It is about time ERHE comes back to life.
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Don't hyperventilate before you understand the facts. This is a filing to inform the investing world that ERHE would like to issue shares to raise UP TO $50,000,000. Keep in mind there are also limitations. The company only has 950M of registered common shares of which 723,050,444 are already outstanding. There is less than 227M to issue freely and that would leave none for executive and BOD compensation/incentive bonus etc. It does not say the sale will be tomorrow or at tomorrow’s stock price. This is setting the table for after the news release or getting ready for the AIM (IMHO).
Some things to consider: What will the stock price be if ERHE announces partnerships in the two EEZ blocks (and it is not SINOPEC)? What if they receive $50M or $100M in cash with these partnerships? What if Sinopec announces confidence in what they have drilled in the 5 holes of JDZ phase I and they submit a plan to the JDA for Phase II drilling? Where do you really think the price may land if one or all of these scenarios get announced over the next two months or so?
If the stock price goes to $1.50 and the company issues 33M new shares to raise an additional $50M, I probably wouldn’t get very upset over it. If they sell 200M at .25, I will reanalyze my long term position to say the least……
Still here will all shares. 9+ years and still focused on the assets, not the BS. It looks like it will remain quiet into the summer but I predict a very strong run well past a buck next time as the following could be released:
EEZ partners (someone other that Sinopec to provide diversity, and disclosure)
Cash infusion from EEZ 100% blocks
A plan on the EEZ (excitement around drilling dates once again)
Phase II with info on next drilling dates (RIGS!)
Total buy in of JDZ block 1. This event alone will likely give a baseline valuation for the ERHE percentages in Blocks 2, 3 & 4.
In the mean time, I will enjoy the summer. Take some time off from work and the IHUB boards. Enjoy the outdoors and focus on the many positives in life.
Have a great summer all.
ok, that was funny! lol.
Happy Friday everyone
mccir,
I respect your thought process here but I think the big difference is that in the GOG, new regulations that would increase the costs of drilling are much less likely to occur unlike that of the GOM. Thus, it would be less expensive to drill for oil in the GOG compared to the GOM. Now add in the extra savings from the 'lack of hurricane' season on the GOG and it is really starting to get a world wide competitive advantage. If they can just keep the "MEND" group at bay, it should work out quite nicely for all players in the JDZ.
Yes, but is this book written by "oilphant"?...lol
amj23, I am just catching up on posts and noticed your post. Where did this info come from? (link?). That is the first time I have seen in print, post drilling, that "many...believe are in the $billions" for the JDZ assets. That is the kind of positive publicity that ERHE needs more press on.
REALITY CHECK
to the garbage I am reading stated as fact. Anyone who begins to believe the bs about Sinopec trying to delay things to simply bleed out ERHE has no comprehension of the oil industry or this situation. Sinopec is worth 67+ billion dollars and is controlled by the Chinese government with dollars to burn. They could burp out a quarters profit and buy out ERHE at any time if they wanted it that bad. They only want OIL and in large discoveries. They have to go after OIL fast and furiously. That is another reason why they will drill in Phase II without delay. China needs oil in the future to run their economy just like the US and they have the money to buy the control over it. They will search (drill) for the oil wisely and studiously just the way they are. They are not sitting around playing silly games to pick up very minor shares from a 235million market cap ERHE who has a free ride. It is a simple loosing scenario for them to do that. Yes, let's piss off both the STP govt. and Nigeria for a hope ERHE has no other options.....?? Your kidding, right?
ERHE has been spending a lot of money in the past few years because they can (not to mention the raid situation which is now completely done). If the delaying game ever got serious, ERHE could go into sleep mode and drastically cut expenditures at the drop of a hat. They have no production to slow down, no widgets to build. They could out last any drilling delay game Sinopec tried to do easily. On top of that, Sinopec does NOT control what ERHE does with the rest of their rights. With the two 100% rights in the STP, the options are wide open to increasing their cash by out right selling one or both 100% blocks. They can also obviously make strategic alliances to another player which, by the way, they have proven they can do.
Don’t get me wrong, I am not saying Sinopec is going to come clean any time soon and say they found 10Billion barrels but it is an absolute joke that anyone would think or espouse that this mega giant Sinopec would waste time playing delaying games they can’t win for a relative peanut position of ERHE. There is a much bigger picture which I doubt they have lost sight of.
In all reality, Sinopec simply asked for a 6 – 12 month extension to wisely study their results to make the best decision possible for their next steps. They received the 6 months and they may not even need to use all of it. They probably thought they wanted 3 more months to study the info so they asked for 6 – 12. It really is not that big of a deal in the long run.
