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EX-10.23 2 ex10_23.htm EXHIBIT 10.23

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EXHIBIT 10.23

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On July 6, 2011, ERHC Energy, Inc. (the “Company” or “ERHC”) announced that it had signed, through one of its subsidiaries, a Production Sharing Contract (PSC) on three oil blocks with the Government of Chad namely the Manga, Chari-Ouest and BDS 2008 Blocks. What follows below is a fair and accurate English summary of said PSC, pursuant to, and as permitted by, § 230.403(c)(3) or § 240.12b-12(d)(3) of the Securities Act of 1933, which “fairly and accurately summarize(s) the terms of each material provision of the foreign language document” and “fairly and accurately describe(s) the terms that have been omitted or abridged.”



SUMMARY OF ERHC CHAD PRODUCTION SHARING CONTRACT (PSC)



1. PARTIES TO PSC | ERHC ENERGY (BVI) LTD.

| -and

| THE REPUBLIC OF CHAD 



2. DATE OF EXECUTION | 30 June 2011



3. PSC ITEMS | PERIOD | WORK PROGRAM COMMITMENT



a. Exclusive Exploration Authorization

Initial Period | 5 years | USD15 Million + 50% Bank Guarantee

Renewal Period1 | 3 years | USD1Million + 50% Bank Guarantee



Signing Bonus | USD6 Million

Administrative Fee | USD480 Thousand

Recurring Yearly Fees

Annual Meeting | | USD75 Thousand

Ministry Training | | USD250 Thousand

Chadian ERHC Personnel and Training | | Max USD 100 Thousand

Surface Royalty (Initial Period) | | USD1/km2

Surface Royalty (Renewal Period) | | USD5/km2



Drilling Obligations | One exploratory well during Exclusive Exploration Authorization



b. Extension of Exclusive Exploration Authorization | 2 years | Conditioned upon Feasibility Study

Recurring Yearly Fees

Surface Royalty | | USD10/km2



Exclusive Exploitation Authorization2 | 25 years |

Award Bonus | | USD2 Million



Recurring Yearly Fees

Abandonment Work Reserve Fund | | Production based formula

Ministry Training | | USD500 Thousand

Chadian ERHC Personnel and Training | | 1% of Operator’s payroll

Surface Royalty | | USD100/km2



c. Renewal of Exclusive Exploitation Authorization | 10 years | Conditioned upon commerciality

Recurring Yearly Fees

Surface Royalty | | USD150/km2

________________________



1 Upon ERHC’s request and compliance with work program commitment for the Initial Period.

2 Upon ERHC’s request and Chad Ministry Approval.



__________________________________________________________Recent Developments

Recently, ERHC offered to novate the PSC by retaining only the BDS 2008 Block and voluntarily relinquishing the Manga and Chari Ouest III Blocks to the Chadian government for efficiency. The novation of the PSC has been approved by the Chadian Ministry of Energy and Petroleum. In April 2014 ERHC received the arrêté (decree) of the President of Chad giving presidential seal of approval to the Company's retention of oil exploration Block BDS 2008 and its voluntary relinquishment of the Manga and Chari-Ouest III Blocks. The BDS 2008 Block has an area of 16,360 square kilometers or 4,042,644 acres.





Cost Recovery and Production Sharing

In the event of a discovery and commercial production from the Company’s blocks, the Company and any partners that have participated in the exploration will be entitled to recover up to 70% of the net hydrocarbon production (less any production royalty) as cost of oil, until all the costs for exploration and development have been recovered. Production royalty is 14.25% in the case of crude oil and 5% in the case of natural gas. No guarantee can be given that; there will be production in commercial quantities from the Company’s exploration acreage in Chad.





Transfer of Rights and Obligations

The Company may at any time transfer all or part of the rights and obligations deriving from its Exclusive Exploration Authorization and, if applicable, from any Exclusive Exploitation Authorizations as well as contractual rights pertaining to such Authorizations, subject to the State’s approval.



[END OF SUMMARY]