travel12343, you are right....most buyout premiums are at less than 100% but that is at the time of the announcement.
Here is where the difference really lies: ERHE is currently priced at an arbitrary (market forces, of course . . . lol) speculation of what might be found in rights to expensive and lengthy development cost areas of the deep sea. It all boils down to the value of the assets this holding company has. Up until ERHE (well, actually it’s partners) drilled into these blocks, there was no legal way for ERHE to report the value of these assets on their books. Therefore, the price has vacillated between .10 & .90 for years and years. Up until 2010, ERHE has been a pure speculative play.
Unless all properties held are commercially unviable, the world is about to change for ERHE. When ERHE’s drilling partners (get off the ball) or the JDZ finally release actual data regarding the 5 wells drilled and when they state it is of commercial quantities, ERHE and the general market forces will finally be able to place a more substantial number to the value of these assets. Once an actual block is declared “commercial” and the NSAI numbers are recalculated, I believe, ERHE will be able to put an actual value (P50 etc….) of the drilled blocks on their balance sheet. This is MONUMENTAL to the true valuation and the speculation of the remaining blocks not drilled.
When this happens (which sounds like the very near future now) ERHE will be at a new stage in the companies life cycle. Right now it is anybody’s guess as to what the value will be (maybe $1, maybe $3, maybe $5 . . . who really knows).
Now, if Sinopec (who holds all the details of the wells drilled) has come to the determination that the blocks are commercial and to what quantities, they truly can be in negotiations with ERHE (or SEO …whatever) right now and they may be discussing multiple $ per share. If the data is released and the general market determines ERHE’s value at $3/share, then Sinopec can offer $4.50 at that time and you will get your 50% premium to the market. ALL VERY POSSIBLE and quite frankly…plausible.
The good news for all current ERHE shareholders is that the results MUST be published for both the buyer and sellers benefit. The shareholder and/or the Chinese government could not possibly justify a purchase price of $4.50 for a .65 security. And, ERHE couldn’t possibly justify a buyout less than that to its shareholders without a HUGE legal battle if the results aren’t made public.
You can use any numbers you want in this example but the bottom line is, it is in every parties overall best interest to release data and it sounds like that is about to happen.
Good luck to all.
