Weeks Ahead Likely To Produce Stunning Gains

The $7,997 gain the ERHC On The Move portfolio of 123,040 shares enjoyed on Friday may seem like small potatoes by the end of next week, when the main dish will likely be meat and potatoes - strong, doubling gains of the kind seen near the hoped-for awards of oil concessions in the Nigeria-Sao Tome and Principe Joint Development Zone in 2004.

Back then, we sold out a smaller cache for $0.90 - $0.93, just below the $0.96 top. We also picked the $0.43 top and sold 175,000 for $0.41 - a $27,000 gain - in October 2003.

Our portfolio's gain since early November 2004 - when we doubled our holdings from about 60,000 and averaged down to $0.4394 - already tops $28,000 and should top $60,000 by next Friday, when awards will have been announced - or at a minimum, scheduled for the following Monday or Tuesday.

While few investors with long-term experience in holding ERHC Energy (OTC BB symbol: ERHE) would argue with this prediction, there is tremendous diversity of opinion regarding a near-term exit strategy for those who want to jump off after a sharp hike to a new all-time high next week or shortly thereafter.

Even long-term holder Ruby1100, whose disappointment with the selling that followed the great Houston Chronicle article last Sunday led him to omentarily lowr his sights below a dollar, has already changed his mind and upped his conservative and steady hopes to somewhere between $1.28 and $1.68, in line with my own hopes.

Others, however - including some who were very, very wrong in their predictions in the last round - are far more optimistic, believng in exit prices like $3.68 and - as Rolling Thunder dreamed several times, $4.33.

But what can you say about a stock whose oil assets are likely to be valued at tens of billions of dollars a few days from now but today is selling for only $0.67, has only $21,000 in cash and one full-time employee?

Frankly, there's no way to know how widely the news of ERHE's new assets will spread, or how quickly, and how volatile the price may become - and what sellers may jump in to try to ruin the party if they can.

What can be said is that when investors who first hear of ERHE on the morning of the awards and want to run ro due their due diligence quickly will have a solid plateful of information from 1,500-word front-page articles in the Los Angeles Times in May 2003, a 1,500-word article from Dow Jones News Service on Jan. 30, 2005, and a 2,000-word front-page piece in the Houston Chronicle on March 13, 2005 - plus roughly 100 articles in the archives of this blog starting back in January (our daily average readership, just 800 a month ago, now tops 1,000).

That amount of good, solid press will make a deep impression on the kinds of heavy hitters that do good DD before investing hundreds of thousands or millions of dollars in a stock they are just now hearing about. And that's why our predictions of $0.60 and $$3.00 gains may be all wet.

When a Canadian firm, Ivanhoe Energy (OTC BB symbol: IVAN) shot out of the gate with far less promise a few years ago, new investors qwuickly pushed it above $10 a share.

And given that our oil assets are very conservatively valued at a $53-a-barrel minimum of more than $28 billion, and that we have already partnered with solid mid-tier players Pioneer Natural Resources (NYSE symbol: PXD) and Noble Energy (NYSE symbol: NBL), there is no apparent reason we can't do the same.

And it also can't hurt that we will apparently be doing business in the same blocks at ExxonMobil, or that our MOU partner Pioneer's partner, Devon Energy (NYSE symbol: DEV), is one of the hottest up-and-coming players in the game.

And then there's the matter of those two 100-percent blocks, both signature-free in the Sao Tome Exclusive Economic Zone, to which we are entitlted when the round offering those opens later this year. Since we don't know now what their assets are - but we do know that everything around them is rich in oil - that may be yet another $5 - $10 surprise for this stock. We had predicted a buy-out of ERHE, or at least an attempted buy-out, and it turns out that our prospective fellow explorer in (probably) Blocks 2 and 4 of the JDZ, ExxonMobil, per its press releases and statements in February, is acquisition-minded and has $25 billion in cash.

So, it may be time to take that old, oil-spotted and beat-up tarp off our brand-newly-named, debt-free and precisely positioned oil-pumping machine and look towards the double digits in the day immediately following awards.

Needless to say, that sounds like a "pumper" talking, and I would plead guitly if it were true. But I have hit you squarely with the bad news just as often as I've hit you with the good, and since Jan. 10, 2005m I have not bought or sold a single share for my own account (I did try to buy 3,000 more shares at $0.565 two weeks ago, unsuccessfully) and am wondering right now if I out to sell at all, beyond what I need for my relatively few immediate expenses.

Not selling is not my normal way of doing business, but as one who bought into stocks like HYPD, FEEC and TMXN and sold out only to see them triple, quadruple and sextuple afterwards, I am slowly learning the difficult lesson that you have to stay in some stocks a while to realize their full potential. A while - at least in the case of those players - doesn't have to be three years, either.

Now, this is not a promise not to sell. Like anyone, I salivate at the prospect of walking aways with a newly-minted $200,000 bill in my wallet, and it may be that my greed indeed may overcome my wisdom. I just wouldn't bet on that anymore - and frankly, I am a gambling man.

ERHE Up Sharply On Good Block News

With more assurance that block awards are imminent in the Nigeria-Sao Tome Joint Development Zone, ERHC Energy (OTC BB symbol: ERHE) moved sharply higher in steady trading Friday, adding $0.055 or about 9 percent to $0.66 on volume of 2,940,100 shares at 3:30pm EST.

The day saw more investors moving to capture a piece of the prized blocks in the Gulf Of Guinea, where ERHC has rights to five option allotments ranging from 15 to 30 percent in a zone that is said to contain more than 11 billion barrels of oil in deep offshore waters.

ERHE is guaranteed rights to more than $81 billion worth of oil at current prices, although only a fraction of that - possibly 10 to 15 percent - is likely to be realized.

Those rights apply only to the current licensing round; ERHE has additional rights in the next JDZ round and rights to two full signature bonus-free blocks in the Sao Tome Exclusive Economic and to 15 percent allotments in two additional blocks of the EEZ, where officials say a licensing round will begin this year.

With XOM In, JDZ Awards May Be Next Week, UpstreamOnline Says

JDZ Awards Next Week, UpstreamOnline Says
Barry Morgan, the prize-winning reporter for UpstreamOnline who has covered the Gulf Of Guinea block auctions by the Nigeria-Sao Tome and Principe Joint Development Zone since its inception, reported shortly after midnight GMT that all outstandng issues regarding ExxonMobil's rights in the five blocks of the zone that are now on offer have been resolved, setting the stage for awards next week - and he again indicated that ERHC Energy (OTC BB symbol: ERHE) may be a big winner, perhaps at XOM's expense.

Here is the story from last night's editions of the highly-regarded petroleum industry's insider journal:

The JDZ issue is finally resolved

00:18 GMT

EXXONMOBIL has finally decided where it stands in the Gulf of Guinea licensing round, jointly managed between Nigeria and Sao Tome & Principe, writes Barry Morgan.

The company will likely take up its priority rights to 25% of Block-2 and 25% of Block-4 in the Joint Development Zone (JDZ), as agreed under an international protocol signed before the current licensing round.

After weeks of agonising over whether to pull out following abortive attempts to muscle into an operatorship for Block-4, the company opted to cut its losses and take its due. Meetings will resume with Nigerian authorities on 21 March.

ExxonMobil already exercised its right to 40% of Block-1 under Chevron-Texaco's operatorship but failed to bid on either first or second round blocks, therefore rendering it impotent to stake its claim for a larger role.

Just how ExxonMobil managed to play its hand so badly in this political game is a question many observers are asking, as minnows in league with mid-sized companies look set to win the big prizes. Following months of procrastination, the Abuja-based Joint Development Authority set up to manage natural resources in the zone, finally forced the supermajor to take action.

ExxonMobil is understood to have sought operatorship of its own interests through the backdoor based on its relations with Sao Tome and the clout it wields with the Nigerian government. Yet the municipal and international law governing the JDZ enabled Nigerian petrocrats to stand firm, allowing only those bidding to emerge.

ExxonMobil had until 18 March to make its pitch but is understood to have elected under pressure to put bidding suitors out of their misery ahead of deadline. Equity breakdowns on all blocks, including operating stakes, will still have to be approved by the JDA and ratified by a meeting of the Joint Ministerial Council.

