ERHC Energy Inc (ERHE)

[Krombacher]

The bottom line is, no matter what probability you want to assign in overcoming each hurdle...the problem is that there are too many hurdles.

To demonstrate the complexity of assessing the risks, let's just take the time for decomposing just the very first hurdle/risk. As you can see, the first risk alone is enough to get ERHC investors to shy away from the company. Here's the first hurdle broken down: (I will leave it to you to break down the other hurdles)

1) What's the reason for the extension for SNP?

a) Phase II, even though it is a paltry 4 holes is still too expensive for SNP. (I don't think so).

b) Phase II, even though the costs are not as high as a development of an AKPO are just not justified by what was found in the JDZ thus far. (Most likely).

c) By postponing Phase II, you get a better deal on the EEZ auctions. (we will know this around Sept., whether SNP was indeed trying to cheapen the auction prices of the EEZ).

d) Phase II postponed because Total is interested. (I no longer buy this argument because I think Total needs to get the deal done with Chevron first before it even considers the other blocks, and 6 months is not going to cut it).