ERHC Energy Inc (ERHE)

[ERHClongtimer]

Just caught up on posts from the last month or so. Lots of angst on the board right now (and understandably so).

The implosion of oil prices and resulting depression of exploration company share prices has taken its toll on ERHC, not to mention the likely effects of toxic convertible debt financing.

Still, there have been positive developments: Work in Kenya and Chad is progressing; Chrome (SEO) has finally stepped up to the plate; and Peter & Sylvan continue to purchase shares.

I view the Chrome financing of $250,000, instead of a larger amount, as a good thing. Makes sense to finance in tranches at this point rather than a big lump 1) because the share price is so depressed - better terms might be possible after some volumetrics are determined for Block 11A and the market improves; 2) they have to pay interest on the financing amount, so less is better; 3) helps to encourage economizing on the part of management. If SEO hopes to preserve his investment, this will be repeated.

I think ERHC needs to go into a semi-hibernation (all the while doing what they can with Kenya & Chad) until this oil market depression subsides. That might mean asking Chad for an extension. Or shedding an asset or two. I don't know how realistic it is to expect a farm-in right now, when so many companies are shedding assets, not buying them. They certainly are not going to get top dollar.

It should be clear to management by now that convertible debt financing is the road to oblivion, especially with the oil market in the state that it is in now. Every dollar counts, and they have to batten down the hatches if they are going to weather the storm.

Management has all the more incentive to do so as they continue to ante up their stakes in the company. - LT