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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Think4Yourself who wrote (73174)9/12/2000 4:33:11 PM
From: Tommaso  Read Replies (1) of 95453
 
I was just doing some figuring about HGT, the gas royalty trust. The monthly trust payments lag income by about two months, or really three, until payment actually is made. The present 17 cents a share is double what it had been two months before. Every 75-cent rise in average gas prices for a month seems to increase royalty payments three months later by about 9 cents, I think. This means that if gas prices average $5.00 for this month, the December payment would be over 30 cents. This would lift the yield on the trust to about $3.60 or about 30 percent. If there is a real bad gas squeeze, it could get correspondingly higher. Even with the prospect of more drilling and more gas in the future, a yield such as that might well cend the stock price up. To get really fanciful, NG at $8.00 would at least temporarily raise the yield on HGT to 75 cents a month or $9.00 a year or about 70% of present prices.

Now I admit that this is all pie in the sky, but I think this delay in raising distributions, which also delays figures in quarterly reports by two months, is disguising a potentially exciting situation (which, I admit, might not last that long). I am therefore playing HGT as a speculation that appears to me to have almost no downside risk for the short term and could produce very exciting gains as it looks better and better for the rest of the year on the basis of its yield.
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