ERHC Energy Inc (ERHE)

[balance_builder]

Aban Abraham:

Above drillship was scheduled to spud block H for PXD on July 1, 2007 (Tomorrow).

drillshipBLOCK H :
•The Aleta well will be spudded the 1st of July 2007 by the drillship Aban Abraham
http://www.paresources.se/upload/Kapitalmarknadstr%C3%A4ff/Del%C3%A5rspresentation%20061115.pdf

On 4-18-07 our interim CEO stated in part in his shareholder update:

"There is plenty of excitement about the extensive exploration and appraisal program that is planned. The goal is to realize value from our asset base in the JDZ in order to have a positive impact on the Company's profitability for the benefit of its shareholders. That said, I want to continue to caution that there are many contingencies that affect operations of this nature and guidance for when exploratory drilling may commence could change. We will continue to look to the operators of each of the Blocks to make the relevant announcements when the time is right."
http://biz.yahoo.com/iw/070418/0240344.html


Could this (see below) be the reason of the "caution" signal issued by ERHC as to when drilling could begin? The below article describes current events in which the Aban Abraham in now NOT going to spud tomorrow:


ROC Provides Equatorial Guinea Activity Update
Wednesday, June 27, 2007
Latest Oilvoice Headlines


ROC advises that a dispute has arisen between Pioneer Natural Resources Equatorial Guinea Limited ("Pioneer"), a wholly-owned subsidiary of Dallas-based Pioneer Natural Resources Limited and its co-venturers, including Roc Oil (Equatorial Guinea) Company ("ROC EG"), with regard to Blocks H15 and H16 (collectively "Block H"), in the deep water Rio Muni Basin, offshore Equatorial Guinea.

The essence of the dispute relates to Farmin Agreements which the non-Pioneer participants of the Block H Joint Venture (ROC EG, Atlas Petroleum International Limited ("Atlas") and Osborne Resources Limited ("Osborne")) entered into in 2004 with Pioneer by which that company gained equity in the Block H Production Sharing Contract.

At the time of the farmins, Pioneer committed to pay ROC EG’s share of the costs of two wells to be drilled in Block H in consideration for which Pioneer earned a 20% interest in the Block from ROC EG and ROC EG retained a 15% interest which was to be free carried by Pioneer through the two wells. Immediately after it entered into the Farmin Agreement with ROC, Pioneer also entered into broadly similar farmin arrangements with the other Block H co-venturers. The first of the two farmin wells, H-1 (Bravo), was drilled in June 2004 and Pioneer thereby discharged its responsibility in that regard. However, ROC EG maintains that Pioneer has breached its obligations with regard to the second farmin well.

In August 2005, all the participants in the Block H Joint Venture, including Pioneer, resolved to drill the H-2 (Aleta) well in satisfaction of the Joint Venture’s minimum work obligations for the first renewal of the exploration period under the Production Sharing Contract. That well would also have discharged Pioneer’s obligations to ROC EG under the Farmin Agreement. The Government of the Republic of Equatorial Guinea subsequently approved the drilling of the H-2 (Aleta) well and, until early this year, all participants in the Block H Joint Venture were proceeding on the basis that the well would be drilled, although the precise timing of the well was subject to rig availability.

Earlier this year, Pioneer indicated that it did not wish to proceed with the drilling of the H-2 (Aleta) well and did not consider itself bound to fund either its own share of the costs of drilling the well or the carried share of the other co-venturers’ interests, including ROC EG. Pioneer further indicated to ROC that there were two reasons for its change of view: the enactment last year of a new Hydrocarbons Law by the Republic of Equatorial Guinea and escalating costs of drilling the well. ROC’s view is that Pioneer is not entitled to take the position it has.

In order to seek clarification of certain procedural matters under the terms of the Joint Venture Agreement which governs Joint Venture operations, Pioneer commenced arbitration actions against ROC EG, Atlas and Osborne, on 14 June 2007. Subsequently, ROC EG notified Pioneer of claims for breach of Pioneer’s contractual obligations under the Farmin Agreement between ROC EG and Pioneer and further advised Pioneer of its intention to pursue its claims through arbitration. ROC understands that the other non-Pioneer co-venturers are also intending to move to arbitration with Pioneer. Until these disputes are resolved, it is unlikely that the drilling of the Aleta-1 well will proceed.

Commenting on the arbitration proceedings, ROC’s Chief Executive Officer, Dr John Doran, stated that:

"Although matters that go to arbitration are often perceived to be of an extremely complex nature, the reality of the Block H arbitration situation is really quite simple – Pioneer wants to cut and run from its farmin commitment and ROC doesn’t believe that it is entitled to do that. Nothing more. Nothing less. That simple."
http://www.oilvoice.com/ROC_Provides_Equatorial_Guinea_Activity_Update/10000.htm

Now the question remains as to where the AA will begin drilling. Will Kosmos and/or PXD have another well site to replace the Aleta well? To be seen.....