Hi Jay -
One the energy side, this site has graphs of prices of major energy components. www.oilnergy.com
Here is NYMEX natural gas -
oilnergy.com
This site has storage under EIA-AGA statistics. Look for graph -
www.highlandenergy.com
Canadian / US Dolalr effects on Canadain trusts -
I think this pretty small I would expect that a 10% change in the exchange rate would mean a less than 3% cahnge in distributions.
Cost and Capital side -
1) First, some expenses, like royalties paid to land owners, the Crown, and some consultants, drillers, etc. tend to be percentages (like 1/8 or 12.5% for the land owner). These drop right out.
2) Major Capital equipment prices, like large pump jacks, pipe, compressors, etc. tend to be relatively uniform from Houston up to Alberta, with differentials limited by transportation costs. I think British Columbia will be a bit more expensive. Too easy to have a crane put stuff on a flat bed truck, have 2 guys drive it from Alberta to Houston or New Orleans to Calgary.
3) Labor is the biggest cost difference, but here's enough labor mobility to limit extreme differentials. Labor is also not that big a factor.
4) Debt Capital - Interest rates are a little higher in Canada, but not too much. Appreciation of the Canadain dollar vs. the US will tend to hurt a little.
5) Equity Capital - stock prices tend to be about 10-20% lower than the US for the equivalent property, and this differential is larger for samller companies.
Pricing side
- Much of the pricing for natural gas acts like one market in the middle of the US, and somewhat diffferent market on the US West Coast and BC. When the price is quoted in CDN or USD, it's the same at a given point.
Close to City gates, prices are higher. Closer to the wells, prices are lower.
This will mostly wash out exchange rate changes on the spot market.
A company that hedges production selling gas forward for CDN or USD will have currency exposure, however.
->> I would expect most companies with loans in a currenncy would execute their forward sales in that same currency. This will then hedge out some of the currency risk.
Stock prices are affected more by the exchange. the Canadian only stocks, like Advantage Energy (AVN.to, CA:AVN.un on Big Charts) tend to have a higher dividend than dual lsited stocks like ERF and NCN.
My conclusion is that even a big currency move won't move the trust much, unless they have made a deliberate currency bet.
Others disagree, most notably Tommaso, who has own these trust for a long time. |