It is envisaged that junior equity positions will be decided for second round offerings (blocks 2, 3, 4, 5, 6) before the end of next week, along with the operators. US minnow ERHC Energy has priority rights to several blocks but also bid for operatorship with US partners Pioneer Natural Resources and Devon Energy (blocks 2 & 3) and Noble Energy (block 4).

Nigeria recently relaxed its rule restricting local independents to 10% of equity in deep-water offerings in this year's round to licence the Exclusive Economic Zone (EEZ), raising the bar to 20%. However, it remains unclear how this would play with the JDZ where the round, governed by international treaty, is close to closing.

Sao Tome also wants to launch its own EEZ round this year, competing with Nigeria.

Morgan has suggested in earlier stories that ERHC may take as many as three operatorships in this round, and that possibility seems to gleam through the klines of today's report.

Is First Atlantic Bank Selling?

There is little doubt that anticipation of the coming Joint Development Zone awards will drive the share price upwards, as many longs have hoped, and may reduce some of the apparent insider selling that has depressed the price in recent days despite strong support from a front-page Houston Chronicle story last Sunday.

The selling,in my opinion, may originate with First Atlantic Bank of Nigeria Plc, which has vastly increased its asset base in the months following a transfer of some 63 million shares from ERHC Energy chairman Sir Emeka Offor, who was sued by the bank in Houston federal court over an unpaid loan and settled the matter with the shares on Nov. 10. 2004.

While the First Atlantic Bank shares are supposedly restricted for a year, the bank has made no SEC filings concerning them despite being a 9 percent owner of ERHC, and it is unclear how U.S. securities laws would impede the bank's transfer agent from selling the shares if it wished. The only statement of the bank's ownership has appeared in ERHE's own SEC filings.

There is little other explanation for the massive 10 percent sell-0ff that investors saw after the highly positive Houston Chronicle story, headlined "Tiny Player Strikes Gold In Huge Oil Deal."

Buoyed by the story, the price soared $0.115 for a 20 percent gain before a wave of selling drove it from a high of $0.695 to $0.63. As in another instance in December when the share price soared, many long-term holders have asked, "Where are the shares coming from?" The answer, again in my opinion, almost certainly seems to be the First Atlantic Bank shares.

The bank, which did not have enough assets to remain viable under Nigeria's newly-enacted bank-capitalization laws, saw its own stock rise and its assets soar from less than Na. 25 billion to Na. 32.7 billion, with little evidence of corresponding new depositors.

If indeed they are the bank's shares that are being sold, it is uncertain whether anyone but the stock's transfer agent would have committed an SEC violation, and there is currently no certainty that the transfer agent is located in the United States or subject to U.S. regulatory regimes.

The issue is a vital one for investors who fear that the long-awaited awards may be robbed of their benefit by massive selling aimed at taking profits for the bank. A major ERHE investor known as Ruby1100 has cut his forecasts for a post-awards high in recent days from well over a dollar to the $0.78-$0.95 range, prompting some other investors to follow suit in formulating their own exit strategies.

Much surely depends on whether Barry Morgan's optimism about the operatorship awards is borne out by the announcements expected next week. A trio of operatorships would surely clear the decks, and possibly lead to prolonged buying that would exhaust even the bank's cache of shares in a matter of days.

Days Away, Doubters Dally

Just days from the award of lucrative oil concessions in the Gulf of Guinea, investors continue to teeter back and forth on the merits of ERHC Energy (OTC BB symbol: ERHE), while in Abuja officials of the Nigeria-Sao Tome Joint Development Authority put the finishing touches on an announcement that will bring the company more than $81 billion worth of undersea oil and a share price that is likely to double and then some.

Despite the front-page headline in last Sunday's Houston Chronicle that presented the awards as a fait accomplis - which by all indications it is - ellers in the last 15 minutes of trading moved more than 450,000 shares to leave the price where it started the day $1.7 million shares earlier: at $0.63.

The process of pushing the share price up the hill to $0.65, only to watch it roll down again to $0.61 before the final burst of trading, was exhausting to watchers who were aware of the last-minute preparations in Abuja and the looming Friday deadline for ExxonMobil to make its move on the 25 percent allocations it holds.

Repeatedly assured at the highest levels that awards will immediately follow XOM's decision, one would think investors would be striving mightily to firm up their positions before the announcement, which ERHC On The Move expects will come after the closing bell on Monday. But in the last five minutes of trading, several blocks of 100,000 and one of 90,000 shares were asserting that some holders didn't know what to believe - and some buyers did.

The Chronicle article proved to be too attractive for day traders, who swung in and out of the stock on Monday as it first climbed 20 percent and then fell back to settle for an 11 percent gain. Admittedly, the day traders made out like bandits - in the very short run. But those who have held on until payday and beyond will make those daily profits look like chump change, we feel. ERHE's share price by the end of next week could well be over $2, and even far higher, we believe, and we have staked our $123,040 shares on that prospect.

There is an interesting parallel to the day-traders and the longs at the craps table. Smart craps players sometimes make a lot more money on their side bets - getting odds that someone will roll a six or right or nine, for instance - than they do at the line, especially when the shooter is hot, hitting lots of 7s or shooting 10 or 15 times before he makes his number or craps out. Day traders make lots of side bets, while the high-rolling longs play the front line, the main chance, the Come line.

Over the years that we high rollers have played ERHE (and its predecessor symbol, ERHC), we've seen a lot of those side bets go very, very bad, very, very suddenly. One day there's a coup; one day a contract written in stone has to be renegotiated; one day the awards process is indefinitely postponed; one day the Los Angeles Times or the Houston Chronicle comes out with a major front-page article. For the day traders, the sudden turnabouts have thrown a wrench into their carefully polished strategies time and again; for patient longs, no loss was involved, just more days of waiting. And we are nothing if not patient.

That's why it is hard to understand such the short-sighted strategies so evident on Tuesday. A half-dozen major and many minor newspapers and wire services, and some very high-level officials, have assured the world that when the awards come, ERHC Energy's rights to about 14 percent of 11 billion barrels of oil will be awarded; those rights today at about $81 billion, and after exploitation and all associated costs and taxes, about $10 billion, or aroundt $14 a share. The awards are imminent, meaning they will be here within 10 days, and probably much sooner.

So who in their right mind - if not a prospective takeover artist that wants to get shares cheap and so plays the weak bid against the strong askto drive his price down - would sell 100,000 shares today? We don't know, but we sincerely doubt their sanity.

ExxonMobil May Get 7-Day Grace Period, Reader Says

A reader has written to take issue with my editorial "Signs of Change," on the erhc.blogspot.com site, and in doing so left behind what reads to me as useful analysis.

If correct, the comment by muktawdadi indicates that XOM could get an additional seven-day grace period if it fails to exercise its 25 percent preferential options in Blocks 2 through 6 of the Nigeria-Sao Tome and Principe Joint Development Zone.

Muktadawdi also indicated that ExxonMobil is not the key reason the awards have been so long delayed, and that the PSC for Block 1, which has been signed but but not paid for, is held up due to boundary changes that were required - and adjustments in acreage holdings by several majors that in turn were affected.
He (or she) writes:

As for the PSC on block 1: the delay relates solely to the time it has taken Nigeria finally to sign into law and gazette boundary changes with the JDZ, and to secure waivers from Total, Petrobras and South Atlantic for acreage previously in Nigerian block 246 and now in JDZ block 1.

That process was complete last week. Chevron Texaco, ExxonMobil and Energy Equity Resources/Dangote (or perhaps Afren, which claimed in its London IPO on Monday to have a deal on half Dangote's stake and tripled in a day) have until second week of April to pay the $123m signature bonus.

On the 2004 JDZ licensing round - ExxonMobil's 30-day notice for exercising its options closes on 18th March. It is very likely they will receive a further 7-day grace period. If by then the company has not indicated a choice, the JDA will conclude that Exxon has chosen not to exercise and call a JMC meeting - which, depending on logistics, may happen before the end of the month.