And finally, with the rumor of Total entering the picture, that is pure bonus and it would be a good thing for all players involved in the JDZ but it is not “needed” in the slightest. Just like the AKPO field started by it self and developed into the many well infrastructure that it has become, the JDZ could do the same thing as a stand alone infrastructure between the blocks given the right discoveries. The gas finds in the initial shallow drilling is pointing in that direction. Someday we will know more but it is obvious that they haven’t given up at this point.
Good luck all
Now that I have to agree 100%. All good points Krom.
Krombacher, most of the time you present very good logical information which I agree with. On your "probability" post, I would like to present a different perspective.
The reason the share price is wafting in the wind is related to the risk of this investment. But I would venture it is greater influenced by the presumption of increased “time” and “lack of facts” that is the biggest burden on the current share price.
My way of looking at the overall picture is this:
If the oil or gas is there in commercial quantities, it will be produced. It is just a matter of money and time.
I am not concerned at all about “TOTAL”. If they enter, I think it is great news for ERHE and it will likely speed up the time to production. Even if TOTAL only stays in block 1 (which I think is doubtful), Sinopec and Addax will get the full benefit of learning what it takes to produce oil and gas in this type of system. From there, they can purchase the technology. The other good news is that Sinopec has the money.
I currently put a much higher probability of hitting commercial oil/gas than the 51% you came up with. But that is what we are all needing to decide with this investment and whether to wait it out through September or not.
Briefly, I want to make a comment about another over exaggerated “risk” I see being blown out of proportion. “ERHE running out of money” is a concern but not as big of a risk as people are suggesting. Yes, they have been burning through cash at a substantial rate with the investigations and with the AIM planning etc. Well, the investigations are over and the AIM plan only makes sense if there is a new story to tell in order to “sell” new shares. Also keep in mind, before the PSC signings, ERHE had no cash for years and years. They borrowed from Chrome and/or SEO. ERHE currently has plenty of cash to get them to a point in time when we will know whether or not there is commercial quantities of oil/gas in their blocks (maybe as early as September or sooner). Once they hit this point in time, they will have multiple options for cash and likely at lower costs due to the reduced risk for a return on that loan.
Just my thoughts.
Someone decided to start getting back in... ok, someone fess up, which trader is back on the positive band wagon?
Or is someone going to come out and start saying the Chinese are buying in cheap or Total is buying up 4%, LOL.
Wow, group think and paranoia are running rampant today.
Although I don’t like seeing my current valuation this low, I also get a laugh out of this situation. The bashers/doubters/traders seem to have taken over the board as there is not much else to talk about so the price is in its downward trend.
For those that are worried, take a step back and think about the bigger picture.
1st Sinopec got the 6 month extension simply to buy time and because they can. It was smart for them to do. There is no point in analyzing stuff if there was nothing there to analyze. I am guessing, the more time Sinopec manages to stay quiet, the more time they will have to either negotiate for rigs, negotiate for more of the current JDZ pie, and/or negotiate deals close by like the EEZ.
2nd All this talk about the AIM is a dead issue if they found nothing in the JDZ. Someone made this statement the other day but I don’t think many caught on the full meaning. ERHE has stated they want to move to the AIM for a more fair share price valuation and to raise capital. The only way to raise capital is to sell NEW shares to new investors. They will have to have a NEW story to tell (real JDZ data results of commercial oil) to get a reasonable price and volume on enough shares to make a difference.
3rd September 14th is the worse case scenario for the wait, in reality, Sinopec can announce phase II whenever they are ready which may just be a delay tactic to negotiate for the next Rig. In the mean time, news from ERHE about a partner for their two 100% EEZ blocks could happen anytime and will likely be a complete surprise. This alone will catch many traders/flippers while out or waiting for that lowest price.
4th Ironically, the disaster happening off the Louisiana coast will actually increase the value of ERHE’s assets in the GOG. Why? Because the demand for oil is not going anywhere but up. The new regulations that the US will put in place to prevent a like type of disaster will increase the cost of drilling in the Gulf of Mexico. I seriously doubt STP or Nigeria will change any of their regulations or procedures for the oil companies drilling in their waters.
5th Really think about the PR’d news of Total in talks to purchase the Block 1 rights. There is nothing to talk about (and PR about) if it held no value to Total (hint… commercial in the right situation). Chevron stated it doubled the value of their asset.
All in all, too many real items are pointing towards a commercial discovery. The only problem for ERHE investors is time. Unfortunately, we are enduring another “quiet period” where the traders are playing on the emotions of the fence sitters all to flip for free shares.
