ERHC Energy Inc (ERHE)

[RUBY1100]

ERHC Energy Explores Sub-Sahara Africa

03.02.2010
http://www.thisdayonline.com/nview.php?id=167608

ERHC Energy Incorporated, a publicly traded American company with oil and gas assets in the highly prospective Gulf of Guinea off the coast of West Africa, is set to expand from the Sub-Sahara to Cape Town. In the just concluded Nigeria Oil and Gas Conference held in Abuja, Ejiofor Alike spoke with key officials of the company.

ERHC Energy Incorporated, a Houston-based independent oil and gas company, which focuses on growth through high impact exploration in the highly prospective Gulf of Guinea and the development of undeveloped and marginal oil and gas fields, is positioning itself to tap the huge potentials in Nigeria and the entire Africa.
The company's Chief Operating Officer (COO), Mr. Peter Ntephe, said despite the heavy presence of other investors, the opportunities available in Nigeria are still very enormous. He noted that the company had commenced discussions with several operators on areas of possible collaboration with ERHC Energy.

Ntepehe stated that ERHC Energy, which he described as “an American company with Nigerian face” is not an Exploration and Production (E&P) company but an energy investment company.
“Our business model is non-operator model. We are an energy investment company. Our policy is to develop opportunities and bring in financial expertise to harness these opportunities. That is what we did in the Joint Development Zone (JDZ) owned by Nigeria and the Sao Tome & Principe. We go into Greenfield areas that have never been touched and explore opportunities for E & P companies to come in,” he said

Ntephe disclosed that opportunities abound in Nigeria for E&P companies but access to international capital is a major challenge.
Being a company listed in America, ERHC Energy, he said has big advantages over others in terms of access to international financing.
“We are publicly listed. So, we can raise funds; the operators can also carry our costs and recover it from production like in the JDZ,” he said.

He disclosed the company had not considered the possibility of listing in the Nigerian Stock Exchange (NSE), adding that as soon as it concluded the process of listing in the Alternative Investment Market (AIM) of the London Stock Exchange, the next target is the Johannesburg Stock Exchange.
“We are publicly listed in the United States. We now want to get into London. After London, what is on the pipeline is Johannesburg. As soon as we finish with London, the next target is Johannesburg. South Africa is a little bit advanced than Nigeria,” he added.

Ntephe described ERHC Energy as “a visionary oil and gas company that sees opportunities before others and relishes the challenge of realising the value of the hard work of our leadership and staff.”
He disclosed that the company is “currently focused on exploiting its assets- rights to working interests in oil and gas reserves in the Gulf of Guinea offshore central West Africa”.
He said during the past two years, ERHC has formed strong alliances with Addax Petroleum and Sinopec Corporation, both of which are experienced exploration and production companies.

“In August 2009, Addax and Sinopec began a coordinated exploratory drilling campaign encompassing JDZ Blocks 2, 3 and 4. A total of five wells are being drilled during the initiative,” he said.
“Additionally, in Sao Tome & Principe's Exclusive Economic Zone (EEZ), ERHC's rights to participate in exploration and production activities include the right to receive up to two blocks of ERHC's choice and the option to acquire up to a 15 per cent paid working interest in another two blocks of ERHC's choice. The Company would be responsible for its proportionate share of exploration and exploitation costs in the EEZ blocks,' Ntephe added.

He said the company is also “working to diversify its holdings and build upon its assets in the Gulf of Guinea through a carefully executed acquisition strategy aimed at viable revenue producing properties.”
On insinuations that the results of the exploratory drilling in the JDZ have not been encouraging, the COO argued that it was premature to arrive at such conclusion.

He said: “It is premature, especially as the results have not been released; to talk about not meeting expectations. The kind of analysis being done on the results is composite analysis of all the blocks and not on individual basis. What we just finished is the first exploratory phase. Let us look at the results first before judging the performance.”
He stated the Exclusive Economic Zone (EEZ) belonging to Sao Tome & Principe contains world class wells in the Gulf of Guinea, stressing that the chances of availability of high exploratory wells are high in Sao Tome.
Ntephe noted that ERHC Energy was the first company to go to the area in 1990s to talk about oil, adding that the company has a commitment spanning for over 15 years and that it was enthusiastic about it.

Ambassador Jetter on his part said he was attracted into the board of the company because of what they were doing and what they have done.
He said: “I actually retired from the United States government shortly after leaving Nigeria in 2003. So, I am now a private person with other interests. When I was asked to
join the board of ERHC, I did my due diligence and I was impressed by what they were doing and what they have done. You know, it is a company exploring opportunities in the oil and gas industry.”

The former diplomat stressed that ERHC Energy also supports local content.
“I have been on the board for almost four years. The company has a vision. As you know, it has very significant interests in the JDZ. ERHC get involved in the JDZ when others wouldn't do it. This shows what local companies that believes in country where they are can do. But ERHC is an American company. It is incorporated in Colorado ; it is a public company,” he added.
The Ambassador noted that the company had done a very good job in terms of their involvement in the JDZ.
“Now, the next phase of development is essentially to look for other opportunities in West African sub-region, particularly here in Nigeria ,” he said.

