It is about time ERHE comes back to life.
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The only reason for a company to ask the investors to disclose them is if there is a positive PR play. I think that only would have been true if ERHE was doing a private placement to other companies within the Oil industry. How good would it have looked if Total or Sinopec would have participated in it? In this case, it was simply a financial transaction and there is no net PR gain to either buyer or seller. Keep in mind that this private placement was very small as a percentage of the total shares outstanding.
One Conspiracy theory I can factually put to rest.
For those of you who may still think the recent private placement was a single payoff to “friends” or people owed by ERHE or even people in Nigeria, I have verified in this case, that this is a false belief.
It turns out to be a small world sometimes. I have run across a US based Hedge Fund manager who participated in a “piece” of this placement directly. Yes, this private placement was not all sold to one entity or person. It was broken up. The transaction was exactly as stated by ERHE - a private placement to raise capital and it was all above the board and legit (no conspiracies or private payoff).
What was stated in yesterday’s PR is also correct in that the participants in the private placement have the choice to remain private as long as they don’t exceed 5% ownership in the company. I do not find anything unusual about this due to the relative small size of the pieces.
One other tidbit of information I will pass along is that some posters in IHUB were correct in that shorting of ERHE stock is taking place to lock in a profit (I have seen the transactions myself). This is a common strategy used in the industry by hedge fund managers (hence the title “hedge”). This strategy will put a temporary downward pressure on the stock price while it’s going on but it is done very systematically to keep volatility under control and lock in a minimum return.
That is all I have for now.
I agree with the .28 warrents for 5 years as being a huge gift also.
I doubt we will find out any time soon who this purchaser was. Notice that the 10 million shares plus the warrents (if purchased) did not equal 5%, therefore no reporting requirements.
I agree whole heartedly with your comment that the selling of shares at .22 is a slap in the face of current shareholders. I believe that this will turn out to be quite the "gift" to the purchaser of those shares.
At least it was only $2 million and not the full $50 million they are approved to raise. I ended up selling a few of my shares, as I posted the other day, but I still maintain a substantial position here. I will be judging ERHE's timing of selling future shares in this same way.
On that note, I do think ERHE is planning on raising capital in spurts over time. I hope they learn from this lesson (shareholder disgust and a further dampening of the share price) and wait for some substantial positive news before the next sale.
EHP, you are reading the file incorrectly. There is no lie there.
the "no transactions currently in place" they are referring to are talking about the purchasing of "working interests....".
They are not referring to transactions relating to the selling of shares to raise capital.
Sorry to say, I completed my first sell of ERHE stock since the STP coop attempt many, many years ago (pre PSC signing).
Now the good news for those who held firmly to their stock here, the price went up fairly quickly after I made that last sale. Maybe it will turn out to be a sign of good things to come…lol.
My reasons for selling mostly boils down to not being comfortable with what I read in the PR today. Yes, there are a thousand ways to spin this in the positive light and another thousand ways to spin the dooms day scenario around this. I don't feel it is either extreme. I do, however, feel that this is a change in what the company has been doing. They have not diluted shares since they paid off SEO’s loan many years ago. They had plenty of cash (with $20 million in the bank) to wait out the disclosure of drilling results UNLESS they change strategies. Regardless of the "why's" and the "to whom" for today's company stock sale, the fact is that they sold stock for cash and at what I consider to be a very low price. To me, this means they do NOT expect to be in a different position any time soon to raise capital at a higher price per share. I think the timing of this has to do with the 6 month extension of Phase I and therefore, we all have another wait of stagnant or drifting share price to endure (although, I hope for the opposite).
I still maintain a substantial position here that I don’t plan on selling soon. On the other hand, I am not planning on purchasing back in with the proceeds of today’s transaction. I simply changed my holdings to a more comfortable level to wait this out further.
I firmly believe the value of ERHE stock will one day be determined more specifically by the prospective assets that they have rights to. At this point, I feel it will be more than a “fortnight” away and I have no idea how many fortnights it may be.
Good luck to all
Here is a thought......