ERHC At A Turning Point Today

The Los Angeles Times, Dow Jones News Service and Houston Chronicle have all weighed in with major front-page articles on ERHC Energy (OTC BB symbol: ERHE), and under the glaring, critical eyes of reporters and editors our investment has been found not only sound, but ripe for appreciation.

"Tiny player strikes gold in huge oil deal" - the Chronicle's front-page, above-the fold headline yesterday - is a fundamental statement of the truth about this stock.

Now, we have to wait for the world to catch up on its reading.

I became an investor in ERHC, which recently changed its symbol to ERHE, on the Monday following the article in the Los Angeles Times in late May of 2003. The stock rose 21 cents over those three days, and I quickly accumulated 175,000 shares. Just before they topped out at .43 a few months later, I sold my stake for a $27,000 profit.

Today (even though I needed the money then), I wish I hadn't. The 123,040 shares I now own are hardly enough to make up the difference I might have earned had I held those first $.215 shares and held on - but "might have" is a perilous illusion. I didn't.

As we weait for the market to open a few hours from now, I think we are on the brink of a great new wave of buying interest in ERHC, occasioned not just by the Houston Chronicle article and the others, but by a new set of circumstances which uniquely apply to ERHC Energy.

Among these considerations are:

• We have no outstanding debt. While the article points out that we only have $21,000 in cash, that's plenty for now - we only have one employee to pay.
  
  
• We have withstood the scrutiny of some of the best business reporters in the world - Ken Silverstein of the Times; Washington Bureau, David Ivanovich of the Chronicle's Washington bureau, and Norval Scott of the Dow Jones News Service's London bureau. As they have noted, our contracts and our rights are intact after innumerable challenges, threats and charges.
  
  
• We are no longer quite so unknown as we were in the late Spring of 2003. Not only have these reporters studied us, but so also have dozens of reporters for news outlets around the globe from the Financial Times to Forbes to Reuters. And while all these media have examined our bona fides, few have ever speculated about what the effect of awards in the Nigeria-Sao Tome and Principe Joint Development Zone may be on our share price.
  
  
• Unlike in 2003, when awards also appeared to be near, they are near now - they could even come this week, or early next.
  
  
• UpstreamOnline reported two weeks ago that we "are in line" for operatorships in three of the JDZ blocks - a fantasy, perhaps, but perhaps one of the very few that become real.
  
  
• The "launch pad" for ERHC is - thanks to the Chronicle - likely to be far higher than if the article had not come out before awards. It is one thing to go from $0.19 to $0.40 over three days when the stock is unknown, but it is quite another to start at $0.564 when the article came out, probably just a week ahead of awards. We can expect very significant gains just from news of our guaranteed rights being awarded.
  
  
• The Houston Chronicle is the premier voice of America's powerful Oil Patch, and when they examined the issue of reserves in the Joint Development Zone, they came up with an authoritative figure more than 250 percent higher than most investors have used to gauge a possible share price. Our combined rights in the JDZ amount to about 14 percent of the 11 billion estimated reserves the Chronicle found, and at a price of $53 per barrel, they can be valued at more than $81 billion. We probably cannot hope to realize more than $10 billion of that, yet even that gived our $0.564 stock of today a future 1:1 value of $14.10.
  

I put in an order this morning on E*Trade for 3,000 more shares at $0.57. If the rush is anything like the one that followed the Los Angeles Times article in May 2003, even that small investment will be worth it. Let's see where $1,700 goes from here.

JDA Meeting With Exxon Ends; Awards Are Next

Raging bull poster Markvo10 has spoken again with Nigeria-Sao Tome and Principe Joint Development Authority spokesperson Sam Dimka, and while it no longer looks like awards will come before the end of next week, they do appear to be forthcoming soon after, and possibly as soon as March 21.

Here is his latest post to RB:

*******Update*******
Just spoke with Sam Dimka at the JDA. I asked him how the meetings with XOM went. He said they went "very very well." He said XOM has left and that they must "report back to their principles." Sam said that they will hear from XOM anytime between now and next Friday. Sam said he expects XOM to exercise their options and that "they would not have sent people from Houston if they were not interested." Sam reiterated that if XOM does not exercise by the March 18th deadline (next Friday) that the JDA will assume that XOM is not interested and the JMC will convene to announce awards. He said next week is the time everything gets done since next Friday is the deadline. Sam said we will know for certain by next week. He said that the JMC is very eager to meet and get this done and he must have said this at least 3 times how eager they all were to get this done.
Also, I sent him a copy of that Indian article that was posted yesterday. He said that no awards had been announced and that "some people are just trying to play smart." He ended the conversation by saying once again that this would all be done very soon and that everyone was eager to see this finished.

It's not precisely clear what Sam Dimka meant by "playing smart" in the context of the online Business-Standard article saying ONGC Videsh / Equator Exploration "has emerged a winner" in their bids for a block of the JDZ, but my take is that Dimka used the phrase as in the American version, "Some people are trying to take advantage of others."

Whatever the purpose, the article has not improved Equator's share price on London's Alternative Investment Market (AIM), where the price remained .85 pence, the same as yesterday's close and well below the intitial IPO pricing of 1 British Pound in December.

ExxonMobil Meets Today With JDA On Block Choices

ExxonMobil meets at 9am Nigerian time (+5 US EST) in Abuja this morning to discuss and perhaps put forward its two 25-percent preferential choices in any of five blocks offered in the Nigeria-Sao Tome Joint Development Zone, a spokesman for the Joint Development Authority told Raging Bull ERHE message board poster orangeandwhite0 Tuesday.

With another meeting scheduled for Thursday at 10am Abuja time, the choices will be the trigger for a meeting of the Joint Ministerial Council and the announcement of awards, according to JDA spokesman Sam Dimka.

ExxonMobil was given 30 days to declare its choices in a letter from the JDA in late February, and that period ends on or about March 18. There is considerably less doubt this time around that further delays will occur, and the possibility remains open that the announcements could come as early as Friday or over the weekend.

Signs that the meetings have also encouraged investors came in Tuesday's trading, where the share price of ERHC Energy (OTC BB symbol: ERHE) moved up $0.02, a gain of $2,460 for the ERHC On The Move portfolio of 123,040 shares.

Volume, however, while well ahead of the hiostorice 495,000 daily average, was well off last week's pace, failing to top 1.5 million. The stock closed at its high of the day, $0.615. Most observers expect a gain of at least several more cents, perhaps to $0.65, tomorrow.

ExxonMobil's relationship with the JDZ was established in the 1990's, when it helped underwrite the creation of the JDZ by shooting imagery of its oil deposits in the Gulf of Guinea, and entitled the company to certain preferential rights that it has been unable to exercise until now.

ERHC Energy, the former Environmental Remediation Holding Corp., had similar rights it has already exercised in Blocks 2, 3, 4, 5 and 9, and in the Sao Tome Exclusive Economic Zone, where it can choose 100 percent of two blocks without paying a signature bonus and 15 percent of two more blocks by paying a bonus fee of 15 percent of the winning bid for those blocks. That licensing round may be delayed for up to three years, news reports have said.

The Joint Development Zone is believed to hold between 4 billion and 14 billion barrels of crude oil. As a percentage of the whole JDZ (exclusive of the EEZ), ERHE has about a 14 percent interest in the oil, or rights to about 560 million barrels at the 4 billion-barrel estimate. At Tuesday's closing crude oil spot price of $53.90 per barrel, that stake would be valued at US$30.1 billion.

$60 Oil 'Soon,' Former Energy Secretary Richardson Says

New Mexico Gov. Bill Richardson - the former Clinton Administaration Secretary of Energy said "I think [we'll see] $60 oil soon" in an interview tonight with former White House communications director-turned-newsman George Stephanopoulos. If true, the statement could soon have a powerful impact on ERHC Energy's (OTC BB symbol: ERHE) share price.

ERHC On The Move has more than 123,000 ERHE shares in its portfolio valued at $73,208, and would benefit substantially if such a price rise occurs.

Richardson, a Democrat who was rumored to be a strong contender for the vice-presidential nod from Democratic presidential candidate Sen. John F. Kerry last year, blamed a White House filled with "oil people" - both President George W. Bush and Vice President Dick Cheney have long histories with the oil industry - for a failure to effectively lobby OPEC oil-producing nations to raise quotas and bring prices down.

