Comments of ERHC Energy's Peter Ntephe from RedChip Small-Cap Investors Conference

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Statements during this meeting may concern ERHC Energy Inc.’s future operating milestones. Such statements are subject to a variety of risks, assumptions and uncertainties. Please refer to our cautionary statements posted on the ERHC Energy Web site at www.erhc.com.

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Thank you for the opportunity to introduce you to ERHC Energy Inc. I am Peter Ntephe, chief operating officer and acting CEO of the company.

I hope you will bear with me and forgive my accent. I am a citizen of Nigeria who lives in the U.K. and make frequent visits to our headquarters in Houston, Texas, so I will speak slowly so you don’t get confused by my Texas accent!

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ERHC Energy is a company unlike any other. Years ago, it made a breakthrough in an undervalued and under-appreciated part of the world. Through hard word and determination, we are now at a point where the value of that find is about to be realized…and now we are taking that blueprint and pursuing other discoveries in parts of the world others either have overlooked or are afraid to venture into.

But let’s address the simple question that everyone is asking: Why should you consider investing in ERHC Energy?

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Our first breakthrough was a region of the world that ERHC Energy determined held great promise as an oil producing area. In fact, the experts have estimated that the area in which ERHC has rights to explore for oil and gas has a combined estimated recoverable reserves potential totaling 14.4 billion barrels of oil.

Yes, 14.4 billion barrels of oil. With a “B.”

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You may have heard a thing or two about oil in the past few months. Oil prices have doubled in the past 12 months and have risen approximately 500 percent in the past six years. The bottom line is that oil assets have never been more valuable than they are today.

So where is this oil?

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It is here off the coast of central West Africa in an area known as the Gulf of Guinea. To give you a sense of perspective, you see the United States here with nothing but the Atlantic Ocean in between.

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In a nutshell, there are two adjacent areas in the Gulf of Guinea in which ERHC Energy has interests. One is the Joint Development Zone and the other is the Sao Tome & Principe Exclusive Economic Zone. We’ll describe each in more detail in a moment, but suffice it to say, we have succeeded in gaining a significant presence throughout the region.

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The experts have analyzed what lies below the Gulf waters and they estimate that the combined recoverable reserves potential through the Joint Development Zone Blocks totals 14.4 billion barrels.

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Of course, ERHC Energy is not the only company active in the region, so we can’t claim all of that. But ERHC’s rights do make up about 12 percent of the JDZ and our rights stretch across six of the nine JDZ Blocks. We won’t know for sure what our share of oil will be until exploration is complete and production is underway, but these estimates offer a general sense of the massive scale of the opportunity there.

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Fortunate, drilling is very close. The operators of two of the JDZ Blocks have indicated that drilling could begin before the end of the year.

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And ERHC has entered into advantageous strategic partnerships that align us with experienced exploration and production companies willing to pay our portion of the upfront costs. The partners will be reimbursed from ERHC’s share of the oil.

I know I have just presented you with a LOT of information, so I am going to back up and take a few moments to explain how we got to the verge of this great breakthrough.

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This is a story of risk and reward. A story of foresight, vision and courage. A story of sweat and toil. And above all a story of an outstanding business strategy.  
 
It begins in 1997. ERHC Energy had several initiatives underway in the Gulf of Guinea area off the coast of central West Africa and noticed that the golden thread in the waters here is oil, lots of oil. 

The Gulf of Guinea is one of the most prolific hydrocarbon provinces of the world. You see Nigeria to the North, and Cameroon and Equatorial Guinea to the East.

And here you see the Democratic Republic of Sao Tome & Principe, an island nation that actually sits atop an ancient volcanic formation. What you see poking up above water are the very tops of very steep volcanoes. The water surrounding these islands can be as deep as 10,000 feet in some places.

Over millions of years, the Niger River deposited organic sediments out to sea, which became crude oil.

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There are world class oilfields in operation from Nigeria thru Equatorial Guinea and Gabon, down to Angola. 

The Niger Delta has estimated proven oil reserves of 48 billion barrels.

These are a few of the notable discoveries, ranging in size from 500 million barrels to 1 billion barrels of oil.

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In the middle of this however, are waters belonging to the island nation of the Democratic Republic of Sao Tome & Principe.  At the time, the area did not attract the attention of the oil establishment. AND SO, ERHC saw an opportunity.  FORESIGHT and VISION.
 
The waters are very deep – about one mile deep and up to two miles in certain places. The technology for drilling for oil that deep was scarce at the time. The big oil companies were not interested. SO ERHC seized the opportunity. COURAGE.
 
We expressed our interest in helping Sao Tome & Principe develop their oil assets and in 1997 our hard work culminated in a joint venture agreement with the government. We were the first. [EMPHASIS] BEFORE ANYONE ELSE IN THE INDUSTRY. 

