ERHC Energy Inc (ERHE)

[YankeMike]

ponzi_implosion: Your underlying assumption is wrong when you said it's the same asset. Perhaps you should read the FAQ's on the website.

Frequently Asked Questions
The following responses are intended to answer the questions currently being posed to the company. We will make every attempt to keep this FAQ section as up-to-date as possible, and appreciate your referencing this section of our website frequently for clarification of facts. Naturally, the content here will evolve as developments occur.


Q. Will ERHC remain in a US exchange or are the plans to move it all to the AIM? Will it just be a subsidiary of ERHC's going to the AIM....or a dual listing? How can the co make a move to the AIM without knowing exactly what their intents are?

We’ve tried to be clear, but also need to leave room for the advisors that we’ve engaged to provide value. The company’s management has described a pretty clear plan to list a subsidiary – one with none of the JDZ or EEZ assets – on the AIM. It would have no effect on ERHC’s current U.S. stock listing. As described originally, the parent company, ERHC Energy Inc., would be a majority owner of the AIM listed sub. The reason we are not saying definitively that this is the going forward plan of action is that we’ve just in the past week and a half engaged Strand Hanson and want them to guide us regarding what will have the greatest positive impact on the Company and its shareholders. It would not make much sense for the Company’s management to engage experts and not give them the opportunity to provide value.

So that’s where the Company stands – a clearly articulated management plan that has been in place for 20 months and an interest in letting its advisors assess the situation and provide advice whether to implement the previously articulated plan or perhaps do something different. Until its management and board have an opportunity to consider the guidance of its advisors, the Company will refrain from describing specifically how it intends to proceed.

But the Company certainly will not proceed with an AIM listing until it has a plan of action and described that plan to shareholders. All that has occurred to date is the company has engaged a firm to develop that plan of action and eventually implement it.

Q. Is ERHC’s intention to be listed solely on the AIM or have dual listings?

ERHC has expressed an interest in listing on AIM to achieve enhanced shareholder value, institutional exposure and liquidity, while at the same time providing investors with greater transparency in terms of pricing and execution. You might refer to http://www.erhc.com/en/art/48/ where you can find some of the ideas that are driving ERHC’s interest in listing on the AIM. ERHC is currently working with Strand Hanson and several professional advisory firms to determine whether the corporate goals are better achieved by a dual listing or otherwise.

Q. If there will be a dual listing, does that mean a dilution of shares?

As stated in numerous presentations that addressed the subject (see http://www.erhc.com/en/art/55/ as an example), the idea is to achieve more by accessing an additional pool of capital through the AIM. The Company will not seek to issue any new shares on the OTCBB, AIM or by any other means without first having properly evaluated whether shareholder value will be enhanced by such new issue.

Q. What happens to the shares we are currently holding?

Remember, all shareholders have to be treated equally and any fundamental changes to your shares will require shareholder approval.

Q. Will there be any type of reverse split to get to the AIM?

No reverse split is currently contemplated. In the event the company does at some point find it necessary to pursue this course of action, shareholders will be given adequate advance notice in accordance with law.

Q. When is the Date for the Annual General Meeting?


ERHC has announced the date of the Annual Shareholders Meeting is April 27, 2010. Please see the proxy materials for the 2010 Annual Shareholders Meeting, including Proxy Statement, voting materials and Annual Report Form 10-K.

Q. Do I need to do anything (register or reserve my place) to be able to participate in the meeting?

You do not need to pre-register but you must be a shareholder of record as of the record date which will be announced formally in accordance with the relevant regulations. Provided you are a shareholder of record to whom a proxy has been issued, you will be required to show your proxy or other proof of being a shareholder of record and identification before being admitted to the meeting. If you want to receive a paper proxy, you may want to ensure that your brokerage account is set up to receive paper materials. We have found that the default setting for many brokerages is for shareholders to receive information only electronically, in which case only an electronic proxy is sent.

Q. ERHC often says that it can't disclose drilling outcomes because of contractual and regulatory constraints. What are those constraints and where are they contained?

First, it is important to understand that the information is not yet available to enable definitive reporting on drilling outcomes and prospectivity of the Blocks in which the exploratory drilling campaign is being carried out. The requisite analyses that produce such information are currently going on to determine the nature and extent of hydrocarbons encountered. Moreover, as we stated at the beginning of drilling, this is a five-well program and drilling in the fifth well is still going on. This first part of the drilling campaign is therefore not yet complete.

