Rights in the Republic of Kenya

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ERHC has interests in Block 11A in the Republic of Kenya. The Block encompasses 11,950.06 square kilometers or 2.95 million acres and is is in the vicinity of Block 10BB in which significant oil discoveries have recently been announced. The Block is situated on Kenya’s border with South Sudan to the north, Block 11B and Lake Turkana to the east and near Kenya’s border with Uganda to the west.

ERHC holds a 35 percent interest in Block 11A after farming out a 55 percent stake to CEPSA Kenya Limited (a wholly owned affiliate of Compañía Española de Petróleos, S.A.U. (CEPSA)). The Block is northwest of the significant Ekales-1, Agete-1, Etuko-1, Ngamia-1 and Twiga South-1 oil discoveries.

In August 2014, ERHC announced the successful completion of a major 2D seismic acquisition program of Block 11A. BGP acquired seismic data over approximately 1,000 line kilometers on behalf of ERHC and its operating partner, CEPSA. The seismic survey, paired with the structural mapping of prospective basins from a Full Tensor Gravity Gradiometry (FTG) survey completed earlier in 2014, helped to identify the Tarach-1 prospect as the drilling location for the first exploration well. The Tarach-1 prospect is situated in the central part of the basin. It is a three-way structural closure trapping against a North - South trending normal fault. The mean estimate of oil prospective resources for the prospect is 65 million barrels. The exploratory well is expected to spud in March 2016.

In April 2015, ERHC announced that the exploration team identified 13 drillable prospects and leads in the Tarach basin. Mean prospective resources of all prospects and leads totals 645 million barrels. The basin stratigraphy is believed to be Tertiary/Cretaceous age, which would be similar to the Lokichar basin 200 km to the southeast of Block 11A, where significant discoveries have been made. The Lokichar basin has over 600 million barrels of 2C contingent resources. 

Rights in the Republic of Chad

Chad_Map-blocks_bottom_small.jpg.jpgERHC has has 100 percent of the interest in Block BDS 2008 in the Republic of Chad. A Production Sharing Contract was signed in July 2011. BDS 2008 is situated next to the Doba Basin oilfield, which in 2010 had an average daily production of 122,500 barrels of crude oil per day. The Manga block is north of Lake Chad, along the border with Niger. 

The West African nation of Chad is one of sub-Saharan Africa’s significant crude oil producers. It share borders with Nigeria, Cameroun and Sudan, which all produce oil as well. According to the World Fact Book, a consortium led by two U.S. companies has been investing $3.7 billion to develop oil reserves - estimated at 1 billion barrels - in southern Chad. 

Rights in the São Tomé & Principe Exclusive Economic Zone

EEZ_Small.jpgIn February 2010, the National Petroleum Agency of São Tomé & Príncipe (ANP-STP) on behalf of the Government of São Tomé and Principe confirmed the award to ERHC of 100 percent working interests in Blocks 4 and 11 of the São Tomé & Príncipe Exclusive Economic Zone (EEZ). The confirmation follows ERHC’s exercise of rights arising from prior agreements between ERHC and São Tomé & Príncipe. 

In October 2015, ERHC and Kosmos Energy reached agreement to transfer all ERHC's rights to Block 11 to Kosmos. ERHC retains 100 percent of the rights to EEZ Block 4 as well as the option to take up to a 15 percent working interest in each of two other unlicensed EEZ blocks of its choice. ERHC and the ANP-STP have agreed in principle to terms of a PSC for Block 4. 

The São Tomé & Príncipe EEZ encompasses an area of approximately 160,000 square kilometers south and east of the Nigeria/São Tomé & Príncipe Joint Development Zone and surrounding the volcanic islands of Príncipe and São Tomé. Block 4 is situated directly east of the island of Principe. Block 11 is directly east of the island of Sao Tome. 

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 currently serves as ERHC’s president and CEO.

  • The company’s corporate offices are located in Houston, Texas.

  • Chrome Energy, LLC and its subsidiary, Chrome Oil Services, own a total of 13.5 percent of ERHC shares.

  • ERHC Energy’s current focus is to exploit its assets in Kenya, Chad and in the São Tomé & Principe EEZ, and to pursue other upstream oil and gas opportunities.

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

  • The Nigeria-São Tomé & 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 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.   

    • 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.

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.

JDZ Block 2 - ERHC has a participation agreement with Sinopec International Petroleum Exploration and Production Corporation Nigeria, and Addax Energy Nigeria Limited.

JDZ Block 3 - 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 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.

  • Addax Petroleum drilled the Lemba-1 well in October/November 2009.

JDZ Block 4 - 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 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. 

  • Exploratory drilling of the Kina well commenced in August 2009, followed by the Malanza-1 well in November and Oki East well in December.

 

Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms on this Web site, such as "recoverable reserves potential," that the SEC's guidelines generally prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-K. You may review our filing with the SEC here.