| mib - Montag, 21. Juli 2003 - 17:32 |
| zu eurer Info: Subject: How to Buy Canadian Oil & Gas Trusts How To Value Canadian Oil & Gas Trusts E-Letter 039 July 20, 2003 www.investingforincome.com ------------------------------------------------------------------- A lot of subscribers have emailed us asking how we value Oil & Gas Trusts. Keep in mind that we are not analysts or trained professionals so please be careful with what we say. We are not experts. Having said all that, I would like to tell you that the first financial benchmark we use to determine whether or not a Canadian Oil & Gas Trust is a good value is NAV (Net Asset Value). We don't calculate our own Net Asset Value for each trust because there is insufficient public information to undertake this calculation. Besides, why re-invent the wheel. We use the NAV (based on a 10% discount rate) published by each company in the year-end annual reports. These published NAVs are determined by independent consultants and are generally quite conservative. The reason why we like the Net Asset Value is because it is the one financial indicator, which takes in the most variables, related to an oil & gas company. In calculating the Net Asset Value the Consultant takes into consideration the following variables: 1) Present and future Commodity prices based on futures contracts 2) Total Debt (the debt is subtracted from the NAV) 3) Present production rates and anticipated future decline rates 4) All Operating costs including production costs and General & Administrative Expense. 5) Reserves in the ground (both proven and probable) 6) Number of Units outstanding. So if there is too much dilution due to issuance of units it will show up in the NAV 7) Future Cash flow is discounted at 10% 8) It indirectly takes into account reserve life There may be more variables than listed above and since I am not an expert in the oil & gas industry I welcome email from experts on this issue. However, I think you get the point. You will notice that yield does not come into play in our analysis because we feel if you purchase your units as close to NAV as possible, the yield will take care of itself either now (i.e. Provident) or in the future (i.e. Peyto). I like to buy my units at a premium of 25-30% above Net asset Value. If it's above that I will usually hold onto my units and collect my cash flow. However, if the unit price is around 100% above NAV I will consider selling the Trust and replacing it with one that is trading closer to NAV. This is why last month I sold my Provident and replaced it with APF Energy Trust. The following is a little chart I make up and update with every quarterly report and year-end statement of various trusts we follow. Please be advised that some of my figures may be incorrect so please check them for yourself. Income Trust 1st quarter 2003 Analysis As of July 18, 2003 NameSymbolPayout Ratio Based on latest declared distribution (Note 2)Latest Declared DistributionClosing PriceIndicated Yield (Note 3)First Quarter Three Month Period Cash Flow Per Unit $First Quarter Annualized Cash Flow Yield (Note 4)Net Asset Value Per Unit @ 10% discount at Dec 31, 2002 (Note 5)Premium to net asset value (Note 6) TSX% 18-Jul-03 $/Month Provident (7)PVE.UN97%0.170$11.1118.4%$0.6222.3%$6.5070.9% NCE Petrofund (7)NCF.UN59%0.180$13.9915.4%$0.9226.3%$9.0155.3% AcclaimAE.UN43%0.163$11.0817.6%$1.1340.6%$8.7526.6% Ultima Energy TrustUET.UN79%0.095$5.3621.3%$0.3626.9%$4.0233.3% Viking Energy TrustVKR.UN82%0.120$6.7221.4%$0.4426.2%$6.0610.9% APF Energy TrustAY.UN60%0.200$11.5020.9%$1.0034.8%$10.0814.1% PeytoPEY.UN56%0.150$17.0010.6%$0.8119.1%$16.701.8% Advantage EnergyAVN.UN82%0.230$15.6717.6%$0.8421.4%$14.329.4% Arc Energy TrustAET.UN58%0.150$12.7314.1%$0.7824.5%$7.8163.0% Enerplus (7)ERF.UN63%0.370$32.2213.8%$1.7722.0%$22.3544.2% Pengrowth (7)PGF.UN76%0.210$16.9514.9%$0.8319.6%$11.2151.2% Prime West (7)PWI.UN63%0.320$26.2014.7%$1.5323.4%$18.7140.0% Vermillion Energy TrustVET.UN76%0.170$13.6115.0%$0.6719.7%$11.9014.4% Focus Energy TrustFET.UN74%0.140$12.6013.3%$0.5718.1%$8.6745.3% Notes to the above Table 1) All $ values are in Canadian Dollars 2) Payout ratio calculated by taking the latest distribution (multiplied by 3) and divided by the first quarter cash flow 3) This is the last declared monthly distribution, annualized and then divided by the recent unit price closing. 