ERHE -ERHC Energy Inc.- Penny Stock- Independent Oil & Gas

[Skydaemon]

The company name is ERHC Energy, the stock symbol is ERHE.

Corporate website at http://www.erhc.com

This is an oil exploration stock, they have an offshore oil zone pre production in the JDZ near nigeria/sao tome. You can look up the story on other boards if you like, I find it really compelling personally but I won't go into it here.

What really matters is the stock price. =)

This stock is unusual on the pinks and I like this stock for a couple reasons.

-Unlike most otc/pinks it can support volume, it trades $100,000 and 300,000 shares most days so you can take larger positions, if so inclined, without worrying about liquidity too much.

-It's a slow moving stock. Not one of these lightning fast you blink and you miss it stocks. If it holds to past trends you'll have a couple weeks to enter/vacate positions where you like.

The other reason I like it right now is the long term charts. 3 year charts on this are pointing to some potentially good gains, and we might be really close to a bottom on those long term charts. Observe the chart:



I view the decline to where we're at now as much the same pattern as it took down to the bottom at the start of 2006. The only thing is it seems to be taking a larger amount of time to descend down the pattern so the chart is wider this time.

Another important thing to note is that the company has a drillship scheduled to show up mid 2008 to drill test wells in the blocks it owns to test the quantity of oil. The charts plus the business direction suggest to me a strong possibility of being worth 3 times the current amount within likely 10 months. When I couldn't say, but I don't think it'll be sooner than 3-4 months and I don't think longer than 12-15.

Anyway, the bottom seems to be in the near future to me.

[lovemoney]

Accumulation looks good on the chart!

[sevago00]

ur analysis is correct and reasonable. but do u know what news made the pps go as high as .90s in the past?

imo, it would reach to 0.50s again when their fields are tested, and will rise to an alltime high on good test results or maybe more than alltime high.

[Skydaemon]

Hi sevago00,

Actually this stock originally came to my attention back then in the april timeframe near the top of the spike. At that time believe it or not I hadn't looked at the long term chart and was just daytrading it for a period of a month or so near the top, made some money and instantly liked it. I read up on the story and loved it, then the stock started to decline.... That's when I basically figured out the great fairytale-like story doesn't matter here.

It was only after it started a decline and _continued_ that decline against apparently good news that I looked at the chart and realized what it was doing long term. At that point I realized it was going to roll down to .30, bailed, and have been waiting patiently an entire year for this stock to get here. (It's been an aggravatingly long wait... but sure enough, it came)

This is part of why I'm very bullish on this stock right now. Because back when it was falling from .90 I was expecting it to get down here, and here it is, and I was expecting another slow rise back to at least .85 back then, and that should begin in the near future.

The .50 point is meaningless in my opinion, and is part of the down pattern. I am looking at it as analogous to the spike in november 2006 on the way down. Seriously, count the spikes on the way down in 2006 and compare to the wider chart on the way down to now. I was sitting here waiting for it back when it was like .33 or something before that jump to .50 and didn't enter because I didn't see the trend as complete unless it dipped under .30.

From what I've seen following this the last year, you should ignore the news cycles. This stock's movement seems largely unrelated to news. It seems to follow it's long term cycles more than news by far. Also, there's a lot of capital flowing around. This is not something spikable by a couple daytraders. That gain you see back in 2006 represents about $500 million in market cap increase, and the float is not small dollar wise (at least compared to other pinks/otc).

To my knowledge there was no specific news that caused the increase, and no news causing the declines either. To be sure, there's been some really good news releases, they just don't seem to do much to the pps. That "spike" on that chart to over .90 was a gradual increase over 3 or so months. If you'd been daytrading it you wouldn't have even noticed it much, it's not caused by a single news release. I remember daytrading back when it was nearing .95 and everyone thought it was gonna punch a buck and go for it because of all the huge news. Then the pps just crawled back down bringing a bunch of confused traders along. Eventually you just accept it "ok we're going down now, despite all positive news that suggests the contrary".

http://erhc.blogspot.com/2006/05/nat...s-chevron.html

Stories like that about chevron completing test drills in it's adjacent blocks to erhe occurred after the spike and just before the big decline from .90 back down. The blog notes it jumped the price by 4 cents, which really is not much different than the normal daily fluctuations back then, hard to point to it making any difference at all. *Chevron's* shares jumped $.65 on that, erhe's, $.04 for like a day, then kept going down.

I also remember when seemingly significant news events were released subsequently. For example, the company signed operations contracts with other cooperating companies, wherein those company's paid the company something like $40 million in cash. The company received the cash too. The pps just didn't care.

Another thing to note, is that there are several blocks of oil in the part erhe is participating in, so if you're determined to follow news you will have to watch other companies too. Most notably chevron. Chevron is important because they own one of the adjacent blocks to erhe's claim, and Chevron has completed it's initial test well. If that company is any indication I wouldn't expect the release to say much other than they were done.

