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If you take a look at the volume of shares bought at one cent it's not just retail buyers buying. It's the convertible share holders reloading. They realized they can't drive the price any lower than one cent so they are now buying back the shares they sold at around a nickel.
This cycle will repeat over and over again. The stock price is effectively capped at or below their conversion price. They will defend the conversion price with every share they have.
Take a look at the volume spikes, both buying and selling. That is now the trading range for this stock. Traders look for opportunities just like this. Large buy volume at one cent and large sell volume at around a nickel.
This cycle will repeat itself until either the convertible contracts expire or good news causes the stock price to rise above their conversion price for a set period of time, usually 60 trading days.
Midtieroil knew exactly what he was doing when he sold around a nickel and bought around one cent, and he had the guts to tell everyone a couple of months in advance what he was going to do. There will be a lot of traders with their money jumping on the band wagon to join the party. These traders will make the task of defeating the conversion price that much more difficult.
This is what makes convertible financing so hated among the true longs. It makes a natural trading pattern for ERHC almost impossible to happen.
Hopefully this will help a few of you.
My Christmas desire for each of you is for you to do whatever you have to do to make sure those you love know and understand just how deeply you care for them.
From my family to yours, Merry Christmas.
bsk
I'm sorry to say I have completely lost track of what is going on with our little minnow. With that in mind this is what I think is going on...
IMO this is an all out effort to thwart the share price of any upward movement in the light of future good news on the drilling front. Their tactic is to try to discourage longs while they don't know what is actually going on. Don't panic. This was totally predictable to anyone who knows how convertible financing works. Don't jump to any erroneous conclusions on how the prospects look for the drilling program. The stock price is not reflecting any fundamental reason to plummet, it's all convertible related.
The reason it's called convertible financing is because the owners of the convertibles are interested in maintaining the interest on their money coming in for the entire length of the terms contained in the contract. They do this by shorting their future promised shares to keep the share price below whatever the conversion price is. When the stock price does meet the target price for the specified length of time stated in the contract, their game is over. They then sell the shares they contractually received to cover their short positions. So it is a zero sum game for them. They want keep collecting the interest payments as long as they can keep the game going.
Midtieroil knows what he is talking about.
It literally is a battle between the longs and the shorts. The convertible holders will sell and re-buy their shares over and over. They will defend the target price with every last share they have at their disposal. It's serious business for them because the interest rate they are receiving is usually a really good deal for them.
Again, I don't have any idea how the language reads on these convertibles but anyone wanting a good entry price has now got one. These prices aren't going to last.
My prediction is when good news hits the market the convertible game will be over. It's tough to maintain the stock price level above the target because usually no one knows what the actual target price is. You have to study at what price the shorts come out to figure out what price they are defending. I've seen convertible financing defeated once. A company TMR did it. When the convertible share owners ran out of shares to short the game was over for them. It was a sad deal when it was revealed the officers of the company were the owners of the convertible shares.
See y'all.
bsk
Thanks for this summary. ERHC has fallen off my radar screen for the last couple of years and haven't had a chance to keep up.
I wonder if you would mind answering a few questions to kind of catch me up a little on what is going on:
How did ERHC land the Kenya and Chad rights?
Does ERHC have any money left?
Did Total ever drill in Block 1?
It's hard for me to believe Balance Builder is gone.
Thanks.
>> Has your group held their shares?<<
I don't have a group. I still have all my shares, in fact I have added some. I have a long term view with all my investments. There are stocks my family has owned since the 1920's.
>>We do need some news to reduce the anxiety/hysteria/psychosis.<<
I consider the mess we are in a lack of leadership from the JMC. They have to start doing a better job enforcing their own rules. Right now the leadership is being slapped around by the operators. IMO no one is willing to stand up to them. Pardon my french but what the JMC needs is an asshole at the helm who doesn't mind pizzing off the operators.
>>I think that they will choose one of the plans to continue. How big is the chance of them coming to the conclusion that none of the game plans is worth persuing, after studying the tests for over a year?
10%? Or more? <<
I would consider it a gift from above if Addax and Sinopec quit the JDZ. This would clear the way for Total to come in and take over. However, IMO it's a given that blks 2-4 are going to get thoroughly explored before a decision is made to give them back to the JDZ.
The JDZ is sitting about 10 miles from a field that is producing about 225,000 bbls/day. In blk one oil has already been discovered. IMO it's just a question of time before commercial quantities of hydrocarbons are discovered in the rest of the JDZ.
With that being said, we have to realize we have some issues to deal with before the JDZ can become a world class field:
.....Nigeria and STP don't really know what they are doing. They have managed to run off world class drillers like Exxon, Chevron, Anadarko, Noble, Devon, Pioneer. We are left with second tier companies. The JMC is a confused mess. No one is providing the strong decisive leadership that is desperately needed right now.
.....Addax proved they are amatuers who aren't ready to play with the big boys. Hopefully their deep water drilling department was gutted and restaffed.
....Sinopec has the money to hire a world class staff but they too are inexperienced in deep water. No amount of money can replace experience. I think Sinopec can eventually get us to commercial but it's going to take longer and therefore will cost more money.
Total's involvement in blk-1 provides a real reason to hope. Since Sinopec and Total are already partners in Akpo, maybe that relationship will spill over into the JDZ.
None of this mess is ERHC's fault. Once SEO exited the stage the JDZ hasn't been the same.
If ERHC Energy Corporation is thinking about suing a poster on a message board because he called the CEO a liar, our problems are deeper than I thought.
bsk
Actually Julius, the amount of time the operators are taking is very typical of wells of this depth and magnitude. I think I'm pretty safe in assuming they ran every type of test they could think of once they reached the depth they wanted to achieve. Companies can spend up to a year studying a well before they decide what to do next.
Someone brought up that super computers are used now which is true. Operators know what is happening as it happens, but computers aren't of much use when you try to interpret the data and formulate a future plan of action. It takes very intelligent, very sharp, experienced oil executives to make decisions of that magnitude.
When the bits start turning again in the JDZ, there will be some very nervous engineers wondering and keeping their fingers crossed they made the right decisions. No one will know for sure until drilling results start coming in.
Bad results equals no job. Just ask whatshisname who is now living in Australia.
Once all the wells have been thoroughly studied then you have the daunting task of deciding how to exploit the entire JDZ as a consortium. This is no easy task. Two years isn't an uncommon amount of time. Sometimes companies don't act for 5 years. It is really complicated trying to figure out the best and most economical way to exploit your structures.
IMO you can take how long it took Total to bring Akpo on line then add two years. That is how long it will take blks 2-4 to start producing. Addax/Sinopec aren't as experienced as Total is.
This is just my opinion but I don't think Peter Ntephe or anybody else is playing games with the drilling information they are sharing with the shareholders. ERHC is being carried by Addax and Sinopec so I don't think they are in the loop as to what they are currently thinking. I wouldn't be one bit surprised if ERHC is as much in the dark as we are concerning the biogenic gas issue. IMO the operators are under no obligation to tell ERHC a darn thing. Now if ERHC was actually kicking in millions of bucks it would be a different story.
I'm just guessing but I think Addax and Sinopec are acting as one company in the JDZ. I don't think there are any of the first set of engineers left over from the first round. If the first round of drilling proved anything, it proved that only the best and most experienced engineers can handle the JDZ. I'm desperately hoping China's best and brightest are working at formulating a drilling plan. I don't think there's a snowballs chance in you know where that Addax/Sinopec will hand over the operatorship to Total. The best we can hope for is for Total to buy enough interests in blks 2-4 to be willing to offer their expertise.
I don't have an opinion on being listed on the AIM. Mr. Ntephe must have his reasons for listing on the AIM so all I can say is ....Go get em tiger.
I like the idea of getting some rights to marginal wells. I hope ERHC will hire the necessary talent to get the job done once the ball gets rolling.
I am glad to see Markgovols back posting. I never bought in for one second that he had devious motives behind his posting. Considering his circumstances I don't blame him one bit for selling his position. If he had just gone through a divorce he most likely really needed the money.
I hope each and every one of you enjoy this Christmas season.
bsk
>>I have a big hang up with the Aim listing. Could someone tell me how easy would it be for someone like Chrome or Starcrest to buy us out for $.30 a share, if we were listed there?? TIA<<
I am almost 1000% positive they would be in for a tussle if they decided to go that route. Chances are very high the buyout would be challenged on the grounds the buying party would benefit unfairly due to said party controlling both the buyers interests and the sellers interests. I'm probably wrong but I think the losing party has to pick of the legal fees of the winning party as well.
>>Logical?? Balance, I can think of nothing logical about lawyers running/ruining a oil company. lol.<<
I can't see Peter Ntephe (sp) being taken very seriously in the oil circles. For one thing he looks too soft for the job. Most CEO's and presidents I know are all battle hardened and they wear the pressures of the job in their faces. Our CEO looks a little on the pampered side IMO.
>>Would you say the Phase I drilling over the last year was mostly a waste of time and effort or will it prove worthwhile based on knowledge gained of the geology of the JDZ?<<
I wouldn't say the Phase I drilling was a total waste but I will say it could have been so much more. The bottom line Addax didn't have the money to do the job the way it should have done, and as we are now realizing, Addax was blowing sheiss up everyone's arses.
