Replies to post #135534 on ERHC Energy Inc (ERHE)

[YankeMike]

bayfisherii:
Yes, we have discussed this before. Let's say drilling in Blocks 2 through 4 gives us proven reserves of 1 billion barrels. Then if you use $13 per barrel for proven reserves, that would equate to a share price of around $18. Of course it won't happen all at once. Every time drilling results come in and you see we have another 50M or 100M barrels, the share price will jump up accordingly. The share price can go from $2 to $15 in a short amount of time, possibly a year IMO.
Many other variables exist, such as natural gas, Blocks 5, 6, and 9, the EEZ, the subsidiary, etc.

Did you see my post from a couple of weeks ago when I gave examples of oil stocks that have gone up a lot in the last year? Some of them went from like $4 to $50 in less than a year.

Our time will come!
Mike

[Lickety Split]

bay,

Suggest you use the more conservative revised numbers given by Addax for block 4 alone, 486Million. If you use the larger number you have to extrapolate proven for each individual drill site over many years of drilling. I think, if you use the addax number you can determine the shorter term price appreciation.

Strass

[magicatlast]

bay, you might want to check the price Sinopec paid for a portion of the AKPO field, the state of development at the time they bought it, and the price of oil at that time. Since it is very nearby, it should give you a good indicator of the price for proven undeveloped reserves as a percentage of the price of oil. I don't have the numbers readily at hand and don't trust my recollection.

Magic

[petemantx]

I am expecting a gradual but steady rise in SP once we drill as opposed to a meteoric rise because we will not be hitting an "elephant" but targeting many nice sized pools so that in total the amount will look impressive but not immediately after the first drill or two. ERHC may say that we have hit on the first XX number of drill sites and if the remaining targets with the same seismic outlook do the same we should have a total of approximately XXX barrels leading to a major market response but I just don't think it will happen over the space of a month or two. I am inclined to believe we will have a very good year or two of steadily increasing SP that could possibly spike tremendously if good news on other fronts also come to pass (as in the EEZ, onshore, gas potential, AIM acquisition, Petrobas/Total/Chevron or whatever alliance with us in whatever manner, etc).
I have stated that I plan for the worst so as to be pleasantly surprised should things go better or faster than I expect.

[YankeMike]

Posted by: tryoty Date: Monday, February 11, 2008 8:32:55 PM
In reply to: None Post # of 135538

Valuing ERHE shares...

"Profitability is everything" does not apply. At this stage it is "Profitability is nothing". It truly is a meaningless measure.

Why?

ERHE will be priced as an asset play. Many here, myself included, believe ERHE will be in control of a billion barrels of oil when blocks 2, 3, and 4 are all proven. A billion barrels, discounted for royalties, taxes, development costs, and any other hands in the cookie jar, was valued at $5B by the Chinese when oil was $50 a barrel. I'm using China's purchase of 45% of AKPO as real world support for those numbers. Oil is near $100 now, and with all the energy companies running conservation and alternative energy commercials the writing is on the wall, Peak Oil is here. Knowing that, I don't expect a billion barrels to be worth twice what it was when oil was $50, there will be a premium. I am confident that in today's world a billion barrels of proven oil is worth in excess of $10B. Don't forget, that's factoring in all the taxes, royalties, and costs of development.

When ERHE is commanding 1 billion barrels, if ERHE commands 1 billion barrels, the share price will reflect that value... roughly $14 per share.

Before anyone goes off on me, I didn't say ERHE will be $14 when the drill bit turns. The JDZ is going to be a repeat cycle of drilling and finding 200-500M barrel pockets of oil. With each hit (and Addax has put the chance of success at an unheard of 78%) ERHE will jump to reflect the additional asset value. I wouldn't be surprised to see the current blocks take 5 years or longer to fully prove, and that's okay, because it will be a steady and dramatic rise in share price the entire time. If they haven't been eaten by then ERHE should be drilling in the STPEEZ where the structures are "extremely large". With two 100% blocks I twitch when I think about what that means.

This is my last post about trying to calculate profitability. It's just not a meaningful measure and I don't think it ever will be a meaningful measure for ERHE. There is a massive land-grab for deepwater assets going on worldwide. There's a reason for that... it's a perfect storm.

[tryoty]

First well + 30 months and we'll see a $20+ share price, IMO.

I base that on 5B barrels proved in 2, 3 and 4 as expected.

($13 per barrel proven book value)