ERHC Energy Inc (ERHE)

[Krombacher]

My thinking on it is:

Shell will get block 4
Total will get the JDZ blocks.

It'll be a one two punch.

Shell will announce... and some longs will sell in the pennies on that announcement.

But the real money is the JDZ that will follow the Shell announcement with Total doing the buying.

But, having said that, either announcement will likely turn into a short squeeze at T+3 after the initial pop.

A dividend or buy out would really clinch that short squeeze though.

So I encourage longs to be patient with the initial pop.

This isn't like the short squeezes attempted in the past with no tangible fundamentals underneath, which would encourage some longs to undercut the market by selling for pennies instead of dollars.

If this happens, you have the backdrop of a Shell deal and probably a Total deal to follow.

So my thinking is don't rush for the exits for the pennies the shorts will offer. I estimate that for many shorts, 2 or 3 pennies are either break even or a mild loss. Although for some shorts, even half a penny might send them into a margin call.

We can take them and their brokers for much more if we play our cards right.

I'm not greedy... but do feel that after all these years, we deserve to take the shorts out royally and not simply because we're exasperated from a wait.

Krombacher