Download the accompanying slides as a PDF here.


(Dan Keeney)

We now turn to a brief presentation by management that will be followed by a Question and Answer session.

Statements during this presentation may concern 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 presentation. 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.

For additional information on ERHC, please visit our Web site at

I am now pleased to turn the floor over to Mr. Peter Ntephe, Chief Executive Officer of ERHC Energy….


Slide 3

Good afternoon!  Thank you all very much for taking the time and trouble to attend the meeting. This afternoon we will provide an overview of ERHC’s oil and gas assets, provide insight into our short-term and longer-term priorities, talk about our financial status and present some recent positive legal developments. Thereafter, we’ll open the floor for questions.

Slide 4

Actually, let’s start with the legal developments. We have very good news to report. After literally years of effort, we are now in receipt of letters from the Securities and Exchange Commission and the Department of Justice confirming that their investigations are closed. It is highly unusual for them to issue such written closure notices, but they have done so at our request. The Senate Permanent Subcommittee on Investigations has also provided similar confirmation that ERHC has fully satisfied its subpoenas and that the Subcommittee is undertaking no further action on the subpoenas.

Next week will mark the sixth anniversary of the worst day of this Company’s history when the first of those subpoenas was issued. It is hard to fathom the damage that was caused and the enormous cost that was incurred.  It is true that the investigations apparently became moribund some time ago but I couldn’t be happier now that we have tangible written confirmation of closure. We expect that some of the challenges of selling the ERHC proposition to the larger investment community might now be significantly lessened without the cloud of suspicion raised by the subpoenas.  

Slide 5

Now let’s discuss ERHC’s assets. As you all know, ERHC is an American company engaged in oil and gas exploration in Sub-Saharan Africa.

Slide 6

Currently ERHC owns interests in exploration blocks in the Republic of Chad, the Sao Tome & Principe Exclusive Economic Zone and the Nigeria - Sao Tome & Principe Joint Development Zone. Applications are in various stages of advancement in several other African countries for additional blocks. 

Africa is a prolific oil and gas region, particularly with recent new and significant discoveries in the West African Transform Margin and in the East Africa rift valley system.  Africa can of course be a challenging business environment but that presents opportunities for hardy entrepreneurs who are not put off by sometimes difficult circumstances. ERHC has historically had unique home-field advantages with regard to Africa and those have continued to provide us with a competitive edge.

Slide 7

We deployed the competitive advantages to good measure in securing the Chad Blocks last year.  These are our three oil and gas Blocks in the Republic of Chad. ERHC has 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 and Doseo Basin oil fields. These fields had an average daily production of more than 122,500 barrels of crude oil in 2010. The Manga Block is north of the Lake Chad basin.  

We expect the initial focus of our work to be the Chari-Ouest III Block and the BDS 2008 The boundaries of the BDS 2008 Block are dotted with numerous wells bearing discoveries drilled by other companies in the adjacent acreages.  ERHC’s target is to drill as soon as possible in our Blocks despite a five-year term being available to us for geological and geophysical work. We have completed the first run of a proposed work program for the Chad Blocks. Subject to approval by the Chadian authorities, the work program will start with an Environmental Impact Assessment (EIA) as mandated by the PSC, followed by Gravity/Magnetic studies. We will reprocess any existing 2D seismic and acquire further 2D seismic within the first two years to enable us determine interesting leads and prospects upon which we will focus 3D seismic. These will be followed by AVO/Inversion studies. Time will start to run on the exploration program as soon as the requisite Exclusive Exploration Authorization, to which ERHC is now entitled under the PSC, is issued by the Chadian Government. 

Slide 8

In the Sao Tome & Principe EEZ, we have a 100 percent working interest in Blocks 4 and 11 free of signature bonuses. The close proximity of São Tomé and Príncipe’s offshore waters to the proven hydrocarbon systems in the adjacent territorial waters of Gabon, Cameroon, Equatorial Guinea and Nigeria suggests the potential for hydrocarbons, which is further supported by seismic data and petroleum seeps seen on the island of São Tomé. This area east of our Blocks has also generated considerable attention because of the possibility of pre-salt plays that share characteristics with discoveries off the coast of South America. It is something we are watching closely and could reflect positively on our Blocks.

We will talk more in a moment about the status of PSC negotiations for our EEZ Blocks.

Slide 9

We also have rights in six of the nine Blocks in the Joint Development Zone situated in the Gulf of Guinea between Nigeria and Sao Tome & Principe. This map shows JDZ Blocks 2, 3 and 4, where initial exploratory drilling took place in late 2009 and early 2010. That drilling found biogenic natural gas, but no oil was discovered. During the two years since drilling, the contracting parties have been involved in an exhaustive analytical effort to better understand the prospectivity of our JDZ Blocks in general and pinpoint potential future drilling locations.

As you can see on this map, there are more than a dozen additional prospects – indicated in yellow -- and we now know a great deal about the various prospects from the information gathered during the initial drilling campaign along with seismic data and data from other sources.

Exploration Phase I officially expired in mid-March. The three potential courses of action at the expiration of an Exploration Phase are:

  1. The operators, the rest of the parties and the JDA could agree to enter into Phase 2 of the exploration program which requires the drilling of at least one more well in each Block.  .

  2. The operators, the rest of the parties and the JDA could agree upon a further extension of Exploration Phase 1.

  3. The operators could decide not to pursue future exploration of the Blocks and terminate their involvement in the Blocks, leaving the rest of the parties and the JDA to decide whether to adopt any of the two other courses of action stated before.

