Replies to post #15674 on Addax Petroleum (fka AXC)

[Krombacher]

Well...from the lens of the old paradigm, I would agree with you.

When looking through that lens, management (of any company) is supposed to spend money either to develop more business or to operate the existing level of business.

The question is, of course, were all of these excursions truly designed to develop more business. I have shown time and again that we would never have landed Kenya if it were not for these trade shows and meeting the right people and networking. I'm not claiming that Kenya just hands properties over to people who make presentations...what I'm saying is it's at these presentations where networking and contacts are formed which eventually lead to having your company recognized. Surely, then much of this trade show stuff was to enhance SEO's and ERHC's influence in Africa in one form or another for business leads, generation, etc.

Since the company did not have much of an operation (it partnered with operators instead)...it makes sense that most of the money would be spent on business development.

And from the old paradigm lens - it's easy to say that "hey these guys spent $40 million and all they managed to get was Kenya and Chad (the JDZ and EEZ they already had)"...

But that's the old paradigm.

In the new paradigm...all manner of things may have occurred during these presentations and trade shows that were never reported...but which enhanced ERHC's positioning in additional properties or alliances with the likes of Total and others.

...for example, perhaps, under the new paradigm, Total came forth and said we're interested in the JDZ and EEZ...but we can't talk to you until certain conditions are met...you have to do such and such with Kosmos first...and THEN we'll be interested. And you can't report any of this to anyone....

...or make up whatever scenario with whatever influential entity in Africa you can dream up...because under the new paradigm anything goes...and they don't have to report it.

As such, with the new paradigm in play, we simply cannot and nor can the markets place a value on the $40 million of investment in business development which ERHC did...because we have yet to find out what the harvest brings.

New Paradigm 101

Krombacher

[midtieroil]

What upset me the most was ERHC losing 4 of the best independents in the world and then ending up with Sinopec as their primary partner in the JDZ after Sinopec acquired Addax. Having a state-controlled communist Chinese company with limited deepwater offshore experience as the operator in charge of making drilling decisions was a terrible mistake. Yes, they had deep pockets and ERHC got a great deal. But all that got them was 5 dry holes. ERHC never recovered from that mistake.

Almost as bad was blowing through the $45 million on things like conferences and world travel as you said. That money should have been spent obtaining a revenue stream instead. I thought these guys were in way over their heads from day one and, unfortunately, that proved to be true.

The death spiral convertibles were also a terrible mistake.