My guess at what happened, what is happening and what might happen by Monday:
Some other posters have mentioned everything from conspiracy theories to fraud to bribery etc. I think it is much simpler than most are making this out to be. I think STP was not so happy to have Nigeria kind of force the day (back a month or so when the STP AG report came out and Edmund Daukoru came out with strong words dismissing it and stating that it was STP internal issues). I think STP came over to Abuja for the time period of yesterday through next week while they worked through the 5 block PSC’s and with the idea of getting as many signed as possible. I also think that STP is feeling uncomfortable or a little out of control because of the Nigerian Indies that have been included in all the awards. I think even though ERHE is a US security, STP thinks of it as a Nigerian company (which it is primarily since it is controlled by Emeka Offor) and they probably feel jealous that Nigeria not only is getting 60 percent of all royalties but their country is benefiting further by Nigerian companies getting a piece of each block. So, now STP gets to the meeting and the JMC is ready to hand them the pen for the big splash signing party (which happens to be held in Nigeria). STP says they would like to read all the details of the finalized JOA’s (which they probably have the right to be curious about since Addax was added very recently and they may have even been tipped by Conoil [as alluded to by Meridian of I-Hub fame] as to them not being happy about the final JOA deal). Nigeria says “what???, just sign the papers. That’s all you’re here for….we’ve already agreed to the PSC terms.etc.” (I am guessing to what was said. I was not there.) STP starts being pushed into the corner further and therefore does the only thing it can…..refuse to sign. Now, notice that when the signing ceremony was aborted for the day, Edmund Daukoru came out and said similar strong comments against STP as when the AG report came out…"This is very, very embarrassing ... It is not good. It does not send the right signal to the outside world in terms of doing business ... This is not how to do business and Nigeria is not happy about it,". This was Nigerian’s play of their hand. Notice we did not hear from the STP delegation or other JDA participants. I think Daukoru was making those comments to send a message back to STP (Pres. Menezes) hoping that they put pressure back on the STP delegation to fold or in this case, sign the PSC’s without further issues.
What will happen this weekend: I doubt the STP delegates are jumping back on a plane and running away with their tails between their legs. I think they hope to buy more time to review the JOA’s. What we don’t know and may never know is if the STP delegation either has the JOA’s now or will get them for reviewing this weekend while they are in Nigeria. There likely will be some closed door meetings and private phone calls going on well into the night and weekend to somehow find a resolution. Or for you conspiracy theorists….some good bribe money or future promises are being exchanged as we ponder, LOL.
By Monday, I think cooler heads will prevail and grandstanding by both sides will die down and they will get the Block 4 PSC signed so they can begin looking at the next blocks for signings later in the week. I also think this will all happen before the stock market opens on Monday due to the time difference.
Let’s all take a minute to realize:
1) They have gone down a very long road at this point to throw it all away.
2) STP is desperate for the money
3) Everyone knows that Chevron has hit something “interesting” in block 1 and it is sooooo interesting that they are having meetings with the announced winners of block 2 (ERHE consortium) due to overlap. This means OIL IS THERE.
4) Neither side came out and is saying anything bad about the PSC’s or the announced winners of the blocks.
5) And finally, notice how strongly Nigeria/Daukoru is coming out and backing ERHE and their assorted consortiums "Whatever the partners do internally is not the business of the state partners (Nigeria and Sao Tome)”. This, I read, as a strong message which should reassure the true long-term shareholders of ERHE.
One final comment… I also got a little chuckle out of JS final comment in his blog today saying that he sold 8400 shares into the close. If events truly unfold similar to what I said above, ERHE will gap above today’s high and rapidly break $1 IMHO.
Good luck to all and as usual, comments and discussions are welcome.
Strategyone
AI
