ERHC Energy Inc. (OTCBB: ERHE) updated shareholders on the company’s continued operations in Sub-Saharan Africa. The company is actively pursuing two offshore zones, the São Tomé and Príncipe Exclusive Economic Zone (EEZ) and the Joint Development Zone (JDZ), and has an additional three onshore exploratory blocks in the Republic of Chad.
Chadian Work Program Gaining Momentum: During 2011, the company made the move onshore to The Republic of Chad, nearly doubling its corporate acreage position in Sub-Saharan Africa. Currently, ERHC is seeking interest from qualified contracting companies to conduct seismic work and gravity and magnetic studies, which will be the focus of the first 18 months of the work program in the country. ERHC was awarded the production sharing contract (PSC) with the Republic of Chad in June 2011 on three oil blocks, including: Chari-Ouest III (50% interest in 1,111,974 acres), Manga (100% interest in 1,600,501 acres), and BDS 2008 (100% interest in 4,042,644 acres). ERHC is working to submit a detailed budget and work program to the Chadian Government for its first year of exploration while simultaneously evaluating farm-in partners on the project. Meanwhile, ERHC submitted a request for conducting environmental impact assessment (EIA) for the work program.
[sam_ad id=”32″ codes=”true”]
Potential in Chad: According to ERHC, two of the Blocks, BDS 2008 and Chari-Ouest Block 3, lie next to the Doba Basin oilfield, which in 2010 had an average daily production of 122,500 BOPD. The Manga block is north of Lake Chad, along the border with Niger. OAG360 notes that in 2000, Chevron (NYSE: CVX) entered in two major projects in Chad. The first being development of the Doba oil fields in the south, and the second being involved in the construction and operation of a pipeline to transport oil from those fields to an export terminal facility in Cameroon. In BP’s 2011 Statistical Review of World Energy, the report estimates Chad’s 2010 proved reserves at 1.5 billion barrels, 2010 production at 122,000 BOEPD, and a 2010 R/P ratio of 33.7 years.
Exploration Phase 1 in JDZ Blocks 2, 3 and 4 has expired: What’s Next? At the JDZ, ERHC’s one-year extension of Exploration Phase 1 in JDZ Blocks 2, 3 and 4 expired. The contracting parties and the Joint Development Authority have been meeting to determine the best way forward. ERHC mentioned three potential outcomes: The operators and the Joint Development Authority (JDZ) agree upon a plan for future exploration of one or more of the JDZ Blocks, the operators and JDA agree upon a further extension of Exploration Phase 1, or the operators could decide not to pursue future exploration of the JDZ Blocks, and ERHC would be able to seek new operating partners for the JDZ Blocks. ERHC has interests in six of the nine blocks at JDZ, an 8.5 million acre area approximately 124 miles off the coastline of Nigeria that is adjacent to several large petroleum discovery areas. At the JDZ Block 1 (ERHC has no interest), Total SA (NYSE: TOT) is drilling two wells this spring for $200 million bringing greater positivity to the ERHC’s exploration plans for the JDZ area.
PSC Negotiations Ongoing: In the EEZ, ERHC has a 100% WI in Blocks 4 and 11 free of signature bonuses. The islands of São Tomé and Príncipe are located in the eastern Gulf of Guinea approximately 124 miles south of Nigeria and directly west of the territorial waters of Equatorial Guinea and Gabon. ERHC and the National Petroleum Agency of São Tomé and Príncipe (ANP-STP) continue to make meaningful progress on the most critical terms of the Production Sharing Contracts (PSCs) for the Company’s two exploration Blocks in the EEZ.