We are somewhat jaded as the São Tomé and Príncipe Exclusive Economic Zone (EEZ) blocks have not yet seen drilling.
But we should keep in mind a few of factors.
1. All the great areas for oil discovery were unexplored since creation of the earth before some oil company started drilling there. This is a very selective industry in a huge ocean. The EEZ is in one of the world's most prolific areas for oil discovery and production, the Gulf of Guinea. So it is only a matter of time as we already see exploration moving into deeper water and south, with most of the 'low hanging fruit' targets already drilled.
2. The EEZ is mostly ultra-deepwater, although the two massive ERHE 100% blocks are the closest to land and less deep water. Ultra-deepwater exploration is still relatively new and there is still a shortage of drilling rigs. The most prolific regions have been explored first, but with many new rigs coming on-line, exploration companies are increasingly looking for new basins to drill.
3. ERHC has a proven history of attracting ultra-deepwater operators to drill wells. The 5 wells ERHC had drilled in the JDZ were the most wells drilled in those previously unexplored blocks. This was very early in the move to ultra-deepater, which is still a new frontier in the Gulf of Guinea. The JDZ wells were the most ultra-deepwater wells that any small oil exploration company go drilled anywhere in West Africa.
ERHC is using this experience and actively promoting the EEZ. As they are moving forward with signing the PSCs, which starts the work commitments, this suggests they are making progress in attracting interest.
With considerable drilling going on just across the water in Equatorial Guinea and Gabon, interest in ERHE 's blocks should increase as this is the same geology.
Things could move fast as a JV operator can conduct studies and move drilling rigs into a new area quite quickly. Just the announcement of an operator signing as JV with ERHC would send the share price on a rally. And we know the largest ERHE share price increases occur during the pre-drill exploration run-up.
Just a game of patience, with the Kenya and Chad blocks already with accelerated exploration plans.
