ERHC Energy Inc (ERHE)

[dw2oil]

Some thoughts that might add some perspective to today’s news/plummeting share price.

1.) The two main risks with this company are, and have always been that a) there is little or no oil in the JDZ, and b) that the owner is a Nigereian who owns a majority of the shares, and can possibly work a side deal to benefit himself without benefiting the company. Today’s news does not alter those risks one way or the other.

2.) Although volume has picked up, as a percentage of the float, volume is still de minimus. When any news of substance is announced (good news or bad) tens of million of shares will be traded. While today’s trading is not encouraging, it is still being done at the retail level, and it is institutional investors that will move this stock in a meaningful manner.

3.) This project at best is something that they are expecting to fund with capital they expect to be able to raise through JDZ results. At worst, they will borrow more money for this boondoggle, but again, the effect on the overall outlook for the company is negligible. I believe this either show that Offor is actually trying to build a real oil company, or it shows that management is just trying to justify their existence to the world by being able to point to something that they are doing, rather than just sitting around waiting for their partners to say something.

I am concerned that Offor will make some side deal which will squeeze us out, and that the Chinese will wait until the absolute last minute possible to release information (of course it goes without saying that I am concerned there is no oil). But at the end of the day, eventually something will happen, and as long as drilling returns some positive results, I think the share price will go up, even if it doesn’t fulfill our wildest dreams. Good luck to all. Happy Thanksgiving.