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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ERHC Energy Inc (CE) | USOTC:ERHE | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Colorado
|
88-0218499
|
|
(State of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
Non-accelerated filer
☒
|
Smaller reporting company
☐
|
Part I. Financial Information
|
Page
|
|
Item 1.
|
5
|
|
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
Item 2.
|
14
|
|
Item 3.
|
25
|
|
Item 4.
|
25
|
|
Part II. Other Information
|
||
Item 1.
|
26
|
|
Item 6.
|
28
|
|
29
|
● |
business strategy;
|
● |
growth opportunities;
|
● |
future development of concessions, exploitation of assets and other business operations;
|
● |
future market conditions and the effect of such conditions on the Company's future activities or results of operations;
|
● |
future uses of and requirements for financial resources;
|
● |
interest rate and foreign exchange risk;
|
● |
future contractual obligations;
|
● |
outcomes of legal proceedings including;
|
● |
future operations outside the United States;
|
● |
competitive position;
|
● |
expected financial position;
|
● |
future cash flows;
|
● |
future liquidity and sufficiency of capital resources;
|
● |
future dividends;
|
● |
financing plans;
|
● |
tax planning;
|
● |
budgets for capital and other expenditures;
|
● |
plans and objectives of management;
|
● |
compliance with applicable laws; and,
|
● |
adequacy of insurance or indemnification.
|
● |
general economic and business conditions;
|
● |
worldwide demand for oil and natural gas;
|
● |
changes in foreign and domestic oil and gas exploration, development and production activity;
|
● |
oil and natural gas price fluctuations and related market expectations;
|
● |
termination, renegotiation or modification of existing contracts;
|
● |
the ability of the Organization of Petroleum Exporting Countries, commonly referred to as "OPEC", to set and maintain production levels and pricing, and the level of production in non-OPEC countries;
|
● |
policies of the various governments regarding exploration and development of oil and gas reserves;
|
● |
advances in exploration and development technology;
|
● |
the political environment of oil-producing regions;
|
● |
political instability in the Democratic Repub
lic of Săo Tomé and Príncipe ("DRSTP"), the Federal Republic of Nigeria, Republic of Kenya, and the Republic of Chad;
|
● |
casualty losses;
|
● |
competition;
|
● |
changes in foreign, political, social and economic conditions;
|
● |
risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets;
|
● |
risks of potential contractual liabilities;
|
● |
foreign exchange and currency fluctuations and regulations, and the inability to repatriate income or capital;
|
● |
risks of war, military operations, other armed hostilities, terrorist acts and embargoes;
|
● |
regulatory initiatives and compliance with governmental regulations;
|
● |
compliance with tax laws and regulations;
|
● |
customer preferences;
|
● |
effects of litigation and governmental proceedings;
|
● |
cost, availability and adequacy of insurance;
|
● |
adequacy of the Company's sources of liquidity;
|
● |
labor conditions and the availability of qualified personnel; and,
|
● |
various other matters, many of which are beyond the Company's control.
