Good Post BinzzerYour 2 cents worth is somewhat understated. I wondered myself why Crescent Point would bother with a $5 M investment in Reliable. I now think I am beginning to understand.
Obviously REL has a cash appetite, but I'm not sure that they would have done the deal at 15c (with management participation) unless some strategic objectives were met as well. My first reaction to the deal was that it was expensive for REL inasmuch as they gave up a 25% working interest in lands outside their discovery pool and incurred dilution for existing shareholders.
We know that CPG contributed 8,503 acres of land to the deal. Now that Binzzer informs us that some of these lands are contiguous to the discovery pool, it starts to get interesting.
The win for REL seems to be not only CPG's fraccing expertise, but possibly a greatly increased interest in a pool whose dimensions are only now being properly tested by seismic survey.
My sense is that both parties are smart business people. Whatever CPG gave up in potential production is more than compensated by a lessening of future land aquisition costs, better control in their backyard, plus their recoup of the investment primarily by way of capital gains and secondarily by the working interest. REL on the other hand, gets huge leverage when one recognises that their market cap is only around $70 M
I'm guessing that the interpretation of the new seismic survey is the reason behind the share price appreciation. A nulti-million barrel discovery is going to do great things for REL. There is no way that this has been discounted by the market yet IMHO, so selling now is way premature.