The good news is that the quiet period will end and hopefully sooner than 9/14.
Good luck all.
petemantx,
Your numbers are way closer than the .41 per share.
If my recollection serves me correct, SEO/chrome originally paid $6 million for his majority purchase at that time (1998ish??? which may have been 400 million shares). After that and before ERHE got cash from the PSC signings, SEO/Chrome cash flowed the company by loans which got paid off by newly issued shares several years ago. I remember it being a big fuss at the time because the loan payoff in shares amounted to like .25 or maybe .41 per share at that time and some IHUBers were complaining that SEO knew the shares were going to immediately rocket to $3.67 per share, lol. Well, history now tells a different story.
Anyway, I agree with your thoughts that it was worth it for ERHE at that time and in the long run we would all have to agree that the price for the loan payoff turned out to be more than fair.
I really think all this will be a moot issue once the shares properly reflect the value of the oil below. Unfortunately, it is taking more time than most wished for including me.
OOPS!..LOL Yes, I am watching the story unfold. They are talking about a misprint on PG but that is only a contributing factor.
Amazing times:
Don't know if anyone is watching this now but the Dow just took a dip nearly 1000 points. It is coming back but we are in for some extremely volitile times.
Greece is just the first shoe to drop IMHO.
Oil, Gold and hard assets will be the safe havens in the months to come.
Good luck all
Sure, if you want to take the most pessimistic view of just the information you have but....
As history has shown us, the AKPO field next door to the JDZ also had just “gas” shows at the beginning. Now it is over a 1 billion barrel find.
Second, we now realize Addax/SNP did not drill deep enough to prove out targeted oil zones, just deep enough to show views in structures above the potential oil (gas caps).
Third, why ask for the extension for 6 months if what you propose were obvious. Just call them all dry and pack your lunch box up and go home (SNP that is).
Fourth, why would Total be interested in Block 1 and why would the 5 new wells “double” the value of the Obo-1 results as stated by Chevron.
Bottom line is that only time will tell at this point. The risk/reward ratio is still more than intriguing in my opinion. I will hold for more info.
Good luck
Kobiashi,
You are spot on. Unfortunately, we will have to wait until the ascent begins close to September before we get out of this "horrid price zone". And I also think a majority of the quiet long term shareholders are with you on this. At this point there isn't anything else worth discussing so the message board is taken over by the basher point of view and the AIM scare tactics.
Time for another vacation from the board.
In response to your usual negative spin:
"Just because Apko is a great field, does not mean that Block 1 will be nearly as productive."
It is also as likely if not more so that Block 1 will be double as productive as Apko. So using your thinking, the likelyhood could be a 2 billion barrel find as much as "not nearly as productive".
But wait, we have more to go on. Now that we know they found the exact same kind of "gas" shows in the exploratory drilling, who's scenario is more likely to be proven correct?
ponzi, maybe investing in an oil exploration holding company isn't your strong suit. Possibly pork bellies is more predictable and suitable for your level of risk?
Good luck to all.
Really robjer? And what kind of koolaid are you trying to sell? You provide no reason or logic but you are entitled to your opinion...
Your comment regarding ERHE management is the best comment of the day and oh so true!
"i think they have done all they damage they need to, they need to keep their mouth shut until Total and sinopec reach an agreement to develop"
I really think the Chinese shot everyone who showed up....lol.
So true! The Ponzi characters have been working overtime here to instill doubt since the company has been so quiet. That is one of the reasons I am guessing we have a bounce to the upside regardless of what is said.
Good luck to all.
From the tone of this board the past two weeks, it must feel awfully cold in that room. I'm not too sure that PN can grin big enough to melt the ice, lol.
I was not expecting any announcements from this meeting as the share price was pretty much pricing in the doom and gloom. It would be nice, however, if the company can solidify the shareholders confidence in what the overall strategy or direction is.
Looking forward to comments from those who could attend.
You can read anything you want into this completely unrelated story. All it says is that China lent Venezuela money now in exchange for a new 10 year stream of oil.
All that tells me is that China is desparate for more new oil sources and therefore would want to do all it could to please any company or country that has rights to oil. Especially new potential sources.
Or it could mean nothing at all as it relates to ERHE.
That is a very interesting discovery. Maybe Sinopec has agreed to both parties that they will release drilling information publically on the 26th or something.
Midtier,
I don't completely disagree with you but on the flip side the results we may have heard might not be better than what we have now. Can you imagine three more blocks like block 1. Sure, we found multiple zones of oil and gas but we can't determine if it is commercial on a stand alone basis. We will now wait for some other operator to take the next step.
