Replies to post #255927 on ERHC Energy Inc (ERHE)

[123wrc]

Good Post....that really helps....wonder what would happen to share price if each investor were to (hypotheticlly) purchase 25% more shares now!

[midtieroil]

Hopefully management will have enough common sense(something they seem to sorely lack) to wait for some tidbit of good news before they attempt to issue 100's of millions of new shares. At least that would minimize the dilution. Remember the original plan? Set up another company for new assets so that our interest in the JDZ and EEZ would not be diluted. Just another Ntephe plan which failed miserably and a plan I said would not work from day one.

Raising money to increase the value of the existing properties by doing seismic is something I don't have a big problem with. Raising money because Ntephe frittered away millions and we need more to pay his bloated salary is pathetic. And using the money to acquire more properties when we can't even find anyone to fund the drilling of the ones we have now seems counterproductive to me. Any money we get needs to go toward getting wells drilled somewhere NOW. It is obvious to me that ERHC cannot buy existing production. They have been trying and failing at that for a long time. Maybe someone needs to explain to Ntephe that in order to find oil you need to drill wells. He seems to not understand that. He also seems to have no clue that you need operations people to operate properties. At least he finally figured out you need exploration people to explore for oil. A very small step forward. Let's hope it isn't too little too late.

One other thing Ntephe needs to figure out and doesn't know. You need financial people to raise capital. We have no one that is qualified.

[TOB]

Troyty, excellent post.

Just to clarify, any such dilution is book neutral for ERHC. Thus Stockholders' Equity neutral on ERHC's books, as Sneak said.

The assets in this case, would be the capital. Capital is an asset, as are rights, (what we typically called assets on this forum). The difference being the value of the capital is known, whereas the value of rights is not known until they are monetized, or developed. Thus cash is an easy to value asset, whereas drilling rights are a difficult to value asset.

I also agree that this is a tempest in a tea cup at this point and just fear mongering, as the CEO has said, due to the current share price. However, we can expect that there will eventually be book neutral dilution at a later date, when the share price is significantly higher, as is the stated intention of the company. (Book neutral, but resulting in a lower ownership percentage of more valuable shares for an individual with a piece of the float pie.)

It’s really the whole purpose of a public company, to be able to raise money through the issuance of shares to build its business.
Thus we have the opportunity to predict this, and add those shares now at ~.093 , instead of waiting for whatever share price we are at if and when the expected dilution occurs.

I would agree with Strategyone that a more likely shareprice level would be .50 - $1, and if it occurred during a period of an appreciating shareprice, the individual shareholder seeking to maintain his same piece of the pie could end up chasing a rising share price and would be paying at least 5 to 10 times more for the additional shares. So the decline gives us the opportunity to predict this and add at a lower cost, which would not be the case if new shares were added during a rising share price.

Alternatively, if the shareholder is focused on the shareprice, and not on their fractional ownership percentage, this is entirely a non-issue.

IMO, whether commercial oil and gas is found, and in what quantities, and whether additional prospective rights or producing properties are added, will have a far greater impact on the eventual share price. Thus ~21% more or less shares in the float will likely be far less of a factor, if any.

So personally I added far more than 21% of my initial position sub 10 cents. But as a bet on future share price appreciation, not to maintain a set ownership share.