ERHC Energy Inc (ERHE)

[TOB]

The PIB has an indirect influence on the JDZ which has several dimensions. The direct influence is on Nigeria, as it is a Nigerian bill, but there may be a knock-on effect.

On the one hand, the uncertainty chills Exploration and Production investment in Nigeria. So this could encourage more attention on the JDZ, Equatorial Guinea, and São Tomé. Exploration for Oil at a 10-year Low in Nigeria

Alternatively, for JDZ-1, which Total intends to develop as a field with Egina, if there is any slow down with Egina this could impact JDZ-1. On the other hand, if JDZ-1 is promising, wells could be drilled there first if there were a delay in Egina. The results of the two wells could alter that plan, but Total appears to be willing and on target to push ahead regardless. Note that Total aims to produce more than 1 million barrels equivalent a day of oil and gas from deepwater fields by 2015.

He discussed the Group’s outlook for growth, which will be built on more than 25 project start-ups to 2015 and cemented by leadership positions in LNG and the deep offshore. At the same time, an ambitious exploration program is being implemented, to which Total has allocated $2.5 billion in 2012.– Total Chairman Christophe de Margerie

But with the Pacific Scirocco extended for 1 additional year of the 4 option years, clearly Total intends to do some more drilling than originally planned. The question being where?

Pacific Drilling S.A. announced today that a subsidiary of Total S.A. has elected to extend the initial contract term for the Pacific Scirocco from one to two years. The contract provides for further options, to be exercised at the client's discretion, which could result in up to three additional years of contract term with an escalating dayrate.

It seems a big coincidence that Pacific Scirocco is tasked to bring Egina to production and the contract time is doubled to two years, right when the exploration well in JDZ-1 should be hitting full depth or be finished. It could be just a coincidence.

It also comes at a time when some believe Total may want to enter ERHC’s blocks in the JDZ, as part of a wider development and the emerging perspective of the JDZ being an extension of OML 130 which has Akpo and Egina. Possibly one large field with multiple stratigraphic and structural traps.

But would Sinopec and Addax give up enough interest to satisfy Total as operator? Total is operator of Akpo in OML 130 with 24%. Or would Total’s percentage come from buying ERHC’s percentage, and perhaps a small amount from Sinopec?

My read is Sinopec wants to build its Addax subsidiary back into a functioning deepwater exploration unit. So if their decision is to continue with this, they may want to develop their competency in the JDZ with investment already made and much valuable data, and a bit of gas, already in pocket.

The original Addax team is disbanded, but you could argue that team wasn’t entirely on the ball as it was a developing team and company. Some success but hardly at the major league level at which the Sinopec Group may want to grow to. Good people are for hire at the right price, and there are drillships and contracts for hire for much of the work. But building a truly competent deepwater team can’t really be just purchased, you need to assemble the team, but also have the correct corporate management to support it and integrate the various disciplines.

I want to be clear that talking about these “clues” is just speculation on my part as to any result of the impending news announcements and a general look at the wider picture and different scenarios. Nothing is fact until it is announced by the companies involved and I'm not making any sort of prediction, just considering possibility from my personal perspective. The upcoming news announcements could affect the share price in either direction.

What is clear is that the PIB is influential and being closely watched, not only in Nigeria, but by the surrounding countries in the Gulf of Guinea. It provides more opportunity for ERHC affiliate Chrome Group and ERHC to prosper, and also puts pressure on both Chrome Group and ERHC to be in a position to raise money to take advantage of the opportunities.

The Nigerian Petroleum Industry Bill, will build upon this advantage. According to Nigerian Petroleum Minister Diezani Alison: "The PIB when it becomes law will move Nigerian business men and women such as your good selves into the commanding heights of the oil and gas industry.

There is a very interesting dynamic going on, with interconnected companies Chrome Group/Addax/Sinopec/ERHC/Eland/Starcrest/Kaztec/Total/etc. . Chrome is well ahead of the curve in capitalizing on the Local Content Act and the pending PIB, which will ramp-up its earning potential. Chrome is closely working with Addax Petroleum, which is now part of Sinopec. Chrome subsidiary Kaztec has first option on Addax work, and has announced plans to move its offshore work to the deepwater arena.

If it were my choice, I’d sell-off a deepwater gas field with probably some smaller oil reservoirs, in order to bring cash to the auction going on in Nigeria with the Shell and ConnocoPhillips sell off. Plus the effect of the PIB which could pass in some form this session. This would seem a faster, and more reliable way to build up the companies involved, while focusing exploration on unexplored areas with higher promise.

Well nobody asked my opinion, but I have confidence that the people in charge of ERHC are working diligently on our behalf.