Equity Technologies & Resources (fka ETCR)

[loki]

OT - ETCR'ers

Twisted1 here. I no longer hold any ETCR, but I did ok with the dividend shares. I do miss hearing from the longs here. I don't miss a couple of the individual posters that made it hell to keep up, and thats probably why I sold off the last chunk I had.
I never have recomended a stock to anybody on these message boards, but I'm in one now that I wanted to turn you on to because I'm thinking that It is really going to go good,(JMHO) and I want to return the favor to the longs who helped me get my dividend shares...Your all adults so look into it or just delete it, good luck to you all....

Twisted1

*******ERHE VERIFIABLE DD v3.25.06*********

ERHC Energy - Ticker ERHE
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(3.26.05 update: added the CVX story.)

Summary info from Government documents (SEC and SEDAR) and News Outlets, links and full stories are found below the summary.

Abbreviations
JDZ=Nigeria and Sao Tome Joint Development Zone.
STPEEZ=Sao Tome & Principe Exclusive Economic Zone.
PSC=Production Sharing Contract.
JOA=Joint Operating Agreement.
NPV=Net Present Value.

Pre-2005: ERHC was granted preferential rights to 10 offshore blocks, (6 in the JDZ in 4 in the STPEEZ), after paying $5 million concession fee to STP and paying for the initial seismic studies at a time when no major oil companies offered assistance. ERHC also helped setup the Joint Developement Zone, thru the UN, to make it a shared zone between Nigeria and STP. The rights were confirmed via international arbitration. The 10 blocks are estimated to contain well over 10 Billion bbls of light sweet crude oil.

In May 2005 ERHC was awarded rights to participate in the exploration and development of 5 "blocks" in the JDZ.

On Feb 17, 2006, Upstream Online reported that Chevron made an interesting find in non-ERHC Block 1 that straddles ERHC's block 2.

On March 14/15/16, 2006 PSC’s are signed for blocks 2, 3 and 4. Addax and Sinopec pay ERHC $45.9 million cash and full carry in blocks 2, 3 and 4. ERHC retains 17.7% of block 4, 10% of block 3 and 21.7% of block 2. As described in the 8K, ERHC pays no costs for exploration, development or production for the life of the PSC’s/JOA’s.
Link to 8K with details. http://biz.yahoo.com/e/060316/erhe.ob8-k.html

On March 25, 2006 an online London news site reports that results of the first well in block 1 by CVX suggest a find of more than 1 Billion bbls of oil and gas.

Ongoing: The STPEEZ license round is planned for late 2006 where ERHE has interest in 4 blocks with 100% rights to 2 of those 4.

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******VERIFIABLE FAIR PRICE $5.******

Determining a conservative estimate of a fair price for ERHC is simple because an independent consultant, ECL, has already determined the NPV for various levels of production for JDZ block 1.
http://www.afren.com/pdf/AfrenCPR-Block1b.pdf
See Tables 6-8 and info.

ECL assumes $40 oil and a 1B reserve field. Then they back out royalties, cost recovery and tax. I scale up the price to $50 oil and use total recoverable reserves of 6B bbls for blocks 2, 3 and 4. 6B bbls is reasonable and easy to work with given that ERHC ends up with about 1/6 of recoverable reserves from the 3 blocks before tax, royalties and cost recovery. Therefore, I use 1/6 of reserves or 1B bbls for ERHC.

Case1: $40 oil, no carry: I can pull the NPV right off Table 8 of $3.2 Billion. Divide NPV by ERHC’s 711 million OS and you get a current fair share price of $4.50.

Case2: $50 oil, no carry: I scale up the NPV per bbl to 3.5 and I get NPV of $3.5 Billion. Divide NPV by ERHC’s 711 million OS and you get a current fair share price of $4.92.

Case3: $50 oil, full carry: Increase NPV per bbl to 4.2 and I get NPV of $4.2 Billion. Divide NPV by ERHC’s 711 million OS and you get a current fair share price of $5.91.

This valuation model is based on the parameters of the JDZ PSC. It uses accepted industry methods of determining value. The recoverable reserves for blocks 2,3 and 4 are in line with quotes from Addax of 2B to 3B bbls in block 4 alone. The biggest shortcoming of this model is that I don’t know how to account for full carry but we do know that $5 is easily a fair and industry accepted share price. Furthermore, this model is based on expected reserves. As reserves become proved the price can only go higher.

