My take. By the way, congrats, all longs! And thanks for the DD, everyone.
The SP went down because dilution is imminent. We can not exist as a going concern without a minimum of $20M, probably more like $60M; even with being carried to first oil. Our connections in the NEEZ will be wasted unless we have financial resolve outside of "being carried to first oil". Afren pulled in ~$100M just to deal with 4.4% of block 1. My guess is the market is expecting the SP of new ERHC shares to be ~40 cents, hence ~60 cents for our unrestricted shares. Hopefully the new shares will be minted to an agent well-connected to one or more of our mid-tier partners, so they can monitor what their cash is up to. (It would be great to bring in influences other than Offor). Remember last nov/dec with a stagnant SP in the 45 cent range even though the awards were rumored to be just around the corner? Then remember what happened when Offor took ERHC's loans off the books. It shot up to 70 cents or so. Financial clarity.
The SP went down because of the number of small % holders in on our blocks. The greater number of smaller companies involved, the more complicated the PSC and potentially longer the PSC will take. Small companies are like leeches, they add little expertise and only encumber the beast. ERHC is way too engorged to be a leech, BTW, more like part of the mothership.
As for valuation:
Snow: Afren LLC, the newly minted IPO mentioned above, has much less going for it than ERHC. ERHC has about 16 times the amount of potential oil in the JDZ (see EF for an excel file detailing the valuation). Further, this oil is distributed in six different blocks which lowers the risk of running dry wells in your one and only block. ERHC holds the sway of operatorships, and owns rights in the STPEEZ. ERHC's JDZ holdings alone should be valued at $1.84 based on Afren's current SP. (For those following ERHC valuation based on Afren, Afren has slid to 38.5 pence since the initial rise to 55 pence off the IPO).
It is my HO that the believers in ERHC were overbought and have now sold slightly. Offor has not sold shares for cash, $25M would hardly make a dent. Institutions will jump in when we have 2-3 years of financing. Our SP has the coming dilution factored in. When financing happens we will see a very remarkable rise in SP --the rise we all expected to see upon awards.
The really great news is that we don't need to rely on Nigerian rags, Sao Tome politics and Portugese translations any more. This is a US company dealing primarially with US companies (neglecting the slight problem of the PSC with the JDZ).
Congrats all!
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