They're amazingly tight lipped. Chevron did find oil/gas in their block, but they won't say how much. For a long long time they couldn't even get a vaguely good or vaguely bad out of the puckered PR reps. I heard something about how big oil companies don't say anything because if they do the governments have a habit of "renegotiating" if it's good. Whatever the reason is it's extremely annoying.

This is part of why I don't necessarily try to tie this coming rise to the drilling mid 2008. It's nice that it should push it in the same direction, but I've waited on pins and needles for the oil test drilling results from chevron before (which were viewed as a proxy for the drill results for erhe since the blocks are touching). The test happened, chevron called it a "tight hole" acknowledged that gas/oil existed, and clammed up for a whole year without saying anything useful. The pps was mostly unaffected.

I am not anticipating any massive spike from erhe's test well either, partially because I don't expect them to say much about it. It's important because it needs to happen to move the company to production, but that's years away from now, and won't matter to this next run on the pps. I'd bet the next peak will be completely unrelated to the test drilling myself.

[Guthrie]

Triple bottom, I like it. It finds support here from the beginning of 04. And I do like the accum/dist positive divergence, it sometimes signals a correction is coming.
However, you said the PPS is generally not affected by news, which to me might suggest the company is diluting.

#
Estimated Market Cap
216,581,565 as of Jul 19, 2007
#
Outstanding Shares
721,938,550 as of Apr 1, 2007 (Confirmed when looking at their last 10Q)
Edit:On November 30, 2006, the registrant had 718,988,982 shares of common stock issued and outstanding.
The number of common shares outstanding as of August 1, 2006 was 714,178,528.
The number of common shares outstanding as of May 2, 2006 was 710,912,226.
The number of common shares outstanding as of February 7, 2006 was 710,912,226.
The number of common shares outstanding at August 4, 2005 was 709,690,093.
Ok, dilution isn't a problem as I look through the past 10Qs

But, check the recent SEC filings; the last 8-K talks about a subpoena from the US Govt about payments to foreign governments and the like.

This seems like a good technical play but the trial with the government, the department of homeland security no less, is a worry to me.
I'm going to stay away until that is done despite the great technical analysis of it just because I think the ongoing trial will allow for the stock price to drop below support levels. Good luck though!

[Skydaemon]

Found a couple things while poking around.

1)

http://www.addaxpetroleum.com/press_room/56

This company addax is jointly operating with erhe on the some of the jdz blocks. This is an estimate they did of how much oil they think is there. I have no idea how they got those numbers as I don't think any test drilling has happened in these specific blocks. In the chart it's the line labelled JDZ (2,3,4) which relates to the part shared with erhe.

These numbers are probably unreliable, but it's the only semi-official guess I've ever seen anyone make.

2)
Re: The investigation thing. Reading the release, I think it's actually not the dept of homeland security, nor is it a trial. It's the U.S. Senate Committee on Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations.

It's a senate committee with a similar sounding name, at the current moment they're requesting information from erhe basically probing into how it acquired it's development rights in the jdz.

It's not that new either, it's been going on for over a year, they've been investigating since just under a year after erhe was awarded it's rights in the region as far as I can tell.

The basic issue is the subcommittee is trying to investigate if erhe bribed somebody to get their rights to the jdz blocks over the discussions in the last 10 or so years.

I have no idea if they bribed somebody or not, I dunno what kind of documents they could find on something like that, but erhe never used to have any money until just recently when it signed the operating contracts with addax etc. If they did buy off somebody they musta been cheap. lol

Myself, I work in a different industry which also has high value contract awards (100-300 mill awards related to state/national lotteries), and I know in our industry lawsuits get tossed around by the losers like party favors, pretty much whenever a bid is even remotely close, just to see if they can stir something up and maybe get lucky (as well as give a competitor a good shot in the nuts). If it's worth enough money stuff like this will happen. I guess I kind of discount it just because of my personal experiences.

Meh, it's an otc/pink, you have to know it's not going to be risk free.

If nothing else it may indicate there might actually be something in the ground worth fighting over here.

[sevago00]

Originally Posted by Skydaemon

Hi sevago00,

I also remember when seemingly significant news events were released subsequently. For example, the company signed operations contracts with other cooperating companies, wherein those company's paid the company something like $40 million in cash. The company received the cash too. The pps just didn't care.

Another thing to note, is that there are several blocks of oil in the part erhe is participating in, so if you're determined to follow news you will have to watch other companies too. Most notably chevron. Chevron is important because they own one of the adjacent blocks to erhe's claim, and Chevron has completed it's initial test well. If that company is any indication I wouldn't expect the release to say much other than they were done.