The operators’ decision whether to continue or not is the key factor in determining what course of action is adopted. As our shareholders are aware, all ERHC’s proportionate share of exploration costs (estimated at over $70 million) so far have been borne by the operators and those costs can only be recovered from production. The operators’ decision is expected to be made public at anytime within the next few weeks. In the event of the operators terminating their involvement in the Blocks, the participating interests we transferred to them would return to us and ERHC would be able to seek new operating partners for the JDZBlocks. It would be similar to what occurred in 2005 when our technical partners at the time, Devon Energy Corp., Noble Energy Corp. and Pioneer Natural Resources relinquished their JDZ rights and ERHC replaced them with Addax and Sinopec.

ERHC will keep shareholders updated in a timely manner as developments occur.

Slide 10

During 2011, ERHC purchased enough shares in Exile Resources, to give us a 7.35 percent stake in the company. Exile is a Toronto-listed Company which holds a carried interest in Nigeria’s proven Akepo Field.  Our objective had been to obtain such control of Exile as would enable us to gain access to the production in the Akepo field. We also wanted to constitute Exile into a wholly owned listed subsidiary of ERHC available for fund-raising purposes or even a reverse takeover.

Oando Exploration and Production, Exile’s partner in Akepo field, had the same idea and managed to preempt us by rushing through a reverse takeover of Exile. Exile’s shareholders, including ERHC, approved the Oando takeover in December but completion is pending a number of regulatory approvals and approval of the Toronto Stock Exchange.

ERHC continues to hold a stake in Exile. We will keep shareholders updated regarding any developments pertaining to ERHC’s holdings in the new company. 

Slide 11

Now for a brief overview of the Company’s focus in the coming year or so.

Slide 12

Obviously, we expect some action related to our JDZ rights. Whether it involves confirmation of further exploration, further extensions or a complete change in operatorship, the one certainty is that ERHC will continue to be a major force in the three Blocks.

In the Sao Tome and Principe EEZ, we expect to be able to complete negotiations of PSCs for our EEZ interests. Already, significant progress has been made on most of the economic terms of the PSCs.  These being deepwater Blocks, ERHC continues to explore potential partnerships to bring in credible operators for the Blocks. Several renowned 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.

Meanwhile, ERHC has opened a data room for the Chad Blocks and we are in discussions with several interested and highly qualified E&P companies who are visiting that data room.

Shareholders will be informed as soon as any partnerships are concluded.

Slide 13

Longer-term, we will be focused on the following…

Slide 14

We will continue to diversify. We will continue to move away from the single asset model to a multi-asset model with risk spread and value balanced over several assets.

In 2011, with the acquisition of the Chad assets, we were able to make meaningful progress in the transition from a single-asset, non-operating company to a multi-asset player which will operate some of its assets. We intend to intensify the transition. Our business development strategy will concentrate on direct awards of exploration acreage from government in Africa and onshore exploration acreages.

We expect to commence the exploration programs for our Chad Blocks shortly and upon completion of PSCs, those for the EEZ Blocks. While operating deepwater exploration Blocks like the EEZ will be beyond our immediate capabilities, we can push forward with various aspects of the initial work program.

Slide 15

Finally, let’s turn to the Company’s financial situation.

Slide 16

Our financial position remains stable. Through December 31, 2011, ERHC had cash, cash equivalents and treasury bills totaling $11.9 million and the Company has virtually no debt. We continue implementing strict cost controls. We were able to reduce our G&A expenses during the first quarter of 2012 by approximately 15 percent compared to the first quarter of fiscal 2011.

Slide 17

Exploration is a very expensive business however.  It is not a business for the faint-hearted, financially.  It is very high risk but also high reward if commercial discoveries result.  ERHC’s cash at hand will fund the Company’s general and administrative expenses for several years.  Operations in Chad and for any other assets that the Company acquires will however require that the Company raise or generate substantial new funds.  There are several ways to raise this new money: 

  1. Selling some portion of the assets as was the case in JDZ Blocks 2, 3 and 4
  2. Raising money through new equity raises either on the current trading platform or, preferably on an IPO upon listing on an international exchange
  3. Bringing in strategic new investors

As we continue to emphasize however, debt finance is not readily available to companies at our stage of development for pure exploration assets. 

While we continue to market the Chad and EEZ assets vigorously, I must caution shareholders that the case of the JDZ farm-outs, where significant monetization was achieved without exploration having commenced, is more the exception than the rule. The JDZ was a uniquely attractive proposition in the industry at the time. It is not always that those circumstances will present themselves in our new assets. Sometimes, we might have to ‘prove up’ the assets’ investment viability – by shooting seismic ourselves and identifying leads and prospects – before significant farm-outs and monetization can be achieved.  In that event, we will have to fund the exploration program otherwise than by farm-outs until the assets’ viability is proved up. 

Our situation is not however different from the numerous other E&P juniors who have successfully traversed this strategic route and many others who are embarking on the same business trajectory.  Indeed, ERHC has many unique and comparative advantages over a majority of the peer companies.    

Slide 19

And that concludes the management presentation. Thank you for taking time out of your busy schedules to participate in Annual Meeting of Shareholders. Know that we don’t take your ongoing interest and trust for granted. It is special and valuable.

I will close with a few key points. We continue to make progress in preparing for our exploration work program in Chad, negotiating PSCs in Sao Tome & Principe EEZ and participating in decision-making pertaining to the exploration program in the JDZ. We also have ongoing growth initiatives underway in several countries in Sub-Saharan Africa.

I’ll turn it back over to Mr. Keeney who will facilitate the question and answer session.