4) This is the indicated yield if the Trust paid out 100% of its cash flow 5) This is the Net Asset Value published by the company in its 2002 annual report discounted at 10%. Keep in mind that some companies use more conservative pricing assumptions than other companies so I recommend you read each annual report. 6) Premium to NAV is calculated by dividing the recent unit price by the NAV 7) These units Trade on USA exchanges Before I get all kinds of emails telling me the errors in my table or questioning my calculations. I would like to point out that the above table is only a GUIDE and should not be taken as gospel. This table gives you an idea of relative value. Please do your own due diligence. Each company's quarterly and annual reports are available on their web sites or on SEDAR at www.sedar.com . When you look at the above table you can see certain trends emerge such as: 1) The US listed Trusts trade at a very high premium to NAV 2) Trusts that trade at less than a 30% premium to NAV are Acclaim, Viking, APF, Peyto, Advantage and Vermillion. 3) Provident has the highest payout ratio 4) Peyto has the lowest yield but trades at the smallest premium to NAV Based on my table my number one pick is Peyto by a long shot. You will notice that yield does not come into play in my recommendation. However, I have bought some APF, VKR and UET in the last few months also. I sold all my Provident at $11.60. Regards RAR DISCLAIMER: The information presented is not a recommendation to buy or sell any security. The author is not a registered investment advisor and the information presented is not to be considered investment advice. 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We do not warrant that any information that we post is true beyond the fact that it came from whatever source we acknowledge. We may at anytime have or not have an interest in a stock that we discuss. Finally we advise every investor to perform their own due diligence on both the investment products they purchase as well as the people whose opinions or decisions they accept about investing. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. |
| mib - Dienstag, 22. Juli 2003 - 09:29 |
| aus Barron's: Canadian energy trusts offer high dividends -- and some risks By RANDALL W. FORSYTH "SEVENTEEN PERCENT DIVIDEND? Is it possible?" There, in the e-mailbox, along with the offers for ink-jet cartridges and generic Viagra, was the invitation to check out "a group of stocks that have consistently paid from 15% to 20% in annual dividends." Well, actually it is possible. And unlike the come-ons to enhance your, well, appeal, these stocks actually can augment the yield from your investments. They are Canadian royalty trusts that invest in energy properties and pass through the cash flows from oil- and gas-producing facilities to shareholders. Analogous to real-estate investment trusts, some provide yields close to 20%. No wonder Canadian investors have been clamoring for them, sending their prices soaring this year and spurring an outpouring of new issues. That's made them the stars of the Canadian market, even with conventional stocks' revival in the past four months. Canadian royalty trusts have attracted many investors on both sides of the border looking for safe, high returns. Indeed, the trusts yield twice as much as better-quality junk bonds. Not surprisingly, they carry their own set of risks -- and those are less apparent than the risks of junk bonds. Still, this sector has boomed by providing an alternative to low bond yields and volatile stock prices. Since the beginning of 2001, their number has doubled and their assets have reached C$55 billion ($40 billion in U.S. dollars.) While most trade in Canada, a few also are listed on the New York and American Stock Exchanges. As a result, even spammers have discovered them. So have vast numbers of Canadians and a growing number of Yanks, including veteran money manager Seth Glickenhaus (" He's an Optimist? " June 9). Also among their fans is David P. Kogan, a