|
December
31, 2016
|
September
30, 2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
258,210
|
$
|
439,544
|
||||
Account receivable
|
15,479
|
-
|
||||||
Prepaid expenses and other
|
29,505
|
29,505
|
||||||
Total current assets
|
303,194
|
469,049
|
||||||
Oil and gas properties and concession fees
|
||||||||
Concession fees
|
5,173,819
|
5,173,819
|
||||||
Proved properties
|
385,000
|
510,000
|
||||||
Furniture and equipment, net of accumulated depreciation of $519,540 and $509,894 at December 31, 2016 and September 30, 2016, respectively
|
60,435
|
70,081
|
||||||
Total assets
|
$
|
5,922,448
|
$
|
6,222,949
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
10,070,034
|
$
|
9,273,608
|
||||
Accounts payable – related parties
|
139,375
|
100,438
|
||||||
Income tax payable
|
2,739,607
|
2,739,607
|
||||||
Convertible note payable, net of discount – short term
|
42,786
|
181,535
|
||||||
Derivative liability
|
682,988
|
770,854
|
||||||
Total current liabilities
|
13,674,790
|
13,066,042
|
||||||
Commitments and contingencies:
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, par value $0.0001; authorized 10,000,000 shares; none issued and outstanding
|
-
|
-
|
||||||
Common stock, par value $0.0001; authorized 3,000,000,000 shares; issued and outstanding 972,769,883 and 47,479,975 shares at December 31, 2016 and September 30, 2016, respectively
|
97,277
|
4,748
|
||||||
Additional paid-in capital
|
108,371,019
|
107,436,940
|
||||||
Accumulated deficits
|
(116,220,638
|
)
|
(114,284,781
|
)
|
||||
Total shareholders’ deficits
|
(7,752,342
|
)
|
(6,843,093
|
)
|
||||
Total liabilities and shareholders’ equity
|
$
|
5,922,448
|
$
|
6,222,949
|
Three Months Ended December 31,
|
||||||||
2016
|
2015
|
|||||||
Revenue
|
$
|
36,330
|
$
|
-
|
||||
Costs and expenses:
|
||||||||
General and administrative
|
465,873
|
576,440
|
||||||
Exploration expenses
|
746,563
|
405,484
|
||||||
Depreciation
|
9,646
|
18,555
|
||||||
Gain on sale of interest in oil and gas concessions, net
|
-
|
(657,806
|
)
|
|||||
Total costs and expenses
|
1,222,082
|
342,673
|
||||||
Loss from operations
|
1,185,752
|
342,673
|
||||||
Other income and (expenses):
|
||||||||
Interest income
|
37
|
232
|
||||||
Gain on MTM of derivative liability
|
30,233
|
112,384
|
||||||
Loss on embedded derivative
|
(495,837
|
)
|
-
|
|||||
Loss on debt conversions
|
(79,745
|
) | ||||||
Interest expense
|
(204,793
|
)
|
(81,147
|
)
|
||||
Total other income and (expense)
|
(750,105
|
)
|
31,469
|
|||||
Loss before benefit (provision) for income taxes
|
(1,935,857
|
)
|
(311,204
|
)
|
||||
Benefit (provision) for income taxes:
|
||||||||
Current
|
-
|
-
|
||||||
Deferred
|
-
|
-
|
||||||
Total benefit (provision)for income taxes
|
-
|
-
|
||||||
Net loss
|
$
|
(1,935,857
|
)
|
$
|
(311,204
|
)
|
||
Net loss per common share -basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||
Weighted average number of common shares outstanding - basic and diluted
|
256,079,013
|
29,624,511
|
Three Months Ended
December 31,
|
||||||||
2016
|
2015
|
|||||||
Net loss
|
$
|
(1,935,857
|
)
|
$
|
(311,204
|
)
|
||
Other comprehensive income – unrealized gain on available for sale securities
|
-
|
236,464
|
||||||
Total other comprehensive loss
|
$
|
(1,935,857
|
)
|
$
|
(74,740
|
)
|
Three Months Ended
December 31,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net loss
|
$
|
(1,935,857
|
)
|
$
|
(311,204
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and depletion expense
|
9,646
|
18,555
|
||||||
Loss on embedded derivative
|
495,837
|
-
|
||||||
Loss on debt conversions
