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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Diana R. Chambers who wrote (2170)1/30/1997 7:22:00 AM
From: Kerm Yerman   of 24922
 
Diana / Energy Trusts

I'm not up on energy trusts. However, permit me to make an observation. These trusts are now competing directly with the producers for land and are driving land costs sky high. The producers are also benefiting because they are selling "mature properties" to these trusts at very good pricing or, ---the producers themselves are selling to an energy trust which they themselves organized, again using mature properties and infrastucture as the sold off assets. In turn, the producers reinvest into newer acreage, acquisitions or paying down of debt.

To me, this is a scary situation for those investing into the trusts. I would not consider any new trust and consider only the established trusts over at least a year old. There would be exception, Morrison Petroleums completely reorganizing into a trust would be an example.

Both the oilsands trusts are favorable in my eyes because of the long term commitment involving oilsands developement. The only thing I would be concerned with is the differential price between heavy and light sweet crude. Currently, there is a narrow gap when compared with historical pricing.

Getting away from the subject of the trusts. You might want to give Canadian Occidental Petroleum a look. The company is one of Canada's larger Senior Oils and underperformed the markets in 1996. They have international exposure and just reported great results in Yemen.
(see Kerm's Korner) I believe there is minimum downside risk with real good upside potential. Common shares pay a dividend and I believe there are preferred shares listed in U.S..

Last, regarding Exxon. Exxon is on everyone's buy list in U.S.. However, from interviews and articles I've been able to hear and read, Mobil Oil is the better investment.

Just one man's opinion.
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