Maybe ERHE is contemplating selling it's rights in Block 2 to Total for them to start developing block 1 & 2 together. But, ERHE is in need of two things... one is cash (sounds like they would be more comfortable with $50 million in the bank). The second thing they desperately need is some OIL company to begin phase II of blocks 3 & 4 and possibly phase I of the EEZ. They also need to have some OIL partner communicate openly with the public to improve shareholder sentiment.
All this could be being negotiated. Maybe ERHE gives up a portion of each of their blocks (2, 3, 4, 5, 6 & 9) to be a part of the "regional" development team? Hey, they can be a smaller player of the whole, get some cash, and set the stage for EEZ all in one swoop.....
wishful thinking?????
If only SEO would publically say he wanted out. Then he would be doing something for the minority shareholder (and all shareholders for that matter).
2IRA's,
That was my thought also. I think the addition of TOTAL to block 1 has created a new round of analysis. Although this is a pain in the ### for us ERHE shareholders, it is likely a better situation for all players in the JDZ. TOTAL will not do work in blocks other than 1 unless there is some arrangement made (sharing of block percentages or of the profits). This is my personal opinion on why we have yet another 6 month delay.
Good luck all
Thanks spp119. Question resolved. AIM only requires 3 years 'audited' financials.
Just to be super duper clear here:::::::
this "price" you are referring to is the FUTURE costs to developement. There is NO up front buyin cost IF a player defaulted. Original signiture payments were paid at the PSC aggreement time or they already would have defaulted before drilling (and expenses) started.
I would bet that one of the reasons this has taken so long is the smaller players attempting to recoup their signiture costs and/or drilling expenses to date like XOM did in block 1. If Sinopec waited long enough, the companies defaulted instead. That alone puts ERHE in an eviable spot for a minnow oil company.
Krombacher,
It means the first option available to all remaining parties is their pro-rata share under the terms of the exiting party. In other words, if a small player left (other than ERHE with a carry), for let's say 10% interest and ERHE chose to keep their pro-rata share of let's say 2.2% in addition, ERHE would be then on the hook for 2.2% of the NEXT phase of expenses. They could also renegotiate this portion back to Addax/Sinopec for further carry but I am guessing Sinopec would say no. If ERHE couldn't pay their way on the new 2.2%, it would default back to Sinopec without having to carry that portion further so why would they.
Common sense here.
This update has a little of the "same ol, same ol" but they specifically hit on topics many here have been harping on. Sometimes all we need is a status of what are they continuing to work on, if anything.
Here are a few things I pulled out as good to hear:
1) "Natural gas was discovered in at least three wells". I don't need to analyze to death whether it was bio or thermo... I just want to see the straight terms "Natural Gas". On a slightly questionable note: why "at least" three wells. Could they not count higher????? They only drilled 5. Nothing to lose sleep over though.
2) "currently negotiating the terms for entry into Exploration Phase II". Simply put... you don't negotiate terms INTO phase II if there is nothing to go into phase II for! Yes, we don't have the specific details yet but we didn't hit 5 dry holes either.
It is a beginning.
It's about time. It doesn't tell us everything we want to know but at least it is a progress report. Thank you PN for the update.
Krom - my point exactly. Great post.
There are many here who make bold statements on what is and what is NOT going on or who at the company knows what. These statements are only your opinion and they have no basis in fact.
Second. Although I am happy to see many here stand up for and try to take action on when they perceive wrong doing, the irony is that if you really follow your logic through on this "midtier" BOD election you end up with a twist:
If Midtier successfully got elected onto the BOD, he would then become an 'insider' and could not disclose to ANYONE what he was all of a sudden privy to knowing including providing hints to answers that everyone here keeps screaming for. Not only that, but his shares in ERHE would also have restrictions put on them due to his 'insider' status and he might not enjoy the freedom he now has with his shares (whether he trades or not or his plans to sell some upon a specific price point or news worthy action would be put in jeopardy).
The company would likely enforce a gag order on him and insist any questions directed in his way be funneled to DK for proper and legal response.
We would be right back to where we are today minus one good knowledgeable oil poster on the board. Even if I don't always agree with his positions, I respect and enjoy reading his opinions.
