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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (1845)	11/9/2001 1:04:29 AM
From: Lorne Larson	Read Replies (1) \| Respond to of 11633

russett: Well reasoned post, but I'm still not convinced. Let me throw PWI at you as a possible example of the point I'm trying to make. When PWI bought Cypress the purchase price included 564000 net acres of undeveloped land. The press release gushed about Cypress's "large inventory of development opportunities". To a large extent then PWI was buying "development opportunities" rather than actual existing production. I've heard rumours (which I feel free to pass on since I own a slug of PWI myself) that these "development opportunities" may not be quite the opportunity that PWI expected, and that this explains the depressed price for PWI. To me this is an example of an oil and gas royalty trust forgetting what it was created to do - namely to buy existing production at a discount from an E&P which wanted its producing assets monetized now as opposed to over the life of its production and was therefore prepared to sell at a discount, and to then flow through the cash from the production to people who are looking for an oil and gas income vehicle without the exploration and development risk. The more I think about it the more I ask myself why an oil and gas trust would buy 564000 net acres of undeveloped land that it did not intend to spin off after the acquisition. Seems like the market may be asking the same question.