PRE - INCENTIVE & ALIGNED INTERESTS With respect to the recent transactions between PRE and CGX - it may be important to look at the 'aligned interests' both companies have as well as their 'forward looking incentives'.
First, PRE has invested over $70M in CGX and own approximately 35% of the company. The only way PRE is going to be able to make a return off this $70M investment is to get CGX's share price to move upwards.
Second, by virtue of the outstanding warrants - PRE should have a 'near term incentive' to get CGX's share price to trade over .60. If the share price move over .60, PRE will be able to increase their ownership position from 35% to over 40% (by virture of exercising their warrants).
Now, if you are looking at this from PRE's position, I am sure they want to see CGX succeed, not fail. Also, PRE certainly does not want CGX to give away these blocks for little of nothing. PRE, I would think, would want CGX to retain as much interest as possible moving forward in all of their blocks. Especially, in light of recovering light oil from two turbidite fans while drilling the Jaguar-1. PRE knows what they are sitting on with this play - PRE would not have made the investment if they did not believe in it.
I do not know how this will play out at the end of the day. However, I do know CGX has a 'big brother' to back them up now - and the 'big brother' has ample cash flow coming in from existing operations / great balance sheet.
Interests between both companies are aligned. Incentives between both companies are in place. This sets the playing field for a positive outcome, in my opinion. Look forward to the future.