|
79,745
|
|||||||
Gain on change in fair value of derivatives
|
(30,233
|
)
|
(112,384
|
)
|
||||
Gain on sale of interest in oil and gas concessions, net
|
-
|
(657,806
|
)
|
|||||
Amortization of convertible debt discount
|
181,120
|
65,808
|
||||||
Amortization of debt issuance cost
|
14,270
|
3,931
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable
|
(15,479
|
)
|
-
|
|||||
Prepaid expenses and other current assets
|
-
|
8,415
|
||||||
Accounts payable and other accrued liabilities
|
771,205
|
(766,349
|
)
|
|||||
Accounts payable – related parties
|
38,937
|
-
|
||||||
Net cash used in operating activities
|
(390,809
|
)
|
(1,751,034
|
)
|
||||
Cash Flows From Investing Activities:
|
||||||||
Purchase of furniture and equipment
|
-
|
(1,000
|
)
|
|||||
Return payment from purchase of oil gas property
|
125,000
|
-
|
||||||
Proceeds from sale of interest in oil and gas concessions
|
-
|
1,500,000
|
||||||
Net cash provided by investing activities
|
125,000
|
1,499,000
|
||||||
Cash Flows From Financing Activities:
|
||||||||
Principle payment on convertible debt
|
-
|
(26,033
|
)
|
|||||
Proceeds from convertible debt
|
84,475
|
-
|
||||||
Net cash (used) provided by financing activities
|
84,475
|
(26,033
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(181,334
|
)
|
(278,067
|
)
|
||||
Cash and cash equivalents, beginning of period
|
439,544
|
757,313
|
||||||
Cash and cash equivalents, end of period
|
$
|
258,210
|
$
|
479,246
|
||||
Non-cash investing and financing activities:
|
||||||||
Unrealized gain in Investment Oando Energy Resources
|
$
|
-
|
$
|
236,464
|
||||
Discount from derivative
|
$
|
590,837
|
$
|
-
|
||||
Conversion of note payable to common stock
|
$
|
378,138
|
$
|
27,841
|
||||
Derivative liabilities extinguished on conversion
|
$
|
648,470
|
$
|
80,038
|
● |
Level 1 — Quoted prices in active markets for identical assets or liabilities.
|
● |
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or, other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
● |
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
Derivative
Liability
|
||||
Balance at September 30, 2016
|
$
|
770,854
|
||
Increase in derivative value due to issuances of convertible promissory notes
|
590,837
|
|||
Decrease in derivative value due to convertible promissory notes converted to common stocks
|
(648,470
|
)
|
||
Change in fair market value of derivative liabilities on convertible notes due to the mark to market adjustment
|
(30,233
|
)
|
||
Balance at December 31, 2016
|
$
|
682,988
|
December 31,
2016
|
September 30,
2016
|
|||||||
DRSTP concession
|
$
|
2,271,600
|
$
|
2,271,600
|
||||
Chad concession
|
2,800,600
|
2,800,600
|
||||||
Pending concessions in other African countries
|
101,619
|
101,619
|
||||||
Total Concession fees
|
$
|
5,173,819
|
$
|
5,173,819
|
|
Proved
Properties
|
|||
|
||||
Balance at September 30, 2016
|
$
|
510,000
|
||
Return of funds deposited
|
(125,000
|
)
|
||
Depletion and amortization
|
-
|
|||
|
||||
Total Concession fees
|
$
|
385,000
|
Lender
|
Date of
Agreement
|
Term
(Months)
|
Annual
Interest rate
|
Outstanding
balance
|
Accrued
Interest at
Reporting
date
|
Deferred
debt
origination
costs
|
Discount
|
Net
Convertible
Note payable
|
Note
Derivative
Liability
|
||||||||||||||||||||||||
Union Capital #4
|
4/12/2016
|
12
|
8
|
%
|
$
|
7,375
|
$
|
-
|
$
|
2,830
|
$
|
10,743
|
$
|
(6,198
|
)
|
$
|
14,628
|
||||||||||||||||
Auctus Private Equity Fund
|
4/27/2016
|
12
|
10
|
%
|
28,212
|
47
|
428
|
6,693
|
21,138
|
57,142
|
|||||||||||||||||||||||
Black Mountain Equities.
