Heading North: ERHE Adds Another 16%

Warming to their task, ERHC Energy investors Friday drove the price up $08.8 cents, or 16 percent, yielding a $10,827.72 gain for the ERHC On The Move portfolio of 123,040 shares, and setting the stage for dramatic price increases this week as awards grow closer still.

It was the second time since January 1 that ERHE has gained more than $10,000 for us in a single day.

The good news for investors might not have been the gain, however, but the fact that the stock moved so far and so fast on a relatively low-volume day. Earlier last week, ERHE gained $0.06 on a pace-shattering Tuesday when more than 7 million shares were sold at the end of a three-day weekend.

As we grow closer to awards and news of our likely oil bonanza in West Africa's Gulf of Guinea spreads, it is not at all impossible that we will see days where volume rises in excess of 10 million shares and price changes of $0.20 a day or more are common.

What the persistent, plucky and patient longs in ERHE have done is build themselves a lofty launch pad for major news of awards in the Nigeria-Sao Tome and Principe Joint Development Zone.

And with the treaty-backed preferential rights to 560 million barrels of oil - and the possibility of rights to billions more if we and our drilling consortia are made operators in one or more blocks - it is difficult to estimate how high the ERHE rocket may go.

As of 4pm EST Friday, there was as yet no confirmation of ExxonMobil's choices as to the exercise of its two 25 percent preferential rights in any of the five blocks on offer, nor any follow-up from the Joint Development Authority on the earlier suggestions by JDA spokesman Sam Dimka that awards could come this week.

An article in The Punch of Nigeria this morning, however, suggests that there may be further delays. For an analysis of that article, see ERHC On The Move, our sister site, at http://erhc.blogspot.com.
Even if they do not come this week, the launch pad could still grow higher, giving investors a takeoff point somewhere in the $0.80 range.

Regardless of that, however, Friday's action validates the faith and dogged persistence - and the plain good luck - of ERHC Energy investors in the investment community. And as a newly debt-free company, we now have more appeal than ever.

The final volume was 3,703,500 shares, with 700,000 of those changing hands in the last 15 minutes towards a close of $0.638, just two-tenths of a cent below the high minutes earlier of $0.64.

Enormous Changes At The Last Minute*

Shortly after the market closed, ERHC Energy reported to the SEC in an S-8 filing that the company's $12.6-million debt had been cancelled by issuance of $38 million in shares (valued at Wednesday's last extended-hours price, $0.53) and final payment of a $2.5 million credit line to the company's account to fund current operations.

When we issued a caveat yesterday noting that "The unanticipated happens often in Africa," we did not anticipate today's big move. Here's what happened:

Sir Emeka Offor, K.C., chairman of ERHC Energy and of Chrome Energy Services, its sole lender, issued himself $38,743,509.86 worth of unregistered - meaning they cannot be sold for a year because they were not purchased in a public offering - ERHC Energy shares, surrendering whatever was still available on a $2.5-million credit line for company operations, and in so doing wiped out all of our $12.646-million debt to his Chrome Energy Services, a Bahamas-based company which is controlled solely by him, while diluting the value of our stock by about 11.5 percent, or $0.061 cents at the current price.

The short-term consequence, barring news tomorrow morning of a new Joint Ministerial Council meeting to make awards, will be - at a minimum - a $0.061 cent drop in share price to account for dilution.

Then, and only then, will investors start to ask themselves, "What does it mean that this company has rights to a minimum of about 560 million barrels of oil and is debt-free, while selling at only $0.469 cents?" My answer to that would be, "What kind of a rate can you give me for a third note on my house?"

Regardless of how the stock is priced tomorrow, the dilution downer will be instantly erased in the warm glow of block awards.

I did some interesting math last evening, and like all my math someone should double-check it. But I figure that the dilution is going to cost us about $0.50 of the new high we expect to reach upon awards.

I had originally said in early January that I had expected $1.28. Then I bumped that after some good news to $1.78. The irony is that Mr. Offor would have seen greater actual cash appreciation from his 225-odd million shares at $1.78 than he will from 306 million at $1.28, by about $24 million.

A year from now, no one will ask, as one poster on the frantic Raging Bull ERHE message board did Tuesday when 2 million shares were sold into the surge, "Where are all the shares coming from?" At the current average daily volume, if each day only these shares were sold, it would take 146 consecutive trading days to sell all the sharas Offor acquired on Jan. 28.

Several posters on Raging Bull noted that the move was signalled clearly in the Dec. 10-K; none of them, however, posted about it at the time.

The dilution means that in effect we gave back all the gains since last Saturday's notification to ExxonMobil by the Nigeria-Sao Tome and Principe Joint Development Authority, some $0.061 cents. For the ERHC On The Move of 123,040 shares, those 6.1 cents mean a paper loss of $7,505.44, which is likely to be topped by another $7,200 actual loss in share price this morning. Mr. Offor essentially relieved me of $14,700 before supper. I will, of course, get it back.

The new shares, giving Offor a total of 306,091,433, or 42.97 percent, helps solidify Offor's voting control of the company but leaves him about 7.04 percent of majority control. We will talk more about that soon.

Here is the press release:

ERHE: Agrees to Cancel Conv Note -
Issues 73.1M Cmn Shrs [delayed]
Ridgeland, MS, Feb. 23, 2005

ERHC Energy Inc (OTCBB : ERHE) reported that as January 28, 2005, ERHC Energy Inc. agreed to cancel that certain Consolidated Convertible Note, dated as of December 15, 2004, in favor of Chrome Energy, LLC, an affiliated entity, with a principal balance of $10,134,084.42 and accrued interest as of January 28, 2005 of $146,597.17 and that certain Promissory Note, dated as of December 15, 2004, in favor of Chrome with an original principal amount of $2,500,000 and accrued interest as of January 28, 2005 of $11,986.30. As of February 14, 2005, ERHC has received the entire $2,500,000 principal balance of the Promissory note and is therefore, canceling the Consolidated Note and the Promissory Note by converting the total outstanding principal and accrued interest as of January 28, 2005.