They're amazingly tight lipped. Chevron did find oil/gas in their block, but they won't say how much. For a long long time they couldn't even get a vaguely good or vaguely bad out of the puckered PR reps. I heard something about how big oil companies don't say anything because if they do the governments have a habit of "renegotiating" if it's good. Whatever the reason is it's extremely annoying.

This is part of why I don't necessarily try to tie this coming rise to the drilling mid 2008. It's nice that it should push it in the same direction, but I've waited on pins and needles for the oil test drilling results from chevron before (which were viewed as a proxy for the drill results for erhe since the blocks are touching). The test happened, chevron called it a "tight hole" acknowledged that gas/oil existed, and clammed up for a whole year without saying anything useful. The pps was mostly unaffected.

I am not anticipating any massive spike from erhe's test well either, partially because I don't expect them to say much about it. It's important because it needs to happen to move the company to production, but that's years away from now, and won't matter to this next run on the pps. I'd bet the next peak will be completely unrelated to the test drilling myself.

thanks for all the background information. as gunthrie said this is a triple bottom and the technical look good.

i got few more questions. about that $40 million that didnt do nothing to the pps? would u happen to know if this deal was anticipated for a while before an official PR was published? im thinking that pps rose throughout time based on anticipation and when the news finally came out, nothing really happened. $40 million is alot of money not to do anything to pps

in my previous post i was going to mention something that u kind went through. i was going to say that the drilling and pumping process takes so long that needs many permissions and regulations etc...

its a very good play. thanks for the post

[Skydaemon]

Well, this link will show you the chain of PRs and dates.

http://www.erhc.com/news.htm


And I think this one specifically relates to the cash promised. This cash was eventually received on schedule too.

http://www.erhc.com/pdfs/PressReleas...SC_3-17-06.pdf

It was kind of a long chain of events, that I consider to have started more or less around sept2005 when the company was entering into agreements with addax and a couple other companies. Nobody really knew what that meant other than it was a path aimed towards getting production moving. As you can see pps was still declining for months after that started.

The one thing about the cash is it's not necessarily that great either. One thing about this kind of business is you have to pay the gov't for the rights that you won, long before you start drilling. So most of this money ended up flowing right through erhe.

The idea was, erhe won a bunch of rights in a bidding process, and when you win rights to drill oil like this, the gov't charges you many millions up front for the privilege of the rights (on top of the fees they take for the drilling later). Erhe basically arranged a skimming deal. Addax and others were given operating rights in exchange for sums of cash. That cash went to pay off the fees owed the gov't to complete the contract award and make it a done deal. Erhe meanwhile, retained percentages in the blocks it had contracted to share. Now erhe has a lot of blocks here, it didn't share them all and still owns some of them outright. But the ones it shared are probably the more lucrative ones.

Also, even though erhe earned this money in it's contract creations with addax etc, it also owed money to the gov't for having acquired it's rights to the oil patches, so it mostly had to pay it out again right away as up front costs. Basically, erhe _had_ to do something like this to pay for what it had won and proceed onward to production.

So basically, it spit out this one pr about the cash payments which would happen in mid to late march 2006, then the payments happened on schedule. March was right after the spike, just before it crested. See where march is on the chart, so yeah, it could be related. It is confusing to see when the pr was released, it says march 17th inside the pr, I'll try to cross reference the date that came out against historical forum chat. I'll post if I find anything that way.

However if it is related though, it still didn't jump pps the way I would've expected. To me a rise on substantial news I'd expect to happen in 2-3 days, not over a month or longer. Something that takes a month+ to move I view as something else. Maybe I'm just not accounting for the heavier volume on this stock properly but I'm still not sure I would attribute it to news.

[lovemoney]

On the Subpoena thing here's what it said on erhc's shareholder update July 9.

"The New York Times and The Houston Chronicle recently ran stories regarding ERHC. There are a few points that I woulld like to emphasize. ERHC's rights in the JDZ, as well as those granted to other companies, were recognized by the Joint Development Autority pursuant to the terms of the treaty establishing the JDZ, which was ratified by the government of Nigeria and Sao Tome & Principe. Our position is that the circumstances during the past decade - including numerous concessions and renegotiations on outr part - led to development rights in the JDZ being legitimately awarded to ERHC.

The Houston Chronicle's report focused on the Securities and Exchange Commission's filing of a subpoena enforcement action against an attorney working for Chrome Oil Services Limited, which is a significant shareholder in ERHC. The subpoena related to the SEC's investigation of ERHC. Our investigation counsel, Akin Gump, has informed us the the SEC and the attorney in question, through his own individual attorney, are working toward resolving compliance with the subpoena."

[Skydaemon]

Here's a better link describing the legal stuff.

http://www.chron.com/disp/story.mpl/...z/4958347.html

Apparently one of the guys being questioned was supposed to testify on july 18th, that was last wednesday, I wonder whether that happened or not.