Chief Executive Officer Updates ERHC Energy Inc. Shareholders
HOUSTON, October 3, 2011 – ERHC Energy Inc. (OTCBB: ERHE), 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.
Republic of Chad
Earlier this summer, ERHC signed a Production Sharing Contract (PSC) with the Government of Chad for three oil and gas Blocks: 100 percent of the BDS 2008 and Manga Blocks and 50 percent, of the Chari-Ouest 3 Block. Both BDS 2008 and Chari-Ouest 3 are situated adjacent to the prolific Doba Basin oil fields which had an average daily production of over 122,500 barrels of crude oil in 2010. The Manga Block is north of the Lake Chad basin.
Quite some excitement was generated in the industry when we received, as we described in August, the formal Decree of Approval issued by the President of Chad, His Excellency President Idriss Deby Itno. The timely issuance of the Decree speaks volumes about the Chadian government’s commitment to encouraging investment in its oil and gas industry. ERHC intends to match the investor-friendly approach of the Chadian Government through the diligent execution of the exploration program.
As an important first step, ERHC’s technical team has concluded its study and cataloguing of the initial geological and geophysical data received from Ministry of Petroleum of the Government of Chad.
We received more than 1,700 seismic lines in respect of the Doba and Doseo basins, geological and geophysical (G&G) reports on swathes of the Doba, Doseo and Lake Chad basins and reports on selected drilling operations conducted within the basins. The data provides valuable insights into the regional geology and petroleum system, broadening our understanding of some of the elements that could be essential in the generation of hydrocarbon prospects in our Blocks. Our technical team has come out of this exercise with a heightened anticipation of the potential of our Blocks in Chad.
It is important to emphasize that the technical data we have reviewed is little more than preliminary for purposes of our exploration program in the PSC. In order to identify specific targets for drilling within our Blocks and to provide reserve estimates, we now need to embark on the detailed work program in the PSC, which has been described in our most recent 10-Q filing available at http://erhc.com/secfilings/.
The next step under the PSC is the setting up of the administrative structures, including a Management Committee, with the Government of Chad. The committee will supervise ERHC’s exploration program. Meetings for the purpose are scheduled to commence before the end of October. Once the administrative structures are agreed, the first Annual Work Program and Budget for the exploration program will be worked out. In anticipation of the budget, ERHC is currently collating estimates from service companies on the requisite G&G activities that our exploration program begins with. We are also in discussions with several possible consortium partners as well as potential in-country personnel for the Chad operation.
In October, ERHC will participate in the Chad International Oil, Mining and Energy Conference and Exhibition (CIOME 2011). The Conference is held in Ndjamena, Chad from October 10th through 13th and is the annual showcase for Chad’s oil industry. ERHC will deliver a paper on October 10th on local partnerships and content. ERHC’s previous participation in CIOME 2008 provided valuable exposure for ERHC in Chad and went some way to establish ERHC as a credible candidate for award of Blocks.
São Tomé and Príncipe Exclusive Economic Zone (EEZ)
Discussions will continue early in October with the National Petroleum Agency of São Tomé and Príncipe (“ANP-STP”) on the PSC for the Company’s two exploration Blocks in the EEZ.
Activity continues to be generated in acreages adjacent to the EEZ and down the western coast of Africa southwards, particularly from the global interest in pre-salt plays. Plate tectonic theory and extensive related research indicate that during Cretaceous time, this area of Africa was contiguous with Brazil’s Santos Basin, where some of the world's biggest oil discoveries have been made in recent years. While most of global production had, until that time, been concentrated in post-salt plays, the Brazilian discoveries were made in pre-salt geological formations, sparking a surge in pre-salt exploration activity. In Gabon, directly east of ERHC’s EEZ Blocks, pre-salt plays have been proven with discoveries made both onshore and offshore.
A flurry of pre-salt activity has resulted from all this in offshore Western Africa, in the vicinity of the EEZ. In June, Petrobras entered the Ntsina Marin and Mbeli Marin offshore permits in Gabon's offshore, which abuts the EEZ. In Namibia, BP recently acquired a 25 percent stake in Block 2714A following Petrobras' earlier acquisition of a stake in the same block. In January, Angola licensed pre-salt offshore blocks to international majors including BP, Eni and Total. We anticipate that this pre-salt excitement will reflect positively on the EEZ in general and on our ongoing pursuit of farm-in partners for our EEZ Blocks.
