| Refiguring a little on HGT, it looks to me that if NG stays at $5.00, the December payment could be about 25 cents, giving it an annual royalty rate of about 23%, and for every dollar above $5 for NG, the monthly payment could rise about 10 cents. Varying amounts of gas production, development costs, expenses, and overhead make it hard to be any more exact, but the royalty rate would be around 50% (annual) two months after NG rose to $8, if such a thing occurred because of the impending squeeze. The implication is that the stock would be nicely, though not spectacularly, higher, with what looks to me like very little downside risk. Meantime, there is the very nice monthly income. With $8 NG the stock could double (temporarily). The long term risk is massive new supplies. |