|
5/20/2016
|
12
|
8
|
%
|
40,500
|
1,318
|
674
|
36,691
|
4,453
|
84,059
|
|||||||||||||||||||||||
Rock Capital #2
|
5/26/2016
|
12
|
10
|
%
|
53,088
|
-
|
2,583
|
50,595
|
(90
|
) |
119,921
|
||||||||||||||||||||||
Crown Bridge Partners
|
6/2/2016
|
12
|
8
|
%
|
26,525
|
2,406
|
423
|
23,032
|
5,476
|
72,549
|
|||||||||||||||||||||||
Toledo Advisors
|
6/22/2016
|
12
|
10
|
%
|
61,000
|
52
|
762
|
53,133
|
7,157
|
169,322
|
|||||||||||||||||||||||
LG Capital
|
8/23/2016
|
12
|
8
|
%
|
32,000
|
895
|
-
|
29,415
|
3,480
|
47,265
|
|||||||||||||||||||||||
Auctus Private Equity Fund 2
|
9/22/2016
|
9
|
10
|
%
|
58,750
|
1,600
|
-
|
52,980
|
7,370
|
118,102
|
|||||||||||||||||||||||
$
|
307,450
|
$
|
6,318
|
$
|
7,700
|
$
|
263,282
|
$
|
42,786
|
$
|
682,988
|
Lender
|
Date of
Agreement
|
Term
(Months)
|
Annual
Interest rate
|
Outstanding
balance
|
Accrued
Interest at
Reporting
date
|
Deferred
debt
origination
costs
|
Discount
|
Net
Convertible
Note payable
|
Note
Derivative
Liability
|
||||||||||||||||||||||||
JMJ Financial #4
|
3/9/2016
|
12
|
8
|
%
|
$
|
39,416
|
$
|
-
|
$
|
-
|
$
|
37,114
|
$
|
2,302
|
$
|
74,913
|
|||||||||||||||||
Adar Bay
|
3/10/2016
|
12
|
8
|
%
|
32,000
|
2,000
|
1,544
|
22,863
|
9,593
|
71,087
|
|||||||||||||||||||||||
Union Capital #4
|
4/12/2016
|
12
|
8
|
%
|
50,000
|
1,732
|
2,126
|
-
|
49,606
|
-
|
|||||||||||||||||||||||
Auctus Private Equity Fund
|
4/27/2016
|
12
|
10
|
%
|
54,250
|
2,318
|
1,839
|
46,757
|
7,972
|
137,157
|
|||||||||||||||||||||||
Black Mountain Equities.
|
5/20/2016
|
12
|
8
|
%
|
51,500
|
926
|
4,131
|
-
|
48,295
|
-
|
|||||||||||||||||||||||
Rock Capital #2
|
5/26/2016
|
12
|
10
|
%
|
55,125
|
529
|
5,950
|
-
|
49,704
|
-
|
|||||||||||||||||||||||
Crown Bridge Partners
|
6/2/2016
|
12
|
8
|
%
|
53,500
|
1,407
|
1,678
|
45,232
|
7,997
|
143,932
|
|||||||||||||||||||||||
Toledo Advisors
|
6/22/2016
|
12
|
10
|
%
|
63,000
|
1,726
|
2,396
|
59,309
|
3,021
|
168,812
|
|||||||||||||||||||||||
LG Capital
|
8/23/2016
|
12
|
8
|
%
|
32,000
|
250
|
-
|
31,033
|
1,217
|
43,965
|
|||||||||||||||||||||||
Auctus Private Equity Fund 2
|
9/22/2016
|
9
|
10
|
%
|
58,750
|
119
|
-
|
57,041
|
1,828
|
130,988
|
|||||||||||||||||||||||
$
|
489,541
|
$
|
11,007
|
$
|
19,664
|
$
|
299,349
|
$
|
181,535
|
$
|
770,854
|
Lender
|
Date of
Agreement
|
Term Of Conversion
|
Eligible for
Conversion
|
|||
Union Capital
|
April 12, 2016
|
Conversion Price for each share of Common Stock equal to 40% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price)".
|
180 after the effective date
|
|||
Auctus Private Equity Fund, LLC
|
April 27, 2016
|
Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price
|
On effective date
|
|||
Black Mountain Equities, Inc.
|
May 20, 2016
|
Conversion Price shall equal 60% of the lowest trade occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.
|
150 after the effective date
|
|||
Rock Capital
|
May 26, 2016
|
Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent
|
180 after the effective date
|
|||
Crown Bridge Partners LLC
|
June 2, 2016
|
Variable Conversion Price shall mean 50% multiplied by the Market Price (as defined herein)(representing a discount rate of 50%). “Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.
|
On effective date
|
|||
Toledo Advisors LLC
|
June 22, 2016
|
Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days
|
On effective date
|
|||
LG Capital
|
August 23, 2016
|
Conversion price shall equal be 60% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.
