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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (31693)	8/2/2008 11:59:59 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78748

Okay, regarding Bakken. Here are a few comments relating to my and your picks: My overarching idea: I want to have several stocks - a package of positions - in several of the now promising shale plays. Some large stocks - XCO, for example, are involved in several shale plays. Some of the smaller firms are in just one. Some of the companies have earnings, some do not. They are not all value picks. Although I've placed most of my bets on the exploration companies, I also have bet on the suppliers and transporters. Such as HAL for horizontal drilling, BWP for pipelines. Regarding just Bakken and the stocks you mentioned, I hold ENB also. I see now according to its website, ENB says they will, or hope to, benefit from the Bakken development. You've mentioned Mr. Buffett's the BNSF (BNI). Positive article in today's Barron's on railroaders - several mentioned favorably including BNI. I missed BNI. I have just a few shares of CNI. "Its roughly 20,000 miles of track spans Canada and mid-America, connecting three coasts: Halifax on the Atlantic, Prince Rupert on the Pacific and cities on the Gulf of Mexico. By purchasing several short-line rails, CNI has gained access to better serve the tantalizing Alberta oil sands region." As regards, "Who are the aggregators and pipeline operators that will benefit from the huge volume of natural gas that needs to be moved and distributed to the end users? I want to stay away from MLPs if possible.", my favorite by far is MDU. MDU supplies electricity, cement, construction expertise, pipelines. And they have a subsidiary - Fidelity Exploration & Production Company - which is active in the Bakken. (I'm not a buyer of MDU here at current price. And just because it's my favorite, doesn't mean I have an overly large position in the stock. Often my favorites going in, turn out to be my worst performers.) MDU is classified as a utility, so I don't expect a lot from it. I expect it'll be okay for me though. Crescent Point I also like. That Canadian trust has Bakken exposure and is increasing it's build out, and has also increased its dividend. (.23/sh is about $2.34 annualized after the 15% Canadian withholding on a stock going for $34.23.) Not a great yield, but that's the offset I presume for an investor/speculator buying into the trust's possibly very good Bakken future: crescentpointenergy.com Worth it to me anyway to take the dividend and hold on to see what happens to their Bakken holdings. Here is a list (in no particular order) of stocks that I classify as my package of Bakken-Williston oil/gas stocks. I have shares in each company in this list. In varying $$ amounts. (Fewer $$ bet on the smaller stuff.): finance.yahoo.com The volatility of these oil stocks is something to behold and experience. =g=

To: E_K_S who wrote (31693)	8/3/2008 1:45:20 AM
From: Spekulatius	Read Replies (2) \| Respond to of 78748

E K S A few comment regarding MLP's You stated: The MLPs throw off good income, but as their projects grow, the master partners (usually the large oil companies and distributors) receive a much larger percentage of the return than the limited partners. Not correct. the general partner can receive up to 50% of the incremental cash flow once the distribution of the MLP exceeds the maximum split. So the general partner can never take the majority of the profits, at most 50% and even that is possible only once the distribution exceeds the maximum split by far. if you do not like the fact that MLP's are taxed by IDR's there are 2 ways to avoid that: 1) By into an MLP that just IPO'd. those start up in the lowest split and only if the GP manages to bumb up the distribution/unit significantly he will receive an increasing share of the cash flow 2) Invest into the GP itself and take advantage of the growth dynamics of MLP's. Many choices here: AHD, ETE, EPE, MGG, BGH etc. MLP's are not for everybody - there is a minimum investment required to make the tax hassle worthwhile. But over time, these MLP's earn 7-8% (and sometimes more) distribution yield, which is mostly return of capital, so not taxed and manage to increase their distributions in the low single digits. So an overall LT return in the 15% range is possible without any stretch of imagination. Those returns i think will beat the S&P500.