I'm down on the marginal field program.
The main benefits of success with this program dwarf the negative side of the ledger.
Afren has how many of these special, hard to get claims ?? 4 , 5 ??
What works for them will work for us, the big difference being they might fit into an operator slot, and we cozy into an investment slot.
We have millions of dollars sitting around getting minimum interest. A better choice would be to farm in to an investment that starts throwing dollars toward us.
It's pretty simply. We invest a certain amount of money to get a certain amount of oil. Crunch the numbers. They work or they don't. Buy interests in ones that do, kiss off those that don't.
These fields are proven, are they not ?? Majors and Supermajors have thrown the towel into the ring on these cash cows because of political reasons, Mend, and more importantly, the hosting nations are now keen to the old strategy of America stealing their natural resources. That's why Nigeria ( and other poorer nations ) have shouldered up to the inclusion of indigenous participation, concerning their natural resources. The past problem with the indigenous inclusion has been greed and graft. Transparancy and other constraints can fix the broken wheel in this respect.
So, for now, there's some great wet real estate out there at foreclosure prices. Should we go get it. Darn straight !!
Here's the MAIN reason why. The market puts much more value on a company that has positive cash flow, then one that only has assets. The marginal program brings us positive cash flow QUICKLY.
Some worry about ERHC management problems with such a windfall. I say, don't worry. We won't be the operator. With the addition of Les and Gralla, and with some consultancy and review of the BOD, we will latch onto some good to great deals.
Almost immediate positive cash flow bought at a bargain basement price. The market will reward the addition with a positive PE ratio and even apply a multiplier to it.
My vote is the marginal program and the continuation of our asset holding ( JDZ and EEZ ) program.
Be bold, think big.
JMO
Red