|
On effective date
|
|||
Auctus Private Equity Fund 2
|
September 22, 2016
|
Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price
|
On effective date
|
· |
The stock price would fluctuate with the Company projected volatility;
|
· |
The Derivative Convertible Notes convert at 40% to 60% of the market prices;
|
· |
An event of default would occur initially 0% of the time, increasing 1.00% per month until it reaches 10%;
|
· |
The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 200% and 260%;
|
· |
The Company would redeem the notes initially 0% of the time, and increase monthly by 1.00% to a maximum of 5.00%;
|
· |
The holders of the notes would automatically convert the notes at the maximum of two times the conversion price if the Company is not in default, with the target conversion price dropping as maturity approaches; and
|
· |
The Holder would convert the note early after 0-90-180 days and at maturity if the registration was effective and the Company was not in default.
|
· |
As of December 31, 2016, the Company was $9,635,637 in arrears of part of its proportionate share of drilling expenses for Kenya Block 11A and therefore in default from May 2016 of its obligation to CEPSA. The drilling expenses are for the Tarach-1 exploratory well which was completed on Kenya Block 11A in summer 2016.
|
· |
The Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.
|
· |
Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned
|
a. |
$2,000,000 as the entire signature bonus
|
b. |
$320,600 in advisers' and ancillary costs related to the PSC
|
c. |
$480,000 as legal fees and costs for the drafting and negotiation of the PSC, as provided for in the PSC
|
d. |
$190,872 as costs of Environmental Impact Study, as provided for in the PSC
|
e. |
$448,000 on Aeromagnetic data acquisition survey, in fulfillment of work program obligations under the PSC
|
f. |
$378,374 2015 Training and Surface rental fees, as provided in the PSC
|
· |
As previously advised, the Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.
|
· |
Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned at the year ended September 30, 2016.
|
KENYA BLOCK 11A
|
|
LICENSE
:
|
PSC with the Government of Kenya (effective September 2012)
|
PARTIES
:
|
ERHC (35%); CEPSA (55%); Government of Kenya (10%)
1
|
Minimum Work
|
Minimum Expenditure
|
Status
|
|||
Acquire and interpret 1,000 square kilometers of gravity and magnetic data
|
$
|
250,000
|
Completed: 14,943.8 line kilometers of FTG data acquired by January 2014 at an estimated total cost of $2,700,000.
|
||
Acquire and interpret 1,000 kilometers of 2D seismic data
|
$
|
10,000,000
|
Completed: 1,086.6 line kilometers of 2D seismic data acquired by August 2014 at an estimated total cost of $28,300,000
|
Minimum Work
|
Minimum Expenditure
|
Status
|
|||
Acquire 750 square kilometers of 3D seismic data
|
$
|
30,000,000
|
Decision taken not to acquire 3D seismic but to proceed to drilling based on FTG and 2D seismic
|
||
OR
|
OR
|
||||
Drill one (1) well to a minimum depth of 3,000m
|
$
|
30,000,000
|
Completed
|
Minimum Work
|
Minimum Expenditure
|
Status
|
|||
Drill one (1) well to a minimum depth of 3,000m
|
$
|
30,000,000
|
Not yet arisen
|
Ministry Training Fund
|
$175,000 per annum during the exploration period
|
$200,000 per annum (minimum) from adoption of first development plan
|
|
Social Projects
:
|
$50,000 per annum (minimum)
|
Surface Rentals:
|
$5/km
2
per annum (exploration phase 1); $10/km
2
per annum (exploration phase 2); $15/km
2
per annum (exploration phase 3)
|
$100/km
2
per annum (development and production period)
|
Cost Recovery:
|
|
Cost Oil
|
Up to 60% of Cost Oil each fiscal year
|
