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

To: Cogito Ergo Sum who wrote (29780)	2/23/2008 9:18:52 AM
From: carranza2	Read Replies (1) \| Respond to of 217560

PWE is indeed worth a look, esp. as nothing untoward took place at the tear end review: bloggingstocks.com Gordon Pape, a top authority on Canadian stocks and trusts, has just returned Penn West Energy Trust (NYSE: PWE) to his buy list. The editor of Internet Wealth Builder explains, "Given the high yield of 14.3%, I suggest Penn West is a buy at this level despite the risks and uncertainties surrounding the trust." "Penn West, with a market cap of almost $10 billion, has been aggressively expanding through acquisitions in recent months. On Jan. 10, it announced the completion of a deal to purchase Vault Energy Trust and one day later it finalized the much bigger acquisition of Canetic Resources Trust. "Both these deals are expected to be accretive to shareholders, however investors are keeping a close watch on the integration process. Surprisingly, virtually all of Canetic's senior executives have been kept on which has raised questions about cost reduction synergies. "With Canetic in the fold, Penn West expects production this year of between 200,000 and 210,000 boe/d (barrels of oil equivalent per day). Of that, 42% is natural gas, 39% is light and medium oil, 14% is conventional heavy oil, and 5% is natural gas liquids. The trust has proved plus probable reserves of 800 million boe and a reserve life index of 11 years. "Penn West has two pilot projects underway which could increase its profitability significantly in the coming years. One is a CO2 enhanced recovery operation near Weyburn, Saskatchewan which involves pumping carbon dioxide into conventional oil fields. "The process can add 10% to 15% to production yields. If it can be made economically viable, it also offers a possible solution to the high CO2 emissions from Oil Sands production. "The other project of special interest is the company's horizontal drilling program in the Seal - Peace River district of the Oil Sands, where it has extensive holdings. In that region, the sands are so far beneath the surface (2,000 feet or more) that the oil exists in liquid form, not the messy gunk that producers such as Suncor must deal with. "Penn West is producing a modest 4,000 bbls/d now from this operation but if it is successful they expect to double or triple that within a few years. Potential reserves in the area are put at between 6 billion and 7 billion barrels. "Penn West will release fourth-quarter and year-end results on Feb. 21. In the third quarter, cash flow fell 5% year-over-year to $347 million ($1.43 per unit, fully diluted), although it was up 13% year-to-date at that point. Net income for the first three quarters was well down from the previous year due to a tax provision booked in the second quarter. "The shares pay a monthly distribution of 34c ($4.08 annualized) for a yield of 14.3% at the current price. There is always a risk that this could be cut, although Penn West's record has been good in that regard so far. If there is to be a distribution cut, it would likely be announced at the same time as the 2007 results are released so you may wish to hold off until after the Thursday announcement before making a purchase. "Of course, if the financials are good and the distribution is maintained, the share price will likely rise – that's the chance you take. If you want to hedge your bets, buy half your desired position now and the rest after the financials are released. "Penn West's distributions are fully taxable, so if possible I recommend that Canadian members hold them in a registered plan. For U.S. residents, the trust says the payments are qualified dividends, eligible for the low 15% tax rate. We rate the trust a buy."