On January 28, 2005, ERHC agreed, upon the funding of the entire $2,500,000 of the Promissory Note, to issue to Chrome 73,100,962 of unregistered shares of ERHC common stock in conversion of the entire outstanding principal and accrued interest of the Consolidated Note and the Promissory Note. The Consolidated Note was converted at $0.175 per share pursuant to the terms of such note and cancelled in its entirety. The Promissory Note was converted at $0.175 per share pursuant to the terms of such note and cancelled in its entirety.

Go to http://www.sec.gov/edgar to read the S-8 filing.

*Thanks to the late novelist Grace Paley for this headline.

Nigerian Panel Wants Oil-Profits Tax Hiked From 50% to 85%

A story from the respected Punch of Nigeria Thursday says panelists at a House of Representatives Committee on Petroleum Resources say oil comopanies are exploiting the country's laws to avoid taxes, and should pay an 85 percent rate instead of the current 50 percent rate, and would also require them to refine at least a quarter of all production oil insde Nigeria.

Here is the relevant part of that article, the top piece in today's Business section:

`Amend petroleum laws to increase profit tax’
by Michael Faloseyi and Chiawo Nwankwo
Feb. 24, 2005

ABUJA -- The House of Representatives has accused oil production companies of exploiting existing regulatory laws to Nigeria’s disadvantage.

It said the planned review of the Petroleum Act and the Deep Offshore and Inland Basin Production Sharing Contract Act, was therefore, to increase the petroleum profit tax from 50 per cent to 85 per cent and redress the trend.

The review of the laws is aimed at increasing the Federal Government’s share of the revenues from the sales of crude oil and operations of the crude oil exploration and production firms in Nigeria.

Chairman of the House Committee on Petroleum Resources, Dr. Cairo Ojougboh, who spoke atthe opening session of the public hearing on the review of the Acts held in Abuja on Tuesday, accused crude oil production companies in Nigeria of exploiting the existing laws to the detriment of the government.

Ojougboh said, “The oil and gas industry has been experiencing some difficulties in achieving the objectives of government with respect to revenue mobilisation and collection.

“Apparent difficulties found in the Petroleum Act and in the Deep Offshore and Inland Basin Production Sharing regimes are threatening to reduce the revenue available to government.”

“It is in line with these apparent distortions in the operations of the industry arising from defects in the Acts that the House of Representatives mandated the committee to investigate activities of oil companies’ operations in the upstream sector of the oil and gas industry.”

Ojougboh, however, said that the Federal Government would have to complement the planned review of the Act with investment in the infrastructure.

Giving an insight into the planned review of the petroleum laws, he said that the portion of the Petroleum Act that recommend 50 per cent petroleum profit tax would be amended to read 85 per cent.

The review would also compel oil companies to refine a minimum of 25 per cent of their total crude oil production locally as from April this year, to increase job opportunities in the country and ensure stable supply of petroleum products in the country.

It is unclear whether Nigeria can unilaterally increase taxes on oil companies doing business under the treaty that governs the Nigeria-Sao Tome and Principe Joint Development Zone and the accompanying Production Sharing Contracts that set tax and royalty rates, or whether the heightened cost of doing business in Nigeria would force foreign firms out of business there.

For ERHE, The Good News And The ... Good News

Everyone gets a chance to shine sometime, and the rest of this week is that chance for ERHC Energy (ERHE) investors.

After endless months of rumors, frustrations, price dips and a toxic jellyroll of poison pens and puffery on the Raging Bull ERHE message board, a verdict of sorts is in: Awards are going to be made, and if ERHE gets only the rights it earned for services to Sao Tome before its Joint Development Zone with Nigeria was even created, investors holding hundreds of thousands of shares are likely to be on their way to real wealth.

That would include the ERHC On The Move portfolio, which gained a little more than $7,200 on yesterday's $0.06 move. Just imagine the gains of investors like First Atlantic Bank Plc of Nigeria, whose own stock has traded at a frenzied rate on the Nigerian Stock Exchange ever since the bank won 60,000,000 shares from Chrome Energy Services Chairman Sir Emeka Offor in November.

But what if gets a little more than its preferential rights? What if it gets operatorship of Block 2 or 3 with its partners Devon Energy and Pioneer Natural Resources, or Block 4, with Noble Drilling?
If 4 billion bbls of crude is the most conservative estimate of reserves in the five blocks on offer. ERHC's guaranteed preferential rights entitle it to 14 percent of the blocks, or 560,000,000 barrels of oil valued at yesterday's closing price at $28.6 billion. Even after huge discovery and exploration costs, there's an awful lot of money left over shareholders, and an awful lot of value as yet not reflected int its $0.54 price.

With the major uncertainties behind us, the issue for investors becomes the management of their gains. Taking profits prematurely could cost holders of just 10,000 shares a substantial appreciation in the next few months - if oil prices hold, if the share price holds after an initial run-up, and if Nigeria is not broken up or besieged again by the dogs of war.

Many credible investors see a near-term high in the $3.69 range, while I have been substantially less optimistic - suggesting a near-term high of $1.78 befiore a buyout bid become public in March - because of the vast selling of the kind we encountered yesterday (and so many of our 1,331 readers sent that article about market makers and manipulation to the SEC yesterday that the Google mail server stopped sending it).

But at the end of the day, albeit when it counted least - when most of the real energy was gone - we came out 12 percent ahead of the opening. I am deeply wary of the ability of shortsighted profit-takers and the rumored accumulators to sell us down against a tide of positive sentiment. That countercurrent tends to grow stronger every day that passes after news. But this week, I think, we are golden. Our time to shine has come.

Only awards will tell us how bright we may finally be.

For today, I like a gain in the $0.04 range as investors look at other issues and gauge the depth of the dollar's weakness and the strength of crude's price climb. I am not gong to guestimate on volume because I was so far off yesterday. but perhaps someo of those who comment here will suggest their targets.

High Hopes For ERHE Buoy Investors; Big Gains Anticipated In Price And Volume This Week

Well-founded and high expectations for ERHE's prospects are stirring investors around the world and on the Raging Bull message board, where nearly 500 posts in the past 24 hours greeted the official news from the Nigeria-Sao Tome Joint Development Authority (JDA) that awards are expected by the end of February.

