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Make money off of EERG's merger with AMZG?  

post #1 of 6
Thread Starter 

So I have been looking at a company for a friend who just invested and she really wanted me to invest in it as well. After going through EERG's financial statements it seems they had a really good year with over $5,000,000 in net sales and and an EPS of 0.06. I thought that was extremely well seeing as their stock is only trading at .35ish.

 

But regardless on how well their stock is doing I think there is money to be made with their merger with AMZG. When the merger goes through AMZG will be absorbed by EERG, but AMZG shareholders will keep 80% of their shares and EERG will keep 20% of their shares. At first I thought that EERG shareholders were going to lose money, but by working with the numbers I think they will make money. Currently EERG trades at about 0.35 and AMZG trades at about 2.42.

 

80% of 2.42 is 1.936 and 20% of .35 is 0.07. Adding those two numbers up only gives us 2.006. So first off that 2.006 should increase at least back up to 2.42 (although I think it will go higher). Which means that anyone who buys EERG will make money even though their stock is being reversed 5 to 1 (which is where our 80% and 20% come in). For example, if you invested $1000 at 0.35/share you would have 2857 shares of EERG. With the reverse stock split you would have 2857/5 which is 571 shares. Multiply this by 2.42 and you have $1382. That is a gain of over 38%!

 

So my question is (finally) that I am wondering if my thinking here is sound? Can anyone support this? On another note, after the merger the new company plans to jump up to a senior stock exchange. Will this increase the stock as well?

 

Thanks!

post #2 of 6
Thread Starter 

I just thought I would provide an update on EERG. Some of you may already know but EERG hit a highFriday of 0.45. The low for the day was 0.35. That is an increase of over 29% in just one day! Now, it didn’t just hit a high for no reason.

 

EERG announced Friday that it has fixed a rod on the Hardy 7-9 well. It is now producing approximately 40 barrels a day. At today’s oil prices (approximately $120/barrel) that means EERG is taking in about $4800 daily. Multiply that by 5 workdays and you have $24000 a month. Going further that is $1,152,000 a year that EERG is bringing in.  

 

This is significant because the Hardy 7-9 well went offline in early February. At that time it was producing approximately 58 barrels of oil per day. Because the Hardy 7-9 well is now completed there will be increased funds flowing into EERG which will substantially increase its revenue and subsequently it’s EPS.

 

Furthermore, the drilling operations in the Bakken and Three Forks Formations in Divide County, North Dakota, should FURTHER increase the company’s revenues. According to oilshalegas, the Bakken formation could hold up to 3.65 billion barrels of oil, making it the largest finding in US history. This gives rise to some potentially huge gains for EERG.

 

Add this to the merger that is coming with AMZG and you have yourself a huge increase in the price of their stock.

 

Need I say more?

 

For a full review of the articles click on the links below. Thanks everyone!

http://www.digitaljournal.com/pr/272934

http://oilshalegas.com/bakkenshale.html

 

post #3 of 6
If you think you found an arbitrage opportunity, you didn't.
post #4 of 6
Thread Starter 
Quote:
Originally Posted by RebelT09 View Post

If you think you found an arbitrage opportunity, you didn't.


Could you be more specific?

post #5 of 6
Thread Starter 

EERG has just announced that it will be merging with AMZG and EERG will be the surviving entity. This increases EERG’s leverage in the Bakken properties in both Alberta and Saskatchewan, meaning that the company has greater opportunity to strike an oil well. The company has also declared that it will be applying to move into a senior stock exchange.

Making it onto a senior stock exchange and out of the pink sheets signifies a great company. By merely being on a senior stock exchange tells people that this is a well ran company and lowers the risk considerably. This is a great time to buy EERG stock, as the company is making some big plays right now.

The company has said that it will buy back some of the stock to jump to the senior stock exchange. All this means is that you will have less stock but the price of each share will increase proportionately. Now is the time to buy in, as the jump to the senior exchange will drive the price higher than normal.

post #6 of 6

Please post in the existing EERG thread.

 

Thank you.

 

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