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These efforts ultimately were instrumental in the establishment of the Sao Tome & Principe Exclusive Economic Zone…

And the Joint Development Zone, between Nigeria and Sao Tome. RISK AND REWARD.

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In exchange for our efforts and the payment of a concession fee, ERHC was granted preferential rights to participate in exploration in the region’s deep waters. Specifically, in the São Tomé and Principe EEZ, which is shaded, ERHC Energy has rights to receive 100 percent of up to two blocks of ERHC’s choice AND the option to acquire up to a 15 percent paid working interest in another two blocks of ERHC’s choice.

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With these successes behind it, did ERHC rest on its laurels? NO.

In 2005 and 2006, we leveraged our rights to establish alliances with world-class technical partners, Addax Petroleum and Sinopec.

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Selling participating interests to Addax and Sinopec injected more than $45 million into ERHC – enough to sustain years of operations. Entering into production sharing contracts in Blocks 2, 3 and 4 was an important step toward commercializing the Company’s interests in the JDZ and increasing shareholder value.

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• Block 2: 22%
• Block 3: 10%
• Block 4: 26.7% - subject to a possible transfer to Addax Petroleum related to a matter currently being negotiated…
• Block 5: 15%
• Block 6: 15%
• Block 9: 20%

Overall, our interests account for approximately 12 percent of the JDZ.

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There have been numerous studies of the prospectivity of the region.

This image provides a general sense of why we are enthusiastic about our assets in the Gulf of Guinea. The image is a 3D view of the structural elements in JDZ Blocks 1, 2, 3 and 4. From left to right, the arrows point to the following:

The Lemba Prospect, which the Joint Development Authority (JDA) has approved as the first drilling location in JDZ Block 3. Anadarko is the operator in JDZ Block 3;

The Kina Prospect, which the JDA has approved as the first drilling location in JDZ Block 4;

The Obo Discovery and Kainji Prospect in JDZ Block 1 (ERHC does not have interests in JDZ Block 1);

The Principe Prospect in JDZ Block 2 in which Sinopec is the operator. This prospect is still under consideration.

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This is a view from the side of the different layers of sediment and rock beneath the Gulf of Guinea at the Kina Prospect in JDZ Block 4. A hump-like formation is generally recognized as a sign of oil and gas prospectivity.

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One of the early studies of JDZ prospectivity was WesternGeco’s interpretation of a 2-dimensional seismic survey shot in 1999. It found literally dozens of prospective structures – nearly FIVE DOZEN in all – stretched out across the nine JDZ Blocks.

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At current prices of $125 per barrel, these findings suggest that there could be well over a TRILLION DOLLARS of oil in the JDZ.

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Western Geco’s interpretation further broke down the reserve potential for the JDZ Blocks that are closest to exploration in which ERHC has interests. The numbers you see here are in MILLIONS of BARRELS of OIL.

This analysis indicated that the total reserve potential for JUST JDZ Blocks 2, 3 and 4 could be more than five billion barrels – prior to deductions.

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Recognizing that first oil is at least three to five years away, we are not taking a “wait and see” approach. We are pushing forward aggressively with an initiative to accelerate growth by duplicating what we have been able to accomplish in the Gulf of Guinea…

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Our strategy is to form or acquire a subsidiary of ERHC Energy Inc. that does not involve any of the Gulf of Guinea assets that we have been discussing. The company would initially be owned by ERHC Energy Inc. directly or through its wholly owned Cayman holding company. That subsidiary will be listed on the Alternative Investments Market of the London Stock Exchange.

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The idea is to achieve more by accessing the additional pool of capital through the AIM. We will be creating a separate asset pool for the company without in any way diluting current shareholders.

ERHC Energy Inc. will retain a large percentage of the U.K.-listed company. There would be a common management team that would be managing both, which can create synergies.

In due course, we would seek to invest in assets that leverage our strengths in central West Africa. We envision the new subsidiary will have substantial assets of its own and we are examining opportunities in energy, minerals and other natural resources.

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And, after a great deal of careful consideration of capital market alternatives, we will be working to position ERHC Energy Inc. to move from the OTC to another exchange in the next 12 to 18 months. While we are still considering whether the NASDAQ or AMEX would be a better fit, we believe that we can achieve enhanced exposure and liquidity, while at the same time providing investors with greater transparency in terms of pricing and execution. We feel the move to a different exchange will be an important step toward future growth of ERHC Energy.

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In closing the presentation, we can say with confidence that we are closer than ever to beginning exploration in the Gulf of Guinea and expect that by this time next year exploration will be underway – possibly in two of the JDZ Blocks in which ERHC has interests…with a third not far behind.

And we will also be executing our strategy to duplicate these successes elsewhere – discovering undervalued assets in parts of the world others have failed to recognize and efficiently bringing them to market. That is our core competency.

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