Barron's reader and a retired stockbroker in Audubon, Penn. He says he's been buying Canadian royalty trusts for the private portfolios he continues to manage -- for retired folks whose need for income has become "dire" with the collapse of bond and CD rates. The royalty trusts' high yields reflect the positive fundamentals in the energy sector -- oil prices north of $30 a barrel and natural gas trading steadily at $5 to $6 per million British thermal units. From the standpoint of U.S. investors, the rise in the Canadian dollar further enhances the trusts' returns in greenback terms. As a result, most of the stocks trade near their 52-week highs. While many retirees buy the trusts as high-yielding bond substitutes, they are no such thing. That was apparent in 1998, when oil plunged to around $10 a barrel, and prices of the royalty trusts were decimated. The yields depend on the revenues produced by the properties in the trust -- both the price received and the output from the wells. Unlike bonds, there is no return of capital at maturity. Exactly the opposite, in fact. As these producing properties pay out the cash flows from their oil and gas, those energy reserves are being depleted. Replacing those reserves requires capital, mainly to acquire properties from exploration and production companies. Thus, as the royalty trusts pay out fat dividends to shareholders, they frequently have to raise new equity or debt. That hasn't been a problem recently, as investors have poured millions into the royalty trusts and mutual funds that invest in them. That pool of cash has readily absorbed the new issues floated by the existing trusts. |
| j_r_ewing - Mittwoch, 23. Juli 2003 - 17:40 |
| Mib, sei doch so nett und strukturiere in dem Datenfriedhof wenigstens die Spaltenüberschriften ein bißchen! (schlage vor, für jede eine eigene Zeile! Vielleicht auch die erste Zeile der Taelle mit Trennzeichen?) SO ist die Rekonstruktion der Tabelle ja Sträflingsarbeit! *grummel* ;-) JR |
| mib - Donnerstag, 24. Juli 2003 - 12:23 |
| sorry! - ich hab das so kopiert, wie ich es bekommen habe... ich bin kein subscriber dieses investment-letters, sondern bekomme einschlaegige Sachen manchmal von einer Gruppe von Leuten, die sich fuer Oel&Erdgas interessieren. ich habe leider auch keine Informationen darueber, wie diese dividenden von der deutschen Steuer behandelt werden (bei US-amerikanern behalten die kanadischen Steuerbehoerden i.d.R. 15% der Dividende ein (wonach immer noch eine erkleckliche Rendite bleibt!). Gruss - Mib ach ja, JR: hast du eine Meinung zu ATYT ? Danke! |
| j_r_ewing - Donnerstag, 24. Juli 2003 - 18:26 |
| ATI? Wenig. Es geht wohl hauptsächlich um höherwertige Grafikkarten? Damit hab ich nichts zu tun, weder mit Videobearbeitung noch mit Ballerspielen. Ich hab nur gehört, daß Profis in dem Sektor eher mit dem Mac arbeiten? Sektoriell: Mit Office-Grafik kann man wohl wenig Geld machen (low-end); aber gerade dort wäre noch Nachholbedarf. Die bisherigen guten PC-Umsätze dürften ziemlich dem Konsumsektor zuzuschreiben sein (die Investtitionen sind ja noch zögerlich). Da ist also schon allerhand gelaufen; ob da noch viel Steigerung bleibt? Daran gemessen, reißen die Earnings (ttm -0,07$, qu +0,04$ lt. yahoo) nicht vom Hocker. (Trend allerdings positiv.) Und ob da jetzt für ATI noch ein mächtiger Schub aus dem Investitionssektor kommt, der es bringt... (s.o.) Vom boomenden Videospiel-Bereich postest Du ja inzwischen schon seit Jahren. Außerdem: was macht die Konkurrenz eigentlich so...? Vom Chart her ist es ein perfekter Verkaufszeitpunkt. Die Aktie ist klasse gekommen und stößt jetzt genau an den 3j.-Abwärtstrend. Da würde ich erst eine kräftige Korrektur sehen wollen - oder den Bruch des \. Aber sind die Fundamentals dazu angetan, den zu stützen..? Um 10..11$ ist auch eine markante U./Wid.-Zone. http://finance.yahoo.com/q?s=atyt&d=5y Also antörnen tut's mich nicht grad. Hoffe, daß Dir das bißchen ein bißchen hilft. Aber ich schätze, Du weißt da selbst wesentlich besser bescheid. Gruß JR |
| mib - Freitag, 25. Juli 2003 - 10:19 |
| der grosse Konkurrent ist Nvidia - und denen nimmt ATI gerade maechtig Marktanteile ab! danke fuer den kommentar, JR! Mib |