Even when all concerned are on the same page, bringing product to market is a difficult process. Add in a few people and/or conditions that are not pulling in the same direction, and the entire process can become a major headache. Some markets are more oriented toward the headache end of the spectrum but are generally that way because there is a tremendous payoff when the product does make it to market. An investor who wants a big payoff is an investor who is willing to ride the ups and downs of a tumultuous development process to a profitable end.
ERHC Energy Inc., an oil and gas exploration and development company, works to find and exploit oil and gas deposits primarily off the coast of Central West Africa. Although the company has rights to several development blocks off the coasts of the Democratic Republic of Nigeria and the Democratic Republic of Soa Tome & Principe, it is primarily focused on 3 blocks located within the off-shore Joint Development Zone (JDZ.) These blocks are generally referred to as blocks: 2, 3 and 4, where the company owns 22%, 10% and 26.7% rights respectively.
Founded in 1986, the company has been putting its lawyers to work in extremely difficult negotiations and due diligence. Generally, this work is related to international law, where almost all international oil and gas companies are working to protect and exploit their/others development rights. In particular, the nature of the JDZ blocks finds many competing interests vying for their share of the oil wealth known to be located within the strata.
In recent weeks, the company was pleased to announce that its position at the JDZ block 4 was clarified, where its relationship with a consortium member that failed to meet conditions was concerned. The company’s relationship with another consortium member was unaffected, although the company does indicate that that company is still working to fulfill its obligations as they relate to providing a “rig of opportunity.”
The company has been having successes as it works to take its share of the JDZ. Currently, however, it has been working to reduce administrative costs as it gets closer to the ultimate goal of production. The legal and political realities of working in this very productive and valuable region notwithstanding, ERHC Energy is positioned to capitalize on large known reserves in the near future. A timeline may be a bit premature but the company is in the right place at the right time and ready to profit by it.
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