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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: stevie who wrote (5364)	9/6/1998 10:17:00 PM
From: Scott Mc	Respond to of 24899

Stevie, sorry, haven't followed them in any detail, the merits are of course the return of capital(payouts) so for taxable accounts there are some real benefits. If we have seen the O&G lows now is a good time to buy a basket of them, and Im hoping we have seen the bottom. Scott

To: stevie who wrote (5364)	9/7/1998 3:44:00 PM
From: Marcman	Read Replies (2) \| Respond to of 24899

Stevie, Most of the poeple on this thread fancy themselves wildcatters and oil patch swashbucklers so you won't hear a lot about gas and oil trusts. Most of the information here is good information, but it's about individual producers, especially those that grow by the drill. I did a bit of exploring around to find information about oil and gas trusts about a year ago, which was, of course, before prices tanked. The advice I was offered most often was to go with the trusts with the longest track record. Apparently in the States, where they have a longer history of o&g trusts, some have actually gone under when the fields they purchased dried up. (Of course, more than a few regular o&g producers have gone under, too.) What a long track record proves is that the trust manager knows how to buy oil fields with good reserves so you don't end up investing in something that is no longer there just a couple years later. The oldest trust in Canada is Enerplus (ERF.G) and the second oldest is Pengrowth, which has become the de facto benchmark for trusts in Canada. Enerplus also manages Enermark, which was created when Mark Resources was converted to a trust. (they've been around since the mid-80s) What I think is easily AS crucial as track record at this time is the trust's asset mix. Enerplus, for example, is weighted about 70-30 oil to natural gas, which means that its units and distributions won't benefit as much from the expected uptick in natural gas prices this winter. That's the strength of the two you've mentioned, SHN.UN and PWI.UN. I believe they're both heavily weighted toward natural gas, which is a good idea these days, especially with yet another pipeline to the US coming in a couple years. I suspect natural gas prices will remain strong over the longer term. Of course, oil has nowhere to go but up, so both of these trusts appear poised, at least asset-wise, to deliver stronger results. Of course, that's just from a cursory look at their web sites, etc. I know nothing about their management so I can't help you with that. I think now is a very good time to buy trusts, if you're going to buy one. They are a direct commodity play, meaning that your fortunes are VERY MUCH tied to the fortunes of the commodity itself. With an individual producer, you can have expectional growth on the basis of a good find or strong production numbers. With a trust, you're really just betting on the commodity (and to a lesser degree, the currency, but let's not get into that.) So if you believe that nat gas has a rosy future and oil will once again rise, then a trust makes sense for you, in lieu of trying to buy oil or gas futures on the commodities market. If you're going to hold it OUTSIDE of an RRSP, there are some very favorable tax treatments to keep in mind. Good luck looking around and let me know what you decide to do. GLTUA, Marcman