for drilling and something about drilling at angles??? I forget the specifics but they have proven themselves next door at AKPO.
Good luck all
petemantx,
I agree. Total is very large and the beginning date of spudding a well that they already have announced (which half of the year they are doing it) is not relevant to them and thus not PR'd.
Now that we have confirmation from Afren that spudding began already in March, I would bet we are within 60 days of hearing officially from Total, Afren, the JDZ, or STP some news on whether this hole is more or less successful than OBO-1.
I also feel this will be the catalyst to get the next phase going for Sinopec. It may be something like, we will drill 3 more holes in the next 12 months or something like that, but I think we will see official announcements of the next steps.
I still strongly feel there is knowledge behind the .75 share price options for the board and officers. They must confidently feel that goal is attainable within the next 20 months now. It has to hold for a month at the .75 level for these options to be worth anything.
Hopefully, we are closing out the last quiet period of no real developments going on in any of ERHE's assets.
Just IMO.
It' almost like we are in a game of Texas Hold em and we are "All In"
Just waiting to see what the hand is holding.... Unfortunately, it takes a long long long time to see.
Just to give a balanced perspective:
I appreciate today's PR and hearing that ERHE was doing the right political and PR type of move to enjoy a national soccer game in STP after spending 2 days of face to face meetings. Anyone in business at a high enough level will not only understand this but also appreciate hearing that ERHE is still working on their "business" relationship with the people of STP.
Take two seconds to think back on why most shareholders here bought into the speculation of hitting a home run with ERHE. I would bet if you really think about it, a lot had to do with Sir Emeka Offor and his political ties to the Nigerian government. This political tie helped prevent either Nigeria or STP from taking away or dramatically reducing the original rights for ERHE in both the JDZ and EEZ. Some people may not believe this or want to pretend it doesn't happen but this is how business gets done in this part of the world.
IMHO, STP figureheads still likes to show a side to their people that ERHE got an unfair advantage with all the rights they retained through multiple negotiations (and maybe they did). At the same time, the political people of STP in control, realize STP needs to promote business and especially the OIL sector to their tiny islands. It's a matter of give and take, win-win negotiations, etc. Do a google search on Sir Emeka Offor and STP and you will find a few years back that SEO started a charity on the STP islands. This is all done in the name of good PR. So was attending this local soccer match.
To top all that off, I would further speculate that since this national soccer match occurred on the Islands of STP, the price of the soccer ticket was probably less than most of us shareholders spend a day for our "starbucks" coffee.
Kudo's to ERHE management for doing the right thing and openly communicating with us shareholders!
mz157,
I have to say, I agree with your entire post.
Let's hope we find out soon where ERHE's cash will be coming from....
Where are you getting your information that "3 weeks ago the PS finalized a well in USAN field..."?
I have been waiting for an official notice from Total or partners that the well is complete. I figured they are still working on that well.
In any case, I tend to believe today's press release and Total will be starting to drill in Block 1 sometime in the next 2 weeks if they haven't already.
I will further speculate that Sinopec will borrow the PS either between the two drilling campaign's in Block 1 or right after the two are completed. This will likely cause the next significant spike in the share price IMHO.
only a fortnight away...lol
snayeman,
I don't disagree that the wealthy get away with all kinds of crap. The difference here is that it is weighing the probability of the common shareholder here getting completely screwed. Given the potential worth of all of ERHE assets (when they find oil), it is TOO big of an asset to risk getting a small percentage more at a cost of 1) having their own assets frozen, 2) ruining their own global reputation along with all officers and BOD's.
If EHRE hits it big, SEO won't need the extra %'s period. That is what makes these scenarios all a moot exercise. So SEO ends up being worth 12 Billion instead of 10 Billion. Does he care about that extra 2 Billion to risk maybe the entire 10? I doubt it.
If you really want to evaluate the kind of crap people get away with, SEO already has increased his share percentage many years ago when Chrome loaned cash to ERHE and ERHE paid the loan back with interest in shares. I see this being way more likely and much much less risk for SEO to shave a few more percentages if he really thinks he needs them.
By the way, I don't fault SEO for this as it was needed at that time and I recognize there are ways to pad their pockets legitimately.
Krombacher,
As you state, "After all, in assessing a stock's performance, it is important to try to assign a probability to various outcomes in order to assess risk." and therefore you want to analyze the possibility a sale of ERHE's JDZ assets for $5 million to an unknown and yet suspicious entity.