Joint Development Zone (JDZ)
Studies continue in JDZ Blocks 2, 3 and 4 which are being operated by ERHC’s partners, Sinopec and Addax. The unprecedented five-well drilling campaign conducted between August 2009 and January 2010 resulted in the discovery of biogenic gas across the Blocks. The parties’ current work is focused on determining the prospects for thermogenic hydrocarbon discoveries in the other potential drilling targets in the Blocks. There are more than a dozen additional prospects that have been identified in the Blocks.
The contracting parties also keenly await drilling in JDZ Block 1, which hosts the Obo 1 oil discovery. Further drilling in the Block is expected toward the end of 2011 or early in 2012. While ERHC does not have any rights in Block 1, drilling there may positively impact on the JDZ as a whole by providing information that would facilitate further exploration work on our Blocks.
Growth Strategy
We are pleased to announce that ERHC has recently signed a Letter of Intent with the Imo State Government to pursue marginal field development together. Imo State is one of Nigeria's oil producing states and one of the earliest places where oil operations were established in Nigeria. Shareholders will recall that our commencement of talks with the Imo State government over cooperation on marginal fields was widely reported in Nigerian and other media in July. Those talks have now progressed to the stage where the Letter of Intent has been agreed and executed. The next steps involve the joint pursuit of award of specific marginal fields within the State
ERHC will contribute technical, operational and financial assistance to the partnership. The Imo State Government will take the lead in the negotiation of awards of the marginal fields from the Federal Government of Nigeria. The parties will jointly determine the proportion of working interests that each party will hold in any field that is awarded to the partnership.
In addition to the partnership with the Imo State government, ERHC continues to explore the possibilities for commercial farm in on a number of Nigerian fields with proven discoveries. As I write, ERHC is involved in negotiations with holders of interests in three Nigerian fields.
This focus on proven fields in Nigeria is in execution of the Company’s growth strategy which calls for acquisition of assets across the exploration and production (E&P) lifecycle. Our Chad, JDZ and EEZ assets are exploration assets. The strategy calls for the addition of assets in the development and production stages to balance risk. The intent is to accrue a rich basket of E&P assets that is diversified in location (within Africa) and in nearness to production. The model has proved to be a successful one followed by numerous exploration companies when they were at ERHC's stage of development.
Our intent therefore is to accrue a mixed portfolio of oil and gas acreages that drive shareholder value.
Beyond Nigeria, ERHC is actively pursuing the award of new Blocks in West Africa, including in the countries whose coasts constitute the emergent play called the West Africa Transform Margin (WATM). As many of our shareholders know, the exciting WATM is the area between two tectonic plates stretching nearly 1,000 miles along the coast from Eastern Ghana across Ivory Coast and Liberia to the West of Sierra Leone. It hosts two of West Africa’s largest discoveries in recent years, Ghana's Jubilee Field and Sierra Leone's Mercury discovery.
ERHC also is pursuing applications in East Africa. Following the Giraffe 1 discovery in Uganda’s Lake Albert in 2009, estimated to be Africa’s largest onshore discovery in a quarter century, East Africa has become an exciting new oil and gas province. Success in our applications in the region will yield significant early mover advantages of the sort that have benefited ERHC immensely in the past.
We will keep shareholders informed of all significant developments in these growth activities.
AIM
ERHC’s continued growth depends on the ability to attract new funding and investment. This requirement drives our pursuit of a listing on the AIM of the London Stock Exchange. This initiative has so far been constrained by the intricacies of due diligence necessitated by ERHC’s long and rich history. We shall keep our shareholders informed when significant breakthroughs are made in the process.
Investor Outreach
In our ongoing effort to spread the word about the exciting things ERHC is doing and take the Company’s story to potential, new investors, ERHC presented at the Rodman & Renshaw Annual Global Investment Conference in New York in September and EnerCom's Oil & Gas Conference 2012 in Denver in August. ERHC’s financial officer, Sylvan Odobulu, delivered both presentations on ERHC’s progress with its assets in the Republic of Chad, the JDZ and EEZ, and plans for growth.
Investors can view an interview with Mr. Odobulu conducted at the EnerCom’s conference by clicking http://www.theoilandgasconference.com/360_interviews.shtml and scrolling down on the 2011 interviews tab.
Fiscal Year End
ERHC’s fiscal year ends September 30. Preparatory work for ERHC’s annual 10-K filing is already underway. The filing is due in December.
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 dan@dpkpr.com).
Sincerely,
Peter Ntephe
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 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 Chad, 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.
# # #