But if Windfall is using its proceeds to buy NOT-DE PP for DE, then NOT-DE will indeed be diluted.

IMHO, it would be better that the company remains as one unit until such time that a major decides to buy them out. Less shares to get diluted, as there should be no further need for PP, if they can get Windfall producing before the warchest dries up in 12-15 months (given current burn rate estimates).