To use your same logic, you can't take lawsuit off the table either. Here is why.
ERHE is a publically traded and SEC regulated US entity. If a transaction occurred similar to what you described above ($5 million for all it's JDZ assets), I feel the probability of an investigation into this sale as extremely high. I would put it at 90% or better. If this were to occur, the likelihood of the SEC freezing the trading of said shares or being able to go back after not only SEO's assets but also the officers and Board of Directors assets, would be arguably very high.
Realistically, you have to look at the complete risk/reward benefit to the specific scenario. Let's assume SEO/Chrome (along with officers, friends and family) currently owns greater than 60% of ERHE (I would guess this to be low). Therefore, the absolute maximum they have to gain is an additional 40% of the future value if they (SEO & company) were able to successfully transfer the JDZ assets into some hidden or secret entity. Keep in mind, SEO still wants to get the "realistic" fair market value for these assets in the future regardless of whether they are in ERHE shares or some secret entity. I would go further to assume SEO would have to pay out/ give out or take a hair cut on this potential 40% percent at a substantial amount to risk ruining the reputation of all officers and BOD's and they would be risking a freeze of all their assets outside of Nigeria. Let's say this brings to new net additional gain down to 20%. Now, wouldn't you agree that the greater the spread between the $5 million sale and the future value of oil discovered, the greater the likelihood of not getting the additional 20% due to law suits and frozen assets?
What probability would you put on all parties involved risking everything to get maybe 20% more as opposed to getting a clean 60% (current holdings valuation)?
Would the Chinese feel better for doing business with the Nigerians in the future if this happened and how would that effect future business dealings in the world economy for Chrome or other SEO entities? Would SEO be more liquid or less liquid in the world economy in the future if this truth eventually came out? Is that worth it for at best a 20% current gain?
I, personally, don't feel the there is even a remote, less than 1/100th of 1% chance of this happening.
LOL. So true.
amj23, that is a fascinating article and should be read by all here. This is further evidence that there are tighter ties between Sir Emeka Offor and Addax (now SNP) outside of the JDZ. These are active, producing, oil related (pipeline engineering), and deepwater offshore potential, business deals that show an ongoing successful business relationship between the Chinese and SEO.
To me, this provides further evidence against the possibility of SNP playing any foolish games like the ones suggested on this board of trying to purposely hurt ERHE or trying to "wait them out of cash". I have never believed these types of scare tactics but haven't had good hard evidence about the flipside argument which would be an ongoing positive business relationship.
Thanks for finding this article and sharing it. Good find.
Midtieroil, by your continuously pounding this drum on the Stanford investment, you are proving your naivety or ignorance (your choice).
First of all, it has been proven in a court of law that this was "Fraud". Do you know the definition of fraud? Let me put it in a way you may understand. I will purchase a plane ticket and fly to Texas and personally picket in front of ERHE's offices for the firing of the person who made the decision to invest in the regulated Stanford CD's IF you can prove to me that this person knew these Stanford CD's were fraudulent before investing ERHE's money. Do you get it yet? Fraud is deception. Allen Stanford defrauded people out of an estimated 7+ billion dollars. ERHE's investment was less than 1/1000th of the defrauded amount. Do you really think 1000's of people should be fired for being duped by this one man and his company?
You and I and all ERHE investors are victims of this fraud. You are lashing out and looking for a scapegoat for your feelings. Your feelings are healthy and true and because you are a victim, it doesn't make your feelings illegitimate. However, this $5 million dollar loss to fraud, does make your firing argument ignorant or naive.
I have much more respect for your opinions on other aspects of running ERHE. Decisions about "Plan B" or Chad or the partners they picked or even how and when ERHE communicates with it's investors have legitimate areas for criticism. Fraud doesn't.
DK said almost exactly what you stated "we cannot speak for SNP". Then several posters here got all up in arms and started reading into this response either to promote their agenda or to create a self fulfilling prophesy in their own mind...
I felt DK had the perfect PR response. It is how the response is taken by posters here and disected into an entirely different message. Again, people are trying to pigeon hole ERHE/DK into a public position on something that they shouldn't be doing.
It works out fine if they find oil, but if they don't, these same posters want to hang the failure on the statements made prior to drilling on the "importance" of the results.
dumb and dumber comes to mind.....
Bingo! should be end of discusion until we here otherwise from the JDA.
