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Krom, previously, I said the following:
"There is 0% chance that CPC would give 50% interest to a company like ERHC, leaving them 20%, for any reason. CPC does not need a partner (remora) like ERHC in their block. Maybe they would farm out a portion to a partner with deep pockets to help with development costs, but there has been no indication from CPC that that is in the cards." (Post 243756)
But your post and posts by others, plus the latest news release from ERHC, has got me to thinking about ERHC's stated 50% interest in Chari Ouest Block 3 (which seemingly includes the whole block).
Perhaps your Formula 2 is the answer. Maybe ERHC did some horse trading with CPC for interests in either the JDZ or the EEZ. However, I still cannot imagine CPC gaving up 50% of its interest in Chari Ouest, leaving it with a meager 20%. SHT had 30%; did it contribute some of its interest? Not likely. So if CPC did hand over 50%, ERHC must have really made a sweetheart deal with CPC.
Maybe this is ERHC's short path to producing assets. It is interesting that CPC has been mum about its Benoy-1 discovery since March.
However, my confidence in the reality of this scenario is very low, given the meager details disclosed so far. I am sure ERHC disclosed as many details as they could at the time. No doubt more details will be forthcoming as soon as they can release them.
In any case, I take heart in these words of Peter during the chat:
So are you saying you hope that ERHC had to pay everything upfront, so that they would have to make a big cash outlay (as opposed to installment payments)? I would say that is bizarre.
I have to hand it to you, midtier, you have a great knack for consistently finding the half empty glass. - LT
Seek, at this point, I don't think we can conclusively nail it down until we have more details.
Regarding your inquiry...
More details from an article already posted:
Looks like Chad oil blocks have become a hotbed of interest lately:
Seek, ERHC's announcement about acquiring 50% interest in Chari Ouest III is truly curious.
Pre ERHC's announcement, the facts were that OPIC (CPC) had 70% of the block and SHT (Chad national oil co.) had 30%.
If ERHC truly has 50% of the entire block now, I can see only one way that would happen:
(1) There is 0% chance that CPC would give 50% interest to a company like ERHC, leaving them 20%, for any reason. CPC does not need a partner (remora) like ERHC in their block. Maybe they would farm out a portion to a partner with deep pockets to help with development costs, but there has been no indication from CPC that that is in the cards.
(2) The most-likely scenario would be that CPC is no longer in the block. That could be either because they had a falling out with the Chad government (which no longer recognizes Taiwan diplomatically), or CPC determined that their find was not as great as they thought it was initially. What we do know is that their initial exploration contract ended May 24, 2011, and that presented an opportunity for a change in circumstances in the block.
However, it is hard to believe that CPC would let go of the "most successful prospecting achievement in the company's 40-year history of overseas oil exploration" without a fight. And there has been no indication in the media of CPC losing or giving up the block. In fact, as late as July 15, the Taiwan news media was still positively reporting on CPC's Chari Ouest find.
But we do have this cautionary note from Africa Energy Intelligence:
Just want to say that with ERHC's recent shopping spree, they seem to be acting like a kid that just got his allowance.
Makes me think they are expecting an influx of cash real soon, or have already received it. Peter did say during the chat:
"These Blocks we have in Chad are very valuable blocks. Other companies which are much more challenged than ERHC have raised financing for such exploration. ERHC will be announcing the full plans shortly...."
"... We are planning comprehensively for the financing and working of the Blocks."
Indications are that some very good news will be coming down the pike soon. - LT
Seek, that Chari Ouest III block is certainly an enigma.
ERHC lists its size as 4,500 km2, whereas the Manga block is listed as 6,477 km2. So there is not a tremendous difference in size. After visually comparing the two blocks, the 4,500 km2 figure they list for Chari Ouest III would seem to be the size of the entire block.
If they had a portion of the block, then why would they list the size of the entire block? On the other hand, how could Chad just take CPC's 70% and give most of that away to another company?
ERHC needs to clarify exactly what they got in Chari Ouest III. - LT
Thanks, Marc!
midtier, what I was asking regarding the geology, is do you or any of your geologist friends have anything you can enlighten us on about ERHC's Chad blocks regarding their prospectivity? - LT
badog, not only did we have Sinopec's own English version touting BOMU-1 as commercial, but also English translations of Sinopec's Chinese news release from two other sources:
investorshub.advfn.com/boards/read_msg.aspx?message_id=54203239
Either, (a) someone is trying to hide something, or (b) Sinopec got prematurely optimistic over BOMU-1.
