An online replay of ERHC's Year-End Conference Call is available at: https://www.livemeeting.com/cc/erhcenergy/view
Recording ID: 4T4SBK
NO "Recording Key" is required
Also, investors and other interested parties can access the replay via phone by dialing 800-642-1687 (domestic) or 706-645-9291 (international) and reference the pass code 45263070.
(Dan Keeney)
Good morning, and thank you for joining us for the ERHC Year-End 2009 Conference Call.
Statements during this meeting 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, 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 territorial waters 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 conference call. 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 www.erhc.com.
I am now pleased to turn the call over to Mr. Peter Ntephe, Chief Operating Officer of ERHC Energy….
(Peter Ntephe)
Good morning! I appreciate you taking time out of your busy day for this update on ERHC’s operations and the Company’s financial position. With me and Mr. Keeney on the call are:- Dan Gralla, ERHC’s vice president in charge of technical matters.
- David Bovell, ERHC’s vice president in charge of corporate development.
- Sylvan Odobulu, ERHC’s controller in charge of financial matters.
- And Deon Warner of Warner & Associates, ERHC’s corporate counsel.
Even though it has only been four months since the last time we conducted one of these calls, we have made great strides during that period toward our vision of realizing the value of our assets. For those who don’t track ERHC’s activities on a daily or weekly basis, I will describe what we have been doing.
In the Nigeria-Sao Tome & Principe Joint Development Zone, which we will refer to as the JDZ, our technical partners are in the midst of a coordinated exploratory drilling campaign that stretches across three Blocks.
In JDZ Block 2, in which ERHC has a 22 percent interest, Sinopec Corporation drilled the Bomu-1 well. In JDZ Block 3, in which ERHC has a 10 percent interest, Addax Petroleum drilled the Lemba-1 well. And in JDZ Block 4, in which ERHC has a 19.5 percent interest, Addax Petroleum has drilled two wells – Kina and Malanza-1 – and is in the process of drilling the Oki East well.
The purpose of this process is to test scientific conclusions and gather additional information. To that end, a detailed evaluation of information from the four wells is underway, but at this point we cannot draw any conclusions regarding the extent and quality of the hydrocarbon systems encountered.
The operators are in the process of a comprehensive analysis that incorporates the drilling results into relevant geologic and fluid models. Each well is being evaluated using several standard oilfield methods and the rock properties and reservoir fluids will be measured and evaluated.
The information from these wells is helping the exploration team understand the geology and hydrocarbon potential of the various prospects being drilled. Perhaps more importantly, it is helping us to understand the prospectivity of the entire area.
I want to assure everyone in the shareholder community that the Company’s management is as excited about getting drilling results as the investment community is. The fact, however, is that this is a highly technical process that takes considerable time. The parties are working to ensure that operations are conducted to the highest industry standards. The focus is quality of work put into each well, not undue haste.
In accordance with the practice in the JDZ, accurate, material information on the progress in the JDZ Blocks will emanate from the operators or the Joint Development Authority. ERHC will release such information in a timely manner in accordance with our contractual and regulatory obligations.
ERHC also has rights in JDZ Blocks 5, 6 and 9. To date, no Production Sharing Contracts have been signed for these Blocks, but depending on what is found in Blocks 2, 3 and 4, we anticipate that the JDA may act to firm up operations in those Blocks as well in the foreseeable future.
For detailed information concerning the JDZ, the JDA and the company’s Participation Agreements and Partnerships, I invite you to visit our Web site at www.erhc.com.
STP EEZ
We are also anticipating progress regarding the Sao Tome & Principe Exclusive Economic Zone where ERHC has substantial interests.
We are also anticipating progress regarding the Sao Tome & Principe Exclusive Economic Zone where ERHC has substantial interests.
ERHC has rights to participate in exploration and production activities in the EEZ. Our rights include the right to receive 100 percent of up to two blocks of ERHC’s choice – signature bonus free – and the option to acquire up to a 15 percent paid working interest in another two blocks of ERHC’s choice.
ERHC has attended the data room for the EEZ and has initiated a strategy for choosing the blocks we feel are the most prospective. It is obvious from their geographic position and the grouping of DRSTP that some blocks are more prospective than others. ERHC will obviously position itself to acquire the most prospective blocks.
Growth Strategy
In recent weeks, ERHC began negotiations on potential investments that would expand the Company’s presence in West Africa’s oil and gas industry. With considerable progress being made in the ongoing exploration campaign in the JDZ, we believe this is the right time to accelerate business development activities elsewhere.
We are in discussions regarding investment in and acquisition of working interests in the Eremor Marginal Field – OML 46 – in Nigeria. We are also in separate discussions regarding the acquisition of a controlling equity interest in an oil services company.
These opportunities will begin the process of diversifying our portfolio of assets. If the negotiations are successful, the investments would enhance shareholder value by accelerating the timeline for producing revenues.
We are also investigating other exploration and production opportunities and will report progress to stockholders at the earliest appropriate time.
I want to emphasize that ERHC’s principal assets remain the JDZ and the EEZ interests and it is our intention to protect them and advance the Company’s overall standing.
Financial Highlights
Now a few financial notes from our annual filing.
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As of September 30, 2009, ERHC had cash and cash equivalents totaling about $22.4 million. Management believes that these cash assets are sufficient to keep the company going for several years.
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We are pleased to report that ERHC’s general and administrative expenses for the year were down from the same period one year ago, which illustrates management’s careful stewardship of the Company’s operations and expenditures.
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During the year, ERHC’s net loss totaled approximately $7.7 million. A few factors contributed to the loss, including provision for loss on certificates of deposits in a financial institution placed into receivership and a decline in interest income as management moved deposits to non-interest bearing accounts that provided greater security from loss.
Annual General Meeting
And finally, a quick word about our plans for an Annual General Meeting. The Annual General Meeting will be held in April 2010 in Houston, Texas. Shareholders of record 45 days prior to the Annual Meeting date will be eligible to receive notice of and vote at the meeting.
And finally, a quick word about our plans for an Annual General Meeting. The Annual General Meeting will be held in April 2010 in Houston, Texas. Shareholders of record 45 days prior to the Annual Meeting date will be eligible to receive notice of and vote at the meeting.
Conclusion
In conclusion, ERHC is now executing its business strategy and making significant progress toward realizing the value of its assets in the Gulf of Guinea. This has been a long process and no doubt it has been frustrating for some investors who are not accustomed to the oil and gas business. Each step takes considerable expertise and time. If oil and/or gas are discovered in commercial quantities, the resulting production of course may considerably enhance shareholder value. It is, however, important for everyone associated with ERHC to understand that this is not a field for those seeking immediate gratification. Each step takes time, financial resources and a lot of work.
Thank you for taking time out to participate in our call today.
And now we would be happy to answer any questions you might have.
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