>>The movie referred to is Heartbreak Ridge, starring Clint Eastwood as Gunny Highway, from whence came the term "cluster f**k".<<
It's kind of ironic that the AMC channel is going to air Heartbreak Ridge next Saturday. What are the odds?
>>If your scenairo plays out, one additioinal thought comes to mind. That is an answer to a questoin that has had me puzzled - why was PN placed on the Board of Directors and at the same time is ERHE CEO? I've thought that this action was redundant and a poor use of the Board.<<
My thoughts are PN is where he is today not because of his leadership skills but because he is completely 100% loyal to SEO and will do anything he is told to do. It doesn't matter how foolish and imbecile it makes him appear to be. Employees like him would be chewed up and spit out in a real company but in this company he is prospering and making a pot load of money.
>>A move to AIM just makes it easier to screw the small investor who has few protections.<<
Yup. But until a worse case scenario plays out I'm not giving it much thought. My plate has more than enough sheiss on it already.
>>Question...I believe you mentioned ERHE "transferring to the AIM". please excuse my ignorance...did you mean "transfer to" as in pick up and move to...or did you mean "expand to" as in staying on OTCBB and also opening on the AIM? Small point perhaps but one I hope you'll be kind enough to clarify.<<
Who knows what will actually happen with this crew but as I understand it, the AIM entity was going to assume the role of the parent company. As such ERHC would be governed by English laws and not U.S. laws. I haven't spent a whole lot of time trying to figure out the whole AIM move because it hasn't happened yet. Once the move happens there will a whole lot more clarity on what is involved.
>>The next Game Changer we are seeing first hand (unfortunately ) is the BP thing in GOM. That will free up the drillships needed in the GOG. Sadly for the US. I would like to take a peek behind the curtain right now…to hear and see what is being said between SNP and Total.<<
The GOM will free up rigs and just as importantly, good solid oil men as well. The talent pool SNP will have to choose from will be rich with talent. The GOM is every bit as tricky, if not trickier, than the GOG. I still think Total is the best option but if SNP has to go on its own, I'm not that concerned anymore. They certainly have all the money and resources and intellectual talent at their disposal to do a superb job developing the JDZ.
>>I have been watching Equinox, Ophir, (B3) Conoil, Dangas ( B4) They don’t seem to be going away…<<
IMO these companies aren't going any where, especially the Chinese. There's a lot of bloviating going on.
Watch what they do, not what they say........the smell of biogenic gas fills the air.
bsk
>>According to information and documents compiled by Total, the two Akpo exploration wells drilled so far have found estimated reserves of 200 million barrels of crude and condensate in place.<<
http://www.highbeam.com/doc/1G1-67920173.html
We would have already heard and the crying long past if the numbers were less than 200 million barrels of oil and condensates. IMO the JDZ easily matches the initial Akpo results.
It's amazing Jeff Shrull is now in Australia. I'm in the camp that thinks he got his butt canned over the results of the JDZ drilling. It looks to me like he was more of a logistics guy rather than a drilling guy. The wells came in on time and on budget but didn't accomplish a whole heck of a lot.
Shrull reminds me of a movie I once saw. A supply officer was promoted to lead an attack on an island. When the time came to invade he was more concerned about the soldiers keeping track of their helmets than he was about the actual battle plans.
I was also disappointed to learn that Addax all along was being positioned for a buyout and not legitimately exploiting it's assets. It became obvious they didn't have near the cash they would need to have just to meet their minimum drilling obligations in all the blocks they had in their stable.
All the speculation about Addax drilling the JDZ blocks as cheaply as possible turned out to be exactly accurate. Going deep into the prospective structures would have been alot more costly than Addax was comfortable with. So they drilled the tops of the structures and moved on to the next site.
A lack of money still doesn't excuse Shrull. The very first drill encountered problems. His fate was probably decided right then. The apparent lack of usable results fell squarely on his shoulders.
I honestly believe the Phase 2 drilling program and beyond will go like clock work. I have no doubt SNP will throw as much money at this project as needed to prove up not only these structures, but several new ones as well. There are oil men all over the Gulf of Mexico that could drill these structures so I am optimistic the JDZ will be in good hands.
If I worked for SNP and was in charge of the drilling program in the JDZ, I would hire an entirely new team who was intimately acquainted with these types of structures.
I think the ERHC management team that is in power right now has the task of getting ERHC listed on the AIM and securing partners in the EEZ.
Once these tasks are completed and it becomes time for the Marginal Wells program to swing into gear, I expect this set of officers to be replaced by real oil men. If SEO holds true to form, he will bring in the management staff that is needed for the job at hand.
Presently, we need a team of lawyers and people that specialize in transferring to the AIM, but once that is completed and ERHC is ready to enter the next phase of its' existence, I for one look for a new team to be put in place.
If SNP becomes ERHC's partner in the EEZ, in my mind ERHC will be nothing more than a subsidiary of SNP.
Another major clue of SNP's intentions would be if this management team was kept and additional oil men were brought in. This would be a powerful hint that they were still needed for a possible buyout in the future.
It doesn't make a whole lot of sense to me that ERHC, with it's obvious limitations, is so dog determined to acquire some marginal fields. It does make sense if it's because they are acting on SNP's behalf. It could be that SNP is waiting to purchase ERHC until after they have acquired a stable of Nigerian marginal fields.
ERHC's move to the AIM doesn't make much sense either unless they know the only way SNP could purchase them is to get out of the US markets. SNP would have a much easier time dealing with England than they would with the US. Moving to the AIM because they can raise money more easily is laughable IMO.
Once the assets are proved up no one will give a sheiss which stock exchange the company is listed on.
This post and every other post I've ever written is JMO. I don't know any more than anyone else, and a lot less than some.
Thank you for all the PM's. I appreciate every single one of them. You DD hounds are the best.
bsk
DOES ANYBODY HERE WANT TO PULL MY FINGER?
BWAAAHAAAHAAAHAAA!!!!!
Here's what my friend Fishdog has to say. I've learned to respect everything he says:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49128414
I happen to agree with every word.
Here's another post by Miamidrift I agree with:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49280931
The replies are also worth reading.
I was dismayed to read the our leader thought the Chinese have been good partners so far. IMO he was either being a little disingenuous or his naivete is disheartening to say the least.
I'm also a little concerned that our management is trusting the Chinese to shoot straight with them by not having any representation in the room while the drilling results are determined. My concern is that the Chinese will put out any story they want about the results and our management will trust they are being 100% truthful.
Bad, bad, bad idea. Our definition of morality and their definition of morality don't really mesh.
Dan, Peter and anyone else in a leadership role, please don't take one thing they say at face value. Verify every word they say. If they are being nice to you I believe it's either because you have something they need or they haven't figured out how they are going to take advantage of you yet.
Your erasure of possible or probable oil findings reeks of Chinese intervention.
bsk
After thinking about your numbers I remember why I am stuck on 17,000 ft. At the time OBO-1 was drilled it was the opinion of this board that you added in an extra 5,000 ft of water to the total depth to reach the final well depth. Now the opinion is that water depth plus drilling depth equals total depth.
All my numbers are approximate and from memory with absolutely no research behind them.
Either way, my point remains the same.
OBO-1 was drilled differently than the other JDZ wells. 2 months compared to 1 month. Twice the cost, etc. It could be once TD was reached in blk-1, some diagonal stuff was done.
I don't know any of the exact details of any of the holes. There are only a few people on earth that do and they're not talking.
All I see are the general differences between the two drilling programs. They tell a very telling story imo.
The geology is the same. I am not going to believe that even though oil was found in blk-1 it's no where else to be found in the JDZ....
What's happened to ERHC the last few days is why only the operator should release information. You have conflicting statements from several different players, innocent statements taken the wrong way, upset shareholders threatening lawsuits, IR departments going nuts, leaks from sources, etc.
There's no doubt there is more to the story than what ERHC was allowed to share. It's sad that some shareholders capitulated based on incomplete information.
The bottom line is everyone involved needs to wait until Addax reveals their plans for phase 2. Nothing else matters.
bsk
Hey dat - For comparison purposes I wish I could put this post in chart form with Block-1 on one side of the page and Blocks 2-4 on the other side.
Here are some facts I want to bring to the table:
Chervron a super major vs Addax a smallish midtier company.
Deep pockets vs a tight exploration budget.
Unlimited technical resources vs limited technical resources.
OBO-1 approx 17,000 ft vs approx 15,000 ft for 2-4
OBO-1 60 days vs 30 days for 2-4
$60 million vs $30ish million per hole
OBO-1 cost an additional $30 million approximately and only went down an extra 2,000 feet, and it took somewhere around 30 more days to drill it.
Chevron can easily afford this type of exploratory well and they had the luxury of only having to drill one well in one block. Whenever the engineers hit a snag they had the very latest technology at their disposal to help navigate through it.
Even though Mr. Schrull (sp) and his staff are very capable, they can't possibly be expected to perform up to the level Chevron is capable of, simply because of the built in limitations of the company they work for.
