My 2 cents.
I have not been following ERHE for some time now but occasionally I drop in to see what is being posted. Still a shareholder from years ago but not hugely substantial.
Assuming the following facts:
1) Lawsuit was dropped preserving ERHE's rights to block 4 - Kosmos dropped the suit. During the lawsuit process, Kosmos gave legal justification for $500 million valuation on this block in question.
2) Total has been in talks with ERHE's for oil prospecting rights
3) March 28, 2019 a delinquency letter was sent to ERHE which means they have known for months that without coming into compliance with their filings, the stock would be suspended in the process of being eventually revoked and the company would turn private.
My logical conclusion:
Deal conclusion IMHO -
ERHE most likely has a tentative agreement with Total for a complete buyout of all ERHE's rights (the entire company). It was likely in SEO's interest to allow the company to linger into the delinquent/suspended/revoked process to become a private company. This likely will simplify SEO's ability to transfer his share ownership to Total outside the rules of a public entity. This also means SEO has more than 50% of the shares outstanding which we know he had to have done outside the proper form 4 filings. Again, likely giving SEO more reasons to move forward with a transaction outside the public company rules and regulations. Yes, he will still have to follow rules of a privately held company so all shareholders are safe as the assets could be frozen and non-transferable to Total if private entity rules are broken.
Short position IMHO -
I am not a strong believer in a large offshore short position being held at this point in time. I also feel this is an irrelevant issue for all shareholders concerned if a transaction takes place. There does seem to be some logic behind some short position being held outside the shores of reporting at some point in time for SEO to regain his greater than 50% ownership along with the reports from several long term holders here claiming their 50% ownership. I, however, think some of the long term holders may no longer have quite the numbers they may have once had. Just my opinion but I back that up with the logic that most people who short a stock like this, would do so with an expected turn around time to close their position out. I think any substantial offshore short position was closed during the time that gave support the ERHE price above .0002 (months and months). I also feel allowing ERHE to fall into the grey's and back into private ownership, indirectly forces the clean up of any short positions offshore without more price manipulation outside of SEO's control (IMHO).
Deal terms -
I have NO idea of any facts regarding the deal terms BUT I am going to put some logic behind some thoughts here. I don't feel Total would offer anything near to the $8 per share that I see being bantered about here because there is no proven reserves at this point. Total is only interested in acquiring these rights at pre-proven prices since they will be the ones funding all future drilling programs (IMHO). If Kosmos was able to give logical and legal basis behind a $500 million valuation for block 4, I will start there and step back to more conservative valuations. With ALL ERHE remaining rights (including JDZ, EEZ, Kenya [if these still exist]), I think Total may be offering anywhere from $50 million to $200 million. I think this is more in the range of "pennies on the dollar" for Total and also multiple millions to SEO for his 50%(+) ownership. This is what I logically think may make sense. YES, there are plenty of arguments that ERHE is worth more than this but how much longer is SEO willing to wait to get something out of this asset? If SEO owns more than 50% (which would be the only way Total would be dealing in real terms with him and he being able to consummate the deal), that is anywhere from $25 million to $100 million to SEO. Not bad pocket change for him.
Timing -
I do think that SEO has intentionally allowed ERHE to be revoked in this delinquent filing process. There may have been too much cost to bringing ERHE current again and potentially stepped on any gag orders etc. I think there may have been a lot of potential future costs by getting current and dealing with other potential lawsuits. This is just a simplified and cheap way of getting a final deal done outside of public disclosure rules. I also think the actual deal is being waited on until after the company is private and therefore is near.
Many of you have been here following a lot more closely than I have so I am sure, many of you could add more arguments to different valuations. Of course, (unbelievably so) the same nay-sayer's that were here years ago, claiming to never owning shares, are still here and have their own arguments of ERHE going "poof" [do these people have a life? why are they still here?]. I just don't see the logic for SEO to let all these rights go for nothing. Why even fight the lawsuit if you were going to let it go "poof"?
Anyway - Good Luck To All. Who's going to right the book about this when done?
AI
