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Royalty Trusts


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#11 PorkLoin

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Posted 06 November 2006 - 08:41 AM

http://www.canadianb...i...ols=&print=

John, the CBO article graded trusts "on their ability to provide healthy distributions for a reasonable price." Maybe the relatively low yield of Peyto hurt its rating.

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It's been a comparitively rough last 15 months, but I don't think the trust's focus has changed. If we're now in a years-long bear market for natural gas (and as I recall you think we have weakness into next year, at least) then the party's over.

Peyto is the lowest-cost producing trust that I know of. Not much over $2 Canadian for each barrel of energy equivalent. Can't beat that. It's always been conservative with dividends, preferring growth, and expecially growth via the drillbit rather than buying reserves. For the share price it really paid off through mid-2005.

I think the long-term future for NG prices is bullish, but let's say we have a warm winter in the US. Stocks are sky-high right now, and without a cold winter's drawdown I'd say we see a big NG price decline coming out of winter. Peyto had an incredible run from its inception, but that's quite a top and move down in progress. NG going down would impact the shares.

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Peyto has a pretty good website, and here's one slide from a slide presentation available for downloading/viewing. I note that in many rankings Daylight did very well -- better than I would have predicted.



Best,

Doug

#12 jmicou

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Posted 06 November 2006 - 08:48 AM

Nicely done! And thanks for sharing. regards, jmicou

#13 SilentOne

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Posted 06 November 2006 - 09:10 AM

doug,

I bought a little YLO.UN on Thursday at $12.55. I will look to add an energy trust or two today. Note Friday's trade and the volumes in YLO.UN and AET.UN.

cheers,

john

SH Top-Five Income Trust Advancers
Friday, November 3, 2006
By Sean Mason






Income trusts managed to trim some of its two-day losses Friday, as the sector gained more than 4%.

Yellow Pages Income Fund (TSX: T.YLO.UN, BullBoards) was the most-actively traded trust on Friday, as its unit price rose 3.2% on more than eight million units traded. ARC Energy Trust (TSX: T.AET.UN, BullBoards) and CI Financial Income Fund (TSX: T.CIX.UN, BullBoards) also traded vigorously, both of which gained more than 3%.

Shares of BCE Inc. (TSX: T.BCE, BullBoards), one of Canada's top telecommunications companies that recently announced plans for an income trust conversion, were unchanged on Friday. Telus Corp. (TSX: T.T, BullBoards) shares, however, slipped 35 cents to $57.38.

Here are some of the best performing Canadian income trusts on Friday, November 3, 2006:

1. HLD Land Development Limited Partnership (TSX: V.HLD.UN, BullBoards) + 25%
2. High Arctic Energy Services Trust (TSX: T.HWO.UN, BullBoards) + 17%

3. Cineplex Galaxy Income Fund (TSX: T.CGX.UN, BullBoards) + 16%

4. North West Company Fund (TSX: T.NWF.UN, BullBoards) + 15.6%

5. Drive Products Income Fund (TSX: T.DPI.UN, BullBoards) + 15.2%


"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#14 SilentOne

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Posted 06 November 2006 - 12:47 PM

doug, The only issue that I have read for DAY.UN is their debt situation. They have limited borrowing room amd may need to raise cash. cheers, john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#15 PorkLoin

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Posted 06 November 2006 - 01:04 PM

For oil & gas trusts I see mostly green today among the bigger, stronger ones. The smaller ones are in the red. Regardless it's mostly an upward day going on, and I think we'll still see a test of the recent lows or at least a move down to better buys.

#16 SilentOne

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Posted 07 November 2006 - 11:49 AM

doug, I'm long the following energy trusts AET.UN, PEY.UN, FEL.UN, and SND.UN. I've shoved them in our RRSPs and we'll see where we end up mid-winter. I also added YLO.UN, Yelo Pages a business trust for good measure. :D Let's hope they were bargains this week. cheers, john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#17 dasein

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Posted 15 November 2006 - 10:03 AM