Particularly worrisome, Richardson said, is the fact that 30 percenrt of America's oil comes from Saudi oilfields, and that they are vulnerable to terrorism that could disrupt supply.

"One attack on Saudi fields and the price goes right to $80," said Stephanopoulos.

"I think $60 soon," Richardson responded.

The exchange on the ABC late-night television news magazine "Nightline" focused on ways to understand and perhaps alter America's dependence on foreign oil. The comments came as top Chevron executives in Nigeria are said to face imminent arrest on tax evasion charges and the closure of the company's Lagos headquarters after a Federal High Court decision upheld a ruling by a state attorney general seekimng the arrests and closure, according to the Nigerian Daily Independent newspaper.

That is only one small facet of an all-out political assault on multinational oil companies doing business in Nigeria. Some others are:

• Demands that the taxes on oil produced be raised to 85 percent; that the companies build huge multibillion-dollar LNG plants; that they pay billions of dollars in fines for environmental damage; that they refine much of their production in Nigeria; that they hire more Nigerian workers; and that they give up leases to oilfields not yet exploited.
  
  
• There have also been a number of violent incursions by armed ethnic guerillas who have overrun and badly damaged oil processing facilities and killed workers, including Americans, and until recently a widespread custom of theft from oil pipelines amounting to more than 100,000 barrels of crde oil per day.

Porter Goss, the new head of the Central Intelligence Agency, recently told a U.S. Senate committee that Nigeria is in danger of becoming unstable, and multinational oil companies undoubtedly face the risk of losing concessions, refineries, flow stations, pipelines and harbor faciltiies in the event of a change of government or a breakup of the nation.

That extreme measure is favored by some influential figures in both the north and south of the country, which has traditionally accused the wealthier north of exploiting the southern Niger Delta region's oil wealth, and is part of the reason for an historic dialogue on Nigeria's future among all sides. The National Dialogue was organized by President Obasanjo and it is now taking place in Abuja. Obasanjo has been a global leader in the effort to restrain price increases and raise OPEC quotas.

It is difficult to assess the value of ERHC Energy's Nigeria-Sao Tome Joint Development Zone preferential rights in the context of $60 oil and Nigerian instability, because the awards of concessions there have been repeatedly delayed and when they come, it is unknown whether they will encompass just the 560 million barrels of oil conservatively estimated to be in the five blocks where the company has rights, or even more, if the JDA grants ERHC and its partners one or more 51 percent allocations of the oil-rich blocks in the Gulf of Guinea.

ERHC Energy also has rights to two 100 percent bonus-free block allocations in the Sao Tome Exclusive Economic Zone and two more 15 percent allocations in other blocks for which signature bonuses must be paid.

The possibility that Nigeria may undergo dramatic changes would not alter a 2002 treaty between Nigeria and Sao Tome and Principe that ensures ERHC's rights - as well as those of ExxonMobil, which has no mainland exposure in Nigeria - nor its entitlements from Sao Tome and Principe, an island nation of 150,000 people.

Under those circumstances, and given U.S. government claims that about a quarter of America's oil needs will be met by the Gulf of Guinea oil in coming years, a valuation of shares of ERHE becomes almost prohibitively optimistic.

Moreover, the fact that slightly more than half of ERHC Energy's stock is held by two Nigerian companies, Chrome Energy and First Atlantic Bank Plc., makes the company substantially less vulnerable to nationalistic claims against clearly foreign-owned firms.

The positioning of ERHC Energy relatively to its multinational rivals may make the company's shares attractive to larger firms who want a greater presence in the region with stronger claims to Nigerian participation.

Top Chevron Nigeria Execs Face Arrest In Tax Evasion, Paper Says

Nigeria's Daily Independent today said that top executives of Chevron Nigeria Ltd. face imminent arrest and the shutdown of their Lagos headquarters over alleged tax evasion of more than Na. 4.1 billion, or US$380 million.

The report comes as the New York Times today praised Nigeria for its efforts to combat corruption that wastes 65 percent of its national budget and as the government of President Olusegun Obasanjo cracks down on tax evaders, mail fraid, customs cheats and the theft of more than 11,000 barrels daily of its major natural resource, crude oil.

Disclosure: A family trust holds substantial quantities of Chevron stock.

Lagos may seal Chevron headquarters over alleged N4.2 billion tax evasion

The Corporate Headquarters of the American multi-national oil company, Chevron Nigeria Limited in Lagos may be shut and its senior officials arrested by the Lagos State Government over tax liability amounting to N4.2 billion.

The coast appears clear for the action, following the striking out of a suit instituted by the management of Chevron at a Federal High Court against the Attorney-General of Lagos State, Lagos State Board of Internal Revenue and the Economic and Financial Crimes Commission (EFCC), claiming that its fundamental rights to acquire and own property and to fair hearing were being infringed upon.

The state government had served demand notice of N4.2 billion on Chevron as tax deductible from its Employee Home Ownership Scheme introduced in 1996.

The state sought the assistance of the EFCC when it became apparent that Chevron was unwilling to pay the said amount.

However, on September 30, 2004, Chevron went to the Federal High Court, Lagos, seeking, among others, the enforcement of the fundamental right to fair hearing and the enforcement of its fundamental right to acquire and own immovable property anywhere in Nigeria as guaranteed by the 1999 Constitution.

Among the reliefs sought by the company were that the payments made under the scheme were loan, which matured with a gratuity supplement as a retirement benefit of the employees as such, no tax deduction was liable to be made under the personal income Act 1993.

The company also said that Lagos did not make use of the machinery set up for redress by an aggrieved tax payer by the Personal Income Tax Act 1993, and instead sought the intervention of EFFC.

“The provisions of the Personal Income Tax Act 1993 are outside the purview of the Economic and Financial Crimes Commission Act 2004,” it said.

It also called the attention of the court to the fact that its premises and head office are in jeopardy and senior staff under threat of arrest.

But Lagos State Government, through its counsel, Ade Ipaye, argued that payment under the scheme is a grant rather than a loan and therefore is subject to tax under the Personal Income Tax Act 1993.

It accused the company of concealment of facts, non-disclosure of information and tax evasion. The state also claimed that Chevron’s action could not be brought or maintained under the Fundamental Rights Enforcement Rules.

It also claimed that Chevron’s action was frivolous, embarrassing and an abuse of court process.

NY Times: Hope For Change Stirs In Nigeria

A powerful editiorial in the New York Times this morning rips Nigerian corruption and praises efforts by President Olusegun Obasanjo to get the country on a better path.

There's no mention made of the specific corruption investigations underway nor any wrongdoing in the Nigeria-Sao Tome and Principe Joint Development Zone.

In all, it's a well-written, intelligent and forceful plea for more U.S. help and attention to a nation of 137 million people whose squandered wealth and lost opportunities are typified by the email fraud known as the Nigerian Advance Fee scam.

Indeed, Nigeria has moved on many fronts in recent months to correct tax evasion, customs fraud, the daily theft of huge amounts of oil and unchecked greed and theft on the part of its powerful politicians and generals. The Times said the ongoing investigations have left many of the most powerful pols "terrified."

Here's the piece, posted this morning on the Raging Bull ERHE message board by The Dane:

March 7, 2005
EDITORIAL
Hope in the Land of Dashed Hopes

For more than 40 years, the epitome of wasted potential and squandered opportunity in Africa has been Nigeria. From the time it gained independence from Britain in 1960, that behemoth of 137 million people has seemed to do its level best to fritter away every natural advantage. Given the second-highest proven oil reserves in Africa, Nigerian officials spent oil income on lavish estates in Europe instead of decent schools and water systems back home. The country that produced the Nobel laureate Wole Soyinka and arguably Africa's best author, Chinua Achebe, was better known for the cruel, thieving dictator Sani Abacha.

Now, "Nigeria is changing," says Ngozi Okonjo-Iweala, the country's finance minister. She suggested thinking of America and the West as the parent and Nigeria as the child: "If your child has been doing bad things - drug abuse or alcohol - and they come to you and say, 'My mother, I want to change; please help me,' would you say, 'No'? Would you say, 'You are hopeless; you can't change'?"