The Joint Development Zone's Petroleum Legislation stipulates the Joint Development Authority's overriding authority regarding operational information submitted by the operator. Contractual obligations also bind the operators and consortium partners in each Block to comply with agreed operational procedures in the JDZ. ERHC is determined to release results in accordance with and as permitted by those regulations and obligations immediately when we have the results and the relevant authorizations.

If you look at similar deepwater drilling initiatives, you will see that the current analysis period is normal. An example is the recent announcement by the operator of a discovery at Owowo South B-1 well. The drilling at the well was completed in the second quarter of 2009 and the results were announced in mid-December. Moreover, it was the operator that announced the results. Other interest holders waited for the operator to make the announcement and THEN they followed with their own announcements. The situation in the JDZ is the norm in oil and gas exploration.

The requirement on management of information is woven into the fabric of the industry. It is the result of the fact that every exploration program has many players with an array of interests. Without strict controls on management of information, inaccurate information would be inevitable. Moreover, the general operating procedure and convention in the oil and gas industry is that definitive announcements on the nature and extent of any hydrocarbons encountered (and particularly on commerciality) are made after all analyses are complete. This procedure and convention has been adopted formally in the Joint Development Zone at the direction of the Joint Development Authority.

We are proud of the fact that most of the official/formal information that has emanated on the exploratory drilling in Block in which ERHC has interests has come from ERHC! This is despite the fact that apart from the operators and ERHC, there are several other companies with participating interests in each of the three JDZ Blocks. We have aggressively and proactively encouraged our being given authority to disclose information on drilling progress that would not otherwise have been disclosed. We have done so out of our determination to keep our shareholders as informed as possible on drilling progress. A cursory search of independent news reports on the drilling campaign shows that they are mainly based on ERHC's press releases.

Q. Why did ERHC Chief Operating Officer Peter Ntephe say on a video on the ERHC site that we will know the value of our assets within "a few weeks" but appear to take a more cautious position during the December 15 conference call?

If you look at the context of Mr. Ntephe's statement on the video, you will see that he was actually juxtaposing the time it has taken the Company and its longtime shareholders to get to this point versus the time left before results are known. This being exploratory drilling, there are many variables that can influence when results will be released. As stated earlier, ERHC is determined to release the results in accordance with and as permitted by contractual and regulatory obligations immediately when we have the results and the relevant authorizations

Q. One of the shareholder updates stated that the Company was planning to get the ERHC story out to the investment community. When can we expect that to happen?

The board and management believe that it is important to build an effective communications strategy around results from the JDZ drilling campaign. The Company, however, continues to work directly to get its extraordinary story out to investment specialists and analysts. For instance, the Company had a major presence as a sponsor of the Nigeria Oil and Gas Conference, the premier industry showcase event in the region, in February 2010.

Q. What is happening with the stock price?

It is impossible at any given time for the company to declare with certainty the trading activity that is affecting the company’s stock price. Investors are encouraged to seek guidance from investment professionals.

Q. Is ERHC going to acquire additional revenue producing properties? If so, when?

We must balance our portfolio of assets to mitigate the risks of having all our corporate interests in one area. Therefore, we intend to acquire a controlling interest of a company that has revenue producing assets or we will form a subsidiary to purchase revenue producing assets directly.

Q. When will investors learn of milestones in the company’s progress?

In keeping with full disclosure rules, the company will announce developments such that all interested parties will simultaneously have access to the information.

Q. Will the company comment on rumors?

No, the company does not comment on rumors and media reports but will provide timely, material information as well as provide periodic updates to the investment community.


Q. When did drilling occur?

Drilling of the Kina well in JDZ Block 4 and the Bomu-1 well in JDZ Block 2 began in August 2009. That was followed by the Lemba-1 well in JDZ Block 3, the Malanza-1 well in JDZ Block 4 and the Oki East well in JDZ Block 4. Addax Petroleum used the Deepwater Pathfinder drill ship in JDZ Blocks 3 and 4 while Sinopec Corp. used the Sedco-702 semi-submersible rig in JDZ Block 2. Exploratory drilling under Phase I commitments in JDZ Blocks 2, 3 and 4 was completed in advance of the required March 2010 deadline.