In my opinion, I feel our ‘shareholder’ rights are being effectively managed with Howard Jeter and Leslie Blair on the board. These are not speculative stock traders with no name but professional and respected people with a lot more in reputation to lose if ERHE ever went in an unlawful direction.
Good luck all.
Balance,
I thought that the official Operator of the block had first choice of picking up the percentage available. If they didn't want the whole amount, it then goes to each remaining participant proportional to their holding as you stated. I am pretty sure this is what happened to ERHE a while back when we actually went to arbitration with Addax for our 'proportionate' amount of block 4 (if I recall correctly). The arbitration when in addax's favor.
Of those 5 example PR's about this show, 2 were PR'd last Thurs., 1 Friday and 2 today. Maybe ERHE is waiting for Sinopec first and then do a combined PR tomorrow.
There is still time.
ps. thanks for finding those examples
My guess is that this meeting has been scheduled for a while and ERHE is presenting on 9/15 for a planned reason (after a planned PR). The meeting goes from 9/12 - 9/15. I would guess that given the 9/14 deadline for Sinopec to announce results and phase II plans, plus ERHE's new estimate numbers, that they planned on presenting some pretty good news about ERHE. This also may be the planned beginning of a PR campaign. The only hitch with this thought is if Sinopec doesn't release info by tomorrow. I would also think that if this were the case, ERHE would have known about it by now and cancelled their presentation.
A lot of pointers are saying news soon but we just can't be certain until we see it in print. I also believe that is why we did not get any run up this time around. To much doubt and the share price reflects that. For the first time, I think any positive news will actually be a suprise.... lol.
Actually, ERHE single handedly helped put the JDZ treaty together (with a little of XOM help too). SEO was not a part of that step. He bought EHRC out later and saved it politically from being taken advantage of (IMHO).
None the less, it is a unique story which continues to unfold. It is so quiet that it makes me think something is cooking.
Although, I am sure some can come up with some valid arguments to wait for the block 5,6,7,8, & 9 auction, I strongly believe the JDA would hold any further delay against them and this holds more weight than the arguments for remaining silent.
STP & Nigeria want oil production sooner rather than later and higher signing bonuses that would come from proven oil discoveries "next door". Sinopec will have to continue to show their ability to work with the nations for which they are "temporarily" purchasing exploration rights from. If they get the reputation for not playing fair, they will likely get fewer invitations to the party. Even though the Chinese have a large bargaining chip with their cash, the whole world has demand for oil resources. We have seen many news pieces in the past year or more of Brazil and other nations willing to talk with STP. The US and Chinese are not the only countries with money and Rigs.
Most successful business negotiations are a matter of give and take and positioning for a “win – win” for both parties involved. I expect the same in the GOG over time.
Good luck.
Interesting find today – well, it is refreshing to see that this new tidbit of info was found on the operator’s website instead of hearsay or secret sources, lol. Regardless of the specific translation, I find that it is very encouraging to see Sinopec talk about the "first.... breakthrough". The tone of this paragraph alone is encouraging and shows they will indeed tout their own horn when they are ready to reveal more news.
I have never accepted some of the views others have said here regarding the Chinese unwillingness to 'ever' disclose the info. They may take extra time or they may save some of the info for strategic reasons, but they also have now shown two specific examples of positive news releases (the other being the Sinopec PR a couple of weeks ago about another oil find with great detail). Even the Chinese have business reasons to publically show success.
I also feel that Sinopec is very close to releasing very detailed information along with the phase II plans. There may have been some strategic reasons to either wait for Total to come on board or for the EEZ September closing, but I do think they are ready to give a lot more information than some might expect.
We should find out in the next week or two.
Good luck all
Equally to you, a whisper about this stock going to 14 cents is about as ridiculous. Yes, it could happen with about the same odds as the $14 in the next year or two.
Maybe that was the news oily was talkin about.... lol
Nice find.
I appreciate BB's point of view and I find much of it as a possibility, however I consider it NO big deal about the contracts going month to month. The original 1 year contract is typically needed to provide a new person a sense of security to jump from one organization to another. Once the original term is up, there really is NO need to extend that contract as now the employee is working based on performance as it should be.
