Chief Executive Officer Issues July Update for ERHC Energy Inc. Shareholders
HOUSTON, July 8, 2010 – ERHC Energy Inc. (OTCBB: ERHE), a publicly traded American company with oil and gas assets in the highly prospective Gulf of Guinea off the coast of West Africa, today issued the following update on Company activities from Peter Ntephe, chief executive officer.
To ERHC Shareholders:
I am pleased to update the ERHC Energy family on the company’s recent progress.
Listing on the AIM Market
ERHC’s Board of Directors has approved the procedure for application to list ERHC on the AIM market of the London Stock Exchange. The Company is proceeding to apply for the listing of ERHC Energy Inc. on AIM rather than listing a subsidiary and offering existing shareholders the option to exchange their shares for that subsidiary’s shares. The Company’s management and its advisers determined, after a re-evaluation of the options, that applying to list the parent ERHC Energy Inc. (rather than a newly formed subsidiary) would be the most expeditious and cost-effective route to a listing.
The subsidiary listing and exchange offer option, which was described at the last Annual General Meeting, would have enabled the Company to achieve a redomiciliation (upon consent by shareholders to the exchange offer) at the same time as the listing. The Company’s management and its advisers have decided, in the interest of an expeditious listing application, to defer the issue of a redomiciliation to a later date after the listing might have been achieved. If any re-domiciliation is later proposed, it would only proceed on the consent of the majority of the Company’s shareholders.
This simplified approach makes it possible for ERHC to take advantage of the benefits of an AIM listing without the complexities, albeit eminently manageable ones, of establishing a new U.K.-based subsidiary and executing a share exchange, as previously described. Listing on AIM may substantially enhance shareholder value. It will potentially give ERHC access to a new pool of capital in a market that is enthusiastic about emerging oil and gas companies and knowledgeable about West Africa’s oil and gas industry. A listing on AIM also holds out the promise of making the Company more attractive to key institutional investors (many of whom are forbidden from investing in OTCBB companies) and avoiding the comparative volatility attending the Company’s current share-trading platform.
With the simplified approach, the Company’s AIM listing is now contingent upon the completion of two major types of forensic analyses of the Company and reporting thereon by the Company’s advisers and independent experts. The first set of analyses is on the Company’s oil and gas assets. The second is on the Company’s corporate history, structure, governance and personnel. The reports of the analyses will form a fundamental part of the Company’s application to list on AIM. The analyses are already well underway.
It is also important to emphasize that the corporate governance regime on AIM is far more rigorous than the current corporate governance regime that the Company is statutorily obliged to implement. The corporate governance requirements for OTC BB companies are, by the nature of that trading platform, much less stringent than those required of companies on Exchanges such as NASDAQ, AMEX and the LSE. ERHC’s management and Board have however long ensured that ERHC aspired to international, corporate best practice, voluntarily adopting and implementing most of the corporate governance requirements of an Exchange-listed Company. While our adoption of such best-practice governance standards has had significant impact on our administrative costs, we find as a result that ERHC is better placed than we would otherwise be to make the transition to a reputable international Exchange such as the AIM of the LSE.
Business Development
ERHC is appraising several exciting opportunities that are expected to diversify the Company’s portfolio of oil and gas assets, give us bookable proven reserves and bring ERHC closer to revenue generation. While the pursuit of an AIM listing is in progress, ERHC will need to raise funds to enable us to compete on some of the more time-sensitive opportunities that hold out a promise of enhancing shareholder value. We therefore recently filed a shell registration statement with the U.S. Securities and Exchange Commission (SEC) to enable us to raise up to $50 million to fund new acquisitions. When declared effective, the shelf registration will permit the Company to offer and sell from time to time in the future in one or more public offerings up to $50 million of its preferred stock, common stock and warrants, or units consisting of any combination thereof. The specifics of any future offering, along with the prices, terms and the use of proceeds of any securities offered by the Company, will be determined at the time of any offering and will be described in detail in a prospectus supplement filed with the SEC at the time of such offering.
Exclusive Economic Zone
Earlier this year, the government of São Tomé & Príncipe awarded ERHC 100 percent working interests in Blocks 4 and 11 of the São Tomé & Príncipe Exclusive Economic Zone (EEZ). ERHC holds those Blocks free of any signature-bonus obligations in accordance with the prior agreements under which the awards were made. In recent weeks, our management representatives traveled to São Tomé & Príncipe to meet with the National Petroleum Agency of São Tomé & Príncipe (ANP-STP).
Our discussions with the ANP-STP have been quite positive and focused on establishing a mutually beneficial timetable for commencing negotiations of Production Sharing Contracts. There is a lot of excitement in São Tomé & Príncipe about the ongoing licensing round being conducted by ANP-STP for other exploration blocks in the EEZ. This Company shares that excitement especially as we were one of the first international companies to identify the possibility of hydrocarbon reserves in the country. We were certainly the first company that had the foresight and conviction to partner with the government of São Tomé & Príncipe with a view to exploring the hydrocarbon potentials. We look forward to even more exciting times ahead for the country and for us in the EEZ.
All the excitement surrounding the EEZ is with good reason. Certain crucial indicators of prospectivity have already been noted in the EEZ. The close proximity of the EEZ to the proven hydrocarbon systems in the adjacent territorial waters of Nigeria, Gabon, Equatorial Guinea and Cameroun suggests the potential for hydrocarbons, which is further supported by seismic data and petroleum seeps seen on the islands. More specifically, seismic data for EEZ Blocks 4 and 11 indicate interesting, prospective structures.
EEZ Block 4 totals 5,808 square km, situated directly east of the island of Príncipe. The northeastern area near EEZ Block 4 contains a large graben structure, which is bound by the Kribi Fracture Zone.
EEZ Block 11 totals 8,941 square km, situated directly east of the island of São Tomé and abuts the territorial waters of Gabon. The Southern area, where EEZ Block 11 is situated, contains parts of the Ascension and Fang Fracture Zones.
Our discussions with potential farm-in partners for exploration of the EEZ Blocks are continuing. The interest already shown in our Blocks has been encouraging and we are continuing to seek interest from other potential partners.
Nigeria- São Tomé & Príncipe Joint Development Zone
The analysis of information gathered during the unprecedented, 5-well drilling campaign in JDZ Blocks 2, 3 and 4 is continuing. As we reported earlier this year, the Joint Development Authority has granted the operators and other contracting parties a 6-month extension to Exploration Phase I, which is scheduled to expire in mid-September. During that period, the operators are expected to complete the analysis necessary to identify new potential hydrocarbon plays and develop further strategy for the Blocks. We remain proud of what this Company has achieved in the JDZ in conjunction with our operating partners. Our role, as the party that introduced and has effectively partnered with the operators who have carried out a highly technical yet safe and efficient drilling program in the deep offshore JDZ Blocks 2, 3 and 4, has been fundamental. We look forward to playing a similarly crucial role in other Blocks of the JDZ in which we are interested as well in the EEZ.
If you have questions, please ask the Company directly through investor relations representative, Dan Keeney (214.432.7556 or dan@dpkpr.com).
I thank you all for your continued interest in ERHC and your trust.
Sincerely,
Peter Ntephe
Chief Executive Officer
Chief Executive Officer
This press release 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, response to the Senate Subcommittee investigation, developments in the SEC investigation of the Company 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. Each of the above statements speaks only as of the date of this press release. 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.