Hello DJ, Here are my interim conclusions on Enerplus:
Toronto quote uk.finance.yahoo.com
NYSE quote uk.finance.yahoo.com
Company profile oilpatchupdates.com
The data trove sedar.com
According to my Royalty Trust Model achamchen.com (this model is done for the use of all who wants to use it. I do not warranty its accuracy, usefulness, or its 'free of virus' state. Users beware), Enerplus, at approximately CAD 29.60/unit current market price, is valued to yield an annualized return of 6%. This assumes steady state exploitation of its existing reserves without any acquisition or divestment, and assumes that realized gas price and operating cost both increase at an annual rate of 2%. The trust is terminated in 2011 when its net asset value is zero (total assets less total liabilities), even though it still holds 5 remaining years of reserves and huge pieces of empty land at that time.
An one-off 10% rise in energy price will ramp annualized return to 8%.
So, the bottom line is that Enerplus is fully price, or, in fact priced quite high, due to its desirability, i.e. transparency, simplicity, perceived yield, and the implicit embedded call option on natural gas pricing.
The game is now clear:
(a) Sense the energy pricing trends (gas/oil) as they are pushed and pulled by the power of economics
(b) Watch the unit price of Enerplus as it wobbles with the mysterious forces of finance
(c) Buy or sell accordingly
Chugs, Jay |