It was a strange incident. - LT
P.S.: If you click on mz157's message to which the post is a reply, you will see the whole exchange with Dan Keeney on the subject.
Thank you, vizsla!
Troy, first let me say that I am truly sorry you are in the situation that you are in. This investment has certainly been disappointing, with years of the stock going nowhere (or down). I have held it since 1998, and have added (pre-drilling) a little here and there along the way.
Thank you for the information on ignoring replies; I did not know that.
I agree that management could have been more proactive. However, it is so easy to judge after the fact.
Here is another way of looking at it: Suppose management was as confident as we were that they were going to hit it big with the first drillings in the JDZ (remember Peter's smiley video?). Suppose they decided to wait until they could book those reserves before moving on some other venture? Hitting big-time oil would have given them collateral for loans and skyrocketed the share price such that they could have issued some shares to obtain funds without tremendous dilution. How different things would be today had that happened.
The fact is we came up empty (in terms of bookable reserves) with that first roll of the dice, and no one was expecting that.
But maybe the Chad blocks present a ray of hope at last. - LT
Vine, great point! Can you post the news release/article wherein Total reveals this: "but chose to have its own to accommodate other area development." Thanks!
John, I didn't mean that as a slam.
I should have said, "That is my hunch also." Glad to see someone else is thinking the same way. Let's hope our thinking will turn into ERHC's reality. - LT
Homeport, while doing my research I was surprised to see Mainland China and Taiwan partnering up in business deals, such as drilling in the Taiwan Straits. It seems the political rheteric is almost nonexistent now, compared to how polarized it used to be.
A week or two ago, someone on this board said the Chinese and Taiwanese would never work together. But that is simply not true now, at least to when it comes to business interests. - LT
John, that is my hunch.
I commented to that effect regarding Chari Ouest Block 3 in this post:
"With CPC's seismic done in the southern half, my bet is that ERHC has obtained the northern half of Chari-Ouest Block 3, right next to CPC's recent discovery. I wonder what the chances are that CPC would farm back into the block under ERHC's concession? They seem very excited about Benoy-1."
BDS 2008 was relinquished by CNODC (CNPC - mainland China). Perhaps they too would be interested in getting back into their relinquished acreage.
Me thinks ERHC is in the process of executing a plan; it's just taking a while to dot all the i's and cross all the t's:
Good idea, Troy. Maybe you could suggest that to Dan.
My two "return to sensibility" posts evidently got reported to the admin; they are gone now. Sometimes the admins gulp down the camel and strain out the gnat. Wish they would delete slanderous posts also. - LT
Apologize to all...
I was looking at a page for TG World Energy: www.tgworldenergy.com/niger.html, then went to this page, www.tgworldenergy.com/stockinfo.php, and saw the TGE ticker symbol and looked that up. But I should have looked up TGE.V instead.
Sorry for the confusion. - LT
Thx, Kobi.
Chad Geology
It would be interesting to talk to the geologist(s) that ERHC used in selecting their three Chad blocks. From the geological information I can find on Chad, it would seem the three blocks are outside (or at best, barely including the margins of) known geologically oil-prospective areas. Perhaps they see evidence that these prospective areas could extend into their blocks.
Here are some graphics:
Mid-African Rift System (source of traps?)
Chad Southern Basins (Chari Ouest Block 3 & BDS 2008 are generally inbetween these)
General Geology of Chad Basins
Chad Bouguer Anomalies
Here is detailed information about Chad geology, albeit dated:
Phanerozoic geological evolution of Northern and Central Africa: An overview
Geophysical and geological evidence for the Benue-Chad Basin Cretaceous rift valley system and its tectonic implications
Regional framework, structural and petroleum aspects of rift basins in Niger, Chad and the Central African Republic (C.A.R.)
If there are any geologists on the board, maybe you can provide some interpretation. (Don't ask me any questions about this, cause I'm not a geologist!)
One further thought... take a look at this road map of Chad:
There are no roads or infrastructure shown very near the Manga Block. Here's a satellite view of the block:
Here's a Google Maps link if you want to zoom in and see the sand dunes.
Hopefully the Manga Block was part of a buy two, get one free package. Quite the expanse!
Looking forward to seeing which operating partners ERHC signs up. - LT
Stocks2rise, no, to the contrary, it seems OPIC is very excited about their discovery.
