The Bid Round attracted very high bids for the top blocks, namely, US$123 million for Block 1 (ChevronTexaco), US$113 million for Block 2 (Foby Engineering) and US$100 million for Block 4 (ECL International). ERHC submitted bids of US$60 million for each of Blocks 1 and 2. Mr. Chude Mba, president of ERHC, said: "The results of the opening of the bids present significant opportunities for shareholders. The top bid by ChevronTexaco is very reassuring indeed. Depending on ExxonMobil's decisions to participate in the JDZ, ERHC will exercise its options in at least two of these three blocks and we are hopeful that we may be able to increase our percentage interests through the bidding process."
Interpretation carried out by WesternGeco has enabled the identification of fifty-six prospective structures within Blocks 1 to 9, of which seventeen were defined as prospects and thirty-nine as leads. Of particular interest to ERHC, however, is the recoverable reserve potential of Blocks 1, 2 and 4. WesternGeco identified six High Confidence prospects in these three blocks alone with estimated cumulative recoverable reserves potential of 4.5 billion barrels of oil. WesternGeco used reservoir parameters similar to those known from nearby fields in Nigeria and Equatorial Guinea. Combined recoverable reserves potential of the seventeen prospects was estimated by WesternGeco to be 14.4 billion barrels of oil. WesternGeco partitioned these reserves on a block-by-block basis for ERHC's exclusive use in the bidding and option selection process relating to the JDZ licensing round.
Mr. Mba added, "The Bid Round and contents of the report provide a basis for continuing optimism about the future of the company. ERHC will continue its work in maximizing its rights in the region to the benefit of all shareholders. The report confirms what has been said by many; that the JDZ is one of the most exciting and prospective hydrocarbon regions available anywhere in the world today.
"The report also confirms that the energy expended over the years on the establishment and development of this region by both governments and our company has the potential to be very rewarding to both countries and all participants. ERHC is pleased to be such a significant participant in the JDZ by virtue of its option rights and will continue to position the company to benefit from the opportunities to be found there."
The scope of the WesternGeco report was to interpret and map seismic data, highlight prospectivity and calculate volumetrics. It did not include any attempt to comply with any SEC definition of reserves. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions.
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