Even though this is the third announced deadline, the JDA is likely to meet this one, having got most of its major business out of the way. The only wild card in the deck is the deuce of 25 percent preferential rights dealt to ExxonMobil. A delay in exercising those rights on XOM's part could snag the process again, but none is anticipated. A caveat: the unanticipated happens often in Africa.

Volume should be substantially higher than last week and should climb through Friday, the last day of trading before the referenced "end of the month" on Monday, Feb. 28.

I expect the news - good, bad or indifferent - to filter down slowly, as it usually does, and then gain strong momentum as new buyers move into the market.

Just the same, the stiock may open a half cent lower today as short sellers and others play their game, but ERHE should be well on its way to a February high by noon. Day traders should be in abundance by then, and 3 million shares should trade. Look for 7 million by Friday, and a similar or larger number on Monday next.

I also expect a minimum gain of four cents on Tuesday, and a maximum of eight cents. The good news is that the same gains could be repeated tomorrow and Thursday. By Friday, I expect that more breaking news will create its own paradigm. Gains could skyrocket, depending on the dominant rumors of the day.

With our recent major coverage, awareness of our prospects is at an all-time high, and that should be to our strong advantage in the rumor mill.

Nothing is guaranteed to anyone with respect to the awards themselves. While I believe we will win big, I could be in for a nasty surprise when the envelopes are opened; meanwhile, I look for every possible sign and omen in the press here and abroad and even in the tenor of discussions on RB, but I play the stock by the news that counts - the Reuters, Dow Jones, Lusa, AFP and AP stories that will detail the winning bids.

As always, there may be mistakes in the first reports that will initially hurt morale.

If the AP gets the story first, it is likely to drop ERHC's name in ERHE's Devon Energy/Pioneer Natural Resources (Blocks 2 and 3) and the Noble Drilling (Block 4) consortia because it has never written a word about us.

The same is likely to be true of of the Portuguese reports from Lusa and French reports from the Agence France-Presse, but we can expect solid facts from the Vitrina and Tela Non Websites - if they are updated.

All-Africa is unlikely to have early reports. The Nigerian newspapers, too, seem incapable of covering the awards in a timely way and may well tip us early to bidders whom they favor, especially Conoil, rather than those who have actually won. Reuters and UpstreamOnline are better than 50 percent likely to get the results right the first time. >br>
Our best bet is for a wide-ranging and very accurate release from the Dow Jones News Service, which by now is certainly on the alert for errors regarding ERHE.

One lingering possibility is that the name submitted in our bid to the JDA is the one that will be announced, and if that is the case, there will be a delay in press coverage and as investors search out the defunct Environmental Remediation Holding Corp. name and find the ERHC Energy symbol, ERHE.

However it turns out, this is going to be a very exciting week. The last day of the month is next Monday, just five business days from today, and the action will be non-stop. Stay tuned.

ExxonMobil Told To Exercise Its Rights; JDA Sets 'End Of The Month' For Block Awards

The Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Authority (JDA) has finally notified ExxonMobil that the time has come to exercise its rights to two 25 percent entitlements in Blocks 2 and 4 of the Joint Development Zone (JDZ).

The long-delayed notification came over the weekend, the Authority said in a brief press release carried by Reuters, and ExxonMobil is expected to respond by the end of the month. It was the first time since a Dec. 31 deadline elapsed that the JDA has offered a date certain for awards, and only its second press release since last November. The JDA announced the signing of a Production Sharing Contract for Block 1 with winning bidders at the beginning of February.

ExxonMobil's director of communuity relations, Len D'eramo, refused to comment beyond Sunday's statement by Susan Reeves to ERHC On The Move, but the company has been roundly criticized for delaying the bidding process and depriving Sao Tome and Principe of much-needed signature bonus fees that could amount to more than $150 million after they are split 40:60 with Nigeria. Reeves had said that a comment could compromise "forward business plans."

The news was greeted by wait-weary ERHC investors with something akin to the relief felt by grain farmers at the end of a drought. It brought closer the ultimate conclusion of the bidding process, in which ERHC is entitled to receive its own preferential rights in six blocks of the JDZ - four of them bonus-free - and the much-awaited formal announcement of awards.

While nothing has confirmed them, rumors and hints persist that ERHC's consortium with Noble Drilling in Block 4 and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3 will be awarded operatorships in at least two of those blocks.

However, ExxonMobil's two choices will determine 25 percent of the allocation of Blocks 2 and 4, so the decision by the multinational giant is fraught with consequences for all bidders who hope to gain operatorships in the second licensing round.

The first licensing round concluded in October with just one of nine blocks on offer being awarded to a consortium of ChevronTexaco, ExxonMobil and Norway's Energy Equity Resources, which is said to be considering a sale of its allocation.
ExxonMobil was said in reports from UpstreamOnline to want to sell its second-round choices to other participants, and has reportedly talked to ERHC and others about acquiring them.

It is unclear what effect the press release and Reuters report will have on the share price when stocks open tomorrow, but if the three-day weekend rule - a formulation by this reporter that says the largest price changes come after a three-day weekend - holds fast, the price could see a rise in the $0.04 to $0.08 range to near the $0.55 mark.

Here is the official press release:

PRESS STATEMENT

TOWARDS THE CONCLUSION OF THE
2004 JDZ LICENSING ROUND

Following consultations between the leaders of the States Parties, the Joint Ministerial Council (JMC) has approved that the Nigeria-São Tomé and Prìncipe Joint Development Authority (JDA) notifies Exxon Mobil to exercise its preferential rights, in the ongoing JDZ Licensing Round.

2. Accordingly, Exxon Mobil was notified over the weekend. It would be recalled that the JMC has revalidated options already exercised by the ERHC following the 2003 Licensing Round.

3. As soon as Exxon Mobil exercises its options, the JMC will be convened to approve the final structure of the award of the blocks put on offer in the 2004 JDZ Licensing Round. This is expected to be done before the end of the month.

4. The recent signing of the PSC for Block 01 and the imminent award of additional blocks will usher in the exploration phase for oil and gas in the JDZ.

Nigeria-São Tomé and Prìncipe
Joint Development Authority
Abuja
21 February 2005

This post was copied from the original ERHC On The Move site at http://erhc.blogspot.com, where it was posted at 3:25pm EST on Monday. That site is updated more frequently.

