ERHC Energy Inc. (ticker: ERHE) is a publicly traded American company with oil and gas assets in Sub-Saharan Africa. Over the last two years, ERHC has acquired exploration blocks in Chad and Kenya to complement its existing offshore blocks in the Joint Development Zone offshore São Tome and Principé.
Kenya Operations Taking Shape
The operational catalysts at ERHC are falling into place at a brisk pace. It was only July2012 when ERHC first signed its PSC with the Kenyan Government for Block 11A. Only 11 months later, the company announced it signed a letter of intent with an integrated international oil and gas company to farm-out part of the Company’s interest in Kenya Block 11A. Terms are still being negotiated and are subject to approval by the Government of Kenya. ERHC recently announced the initial steps in a full scale exploration program.
Identifying Prospective Resources in Kenya
Bell Geospace is partnering with ERHC Energy to acquire an airborne Full Tensor Gravity Gradiometry survey (FTG) across ERHC’s 2.95 million acre Block 11A in northwestern Kenya. The survey is expected to take place this summer.
An FTG survey has been accepted as “step one” for many exploration and production companies operating in West Africa, or other areas with expansive acreage blocks.
The key is to first identify the structural mapping of prospective hydrocarbon basins. The process requires an aircraft that flies dense grid flight lines to measure small changes in gravity that are caused by minute changes in density of subsurface rocks and local geology. After receiving the results, ERHC will then gather 2D seismic data in order to estimate the locations of resource deposits and geometry of geologic structures prior to drilling.
Location is Key
Kenya sits at an interesting position at the intersection of two major rift systems – the Cretaceous Central African rift system and the Tertiary East Africa rift system. The company is pursuing the same kind of rift margin play that has yielded major discoveries in neighboring Uganda as well as recent large discoveries in Kenya to the east of its Block 11A.
For example, on July 3, 2013, London-based Tullow Oil (ticker: TLW) increased its resource estimate for the South Lokichar Basin to 250 MMBOE in Kenya after flow tests at its Ngamia and Twiga South wells and a new, more recent discovery at the Etuko-1 well.
A recent Reuters write-up wrote, “The discoveries in Kenya, along with oil struck in Uganda and gas finds offshore Tanzania and Mozambique, underlines east Africa’s potential to become a major oil and gas producing region in the next five years.”
Other Operational Upside
In addition to its oil and gas exploration interests in the Republic of Kenya, the Company holds interests in the Republic of Chad, the Sao Tome and Principe Exclusive Economic Zone (EEZ) and the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).
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