humsafar: this also is one of my questions; however, with this type of stock, in its current situation, i am not expecting to know the full answer ... at this time.
yes, this is a low "up-front cash" price, but, if you see the press release of several days ago which repeats the line from the 2009 press release ... it states (as i recall) the price shall be US$10MM "plus other consideration".
and, of course, that is the real question: what, specifically, is this other consideration?
the answer will not come out until the deal is finished; however, i speculate, in no way surprising, to say such consideration could be: additional stock, additional WI revenue, additional ORRI revenue, or, a combination of these or something different. which of these it is will affect the valuation of the company ... so this answer will be reflected --- somewhat --- in the new audit. with the release of some of the audit info, i am hoping that the investment community will be able to see "who gets what portion of the pie".
as a long investor in arete, i have taken the leap of faith --- based primarily on the large amount of SEC filings, new audit and other recent work that i estimate will have cost upwards of $75k that --- is being conducted for the purpose of completing an acquisition and growing this company. and, when that announcement is made, i anticipate a significant increase in the pps.
note: i see this issue of 'other consideration' to be of significance, but, not so much as the issue of commodity price forecasting model, that is, what price model --- for both oil and gas --- did the audit company use to estimate the revenue stream for the productive life of the field; where this productive life can reasonably extend beyond 10, 15 or maybe 20 years. in other words, in order for the audit company to estimate a NPV --- net present value --- they had to estimate the commodity price, rates of production, etc for the productive life of the field. as you can imagine there is much uncertainty in this; however, it is something which every company must do ... but, which is particularly challenging for petroleum because of the longer term price swings.
hmmmmm....
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