ERHC Energy Inc (ERHE)

[Sidewinder]

Posted by: balance_builder Date: Tuesday, April 07, 2009 4:35:00 AM
In reply to: None Post # of 3040

Strong rumors exist that there are ongoing negotiations between CEO Gandur (Addax Petroleum) and the Chinese in attempt to meet somewhere within THE GAP.

To substantiate this rumor, please recall Gandurs comments in a presentation in 2007 where he commented that the Chinese were in contact with him every month trying to get him (Gandur) to sell Addax.

These comments were followed by:


"BECOMING A TARGET

It doesn’t take a genius to figure out the exit strategy. You can assume the Addax lads are not around for the long haul. They want to bulk up the reserves and production and double the size of the company, at which point takeover approaches from the biggies are probable, perhaps inevitable. Rising oil prices - Mr. Gandur is a believer in the peak oil theory - might speed up the doubling process. Mr. Stanton, the RBC analyst, said Addax “is not an acquisition target today, but it will become one because it’s a growth story.” He and the Addax executives think Asian buyers, perhaps the Chinese, are the logical suitors. Why the Chinese? Because they have a voracious appetite for oil, are highly tolerant of political risk and know how to win the hearts and minds of the leaders of poor countries. They do so by funding big local infrastructure investments.

Mr. Gandur has one other goal: Buy more antiquities with his profits. “Money in the bank is no fun,” he said."
http://canadiandimension.com/articles/2008/02/12/1597/


Then on 2-13-09 this statement was made in a rueters article:

"HONG KONG, Feb 13 (Reuters) - Africa and Middle East-focused oil and gas firm Addax Petroleum (AXC.TO)(AXC.L) has attracted buyout interest from major Chinese, Japanese, and Indian energy firms, according to three sources with direct knowledge of the matter.

Toronto and London-listed Addax, with a market value of roughly $2.9 billion, has projects in Nigeria, Gabon, Cameroon, and exploration licenses in the Kurdistan region of Iraq.

Chinese offshore oil giant CNOOC (0883.HK)(CEO.N), Japan's Mitsubishi (8058.T), and major Indian firms, which include Oil & Natural Gas Corp (ONGC.BO), have all expressed interest in the firm, sources said.

"Addax has been talked about for a while. Chinese players are looking at it," one of the sources told Reuters, adding that Chinese oil majors continue to scour Africa for quality assets.

"CNOOC has looked at Addax," a second source said.

The sources declined to be named due to the sensitive nature of the process, which is at an early stage.

CNOOC in particular has aggressively sought African resources. The firm, which is hunting for overseas assets to meet demand from China, set aside $6.76 billion in capital expenditures for 2009, up 19 percent from last year.

Addax Petroleum was not immediately available for comment. Mitsubishi and CNOOC declined to comment. A New Delhi-based spokesman for ONGC could not comment immediately when asked whether the firm was looking at Addax."
http://www.reuters.com/article/marketsNews/idAFPEK5148320090213?rpc=44


THE GAP

The gap is the negotiating space between pre-drilling and post-drilling.

We all know that once probable oil becomes proven oil via drilling it becomes more (the gap) costly to the buyer and more valuable to the seller. This is where rumor exists there are serious ONGOING negotiations between Addax and the Chinese.

At some point within "the gap" there is a price tag that Gandur will sell and the Chinese will buy. If Gandur and the Chinese meet at that point, ERHC will very likely be included in the sale. The question is, how high is that pricetag? How large is "The Gap" and how close are the two parties to reaching the ultimate agree/agree by both the buyer and the seller.

Gandurs price tag is likely quite high as he sets his agreeable price with NSAI plus ?????? at a level under proven prices but still at a level where the risk factor of dry holes etc are welcomed. The Chinese are looking for a price below proven. The question is, can Gandur and the Chinese arrive at a pricetag they can both be pleased with?

I'm guessing they can and further guessing a pre-drilling deal will be made between Addax and the Chinese. As the article above points out....in February 09 the process of meeting within the gap was at an early stage. I'm thinking that stage has now advanced as the Chinese start to become aggressive with adding assets in Africa to their portfolio.

Recall past comments that Gandur stated he wanted to sell Addax at age 60. He's awfully close to that age today and he's got a serious buyer looking at a takeover of his company. That said, there is a likelyhood of a meet somewhere within "the gap".

Healthy discussion is welcomed as an agreement between Gandur and the Chinese will be the end for ERHC alongside Addax IMHO.

I'd like to see some numbers thrown around where you think Gandur and the Chinese could meet in "the gap" with an agreement.

It doesn't get more serious than this fellow investors. There is a good chance of a pre-drill deal. Would the serious ERHC investors, do some number crunching and come up with a figure they believe Gandur and the Chinese could agree on (Addax only, as ERHC would likely follow with a sale to the Chinese).

First some Addax numbers....followed by ERHC numbers. Again, the rumors are there and the articles backup the interest.