See this post, Reports on OPIC's (CPC - Taiwan) Benoy-1 oil and gas discovery, if you haven't read it yet. Looks like OPIC is intent on developing an oil field there, unless something really wild has happened since February/March. - LT
Homeport, if it is a consolation, the company that has the Ténéré Concession in Niger, TG World Energy, was selling for .055 a share (Canadian) back at the start of 2003. Its shares closed today at $6.27.
If ERHC can just book some solid reserves, we'd get there too. - LT
Reports on OPIC's (CPC - Taiwan) Benoy-1 oil and gas discovery (this is the discovery closest to ERHC's blocks)
OPIC & Chari Ouest Block III
Seek, Kingpindg read my mind...
"if CPC did not relinquish a portion of the block back to the government, then how could ERHC get a portion from the government. If I recall correctly, the original interests in BCOIII were CPC 70%, Chad 30%. Now that they've discovered oil in the block, Chad is going to give us their 30%, plus take 20% from CPC to give to us. Doesn't make sense."
But here is more information to support the conclusion that ERHC received a relinquished portion of Cheri Ouest Block 3. According to this source (page 4), OPIC's initial exploration contract expired on May 24, 2011 (translated from French):
Homeport, Agadem, Niger is about 160 miles (258 km) from the SE corner of ERHC's Manga Block, and the Agadem Block is SW of the Manga Block.
Here are some maps of the Agadem Block in Niger:
Click on the map this link pulls up for more detail on oil finds in the region.
Click here for information on exploration activities in the adjacent Ténéré Block.
Esso's exploration and development activities to the south of ERHC's blocks
Esso Chad 2008 CIOME presentation
Esso 2010 H1 update
Esso 2010 year-end update
CNPC's activity and discoveries in the Bongor Basin, just north and west of ERHC's BDS 2008 & Cheri Ouest Block 3:
[Source: CNPC Bangor Basin CIOME 2008 Presentation]
CNPC looks to have made a fifth discovery in Permit H - Chad
This article is extracted from International Oil Letter, Vol 25 issue 18, published 4 May 2009.
It looks as though China National Petroleum Corporation (CNPC) has added to the four discoveries it listed in October 2008 and that the latest find, Prosopis 1 in Permit H, is potentially the largest of them all. Details of the well are yet to be forthcoming but it is known that two drillstem tests were run, the first of which flowed 4,310 bo/d plus 1.13 MMcfg/d while the second yielded 3,248 bo/d plus 0.49 MMcfg/d.
CNPC entered into the three-year third exploration period for Permit H in January 2008, committing to the drilling of three exploration wells and the acquisition of an unspecified amount of seismic data. The four discoveries drilled by the company, Mimosa, Baobab, Kubla and Ronier, are all located in the Bongor Trough.
Two African Discoveries for CNPC
Date: Tuesday, December 1, 2009
PetroChina, CNPC’s parent company said in a statement that the Prosopis C-2 well on Block H and the Baobab S-2 well at Block Baobab S in Chad were tested with “high oil flow”.
Throw off [Kick off of?] the exploration project in Chad to obtain breakthrough (Google translation from Chinese)
2009-4-15
CNPC International (Chad) exploration and development company to seriously implement the work plan in 2009, insist on exploration and development simultaneously, and increase efforts to throw off exploration in the Maye area was awarded the exploration breakthroughs.
Prosopis-1 well as an important region bypassing Maye exploratory wells, oil and gas well logging interpretation layer of nearly 90 meters. April 13, the scene of exciting news, the second layer of the well test 64/64 "choke stable output equivalent to 4310 barrels of daily output of crude oil, natural gas 3.2 Articles, together with the first layer of the test equivalent to 3248 barrels of crude oil production , 1.4 Articles of natural gas, equivalent to the total well over one thousand tons Nissan With the subsequent layer of the test is successful, oil and gas production is expected to further increase.
This is the beginning of 2007 CNPC get 100% stake in Block H has been found that the first port project in Chad, "one thousand tons" exploratory well. Prosopis-1 well successfully, initially proved a Prosopis structure is a thick layer of high concentration reservoir, revealing a large resource potential Maye region, the project in 2007 following the capture of commercial oil flow off, to obtain high light oil in 2008 discovered a major breakthrough, the three steps to achieve a three-year span, but also for the project a capacity building and early operation in Chad refinery, lay a more solid foundation.