Mr. Schrull decided, wisely imo, to drill 4 shallow wells instead of 2 deep, costly wells. It would have cost approx $30 million to drill the extra 2,000 ft and it would have added an extra month to each well. To say these structures are a tough drill is an understatement.
The stated purpose of this first phase of drilling was to get a peek at the geology and verify that their interpretation of the seismic was accurate. In other words it was a fact finding mission.
Guess what???? 5 holes - 5 hits. Overwhelming success. Congratulations!! What they set out to accomplish they accomplished. It was anything but easy. There are only a few on this board that knows what it's like to spend millions on a hole, get down to total depth and all you find there is a bunch of rocks. No hydrocarbons within miles. It wipes me out emotionally, physically, and it puts a major dent in the ol wallet.
The info they learned from these wells will be applied the next time they go in to these structures. They will know exactly what they are targeting and they will know what to expect when they get down there. Sinopec will be funding the next round so we can expect the latest tech to be available. I believe the next rig will be around a lot longer than 120 days. No more cramming as much as possible into a tiny time frame.
I don't think anything new was revealed at the SHM on Tuesday. The only thing I learned was that these wells were pretty darn shallow. It's hard for me to understand the sell off. I'm as excited as I can be over what's ahead for this company.
Do you want to know what makes me nuts? This is what drives me nuts:
http://earthquake.usgs.gov/earthquakes/recenteqsww/
There are between 300 and 1000 measurable, 2.5 or greater earthquakes per week. I've been told the earth shifts about 500,000 times a year. The good thing for ERHC is the Gulf of Guinea seems to be pretty stable at the moment.
I am so sorry to see Walldog moving on. He is a wealth of ERHC knowlege. I hope he has a long, wonderful retirement.
bsk
Can someone tell me at what approximate price the short interest started? I would like to know what the longs are up against.
To overcome the convertible black hole the fundamentals are going to have to be extreeemely bullish. I have seen it happen several times before so it's not impossible.
Downsideup is right. There is a lot of shorting going on by the holders of the convertibles. He's also right that they are probably high officers of the company. They don't want the share price to exceed their conversion price for more than say about 90 days or so. If it does exceed that limit they will be forced to convert and they will lose their position. To them that would mean no more interest payments, something they will try to defend because they want to keep the interest payments coming in.
Their goal is to short the shares down to below the conversion price, then buy back the shares they sold.
To me it looks like the conversion price has already been exceeded so the war with the shorts has already begun. When they have to short more shares than what they will collect upon conversion, they will give up and let it convert. They will use the shares they will receive from the conversion to cover their short positions.
To them it's a zero sum game so the only thing they would lose is their future interest payments. It's actually a very sweet deal. Lot's of people make their living in exactly this way.
As an outsider looking into these convertibles for the first time, it won't take all that much money to break their stranglehold on the share price. They must be getting pretty nervous by now.
Where I disagree with Downsideup is that this is most likely nothing more than a financial deal. All the lenders want to do is maximize their investment. When convertibles are involved you must expect a certain level of shorting. It has nothing to do with their opinion of the fundamentals of the company. Some of them may not know a thing about the company. Their main focus is protecting their interest income.
Is anyone actually crazy enough to naked short this company? I don't think so. Not with the chart this stock has. Anyone trying to put forth the argument that naked shorting is going on is IMO being disingenuous.
Has Downsideup admitted to being one of the convertible holders?
When the list of convertible holders becomes public you will be surprised at who is actually shorting this stock.
I apologize if this has been discussed ad naseum before.
bsk
Thank you Fishdog for your hard work in digging out this very valuable information:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=47856816
>>Thought for the evening: 1)There seems to be a big rush to get the DP back into the JDZ for some unscheduled follow-up drilling. Immediately, if not sooner. 2)Total, the operator of the Akpo field, is in negotations to buy out Chevron's interest in Bl 1 where there has only been one well drilled, reported to be non-commercial. 3)Bl 1 is adjacent to, and on the Akpo geologic trend with, Bl 4 where there have been several very provocative wells drilled which have probably proven up a commercial discovery.<<
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=47438065
>>Like similar fields, Akpo’s reservoirs are located offshore an immense oil and gas-rich river delta, in this case the Niger River Delta. But they differ in one important aspect: they are much warmer than was the case for our earlier Gulf of Guinea deepwater developments, and reservoir pressures are much higher. Temperatures reach 112°C at their hottest and the pressure is 700 bar at its highest. These conditions account for the fact that the hydrocarbons trapped inside them is so light. This "critical fluid" separates into condensate and gas when extracted from the well."
That certainly describes Bl4. With Total's expertise in dealing with deepwater HT/HP conditions, and soon to be operating right next door and on trend, it makes you wonder. Not 'if' but 'when'.<<
Total's potential entry into the JDZ has completely altered the playing field. IMO this game changer has SEO's fingerprints all over it. Just as he brought STP and Nigeria to the table, he is now setting up the consortium that will develop the JDZ. I think it is way beyond coincidental that once it became painfully obvious Addax couldn't get the job done in the JDZ that Total just magically appeared on the scene. Getting Chevron, Sinopec, and Total to sit at the same table and behave themselves is a miracle.
The temperatures and pressures the Pathfinder encountered in Kina must have been a real eye opener for Addax and everyone else involved. The "incident" quickly taught them that they were unprepared for what they encountered and realized the JDZ was an even greater engineering nightmare than what they thought. It's no wonder the drilling depths were so sporadic, they didn't dare go too far into the structure for fear of causing another "incident". This is why I don't put much value into the leaks of what was found. IMO until the structures are reentered any announced drilling results will be incomplete.
With the drilling realities staring them in the face, it's not surprising Chevron is willing to say no thank you. It's not that they don't have the skill to pull off a full development of the JDZ, it's more a decision of not wanting to expend the resources to do it. This very nicely answers why Chevron let blk-1 sit idle after OBO-1 was drilled. It also explains why OBO-1 took 60 days to drill. They had a monster on their hands and it caught them by surprise.
It is a very natural fit for Total to step in and take the reins. They are the only company in the GoG that has dealt with the challenges the JDZ geology presents and they have an infrastructure design that has proven to be workable.
I don't think I am going too far out on a limb predicting that these developments are what is causing the delay in announcing the Phase 2 development plan. I am more than content to wait to see what transpires from the negotiations that are taking place.
As an outsider looking in, it seems logical to expect Total wanting a motivation to develop the JDZ. They are going to need more than just blk-1 interests, they are going to have to have a stake in the other blocks as well.
Is ERHC the answer to that little dilemma? Unfortunately this story will unfold one step at a time. Before ERHC comes into play Total will probably want to see the blocks reentered one more time.
bsk
I doubt Sinopec goes after any more percentages in the JDZ blocks 1-4. If they did it would be an ultra-bullish sign. It would mean Sinopec is comfortable with the raised risk level owning ERHC outright would bring. The only other scenario would be if SNP used ERHC's percentages as a bargaining chip with Total.
What a difference a week makes. Last week I was wondering if CVX was going to try to make a play for ERHC, now I'm wondering the same thing about Total. If Total does try to buy out ERHC it means they have every intention of teaming up with SNP. Once the ink dries on their purchase of block 1 rights I think we will start reading about the possible Total buyout of ERHC. One very important fact to remember is Sinopec/Addax needs Total a lot more than Total needs them.
I'm in the camp that believes Total wasn't interested in blk-1 until after the drilling was done in blks 2-4. I say this because the price of blk-1 went up 50% after the drilling was done. The fact that Total is still in negotiations for blk-1 is a very very good development for ERHC. The writing on the wall is that the JDZ has commercial quantities of something. My guess is it's awash in natty and condensates, with a very respectable quantity of oil.
Someone posted that the EEZ rights might be treated separately from the JDZ rights, meaning that just because ERHC unloads the JDZ to Total for instance, doesn't necessarily mean the EEZ rights will be included in the deal. Right now it looks like STP wants ERHC to team up with the Lusaphone group to develop the EEZ. That's a very smart move on STP's part. More than likely they believe ERHC will be eventually taken out by one of their Portuguese partners. We'll see.
There are way too many posters on this board who think they have the right to take a potshot at anybody they choose to for any reason. If you don't have your opinion out there for everyone to read, you don't have any right to belittle someone else's opinion. If you do disagree with a fellow board member that's fine, but you need to offer up what you're thinking at the same time.
If you aren't willing to offer up your own opinion on the matter, please respect your fellow board members and stay on the sideline and keep quiet. No one wants to read your whining and crying.
It's natural for posters that are offering their opinions on something to disagree from time to time. If things get a little heated between them so be it. Stating their convictions with passion shows they really believe in the position they are trying to support. I have nothing but respect for each participant no matter if I agree with them or not.
What is disgusting is when the people on the sidelines who don't have the guts to get into the discussion start taking their little ankle biting potshots at the players. These posters prove they are just little people who aren't to be taken seriously. I think those are the posts that should be deleted immediately.
I hope the moderators don't mind if I name some names....
If you are going to call a poster "bashdog", have the guts to tell us why.
If you don't agree with Balance Builder's dot connecting, that's great, you're entitled to your own opinion. Before you tell him he's out in left field have the guts to put your dot connecting out there so we can judge your scenario as well. You'll soon learn it's not easy doing what he makes look so easy.
