HOUSTON, March 15, 2011 – 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 investment community and other interested parties on ERHC Energy Inc.
São Tomé and Príncipe Exclusive Economic Zone (EEZ)
ERHC continues to prepare for the commencement of negotiations of Production Sharing Contracts for the Company’s 100 percent working interests of EEZ Blocks 4 and 11.
For those not familiar with the EEZ, I recommend visiting the ERHC website for a complete overview. The São Tomé and Príncipe EEZ is a massive area that encompasses approximately 160,000 square km. It is a frontier region that sits south of the Niger Delta, and west of the Gabon salt basin, retaining similarities with each of those prolific hydrocarbon regions.
São Tomé and Príncipe are islands in a north-east to south-west trending chain of islands extending offshore from Cameroon into the Eastern Gulf of Guinea. São Tomé and Príncipe are located in between prolific hydrocarbon regions, lying approximately 200 km south of Nigeria and directly west of the territorial waters of Equatorial Guinea and Gabon.
The regional seismic database comprises approximately 12,000 line km of seismic data. Interpretation of that seismic data shows numerous structures that have similar characteristics to known hydrocarbon accumulations in the area. The interpretation done to date has led to a regional understanding of the subsurface geology, trapping styles and prospectivity within the region of investigation. Additionally, oil sampling of seeps observed on the islands has suggested the occurrence of a Late Cretaceous petroleum system.
Last winter, after careful evaluation of the seismic data available, ERHC selected EEZ Blocks 4 and 11 which, incidentally, are adjacent to the islands where water is not as deep as in most other EEZ Blocks. The comparatively shallow water depths should simplify drilling relative to the other Blocks. The Blocks are also east of the islands and close to Gabon’s many offshore oil discoveries.
Below is a close-up of EEZ Block 4:
EEZ Block 4 is 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.
Below is a close-up of EEZ Block 11:
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 of the EEZ, where EEZ Block 11 is situated, contains parts of the Ascension and Fang Fracture Zones.
Several hydrocarbon plays can be proposed in the territorial waters of São Tomé and Príncipe, including the following:
Structural traps related to line of islands – The ‘Cameroon Trend’ of islands consists of a series of Miocene anticlines, with a thick Late Cretaceous-Miocene sedimentary section developed below outcropping Miocene-Recent rocks and sediment. The outcropping structured section on São Tomé includes coarse Late Cretaceous siliciclastic sandstones reported to be similar to deepwater clastics in Gabon. These could be charged by Cenozoic or Late Cretaceous source rocks, which are indicated by the seep data from Ubabudo-1.
Stratigraphic traps, distal extension of Ogooué Delta – The southeastern portion of São Tomé and Príncipe’s territorial waters, where EEZ Block 11 is situated, covers the outer continental margin of the Gabon basin. A deepwater extension to the Ogooué Delta petroleum system could occur here, with a major input of reservoir rocks likely during the Late Cretaceous, when the Ogooué is believed to have been the outlet of a large West African drainage basin.
Structural Traps on Gabon/ Equatorial Guinea Margin – A variety of structural traps are present in the east of the EEZ, where Cretaceous clastics are associated with structuration of the fracture zones. The Albo-Cenomanian shales provide the source rocks.
Stratigraphic traps in detached sand bodies south of the toe thrust trend – This is an untested play, but channels fed from the Niger Delta can be observed to cut through the toe thrusts, supplying reservoir to the less structured region beyond.
While we await the commencement of PSC negotiations on our EEZ Blocks, we are continuing discussions with potentially interested farm-in partners/operators/consortium parties.
Joint Development Zone (JDZ)
Negotiations have commenced between the Joint Development Authority (JDA), which oversees the JDZ and the contracting parties in JDZ Blocks 2, 3 and 4, led by our technical partners and operators, Sinopec Corp. (in JDZ Block 2) and Addax Petroleum (in JDZ Blocks 3 and 4). As you may be aware, the 6-month extension of Exploration Phase I in JDZ Blocks 2, 3 and 4 expired on March 14th, and the contracting parties and JDA are working to reach agreement on how to proceed with the exploration program.
Of course, the extension of Exploration Phase I has allowed for comprehensive analysis of the information gathered in the initial exploratory drilling campaign that was completed in January 2010. Valuable information was obtained from the first five wells regarding stratigraphy, sedimentology and structure of the JDZ acreages.
The contracting parties and the JDA are working to arrive at mutually beneficial agreements and that takes time. As usual, ERHC will inform its shareholders when agreements are reached.
ERHC is currently in negotiations with prospective local partners in two African countries (other than Nigeria) with proven hydrocarbons and opportunities for interest awards in delineated Blocks. African E&P regimes increasingly look favorably at international companies that advance local content aspirations. ERHC expects its bids for Blocks to be facilitated by voluntarily bidding in conjunction with reputable and credible local partners with ERHC playing the lead role and holding decisive equity in any resulting joint awards.
AIM Listing Status Update
The due diligence on ERHC, required before a listing on the AIM market of the London Stock Exchange, is continuing. I can report that most of legal due diligence has concluded. We are currently reviewing the interim findings with the Company’s advisors. The process has taken longer than expected because of ERHC’s long trading history as a public company, but ERHC’s management continues to believe that listing on the AIM is ultimately in the best interests of the company and its shareholders.
I also want to reiterate that none of this activity impacts the Company’s current trading on the OTC in the U.S. We will provide updates as the process advances.
ERHC has recently welcomed Messrs. Michael Shafie and Reginald Sewell to its team. Mr. Shafie joins ERHC’s technical consulting team as senior geoscientist.
Mr. Shafie has 29 years of experience in exploration and development of oil and gas fields in the shelf and deep water provinces in West Africa, the United States, Malaysia, Vietnam, Venezuela and the Black Sea. Mr. Shafie has worked for major independent and national exploration and production companies, contributing to the discovery of significant volumes of oil and gas reserves. Mr. Shafie is experienced in the evaluation and acquisition of oil and gas producing properties and expert in offshore lease sales projects. He holds a Bachelor of Science and Master of Science degrees from Florida State University.
Mr. Sewell is an attorney and will attend to ERHC’s in-house legal requirements as corporate counsel. With more than a decade of experience in legal and business matters, Mr. Sewell’s practice areas include business organization and governance, corporate finance, mergers and acquisitions, private placements, joint ventures and private equity including in oil and gas. Apart from the United States, Mr. Sewell has lived, worked and studied in Brazil and India. He holds a Bachelor of Arts from Morehouse College, a Master’s of Business Administration from the University of Chicago Booth School of Business and earned his Juris Doctor from the University of Texas Law School.
Both Messrs. Shafie and Sewell have significant transactional skills and experience in their respective specializations that should prove valuable to ERHC as we grow the business through a carefully planned program of acquisition of new assets.
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
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.