sensible to me - still, did like the dividends <G> Oilpatch outrage? Give me a break Claudia Cattaneo Financial Post Wednesday, November 15, 2006 CREDIT: Mikael Kjellstrom, CanWest News Service John Dielwart of ARC Energy Trust, left, Sue Riddell of Paramount Energy Trust and Gordon Kerr of Enerplus Resource Fund announcing the formation of the Coalition of Canadian Energy Trusts in response to Ottawa's recently announced changes to tax rules for trusts. At the height of the income trust debacle, some members of Canada's oilpatch were so outraged at the Tory government for messing with the income trust model they accused Prime Minister Stephen Harper of cooking up a new National Energy Program. There were widespread warnings the entire industry would be so weakened by such an egregious move it would be swallowed up by foreigners. Some even predicted a Tory election loss due to a widespread backlash from income trust unit holders in Alberta. Oh, please! The fact is, the oil industry has been deeply divided from the get-go about whether oil and gas trusts have been a blessing or a curse. Even as trust executives -- and others who fed off the system -- were beating the war drums, many others in the oil and gas industry were, at the very least, indifferent. Some were saying: good riddance. A few were applauding the return to tax fairness. Others were squirming at the over-reaction. The rift in the oil industry may be one of the reasons why the newly formed Coalition of Canadian Energy Trusts has apparently failed to even get a meeting with the federal government. Since 2000, the trust sector has been a big part of Canada's oil and gas industry, replacing mid-sized companies. It now accounts for about 20% of overall production. It's made a big contribution to the development of mature fields. Trusts have made it possible for the sector to spread its wealth, rather than re-investing most of it in holes in the ground. Best places to live: UN How to grow a franchise More breaking business news headlines But while adored by unit holders, trusts never achieved much industry standing because of perceptions they are not real companies, just distributors of cash. Sector-wide, there has been a price to pay for trusts' expanding role. Unlike the mid-sized companies of the past, which were aggressive explorers, trusts -- with few exceptions -- have been deadbeats as far as finding new pools. Instead, they have been voracious acquirers of reserves from those that still did the heavy lifting, senior and junior exploration companies. Trusts used their cash flow for distribution to unitholders rather than to build a business on their own. Because their tax-favoured status allowed them to be big spenders, they contributed to bidding up prices for land and services, raising costs for everyone. Many oil companies complained they could no longer win lands because they could not compete with trusts. Oilfield services costs in Western Canada are so high conventional companies are slashing back spending with a vengeance. High oil and gas prices propped up the trust model. But with the struggle to find reserves intensifying every year across the basin, it was only a matter of time before the trust sector was in serious trouble. Already, some trusts were making acquisitions outside the business to maintain distributions. In fact, Ottawa's trust phase-out may have averted a trust sector meltdown of its own doing. A shrinkage of trusts is sure to promote more exploration, which is what the basin needs if it's to continue to at least replace what it produces. Junior companies will have little choice but to get bigger rather than sell out to a trust, which has been their main exit strategy. The best trusts will convert back to corporations and rediscover how to build their own reserves. Big companies will have to continue to work their mature properties rather than put them on the market, often for no other reason than to take advantage of trusts' deep pockets. The biggest advantage of Ottawa's trust move is that market pressure to convert is off, halting the domino effect. It was getting to the point at which even growing companies, the gems of the oilpatch, those that had no reason to be trusts, were under the gun to justify the status quo. EnCana Corp., the largest in the sector, was ready to succumb, as it revealed last week. As for an increase in foreign takeovers, it's an empty threat for the most part. Foreign companies that want to grow in Canada will want growing businesses, not mature properties, and few trusts will appeal to them. Ottawa's trust shakedown may even discourage foreigners from acquiring in Canada. They dislike changes to the rules of the game. Those that are still keen to expand here will do it based on much broader objectives, such as their view of oil prices and the promise of the land. National Post 2006
best,
klh

#18 SilentOne

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Posted 15 November 2006 - 01:44 PM

Hi karen,

Oilpatch outrage? Give me a break


I would have to say given everything I have read, the Tories messed up with the energy sector. They did not think through the full impact of their proposed tax scheme. This will probably only come to light in the coming weeks/months.

I like the gas weighted trusts in here.

BTW, I think SND.UN will prove to be a wise choice. Are you buying primarily for income?

cheers,

john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#19 SilentOne

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Posted 15 November 2006 - 03:19 PM

karen, I want to add that this article, IMO, is inaccurate. The main benefit of energy trusts was it lowered the cost of capital for the sector, thus enabling many trusts to explore and develop mature fields beyond what could be achieved by regular E&P companies. Now this is being taken away. I expect to see less gas production next year as a direct result of this tax change for the energy trusts. It will be quite bullish for natural gas IMO, as the current high inventories will come down quickly on lower production. Also, a lot of gas production was shut in the last quarter as many "gassy" trust producers opted not to produce as much gas at the prevailing low NG prices. cheers, john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#20 dasein

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Posted 15 November 2006 - 09:32 PM

Thanks for the comments, SO, I think the article is right on in the opinion area - I do not support any discrimination by governments. I think you are absolutely right in that some wells were drilled that wouldnt have been because of the financial preferences. I am also sad for retirees, since they are getting screwed by everyone, and it was nice to think they had something that was giving a decint return. I am looking for income, but I believe the gaps will fill, and thats a lot of Cap gains too. I am US taxed. I also agree with you and am looking for a higher NG exposure - people act like NG and money (aka credit) grows on trees, they are mistaken.... best, Karen
best,
klh