ERHC Energy Inc. (ERHE) will be in the spotlight heading into next week as they approach their October 9th Shareholder Meeting at the Renaissance Houston Hotel. The special meeting is said to include a vote to increase the number of authorized shares of ERHE stock and to authorize the Company’s Board to create and issue preferred stock. Seeing as how the oil and gas has been rallying for the last few weeks, traders should pay close attention to what transpires over the next few trading sessions.
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ERHE Stock Chart
Market Cap: 101.60M
Close: 0.1375, up 0.0025 (1.85%)
Average Trade Size: 13,879
Issued and Outstanding: 738,933,854
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ERHC Energy already has a huge number of shares outstanding compared to most penny stocks, but they also had a huge amount fo cash to go with it as of June 30, 2012, $8,541,700, something very uncommon for most OTC pennies. So why the big deal when no revenues have yet to be generated?
On June 28, 2012, ERHC entered into a production sharing contract with the Government of the Republic of Kenya, Obama’s Father’s homeland, for certain land based hydrocarbon exploration and development. ERHC, as of June 30, had paid in full the requisite signature bonus of $310,000 and is committed to spend at least $10.25 million over the first 2 years on a minimum work program and an additional $60 million in each of the following 2 periods of 2 years each. That’s over $130 million!
Earlier today, Chrome Oil Services Ltd. and Chrome Energy LLC, subsidiaries of The Chrome Group, a leading West African oil and gas conglomerate, announced their support for ERHC Energy’s proposal for raising funds for its exploration programs. Combined, the two companies beneficially own approximately 43% of EHRE outstanding stock. So, the question many shareholders will have on October 9th who attend the special meeting will be: “When is ERHC going to book some revenues?”
About ERHE Stock
ERHC Energy Inc. is in the business of exploration and exploitation of oil and gas resources in Africa including its rights to working interests in exploration acreage in the Republic of Kenya, Republic of Chad, in the Joint Development Zone between the Democratic Republic of Săo Tomé and Príncipe and the Federal Republic of Nigeria and in the exclusive economic zone of Săo Tomé and Príncipe. The Company’s strategy in the joint development zone and exclusive economic zone is to farm down its working interests to well established oil and gas operators for upfront cash payments and be carried for their share of the exploration costs.
Bottom Line: ERHE could come very close to, if not breaking, its 52 week high this week and should be a penny stock worth watching. Increasing their authorized capital would obviously mean more dilution of ERHE stock, but with no revenues and net losses of around $1 million each quarter, can it get much worse?
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