Now that Sinopec as the sole operator, with all it's cash and demand for oil, it is more likely ERHE will get news of commercial finds (possibly in both gas and oil) due to their ability to connect the finds over multiple blocks.
Just another way to look at it.
Willjam and Balance,
Try not to over think the AIM issue. You ask, if there is no dilution and they aren't going to use the JDZ/EEZ assets, what are we going to use to fund the AIM?
Anyone around here ever heard the term intellectual property? Think about Starcrest for a moment. What assets or dilution did Starcrest have before they established the deal with Addax? Oh, it was just SEO and his connections which created an opportunity which also had a nice little payday for Starcrest……
What if SEO and/or current ERHE management find/negotiate (bribe…lol) another opportunity somewhere in the GOG? ERHE can simply utilize this to create the AIM subsidiary.
This is pretty much what management has been saying all along but no one cares to listen. Until they find and work out the details of this type of deal, they can’t give much more guidance than they have.
To me, all this is pretty much a moot point as I am primary concerned and invested in what the value of the JDZ/EEZ is. Anything management puts together with this other strategy is just bonus….
Balance, you ask "are we still waiting for them to deliver that action"? Stated 16 months ago by PN.
That depends on how you choose to look at that half full glass. Let me see, 16 months ago, they had no drill ship in sight and the partners hadn't drilled 5 exploratory wells in their three blocks. That's 4 more wells than Chevron has done.
I am pleased they drilled 5 wells. I am more pleased that they drilled the extra optional well. I am pleased that they are working together to analyze all blocks to possibly exploit together (better chance of being commercial sooner). I am pleased Total is now interested in Block 1 (yes, nothing to do with our management, but Block 1 value just doubled due to the 5 new wells drilled in our blocks). I am pleased ERHE management hasn't rushed into other marginal fields yet (maybe if it is a really good deal and we are closer to production on the JDZ, I may get more excited over this strategy). I am pleased with the EEZ selections and progress. I am very pleased with the new BOD appointee.
I choose to look at our current position as the glass being half full and still being poured.
I don't disagree with all of your frustration with management but I also don't plan on dwelling on it or harping on it too much until it affects the assets I bought into.
When the partners PR the word "commercial" and the next steps for phase 2, this board will be a different place with a lot more half full glasses (and hopefully a substantially higher share price...lol).
Good luck to all
soon as the next bird chirps and it breaks .65 you will hear the $3 - $4 predictions at a minimum..lol.
Just for the record, I didn't think this week as so exciting, lol.
Maybe next week.
Have a great weekend all.
ssc, you can argue your point until you are blue in your face (if you aren't already) but I would bet most people here understand exactly what YM said and what Bovell said.
You can continue to try and slant every bit of information that goes out as negative but I tend to look at things more logically.
Bovell did not release amount of net pay, amount of p50 reserve estimates, or any other significant details to break any rules of the operators. What is most logical at this point is that Bovell is fully aware of what is being discussed, planned, and negotiated between all the operators and he said production in 2015 - 2020.
All of this argument will all be a moot point when official details are released. At this point, all we know is that we are one day closer today than we were yesterday to the official release.
Now play nice and admit you are wrong. I read it as an opinion.
Good points Midtieroil. I couldn't agree with you more.
Just printed .69 with above average volume.
Oh, this one is too good to pass up.
"What is the value of this company if oil is not comercially viable?"
With what has been officially released..... "oil found in expected quantities.....", the chance of that is about the same as waking up one day and all of Microsoft's software no longer being viable. It would have a similar value.
Good luck with your further evaluation.
travel12343, you are right....most buyout premiums are at less than 100% but that is at the time of the announcement.
Here is where the difference really lies: ERHE is currently priced at an arbitrary (market forces, of course . . . lol) speculation of what might be found in rights to expensive and lengthy development cost areas of the deep sea. It all boils down to the value of the assets this holding company has. Up until ERHE (well, actually it’s partners) drilled into these blocks, there was no legal way for ERHE to report the value of these assets on their books. Therefore, the price has vacillated between .10 & .90 for years and years. Up until 2010, ERHE has been a pure speculative play.
Unless all properties held are commercially unviable, the world is about to change for ERHE. When ERHE’s drilling partners (get off the ball) or the JDZ finally release actual data regarding the 5 wells drilled and when they state it is of commercial quantities, ERHE and the general market forces will finally be able to place a more substantial number to the value of these assets. Once an actual block is declared “commercial” and the NSAI numbers are recalculated, I believe, ERHE will be able to put an actual value (P50 etc….) of the drilled blocks on their balance sheet. This is MONUMENTAL to the true valuation and the speculation of the remaining blocks not drilled.