It's a tough question for anyone who has ever been assaulted at the airport in Lagos just trying to enter Nigeria, or hit up for a bribe by Nigerian government officials, or struck dumb at the sight of orphaned children drinking dirty water on the street. But if America and the developed world are serious about their stated intent to tackle poverty, most of which is in Africa, then they cannot ignore the home of 20 percent of sub-Saharan Africa's people.

Hard as it is to believe, there are hopeful signs in Nigeria. The Nigerians, through two, albeit flawed, democratic elections, have given themselves a reformist government with the right intentions. President Olusegun Obasanjo has taken up the mantle of anticorruption - or, at least, slightly reduced corruption. He established an Economic and Financial Crimes Commission, whose chairman, Alhaji Nuhu Ribadu, at risk to his life, has been terrifying current and former officials with his investigations. Already, two rear admirals have been convicted of helping to steal 11,000 barrels of oil. Some 130 customs officials have been fired.

Bunkering, the quaint term Nigerians use to describe outright stealing of crude oil by members of the armed forces or the government, has been reduced to a mere 20,000 barrels a day from 100,000 barrels a day, according to Dr. Okonjo-Iweala. And finally - this should please all of us who have received e-mail supposedly from Idi Amin's son or Charles Taylor's wife offering untold riches if we'd only provide our checking account numbers - three purported e-mail crime leaders have been arrested.

Beyond the fight against corruption, Nigeria has made huge strides in promoting regional security. Nigerian peacekeepers are in Liberia, Sudan and Sierra Leone. Last month, when Togo installed the son of the country's longtime strongman as president, it was Nigeria's Mr. Obasanjo who led the fight that ultimately forced Faure Gnassingbé to step down. We can't help but notice the difference between Mr. Obasanjo and the leader of black Africa's other regional power, South Africa. Thabo Mbeki has largely thrown up his hands in the struggle to force Zimbabwe to hold honest elections that could rid it of the odious despot Robert Mugabe.

What's missing is for America to take Nigeria more seriously, to do much more than simply treat the country as a gas station. The United States has made some strides with H.I.V.-AIDS treatment in Nigeria, but that should be expanded to include prevention as well. The country isn't anywhere close to qualifying for aid under President Bush's Millennium Challenge Account, which ties money to good governance. But that approach, while worthy, condemns the 80 million Nigerians who subsist on barely anything. America should supplement the Challenge Account program with something that encourages countries like Nigeria to press ahead with reforms, and find ways - perhaps through private aid groups - to funnel money to the desperately poor. Nigeria is too big to ignore. If it doesn't succeed, it's hard to imagine that the rest of Africa has much of a chance.

A Precipitous Plunge

I awoke from a powerful dream Saturday morning.

I had been on a long journey, accompanied much of the time by many people, among them a very special woman, and near the end I boarded a bus full of people whose faces I could not see, and I got off on a high stone bridge, overlooking a pond far below. Then I seemed to be riding in a pushcart or something, but as I crossed the bridge I was suddenly pushed in the cart over the edge to the pond far below.

Immediately, I freed myself from the cart and prepared myself to hit the water. I knifed deep into the pond, afraid I would smash into the bottom, and just as skulls and bones on the floor of the pond came into view I finally stopped plunging, reversed, and headed towards the surface. As I did that I became aware that the water was as greasy as a soul food kitchen sink.

I burst back into the air dripping with oil.

At the side of the pond was a high wall of boulders like those of a jetty at the seashore, and I swiftly climbed them back to the top. There I met my oldest brother, or someone like him in a wheelchair, and he gave me something odd - it was a square, shallow box with what looked like a tongue stretched out and caught in a mousetrap, and then he pointed me ahead, across another walkway, and told me to follow that down along the river.

As I mulled it over later on, I kept trying to recall the woman, and I could remember dreaming of her before, of her lush breasts and warm embrace and making love to her several times, of loving her and not wanting to leave her, but as in the dream, I was swept along in the tide of humanity down the old cobbled streets.



Years ago, my heart wrote a poem that said,

All desires rise and fall;
At the low ebb of desire
the ocean waits;
The current pushes outward,
attachments fall.

Life sweeps us away, sooner or later, from the things we love. But it doesn't have to drown or diminish us, not if we struggle for the light, for reason, for purpose, and not if we have the humility to listen, to be gently guided by the friends and other currents in our lives.

I face a gentle denouement as events surrounding ERHC Energy come to an inevitable turning point. Soon we will know what we have won, if we have won. We will see where this fierce and loving journey of change and challenge will leave us.

In a few days, like many of my fellow travelers whoses faces I can only know from their hastily written words and comments here and on the message boards, I will likely disembark at a high, distant place and head for a new one. That is the way the current is pushing me, and I would be a fool not to let it do so.

All good things come to an end, do they not? And so will come an end, high or low, to my journey with ERHC.

Through coups and catastrophes, through peaks and plunges and valleys and plains, we have traveled a path through a world new to us, and arrived in a far, far safer place than the one we left.

As we part, a few days or weeks or months from now, I will remember many people fondly, for small favors and fine compliments, and have bad memories of just one or two - and even those I will forgive and forget, because doing otherwise would only slow my journey.

I have far to go, and much to do, and I will always miss you, all of you, very much. Thank you for sharing this perilous and very promising journey with me.

Angered By Blog Report, Houston Chronicle Kills ERHC Story

A senior editor at the Houston Chronicle, apparently angered by our speculation that the confluence of stories in Upstream and the Houston Chronicle would improve the share price, has killed the story.

"That is not something we want any part of," said the assistant business editor who initially proposed the story to Washington bureau senior writer David Ivanovich.

Ivanovich told an ERHC On The Move reader Arthur Krauser, known as ArtK4K, "Actually, the story has been held up, probably for one week."

Our estimate is that the share price will be unaffected by the absence of the article, and will still move to $0.90 by Monday's close.

Ivanovich also told ERHC On The Move, "I do not know when the story will run. That's my editor's call."

It's great to know that the Chronicle bases its editorial decisions on our predictions of price movement. We didn't know they cared!

Huge Gains Seen As UpstreamOnline Says ERHE May Win 3 Operatorships In JDZ

Incredibly good news came tonight from the respected Barry Morgan at UpstreamOnline, the premier daily Website of the petroleum industry. Morgan, a veteran, prizewinning reporter who has had the Gulf Of Guineau beat for years, says ERHC Energy is "in line" to get not only its preferential rights in "a raft of blocks", but operatorships in Blocks 2, 3 and 4 with its partners Noble Energy (in Block 4), and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3.

If true it is astounding news, and may account for an unusual statement from the owners of First Atlantic Bank today that said they guarantee a new offering of shares from the bank, which holds 60 million shares of ERHC Energy, will quickly appreciate in value when they hit the market.

The bank's ERHE stock has risen by $12 million since it was acquired in November from ERHC Energy chairman Sir Emeka Offor.

Given the proximity of the awards - late next week, according to the latest estimates - and the confluence of this article with a 2,000-word story Sunday in the Houston Chronicle, the share price could easily reach $0.90 or more by Monday's close. Investors should expect busy trading through the day on Friday.

This was the article published on UpstreamOnline tonight:

Gulf of Guinea hopefuls eye mid-March awards
by Barry Morgan
March 3, 2005, 00:09 GMT

SUITORS tired of the protracted delays in the deep-water licensing round in the Gulf of Guinea between Nigeria and Sao Tome & Principe, hope the way will be cleared for awards by mid-March, writes Barry Morgan.

ExxonMobil has blown hot and cold over its rights to exercise a 25% option in blocks 2 and 4 in the joint development zone and is affecting the timetable for Abuja's plans to licence its own waters.

The supermajor was put on notice last month to exercise its options within a specific time frame. It is believed a quid pro quo deal might yet be forged if ExxonMobil agrees to farm out its rights to make room for independents in exchange for preferential treatment in Nigeria's Exclusive Economic Zone.

US minnow ERHC Energy also has a sliding scale of preferential rights, some free of signature bonus, on a raft of blocks and has bid again on others.

