Frequently Asked Questions

The following responses are intended to answer the questions currently being posed to the company. We further recommend reviewing the Company’s SEC filings, which are posted at http://erhc.com/secfilings/, news releases, which are posted at http://erhc.com/news and presentations, which are posted at http://erhc.com/presentations/.

We will make every attempt to keep this FAQ up-to-date, and appreciate you referencing this section of our website frequently for clarification of facts. Naturally, the content here will evolve as developments occur.

General Questions

Q. How can I find out information about ERHC's capitalization, such as the number of shares outstanding?

ERHC complies with regulations requiring mandatory disclosure of certain financial information including information on its capitalization in its quarterly and annual filings, which are posted at http://erhc.com/secfilings/. ERHC has direct responsibility for the accuracy and timeliness of those disclosures with particular reference to audited accounts and related figures and price-sensitive information. Independent contractors, consultants or agents retained by ERHC to maintain, compile or archive such disclosures, or the information contained therein, usually do so under contracts containing strict covenants as to unauthorized or random disclosures, in accordance with general industry practice.

Requests for information and other enquiries should therefore be directed to the company and not to contractors, consultants or agents, including stock transfer agents, in the first instance. Contact ERHC at http://erhc.com/contact/.

Q. What steps have been taken to minimize expenses?

The company continues to minimize expenses sharply on all fronts, focusing its resources on the maintenance of its exploration licenses.

Q. Is ERHC considering divesting its position in Oando Energy Resources to raise funds?

The company is considering all fund-raising options available to it.

Q. What is happening with the stock price?

It is impossible at any given time for the company to declare with certainty the trading activity that is affecting the company’s stock price. Investors are encouraged to seek guidance from investment professionals.

Q. With the current valuation, how could a stake in the company be sold for much value?

All parties in the oil and gas industry understand that the underlying valuation of the company is distinct from the market valuation. This is not something unique to ERHC. Many small oil and gas exploration companies have found it challenging to raise funds in the current environment, which impacts market value but does not impact the value of the underlying assets.

Q. With the company valuation so low what is the Company’s updated plan to raise the funds necessary to fund the overhead and requirements for Kenya and Chad?

The company's funding plans continue to focus on a farmout of its assets and attracting a new significant equity investor. This does not foreclose any other funding options available to the company.

Q. What type of funding is planned?

The Board and management, in conjunction with our financial and legal advisers, have carefully considered ERHC’s available options and formulated a funding strategy that may include:

a. Direct placements to new shareholders or strategic investors.

b. Farm-outs of part of our interests in the assets to interested E&P companies or strategic investors.

c. Debt instruments, such as convertible notes, where available and appropriate.

Q. How will the company’s cashflow needs be met?

Oil and gas exploration is an expensive business. Historically, ERHC's cash on the balance sheet has resulted from three sources: monetization of the Company's oil assets through farm-out agreements, private placements of shares and issuance of convertible notes. Our main plan is to monetize a portion of our assets in Chad and the EEZ, but we also intend to seek financing from equity issuances to existing and new shareholders as well as from appropriate debt instruments and other arrangements.

Q. Why doesn't ERHC Energy disclose more information?

We have aggressively and proactively disclosed information on drilling progress. Please refer to ERHC's press releases.

Q. When will investors learn of milestones in the company’s progress?

In keeping with full disclosure rules, the company will announce developments such that all interested parties will simultaneously have access to the information.

Q. Is the company’s plan to position itself for a buy-out?

The Company's intention is to become a recognized and respected member of the international oil and gas community, specifically with interest in developing our business in Sub Saharan Africa. That said, the board will pursue those opportunities -- including but not limited to potential merger and acquisition opportunities -- that it determines are in the best interests of the shareholders.

São Tomé and Príncipe Exclusive Economic Zone

Q. When does ERHE expect to have an operator partner secured and a contract signed for EEZ Block 4?

We are working toward that. ERHC previously announced that the Company and the National Petroleum Agency of São Tomé and Príncipe (ANP-STP) have reached agreement in principle on the Production Sharing Contract for EEZ Block 4.

Q. Can you give a realistic estimate of when shareholders can expect drilling to begin in our EEZ block? And the same question for one or more of the Chad Blocks?

There is a lot of work that must be done prior to drilling in the EEZ. We are basically where we were in the JDZ back in 2004. It took approximately five years after PSCs were signed to complete the initial drilling – and we probably have a similar timeline ahead of us in the EEZ. As for Chad, we have no commitments to drill a well before year 5 of the exploration term in Chad.

Kenya Block 11A

Q. What is next in Kenya?

Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned.

Q. What was the objective of the Tarach-1 drilling?

The Tarach-1 well was designed as an exploratory well. An exploratory well is drilled purely for information gathering (exploration) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

Nigeria - São Tomé and Príncipe Joint Development Zone

Q. What is the status of Joint Development Zone (JDZ) Blocks 2, 3 and 4?

In late 2009 and early 2010, ERHC’s consortium partners in JDZ Blocks 2, 3 and 4 drilled five wells at a cost of more than $300 million. Each well targeted several unique sands or potential hydrocarbon reservoirs. In our specific area there are approximately 10 sands that could have contained hydrocarbons. We expected some would contain producible hydrocarbons; and that some would fail. In our specific case, four of the five wells discovered gas. The drilling did not find oil or gas in commercial quantities. Since that campaign, the Joint Development Authority (JDA), ERHC and other contracting parties have been reviewing possible next steps. One of the possibilities that the parties are collectively examining is to bring in exploration companies to spread risk and to reinterpret existing data with a fresh perspective and possibly a fresh exploration strategy. The current analysis of the JDZ assets (see slide 22 of the presentation, ERHC Presentation at Enercom's London Oil & Gas Conference, which illustrates current theories regarding the Migration Pathway in the JDZ.

