It is a lot of money for SNP to spend...but, I think I need to relay to you the story of the Brita water filter so that you can understand.
Brita sells these pitchers with water filters attached. They claim that you could save thousands of dollars in bottled water costs, if you instead use those pitchers.
BUT, as we learn in business school, even though people stand to save thousands, the pitcher sells for something like $30 bucks. Why? Why wouldn't you spend say $2,500 on a pitcher if you are spending $3000 on bottled water? In fact, since the pitcher can last several years, isn't that pitcher worth say at least $4k?
The answer to the solution is that there are competing products that offer the same level of savings to the Brita pitcher. Brita has competitors.
Likewise, SNP has competing properties, perhaps, like the Canadian Oil Sands or something. SNP may be happy just to have its percentage in the JDZ and pick up other percents at other properties. As a result of competing properties, ERHC's price would then fall to something below that which SNP saves by buying it.
Krombacher
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