JMHO
Great post and I second your thoughts. EO has nothing of value to gain by diluting his own (and his friends) shares to marginally increase his numbers and risk major lawsuits; freeze up of his assets (us stock) etc. Not feasible and completely foolish.
Finally, a note back to Krom, if EO wants more shares he could simply do what he successfully did in the past: 1) pay himself very well with stock options or stock compensation or 2) lend the company $50,000,000 in cash with a loan and pay that loan off later with shares. Very little legal risk with this approach. Oh, and you don't have to go through the legal expense of "shelf registration" to do this.
Bottom line is that the shelf registration is exactly what the company said it is. To raise up to $50M in cash if and when needed. Most likely used when they list on the AIM which also wouldn't make sense to do until they have VERY good news to move forward with (in order to attract new investors).
Actually, I reviewed claytraders video today and ERHE closed at the Second (and top) level of resistance from his chart. Everything else you said I agree with.
I sense that many of the ERHE traders exited their trading positions back when Sinopec was granted the 6-month extension. This was considered dead money through the summer and now some are re-entering for the September 14 run up.
Second, I noticed a number of ERHE’rs jumped ship (at least with a portion of their ERHE shares) back with Markgovol’s missed call on the JDZ contact rumors. Many jumped to the MMRF stock for perceived great fortune. Unfortunately for them (and for shareholders here), that stock took a fall from .30’s down to .14 currently even with the great communication that management team seems to have. I was hoping they would have a great fortune or run with that security so they could re-enter here in the fall with more basis. I still suspect some of those shareholders will try to move some money back here for the Sept. run also.
I thought we would have another week or two before the run up but my timing has never been very good. That’s why I am not a trader, lol.
Good luck all
ERHC has Proven, great statement that is a precedent to keep handy for reposting. When the typical naysayers stop by to drop comments like SEO is out to get the common shareholder, this precedent should be reposted. Even with a dual listing on the AIM, the (ERHE included) smaller shareholders are protected. I have never felt like there was any reality in the naysayers comments but I think those statements had been effective in instilling doubt and fear and have had very negative effects on the share price.
ERHC has proven,
please take a moment and step back to read your suggested statement. Now think of it as if the previous one hadn't been done.
Here are two reasons why I am glad your suggestion was not released:
First, the statement of "if its current funds run out" would create panick and concern over the thought that it might or that management thinks it might. It is also extremely unprofessional to make such a comment.
Second, the statement of "there are no current plans to sell shares at this level" could not be stated as it potential puts ERHE into a future lawsuit. ERHE does not know the future and can not know exactly how the share price will be valued in the foreseeable future. If they made such a statement and more delays or bad news occurred, the future price may be lower than the current price of this proposed release. This may put ERHE either into a bind of NOT being able to raise capital in this fashion when needed or create a potential lawsuit if they did raise capital in this fashion. Again, this wording would not be taken as positive as you might think by some of the investing public and would be unprofessional in my opinion.
Speaking from my point of view, I did not take the shelf filing as negatively as many here have interpreted it. I am guessing that there are many here who read the filing for what it was. It was simply setting the stage for possibly raising capital in this fashion using common boiler plate language that many, many other companies use. The known “bashers” out there used the boiler plate language to instill doubt and fear which they would also have done with your proposed wording.
Back to waiting.
Good post petemantx
I agree with a majority of your thoughts here except that I think ERHE will push for at least a little bit of "meat" to include in the info released for going into phase II. ERHE's reason would be to get the share price to a more respectable level (over $1 IMHO) in order to raise up to $50 million in capital. I think SINOPEC can release enough info to accomplish this and still hold the full details close to their chest for control reasons and make everyone happier.
Keep in mind, SINOPEC also plays multiple balancing games with this info. They need to prove value in the Addax purchase; they need to prove prospectivity to their government as all they care about is oil assets; they need to make both STP and Nigeria continously happy to partner with them as they are in heavy competition with Brazil, Korea and other India based companies along with the arrogant US majors, in all the GOG offshore and onshore.
It is because of these reasons, I am confident we will hear a bit more than you have speculated.
Krombacher, I think you are missing the point in a few areas.