Q. Has SNP officially left the JDZ? If so, did their interest in Blocks 2, 3 and 4 revert back to ERHC?

The Participation Agreements signed with Addax and Sinopec, subject to the satisfaction of legal and regulatory conditions, provide for reversion of interests acquired from ERHC in the event of relinquishment by Addax and Sinopec. The Joint Development Authority is currently working with the contracting parties towards a resolution of several matters, including but not limited to relinquished and retained interests as well as further exploration possibilities on the Blocks, following the unsuccessful drilling campaign in 2009/10.

Q. How will you determine commerciality?

Commerciality is dependant upon many factors. Arguably the most important are volumes of hydrocarbons, price achieved for the hydrocarbons, cost of development and availability of infrastructure, fiscal regime, and timing to first sales.

Q. Has any JV partner in JDZ Blocks 2, 3 and 4 done any log analyzing besides SNP? Has ERHC done any analyzing? Is SNP our sole source of info for results of Phase I?

Analysis of the results is a collegiate process rather than one by the operators unilaterally. The operator does take the lead since it is the part in charge of expenditure but all the contracting parties are part of the management committee, the technical committee, the financial committee and the operating committee that run the operation. These committees meet regularly and review results and progress thus far. Several rounds of meetings are taking place this month. The JDA of course oversees all this particularly at MACOM level and also analyzes results. Indeed, by the PSC, as is conventional, all data produced during the exploration period ultimately belongs to and must be turned over to the JDA.

Q. Are drilled prospects in Phase I considered a total waste or could they again be drilled at a later date?

It is highly unlikely that an operator would choose to re-enter any of the five wells drilled to date. They did not discover oil in those wells. However, the wells provide a plethora of useful data and information about the stratigraphy, sedimentology and structuralism of the JDZ that will facilitate any further drilling.

Q. How does the company explain such a large difference between initial expectations and reality?

The 2-D and 3-D seismic of all five prospects that were drilled in 2009 and 2010 had everyone very enthusiastic. But everyone knowledgeable about oil and gas exploration understands that pre-drill is not an assurance of finding oil. The only certainty in oil and gas exploration comes with drilling and our drilling found only biogenic gas.

Q. What is the status of blocks 5 & 6 in the JDZ?

As indicated in the various quarterly and annual filings from ERHC in recent years, the Company’s rights in JDZ Blocks 5 and 6 are in arbitration. We have worked in recent years to improve our relations with Sao Tome government in hopes of resolving issues related to those rights – and the advances we’ve been able to make in the EEZ illustrate those positive relations. The JDA recently announced the signing of a PSC with the other parties in JDZ Block 5 and it is our understanding that 15 percent interest accruing to ERHC in that Block remain intact pending resolution of the arbitration.

Chad Block BDS 2008

Q. In Chad, does ERHC expect to receive sizable cash compensation along with full carry in operator contracts (somewhat akin to the JDZ)?

The agreements that were struck in the JDZ are the model. We intend to raise funds by monetizing a portion of these assets. Whether we will be able to have our exploration costs carried until first oil as is the case in the JDZ will have to be seen. That was an unusual arrangement, but it has provided significant protections for the Company.

Q. Does ERHC have interested companies looking at our assets?

A number of interested companies are examining our assets and our plan is to monetize a portion of our Chad and EEZ assets to raise funds. We are in talks with prospective partners for the Chad Blocks, several of which have visited the data room where we are confidentially making available technical information about our assets. Additionally, several credible deepwater operators have visited the data room established jointly by the National Petroleum Agency of São Tomé and Príncipe and Petroleum Geo-Services (PGS) as a repository for the existing seismic and related technical data on the EEZ. When we have an agreement in place, we will notify shareholders.

Q. In Chad, what time frame to get seismic results?

The acquisition of seismic is part of the early phase of the work plan and should be completed within the first 18 months after the award of an Exclusive Exploration Authorization (EEA).

Cautionary Statement

This page contains statements concerning ERHC Energy Inc.’s future operating milestones, future drilling operations, the planned exploration and appraisal program, future prospects, future investment opportunities and financing plans, future shareholders’ meetings, and related proceedings, as well as other matters that are not historical facts or information. Such statements are inherently subject to a variety of risks, assumptions and uncertainties that could cause actual results to differ materially from those anticipated, projected, expressed or implied. A discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s reports and other filings with the Securities and Exchange Commission. These factors include, among others, those relating to the Company’s ability to exploit its commercial interests in the JDZ and the Exclusive Economic Zone of São Tomé and Príncipe, general economic and business conditions, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations and various other matters, many of which are beyond the Company’s control. Given these concerns, investors and analysts should not place undue reliance on these statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any of the above statements is based.