Q. What can you share regarding drilling progress?

First we would like thank our technical partners, Sinopec and Addax Petroleum for a job well done. Drilling wells in deep water, of over 5,000 feet is technically challenging, requires years of planning and a great deal of teamwork. So far the drilling has gone remarkably well. The wells are over 11,000 feet deep and take approximately 40 days to drill.

We have finished drilling five wells -- one each in JDZ Blocks 2 and 3, and three in JDZ Block 4. Each well targets several unique sands or potential hydrocarbon reservoirs. In our specific area there are approximately 10 sands that could have contained hydrocarbons. We expected some would contain producible hydrocarbons; and that some would fail. In our specific case we found both and are currently evaluating the results.

The forward plan is to evaluate the well results, re-calibrate the seismic interpretation, and update the geologic model with the aim of calculating the volume of hydrocarbons in place. This process will take several months.

While the sub-surface team is doing their evaluation, the development group will study various development scenarios to determine commerciality. If studies indicate a commercial development, the joint venture will decide to drill further exploration wells or development if appropriate.

Q. How will you determine commerciality?

Commerciality is dependant upon many factors. Arguably the most important are volumes of hydrocarbons, price achieved for the hydrocarbons, cost of development, fiscal regime, and timing to first sales. A decision for the next Phase may be made in the 2nd or 3rd quarter of 2010.


Q. If oil and/or natural gas are discovered in commercial quantities, when would you expect the production of oil and/or gas?

Due to the depth of the Joint Development Zone (JDZ) Blocks after the first year of exploration drilling an appraisal well in each block would be drilled in the following year, with a possible second well. Two further wells would be drilled in the third year. Actual commercial production would not be expected until 2015 or later.

Q. How do you plan to transport the oil? Are you going to use Floating Production Storage and Offloading (FPSO) vessels or are you going to pipe the oil to an onshore terminal?

Due to the depth of the JDZ Blocks, an FPSO is likely to be the most economical approach to conduct production operations. For more on FPSOs, click here.

Q. Are you only exploring for oil or is thee also the possibility of discovering natural gas as well? If so, do your rights entitle you to the gas?

After extensive technical evaluations of all Blocks of the JDZ, it is anticipated that both oil and gas will be discovered. ERHC's exploration and production rights extend to natural gas as well as to oil.


Q. Is ERHC Energy truly a U.S. energy investment company or a face for another foreign company?

ERHC Energy is a Houston-based publicly-traded, energy investment company with the goal of exploring numerous opportunities in West Africa. ERHC Energy and its shareholders have the benefit of being invested in a regulated US company that has extensive relationships in the region, which is a unique position among peer companies seeking to do business in the region and attract foreign investment to their cause.

Our company is managed by employees and consultants to the company whose shared mission is to return value to all our shareholders. Though a significant portion of our stock has been held by a Nigerian controlled company, the majority of our ownership is in the hands of other investors.

Q. Is the company’s plan to position itself for a buy-out?

The Company's intention is to become a recognized and respected member of the international oil and gas community, specifically with interest in developing our business in West Africa. That said, the board will pursue those opportunties -- including but not limited to potential merger and acquisition opportunities -- that it determines are in the best interests of the shareholders.

Q. Should I respond if contacted by Equisearch?

ERHC Energy's stock transfer agent, Corporate Stock Transfer, uses Equisearch to reconnect with shareholders whose addresses or other information have become outdated. As is the case with any organization that contacts you seeking personal information, we recommend proceeding with caution and confirming that the person contacting you works for Equisearch before providing any information. As always, never give your social security number or credit card information.

Cautionary Statement

This page contains statements concerning ERHC Energy Inc.’s future operating milestones, future drilling operations, the planned exploration and appraisal program, future prospects, future investment opportunities and financing plans, future shareholders’ meetings, and related proceedings, as well as other matters that are not historical facts or information. Such statements are inherently subject to a variety of risks, assumptions and uncertainties that could cause actual results to differ materially from those anticipated, projected, expressed or implied. A discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports and other filings with the Securities and Exchange Commission. These factors include, among others, those relating to the Company’s ability to exploit its commercial interests in the JDZ and the Exclusive Economic Zone of São Tomé and Príncipe, general economic and business conditions, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations and various other matters, many of which are beyond the Company’s control. Given these concerns, investors and analysts should not place undue reliance on these statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any of the above statements is based.