ExxonMobil Won't Confirm JDA Notification

A spokesperson for ExxonMobil today would not confirm information posted on the Raging Bull ERHC Energy message board purporting to be from the Nigeria-Sao Tome and Principe Joint Development Authority and saying that the company has been notified that it must exercise its choices in Blocks 2 and 4 in the JDA's second licensing round within 30 days from Feb. 18.

To comment would be to discuss the company's "forward business plans," spokesperson Susan Reeves told ERHC On The Move.

This post was copied from the original ERHC On The Move site at http://erhc.blogspot.com, where it was posted at 2:25pm EST on Sunday. That site is updated more frequently.

Oil Majors May Be Charged In Tax Avoidance Probe

The Nigerian government's tax compliance agency today announced that several "major" oil firms doing business in Nigeria may soon be charged with tax evasion, and revealed that 85 percent of all the goods imported via its bustling ports were illegally imported, the country's leading daily, "This Day," reported today.

The charges come as Nigeria's relationship with foreign oil companies and domestic producers is in a politics-driven state of flux. A strong current of nationalism runs through much of the Nigerian media these days, and its favorite target tends to be the companies that exploit its natural resources and generate almost $30 billion a year of the country's revenues.

Oil companies are facing new challenges from the government and other Nigerian groups on every side, including demands that they buy exhausted refineries, build multibillion-dollar natural gas processing plants, give up awarded oilfields that they have not been exploring sufficiently, and pay fines that have ranged as high as $1.2 billion.

Meanwhile, Nigerian criminal syndicates - many with powerful political connections - are siphoning vast amounts of oil from pipelines and tankers, and so-called community activists are rampaging acorss their processing facilities, causing as much as $500 million in damage in a single incident.

It takes courage, persistence and animal cunning to survive in the nation's overheated economic and political climate. So far, the major multinationals in Nigeria - Italy's Eni, Total, ExxonMObil, Royal Dutch/Shell and ChevronTexaco - are meeting the challenges, but it remains unclear how long they can do so on the Nigerian mainland.

Offshore Nigeria, and particularly the Nigeria-Sao Tome and Principe Joint Development Zone in the oil-rich Gulf of Guinea, is another matter. That region is guarded by an international treaty, and several nations take an active interest in ensuring its peaceful operation. The JDZ may one day be an imprtant alternative to crisis-ridden Mideast oil supplies, many believe.

Here is the This Day article, from its online site:

EFCC Probes Major Oil Firms Over Tax Evasion
by Onyebuchi Ezigbo
Feb. 22, 2005

ABUJA -- Chairman of the Economic and Financial Crimes Commission (EFCC) Mallam Nuhu Ribadu, said yesterday that his commission has initiated investigation into the allegation that some major oil companies in the country have, in connivance with certain government officials defrauded, Nigeria by evading tax payment.

Speaking as a guest lecturer at the opening ceremony of 33rd Class of the Chief Officer's Management Development Programme of the Nigeria National Petroleum Corporation (NNPC) held in Abuja, Ribadu said some un-named big oil companies have been evading payment of relevant duties and taxes to the Federal Government over the years and that EFCC is moving in to uncover the malpractices.

Aside from investigating the oil companies, Ribadu said EFCC is also focusing its searchlight on the banking sector, where a number of senior officials have been arrested and will soon face trial in court.

"We intend to investigate all movement of money by the banks and we will seize any ill-gotten money. Banks chief executives have been directed to make available regular reports on their transactions to the commission", he said.

He said that already EFCC is recovering some money for government and will move in to do a "detailed investigation".

Ribadu disclosed that the commission recently made a startling revelation when its team, which went to investigate affairs at the Nigerian Port Authority (NPA) warehouses discovered that 85 percent of the goods were illegally imported into the country.

He described the situation as an indictment on the operations of the Nigerian Customs Service.

Giving further run-down on the efforts of the commission so far, Ribadu said EFCC has succeeded in retrieving about $700 million (N30 billion) made up of cash and properties seized from people involved in 419 and other financial offences while more than 700 persons are being detained in its cell.

Nigeria Potentially Unstable, CIA Chief Warns

In a dramatic warning to U.S. oil companies doing business there, the new Director of the Central Intelligence Agency warned yesterday that Nigeria may suffer instability as ethnic militias continue attacking oil facilities in the southern Niger Delta region and Muslim unrest grows.

CIA chief Porter Goss also told the U.S. Senate that “extremist groups are emerging from the country's Muslim population of about 65 million.”

The CIA warning warning came as furious investors on the Raging Bull ERHC Energy message board repeatedly slammed Nigeria and Sao Tome for their failure to make awards as promised in the Nigeria-Sao Tome Joint Development Zone. At least a dozen posters repeatedly criticized the agencies responsible for announcing the awards, which were first promised for the end of December and then for the end of January, and now, according to JDA public relations director Sam Dimka on Tuesday, are expected "soon."

The JDA delayed announcement of awards in Block 1 of the JDZ last year for six months, and then awarded only one block.

That block went to ChevronTexaco (51 percent), ExxonMobil (40 percent) and Energy Equity Resources (EER), a Norwegian firm that got nine percent. A report in the occasionally reliable Afrca Energy Intelligence newsletter on Feb. 16, however, said EER is said to be selling its interest, and ExxonMobil has told JDZ officials it wants to farm out its two 25 percent entitlementsd in Blocks 2 and 4 rather than participate in the second licensing round for five blocks that ended Dec. 15.

A report in This Day Online, a Nigerian site, bannered the CIA story across its front page. Here is a relevant excerpt:

Nigeria Worries US
By Moses Jolayemi with agency report, 02.17.2005

WASHINGTON -- Nigeria is one of the potential areas for instability, the United States director of Central Intelligence Agency (CIA), Porter J. Goss, told the Congress yesterday.

“In Nigeria, the military is struggling to contain militia groups in the oil-producing south and ethnic violence that frequently erupts throughout the country," he said.

According to the CIA boss in a report titled “Global Intelligence Challenges 2005: Meeting Long-Term Challenges with a Long-Term Strategy” delivered to Senate yesterday “extremist groups are emerging from the country's Muslim population of about 65 million.”