CNPC 2009 Annual Business Review
Testing of well C-2 in Block H of Chad generated a high output, which further proved the 100-million-ton resource volume at Prosopis-Baobab petroliferous zone
[Information from undisclosed source - 7/8/2010]
CNODC Department of mainland China's CNPC's overseas subsidiaries, currently operates Chad "H" mine. December 2003 CNODC joined EnCana Corporation Co-operative Group, has entered Chad exploration, in January 2007 acquisition of EnCana's "H" all mining rights, and in large-scale mining activities Bongor Basin, a few years the company for Bongor Basin Mimosa and Kubla two oil-bearing structures for exploration and resource estimation, confirmed the existence of the basin, there are three oil groups, more gradually in 2007 and 2008 in the upper and lower layers of Cretaceous oil sands by drilling; in April 2009 Mimosa oil and Ronier oil drilling between the Maya region, estimate the target level of electrical measurement with 7-layer oil sands, the test results, the first 3,248 barrels of daily output layer, layer 2 4,310 barrels of crude oil production, 4-layer capacity high-purity gas, 1,000 barrels of layer 5, 6 and 7 layer is not tested, since the electrical mapping should be observed on both oil production, total production reached more than 70 meters in thickness, estimated that the drilling could yield up to 10,000 barrels / day or more, the Department CNODC mining history on the company's overseas production of the largest oil discovery. According to the company released information only Ronier oil field construction, estimated to produce 20,000 barrels a day of light crude, the overall amount of resources can be understood only in this structure for nearly 2 billion barrels of recoverable resources, but has not yet been declared and the development of the Mimosa Prosopis oil, total recoverable resources would far exceed 10 billion barrels or more. Dou LR, general manager (CNODC), said that initial drilling of the mine is not smooth, but fortunately the assistance of the mainland headquarters technical team finally found the success of large oil fields.
Map showing proximity of ERHC's Chad blocks to known petroleum basins:
PLEASE NOTE: This is not an official map. Locations are approximate. I created this map by combining information from the following four maps:
Chad-Cameroon Petroleum Development and Pipeline Project
Chad Ministere du Petrole block map
CRC exploration map
CNPC Bangor Basin CIOME 2008 Presentation
As you can see, there are known petroleum basins all around (and, in some cases, apparently in) ERHC's blocks. Note also the discoveries in the neighborhood of our blocks. - LT
They would have given up the JDZ blocks by now if there was no potential for finding something worth bringing up. - LT
midtier, I would say, have patience. ERHC hasn't even consummated a MOU with an operating partner yet for any of the blocks in Chad. No doubt management will be adding a section about the Chad blocks on the website as details come together and their Chad strategy is executed, just as they did for the JDZ and STP EEZ. - LT
If I could sum up the last few day's constructive posts, it would be... "It's the assets, stupid!" (to borrow from a former U.S. president)
Noteworthy comments from kobi, tamtam, seek, and Doc regarding ERHC's strategy (compiled below), as to accumulating assets and adding value, particularly as it pertains ERHC's AIM listing. I wholeheartedly agree, and personally am glad that they have not tried to push through the AIM listing yet.
The company is communicating its intentions, but a few here just don't get it because of their incessant whining and myopic view. It is refreshing to read constructive posts like those listed below, as opposed to broken-record complaints that lead nowhere. - Longtimer
Troy, I'm not sure I know what you want management to do. If they invest money into business ventures, there are complaints of dilution. If they do nothing, they are accused of incompetence.
The one thing that I would have liked to have seen is them doing the shelf registration when our stock price was trading nearer its highs. From my limited viewpoint of the circumstances, I could see that as a lack of business acumen. (As you know, hindsight is always 20/20 though.)
A couple things I do know: (1) SEO is not in this thing to lose money; (2) I have seen a number of pump and dump scams, but ERHC is not one of them; management is not out to take anyone's money.
- Longtimer
farrell, thanks for your PM. For what it is worth, I was a little disappointed too with the outcome. But it was the first time this was tried, and time went by fast.
Maybe next time they will manage the questions/time better. Could be they felt they had to address the more acrimonious posts. (Or those posters, fired by their emotions, were the first ones out of the gate.)
I do feel they made an effort to coddle the fears of most, and to imbue the call with the feeling that more good things are coming down the pike.
I really think these Chad acquisitions are exciting. They are a tangible demonstration that someone has been kicking butt. - LT
Yeah, man, it's been a whole two days since the PSC announcement and a week since the block award announcement! My oh my!
They should have had the whole exploration plan worked out by now and disclosed the cost outlays!
Boy, I hope Peter wasn't cramped when he was conducting that chat session under his desk!