Thanks Kastel -
Two other big factors -
Percentage Split Gas to Oil revenues - This is a big influence. Higher gas percentages are much better, because gas is going up, while oil may come down more and is easier to ship from around the world.
Hedging - NCN and AVN don't do hedging. Good on the way up, and who knows how high is up, or how long ? Hot summer, cold winter, and if drilling doesn't pick up a LOT MORE soon Up could be
over $9.00 for about 3 winter months.
AVN also mostly gas.
The US trusts, SJT, HGT, about > 98% gas.
Add in moderate low hydro levels in the West, Nuke plant shut downs, economic recovery, and Hurricanes shutting down production in the Gulf of Mexico for a few days...
Two other great factors on the Canadian side...
1) Ladyfern, huge find in BC, pushed prices down in the North with a huge supply of gas about 4 years ago.
Huge surplus lasted about 2 years or so.
This surplus depressed gas prices in Canada, and thus the prices per Mcf of the properties that the trust bought.
Ladyfern produced very quickly, and has had a rapid decline. Now Canada has a lower percentage in storage than the US, and prices for Natural gas have come up more.
Ladyfern continuyes to decline, helping keep prices up.
This means the gas in the ground the trusts bought a year ago can now be sold for a higher price.
2) There are some theoretical potential liablity issues with insitutions (pension funds, etc. ) owning trusts. So right now, few insitituions own royalty trusts. There is legislation in Ottawa to fix this. If it gets fixed, that means more potential buyers for trusts, which will tend to push prices up.
I like ERF also. It's also bigger and more liquid than any other Canadian trust.
Another resource - The TEI board on Yahoo has a lot of postings on income investments, like royalty trusts, REITs, Mortgage reits, perferred stock, high dividend stocks, foreign bond funds.
Discussion is mostly pretty civil, but a lot of posts. Some of the posters are well informed, some beginers. Many retired people who take the time to read all thaose SEC filings etc. bond_daddy one of the better posters, I think he works on Wall Street.
Some discussion of realative merits of different royalty trusts. |