Thanks petemantx
Some people here sure try to make multiple mountains out of a single mole hill.
Really?
Dan made the exact public comment he should have regarding the "importance" of Block 1 drilling. Stop giving yourself headaches trying to dissect and argue with the response.
Bottom line:
Of course, block 1 drilling is important for Total, SNP, AND ERHE. BUT ERHE can NOT publically speak for the "importance" for these other companies.
Some people keep trying to corner Dan into an answer they can use to justify their investment position. This is a ridiculous and futile exercise.
Here is the reality as I see it:
Block 1 drilling. 2 holes. 1 on OBO-1 to confirm or get more information on the 150 feet of oil pay they discovered the first time around. Second hole in a new location.
If Total drills OBO-1 again and incorporates their "superior technology" that they mentioned when they purchased block 1, and they prove up a commercial discovery then..... it increases the likelihood of more success in future drillings in any area nearby if the interested parties can use that data.... Yes, SNP can use that data.
If Total drills a new prospect location and finds oil again that can be tied to OBO-1 production plans... this greatly increases the prospect of an area wide development. And again, this information can be used by interested parties in improving their chances for discoveries in other prospects.
If, however, the new prospect comes up dry or bio-gas, I think we have another extended quiet period while Total decides how much they want to be involved from an "area-wide" development perspective. It will NOT be the end of the world NOR will it prevent SNP from making their own decisions on drilling further prospect in Blocks 2, 3 & 4.
It is important? Hell Yes. Are they going to come out and publically state this?.. Hell No. You fickle OTC:BB stock gamblers....LOL.
TOB,
I also look at the ~800% return before vesting to be correct as it relates to the approximate .09 share price when the options were granted.
Tryoty,
Those are even better points. I agree especially on the "finding greener pastures" if I had NO faith in Management.
midtieroil,
I think very similarily to what you stated. I think the Chad deal may get the JV partner to contribute their proportionate share of the $5 million owed next year. So if ERHE ends up with 25% of their Chad blocks, I think they will only pay 25% of that additional $5 million owed. The other option is ERHE ending up with a larger slice than 25% IMHO.
Due to ERHE's cash postion, I am hoping they are trying to do the EEZ blocks separately. Maybe they get a JV partner for the first block and end up with a full carry and about 25% again. Then delay the second block for a year or so and by then maybe the JDZ will have some scheduled drilling for phase 2 with good drilling results out from Total.
I do think that any money ERHE invests in the Chad or EEZ seismics will be reimbursed at least proportionately by their partner.
Extremely good point tryoty and frequently overlooked by some dooms day promoters on this board.
There are different reasons for major oil companies to work together in the ultra-deep water exploration. They also maintain relationships in joint ventures around the world and are probably not as JDZ or EEZ focused as most of the readers on this board.
The big oil companies all want oil and to make a profit but I doubt they would go out of there way to piss each other off in the JDZ or go to the extremes many here speculate on how to cheat a little minnow like ERHE out of their percentages.
There is no way Total or SNP would waist their time or energies to try and wait out a 6 person non-operator company that historically lived years with no cash, that is backed by not only a local Billionaire in SEO but a viable and profitable, industry related company in Chrome. To top it off, they are tightly politically tied to Nigeria (and beyond by the proof of the Chad deal).
Really people, stop dreaming about the boogey man in the closet. There is NO huge negotiating advantage of SNP or Total or anyone else for that matter as it relates to ERHE's cash flow or reserves. ERHE is way too small to even care about for these operators.
It is all about allocating resources worldwide to the highest probable locations and this takes time and planning. And I doubt they could give a care about what ERHE is doing or not doing with $10 million dollars or how long they could make that last.
umbra, well stated.
In addition to your comments, I am a firm believer in "what you seek, you will find".
It's like a little golden nugget sitting in the 10Q which gives extreme confidence in future share price appreciation by the management team that actually knows what is going on behind the scenes. It even has a relatively short time frame given the oil exploration business and considering the African time to boot. To top it off, it cost the shareholders $0 unless there is a 800% price appreciation from this point. Even with that, there is a cap to the cost (4,750,000 shares) and the cost is $0 in cash.
There are no guarantees in the investment world and this, by no means, guarantees an 800% return from here, but I can not think of a more positive statement by the management team & the board without actually saying something illegal. This is close to in line with the management team saying "we have an offer on the table for a .75 buyout but we don't feel this is high enough to take seriously so we will not be presenting it to the shareholders for a vote".