If you don't like Markgovols "updates", before you start snipping at him let's hear what your phone calls produced. If you're not willing to verify information like he does, don't drag him through the mud or criticize his hard work. If you think he posts what he does for dishonest reasons, do us all a favor and back up your charges with some verifiable facts. What he does for us is hard work, he doesn't deserve to have his character assaulted for his efforts.
All the needless sniping at the ERHC management we did caused them to go into silent mode. Can't say as I blame them.
bsk
>>What if Danagas no longer sees the potential for gas in the structure and decides that they no longer want to participate in any further of the costs?<<
A. That's not happening.
B. They sell their interests or can just forfeit them back to the host country. The JMC has a pretty big stick to make sure all parties behave.
>>logic would lead me to believe that if you are looking for gas and oil, that you would drill to whatever depth needed in order to achieve these goals.<<
Smaller companies could then be forced into bankruptcy by the operator if this were the case. Then the operator could pick up additional interests for almost nothing.
>>If Dana Gas does not agree to the additional cost of drilling 1000 more feet would they still share in the proceeds if Addax hits a significant and commercial Net pay zone within that additional 1000 FT?<<
Production Share Agreements are iron clad. Addax would have no defense and would be stripped naked by Danagas and the JMC if they were to try to claim right to the added pay zone.
The contracts and subsequent negotiations the partners enter into with one another are usually pretty standard and straight forward. I haven't seen the contract between the JMC and the operator but it probably spells out in very specific detail what the contract between them and the partners must contain.
I also am guessing that a contract between the JMC and all partners was signed that spells out what is expected of the partners. Nothing is left to chance. Good behavior isn't just assumed it will happen, it is contractually assured.
Once all the contracts are signed by each participant with the JMC, they are vigorously enforced.
Now that Phase 1 is over an agreement has to be reached how to procede into Phase 2. This is probably where the delays are coming from, not that Sinopec is keeping results secret for sinister reasons.
If Danagas doesn't want to sign a contract to participate in Phase 2 that is their right. The decision they have to make (as does each particiant) is if the risk/reward is worth the money they will fork out. Before contracts are signed any one can walk away by informing the JMC of their intentions. The JMC would then seize their percentages and put them on the market again.
FWIW I think Danagas will continue to participate in block 4. I would I if I were them.
Talking about the contracts between the participants is something that can't be done properly on a message board. I am speaking in very general terms about a document that every word it contains is meticulously studied. If someone familiar with contract law wants to take on the issue feel free.
I don't feel like I did a very good job explaining the contracts but I have run out of time.
See y'all.
If I could give each person reading this one piece of advice it would be to realize the process has just started in the JDZ. Don't let anyone cause you take your eyes off the prize. Eventually billions of dollars will be spent in the JDZ because it will prove to be just as prolific as Akpo. It's just going to take a little longer because our operator and partners are a little green around the ears.
bsk
Here's my last post on this subject.....
Once a drilling plan has been approved by the JMC, the operator and each partner then enters into contract negotiatons with the intent to specify what the costs will be and how much money each stakeholder will be responsible to kick in.
If Danagas for instance has 10% of block 4, Addax will formally present the drilling plan with all it's costs to them for approval. If Danagas has an issue with what Addax has presented, they have dialog with each other until they come into agreement. They will do this for each and every detail of the well.
Once that process is completed Danagas will know what their 10% of the drilling expenses will cost them. In the present case it was about $6 million. Danagas then doesn't just write out a check from petty cash to cover their share. They have to write it into their next budget for the next fiscal year.
This process is why it takes about 2 years to carry out a drilling plan.
Addax and ERHC entered into these same negotiations, even though Addax was obligated to pay ERHC's share of the costs.
Operators wouldn't ever consider drilling anything other than the approved drilling plan even with a cost overrun clause built into the contract. First and formost the JMC would have a hissy fit and would have every right to declare their contract with the operator null and void. If Addax did decide to risk the wrath of the host country(s) and on their own decided to go an extra thousand feet down for example, Danagas is under no obligation to pay the the extra 10% of the costs. Addax would eat the cost of the extra 1000 feet themselves.
If Addax were to submit a bill to Danagas for 10% of the extra costs, Danagas would get a good belly laugh out of it. They would tell Addax they never agreed to the extra costs.
If Addax were to formally approach the JMC with a new drilling plan, the JMC would have to take it under consideration. The JMC engineers would have to study the changes to determine the benefits to the JMC. This would happen in African time. Once they approved the new plan they would enter in to a new contract with Addax.
Addax would then formally approach Danagas with the material changes to the drilling plan. The existing contract between them is now in jeopardy of becoming null and void. Each company would demand to start over from the beginning, especially if the costs were to increase substantially. A new contract between Addax and Danagas means a new budget item for next years budget.
POOF!!! YOU HAVE AN EXTA YEAR ADDED ON TO THE TIMELINE!!!
This is a very simplified version of what happens.
I don't mind explaining details of my posts if you are really interested in knowing how or why I said what I said. It really irritates me when I have to explain things to stupid people/ankle biters who don't have a clue what they're talking about.
bsk
The drilling plan was submitted to the JMC for approval at least a year prior to Addax being bought by Sinopec. It would have delayed the drilling by at least a year to go back and scrap the old plan and replace it with a new one. So even though Addax had access to Sinopec's bank account while the drilling program was ongoing, at the time money management was a real issue.
Hey gordiek - I've never been to Grantsburg but I have family right across the border in Mora. Once every few years I get this irresistible urge to go back to my roots near Brainerd. As a White Earth Chippewa I feel most at home when I travel through northern MN and WI. When my mom was alive she would tell me that wherever I was in the world I still belonged to the land around White Earth. The scary thing is I'm starting to understand what she was talking about.
Sam Bradford is up and throwing again so my pipe dream of him becoming a Viking is fading fast. I was hoping it would take him longer to heal so his stock would drop but what I hear his recovery is ahead of schedule. I'm just now getting past that d@#% interception Favre threw.
Danagas is a regional company primarily located in the Middle East and northern Africa. They don't have much of a presence in the GoG area so it's understandable they only dedicated one brief paragraph to the JDZ. It was poorly written in the fact they didn't elaborate what the geology of the area is and that the goals of the operators were more than met with each of these wells.
What you need to keep in mind is that the JDZ shares the same geology as Akpo, their billion barrel neighbor to the north. There isn't a single well in Akpo that would be considered to be a commercial find in and of itself. Instead, Akpo is defined by the sum of it's parts, not by each individual well. So when Danagas stated that each JDZ well by itself is non-commercial, they stated a fact. It's what they didn't state that makes their presentation misleading.
If you were to go back and research my posting history you will see I wasn't excited at all when Addax took over for Pioneer. I was pretty disappointed Anadarko didn't get blk 4 and I didn't like Sinopec getting blk 2.
There were 2 reasons I wasn't all that enamored with Addax: They didn't have the expertise to drill in the deep water or handle the geology and they didn't have the money to bring the JDZ to production on their own. Too bad Addax cut their teeth on Kina, their best prospect. Hopefully the blowout or whatever the problem was didn't allow saltwater in to damage the structure.
I'm not at all convinced Addax can successfully develop the JDZ without the help of Chevron. To get maximum production the JDZ needs someone like a Chevron to take over the engineering. It's a good thing Sinopec and Chevron have a history of cooperating with each other.
A lot has been written about Addax just drilling the tops of the structures. The reason why that is what happened is Addax didn't have the funds to drill as deep as they needed to go. They had a difficult decision to make and they opted for the extra well instead of drilling them down a few more thousand feet. IMO they weren't looking to prove up much of anything with these holes because they drilled just deep enough to get a real good look at what is down there.
The next phase will be funded by Sinopec so there's no reason why the holes won't at least match OBO-1 depth. Hopefully Chevron will be involved by then.
My heartfelt thanks go out to Fishdog, Kobiashi, Balance Builder and Markgovols. Over the years your wisdom, forward thinking and hard work have been very appreciated. Please ignore the ankle biters.
bsk
You guys are a tough crowd.
Tryoty I was trying to be funny. Humor is hard to convey sometimes. I actually don't consider myself to be an expert at anything. I manage a few companies on three different continents so I don't have much time nor do I possess the expertise to get involved in the day to day technical decisions. I have people working for me that are far more intelligent than I could ever hope to be.
As far as me using this message board for my own sordid gains....I don't have the time to do that. It wouldn't do me much good to try to trade in and out to gain a few free shares. I have no intention of selling my shares until the volume is at least 5 million per day or they all get bought at once.
About a year ago I let some idiot get under my skin a little bit and in the process I wrote how many shares I own. The number has stayed the same, I haven't been a buyer since. I did my best to take advantage of the plummeting share price last year. Scroll down to the bottom of the post.........
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=34860384
As I said......trading or trying to influence the day to day share price doesn't even enter my thinking.
As far as the other questions posed to me privately......there are far more knowledgeable posters on this board than I am. I haven't spent the time studying this company like several of the frequent posters have. I freely admit I'm not nearly as qualified to answer them as they are...
