To ERHC Shareholders:
I am pleased to update the ERHC Energy family on the company’s recent progress.We're pleased too. It's about time.
Joint Development Zone
With ERHC’s assent, support and participation, the operators of Joint Development Zone (JDZ) Blocks 2, 3 and 4 are currently negotiating the terms for entry into Exploration Phase II with the Joint Development Authority (JDA). ERHC has 22 percent interest of JDZ Block 2, 10 percent interest of JDZ Block 3 and 19.5 percent interest of JDZ Block 4.
The contracting parties’ commitments on Exploration Phase I of JDZ Blocks 2, 3 and 4 were successfully met with the drilling of five wells in the three blocks between August 2009 and January this year. Natural gas was discovered in at least three wells (you can review more information about each of the Blocks at www.erhc.com/jdz).Now it's natural gas, not biogenic and it's in 3 wells, not 4. The operators’ analyses of the well outcomes, while still ongoing, are informing the parties’ negotiations with the JDA on terms for entry into Exploration Phase II (or a further extension of Exploration Phase I).So now they might not go to Phase 2 and instead just extend Phase 1 even farther, Whatever
We are highly encouraged by the decision to negotiate entry into Exploration Phase II. In meetings with Sinopec Corp. (NYSE: SNP), operators of JDZ Block 2, and its subsidiary, Addax Petroleum, operator of JDZ Blocks 3 and 4, ERHC has been a strong advocate for advancing to Exploration Phase II and we consider the current negotiations to be a very positive development.Of course ERHE is strong advocate since it won't cost us a dime to go on
Potential outcomes of the negotiations could be to enter into Exploration Phase II or further extend Exploration Phase I. An agreement could come at any time.Or it might not come at any time
We also expect these negotiations to address the issue of a number of small interest holders in each Block either defaulting on their financial obligations or choosing not to proceed with Exploration Phase II. The interests of the defaulting or withdrawing parties will be available in the first instance to the remaining parties and thereafter to interested new players in the Blocks.
Institutional Investor Outreach
ERHC had a very enthusiastic reception from institutional investors last week at the Rodman & Renshaw Annual Global Investment Conference. The conference was a good opportunity to describe how, through our heritage of visionary leadership,Oh please. What heritage of visionary leadership. I hope Ntephe isn't including himself but it sure sounds like it. ERHC secured its current impressive portfolio of assets and how we intend to build on this heritage by leveraging our contacts and expertise.
ERHC Vice President of Corporate Development, David Bovell, offered a history of the Company and an overview of its deepwater oil and gas assets, and explained the Company’s major growth initiatives. The presentation slides can be viewed at www.erhc.com/presentations. Mr. Bovell and other ERHC representatives also met individually with institutional investors to address questions and describe our vision for the Company’s future as an energy investment company with assets across the development lifecycle – from exploration to production.
Status of AIM Listing
ERHC is well advanced with its plans to list on the AIM market of the London Stock Exchange before the end of 2010. When completed, this listing will complement the Company’s current trading on the OTC in the U.S., to which no changes are planned.
In the coming weeks, we expect reports to be completed by the Company’s advisers and independent experts on the Company and its assets. This will include a “Competent Persons Report,” which will include an analysis of the Company’s existing portfolio of oil and gas assets conducted by independent engineering firm Netherland Sewell & Associates. The Competent Persons Report will be made public in ERHC’s AIM Admission Document.Great. The best info in this update. We finally get a 3rd party analysis of drilling results. Let's hope it happens by year end like they say
A listing on AIM will give ERHC access to a new pool of capital in a market that is enthusiastic about emerging oil and gas companies and knowledgeable about West Africa’s oil and gas industry. We anticipate that it could also make ERHC more attractive to institutional investors and potentially reduce the volatility of the Company’s share price.I'll believe it when I see it
Exclusive Economic Zone
ERHC continues to be encouraged by the interest from potential farm-in partners for oil and gas exploration in the São Tomé and Príncipe Exclusive Economic Zone (EEZ). ERHC has a 100 percent working interest in EEZ Blocks 4 and 11 – completely free of signature bonuses.
Earlier this month, the National Petroleum Agency of São Tomé & Príncipe (ANP-STP) extended the 1st Licensing Round to later in the year to give more companies an opportunity to take part in the bidding process. We consider the extension to be a positive development as it could attract more exploration companies and provides ERHC more time to reach agreement with a technical partner prior We don't want more time we just want it done. The sooner the betterto entering into negotiations of Production Sharing Contracts.
ERHC believes the EEZ has all the necessary components of a successful petroleum system. The close proximity of São Tomé and Príncipe’s offshore waters to the proven hydrocarbon systems in the adjacent territorial waters of Gabon, Cameroon, Equatorial Guinea and Nigeria suggests the potential for hydrocarbons, which is further supported by seismic data and petroleum seeps seen on the island of São Tomé.
The effort to conclude an agreement with one or more operating partner(s) in the EEZ is a long-term initiative that is likely to be completed in 2011.
Following the completion of the EEZ 1st Licensing Round, ERHC will consider exercising its preferred rights to back-in to two additional EEZ Blocks of its choice with a 15 percent working interest on which a signature bonus would be payable. This would follow discussions with the Block operators whom ANP-STP selects as well as technical due diligence of the Blocks.
If you have questions, please ask the Company directly through investor relations representative, Dan Keeney (214.432.7556 or dan@dpkpr.com).
I thank you all for your continued interest in ERHC and your trust.
Sincerely,
Peter Ntephe
Chief Executive Officer
