ERHC Energy Inc (ERHE)

[Krombacher]

TOB,

the minors did not have the same carry agreement as ERHC does. They have to pay their share of phase 1, the delays associated with phase 1, phase 2, the delays associated with phase 2, phase 3, the delays associated with phase 3, and finally costs associated with production.

Let's start with costs associated with production. If the JDZ is more like Akpo, then presumably it is more "expensive", and it requires Total-like "expertise" and it requires Total-like existing infrastructure to make it commercial.

A small player cannot afford to pay for all of that.

Furthermore, with SNP not letting out the info on the degree of commerciality and the details of their analysis, the smaller players cannot entice investors and bankers in order to raise the funds to pay for those costs.

In fact, one theory as to why SNP does not let out the info is precisely for the reason that the small players will fold, and in the process, hand over the rights by default to SNP. That is a theory and may not be based in any reality (or anything stated in this post for that matter).

ERHC's carry arrangement is different!

ERHC pays for the above mentioned costs with the oil that is produced at production and not with cash on hand today. Whereas the smaller players have to pay at each phase, it would appear, and it would appear that they do not have the resources to pay each phase, especially when only biogenic gas is being reported. Instead, they choose to forfeit their rights. Of course, the big question is, how much do they forfeit their rights for? If we knew the answer to that question, then we could get a good valuation of the JDZ blocks.

Krombacher - the above is all my opinion.