ERHC Energy Inc. Updates Shareholders on Progress
HOUSTON, TX--(Marketwire -01/24/12)- ERHC Energy Inc. (OTC.BB: ERHE.OB - News), a publicly traded American company with oil and gas assets in Sub-Saharan Africa, today issued the following update on Company activities from Peter Ntephe, chief executive officer.
To ERHC Shareholders:
I am pleased to update the investment community and other interested parties on ERHC Energy Inc.
ERHC continues to make significant strides towards commencement of the exploration program on our Chad Blocks. Following evaluation of available data related to our three blocks -- BDS 2008, Chari Ouest III and Manga -- the current indications are that our initial focus will be on the first two.
Our excitement about our Chad assets has only grown as the detailed exploration work program submission takes shape. As described during our year-end conference call, the Company is currently working to submit to the Chadians the detail and budget for the Company's proposed work program for the first year of exploration. The Company's submission will also include an overview of the rest of work planned for the initial exploration term. The timeline that guides the exploration program will start to run following requisite administrative approvals and authorizations to be issued by the Chadians.
Simultaneously, prospective farm-in partners have continued to visit the data room which we have set up on the Chad blocks. We will inform our shareholders of progress towards a definitive farm-in.
Joint Development Zone (JDZ)
The expiration of the one-year extension of Exploration Phase 1 in JDZ Blocks 2, 3 and 4 is now seven weeks away. While the 5-well drilling campaign in late 2009 and early 2010 was an impressive accomplishment, the discovery of only biogenic gas was different from what everyone involved hoped to find. During the two years since drilling, the contracting parties led by our technical partners, Addax Petroleum and Sinopec Corp., have been involved in an exhaustive analytical effort to better understand the prospectivity of our JDZ Blocks in general and pinpoint potential future drilling locations.
When the extension of Exploration Phase 1 ends in mid-March, the operators are due to propose a plan for how they intend to proceed. The considerations that will determine this plan are as much commercial as technical. The operators will take fundamental decisions on the extent to which the nature of discoveries and outcome of studies in the JDZ justify further significant expenditures of the kind that deep offshore exploration requires. It is important to understand the following three potential courses of action:
1. The operators and the Joint Development Authority (JDZ) that oversees the JDZ could agree upon a plan for future exploration of one or more of the JDZ Blocks with specific proposed work plans, timelines and budgets.
2. The operators and the JDA could agree upon a further extension of Exploration Phase 1. Similarly, they could agree to proceed with exploration, but subject to further studies and with no specific work plan or timeline of when such exploration would commence.
3. The operators could decide not to pursue future exploration of the JDZ Blocks. If this were to occur, ERHC would be able to seek new operating partners for the JDZ Blocks. It would be similar to what occurred in 2005 when our technical partners at the time, Devon Energy Corp., Noble Energy Corp. and Pioneer Natural Resources relinquished their JDZ rights and ERHC replaced them with Addax and Sinopec.
Any of these three potential outcomes could have a significant impact on ERHC and we have been working closely with all interested parties to advance the interests of the Company and shareholders.
While it is possible that the intentions of the operators are released publicly in mid-March, it has been typical in past years for negotiations to continue beyond the deadlines in order to reach mutually acceptable and workable resolutions. Regardless, ERHC will keep shareholders updated in a timely manner once a decision is reached.
As we have stated in the past, ERHC continues to be enthusiastic about our JDZ Blocks. There are more than a dozen additional prospects and we know a great deal about the various prospects from the information gathered during the initial drilling campaign along with seismic data and data from other sources. We also anticipate that the future drilling in JDZ Block 1 this spring may reflect positively on the entire JDZ.
São Tomé and Príncipe Exclusive Economic Zone (EEZ)
ERHC's delegation is scheduled to return to São Tomé and Príncipe in February for another face-to-face round of negotiations with the Government of São Tomé and Príncipe on PSCs for the Company's two exploration Blocks in the EEZ. The PSCs pertain to ERHC's 100 percent working interests in EEZ Blocks 4 and 11.
Since our initial round of talks in November, negotiations have continued via correspondence and telecommunication, and we have made steady progress. Negotiations have been professional and determined but cordial. We expect a few more rounds of negotiations before the PSCs are complete.
As we indicated during our year-end conference call, ERHC is also in talks with prospective partners for the EEZ Blocks. The National Petroleum Agency of São Tomé and Príncipe and Petroleum Geo-Services (PGS), jointly maintain the EEZ data room, which serves as a repository for the existing seismic and related technical data on the EEZ. While such matters are handled in the strictest confidence, we can disclose that several credible deepwater operators have visited the data room on ERHC's invitation to view the data on our Blocks.
Nigeria Oil & Gas Conference
On our way to São Tomé and Príncipe, the ERHC delegation will participate in Nigeria Oil & Gas 2012, which runs February 20-23, 2012. With more than 5,000 visitors expected, Nigeria Oil & Gas 2012 is the largest annual event for the oil and gas industry in West Africa. For those planning to participate in the conference, please stop by the ERHC exhibition booth (K10) and say hello.
ERHC representatives participated in a shareholders' meeting of Exile Resources in December during which shareholders approved the reverse takeover of Exile by Oando Exploration and Production. The completion of the deal remains subject to a number of conditions, including the approval of the TSX Venture Exchange and Toronto Stock Exchange and other regulatory approvals. ERHC continues to hold a stake in Exile and, once the regulatory approvals are secured and the deal is completed, ERHC plans to participate in the new company's first meeting of shareholders. We will keep shareholders updated regarding any developments pertaining to ERHC's holdings in the new company.
Annual Shareholders' Meeting
Earlier this month ERHC formally set the date for its Annual Shareholders' Meeting for Tuesday, April 24, 2012. ERHC's Annual Shareholder's Meeting will be held in Houston. Stockholders of ERHC as of the record date, which will be fixed for the meeting, will be entitled to receive notice of and vote at the Annual Shareholders' Meeting.
The first quarter of ERHC's fiscal year ended on December 31, 2011. Preparatory work for ERHC's quarterly 10-Q filing is underway. The filing is due in the first half of February and we shall hold our next investor conference immediately after, with sufficient advance notice to our shareholders to participate.
Growth and Diversification
It has been a busy few weeks on the growth and diversification front since our last conference call in December. Plenty of business development activity is underway as ERHC pursues the diversification strategy in Africa described during the year-end conference call. As the Company solidifies agreements that are in various stages of development and negotiation, we will update shareholders.
Thank you all for your continued interest in ERHC and your trust.
If you have questions, please ask the Company directly through its investor relations representative, Dan Keeney (214.432.7556 or firstname.lastname@example.org).
Chief Executive Officer