ERHC Energy Inc (ERHE)

[midtieroil]

My problems with the marginal properties idea centers around 4 issues.

1) Risk - This is a high risk area no matter how many times management tells us it isn't. Are the possible returns higher? Yes, but that is because of the higher risk.

2) Competency to select properties - Who at ERHE has any experience buying producing properties and who is going to make the decision on which properties and who is going to operate them. Like it or not, ERHE has zero experience doing that. I am unwilling to entrust this task to consultants. If you are going to get into this business you need people on staff to make these decisions. Blair and Gralla are not capable of doing this.

3) Dilution - I am not willing to dilute my interest in the JDZ and EEZ properties to purchase marginal properties. By their own estimates management says they MIGHT get a 40% return on their investment in marginal properties. That's a great return but it pales to the returns we all expect on the JDZ and EEZ. Why would I want to invest in something with lower returns than what I already expect.

4) Ability to market to investors - Give ERHE's inexperience in the producing property acquisition arena I fail to see who would invest in this. This has been proven by the fact that ERHE has to put the JDZ and EEZ assets into play or they won't have a chance in hell of marketing this idea to anybody. I said before you can't create a company out of thin air and now they have been forced to put our EEZ and JDZ on the line to start this new company.

I fully understand the need to generate a cash flow stream to pay administrative expenses until we get some other production. But diluting our EEZ and JDZ assets to do it is NOT the way I would like to see us proceed. Go out and and see what you can get for the EEZ farm-outs and then decide what to do. Now is not the time and this is not the plan I want to see. I want to see a cash flow stream that lowers risk, not one that increases it.