Facts About ERHC

Rights in the Joint Development Zone

The JDZ was established during the spring of 2001 to govern the disputed boundary area between Sao Tome and Principe and Nigeria for commercial exploitation. The JDZ is administered by a Joint Development Authority (JDA) which oversees all future exploration and development activities in the JDZ.

In June 2005, ERHC accepted awards by the JDA for Blocks 2, 3, 4, 5 and 6. The awards were subject to the execution of a mutually acceptable production sharing contract and joint operating agreement for each Block.

The foundation for those awards was established in April 2003, when ERHC and the Democratic Republic of Sao Tome & Principe entered into an Option Agreement in which ERHC relinquished certain financial interests in the JDZ in exchange for exploration rights in the same area.  The rest of the claimed territorial waters of Sao Tome and Principe is known as the Exclusive Economic Zone (EEZ).

ERHC Energy’s decision reflected the company’s consistent approach to growth and expansion through high impact exploration and development of oil and gas fields in the potentially lucrative and undeveloped oil fields in the Gulf of Guinea.

Business Operations

• Peter Ntephe, the chief operating officer of the company, currently serves as ERHC’s acting president and CEO.
• ERHC Energy management includes three corporate officers and support staff. 
• The company’s corporate offices are located in Houston, Texas.
• Chrome Energy, LLC and its subsidiary, Chrome Oil Services, own a total of 42 percent of ERHC shares.
• ERHC Energy terminated its management services agreement with Chrome Oil Services, Ltd. effective December 31, 2004.
• As of January 1, 2005, ERHC assumed direct responsibility for costs and expenses of its officers and staff, and the lease obligation of its office space.
• ERHC Energy’s current focus is to exploit its assets in the JDZ between the São Tomé & Principe and Nigeria, and in the São Tomé EEZ, and to pursue other upstream oil and gas opportunities in West Africa. 

Democratic Republic of São Tomé & Principe

• A member of the United Nations, the island nation of São Tomé & Príncipe, strategically located in the Gulf of Guinea, has a population of approximately 150,000.
• In 1997, ERHC entered into a joint venture with São Tomé & Príncipe with the goal of developing the region’s oil and gas reserves.
• Exploration in the deepwater zone being managed jointly with Nigeria is expected to have significant impact on the nation‘s economy.

Nigeria-São Tomé and Principe Joint Development Authority (JDA)

• The Nigeria-São Tomé and Príncipe Joint Development Authority (JDA), manages the development of oil and gas resources in the waters between the countries.
• In April 2003, ERHC entered into an administration agreement with the JDA that fully implemented the company’s preferential rights to interests in its JDZ acreage.
• ERHC Energy had previously exercised its option rights in all five Blocks on offer in the 2004 JDZ Licensing Round, and in December 2004 submitted bids for Blocks 2, 3, and 4 as a consortium member.
  • In May 2005, the Nigeria-São Tomé and Príncipe JDA awarded five blocks on offer in the 2004 JDZ Licensing Round. This and subsequent decisions by the JDA led to the following results:
  • In Block 2, the ERHC/Sinopec/Addax consortium was awarded 65 percent interest, which is inclusive of ERHC's 30 percent signature bonus free interest. The consortium was designated operator for Block 2.
  • In Block 3, the ERHC/Addax consortium was awarded 25 percent interest, which is inclusive of ERHC's 20 percent signature bonus free interest.
  • In Block 4, the ERHC/Addax consortium was awarded 60 percent interest (Addax has since acquired an additional five percent interest), which is inclusive of ERHC's 25 percent signature bonus free interest. The consortium was designated operator for Block 4.
  • In making the awards for Blocks 5 and 6, the JDA confirmed ERHC's 15 percent interest in each of these Blocks.
  • ERHC's interest in Block 6 is free of signature bonus.

Participation Agreements/Partnerships

• ERHC Energy has entered into relationships with other oil and gas companies that have the technical and financial resources to work in deep water. These strategic relationships are designed to assist ERHC in realizing the full value of its assets in the JDZ.
• ERHC has a participation agreement with Sinopec International Petroleum Exploration and Production Corporation Nigeria, and Addax Energy Nigeria Limited
  • ERHC assigned Sinopec a 28.67 percent participating interest in Block 2 and Addax a 14.33 percent participating interest in Block 2 of the JDZ, leaving a 22 percent participating interest in Block 2 to ERHC.
  • Under this agreement, ERHC will support Sinopec as operator, and Sinopec and Addax Ltd. will pay all of ERHC’s future costs in respect of petroleum operations in Block 2.
  • ERHC has agreed to pay Sinopec and Addax Ltd. up to 100 percent of the allocation of cost oil plus up to 50 percent of the allocation of profit oil until all carried costs are recovered, subject to certain conditions.
• ERHC has a participation agreement with Addax Petroleum Resources Nigeria Limited.
  • Addax received a 15 percent participating interest in Block 3 of the JDZ, leaving ERHC a 10 percent participating interest in Block 3.
  • Under the agreement, Addax will pay all of ERHC's future costs in respect of all petroleum operations in Block 3.
  • ERHC has agreed to pay Addax up to 100 percent of the allocation of cost oil plus up to 50 percent of the allocation of profit oil until all carried costs are recovered, subject to certain conditions.
• ERHC has a participation agreement with Addax Petroleum (Nigeria Offshore 2) Limited
  • Addax received a 40.5 percent participating interest in Block 4 (Addax has since acquired an additional five percent interest), leaving a 19.5 percent participating interest in Block 4 to ERHC.
  • Under the participation agreement, ERHC will support Addax as operator, and Addax will pay all of ERHC's future costs in respect of all petroleum operations in Block 4.
  • ERHC has agreed to pay Addax up to 100 percent of the allocation of cost oil plus up to 50 percent of the allocation of profit oil until all carried costs are recovered, subject to certain conditions. 
• The Joint Development Authority has approved the following drilling locations: The Bomu Prospect in JDZ Block 2; The Lemba Prospect in JDZ Block 3; and The Kina Prospect in JDZ Block 4.