The trick is to buy or acquire assets that are undervalued (like erhe shares). ERHC doesn't have enough cash to just run out and buy assets, so they will leverage their jdz rights (and soon to be assets with drilling) to buy without cash. They most likely will not own 100% of the acquired company, but will share ownership with other companies or public shareholders. Say they start a KINA company that IPO's for $10 billion, and erhc owns 50.1% of it and the public 49.9%. The public investors pony up with just under $5 billion in cash and erhc's contribution is their share of Kina oil. We would then share revenues proportionately. That would be good or bad depending on your point of view. We would have less risk, but less return if it hits it big. However, if we used that $5 billion to buy back our cost oil and the percentage sold for full carry, we'd have more in our pocket. We could also pay a cash dividend to existing shareholders of $7/share. The devil is in the details.
If we acquire a totally different company. as long as we get a good buy on it, it will add more assets than what we pay, so it will accrue to the bottom line in our favor.
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