ERHC Energy Inc (ERHE)

[rheddle]

Jhermit - $45 m does not provide too much room to manouvre.

I think that we may see something along the lines of ERHE bargaining with its rights in order to ensure short term revenue.

ERHE might be content with $45 m in the short term until oil is found, because that is the figure that was negotiated when ERHE sold some of its percentages to bring in Sinopec and Addax. The 10Q said something along the lines of [the $45 should see us through the next 12 months]. Of course the $45 will see them through the next 12 months and beyond based on their current expenses, unless we will shortly hear of plans for the $45 m that nobody here has thought of as yet.



ERHE might negotiate some of its rights to future profit oil with the operator in one of its blocks, on the basis that the operator pays ERHE a negotiated percentage of the funds recovered from the cost oil.

Such deals are probably only forthcoming once oil is found, unless ERHE and the parties they are negotiating with are willing to take a silly gamble with no information.

One other possibility relates to the following:

Nigeria in the past has said that it needs refining capacity (I seem to remember seeing a recent announcement about that but am not sure, so if anybody can enlighten me then please do) so perhaps ERHE plans to use the cash towards that end, although $45m would not cover the total cost.

A third possibility is as follows:

We can not discount the possibility of something that may come up with those in block 1, but I am still not convinced of this possibility in view of Chevron's original complaint that they did not want to be involved in any blocks ERHE is involved in. That said, I am coming round to thinking that the discoveries in block 1 are likely to change Chevron's position a great deal vis a vis ERHE compared to that taken a few years ago.

There are so many potential scenarios, but whatever we speculate here, we are unlikely to uncover the precise nature of what is going on. That said, it all still looks good.

Just a couple of thoughts for the day, R