At this stage in the talks, it appears that ERHC would be in line to operate blocks 2, 3 and 4 in joint ventures with its partners, notably Pioneer Natural Resources and Devon Energy on Blocks 2 and 3, and Noble Energy on Block 4.
barry.morgan@upstreamonline.com

ERHE Booms Again, Up Nearly 15% on 2.5 Million Shares

Gaining strength as it goes into what may be the final week befor awards, ERHC Energy shares outpaced expectations today as they soared 14.81 percent to close at $0.62, a gain of $0.08 on volume of 2,568,266 shares.

The strong performance was at least partly due to former investors revisiting the company's shares as they learn it has become debt-free and as Nigerian newspapers openly suggest the company will be awarded all of the preferential rights it sought and perhaps one or more operatorships with partners Noble Energy in Block 4 and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3.

The share price had an early and rather odd run in the late morning as just four or five lots moved it up in half- and then full-cent increments to $0.60, where it immediately stalled and fell back to $0.57 in the range of the anticpated gains we advised this morning.

Investors now look forward to a strong opening on Friday, especially after apparent day-traders tried to knock the price down in the last 15 minutes, and succeeded in taking it from $0.63 to $0.60, only to find stronger hands guiding the price back to $0.62. The ERHC On The Move portfolio of 123,040 shares purchased at an avergae of $0.4394 enjoyed a gain of $9,843.20, giving us a total gain of $22,221.03 since our last substantial purchases in November, when the stock briefly toyed with a low of $0.38.

There was a great deal of news propelling today' momentum, although none of it produced a day certain for awards. A clarification from Nigeria-Sao Tome Joint Development Authority spokesman Sam Dimka addressed to markvo10, now known on the Raging Bull message board as orangeandwhite0, resolved a ticklish phrasing in one story that suggested ExxonMobil might get more time to exercise its rights after the JDA met with them next week so that the company could seek clarification of unnamed issues relating to their two 25 percent preferential choices in any of the five blocks on offer in this second JDA licensing round. Dimka said that process would not extend the March 19 deadline for XOM to make its choices.

Those choices seem to remain three: first, to till the fields itself, as it apparently does not want to do; to partner with other bidders to whom it would "farm out" the rights, much as landlords and sharecroppers do; or to reserve their choices for three blocks yet to be offered - Blocks 7, 8 and 9 - or possibly for rights in Sao Tome's Exclusive Economic Zone.

Either or a com,bination of two could prove a judicious play if, as expected, vast reserves are verified in the Gulf of Guinea blocks controlled by the government of Sao Tome and Principe and those now offered by the JDA.

For investors, however, having some assurance that the months of delay must end on March 19 is a relief likely to encourage more buying even before the market opens on Friday.

Houston Chronicle Story On ERHC Scheduled For This Sunday

A 2,000-word story exploring the history and prospects of ERHC Energy will appear in Sunday's Houston Chronicle, America's most oil-savvy newspaper, the senior writer preparing the story said today. The story was suggested by ERHC On The Move.

The in-depth examination comes after the Washington bureau senior writer on the story contacted dozens of figures throughout the world, including President Fradique de Menezes of Sao Tome, Nigeria-Sao Tome and Principe Joint Development Authority executive director Carlos Gomes, and ERHC CEO Ali Memon in order to limn the story of a tiny Louisiana firm that nearly went broke before it became a major player in the JDA's Joint Development Zone, a region of the Gulf of Guinea where studies suggest there may be anywhere between 4 billion and 12 billion barrels of untapped crude oil to satisfy the hungry petroleum markets of the world.

Block awards by the JDA for Blocks 2, 3 4, 5 and 6 of the JDZ are pending a decision by ExxonMobil to either exercise preferential rights to 25 percent allocations of any of the two blocks on offer, to farm them out to other explorers, or to forgo them for later choices in future JDA rounds.

Also on the news front, Nigeria's The Guardian reported on comments from national petroleum advisor Dr. Edmund Daukoru to the News Agency of Nigeria in which Daukoru again promised that the twice-delayed start of a bidding round on 80 Nigerian blocks is moving into an "advanced stage," but he did not give a date for the event, which is generally thought to be virtually the same date that the winners of the JDZ blocks are announced.

Here is the article from The Guardian:

Investors await presidential nod on 2005 oil block award

ABUJA (NAN) -- PRESIDENTIAL adviser on petroleum and energy Edmund Daukoru says preparations have reached advanced stage for the 2005 bidding round.

Daukoru confirmed to the News Agency of Nigerian (NAN) in Abuja that the exercise would be conducted once the technical details were put in place.

"I have just submitted the bidding round documents to the President last Friday and he needs time to study them before opening the bid," he said.

He said 80 oil blocks would be put on offer both in the inland basin, onshore and deep water offshore for every player big or small to benefit.

The presidential aide expressed optimism that the exercise would attract multinationals as well as indigenous oil companies and that it would be conducted in a transparent manner.

Daukoru denied reports that lack of presidential approval delayed the bid round from opening in February as earlier scheduled.

"I will like to make it abundantly clear that presidential approval not delaying the process leading to the 2005 oil blocks bidding round," he said.

He said there was need for the government to be flexible on the timing due to the complex and technical nature of the exercise.

He gave the assurance that the exercise would soon be conducted with minimum delay.

A Useful Post From Markvo10, And A Solid Upturn

Two useful bits of data from orangeandwhite0, the former markvo10, were posted today on Raging Bull's ERHC Energy (ERHE) message board. The first told us that Nigeria-Sao Tome Joint Development Authority (JDA) spokesman Sam Dimka confirmed that the 30-day period for ExxonMobil to notify the JDA of its exercise of 25 percent preferential rights is "hard and fast," and the second that PXD Investor Relations spokesman Greg Panangos had confirmed that information.

ERHE's share price improved slightly this morning, with the opening $0.51 moving to $0.53 briefly. At 10:12am EST, the bid stood at $0.519and the best ask at $0.525, and $0.15 gain. A fair number of large blocks, ranging from several 25K buys to 35K, 50K and 100K, moved volume to 683,815 in the first 45 minutes of trading, a little ahead of yesterday's relatively slow pace.

Update, 2:45pm EST: The upturn we anticipated in last night's advice has materialized. At 2:53, the price was .545, an improvement of $0.035 from yesterday's close at $0.51. Volume was pushing yesterday's peak, with 1,748,145 shares traded.
Update, 4:09pm EST: ERHC Energy's share price rose to $0.54 at the close on the Over The Counter Bulletin Board today on closing volume of 2,213,700 shares. A small block moved at 3:04pm EST after closing at $0.545. ERHC On The Move expects more cautious upward movement in share price tomorrow, to the $0.57 range. Today's movement added $4,321 to our portfolio of 123,040 shares. We have bought just 40 shares since November, and our average price remains $0.4394.
According to markvo10's post, XOM now has just 18 days left to exercise its rights or lose them. Dimka indicated that the JDA will meet with ExxonMobil next week, and that the meeting could be followed very shortly by a meeting of the Joint Ministerial Council to make the formal awards.

Here is the post from orangeandwhite0:

PART 1. I just spoke with Sam Dimka. I asked him if the XOM 30 day deadline was a hard deadline. He said "it is Definitely a hard deadline, a contractual obligation. If XOM does not exercise within the 30 day deadline we will assume that they are not interested and the JMC will immediately convene to announce awards." Just to clarify with him I stated that there are only 18 days left for XOM to exercise their options and he said that this was true and that this should all be done very soon. I asked Sam if JMC would meet this week and he said not sure and that next week looks more likely. He said "unofficially" that XOM is coming to meet with them next week and that is why he thinks next week is more likely. You can call Sam Dimka yourself at 011 234 9 524 1069.

PART 2. Yesterday I posted the details of a conversation that I had with Susan Spratlen, IR PXD. After I spoke with her I sent an email to NBL IR, Greg Panagos. Below is the correspondence that I had with Greg:

My email to Greg Panangos, IR NBL:

Hello Greg,

I spoke with someone at the JDA and also someone at PXD (also bid in JDZ). They both said XOM has 30 days starting 2/18/05. So, XOM has 18 days left to exercise their options. XOM must do this within the 30 day period.

