ERHC Energy Inc (ERHE)

[bayfisherii]

dat_51,

Thanks for the reply and let me share my thoughts with you on mabenn 1's model.

The two valuation models are different. Mabenn created a cash flow model, while I created a (very simple) balance sheet reserve valuation model. Neither one has any more relative value as a valuation model than the other they are just different ways to skin the same cat. BUT cash flow valuation models are typically used to value something for purchase that does not have an intrinsic market value. A good example of this would be a Doctor's pratice. In our case if oil and amount of Oil are 'PROVEN' than a valuation model based on proven reserves would be IMO the better tool.

But I looked at Mabenn's model and besides the obvious fact that he has oil priced at only $40/Bbl another thing caught my eye. He has ERHC receiving only 1.8% of any oil produced. So therefore out of the 6 Billion recoverable reserves (again using Mabenn's model) Mabenn's model has ERHC receiving only 1.6% of the recoverable reserves. Mabenn does qualify this number by saying that the 1.6% is net of all costs and all taxes, but I have trouble with using that type of quantitative analysis as he is not sure in the future what type of tax structure ERHC will be engaged in as well as factoring in cost. And even if you accept just a simple taxing structure I have problems duplication Mabenn's 1.6%.
From my analyis this number is too low.


But who knows, I have a bit of back ground in all of this but would certainly not say it is my area of expertise. I just wanted to lighten the board up a bit by putting some very hypothetical numbers up on the board.


But if the numbers mentioned during the ADDAX investors meeting are anywhere near correct and can be proven through phase 1 of the drilling program (the first 6 wells) then we
could see a mid 20's share price by 2009.


IMHO