First, when XOM bowed out, they sold their interest in block one basically equal to their signature bonus plus the cost of drilling. They retained the 2% of profit oil on their percentage as just an extra or an attempt to get a return on their "cost of funds". The single well drilled by XOM/Chevron was not a blockbuster find like I think they hoped for. Being that neither company has other block percentages close by or any infrastructure next to it, I simply think they moved on to other pastures. It is a big globe out there and both XOM and Chevron can dominate or get their fill of oil in other parts of the world more economically for them.
Second, from what little information we know about the numbers of the buyout price, I am guessing it is closer to Chevron's signature bonus plus drilling expense PLUS some kind of premium for being the operator of the block. Then multiply that by 1.5 or the 50% premium that was stated when Total first rumored interest.
Third, the value of exploration rights change dramatically for each phase of drilling and/or commercial discovery proven. Chevron drilled one exploratory well 4 years ago and 1) DID discover oil (good news) but 2) did not feel it was commercially viable to them as a stand alone well at that time given their infrastructure close by, etc. compared to Chevron's alternatives throughout the globe. This evaluation is different for each company.
Obviously, China feels a greater need for oil and has shown it will pay more than most companies for 'proven' oil. Total's commerciality model is different from XOM/Chevron due to the Apko infrastructure already close by therefore, they will pay more.
All these numbers are fun to explore but aren't fully relevant at this time. If Sinopec goes on to phase II and Total successfully does the Block 1 phase II drilling and together they decide to develop the area to commercial production, then better numbers to use would be the price Sinopec paid to buy into Apko next door (once proven) with comparable estimates of quantities of oil.
I really feel SEO is at least waiting for this stage to get a much bigger payout than selling the rights before developed. I have no idea if SEO or ERHE will try to sell the whole company or just the proven blocks at that time and then play the same game with the EEZ and the remaining JDZ block rights.
All I know is the September deadline is getting closer and closer and phase II drilling could be announced before the deadline arrives. We could also get surprise news of EEZ partnerships at any time without notice so I think ERHE share price will be in a general uptrend from the time the Total news was released last week through the September deadline (IMHO).
Good luck all.
Another quick positive regarding TOTAL buying operatorship of block 1:
With the 2/1/11 deadline to drill another hole in block 1, it probably won't take much effort for Total to move one of their drill ships that are already in the area (note from another poster a few posts back about the number of blocks Total has interest in the GOG already). This also won't take another drill ship off the open market that Sinopec will need to be negotiating with for phase II. Although, they may be able to swing a good deal with Total after they complete their block 1 hole to use the same rig???
Ok, that is funny! I feel your pain. I stopped communicating about ERHE a long time ago. Until this breaks a buck, I will keep it as my information only, lol. This board is my only outlet on this stock...good or bad.
Congrats all shareholders. This was news many had predicted/expected but know one knew when it was going to hit. Although this isn't ERHE directly, I agree with most others here who posted that this validates the JDZ at least to some extent.
As for the share price, we have a nice starting pop today and I suspect it may rise into the close as a majority of the people purchasing today are likely long followers of ERHE. It may take a few days for others to connect the potential of the rest of the JDZ with ERHE's stock. I also think it will take time for other investors to put 2 & 2 together about TOTAL being the operator of Block 1 now and they will likely extend their already existing deep sea infrastructure into block 1 which they just so happen to be partners with Sinopec.
Phase II news (if positive) should create a much larger pop. As with this TOTAL news, we will likely be suprise by the Sinopec announcement when it comes too.
Good luck all
Now that is a well done PR communication about a gas discovery. I hope ERHE uses this type of template when they finally get the ok to PR real data.
Thanks for that example midtieroil.
LOL, 49 Billion huh? The first thing that popped into my head was a song. . . . 99 bottles of beer on the wall, 99 bottles of beer...... I think someone might have been drinking when they told you that.
Krom, I will happily accept the new NSAI numbers with 49 Billion barrels but I won't even ponder it until I read it from official sources and by that time the share price will have gone through the roof.
Have a good evening.