Mid, I agree that accomplishments are positives. Believe me when I say, I would like to see successful accomplishments as much as you.
Whether you are willing to admit this or not, this option award is not only a positive, it does exactly what you were so loudly demanding just a few short months ago. This ties both the board and the company officers to share price appreciation. And to think, a 800% appreciation from here before the options are worth anything. Do you think ERHE can get this 800% increase without actually a substantial accomplishment? The bigger question for you is will you admit it when they do?
Petemantx,
I want to respond to your direct concerns regarding ERHE and fund raising. First, I will be the first to admit that I do NOT know how exactly ERHE will come up with funds. I will state some obvious options and then give you my opinion on what I feel is the most likely scenario.
Option A). Massive dilution at the current share price with no new news released to support/prop-up or advance the share price prior to moving forward with this strategy. Limitation - They currently have 738,933,854 shares outstanding out of 950,000,000 authorized. This puts them at about 200,000,000 shares remaining (given some are locked up in stock options such as this new 4,750,000 in the 10-Q). Realistically, this option has a current maximum of less than $20 million assuming a .10 price (which I think there is no way it would hold if they moved forward with this). Keep in mind, to use the shelf registration with these 200 million shares, it would raise a lot less because you have to provide 1) a deal to the current share price for the block investors; and 2) most likely a 2 year option for an equal number of shares sold like they did in the first shelf placement. This would bring down the total available to 100 million shares at a price much lower than .10. IMHO - this option is so unlikely (I would give it a 1% or less of a chance of happening), it is barely worth mentioning.
Option B). Similar to A above, the company can set a goal of using the shelf when the price hits a target such as .50 or $1.00. This would obviously need to happen AFTER very positive news to move the share price to these levels and hold. A quick side note here.... assuming a news event occurs and the price hits a target such as the above example, the original shelf participants would be holding their current options (I recall .27 strike price) in the money which would make a future shelf sell MUCH, MUCH easier. I strongly feel, the remain shelf is almost worthless unless ERHE can prove the original shelf to have made the venture capitalist money on the warrants. The clock is ticking on those warrants. That is another reason why I think something positive is going to happen within 2012.
Option C). Sell, bargain, exchange some of their current holdings. They have rights to 6 blocks in the JDZ; 4 blocks of the EEZ; and now Chad holdings. The current market sentiment is very down right now but Total is drilling in block 1 within the next quarter. Not only do I have more confidence in Total striking more oil than both Chev. and Sinopec, they are drilling after a known 150 ft pay of the original hole. I think many people will be surprised by the success of the next Total hole poked. I would give the odds way higher than what is currently priced in which is about zero. IMHO, ERHE could wait 6 months for any number of positive events to occur but primarily the Total results, and the JDZ assets go way up in value (again, they are priced at near zero right now). At this point, they won't have to give up nearly as much to get needed capital in return.
Option D). From 1997 - 2004, ERHE had ZERO cash. Chrome supported their cash flow needs. If push comes to shove, I would bet Chrome would support ERHE again since they own 330 million shares. Keep in mind, I feel this is more likely (and a smarter choice) than option A above but if ERHE got to this point, I do think they drastically change their needs. They would likely default on the CHAD deal if they couldn't find a partner to carry them and similarly default on other things such as JDZ blocks 5, 6 and 9 where they would owe signature bonuses. They could minimize staff to the bones and hold out for any one of their remaining assets to pay off. Again, I don't put much odds in this happening but way more likely than the massive dilution that many think as ERHE's only option.
Option E). A straight out bank loan. Not like businesses have never gone into debt before. People seem to ignore this option. Granted, we may be currently down on the ERHE assets as proven in the share price, but their assets may still hold value as collateral. Especially to some country like China. Maybe, they go in deeper with their Chinese partners and get some kind of cash loan. They may have to use more of Offor's political clout for this but I don't think this is as unlikely as many think.
My final thoughts on this subject. Anyone who has been in ERHE for longer than 2 years has experienced how volatile the share price can be. It can rocket up in one to two weeks on any big assumed news. It can also drift down and stay down on long periods of silence, business delays, and or poor drilling results. Anything can happen. It is evident to me that the relatively few people they have on staff at ERHE, there is a lot in play. I feel strongly that these people know more than me on the likelihood for success in any one of their ventures. They have their careers, their income, and their reputation riding on their decisions and the outcome. The CEO has even put his own "skin" in the game several months ago at like .12 a share. The options just announced today are WORTHLESS without a 800% gain and these are incentives to keep the officers and board there. Until someone starts jumping ship, there are way too many actions pointing at a high likelihood of success.
