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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks
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To: maxed who wrote (863)4/2/2001 8:16:27 PM
From: Lorne Larson  Read Replies (1) of 11633
 
The numbers look pretty good, except by my calculations the reserve life is only about 7 years. However they're talking about paying out $3.36/year, on a unit value of $11.00 (at 4 times todays price of $2.75). Assuming that this payout is consistent for the next 7 years (they're using $26 oil and $6.5 gas), you would receive a total of $23.52 in dividends, at which time the reserves would be depleted. So you net 23.52-11.00, which is $12.52, which annualized over 7 years is $1.79/year, which at a purchase price of $11.00 is a return of about 16% per year.

Course it won't work out this way, because oil and gas prices will fluctuate, and the trust will make acquisitions, etc etc. However at this point it's, in my opinion, the only way of analyzing these conversions. Not a bad return, actually. Again goes to demonstrate how the junior oil and gas companies are undervalued in todays market.

Will I buy it? Maybe.
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