Both said they expect awards within the next 2-3 weeks since that's the amount of time XOM has to exercise its options. Both also said that XOM most likely would not take the full 30 days. So, awards could happen any time between now and 18 days. Is this what you hear? Is this accurate? Please reply.

Thanks,

Mark

Greg Panagos, IR NBL Reply:
You are correct and accurate.

Greg Panagos
Phone: 281.872.3125
Fax: 281.872.3121

Also, today's SEC filings show that one insider has registered some 220,000 shares to sell. We have not seen many such Form 144 registrations recently, even though a sharp price increase is expected with awards.

Here is that filing:

SOURCE: Form 144

ISSUER: ERHC ENERGY INC
SYMBOL: ERHE


FILER: VERTICAL VENTURES
TITLE: No Relation
BROKER: BERNARD HEROLD & CO
RESTRICTED SHARES TO SELL: 220,000 DATE REGISTERED: 02/28/05
APPROXIMATE DATE OF SALE: N/A

The Form 144 is filed with the Securities and Exchange Commission to reflect the ontention of any holder of restricted stock to sell those shares. After the 144 is mailed to the S.E.C., the filer is permitted to sell the shares, or any fraction of them, within 90 days.

Form 144 Data Source: Washington Service (info@washserv.com or 301-913-5100)


(END) Dow Jones Newswires

03-01-05 2237ET

22:37 030105

Awards Due Next Week After Hurdle Is Overcome, Nigerian Paper Says

Under the optimistic headline "JDZ bids result out next week", the Nigerian Daily Independent reports tomorrow that Nigeria-Sao Tome and Principe Joint Development Authority officials will meet with ExxonMobil executives next week to answer any questions the company has and finalize awards of Blocks 2 through 6 in the Gulf of Guinea Joint Development Zone.

The news follows an $0.03 rise in ERHC Energy's share price to $0.54 on the Over The Counter Bulletin Board today on closing volume of 2,213,700 shares. A small block moved a minute after closing at $0.545. ERHC On The Move expects more cautious upward movement in share price tomorrow, to the $0.57 range. Today's movement added $4,321 to our portfolio of 123,040 shares, which have not been traded since November.

In the Daily Independent article the mention of ERHC Energy mistakenly leaves the impression that our rights are in the Exclusive Economic Zone, when in fact they are in six of the JDZ blocks (2, 3, 4, 5, 6 and 9) as well as the EEZ, where the company has second choice of 100 percent of two blocks signature bonus-free, and additional 15 percent options in two other blocks in the EEZ requiring bonus payments, which are a percentage of the winning bid proportional to the rights we are finally awarded there. The EEZ blocks may not be awarded this year.

Here is an excerpt from yesterday's story in the more careful Vanguard which correctly spells out the rights situation:

According to the rules, ExxonMobil has up 30 days from the day it was notified to exercise its preference rights in any blocks of its choice among the five currently on offer. The blocks are 2, 3, 4, 5 and 6.

It was learnt that as soon as ExxonMobil exercised its rights, the JMC would meet to set the final stage for the award of the remaining stakes in the blocks as the case may be. Officials said it was not compulsory for ExxonMobil to exercise the remaining two rights in any of the current five blocks if it wanted another block yet to be put on offer.

ERHC which has a Nigerian business mogul, Sir Emeka Offor, as Chairman, has already fully exercised its preference rights in the six of the blocks in the zone, as provided for in the agreement.

The development of the JDZ recorded a milestone whena Block 1 Production Sharing Contract (PSC) was signed between the oil companies and the JDA on behalf of the governments of Nigeria and Sao Tome and Principe.

Only Block 1 was awarded in the first Licensing Round which was flagged off in April, 2003. there were nine blocks in all originally. Five of the remaining blocks were thus readvertised in 2004 while the remaining three were put on hold pending the generation of further data on them.

With the first PSC in place, it is expected that the entire zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model. Tax regulations in the zone have also been adequately addressed.

The Daily Independentstory also erred in saying that ExxonMobil had preferential rights in three blocks in "the 2004 round," leaving the impression that it has three options in the current 2004 second round; only two of those remain after XOM exercised its first option in Block 1 in the first round, gaining 40 percent of that block.

It was the second important mistake of the day, with the other being a widespread misreading of the last sentence in a story about the upcoming auction of 80 Nigerian blocks, which mentioned the JDZ blocks in passing and said the Nigerian Petroleum Development Corp. had been unable to compete for blocks with multinationals in the "last licensing round."

Many posters on Raging Bull mistakenly took this sentence to mean that ExxonMobil had not partnered with the NPDC in the current licensing round, rather than the "last" - the 2003-2004 round that ended on Oct. 15, 2004. It may still partner with NPDC in this second round.

The five blocks in which ERHC's preferential rights were validated will be awarded after ExxonMobil chooses whether or not to exercise its two 25 percent preferential rights in two of the five second-round blocks on offer, to farm them out to other companies, or to reserve them for exercise in the third-round bidding for Blocks 7. 8 and 9. The company has indicated it would farm the rights out, according to UpstreamOnline, but much has changed since that article was written - including an influx of newly identified bidders.

JDZ officials remain wary of setting a date certain for awards after having missed three successive self-set deadlines, the first of which was Dec. 31.

Here is the article by Bassey Udo, a veteran oil correspondent for the Daily Independent, whose misdirection regarding the preferential rights of ERHC Energy is surprising in light of his earlier, more accurate - or more precisely worded - energy reports:

JDZ bids result out next week
by Bassey Udo
Energy Editor
March 3, 2005

Hurdles in the approval of the result of bids in the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) 2004 licensing round may be removed next week when ExxonMobil exercises its rights in the five oil blocs on offer.

A top management team of the American multi-national giant is scheduled to meet with the Nigeria-Sao Tome Joint Development Authority (JDA) in Abuja to resolve all outstanding issues in pursuit of its preferential rights.

Two weeks ago, following the conclusion of consultations between the Nigeria and Sao Tome authorities on the 2004 licensing round, the JDA notified ExxonMobil to move within 30 days to exercise its rights to pave the way for the final appraisal of the bids and announcement of the result by the Joint Ministerial Council (JMC).

This is contrary to reports that the process was stalled by disagreement by the two countries.

“There is no disagreement whatsoever between any of the parties. The bid is on course. Having notified ExxonMobil to exercise its rights, we have to wait till the expiration of the 30-day deadline. The response might come earlier than expected”, a source close to the JDZ said on Wednesday.

It was learnt that the Abuja meeting will afford all the parties the opportunity to review the 26 bids collated at the end of the exercise last December, to accommodate all interests.

“ExxonMobil may require more information to take a final decision. This might come after a review of the bids. The meeting will enable it (ExxonMobil) compare notes and arrive at a balanced decision”, the source added.

ExxonMobil is already operating in the premier oil Bloc-1 in the zone through its subsidiary, Esso Exploration and Production Nigeria-São Tomé "One" Limited, which partners ChevronTexaco JDZ and Dangote Energy Equity Resources (DEER), a joint venture (JV) between the Dangote Group of Nigeria and Energy Equity Resources AS of Norway.

Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multi-national exploration and production (E&P) companies that operated in the territorial waters in years pre-dating the agreement were assumed to possess pre-emptive rights over the area. The arrangement conferred on them substantial rights of preference on some oil blocs.

While ExxonMobil possesses pre-emptive rights in any three of the blocs on offer in the 2004 round (provided it matched the highest price offered by the bonafide bidders), ERHC has preferential option rights in the Exclusive Economic Zone (EEZ).
[Editor's Note: ERHC has preferential rights in all five of the blocks on offer, and to a sixth block later, all of which it has already exercised, and ExxonMobil has preferential rights of 25 percent each to just two of the five blocks now on offer.]

After the exercise of its rights in the five blocs, the JMC is expected to meet immediately to carry out the final appraisal and announce the bid winners.

Two New Articles Suggest Awards Are Close

Two new articles Tuesday morning in the Nigerian press suggest awards in the Nigeria-Sao Tome and Principe Joint Development Zone are closer than April 15, but still offer no date certain.

