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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks

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To: Peter W. Panchyshyn who wrote (1364)	9/9/2001 6:24:54 PM
From: Lorne Larson	Read Replies (1) of 11633

Try this link for Empress NG prices. Hope the link works. ngx.com Yes the trusts can make money at these prices. The question is however whether they can can make money at $1.50 (CDN) NG. Most people don't realize that a drop from $3.00 to $1.50 may not just means a 50% drop in distributions, it probably means no distributions in some cases. The reason is that a trust has to cover its costs before making ANY distribution. If a trusts costs are $1.50 than a drop to that price means no distribution. The numbers work the opposite way when NG prices are going up. What this means is that depending on their cost structure some trusts are way more vulnerable to a drop in NG prices than others. These same trusts have the most dramatic upside when NG prices are going up. This math applied to MXT when oil prices were low, and as a result MXT went from less than $2.00 to more than $5.00 - the most dramatic rise, I think of any oil and gas trust. I once saw a brokerage report that analyzed trusts on this basis. Unfortunately it is now completely out-dated because of all the recent acquisition activity. Regards

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