In one of the first posts I ever wrote here or on RB, I explained how I choose one company to follow for entertainment purposes. It's good stress relief for me. PGO (now PGS) was the company before this one. Some of you know me from that message board. I do have to say that ERHC puts PGO in the shade as far as a story stock. Unfortunately ERHC will be my last small company I am going to invest in and keep up with.
What I admire about so many of you is that you are willing to take risks that I don't have the fortitude to take. Like so many of you here...I wouldn't be here if I didn't think I was going to make a potload of money.
NWTF.....If you are out there...I think the Hawkeyes have a good chance to beat Georgia Tech.
See y'all.
bsk
Sinopec will release their information when they are finished analyzing their data. I am hoping that they have such a mountain of data it will take months.
The STP EEZ auction won't have any bearing on when the release date is. If I remember right the JDZ is what...about 30 miles away from the nearest STP block? There's a fault line between them and it's a block that more than likely will not go too high in the pecking order.
The reason operators insist on non-disclosure clauses from their partners is actually pretty simple....All the partners such as ERHC are getting the current drilling data but unless they all can interpret it acurately they will inevitably start releasing information that isn't 100% accurate.
The mess inaccurate information would create would be nightmarish by itself but it's the resulting legal entanglements and credibility destruction that would cause the real damage.
It's so much easier to just let the operators control the flow of information because it will be accurate and reliable. Accurate and reliable information is what the industry demands and it is what us stock speculators use to make our decisions on where to put our money.
If someone could prove that Sinopec delayed the release of contractually required information for their own private gain, they would have a very attractive looking lawsuit.
See y'all.
bsk
If the JDZ is deemed to be worth developing it will be an extensive and complicated project. If it took 42 holes to exploit Akpo we may be looking at 100 holes to develop the JDZ. It is way too early in the game to figure out how many barrels of oil this or that well may produce. They are just now in the top of the first of a 9 inning game.
So far there have been 6 exploratory drills, 5 of which are new. It's very evident that the purpose of these 5 wells is strictly information gathering. None of them can be used for production later on so don't get excited when you read that they have been abandoned. I fully expect each of these holes to be plugged and abandoned when they are done with them, but due to the tremendous pressures they have encountered the challenge for them will be to plug them safely and not compromise the resevoirs in doing so.
The information that will be released in the near future will be sketchy at best simply because Addax wouldn't dare release information to the public that in the future may prove to be false. Addax may release feet of net pay but that figure won't reveal the size of the find or the volume of hydrocarbons that can ultimately be produced. They may release something about finding gas in block 2, or gas and oil in block 4 etc. but it will be nothing specific.
They simpy don't know yet. It will take many many more holes to determine the type of information that you all want to hear.
I don't think anybody would have liked what they read if the results of drilling were released in December. We would have been reading how every hole was a dud and they were all plugged and abandoned.
Instead we are reading about how they have to go back in and do more testing. That's a good thing. It means they liked what they found. It would really be a good thing if they didn't release anything for several months. The longer they wait to release information the more exact that information will be.
I will be excited if they publish that they are going to run more seismic. That means they want a closer look at some target prospects so they can study in fine detail what's down there. Will they run some 4D??....you live for that!
Politicians can say anything they want to about their own prospects. The problem with this is their information isn't very reliable because they only know partial information. Leaks aren't much more reliable because the sources don't know the whole story either. The only reliable source of information is what is put out by Addax/Sinopec.
Since Addax and Sinopec are the operators they are held legally liable for what they release to the public, so they will only release information that is absolutely, 100% provable. Since not much of anything has been proven yet they aren't going to risk a massive lawsuit by spilling their guts on what they think is down there.
At this stage in the game the best news us speculators can hope for is that the operators are going to proceed to Phase Two. Nothing else will mean all that much.
I appreciate the efforts of Peter Ntephe. He is going way beyond the extra mile in trying to keep us stock speculators informed.
I'm just playing around with the bold and color features. I wish purple was available.
I hope the Vikings can get Sam Bradford in the draft. He could be groomed under Favre for a year and then take over.
Happy New Year.
bsk
My sincere, heart felt condolences go out to Fishdog and Top Shelf as they struggle with all the mixed emotions stirring around inside of them right now. Unfortunately death is a part of life and each of us has no choice but to learn how to deal with the finality death brings in our own individual way. There is no magic formula, each one of us is different. I have chosen to embrace each memory I have of my passed loved ones, both good and bad, the happy and the sad. I've chosen this path because I want to remember all of what that person meant to me, how they affected me both in life and in death, and how they helped shape me into to person I now am. Time has taken much of the sting away and my memories have faded some, but the void they left in my heart will probably always be with me. I wouldn't have it any other way.
IMO SEO is in the loop that receives all the information that is released. He is probably getting it straight from the Chinese. It's fairly common for all major stakeholders to receive this information.
I have come to the conclusion that the JDZ is an extention of the Akpo field. The one common denominator is the tremendous pressure each field has. I have learned over the years the best way to deal with this kind of pressure is to avoid it as much as you can. This could account for the short drilling going on. I think Kownski is right about them just drilling into the tops of the traps. Next round they will probably drill down the side and angle in to their target. That will be tricky to say the least.
I don't really know or want to know the details of the disagreement between 2 of the top posters on this board. I will say this though....
Anyone can hold a grudge. It's easy to do.
Anyone can be negative and find fault. It's easy.
Anyone can get angry. It's a basic human emotion.
Anyone can give in to their emotions and tell another to F off.
Anyone can be condescending and not care about another's feelings.
Anyone can choose to be offended and just walk away....This rejection is the cruelest of behaviors.
HOWEVER.............
The people that live that way are those that are very forgettable. Once they are gone they are quickly forgotten. Those people are tolerated but never cherished.
This board will not be the same without them. I for one will miss them both. Hopefully they will find it within themselves to choose to forgive everyone of everything and come on back. If they choose not to come back, we will all be a little bit poorer as a result, most of all them.
I am guardedly optimistic about the marginal fields program going on with our little minnow right now. I'm still trying to process it all but I have a feeling this is for real. I also hope our current officers will find it expedient to bring in a person or a team of experienced people who know the area they want to operate in. If there really are 200 new fields ready to open up I can understand their excitement.
Being successful in the oil biz isn't easy. If it was everyone would be doing it. It's more of an art than a science. I am desperately hoping our officers realize this. There is no shame in not knowing the business, the shame comes from not admitting it and failing as a result. There are people's hard earned money at stake here.
bsk
The crew that comes with the ship runs the rig. All the actual drilling decisions are made by the petro engineers. The crew chief will set the bit just as he is instructed.
I don't know of any company that would trust all their drilling decisions to a rig crew. It's the engineers job to be intimately familiar with the geology and deal with any problems that will inevitably arise.
The team of engineers CVX could assemble would make the team Addax could assemble look like a bunch of amatuers.
Alot has been made of J Schrull being hired away from CVX and the team he brought with him. I'm sure Mr. Schrull would be the first to tell you he's not near the genius he used to be when he had the huge resources of CVX behind him.
I'm sure J Schrull and his staff are good, and maybe they did drill over 2 miles in 30 days. I have my doubts but we'll see.
bsk
>>bsk2007 However DP is a much more advance rig then the one used by CVX<<
I agree it is somewhat more advanced but it's not much faster. The Pathfinder can get the next pipe in position faster and may have a more powerful engine used to turn the bit.
Once you are down drilling through the crud these advantages aren't that great because once you get to where you want to be, you don't drill full bore, you tend to be more cautious and therefore slower.
You can shear off every bolt holding your rig together if you don't watch it.
My understanding is that the advancements were in the computer software area more than the physical aspects.
I am open to be proven wrong since I've never had a reason to do much research on them.
bsk
>>my as well just say they are trying to underplay the JDZ at this point..If that is true<<
RTK....no one knows for sure what is happening. Kownski knows his stuff so I have to consider what he says to be possible.
It is possible the Chinese went down a lot deeper in blk-2 than what Addax is doing in their blocks.
A very real possibility is that Addax is out of their comfort zone going down much more than a mile. OBO-1 went down 2 or more miles.
The length of time Addax is spending on each prospect tells me that they are limiting their depth.
Why? I don't know for sure.
bsk
>>$600 000 per day willfully spent to only scratch the top of the dome ????? Good one !!!!! Now you want to tell us another work of fiction !<<
Well emdyal...I wouldn't have wasted my time if I didn't think this was a viable explanation of what is happening.
The Obo-1 took roughly 60 days and they went down about 17,000 feet.
These wells in the same geology are only taking roughly 30 days. Block-3 was about 3 weeks.
If CVX took 60 days to drill ~17,000 feet, I would expect a company that has never drilled that deep to take at least as long as them, wouldn't you?
It is very feasible that Addax is only going down to the top of the traps considering the length of time they are spending on each prospect.
My eighth grade daughter figured this out weeks ago.
bsk
>>I still think you are overlooking one very important thing.
Every drill site map that I've seen shows them drilling into the very top of these traps<<
I've got a few reasons, (guesses really), why Addax and Sinopec are stopping at the top of these prospects instead of drilling down to the fat pay zones we can all see on the seismic:
....Their goal in this phase is to only drill down as far as they have to go, to prove that their interpretation of the seismic is actually correct.