After yesterday's 12 percent selloff, they may bring a slight boost to the price, which is otherwise expected to continue to fall.

During Monday's big day-long selloff that took the price down from a high of $0.65 at opening to a $0.56 close on high volume, traders suggested fears of a long delay in awards - as has become customary with the JDZ - will tie up funds for the next several months.

At a minimum, both articles corrected yesterday's erroneous reports from This Day saying "ExxonMobil has 45 days from the time of the notification to exercise its rights or forfeit same," and The Punch of Nigeria that also said ExxonMobil has 45 days in which to exercise its preferential rights. The company has only 30 days to select its rights, which would trigger the convocation of the Joint Ministerial Council to award the blocks. If ExxonMobil used the full 30 days, the earliest awards could be held would be the first week of April.

In a new wrinkle added in the Vanguard article, ExxonMobil can reportedly forego its two 25 percent choices in any of the five blocks on offer in the current round for blocks on offer in any future round. This is the first time that the possibility has been suggested that ExxonMobil would neither exercise its rights nor farm them out, but use them instead in a third licensing round or in the Sao Tome and Principe Exclusive Economic Zone licensing rounds that follow.

But without spelling out a new award date, or even suggesting one, the two new articles from the Vanguard and the Daily Independent - the latter paraphrasing remarks allegedly made by Sir Emeka Offor, who has not been quoted directly in recent years - by their very timing suggest awards may be closer than ERHC On The Move, and more openly state that ERHC is in line to receive its preferential choices in five blocks, or that at least ERHC officials want the process to bear "fruit," as the Independent article put it.

The second article, paraphrasing Offor and quoting ERHC Energy CEO Ali Memon, says Offor believes the company may "grab an operatorship" in one of the blocks, and also recycled outdated information about Mr. Offor's holdings and a quote from investor Phil H. Nugent that last appeared in the Dow Jones News Service Report by Norval Scott on Jan. 24.

Hopes had been high that the company could even sweep three of the blocks with its strong mid-tier partners, Devon Energy and Pioneer Natural Resources in Blocks 2 and 3 and Noble Energy in Block 4. There was no hint of that optimism in Tuesday's news reports.

The first article is from Vanguard:

Nigeria-Sao Tome: JDA asks ExxonMobil to exercise preference rights
by Emma Ujah
Tuesday, March 01, 2005

ABUJA -- The Nigerian-Sao Tome and Principe Joint Development Authority (JDA) has formally requested ExxonMobil to exercise its preference rights on the five blocks in the Nigerian-Sao Tome and Principe Joint Development Zone (JDZ) for which licensing rounds commenced in November last year.

ExxonMobil has the third party right to exercise the right of options in any two of the affected blocks, to the level of 25 percent.

JDA letter to ExxonMobil, which sources said was sent last weekend, followed the approval obtained from the "highest levels" by the Joint Ministerial Council (JMC) in order to fast track the licensing round which was originally planned to have blocks awardees announced at the end of last year.

Nigeria’s Presidential Adviser on Petroleum and Energy, Dr. Edmund Daukoru had announced at a press conference in November last year, that the results of the round were to be announced on December 31, 2004, but officials said ""certain factors"" made the initial date unrealistic.

According to the resolution of the agreements, ExxonMobil and the Environmental Remediation Holding Corporation (ERHC), a company quoted on the New York Stock Exchange, were to have the privilege of investing in any block they may so choose before the award of the remaining stake to other oil companies bidding for the blocks. [Editor's Note: The company's name is now ERHC Energy, Inc., and it is traded on the Over The Counter Bulletin Board, not the NYSE, under the symbol ERHE.]

ExxonMobil has three such rights to exercise. It has already exercised one of such rights in Block 1 in which it took 40 percent. Other companies to jointly develop Block 1 are ChevronTexaco with 51 percent and the operator, as well as Dangote/Energy Equity Resources with 9 percent.

According to the rules, ExxonMobil has up 30 days from the day it was notified to exercise its preference rights in any blocks of its choice among the five currently on offer. The Blocks are 2, 3, 4, 5 and 6.

It was learnt that as soon as ExxonMobil exercised its rights, the JMC would meet to set the final stage for the award of the remaining stakes in the blocks as the case may be. Officials said it was not compulsory for ExxonMobil to exercise the remaining two rights in any of the current five blocks if it wanted another block yet to be put on offer.

ERHC which has a Nigerian Business mogul, Sir Emeka Offor, as Chairman has already fully exercised its preference rights in the six of the blocks in the zone, as provided for in the agreement.

The development of the JDZ recorded a milestone when Block 1 Production Sharing Contract (PSC) was signed between the oil companies and the JDA on behalf of the governments of Nigeria and Sao Tome and Principe.

Only Block 1 was awarded in the first Licensing Round which was flagged off in April, 2003. there were nine blocks in all originally. Five of the remaining blocks were thus readvertised in 2004 which the rest three were put on hold pending the generation of further data on them.

With the first PSC in place, it is expected that the entire zone would soon come alive with serious exploration and production activities sine other PSCs to be signed on each of the blocks would follow the block 1 model. Tax regulations in the zone have also been adequately addressed.

Here is the article from the Daily Independent:

ExxonMobil, ERHC may secure equity in five JDZ oil blocs
by Bassey Udo, Energy Editor
and Charles Okonji, Senior Business Correspondent
March 1, 2005

ABUJA -- ExxonMobil and Environmental Remediation Holding Corporation (ERHC) may be granted equity to participate in the operation of the five offshore oil blocks offered in the 2004 Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) licensing round.

Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multi-national exploration and production (E&P) companies that operated in the territorial waters in years predating the agreement were assumed to possess pre-emptive rights over the area, an arrangement that conferred on them substantial rights of preference on some of oil blocks in the zone.

While ExxonMobil is said to possess pre-emptive rights in any three of the blocs on offer in the 2004 round provided it matched the highest price offered by the bona-fide bidders, ERHC has preferential option rights in the country’s Exclusive Economic Zone (EEZ).

Last week, in a bid to round off the proceedings on the 2004 licensing round Exxon Mobil was notified to move within 30 days to exercise its preferential rights in the five blocs in line with the decision of the Joint Ministerial Council (JMC) of Nigeria-Sao Tome and Principe to revalidate revalidated options already exercised by the ERHC following the 2003 Licensing Round.

ExxonMobil’s response is expected to pave the way for the meeting of the JMC to carry out the final appraisal and announce the winners out of the 26 bids collected at the end of the bids opening exercise last December.

Daily Independent, however, gathered that ERHC might eventually emerge one of the major players among the companies that will develop the six to 14 billion crude oil reserve capacity JDZ and an important supplier of crude to the United States of America.
The United States, the world's largest crude oil consumer, meets about 12 percent of its crude needs with supplies from the West African region, hopes to increase the volume to about 20 percent in 2010 and 25 percent by 2015.

ERHC’s Chairman, Mr. Emeka Offor, with 34.98 percent controlling shares said the company might grab the operatorship status of one of the blocks in the zone. ERHC submitted joint bids with established US companies (Devon Energy and Pioneer Natural Resources) for Blocks 2 and 3, and Noble Energy for Block 4. [Editor's Note: With the recent issuance of 73 million shares to cancel all outstanding debt of ERHC Energy, Mr. Offor's stake has rise to 43 percent.]

Offor, who is also Chief Executive, Chrome Energy, said though ERHC had endured a painful wait to allow for the resolution of the dispute with Sao Tome, which almost made it lose its rights in the zone, its preferential rights of between 15 and 30 percent in all five blocks stands it in good stead to reap the fruits.

“When the awards in the current JDZ bid round are finalised, it will be a significant step forward,” ERHC Chief Executive Officer, Mr. Ali Memon, said, pointing out that the conclusion of the licensing process has been continually delayed, leading to some disquiet among shareholders and keeping ERHC's stock price range-bound near the 50 cent mark.

A Houston-based oil and gas consultant and long-time ERHC shareholder, Mr. Phil Nugent, had said: “We're due our day in the limelight. At some time the dust will settle and ERHC will be recognized as a viable entity in one of the most prospective oil and gas regions in the world.”