When this happens (which sounds like the very near future now) ERHE will be at a new stage in the companies life cycle. Right now it is anybody’s guess as to what the value will be (maybe $1, maybe $3, maybe $5 . . . who really knows).
Now, if Sinopec (who holds all the details of the wells drilled) has come to the determination that the blocks are commercial and to what quantities, they truly can be in negotiations with ERHE (or SEO …whatever) right now and they may be discussing multiple $ per share. If the data is released and the general market determines ERHE’s value at $3/share, then Sinopec can offer $4.50 at that time and you will get your 50% premium to the market. ALL VERY POSSIBLE and quite frankly…plausible.
The good news for all current ERHE shareholders is that the results MUST be published for both the buyer and sellers benefit. The shareholder and/or the Chinese government could not possibly justify a purchase price of $4.50 for a .65 security. And, ERHE couldn’t possibly justify a buyout less than that to its shareholders without a HUGE legal battle if the results aren’t made public.
You can use any numbers you want in this example but the bottom line is, it is in every parties overall best interest to release data and it sounds like that is about to happen.
Good luck to all.
Real slow day on IHUB today and low volume too. Everybody must be too busy filling out their "brackets" at work.....
Why excercise the option to purchase shares at .43 when they were available on the open market for around .10? 12/31/08 close was .13
Not too confusing to me.
Thank you Sidewinder for sharing that response.
No Secrets there. Thank you ERHE for having a more appropriate sized conference room for the shareholder meeting.
Hopefully this will be the end of this discussion also...
amj23, maybe with an open mind and a little more thought you can see more positives than just the few "commercial" outcomes (which we all agree would be much better if it was publicly disclosed).
First, the annual shareholders meeting: If you really cut to the chase, ERHE is an asset holding company. There shouldn't be a lot to discuss or vote on for that matter for the typical annual meeting. Yes, you and several other vocal shareholders may want to go and voice your strong objections to the way they run the business but really, with 3 or 4 people in the company and our "Partner" companies with all the operations and responsibilities, there isn't much real business to discuss.
Now, for the "drilling results" and whether Total knows about them or not: Yes, they should know about it and it still doesn't mean ERHE shareholders should (YET). We have known for years that the JDZ would be better off being drilled as a consortium of partners. Because of this, Chevron probably has a close relationship with Addax and Sinopec and therefore they have all the data to date. Chevron, no doubt, has had Total sign non-disclosure agreements for the discussions on purchasing the Block 1 rights and for that, they have received as much results as Chevron possibly has available. Remember, they are trying to get the best price for their 49.5% interests.
Finally, the possibility of a buy out: This should have NO impact on the shareholder meeting that is scheduled for April. If there was a buyer that wanted to attempt to buy out ERHE, there would be a special shareholders meeting scheduled for discussion and voting. Keep in mind, by this point it would be a for gone conclusion as SEO, Chrome, and the bank that owns a huge chunk would have been in discussions and agreed upon the terms ahead of time. The special shareholders meeting (with special proxy mailings soliciting votes by mail and online) will just be a formality unless the price was so ridiculously low that a law suit was started to challenge the legality of the price offered (which, by the way, is a moot point because SEO stands to loose the most with a low ball offer).
Now, you or any other shareholder can spend your time and money going to the shareholder meeting (I would encourage it for the experience if you haven’t ever been to a public companies shareholder meeting) and you can plan on giving them a piece of your mind for how they are running the business. I wish you the best of luck with that but you should probably not get your hopes up to making any kind of substantial change. If you really have a valid change that you want a legitimate vote on, you would be better served by working through management with your proposal than trying to “surprise” them with it. With all of that, I don’t think the company is wrong for booking a “smaller” room than the previous shareholder meeting. I personally would rather them spend more money on things like the presentation last week in Nigeria.
It is in my opinion, that we will all know the results of the drilling and the plans for phase II of the JDZ before the shareholders meeting. With this information publicly disclosed, the share price should better reflect the value of actual results (yes, much higher than today’s price IMHO). When this happens, many shareholders will calm their negative thoughts and hopefully many will be planning their trips to Vegas instead of the shareholders meeting.
Good luck to you.
The Dane, I think the correct term is "traders", not "bashers". They were busy performing their art the past few days. The same traders will be back again telling the longs how stupid it is to hold shares in this.... afterall Nanogas (or whatever) said it was worthless before we started drilling....lol.
Ask now at .719 .70 just went through.
Time to seriously cover those shorts and also time for the traders to try and get back in.
Good luck all