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JDZ Awards

SEC doc with the details of ERHC's JDZ awards:
http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001144204-05-041512&Type=HTML
Page F-14

Nigeria/Sao Tome government website detailing all awards and partnerships:
http://www.nigeriasaotomejda.com/

ERHC also has rights in JDZ block 9.
Block 9 ERHC 20% signature bonus free. (To be awarded in a future JDZ licensing round.)

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STPEEZ Awards

Sao Tome and Principe plan to auction several blocks in their Exclusive Economic Zone, (EEZ), later in 2006. The "STPEEZ" geology is thought to be similar to the JDZ and hold billions of bbls of light sweet crude. ERHC retained under the 2001 Agreement the following rights to participate in exploration and production activities in the EEZ subject to certain restrictions:

2 blocks of ERHC choosing, 100% interest in each block.
2 blocks of ERHC choosing, 15% interest in each block.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001144204-05-041512&Type=HTML
Page F-13
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11 billion bbl's of crude in ERHC's blocks

Houston Chronicle article stating 11 Billion bbls of Crude
http://www.chron.com/CDA/archives/archive.mpl?id=2005_3876227

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China pays $2.3 Billion for 45% of Akpo Field near JDZ
http://www.rigzone.com/news/article.asp?a_id=28369
Akpo's P50 liquid recoverable volumes have been estimated by Total, the operator of OML 130, to be approximately 600 mmbbls, with potential for additional P50 recoverable oil in excess of 500 mmbbls for the whole OML130 area. Akpo is expected to come on-stream by end 2008 and reach peak production shortly after that. Total production is expected to increase sharply when Egina, Egina South and Preowei will come on-line. At a price of approximately US $4.6/boe (multiple calculated based on the P50 recoverable volumes of Akpo and other additional volumes in the OML 130 area), the acquisition is on highly attractive terms also when compared to other recent world-scale upstream transactions.

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Chevron and Exxon strike it big in Africa
By Richard Orange
26 March 2006

US giants Chevron and Exxon Mobil have made an African oil discovery that could hold more than a billion barrels worth of oil and gas.

The find promises to be one of the largest finds this year, potentially opening up a new province off the shore of the West African island state of São Tomé and Principe.

A source who has seen the results told The Business that the Obo-1 well, completed on 15 March, had found oil and gas in significant qualities. He said: “It is an encouraging result. Everyone is pleased.”

Geological studies of the prospect suggest it could hold even more oil and gas than the Akpo field in the Nigerian waters to the north, which is thought to have recoverable reserves of more than a billion barrels.

The source said Chevron and Exxon would meet on Tuesday to plan their next moves. He said Chevron, the operator of the field, had not yet decided when it would drill more wells to prove the exact size of the recovery.

There is a severe shortage of oil rigs off West Africa, where the field has been discovered, making it extremely expensive to drill further at short notice.

The companies would not be able to confirm the full extent of the discovery until they had drilled more wells. It took four wells before the full extent of the Akpo field had been proven.

Another source said the consortium was still examining the data and was unlikely to agree on how to release the result until April.

Chevron is the operator of the field with a 51% stake, Exxon holds 40%, with an alliance of Nigerian oil companies Dang-ote Energy Equity Resources and Afren holding the remaining 9%.

The discovery will turn São Tomé into the oil industry’s newest resource-holder. The 160,000 inhabitants of the tiny former Portuguese colony could see their lives transformed in a way that has sadly eluded the inhabitants of the far more populous Niger Delta to the North – so long as São Tomé’s rulers manage to prevent a corrupt few siphoning off most profits.

Campaigners for transparency in oil producing countries were optimistic about São Tomé after the country put into place a petroleum law modelled on that of Norway, with transparency over oil revenues and an oil fund for future generations.

Sadly, the awards of other licences to drill in São Tomé have already shown significant irregularities, with squabbles between Nigerian and São Tomé officials delaying the awards.

A report by São Tomé’s attorney general said the recent bidding rounds were subject to “serious deficiencies and political manipulation”.

São Tomé signed its deal with Nigeria in 2001, after years of dispute over the maritime boundaries between the two states.