He said the company's vision is to “maximise shareholder value through exploitation of its rights and working interest in exploration acreage offshore central West Africa ” while its mission is “sustainable and profitable growth through risk-balanced exploration, cost efficient development and high margin production”.
ERHC Energy's Vice President in charge of Corporate Development, Mr. David Bovell, said the company's deepwater will come on production between 2015 and 2020.
“We don't only see ourselves as Nigerian but also sub-Saharan African. Our target is to expand from the sub-Sahara to Cape Town ,” he said.

The company was among American companies investigated by the United States Government but its Chief Financial Officer, Mr. Syvan Odobulu, a Nigerian confirmed to THISDAY that United States Federal investigators had returned all the documents taken from its corporate headquarters in May 2006.
A total of 106 boxes containing original archival records from the company's inception until 2006 have been returned were returned.
It was gathered that the return of all the documents was an indication that the company was not involved in any corrupt practices and had been given a clean bill of health.

ERHC recently announced that the National Petroleum Agency of São Tomé & Príncipe on behalf of the Government of São Tomé and Principe had awarded it 100 per cent working interests in Blocks 4 and 11 of the São Tomé & Príncipe Exclusive Economic Zone (EEZ).
The confirmation of the award follows ERHC's exercise of rights arising from prior agreements between ERHC and São Tomé & Príncipe.
The National Petroleum Agency had also indicated that it expected to invite ERHC to negotiate Production Sharing Contracts (PSCs) on the two Blocks in due course.

The São Tomé & Príncipe EEZ encompasses an area of approximately 160,000 square kilometers south and east of the Nigeria/São Tomé & Príncipe Joint Development Zone and surrounding the volcanic islands of Príncipe and São Tomé.
Block 4 is situated directly east of the island of Principe , while Block 11 is directly east of the island of Sao Tome .
ERHC was among the first companies to identify the possibility of significant oil and/or natural gas reserves offshore of São Tomé & Príncipe and has been active in the area since 1997.

In addition to the two Blocks already awarded, ERHC has rights to acquire up to a 15 per cent paid working interest in two additional blocks of its choice in the EEZ. The ANP-STP has informed the Company that selection of these other blocks will take place at a later date to be determined.
The company had disclosed it was pursuing potential acquisitions in the West African oil and gas industry and firming up plans for listing a subsidiary on the Alternative Investment Market (AIM) of the London Stock Exchange with the guidance of its Corporate Finance Advisors, Strand Hanson.

The company has interests in six of the nine Blocks in the offshore Nigeria-São Tomé & Príncipe JDZ. The Company has additional interests in the EEZ of the Democratic Republic of São Tomé & Príncipe.
The company has constantly reiterated its commitment to creating and delivering significant value for its shareholders, investors and employees, and to sustainable and profitable growth through risk balanced smart exploration, cost efficient development and high margin production.

ERHC Energy Milestones
In 1996, ERHC, which began operations as an environmental remediation company, began operating solely as an independent oil and gas company, according to information in the company's website.
In May 1997, ERHC formed an exclusive joint venture with São Tomé & Príncipe, a decision, the company took “because it identified the possibility of significant reserves offshore of Sao Tome & Principe years before anyone else did and was willing to undertake the hard work necessary to realize the value of these assets.”

The governments of Sao Tome & Principe and Nigeria reached an agreement in 2001 over a long-standing maritime border dispute, with the establishment of the Joint Development Zone to govern commercial activities within the disputed boundaries.
ERHC was awarded exploration and production rights in the EEZ and the JDZ on May 21, 2001.
ERHC and Sao Tome & Principe signed an Option Agreement in which ERHC relinquished certain financial interests in the JDZ in exchange for exploration rights in the same area in April 2003.

The company sold participation interests in JDZ Blocks 2, 3 and 4 to establish relationships with experienced exploration and production companies and stabilise the company's financial position.
This transaction took place in late 2005 and early 2006 and on November 17, 2005, ERHC agreed to sell a participating interest in Block 4 of the JDZ to Addax Petroleum, a transaction, which was completed in February 2006.
The company sold a participating interest in Block 3 of the JDZ to Addax Petroleum on February 16, 2006.
On March 2, 2006, the Company sold participating interests in Block 2 of the JDZ to Sinopec and Addax.

ERHC signed Production Sharing Contract (PSC) for JDZ Blocks 2, 3 and 4 in early 2006 and on March 14, 2006, ERHC signed a PSC with Addax Petroleum, several oil and gas companies, and the Joint Development Authority (JDA) to conduct petroleum operations in Block 3 and 4 of the JDZ.
On March 15, 2006, ERHC signed a PSC with Sinopec, Addax, several oil and gas companies and the JDA to conduct petroleum operations in Block 2 of the JDZ.

The company works closely with its consortium partners, Addax Petroleum and Sinopec Corporation, which began a coordinated exploratory drilling campaign that stretched across JDZ Blocks 2, 3 and 4 in Ausgust 2009 where a total of five wells were drilled.
Sinopec Corporation drilled the Bomu-1 well in JDZ Block 2, in which ERHC has a 22 percent interest and in JDZ Block 3, in which ERHC has a 10 percent interest, Addax Petroleum drilled the Lemba-1 well.
In JDZ Block 4, in which ERHC has a 19.5 percent interest, Addax Petroleum has drilled three wells - Kina-1, Malanza-1 and Oki East.

“The purpose of this process is to test scientific conclusions and gather additional information. To that end, a detailed evaluation of information from the five wells is underway, but at this point we cannot draw any conclusions regarding the extent and quality of the hydrocarbon systems encountered,” the company said.