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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (713)	9/22/2005 10:35:33 PM
From: Taikun	Respond to of 217713

I have read McDep and did an analysis awhile back (below). Their RLI is 14yrs, HGT is 16. Compare that to Canadian trusts with 8 year RLIs spending millions to increase RLI when BPT has so much land all they need to do is drill some more. Original analysis below, from 6/1/05: I have analyzed the US trusts like SJT, BPT, HGT, SBR. Although one can make the argument they are hamstringed and cannot replace reserves through acquisitions like the Canadian trusts they are still finding more reserves on their property. They generally run a tight ship with much less debt, less exploration costs than Canadian trusts which, if you look at PWT for example, they spent maybe $2bn and produced about $2bn last year. Anyway, here is the distribution increase from the most recent 12 months (ie June 04-May 05) compared to the same period 24 months prior (ie June 02-May 03) on 4 US trusts: SJT 164% ($1.44 to 2.35) Proved RLI 8.8yrs, 6.5% yld HGT 167% ($1.35-2.25) Proved RLI 16.7yrs, 8.1% yld BPT 220% ($2.45-5.39) Proved RLI 14.5yrs, 8.2% yld SBR 146% ($2.02 to 2.944) Proved RLI 8.3yrs, 7.44% yld And to compare with PEY most recent 12mos to prior 12mos SJT 125% HGT 116% BPT 200% SBR 110% Some on the $trsts board don't think much of the US trusts but I have found they are MUCH better at tracking the underlying commodity price than the Canadian trusts. AET.UN 113% ($C$1.68-1.90) Proved RLI 9.5yrs, 9.6% yld AE.UN 111% (C$1.74-1.9325), Proved RLI 9.6yrs, 13.03% yld ERF 113% (C$3.7098-$4.2), Proved RLI 9.6yrs, 9.5% yld PWT 71% (C$4.80-3.425), Proved RLI 8.0yrs, 12.15% yld PEY.UN 122% (only 12 months) (C$0.99-1.21), Proved RLI 11.7yrs, 5.48% yld While the yield on HGT is only 8.1% in a tax-sheltered account (or a US taxpayer in the lowest tax bracket where dividends are taxed at 0%) HGT without withholding represent a 9.52% gross yield on a Canadian trust, however HGT has an RLI of 16.7yrs, 50% more than PEY. HGT has not had the commodity upside of BPT, though. BPT has a pre-tax equivalent Canadian trust yield of 9.65%, 14.5% Proved RLI and 220% growth in distributions since the 02-03 period. I am beginning to think I will be hard pressed to find as good metrics in Canadian trusts. The US trusts all trade at premiums to book and have a high POR. Their ROE and Return on Assets seems to be higher than the Canadian trusts I looked at. Did I forget to mention these US trusts have zero debt. For a US investor paying 15% withholding on a Canadian trust, while the current yield may be lower the upside potential on the underlying commodity seems greater and the Proved RLI’s are not necessarily shorter. The US trusts seem to have a sustainable model for the foreseeable future. To complete this analysis I used Globeinvestor, oilpatchupdates, Capital IQ and company websites.