ERHC Energy Inc (ERHE)

[Krombacher]

Well, here's a point that should drive it home to anyone who wonders about it:

In the last ten years or so, the share price has averaged around:

0.38 a share, I kid you not. In other words if your average cost is around .38 cents a share, you are exactly where everyone else is.

But what is more fascinating is the standard deviation which is:

.19 cents a share.


That means if the share price moved by ONLY one standard deviation, then the value on just "statistical noise" could be anywhere from $0.19 a share to $0.56 a share.

That means if you managed to buy the stock between .19 cents a share and .56 cents a share, there is nothing special about you. So did everyone else, and you are not some fantabulous trader or something. Of course if you bought below this range and sold above this range, then you have something to brag about.

That said, what a range! Conclusions can't really be drawn inside of that range. The share price is meaningless inside of that range....

...now let's say a six sigma (that's six standard deviations) event like finding commercial oil were to occur:

$0.38 a share + 6*$0.19 a share and you are looking at $1.49 a share.

Put another way, if you believe we will be worth more than $1.49 if commercial oil is found, then what you are saying is the market is pricing a commercial oil discovery at something greater than 6 sigma. Maybe 10 sigma or more.

Since 10 sigma is something that is like totally impossible, one can conclude that the market has it wrong, and should price the average share price higher to reflect that fact.

Krombacher