I don't necessarily agree with that "rigmyster". Notice that today’s release was on one hole and they gave specific details on both gas and oil including flow testing. It seems to me that Addax/Sinopec is doing exactly what they have publically said about the 5 holes in the JDZ. They are still analyzing the whole area and they have not given out complete details of what was found from any single hole yet. Even if they only find gas, I expect to see documented quantities (recoverable) and what their plans may be with it (ie. Connecting to another local system or creating a JDZ production gas system). Or they could come back and say they pass on Phase II, who knows. But, again the good news is that we now know, Addax/Sinopec are capable of giving a valid, detailed and complete press release on a discovery.
This means ERHE can then send out their own PR after Addax/Sinopec does that, at a minimum says "yes, same as what they said....",lol.
Strass, I would love to see the full drilling results of our 5 well program too. Although I have no idea what those results will contain, I am more confident today that we WILL actually see real data due to the Addax/Sinopec Press Release today. This shows SINOPEC is not as tight lipped on real data being released when they finally get around to releasing it. I now have increased my expectation for the information I expect them to release at some point in time in the future. I expect a similar type of PR to be release by Addax/Sinopec along with the determination to go into phase II or not later this year. This is good news for ERHE but not anything significant enough to raise the current share price.
And, although I also agree with you that the history of Udele-2 etc. has no direct impact on ERHE's JDZ holdings, it does provide a specific example of another target in the GOG that originally showed only "gas" to then become a successful "oil strike". This is also from the same operators/technical people working on the JDZ and I have confidence that what they learned from those other drilling events can help them make better educated "guesses" for the future ERHE drilling programs.
Again, I view todays release as positive signs only, not "company maker" rumors. lol.
Some food for thought:
I enjoyed reading the PR today by Sinopec/Addax “Sinopec Addax strikes oil at Nigerian Block” regarding the UDELE-3 well of block 137 off Nigeria. Several good pieces of news to come out of this regarding ERHE. First, this should stop the conspiracy theories of Sinopec never releasing news. I remember reading another posters view (I apologize for forgetting which poster deserves credit here) a while back that said they were not concerned because they felt Sinopec had to prove the acquisition of Addax to be a prudent investment and therefore, the company would be publicizing its’ oil and gas finds. It looks like this poster has been proven to be correct. I think now we can all put to rest the incorrect assumption that at least Sinopec may never release news on finds in the JDZ!
I also decided to research this find on Block 137 to maybe shed some light on the history to provide some possible insight as the future of JDZ blocks 1 – 4. I found some interesting finds:
From Rigzone there was a good article on 7/12/2007 regarding UDELE-2. Full article here:
http://www.rigzone.com/news/article.asp?a_id=47563
Quote from this article by Jean Claude Gandur - “I am very pleased that the exploration focus we initiated last year has already started to produce positive results. ……..I am particularly excited at the potential demonstrated by our exploration results in OML137, including the potential for significant gas exports.”
From broadcast transcript on 3/24/2009 regarding Udele West. Full transcript here:
http://goliath.ecnext.com/coms2/gi_0199-10316228/ADDAX-PETROLEUM-CORP-Capital-Markets.html
Quote from this transcript by Jim Pearce, COO of Addax – “Our real growth potential in this area is OML137. We had two discoveries; that is Ofrima and Udele West. Udele West was mostly gas.”
From this same transcript a quote by Jeff Schrull – “We have made the Udele West gas discovery …..since we shot the 3-D; and now we have the queue in place to continue drilling.”
Does any of this sound familiar? So according to history, Udele West was originally a “gas discovery” and they drilled Udele-3 and lo and behold Addax/Sinopec “strike oil”.
This is just further proof of the potential that could be discovered in the JDZ as well. I am looking forward to Phase II if Sinopec/Addax decide it is worth exploring…
Good luck all
Midtieroil, thanks for the thoughts on the 75/25 split.
I also agree with the "snowballs chance" on a public offering of new shares without substantial new news. That is also why I am not worried about it. When it all boils down, either ERHE will share substantial news to increase both the price and demand for new shares OR this offering is going private similar to the buy-in example I gave (but more close to your 75/25 split for retained rights).
Thanks again for your thoughts.