Good points midtieroil.
Like I said, I wish that Gandur had closed a deal on a ROO because ERHE share price would no doubt be above .11 now (IMHO) BUT that doesn't mean it was a bad decision for Addax to pass on a deal which it turns out to be the peak in hindsight.
I am not completely taking sides here. I think the truth lies somewhere in between. We are in a huge economic crisis and it will effect EVERY company with debt and that NEEDS debt to grow. Smart companies must look at their budgets with a "corrected" set of rose colored glasses for growth strategies. No, that does not mean stop every thing regarding exploration, but to take a 3 - 6 month pause and see what happens with rig negotiations should not be the end of the world like some people are making it out to be here. The projected 14.4 Billion barrels in the JDZ will still be there 6 months from now if it is there now. Addax/ERHE will have lost NOTHING if they passed on a ROO in Nov/Dec but sign a different contract in Apr/May (I am optimistically hoping for this).
The only real threat is if they don't find another ROO AND there is yet another delay for the AA, they could get penalized for missing the minimum drill dates. But thanks to whoever found the article a few minutes ago, it looks like Nigeria and STP are going to hold firm to those dates. Good for them! More pressure on Addax to actually sign on the next opportunity. And whether the Gandur bashers would like to admit it or not, EVERYthing I am reading points towards MORE available rigs and at a LOWER cost. Still doesn't mean Gandur didn't make mistakes but he may have caught a little luck and he could look the hero with a successful contract down the road.
I still feel strongly that the oil companies are much more longer term oriented and Addax probably did have a ROO budgeted in with oil around $60 and they should continue planning on drilling many of their prospects. Once proven, they could always sell specific rights if they really ran into financial problems over their debt. Better to sell pieces of their rights with proven than untapped hopeful rights. There is a reason oil companies get HUGE lines of credit with a very long term focus.
Unfortunately, we all have to wait longer than anticipated to see how this plays out. I wish the best for all invested here.
