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Re: listener post# 21482

Thursday, 02/09/2006 6:33:59 PM

Thursday, February 09, 2006 6:33:59 PM

Post# of 353423
listener, if you expect to see a PR from ERHE by the first week in March stating they received 18 million and then expect to see a stock repurchase or dividend, you are truely missing a lot about this stock.

First, Addax pr'd that they will be covering ERHE costs and giving them "up to" 18 million. We won't know the details until the PSC's are signed and then the JOA's are made public. I am pretty sure that ERHE has been in talks with Addax for quite a while and the "up to" 18 million may include Addax's participation in Blocks 2, 3 and 4. I would expect this 18 million to come in over time (not lump sum up front). I also will guess that Sinopec will agree to both covering costs and some extra cash flow too but nothing is known yet.

Once ERHE get's a more firm agreement on how much and when the cash will come in, they have huge obligations prior to stock buyback or dividend. First, they are over 2 million in debt (which they probably will cover with the first cash they receive). Then they will owe their 15% bonus on Block 6 (if I recall correctly). IF they have any cash left after that they will need to bank it for ongoing expenses outside of the costs being covered for drilling in Blocks 2, 3, 4 etc.

I beleive ERHE will have another up hill battle for their STP EEZ rights that I can see coming up within 6 months. More trips, expenses and lawyer fees (not to mention any necessary 'political donations', after all it is election year in STP LOL).

The good news is that with several of these major steps forward in the next month or two, I would expect the ERHE share price to be stablized at a much higher point than it is now and IF we needed additional funding, it would be from stock being issued at $2+ per share vs the $.20 that it was being issued for the past 3 years.

Finally, I don't expect any cash dividends at least until after 2010 unless there is some kind of buy out, buy in.

GLTA

Strategyone

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