I'm in! If I had more risk capital available right now, I would be more in.
Good luck all.
Little gem hidden in the 10Q which I take as very positive.
"On January 6, 2012, the Company granted 2-year stock options to the board of directors and officers totaling 4,750,000. These options have an exercise price of $0.20 per share but will vest only if the Company’s share price reaches $0.75 for a period one month."
What does this mean.... well, considering the current share price is about .09 and the exercise price for these 2-year options is .20 AND they will only be exercisable if the share price reaches and holds .75 for one month, this is an extremely confident sign that management expects a share price appreciation to at least .75 (and I would guess it will have to break $1 to hold at least .75 for a month).
Keep in mind that the company granted these to the board and officers which is intended to have value. So there is no point in granting something you know to be worthless. It also is a pretty strong sign that they don't plan on massive dilution as some people here speculate on as a scare tactic. Massive dilution would effect these stock options the same way it affects the common shareholder.
Something is going to happen this year......IMHO
Buffalo Trader, I agree with your perspective. My understanding was that the block 5 & 6 operators essentially fell through. Because of this ERHE's 15% kind of went into limbo and JDM tried the direct approach to off these blocks onto viable operators. In that process, they thought they could grab back the 15% of ERHE and have that to sweeten the offering to potential replacement operators. That is when ERHE said.. hold it! We are still in . . . with the lawsuit that likely would have held up in world court (IMHO).
Because of this, I think JDM has realized the errors of their ways and has only been shopping the 85% remaining portion to potential operators. The December notice I feel, confirms that ERHE's 15% is no longer at risk. It also sounds like JDM might be close to replacing the operator and that is the big question.
If they have, who is it (hopefully not Sinopec)? If so, has ERHE started talks with them regarding PSC or carry type discussions?
Side Fantasy.... Wouldn't it be cool if Total found interest in picking up the rest of 5 & 6 and then had more to go into the joint pool for blocks 1 - 6. Probably not as far fetched as some here will think......
If #9 holds true, this would be kind of bad news for ERHE. Block 6 of the JDZ, ERHE holds a 15% NOT bonus free. ERHE would have to come up with 15% of the signiture bonus.
On the positive side, we would be partnered with someone other than the chinese......
fyi, yes this is about the JDZ because they refer to the "dispute" which is actually ERHE's lawsuit against STP to maintain their rights.
Break even calculations considering warrants:
According to the filing:
ERHE will own 419,165 shares of new entity.
and 419,165 shares (of $1.50 warrants) for a 12 month period.
and 419,165 shares (of $2.00 warrants) for a 24 month period.
Breakeven point will be if the new share price hits between $2.24 adn $2.25 in the next 12 months for both sets of warrants to be in the money.
ie: @ $2.25
419165 X $2.25 = $943,121.25
419165 X (2.25 - 1.50) = $314.373.75
419165 X (2.25 - 2.00) = $104,791.25
Total = $1,362,286.25 Gain of $12,286.25 over investment.
According to the last sec filing, ERHE paid $1,350,000 for the 7.35% of exile. But if your calculations are correct and this holding is now worth $3,300,000 without considering the options, then ERHE made a pretty good investment.
If this is all true, Midtieroil, will you be retracting some of your comments and opinions of this management team? lol.
Correction - also according to the filing, they will own 419,165 shares of the new entity. Breakeven price of new entity would need to be around $3.22 per share (giving 0 value to the warrants)
I stand corrected. CNOOC is Total's partner in Akpo, not Sinopec.
Interesting side note I just noticed. Total is a 24% partner in Akpo and the operator. CNOOC is a 45% partner along with Petrobas(16%), NNPC(10%) and Sapetro(5%). It is nice to see that Total is willing to be the primary operator with such a small percentage. This tells me that they are open to partners with larger pockets than theirs.
In all my scenarios I have imagined in the past, I was always trying to come up with TOTAL ending up with the highest % in all JDZ blocks to be the operator but this shows it doesn't have to be the case.
Once again, this confirms the possibility of the "area wide" development of the JDZ being done with Total leading the way. Just another reason why I doubt Sinopec will walk on blocks 2 - 4.