....Drilling is uncommonly complicated in this type of layered geology so they are going to let someone else with more experience drill down to where the mother lode of hydrocarbons are located. I'm pretty sure both companies are well aware of their limitations in a deep water environment.
....Attic oil is all they needed to prove to Chevron, Petrobras, etc. that the blocks are worth continuing to explore.
....They drilled far enough down to see what gas looks like, what oil looks like and what water looks like. Hopefully they will be able to avoid water in the next cycle of drilling.
I have a sneaky suspicion water is the reason the Lemba prospect was cut short.
I would like to stress that a find that is predominantly gas or predominantly oil doesn't mean much at this early stage of the process. This is especially true if they have only scratched the tops of these domes.
I'm in the camp that believes if oil gushers were found that the STP'ers would be singing like a canary.
We'll see. Time will tell.
bsk
>>The current drilling in JDZ by Addax and Sinopec has hit three gas rather than oil prospects - each very big though<<
That's interesting. I just left China last week. Among other things I was told they didn't know what they had in the JDZ yet.
I do know that going in Addax expected to hit a lot of gas. It's just the nature of the GoG. Akpo is full of gas, so is the Jubilee.
Just because they hit gas doesn't mean they haven't hit oil also. Every well in the GoG has gas in it, it's just the nature of the beast.
Addax/Sinopec will learn from these drills and will recalibrate their seismic interpretation. Everyone involved expects a lot better accuracy in Phase II.
IMO the hole in blk-3 was modified based on what they learned in the first two drills. Drills four and five will be alot more precise. I expect them to have some nice finds in holes 4 and 5.
Is it just my imagination or do I remember reading about huge gas finds when exploration first started in the Jubilee?
bsk
The value of the dollar is weakening so the price of commodities and almost everythng else is rising. It has nothing to do with supply and demand. Diamonds, platinum, gold, silver, stocks, you name it. They are all rising on dollar weakness.
The bottom line is it takes more dollars to buy the same value.
A lot of investors missed the bottom of the market plunge because they were worried about how expensive stocks were compared to earnings. They didn't factor in the weakening of the dollar.
If somehow the dumb $%&@'s running the Fed and Treasury can figure out how to raise the value of our clown buck you will then see the price of commodities come down.
Not much of a chance of that happening. They can't do it through interest rates any longer. There is no way our current policy of printing money with total disregard of the consequences can turn out well. It's a disaster waiting to happen.
IMO ERHC will be around for a while if the entire company isn't sold after drilling results are known. I can't see the wisdom of selling the JDZ but keeping the EEZ rights. Why not just keep everything including the JDZ? It's not costing ERHC a penny to stay in the JDZ.
Why sell the JDZ for say $1 billion now when in 3-5 years when the STPEEZ becomes marketable the JDZ could be worth significantly more? Might just as well hold on to it.
I'm in Balance Builder's camp on this one. All or none. I believe all. This company doesn't look like anything but a takeover target.
I am in 100% agreement with Midtieroil concerning the competence of the current management. If the company starts buying properties with this current management, I'm out. It would be a real pain in the arse to get out but I'm not sticking around.
The only way I would stick around is if real oil executives would be put in place. Even then I would decrease my position over time.
I have been reeelly reeelly busy so I want to be the first to wish you all a wonderful Thanksgiving and Christmas season.
God be with each one of you.
bsk
>>Where did the info come from that says Kina or Bomu have deeper zones to look at?<<
There isn't any.
I'm too lazy to look it up but OBO-1 went down about 18,000 ft and that's how deep these holes will be.
Chevron took 62 days to drill OBO-1 so I expect Addax to take about 14 days less. The way Chevron had to drill sideways and then diagonally to TD was a lesson learned for Addax.
It's been about 40 days so if the tests haven't been run by now they will be soon. It could be that the DP is now moving to Blk-3 but to me it seems a little too early.
Don't be surprised if the results aren't released one well at a time but as a whole instead. At this early stage in the game, each well is a learning experience so they will know more about the first well after the second and third are drilled. Each well is a piece of the puzzle so the more pieces they have in place, the better the understanding will be of what they have.
IMO it's too early to drill 4 optional wells in the JDZ unless they already have 4 new targets in mind. I doubt this is in the game plan at this time. They don't want to bite off more than they can chew.
It's going to take at least 20 holes to prove and develop what they've got on the table right now, so they have plenty on their plate to keep them busy for the next few years.
The stock price is trickling down because that's the way natural resource stocks act when circumstances surrounding the company are uncertain or at a stand still. As results are known or announced the sp will move accordingly.
It would be nice if someone active in the arena would give us an update on what actually is going on, but we will probably have to wait until the drilling program is over before we hear from them.
bsk
+
My opinions actually are factually based. When you were posting the different areas the Chinese are focusing on, didn't it hit you that these areas are in some of the most volitile regions in the world?
Most Western companies operating in the Middle East think China is crazy, me included. There's an uneasy feeling that the U.S. is pulling out of Iraq because the oil fields are just too risky to develop. That doesn't seem to bother China very much though. Probably because they have money to throw at areas like this. It's interesting that the Chinese are buying up some of the very real estate that WW III might be fought on.
Sorry SPP but I have to cut this short. Maybe later in the week we can continue this.
Before I leave I want to restate my main point.....Gandur had very good reasons why he sold Addax.
My apologies.
bsk
When the Brits divided the Middle East into countries they had a monumental task on their hands. They had some impossible decisions to make.......
Knowing they all hate each other....do we divide the area according to ethnic backgounds or do we split the ethnic tribes into separate countries?
This was a no-win situation for them.
If they let the Kurds have their own country of Kurdistan for example, will they get so powerful that they will go pick a fight with their avowed enemies the Turks?
No one in the area likes the Sunni's so will all their neighbors gang up on them and use their women and children for target practice?
What they decided to do was divide up the ethnic races into different countries. They made half of Kurdistan a part of Turkey and the other half a part of Iraq. The Sunni's live in Iran and Iraq.....etc.
This logic seemed to work splendidly until the region started getting rich off the oil underneath them.
Fast forward about 100 years......
Now it's a powder keg with a very short fuse. The Sunni's and Kurd's don't really have any allegiance to the countries they live in, they have allegiance to their ethnic roots.
Specifically, the Kurds in Turkey still hate the Turks even though they are a part of Turkey. In their minds they are still a part of Kurdistan. The Turkish government has threatened the Iraqi Kurds of swift retaliation if they cause the Kurds in Turkey to rebel in any kind of way. What is weirder yet is the Iraqi government would probably side with the Turks because the Iraqi Kurds have made it very plain that they want out from under Iraqi government control.
IMO the Turks are itching to pick a fight with the Iraqi Kurds so they can wipe out the Kurdish oil infrastructure. In their eyes, cripling the Kurds financially would solve a lot of their internal problems. The only thing holding them back are the Americans. Once the U.S. is gone, fields like Taq Taq are sitting ducks.
Gandur somehow managed to get full price for the Taq Taq fields. I guess the Chinese think they can keep the fields from being attacked. Good luck to them, they are going to need it.
Even though I have made fun of Gandur in the past for selling out, I don't blame him at all. If Taq Taq were to get blown to bits, a small company like Addax with its limited cash flow couldn't rebuild it back. It would be a long long haul to get his company back to where he could get about 8 bills for it.
If Gandur was forced to choose between building Taq Taq back or an agressive drilling plan for the GOG, I'm almost certain the GOG would have been put on the back burner.
So the gamble wasn't so much on the JDZ prospects as it was on the Taq Taq fields staying viable. No one knows what went on at the negotiating table but I suspect the Chinese put a time limit on the deal. They are famous for applying subtle pressure to get the deal they want.
The Chinese win either way. If Taq Taq blows they still have all the GOG assets which they consider a treasured prize. We all know they have the money to build Taq Taq back. If their gamble pays off and Taq Taq survives, they hit the jack pot.
In spite of what I said about Gandur in the past, I really don't blame him for taking the money and running. He didn't want to gamble away a sure thing, can't say as I blame him. I could sit here and say I would have called their bluff, (I have in the past), but I can't honestly say I would have done anything any differently.
A few years ago I was told by the Chinese that they don't like dealing with Emeka Offor. I suspect it's because he stands his ground very firmly. To that I say good for him.
bsk
An indigenous company with about 5% rights somewhere in the GOG could be had for what, about 5 million bucks?
At $30 million per hole a 5% stake would run about $1.5 million each.
Throw in another million or two for seismic and misc junk and we are talking about $8 million in up front costs and that includes one hole.
For $10 million ERHC could have had full rights and 2 holes drilled. IMO this would have been a very wise way to spend part of the $45.9 million.
This company has easily wasted $10 million. Besides defending itself and hiring NSAI have they spent any other monies wisely?
My point is that with a little discipline ERHC could have taken a path of growth. It would have been slow at first but it could have happened.
If the decision had been made years ago to grow the company, IMO this board would be oozing with excitement right now in anticipation of what growth the future might bring with drilling results right around the corner. I believe the stock price would be reflecting that excitement.