He told the Senate that such chronic instability found in Africa “will continue to hamper counter-terrorism efforts and pose heavy humanitarian and peacekeeping burdens.”

Yesterday’s briefing, Goss explained, was to discuss the challenges facing America and its interests in the months ahead. He pointed out that “these challenges literally span the globe.”

“My intention is to tell you what I believe are the greatest challenges we face today and those where our service as intelligence professionals is needed most”, he added.

The U.S. officers, he said, are taking risks adding that he will encourage them to take more risks because “I would much rather explain why we did something than why we did nothing.”
Last week, basketball superstar Nigerian-born Akeem Olajuwon was accused of using a mosque he established and funded to donate money to a group which acts as a front for al-Qaida and Hamas terrorist groups. More than $80,000 given to charities were later determined by the US government as being for the groups, according to financial records obtained by The Associated Press.

Olajuwon told the AP he had not known of any links to terrorism when the donations were made, prior to the government's crackdown on the groups, and would not have given the money if he had known.

Oil Company Airstrips Run Afoul Of Abuja

Oil companies, including multinational players, are operating nearly 200 illegal airstrips in Nigeria, the Federal Government says, and some of them are used for illegal purposes.

The story got wide play in Nigerian newspapers this morning, but only one - the New Age daily, gave p[rominent coverage to the fact that they were operated by the country's petroleum Establishment.

Here is the relevant part of the story:

Oil firms operate 200 illegal air strips — Yuguda
Mobil 76, Shell 68, Chevron 25, Agip 13, Total 10

ABUJA -- The Federal Executive Council yesterday in Abuja approved a memorandum seeking to regulate the operation of private airstrips in the country with regard to the payment of fees by users and full security against economic sabotage. Minister of Aviation, Isa Yuguda told State House correspondents that oil companies own most of the illegal airstrips - numbering about 200.

According to him, these include Chevron with about twenty-five (25) airstrips; Shell Petroleum Development Company (68); Mobil Producing Unlimited (76); Total (10); Agip (13) and Conoil (1), adding that the operation of these airstrips “has meant that they are using the airspace illegally, and have not been paying fees as they are expected to do."

Further, Yuguda said the government discovered that some of the airstrips are used for smuggling, gun running and other forms of economic sabotage against the country.

The minister said also that approval had been given for the installation of flight landing equipment at the Akanu Ibiam Airport, Enugu at the cost of N241 million.

The project makes it 18 out of the 22 airports in the country which would be rehabilitated under a programme meant to upgrade airport facilities in the country.

The minister acknowledged that the Enugu Airport was one of the airports with serious deterioration in facilities, saying other equipments would be provided for its upgrading.

The oil companies apparently were not contacted for a response.

ERHC On The Move Averages 800 Readers Per Day

ERHC On The Move has reached an average of 800 readers each day in the first two weeks of February, Google's AdSense monitoring statistics show. The site is now listed as the third relevant link in Google searches for the term "ERHC."

Here are the statistics as delivered by Google:

Thursday, February 3, 2005 278
Friday, February 4, 2005 1,477
Saturday, February 5, 2005 497
Sunday, February 6, 2005 714
Monday, February 7, 2005 1,074
Tuesday, February 8, 2005 798
Wednesday, February 9, 2005 949
Thursday, February 10, 2005 764
Friday, February 11, 2005 860
Saturday, February 12, 2005 350
Sunday, February 13, 2005 263
Monday, February 14, 2005 1,190
Tuesday, February 15, 2005 1,081
Wednesday, February 16, 2005 909
Totals 11,204
Averages 800

We deeply appreciate your patronage.

(Almost) As Predicted, A Hard Bounce

Sunday's longish article on ERHE contained this advice to readers:

What may happen instead is that accumulators will open the day with very low asks on a limited amount of stock, driving it sharply down in the thin market of recent weeks. Since they have slowly perfected this "dump and pump" technique, they ought to be able to get it down to $0.43, a very attractive level for such buyers (and for me) before they run out of idiots willing to sell. Recovery in advance of heat from leaks of pending awards announcements will be slow but steady, in this scenario.

It didn't take long for that prediction to come true! In pretty thin trading, sellers drove the price of ERHE down to $0.415 at 10:25am EST, but like a good man it could not be held down.

Within 32 minutes, the price had rebounded to .48, but not before lucky buyers picked up 57,480 shares at $0.42, 10,000 at $0.435, 20,000 at $0.44, 45,000 at $0.45, with the next trade going off bove today's opening at $0.47, then at $0.475 and $0.48, before the trading settled in at the $0.46 opening once again.

Update: The stock closed at .44, down $0.02 for the day, on volume of 708,000 shares, about a third better than Tuesday's.

Silence Of The Bulls

Silence of the bulls?

Not a single share of ERHE, the newly minted symbol for ERHC Energy, was sold between 12:30 and 2:40pm EST today, and volume stood still for more than two hours at 209,810, the lowest level in months. At 2:40, another 1,000 shares traded.

What can investors learn from this experience? Here are my observations.

• Since volatility and volume are critical to day traders, very few are trading ERHE today.
  
  
• Non-day-trading Investors who regularly post on the Raging Bull ERHC message board do not account for much of the daily trading - possibly less than 25 percent of it, collectively.
  
  
• Anyone who had a "naked" short position in this stock is in a world of hurt, since they have no certificates to present to the stock transfer agent for new ones with our new CUSIP and the new ERHC Energy name.

I think we are in for a brief period of retrenchment, and then a time of steady growth leading up to the awards. If the conduct of the first round was any indication, it will take the Nigeria-Sao Tome and Principe Joint Development Authority about six months to sort out all of the bids and make their choice of operators and participants. As much as all of us had hoped for awards very soon - and they still could, surely - the JDA's track record does not encourage that hope.

That timing, though, would prove to be a problem for any of the companies that want to bid on blocks in the Nigeran Exclusive Economic Zone, or on other blocks that are up for auction in July. But Nigeria and Sao Tome are unlikely to rush such a potentially profitable set of contracts through when oil price volatility is growing and dire predictions of shortages become more urgent.

