ERHC Energy Inc (ERHE)

[TOB]

Excellent post and spot on!

A few supporting points which I've made in the past.

There will be no 1:1 offering.

It was clearly stated that the offering(s) and other fund raising efforts would be in stages over an 18 month period. With a conservative estimate of a maximum of $45 million raised.

The first Rights Offering was said by the CEO to test the waters. It will not be for the full amount obviously if it's going to be done in stages over 18 months with other efforts.

1. Rights issuances to existing shareholders. 2. Direct placements to new shareholders or strategic investors. 3. Farm-outs of part of our interest in the assets to interested E&P companies or strategic investors.

The $45 million was called conservative, as it assumes that ERHC would not bring in a JV farm-in partner on either Kenya or Chad, and would pay the first two year work program entirely.

It is important to emphasize that ERHC is simultaneously continuing work on farm-outs, which involve selling some of the interests in our PSCs to raise money and spread risk by reducing ERHC’s financial obligations on the work programs. Success in these farm-outs will not however mean that there is no more need for the financial flexibility provided by an increase in authorized shares. ERHC is a growing company and a very ambitious one. Our remarkable strides in the last few years are evidence of that. We have more exciting assets in view across Africa, our goal being to become one of the largest holders of exploration acreage on the continent and one of the most successful in exploiting them. -Peter Ntephe

As we’ve described in the past, our preference would be to monetize a portion of the Company’s assets, as was done in the JDZ, by farming out percentages of our EEZ, Chad and now Kenya Blocks. While that remains Plan A, potential farm-outs do take time to conclude particularly in early-stage exploration assets. Furthermore, as experience with the JDZ shows, attractiveness is increased and larger premiums are commanded on a farm-out when exploration value has been added to the acreages such as the shooting of seismic and identification of leads and prospects. Peter Ntephe

This means ERHC gets better terms for Kenya and Chad after they do initial Gravity and Magnetic and Seismic studies to clearly define good prospects. Accepting a deal before then is not good value for us ERHE shareholders, unless the terms are as attractive as they would be after the initial studies.

This is less likely, but possible as there will be many wells reporting results in Kenya in the coming months. But it is far better for ERHC to have the two years work with payable with cash on hand to get the best deal. This is an obvious point. Negotiate from strength, not weakness.

Every block in Kenya is now licensed, and all of the blocks around ERHC's Block 11A now have attractive farm-ins on variable terms, including full carries, good operators, etc. Including Block 11B just adjacent.

I can tell you that when I mentioned to the Exploration Manager Gertjan van Mechelen that considering the reported bidding war for a farm in to the adjacent Block 11B, ERHC may consider delaying the process a bit until some specific targets are identified with new seismic and gravity studies and exploration advances in other area blocks, and potentially get a much better deal. I got a big smile and agreement.

ERHC is really in the catbird seat in Kenya, and also in Chad, and this fund raising will put them in a powerful negotiating position. It will be take it or leave it, not ERHC begging and desperate for a JV farm-in at any cost.

Time to end all the hidden agenda BS and accept what mgt keeps telling us as to their plans for Chad/Kenya. -petemantx

Exactly. Enough with all the secret conspiracies that somehow cheat us or hide secret good news. It's silly really, and all this has proven utterly false and misleading over the years. Let's deal with reality, true Due Diligence and what ERHC is clearly disclosing.

The fact is in the initial Rights Offering, The Chrome Group is getting exactly the same terms as we are as minority shareholders. If the deal is sweet for Sir Emeka Offor, it is sweet for everyone who participates as we will all have the same deal.

It will be especially sweet for those who over-subscribe, and it's possible The Chrome Group will have a backstop advantage. But again, that is only for shares that are not purchased by minority shareholders offered them first. Likely the initial over-subscription option will go to those who participate prior to the backstop.