Instead we have a dull mostly unimaginative board wondering why we are stagnating at $.90 when we should be racing past a dollar. Most of us are formulating our selling plans instead of anxiously awaiting the future.
With 2 drillers going at it at the same time you would think that would raise the excitement level up some. It ain't happening!
WHY?
The stock price IMO is just reflecting the systemic lack of energy this company has projected the last few years. Not much to get excited about.
No dynamism shown from the leadership. ERHC has never had a charismatic officer since I have been involved with the company. WB maybe, but he wasn't given much of a chance.
No vigorous defense of our company in the media. Our leaders have allowed us to be trod upon, to say the least. There are companies ERHC could have hired that would have had a field day refuting the recycled articles that made the rounds.
No energetic promotion of the assets. The pathetic attempts at self promotion were an embarassment. Again, there are companies that are experts at promoting a company. This company would be so easy to promote, they have an unheard of situation.
To me, it looks like SEO put a staff in place that would maintain the integrity of the company by filing the required reports on time and by not getting into any trouble. Once everyone was in place it was....."don't call me, I'll call you". The company has stagnated ever since.
If the company's behavior isn't a big enough clue, Mr. Bovell's presence is a huge hint of what SEO has planned for this company. We all have seen that EO doesn't keep any staff around if they are not needed.
That's why I think at some point they will dress this pig up and sell it. I don't want to venture a guess when but my preference is to wait until the next round of drilling is complete. Will it happen that way? I don't know.
I do know however, that the leaders obviously aren't putting any real resources into the company to make it better. That's why I respect all those who hold the opinion the sale will happen after this round of drilling.
Are we all wasting our time here? Why are we here trying to figure out what the company is up to when the evidence shows they aren't up to anything?
With all that being said, it's still not to late to have a go at it. ERHC can still leverage whatever their proven numbers will turn out to be. They can hire a dynamo that has the energy and vision to turn this company around. It could happen if the BOD and SEO would get on board and use their influence to promote this company.
I don't think I'll hold my breath waiting for that to happen.
bsk
Is there anyone here besides me that thinks all the talk of a buyout is a little premature?
Just because Gandur tucked his skirt between his legs and ran away doesn't mean that SEO is about to do the same thing. Quite the contrary. The way the stock price is acting is that of a stock that is going to be around a while. A nice stair step up to drilling.
For those of you who knew me when I first started posting on RB and then on this board, know that I used to be a real critic of SEO. Not anymore. SEO doesn't strike me as one who is afraid of a little risk. Quite the contrary. Once he decided what he wanted to do with this company he hasn't wavered one bit.
I have as much riding on this company as the next guy, but I just don't see the wisdom in selling out at the first sign of oil.
If this company is for sale where is the lipstick? A lot of the smell is gone from this company but there hasn't been any real effort to make this company look attractive to a potential suitor.
There are no rumors from so-called sources close to the company about an imminent deal. No real giddiness from the officers. What we are seeing from them is an excitement about drilling right around the corner. Not much else.
We see a real plodding type of stock action. All big jumps in price are being sold into, we don't see anyone fanning the flames. There aren't any signs of people in the know buying huge blocks of shares.
ERHC isn't hurting for cash, in spite of the geniuses we have running this company. ERHC doesn't have to come up with one thin dime for their share of the drilling costs.
I don't think SEO is in any hurry to sell. Why should he be? He spent years putting the JDZ together, withstood attacks from STP, USA, Exxon, Chevron, Anadarko and the list just keeps going. Even Nigeria hasn't offered much support. Do you really think he is going to sell out at the first sign of success? He doesn't seem like the type to settle for about 50% of what the potential payout could be.
What could Sinopec do or say to entice SEO to agree to sell except give him what he wants? Nothing! ERHC/SEO are in the enviable position of telling all suitors to pay up or beat it.
Maybe Sinopec will give SEO what he wants but the question still has to be asked is if Sinopec is even in the market for ERHC. They already control the oil so what motivations do they have to acquire ERHC. ERHC is only along for the ride. More of a nuisance than anything.
The real results will be in the next round of drilling where they will define the exact dimensions of the fields as well as poke for new ones. By that time maybe some action will have taken place in the EEZ.
For those of you wanting 3 or 4 bucks a share you will probably get your chance. IMO I don't think SEO will be joining you.
A few years from now would be the time to sell, not now.
FWIW.....I plan on letting a few shares go between $3-$4 myself.
bsk
We'll see if the JDA has grown a pair or if their ba!!z are still in their wife's purse. (That's a good one isn't it. I just heard that one last night and I already get to use it).
Let's see who has the kahuna's to go face to face with the Chinese:
JDA.............Nope. CVX exposed them.
STP.............Your kidding right.
Nigeria.........Nope. Gas flaring anyone! Amnesty for MEND! Give me a break.
SEO.............Yup.
Mrs. Gandur.....Nope.
SEO is the only one who has what it takes to stand up and demand the Chinese not run over him. He's already proven he doesn't take any crapola from the Americans. It doesn't surprise me one bit that ERHC hasn't been bought out yet.
I used to not have much respect for SEO, but that view has changed. He knows what he is doing and is a disciplined negotiator. The Chinese don't like him but they do respect him for who he is. That's why in the end I firmly believe SEO gets his asking price. The Chinese will put up a fight but SEO knows he has something they want so he will make them pay.
If the JDA was smart they would hitch their wagon to SEO, like all of us have. If the Chinese try to pull a Chevron all the JDA has to do is communicate in a polite but firm way that they will deny any drilling plans for 2 years and then pull the block from them.
If they raise a stink and try to push the JDA around, that would be the end of Sinopec in the GOG.
Once Sinopec, Exxon, Chevron, etc. see that you will go toe to toe with them, they back off. If you don't go toe to toe they will have their way with you over and over and over again.
That's why I was glad to see the JDA enforce their drilling time lines like they did. Hopefully it sent a message and hopefully the JDA will start acting like they are in charge. IMO and I can't prove this.....but the new found toughness has SEO's fingerprints all over it.
Block 1 without SEO the JDA was puzzywhipped.
Block 2 & 4 with SEO it's a completely different story.
ERHC will have representation on each drillship. Only a complete idiot would trust Sinopec to do the right thing by themselves. That's not a knock against the Chinese, I wouldn't trust the Pope in this situation either.
bsk
Things are about to get real ugly for Anadarko:
http://www.eia.doe.gov/emeu/finance/mergers/anadarkokmindex.html
When Anadarko bought Kerr McGee and Western Gas they had their eyes on their GOM and NG prospects. Unfortunately Kerr McGee also had some serious baggage. Anadarko's alleged answer to this was to spin off Tronox with "assets" that Anadarko didn't want.
It's the opinion of some very smart people that Anadarko dumped their unwanted junk into Tronox and then spun it off as a separate company. Now about 3 years later here come the lawsuits which will be pretty expensive.
These are serious charges:
http://www.tulsaworld.com/news/article.aspx?subjectid=12&articleid=20090513_298_0_KerrMc577770
>>In Tuesday's complaint, Tronox seeks damages to be determined at trial. The complaint accuses Kerr-McGee of fraudulent transfer; civil conspiracy; breach of fiduciary duty as a promoter; and unjust enrichment. Anadarko is accused of civil conspiracy, aiding and abetting fraudulent conveyance and unjust enrichment<<
Here's another little problem Anadarko has:
http://www.nytimes.com/2007/01/24/business/24royalty.html
This could develop into a sticky mess as well. The fines aren't that much but if conspiracy to defraud can be proven then the battle could escalate to a new level.
I'm not one bit surprised Anadarko wants to bail out of Block 3. Their home turf so to speak is the GOM and western U.S. Anadarko feels like it's time to circle the wagons so they can dig in and defend their turf. I don't blame them.
There are 2 major questions that need an answer looming on the horizon:
...Will Chevron give up their stake in Blk 1 and sell it to Sinopec OR will Sinopec give up their stake in Blk 2 and sell it to Chevron? The answer may lie with the company that buys Addax.
OR......
...Will Addax end up buying out both Chevron and Sinopec and end up with the entire JDZ?
Scenario two seems to be the path Addax is on right now. They've been pretty darn spunky lately. Their agressiveness has surprised me.
As ERHC shareholders we think being bought out by Addax would be a major deal for them to pull off, when in reality in Addax's eyes it may be just a small step in the process of acquiring the entire JDZ.
Once Addax proves up a large part of their assets not only in the GOG but the ME as well, they will command a tremendous purchase price.
Interesting times as we watch things unfold.
bsk
I agree 100%. Vanco and that crew don't seem to be in much of a hurry getting their holes drilled. If I remember right their daily rate is so low it's like they're getting the rig for free. Why not take your time.
For those who are spazzing about the AA I seriously doubt Addax would have drilled all 10 holes in the JDZ. Addax would have used several slots for their other obligations in the gulf.
It will be interesting to see what the meaning of the word "replaced" is. Does it mean that the AA is gone for good or does it mean that the 2009 drill slots originally meant for the AA have now gone to the Pathfinder?
