A poster on another board asked about the possible effects of the SPE/UN merger on CIVC share price. I posted this response. I wondered if anyone on this board might have thoughts about it.

My guess is that it depends on the price that the newly merged company opens, and how that compares with the price of CIVC shares in proportion to the number of shares on issue. If they had the same number of shares and the price of CIVC shares was ten cents (I'm just using 10 cents so I can stick to round numbers) and the new company opened at 10, then there would be a rush to buy. Those who got in on the ground floor would benefit. But I think the buying pressure would soon bring the SPE/UN shares to 20 cents, and there would be no advantage, as the potential percentage gain would be the same for each company in proportion to its interest. Say CIVC had exactly half the interest of SPE/UN and the oil discovered was worth $1m profit, then CIVC would have $200,000 and SPE/UN would have $400,000.
Of course the other factor is the number of shares. Say CIVC had twice as many as SPE and SPE/UN opened at 10, then there would be the same rush to buy until SPE reached 80 cents. So, if CIVC had 200 shares and SP/UN 100, then when the $1million was carved up, each share in CIVC would be worth 1000 cents or 10$ and SPE/UN would be worth 4000 cents, or $40 dollars. But divide the price paid, 20 and 80 respectively, and you find that the shares have gone up by the same amount - fifty times their market value before the find.
So, if SPE/UN open cheaply, I think the answer is get in quick.

This is just a bit of naive maths, and I hope my calculations are correct. Perhaps more knowledgeable investors are aware of other factors that might have an effect. Interestingly, using this kind of maths and if my calculations are right, Energioil shares are proportionately slightly more expensive than CIVC shares at the moment, probably to take into account their extra interest in Garden Hill.

Regards
Dunnock