ERHC Energy Inc. Announces Production Sharing Contracts in JDZ Blocks 2, 3 and 4
HOUSTON, March 17, 2006 - Walter Brandhuber, President and CEO, of ERHC Energy Inc. (OTCBB:ERHE - News) announced today that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum (Nigeria Offshore 2) Limited (“Addax”), several oil and gas companies, and the Nigeria-Sao Tome and Principe Joint Development Authority (“JDA”), to conduct petroleum operations in Block 4 of the Joint Development Zone between Sao Tome & Principe and Nigeria (“JDZ”). Mr. Brandhuber also announced that on March 14, 2006, a subsidiary of the Company entered into a production sharing contract with Addax Petroleum Resources Nigeria Limited (“Addax Sub”), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 3 of the JDZ, and on March 15, 2006, a subsidiary of the Company entered into a production sharing contract with Sinopec International Petroleum Exploration and Production Corporation Nigeria (“Sinopec”), Addax Energy Nigeria Limited (“Addax Ltd.”), several oil and gas companies, and the JDA, to conduct petroleum operations in Block 2 of the JDZ. Addax, Addax Sub, Sinopec and Addax Ltd. are required to pay all of the Company’s future costs in respect of all future petroleum operations in Blocks 2, 3 and 4 of the JDZ. They are entitled to the Company’s share of cost oil until they recover the Company’s costs.
The Company’s CEO Walter C. Brandhuber commented by saying, “The entering into production sharing contracts in Blocks 2, 3 and 4 of the JDZ represents an important step in our goal of commercializing the Company’s interests in the JDZ and increasing shareholder value. The Companies’ interests in the JDZ blocks represent the cornerstone for the Company’s future growth strategy.”
In November 2005, the Company entered into a participation agreement with Addax with respect to Block 4 of the JDZ where Addax paid the Company $1.35 million, and will be required to pay an additional $16.65 million on or before March 24, 2006. In February 2006, The Company entered into a participation agreement with Addax Sub with respect to Block 3 where Addax Sub paid the Company $500,000, and will be required to pay an additional $7 million on or before March 24, 2006. Further, on March 2, 2006, the Company entered into a participation agreement with Sinopec and Addax Ltd. with respect to Block 2 where Sinopec will pay the Company $13.6 million on or before March 25, 2006, and Addax Ltd. will pay the Company $6.8 million on or before March 25, 2006.
The JDZ lies approximately 200 km. offshore Nigeria and is adjacent to areas offshore Nigeria where several large petroleum discoveries have been made. The JDZ was established in 2001 following ratification of a formal bilateral treaty between Nigeria and Sao Tome and Principe. The JDZ is administered by the Joint Development Authority.
Safe Harbor Statement
This press release contains "forward-looking statements," including statements about ERHC Energy Inc.’s future operating milestones, financing plans, as well as other matters that are not historical facts or information. These forward-looking statements are based on management''s current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to the Company’s ability to exploit its commercial interests in the JDZ and the exclusive territorial waters of Sao Tome and Principe, that may cause the Company’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. The Company undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, nor is there any assurance that the contemplated financing will be effected, under the terms set forth herein or any other terms.