I don't see why Addax would just dump the AA for good because by the time Vanco and company get done with the rig, Addax will be ready for round two. At $410,000 the price is right. The only way the AA will be dumped is if Addax is confident they can easily replace her in a timely manner.
Now I can't say I've never lost some serious amounts of cash in my life. Far from it. When I was 24 and stupid I lost all my cash because I had every peeeenney to my name in a bank in Oklahoma City that went belly up. Fast forward 20 years, I lost a little over $5 million in an afternoon over a little spat I had with a driller. One was a cost of doing business and the other was stupidity.
My question is.........How does a publicly listed company not know to check on the health of the banks that are holding their already limited assets? WOW! is that inexcusable! I don't think I'm being too harsh in saying that someone was a little derelick in their duties.
Hopefullly the lesson learned is that the cheapest help isn't always the best route to go. Usually you get what you pay for. It will be interesting to see if someone gets canned and which can will it be.
I think ERHC's future is competely up in the air right now and dependent on drilling results. If Sinopec and Addax hit a few nice gushers then ERHC will be snapped up in a heart beat. If the news is just so-so ERHC may go the acquisition route.
I am beginning to take seriously all their talk about acquistions. The presence of Mr. Bovell tells me they are ready either way they decide to go.
In 10 years ERHC could grow themselves into a nice juicy 100,000 - 200,000 bbl/day takeover target that would make us all proud.
In the end it's just a question of which super will end up with the JDZ. ERHC will have to go shallow or on land to have a chance to survive.
IMO SEO wants to dump ERHC and concentrate fully on his other assets but we will make a lot more money if ERHC sticks around for a while.
We'll see.
bsk
Hey Kobiashi - I am a big fan of yours. Even though I may disagree somewhat with what you just now posted, I find myself agreeing with just about everything you write.
In a perfect world you would be right......The share swap comes and then we ride Addax right up to buyout time, sell for $10 and laugh all the way to the bank.
I wish it was going to be that easy but it probably won't be. No one knows for sure what is going to happen. There's lots of risk involved.
If someone has let's say 400,000 shares and needs the money to make things a lot easier for his/her family....
$10 a share equals 100% risk.
$5 a share equals 50% risk.
The market is full of broke 100% risk takers.
I'm saying the wisest thing to do is take the $2,000,000 and laugh all the way to the bank.
Let's say our investor sells 200,000 and becomes a millionaire, and then plays with the other 200,000 because he thinks he can trade his way to more than an extra million.
Remember.....the longer he holds this the more risk he is taking that the momo's leave and the price tanks.
There's only 2 ways our investor can make more than an extra million....
Be a professional trader and time his sells perfectly or the deal works out and the price goes to $10 before he has a chance to mess it up.
My exit strategy isn't going to change. I'm selling to the momo's on the way up. At $5, 50% of my shares will be gone. If/when the price hits $10, I will only have 10% of my shares left to sell.
The question everyone on this board must ask themselves: HOW MUCH RISK AM I WILLING TO TAKE?
Is it really worth risking financial security for you and your family for a shot at getting maximum benefit out of ERHC?
Look at Troy's example.....He proved he is a good man. $45,000 made life for his family a whole lot easier. Notice he didn't spend any of the money on himself, he spent it on his family making their lives better.
What will $2,000,000 mean to him?
What will $5 a share mean to single dad FlightNews? Everything probably. Is his precious little boy's future worth taking unnecessary risks? I hope not.
I practice this discipline in my own life all the time. My daughter wants to be a doctor so I figure she will need $600,000 for her education. When her education IRA hits $600,000 I'm selling everything in her account. I don't care how much potential I leave on the table. The most important thing to me is to get her as educated as possible. Making her dream of becoming a doctor a reality is priceless to me.
In my career I have to access risk all the time. If I miscalculate the risk involved it can and has cost me a fortune.
Look at what Anadarko did in blk 3. 51% is what they wanted. Why? It's enough to obtain operatorship, but they only wanted half the risk. This is very typical throughout the industry.
Being invested in ERHC isn't a game or a chance to see how smart you are. It is serious business.......it can change your life FOREVER. Think about that. It can change your life forever!
I hope everyone here takes a good long look at what your needs are, what your hopes are, and then do the math and make double darn sure you walk away with at least that much money. Anything above that will just be icing on the cake.
This is your chance, for some of you it's your only chance. It's up to you whether you blow it or not.
bsk
(Wow! 2 sermons in one day. Only in this one I didn't swear.)
>>One other thing. I wouldn't have the huevos to trade ERHE before November.<<
I definitely don't have the huevos to trade ERHE before November!!
Bwaahaaahaaa!
Sorry! Couldn't resist that one.
A few years ago when I first started taking a position in this company, I was very hopeful ERHC would morph into a real oil producing asset that would pay a nice quarterly dividend. That is my investing style.
Now, unfortunately, it has become painfully obvious that SEO is going to sell ERHC and use the money to develop his other assets such as Chrome and Starcrest. Can't say as I blame him.
Over the years I've learned that unless a natural resource stock pays a dividend, they are great stocks to trade.
You take a position in a driller well before they PR their drilling plans to the general public, wait until you think the frenzy is peaking, then sell your shares to the momo players, 10% at a time.
You know you waited too long to sell if you start reading posts on message boards like......."This company just doubled their reserves and look how the share price is tanking."
With all that in mind, here is my exit strategy FWIW....
When the momo feeding frenzy hits I'm going to be selling into it. On extemely high volume days (10 to 20 million), the momo's will be buying a lot of my shares. If a buyin/buyout announcement hits in the middle of the frenzy, ALL of my shares will be gone.
In ERHC's case, I'm not selling all my shares until the buyout occurs. I will save 10% of my shares for that. The ONLY! reason I wouldn't sell all my shares into the momo ride is because I've been doing this for 3 decades and I can afford it.
If you are just starting out or if you are depending on this stock to set you and your family up financially for life, and you can do that for $3 or $4 or $5 .....SELLLLLL!!!! DON'T BE AN IDIOT!!!
If you can set your family up and still keep 10% okay, but your number one priority has to be your family. Please don't get overly greedy. Pigs get fat but hogs WILL GET SLAUGHTERED.
We all have seen that ERHC can come down just as fast as it went up.
"Yeah but this time ERHC ain't going back down." YES IT WILL!
"Yeah but ERHC is special." NO IT'S NOT!
"But what if I miss the buyout and it runs higher than what I sold for?" B I G @$#(*%^@! D E A L!!! YOU ARE SET FOR LIFE! ENJOY IT!!
I fully expect to leave some upside on the table, I'm not even going to try to get every last drop out of this pig. I hope you guys don't either.
Like I said, I may keep 10% or I may not. Depends on the price. What I do know is this......I am going to make a pot load of money on this because I've earned it. We all have.
When the party is over and the momo players have left and gravity starts kicking in, IF I think ERHC is good for another ride, I may repeat.
I don't have any exact dollar figures in mind as far as a target goes, I usually just let the market action dictate at what price or prices I sell at.
Keep in mind that this process won't play out in a week, IMO it will take several weeks or months. Perhaps as long as there is a drill ship in the JDZ. Impossible to predict.
WOW!!! That rant felt good!
bsk the preacher
My guess is #4.........
Troy sold his $.10 shares for $.45 and pocketed $.35 a share.
If he had 500,000 total and sold 100,000 yesterday the math looks like this.........
100,000 shares X $.35 = $35,000 profit.
He made a very wise decision imo. We are all here to make money and $35,000 would be a nice boost to anybody's check book.
He also said he wants a little powder to take advantage of other opportunities the market may present.
Wise decision again. Don't take this as investment advice but I think gold is about ready to run. This engineered financial crisis we have going on has presented some great trading ops.
I am going to really miss Oilphant. I never could understand what he was trying to say but you could rely on the fact that he was going to provide some darn good entertainment. The responses to his posts, both the serious and the lighthearted, provided some good stress relief for me.
FWIW I am in the camp that Addax eats ERHC and Sinopec eats Addax in a prearranged deal. I also don't think this magnitude of a deal could happen without SEO putting it together. SEO is the only human alive that could persuade Nigeria to let Sinopec operate the JDZ.
I agree with this scenario on how SEO gets his $10.....
Addax buys ERHC for around $3.00 per share in an all stock deal. Sinopec buys Addax for around triple the amount it is now and poof! SEO gets his 10 bucks and he looks like a genius in the process.
Maybe Chevron gets in the game. They probably could have bailed out of blk 1 when Exxon did but they chose to stay. In my mind the odds are 80% Sinopec ends up with the JDZ, 20% Chevron.
Lately this board has been kind of boring to read because everyone seems to have a pretty good grasp of the reality of the situation. I wish the guy who said he logged the original Akpo wells would post again. His claim of a river of oil underneath the JDZ was truly fantastic reading. I miss reading about the $80 ERHC predictions his posts were inspiring.
I have been affectionately referred to as a real "bitch" in about 15 different languages, but with $80 ERHC I would redefine the meaning of the word.
I am willing to go way out on a limb and make this BOLD prediction: Nothing happens until after drilling!
I've been educated on the proper way to spell y'all. It's not ya'll, it's y'all. Thanks to whoever it was that enlightened me.
Chow y'all
bsk