While the prospect of four to six month further delay may cause some investors to sell, that would probably be a mistake. Unless Osama bin Laden is captured, and the insurgency in Iraq and Afghanistan ends, and the Iranian and North Korean nuclear programs are abandoned, and the Israeli-Palestinian truce holds, and no new technology makes oil redundant, the price of oil is going to rise higher as Summer approaches.

The idea of $65-a-barrel crude is not the fantasy it once seemed. Awards after a substantial price rise would mean more money for ERHE shares than we ever dreamed possible.

Just the same, those who trade with a limited amount of cash might decide to jump out here, invest elsewhere until awards seem imminent (and don't they always?), and then jump back in. If that creates a tax loss, the deduction could be mighty useful if price hikes, awards and big profits for investors come about.

ERHC Energy Changes Its Symbol To ERHE

After ERHC Energy's coporate chieftains openly declared that they would not change the symbol for our stock, the Over The Counter Builletin Board did it for them, as required when the stock's CUSIP number is changed.

Announced 10 minutes before the closing bell on Monday, the new symbol for ERHC Energy is ERHE, and the name of the company is now officially ERHC Energy.

The name change reflects the fact that the company has not done environmental remediation work in many years, and is now strictly in the energy business, CEO Ali Memon said at the company's shareholder meeting on Feb. 4, where ther name change was near-unanimously adopted.

The name and symbol change could prove to be a problem for short sellers, most of whom were probably caught by the short shares at the end of trading. When CUSIP numbers are changed, short sellers must present their certificates to the stock transfer agent to be issued new shares; that's impossible when shares are held in "naked short" positions as a result of having been sold and never physically delivered because they never existed.

The symbol change was heralded in a Business Wire press release that came out just before the close of business Monday:

ERHC Energy Inc. New Name and New Symbol Effective Feb. 15, 2005

February 14, 2005 15:50:00 (ET)

HOUSTON, Feb 14, 2005 (BUSINESS WIRE) -- Effective the opening of business Feb. 15, 2005, Environmental Remediation Holding Corporation (ERHC, Trade) has changed its name to "ERHC Energy Inc." and will trade on the Over the Counter Bulletin Board under the symbol "ERHE."

It will now use the CUSIP number 26884J 10 4.

SOURCE: Environmental Remediation Holding Corporation

ERHC, Houston
John Coleman, 713-626-4700

For the time being, this blog will merely duplicate the old one, located at http://erhc.blogspot.com.

From Barron's: A Sneaky Valentine To ERHE

An article on page 12 of the Feb. 14 Barron's weekly, in Bill Alpert's "Follow-Up" column, is an inverted Valentine to ERHE - i.e., the pointed side is up - and a carefully mounted attack on ERHE's former owners, oil investor Philip H. Nugent of New Orleans and Washington, D.C., lobbyist Noreen Wilson.

The article is ostensibly about Global Environmental Energy Corp. (GEEC), where Wilson is vice president for U.S. operations, and Nugent - according to Alpert - is a "current associate." On Jan. 21, GEEC signed a contract worth $9.75 billion with two Chinese firms to build up to 1,330 plants by 2010 to convert garbage to gas to generate 10 percent of China's electricity needs. Last Spring, it had also closed a deal with 20 percent-owner Diamond Ridge Advisors for a $250 million credit line that was later increased, Barron's indicates, to $2.08 billion.

The company, headed by former Irish Prime Minister Albert Reynolds, got a $51 million check from Diamond Ridge in September that was rejected by its bank, and as of the Barron's Feb. 7 was expecting a wire transfer to replace it. There is no indication from Barron's or GEEC that the wire transfer has materialized, and that is the basis for the story - along with the fact that the CEO, a fellow named Chris McCormack, didn't turn up for a hearing because he was busy making deals and sent Wilson in his place. The mention of Wilson precipitated a discussion of her former project, Environmental Remediation Holding Corp (ERHE), now named ERHE Energy.
Here's how the paragraph reads:

"[ERHE co-founder Noreen] Wilson has a long history of working with [GEEC attorney Wayne] Hartke - but as a public relations person who was paid in stock to promote companies like Environmental Remediation Holding. As a company, ERHC obtained the right to explore for oil in Sao Tome and Principe, a tiny two-island nation off of Nigeria. Hartke and his father, the late Sen. Vance Hartke, once represented the country - and ERHC - in the U.S. The oil-exploration-rights deal was cited as unfair by the World Bank and criticized by others as one of the worst ever secured by an oil-owning nation. Wilson had arranged the deal, working with yet another current associate of Global Environmental named Phil Nugent. Sao Tome politicians have acknowledged receiving financial favors from ERHC. The securities lawyer for ERHE and many other deals promoted by Wilson was Donald F. Mintmire - a Palm Beach, Fla., lawyer convicted Wednesday by a federal jury in Miami of obstructing an SEC investigation into a citrus exporter unrelated to ERHC or Global. Mintmire will appeal the verdict. [GEEC attorney Joseph A.] Artabane says the Mintmire allegations surprised Wilson."

Alpert has employed the "bomb in a suitcase" technique I invented more than 30 years ago when I fell into public affairs work for a California company after returning from a bomb-filled tour of duty in Northern Ireland as a war and foreign correspondent for the Village Voice. In Belfast, I made the not-very-astute observation that the best way for IRA bombers to get their munitions into the Europa Hotel across the street from me was in a suitcase, because while the barriers outside the hotel neutered some effects of car bombs, no one searched the guests' suitcases. They were an afterthought, and the hotel's Achilles heel. It was bombed 27 times.

A "bomb in a suitcase" is a paragraph or so of information in a longer article that seems tangential to most readers, but to the wise is nothing less than a bombshell; it was the only point of writing the 10-paragraph, 800-word story in the first place.

A bit of "deconstructive analysis," if you will, shows that the lengthy, complex paragraph on ERHE is 34 lines and 179 words long, or about 22 percent of the words, and is twice as long as all but one of the other paragraphs, 15 lines longer than the next-longest and takes up a full 25 percent of the two-column story.