Incremental Production Tranches
|
Government Share
|
Contractor Share
|
||||||
0-30,000 barrels per day
|
50
|
%
|
50
|
%
|
||||
Next 25,000 barrels per day
|
60
|
%
|
40
|
%
|
||||
Next 25,000 barrels per day
|
65
|
%
|
35
|
%
|
||||
Next 20,000 barrels per day
|
70
|
%
|
30
|
%
|
||||
Above 100,000 barrels per day
|
78
|
%
|
22
|
%
|
CHAD BLOCK BDS 2008
|
|
LICENSE
:
|
PSC with the Government of Chad signed June 2011
2
|
PARTIES
:
|
ERHC (100%)
|
Minimum Work
|
Minimum
Expenditure
|
Status
|
|
Unspecified: annual work program to be proposed yearly by contractor
|
$15,000,000 in total for the exploration phase
|
EIA completed;
|
|
Aero gravity and magnetic survey completed;
|
|||
·
|
4,720 line kilometers of high precision gravity and magnetic data acquired by November 2014;
|
||
·
|
Three leads identified;
|
||
Seismic in preparation;
|
|||
·
|
2D seismic on focus areas planned for 2016
|
Minimum Work
|
Minimum Expenditure
|
Status
|
|||
Unspecified: annual work program to be proposed yearly by contractor
|
$
|
1,000,000
|
ERHC proposes an exploration well in this period if Phase 1 G&G studies justify
|
OTHER FINANCIAL OBLIGATIONS
:
|
|
Ministry Training
Fund
|
$250,000 per annum during the exploration period
|
$500,000 per annum during the exploitation period
|
|
Social Projects
:
|
None specified in the PSC
|
Surface Rentals
|
$1/km
2
per annum (Exploration Phase 1); $5/ km
2
per annum (Exploration Phase 2); $10// km
2
per annum (Extension)
|
$100
/
km
2
per annum (Exploitation Phase 1); $150
/
km
2
per annum (Exploitation Phase 1)
|
COST RECOVERY AND PRODUCTION SHARING:
|
|
Royalty
|
14.25% for crude oil
|
5% for natural gas
|
|
Cost Oil
|
Up to 70% of net production after deduction of royalty
|
R-Factor, as defined by the PSC
4
|
Less than or
equal to 2.25
|
Between 2.25
and 3
|
Greater than
3
|
|||||||||
Contractor’s share of profit oil
|
60
|
%
|
50
|
%
|
40
|
%
|
||||||
State’s share of profit oil
|
40
|
%
|
50
|
%
|
60
|
%
|
JDZ Block
|
ERHC Original
Participating Interest
|
ERHC Joint Bid
Participating Interest
|
Participating
Interest(s) Assigned
|
Current ERHC
Retained Participating
Interest
|
|||||
2
|
30.00%
|
35.00%
|
43.00%
|
22.00%
|
|||||
3
|
20.00%
|
5.00%
|
15.00%
|
10.00%
|
|||||
4
|
25.00%
|
35.00%
|
40.50%
|
19.50%
|
|||||
5
|
15.00%
|
-
|
-
|
15.00% (in arbitration)
|
|||||
6
|
15.00%
|
-
|
-
|
15.00% (in arbitration )
|
|||||
9
|
20.00%
|
-
|
-
|
20.00%
|
● |
JDZ Block 2: 22.0%
|
● |
JDZ Block 3: 10.0%
|
● |
JDZ Block 4: 19.5%
|
● |
JDZ Block 5: 15.0% (in arbitration)
|
● |
JDZ Block 6: 15.0% (in arbitration)
|
● |
JDZ Block 9: 20.0%
|
· |
Farm-outs of part of the Company’s assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone
|
· |
Issue shares of common stock through a registered direct offering
|
· |
Other available financing options
|
• |
Farm-outs of part of the Comp
any's assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone
|
• |
Issue shares of common stock through a registered direct offering
|
• |
Convertible loans and other debt instruments
|
• |
Other available financing options
|
(i)
|
The Company’s system of internal controls failed to identify multiple journal entries that were identified by the Company’s external auditor.
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Submission of Matters to A Vote of Security Holders
|
Item 5. |
Other Information
|
Name
|
Title
|
Date
|
/s/ Peter Ntephe
|
President
|
February
21
, 2017
|
Peter Ntephe
|
Chief Executive Officer
|
|
/s/ Sylvan Odobulu
|
Vice President (Admin) and Controller
|
February
21
, 2017
|
Sylvan Odobulu
|
Principal Accounting Officer
|
1 Year ERHC Energy (CE) Chart |
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