Under the agreement, São Tomé keeps 40% of state revenues from any discoveries and Nigeria keeps 60%.

http://www.thebusinessonline.com/Stories.aspx?Chevron%20and%20Exxon%20strike%20it%20big%20in%20Afric...
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Most Recent PR from ERHC
http://biz.yahoo.com/bw/060317/20060317005468.html?.v=1

ERHC Energy Inc. Announces Production Sharing Contracts in JDZ Blocks 2, 3 and 4
Friday March 17, 3:27 pm ET


HOUSTON--(BUSINESS WIRE)--March 17, 2006--Walter Brandhuber, President and CEO, of ERHC Energy Inc. (OTCBB:ERHE - News) announced today that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum (Nigeria Offshore 2) Limited ("Addax"), several oil and gas companies, and the Nigeria-Sao Tome and Principe Joint Development Authority ("JDA"), to conduct petroleum operations in Block 4 of the Joint Development Zone between Sao Tome & Principe and Nigeria ("JDZ"). Mr. Brandhuber also announced that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum Resources Nigeria Limited ("Addax Sub"), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 3 of the JDZ, and on March 15, 2006, a subsidiary of the Company entered into a production sharing contract with Sinopec International Petroleum Exploration and Production Corporation Nigeria ("Sinopec"), Addax Energy Nigeria Limited ("Addax Ltd."), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 2 of the JDZ. Addax, Addax Sub, Sinopec and Addax Ltd. are required to pay all of the Company's future costs in respect of all future petroleum operations in Blocks 2, 3 and 4 of the JDZ. They are entitled to the Company's share of cost oil until they recover the Company's costs.

The Company's CEO Walter C. Brandhuber commented by saying, "The entering into production sharing contracts in Blocks 2, 3 and 4 of the JDZ represents an important step in our goal of commercializing the Company's interests in the JDZ and increasing shareholder value. The Companies' interests in the JDZ blocks represent the cornerstone for the Company's future growth strategy."

In November 2005, the Company entered into a participation agreement with Addax with respect to Block 4 of the JDZ where Addax paid the Company $1.35 million, and will be required to pay an additional $16.65 million on or before March 24, 2006. In February 2006, The Company entered into a participation agreement with Addax Sub with respect to Block 3 where Addax Sub paid the Company $500,000, and will be required to pay an additional $7 million on or before March 24, 2006. Further, on March 2, 2006, the Company entered into a participation agreement with Sinopec and Addax Ltd. with respect to Block 2 where Sinopec will pay the Company $13.6 million on or before March 25, 2006, and Addax Ltd. will pay the Company $6.8 million on or before March 25, 2006.

The JDZ lies approximately 200 km. offshore Nigeria and is adjacent to areas offshore Nigeria where several large petroleum discoveries have been made. The JDZ was established in 2001 following ratification of a formal bilateral treaty between Nigeria and Sao Tome and Principe. The JDZ is administered by the Joint Development Authority.

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Drilling Schedule
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There is no formal drilling schedule yet but information is starting to trickle in.
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Posted by: Meridian
In reply to: Spec29 who wrote msg# 29366 Date:3/9/2006 12:44:10 AM
Post #of 29453

just kidding, i may be a bit conservative with USD 2 to 3 /share. But remember until we actually drill, and discover a lot of oil and some cap and associated gas, you do not know what you have.

Addax has a slot for a rig for block 4 towards the end of the year. That will clarify a lot i hope.
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Schedule for Drillship Deepwater Discover currently drilling in Block 1 for Chevron.

Deepwater Discovery

Chevron Jan-06 Mar-06
ExxonMobil Mar-06 Apr-06
Chevron Apr-06 Jun-06
Petrobas Jun-06 Aug-06

Aug-06 30 days
Shipyard or Project

Nigeria Total Sep-06 Sep-07
Nigeria Total Sep-07 Sep-08
Brazil Devon Dec-08 Dec-11
http://www.rigzone.com/news/article.asp?a_id=29119
The Deepwater Discovery is currently under contract to an operator group and drilling offshore Nigeria, Sao Tome and Principe in the Joint Development Zone. Upon completion of the existing contract, currently expected during August 2006, the rig will enter a shipyard for approximately 60 days, followed by the commencement of a two-year contract with Total SA on Total's Akpo field development offshore Nigeria.

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More DD links
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By: tryoty
01 Mar 2006, 07:48 PM EST
Msg. 85770 of 85770
(This msg. is a reply to 85765 by TheDane.)

"Geological Summary" and "Multi-Client Data" are the two links that give the best info.
http://www.nigeriasaotomejda.com/

I found a GREAT (read easy to understand) article on oil recovery (how the oil pools form, etc) here:
http://science.howstuffworks.com/oil-drilling1.htm

Then I tackled the JDZ brouchure (which should be in Bullwriter's posts if it isn't! I think it is.):
http://www.nigeriasaotomejda.com/PDFs/JDZ%20Brochure.pdf

I found some actual seismic surveys for part of the JDZ here:
http://www.pgs.com/upload/31159/data.pdf
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Others:
http://www.erhc.com
http://www.erhc.greatsprings.net
http://www.investorshub.com/boards/read_msg.asp?message_id=5721853