The former name of ERHE Energy, Environmental Remediation Holding Corp. (Alpert dropped the "Corp."), is used in boldface, as is that of GEEC, the only other boldfaced name in the story. Barron's fact-checkers presumably missed the Feb. 4 name change reported by Dow Jones, its corporate sister. The paragraph is elongated to 34 lines because it is squeezed into the right-hand column where its bold-faced name appears immediately next to the lone small chart on the page that shows the price history for "Global Environ Energy," tying the boldfaced name just right of it to the chart's title.

This handsomely designed suitcase fits the hotel - the story - quite nicely. The narrative fuse sizzles along through its ties to the attorney son of a United States Senator, pausing to declare Wilson a stock promoter (the Los Angeles Times, in a front-page story on ERHE in 2003, called her a lobbyist) before it moves into a discussion of the overly generous terms of ERHE's deal with Sao Tome and Principe, which was once represented by Hartke's firm, glowing more brightly as it implies ERHE bribed Sao Tome officials, and finally ignites the dynamite: the link to Donald Mintmire, the lawyer convicted of obstruction who represented Wilson, Nugent, Bass et alii when they owned ERHE and in other deals. Finally, the smoke appears, as Alpert acknowledges that Mintmire's conviction has nothing to do with either GEEC or ERHE. All in all, it is a powerful piece of work, and whoever planted this bomb in Alpert's ear was a master of destruction. Just the same, his handiwork is a dud.

Bill Alpert's "reverse Valentine" may have had the pointy side up, but smart investors who also read Barron's will probably recognize the meaning of it. For ERHE investors, what was "unfair" to Sao Tome and Principe was, by fiat, greatly generous to ERHE Energy. The worst deal ever made by an oil-owning nation, of course, was also just about the best deal any oil company has ever gotten.

I wonder if these smarter investors will also note that in a publication geared not to foreign policy experts but to small investors, Alpert's emphasis is on how bad the deal was for the tiny islands of Sao Tome and Principe (population 140,000), not how good it was for ERHE. No one ever got rich overestimating the intelligence of penny stock investors, but like Woody Guthrie's Depression Era potato soup, this article's agenda is so clear "that even some of them thar politicians could see through it."

So the investors Barron's has jilted have to ask, like an abandoned lover does, "Why, oh why?"

Here are some obvious answers: First, the author and his sponsoring sources - more about them later - wanted to damage the reputations of Phil Nugent and Noreen Wilson that investors like the many-aliased stockhocker70 have worked so hard to revive. Why Nugent and Wilson?

With the late Sam L. Bass, Jr., these two founded the current incarnation of ERHE in 1997, and took away some 116 million shares then valued at around $2 million (and now worth $58 million) when - well after Wilson's 1998 resignation - ERHE was sold, first to Geoffrey Tirman in 1999 and then to Sir Emeka Offor of Nigeria in 2001. Note that the main paragraph of Barron's GEEC story concerns not GEEC but a company Wilson and Nugent left (with their hoard of stock) seven years ago.

Now, after Emeka Offor's loss of 60 million shares in a lawsuit settled last Nov. 10, they own a goodly chunk of the shares that would be necessary to mount a takeover of ERHE. As we pointed out last week, if the 116 million they own could buy First Atlantic Bank's 60 million shares away for about $30 million - or simply gain its proxy for free - they would need only add another $30 million worth from the open market to gain voting control of ERHE Energy. ERHE's rights amount to about 14 percent of the estimated 4 billion barrels of oil waiting in the deep, dark waters of the Gulf of Guinea's Nigeria-Sao Tome and Principe Joint Development Zone and Sao Tome's Exclusive Economic Zone. At current prices, that oil is worth $25.6 billion. The Nugent-Wilson group, or a rival mischief-maker among the multinationals, could get voting control of it all for $62 million or less, if no one stops them.

But "Why, oh why?"

Barron's is a Dow Jones publication and a sister of the Wall Street Journal, CBS Marketwatch and Dow Jones News Service. In the past month, complaints from ERHE investors about errors have forced the Dow Jones News Service and Dow Jones Newswire to run one glowing 1,500-word story on ERHE three times and a handsome story on its shareholder meeting twice. The first story, by Norval Scott, liberally quoted Nugent as he praised ERHE and its prospects, and also mentioned Wilson (both were also key sources for the 2,400-word Los Angeles Times front-pager). That's a lot of backpedaling to do, and you could, if you chose, look at Alpert's column as Dow Jones' way of getting even. To me, though, our clever master of destruction merely used that anger to spur the Alpert piece.

Deconstruction is a useful tool because once it has cleared the smoke and contextual debris away, it leaves only motives left standing. But a little more of the bulldozer first.

Alpert left key facts out of his piece:

• He never acknowledges that Wilson left ERHE in 1998, and that the trio sold ERHE to an interim owner, Geoffrey Tirman, in 1999, or that it was purchased in 2001 by Sir Emeka Offor, a friend of Tirman's.
  
  
• Alpert fails to mention that it was Tirman who accused Sao Tome politicians of demanding bribes, and that partly as a result of the fallout he was forced to sell the company. ERHE's contract required it to pay some educational expenses for Sao Tome children to study in the United States in order to build a cadre of economically-enlightened technocrats. Those gifts were used in part by the children of powerful Sao Tome politicians, and thus became the "favors" Alpert mentions.
  
  
• Alpert doesn't mention that ERHE's rights were challenged in Sao Tome's parliament this past year and that a bill to void them was rejected there.
  
  
• Alpert fails to mention that the Paris-based International Chamber of Commerce was the arbitrator of ERHE's contract terms with Sao Tome, and that it upheld them, or that ERHE voluntarily renegotiated the rights with Sao Tome and got itself an even better deal.
  
  
• Alpert fails to note that ExxonMobil and the South African-owned, London-based Equator Exploration Lltd. came by their preferential rights in the nine Joint Development Zone blocks and the Sao Tome Exclusive Economic Zone pretty much in the same way ERHE came by theirs. As political analyst Gerhard Seibert writes, "Indeed, Mobil was able to clinch an exclusive deal in STP (which apparently included the right to first refusal on all blocks) as other major companies such as Exxon and Shell were believed to have backed away from the offering because of unresolved issues concerning STP’s maritime boundaries with its neighbours."
  
