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Homeport

10/11/12 2:12 PM

#266185 RE: spp119 #266184

Let me be the first to welcome you back to this board, Spp!

Bests,
HP
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brez63

10/11/12 2:16 PM

#266186 RE: spp119 #266184

spp119,
Welcome back, your views and posts are always welcomed!

Cheers
Brez
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umbra

10/11/12 3:18 PM

#266190 RE: spp119 #266184

All the best 'spp119'.
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TOB

10/11/12 3:28 PM

#266191 RE: spp119 #266184

There are indeed existing gravity and magnetic studies on the ERHE Kenya block 11A. Both the Aero study done by Camac and the previous ground gravity study done by Amoco. Amoco also did some reconnaissance seismic.

Both are valuable as the Amoco study identified clear rift basins extending into the south-west of the block, and the Camec study identified basins throughout the north of the block.

The gravity data is coarse grid, which is why there is a need for more refined and targeted work, thus the first year exploration will conservatively be limited to a targeted gravity study. But this could of course accelerate to seismic should a farm-in occur.

There is also some seismic from the 80's by Amoco, as well as the Kenya Rift International Seismic Project (KRISP), it is older technology, quite thin and noisy due to the scattering effect of the volcanics of the region (igneous extrusive) but it and other research is sufficient to identify good reservoir rock and a potential 5,000 meter thick sedimentation fill adequate to provide the petroleum charge. (Maturation, migration, timing, and trapping must of course all be identified and confirmed)

The gravity data also has challenges and limitations, again due to the local geology.

So more refined studies are definitely needed, using more up to date technology and concentrated targeting following the leads of the earlier work. Not only the data itself, but more current modelling software in this rapidly evolving science. There is also the advantage of additional wells and seismic and gravity studies being done in area blocks, but most importantly, actual drilling and direct sampling of the geology for correlation of the regional geology.

The major Ngamia-1 discovery by Tullow was of course, the game changer in Kenya, with oil similar to Tullow's elephant discovery in Uganda being found. With early estimates suggesting Ngamia may be even larger.

Tullow used their theory of analogous geology to open yet another major oil basin hundreds of miles from their Uganda discovery. Drilling a different part of the geology than was tried by earlier operators. Tullow, Marathon, and Total, are all either actively exploring, eager to explore, or with proven discoveries essentially surrounding the ERHE block. With the 6 billion barrel fields of South Sudan also in trend with block 11A.

Chad is another story, also needing studies, but with a higher probability of success due to being right adjacent to known working petroleum basins and working systems and oil discoveries. But likely smaller reservoir targets than what may be possible in the Kenya block, as the Kenya block has an intersection of two prolific and proven geological rift plays with billion barrel discoveries.

Both have the advantage of likely pipelines. In Kenya, proposed to run right through the ERHE block 11A with the existing petroleum discoveries in Sudan providing strong motivation for the norther extension past Ngamia-1, and in Chad a proposed extension of the existing Chad-Cameroon pipeline planned to run right along the border with ERHE's southern block.

Good to have you back on the ERHE board spp119! I hope you stay and poke around a bit more.

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Tamtam

10/11/12 3:29 PM

#266192 RE: spp119 #266184

Welcome back spp119, we have missed your input and information
TT
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TOB

10/11/12 3:48 PM

#266193 RE: spp119 #266184

What is exciting to me is, ERHE is again in a situation as it was pre-JDZ drilling, with the share price and early acquisition stage of the assets having a share price as shown by the star. I know many people bought into ERHE closer to the intersection of the red and blue when exploration of the JDZ had already reached a stage where there were clear seismic targets and independent reserve estimates, but the share price was much higher and needed a discovery for a big win. But many also bought in near the current price, and had several opportunities to cash out with a 5 or 10 bagger.

We will very likely see a repeat of the same phenomenon again with Kenya, Chad, the EEZ and new acquisitions being bid for IMO. But here we are with a 12 cent possible buy in again, which was historically a very profitable buy zone for ERHE just on exploration excitement. 5 or 10 bagger possible on just exploration excitement just like in the past, without a drop of oil discovered. Yet again, but now with several asset groups.

Another huge difference is the timing. We saw how many years, delays and complications there were in the ultra-deepwater JDZ, including politics and legal challenges to get to that good target, pre-drill exploration stage share price high. In Kenya and Chad it can all happen in the conservative one to two year period which assumes ERHC has to raise all the money and go it alone, or even faster should a JV farm-in occur.

Also considering the low cost of onshore drilling, rig and crew availability and sharing, and other cost savings, there reaches a point quickly where the cost of additional 2D and 3D seismic becomes comparable to just reconnaissance by drilling. With the drilling providing actual samples of the geology and hydrocarbons. So after the initial work, there is the decision to be made whether to just drill, or spend more on studies. Very different from the economics and timelines of ultra-deepwater.