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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: dfloydr who wrote (47886)	7/13/1999 2:45:00 PM
From: double-plus-good	Read Replies (1) \| Respond to of 95453

The gas royalty plays WTU and DOM offer some enticing tax benefits that might be of interest to those who have been profitably trading the sector. As I understand it the tax benefits can be deducted in total from your taxes due. I'd be curious to hear if this interpretation is correct. I am considering putting some money into one of these trusts as a means to reduce taxes, though for now i remain on the sidelines. dpg

To: dfloydr who wrote (47886)	7/13/1999 3:50:00 PM
From: Wowzer	Respond to of 95453

Floyd, thanks for your comments while I agree the HGT doesn't offer a large upside potential, it also doesn't offer a big downside either and should pretty much move with NG prices. The main reason why I like HGT is the large proven NG properties and that the monthly distribution should be tied directly to price of NG, and given the properties this trust has, the trust should be around awhile. For me it a safe play on NG prices and also don't have to worry about the dividend since I hold it in my IRA. Anyone, I am by no means an oil expert, so if there are some glaring holes in HGT please inform. I pulled this from HGT's prospectus. Thanks again, Rory Producing Areas The underlying properties are predominantly natural gas producing leases located in the States of Kansas, Oklahoma and Wyoming. These productive areas consist of: . Hugoton Area. The largest natural gas producing region in North America, the Hugoton area covers an estimated five million acres in parts of Oklahoma, Kansas and Texas. The area has produced more than 64 trillion cubic feet of natural gas since 1922. Wells in this area produce primarily from formations less than 3,000 feet in depth. Wells also produce from deeper formations at depths ranging from 3,000 to 7,000 feet. The average 1999 net daily production for the underlying properties in this area estimated in the reserve report is approximately 36,700 Mcf of natural gas and 40 Bbls of oil. . Anadarko Basin. Cross Timbers' properties in this area are concentrated in Major County, Oklahoma as well as the Elk City Field and other areas in western Oklahoma. Oil and natural gas were first discovered in Major County and the Elk City Field in the 1940s. Natural gas wells in this region produce from a variety of productive zones and geological structures. Principal productive zones range in depth from 6,500 to 9,400 feet. The average 1999 net daily production for the underlying properties in this area estimated in the reserve report is approximately 45,000 Mcf of natural gas and 1,100 Bbls of oil. . Green River Basin. Located in southwestern Wyoming, this area includes Cross Timbers' properties in the Fontenelle area. Wells in this area have produced since the early 1970s from formations ranging in depth from 7,500 to 10,000 feet. The average 1999 net daily production for the underlying properties in this area estimated in the reserve report is approximately 30,500 Mcf of natural gas and 50 Bbls of oil. Long Life of Properties The productive lives of producing oil and natural gas properties are often compared using their reserve-to-production index. This index is calculated by dividing total estimated proved reserves of the property by annual production for the prior 12 months. The reserve-to-production index for the underlying properties at December 31, 1998 was 12.9 years. An index of 12.9 years shows a long producing life for an oil and natural gas property. This compares favorably to an average index of 9.2 years for U.S. natural gas properties of publicly reporting companies at year-end 1997. Because production rates naturally decline over time, the reserve-to-production index is not a useful estimate of how long properties should economically produce. Based on the reserve report, economic production from the underlying properties is expected for at least 40 more years. High Percentage of Proved Developed Reserves Proved developed reserves are the most valuable and lowest risk category of reserves because their production requires no significant future development costs. Proved developed reserves represent approximately 93% of the discounted present value of estimated future net revenues from the underlying properties.