  
• Alpert also failed to mention that the rights ERHE gained are incorporated by reference into the formal international treaty between Nigeria and Sao Tome, leaving them virtually invulnerable to legal attacks.
  
  
• Alpert could have told his readers that Mintmire hasn't been of counsel to ERHE for several years.

Obviously, Alpert was not working for his readers when he wrote this piece. So who planted his "bomb in a suitcase"? To answer that, the investigative journalist in me would say, "Follow the money." Let's see where that might lead:

• Short sellers, including some of the professed longs who have touted GEEC on the ERHE message board, will benefit from a drop in share price, at least of GEEC. Cashing out now, though, might give Nugent and Wilson et alii enough cash to buy control of ERHE. You can be sure they will not be the last to bail - or to short. In fact, with a few filings, they may be able to make a fortune in both directions. Short sellers of GEEC may get mightily smacked, though, if the wire transfer materialized after Barron's Feb. 7 deadline; nothing in Nugent's and Wilson's histories suggests they can't deliver when the chips are down. The stock fell 12 percent on Friday, or some $0.20 cents, after the fourth day of exposure to the Barron's attack.
  
  
• Savvy ERHE investors who understand the bulletproof nature of ERHE's deal may get a key buying opportunity shortly before awards are announced.
  
  
• Accumulators, whom we insist are planning to take over ERHE, can consolidate their current holdings at anywhere from a future $0.27 to $0.42, where the share price is likely to land if awards don't come soon. But that presumes there are a lot of naive investors left in ERHE, and we're not sure that's the case. What may happen instead is that accumulators will open the day with very low asks on a limited amount of stock, driving it sharply down in the thin market of recent weeks. Since they have slowly perfected this "dump and pump" technique, they ought to be able to get it down to $0.43, a very attractive level for such buyers (and for me) before they run out of idiots willing to sell. Recovery in advance of heat from leaks of pending awards announcements will be slow but steady, in this scenario.

That brings us to the final pieces of the Barron's puzzle. Let's recall that several publications have gone out of their way to characterize the relationship between oil majors and ERHE, who are bidding against each other in the Joint Development Zone, as like that between hard-working people and "freeloaders," the word used in an article by an anonymous writer in the high-ticket "Energy Compass" on Feb. 8. Menas Associates, an oil consulting firm, talked about ERHE and one of its partners' "concerns about compliance with US regulatory regimes." Barry Morgan of UpstreamOnline, in the more benign form of implication, suggested the oil majors were essentially jealous that ERHE was getting for free what they pay dearly for. Seibert, an academic whose last reports appear to have been sponsored by someone unfriendly to ERHE, has pursued other attacks on ERHE through Yahoo's Sao Tome message board.

I believe these kinds of attacks, which are at once more covert - i.e., better hidden from the general investing community - and more focused in their placement, all serve the same interest: the multinational p.r. player ExxonMobil, portraying it only as a benevolent donor concerned with the welfare of Sao Tome (while raking in $25 billion in last-quarter profits, about 250 times more than Sao Tome's annual budget). Ironically, as UpstreamOnline and other publications have reported, it is ExxonMobil that is holding up the process that would finally deliver hundreds of millions of dollars in signature bonus fees to Sao Tome, and tens of billions of dollars in oil royalties down the line.

By directing attention away from its own delay in choosing how and whether to exercise its preferential rights in the second bidding round, ExxonMobil undermines ERHE's memorandized partnerships with Noble Drilling, Pioneer Natural Resources and Devon Energy, justifies the continued pauperization of Sao Tome and Principe, and uses its delays as leverage against both Sao Tome's financial needs and Nigeria's independent licensing schedule - it has its own Exclusive Economic Zone auction on hold pending ExxonMobil's decisions - in a far more effective way.

Both nations are thus being inexorably pressured by ExxonMobil, we believe, to break its treaty terms and abandon ERHE. So doing will make the Devon Energy, Noble Drilling and Pioneer Natural Resources bids - all based on ERHE's preferential rights - instantly evaporate, and give ExxonMobil, with its two 25 percent preferential entitlements in Blocks 2 and 4, operatorship in at least two and possibly three of the most promising offshore deposits in the world. As the Menas Associates newsletter pointed out, "Without Devon there was a possibility that ExxonMobil could have won the operatorship through exercise of its opt-in rights, though it may need a partner among the bidders."

We believe it has more than one among the bidders, and probably one of those five or six that appeared so late in the process that their names went unreported when the second-round bids were opened on Dec. 15.

ExxonMobil is a substantial advertiser, not to mention one of the largest companies anywhere, and we think their hand is behind the dud bombshell. They accomplished little, but they did undercut their rivals and at the same time put a crimp in one of the world's most important technologies. Nugent and Wilson are turning garbage into energy, and GEEC is growing fast, especially in China, which should become a major market for ExxonMobil but may not because of GEEC's waste gasification plants. There's a lot more garbage than there is oil, remember, and it's an awful lot cheaper to find. And even if it helps Nugent and Wilson make a fortune playing GEEC up and down and they then go for ERHE, that will disrupt and distract ExxonMobil's upstart rival and might spoil the party for our mid-tier partners.

Unfortunately for ExxonMobil, I think, its pure savagery on the playing fields of business has not translated into a popular political presence in Nigeria, which tends to control the Gulf of Guinea bidding process.

While most of the violence of indigenous assaults against multinational facilities have targeted those of Royal Dutch/Shell and ChevronTexaco [Disclosure: my family holds about 3,600 shares of CVX], ExxonMobil has done little to endear itself. It is a very, very long way from having co-opted majority politicians in either Nigeria or Sao Tome, I think. And if it has skillfully exploited opposition figures in the Nigerian Senate and Sao Tome parliament, I believe those figures have found their efforts on behalf of ExxonMobil a bit embarrassing. By refusing to cooperate further, the politicians may have to brave some modest scandal-mongering proposed to the press by ExxonMobil, but they will survive it a little wiser for wear.

So will ERHC Energy's 2,250 core investors, I hope, used, abused and now somewhat less confused by the tactical skills of one of the most powerful marketing companies on the planet.

Disclosure: Joe Shea owns 123,040 shares of ERHE.
mnj