Saturday, March 17, 2007

Canadian Energy Trusts May Get a some sort of break on the Trust Tax

Richard Lehmann on PBS show NBR thinks Canroys may get a reprieve
Below is a portion of the transcript from the Friday March 16, 2007 Nightly Business Report Market monitor interview. I don't know where he is getting his information.

Full Transcript

Partial Transcript

YASTINE: Really. Well, tell us which ones that you like best here. One area I know that you like are Canadian energy trusts. What are those?

LEHMANN: Canadian energy trusts are actually stocks, but they're income secured because they pay monthly dividends. And they -- they differ from the U.S. energy trusts in that Canadian trusts are allowed to continually replenish their reserves so they never go out of business. And the second advantage of them is that the dividends from them is qualified dividend income, so it's only subject to a 15 percent tax rate.

YASTINE: Do you have a first pick?

LEHMANN: Yeah, the biggest and best energy trust is EnerPlus Resources (ERF). And --

YASTINE: It has a 10 percent yield.

LEHMANN: It has a 10 percent yield, ticker ERF and it's about 50-50, oil and gas. So it's not only just in exploration. They produce from a pool of reserves.

YASTINE: And you have a second one.

LEHMANN: The second one is PennWest Energy (PWE). And this, too, is a very large company with over nine years in reserves and a lot of unexplored properties as well.

YASTINE: And this one, both of these have come down quite a bit from 43 to 27. On PennWest you expect these to go back up in addition to the yield?

LEHMANN: Yeah. The trusts suffered a big drop in November when the Canadian government announced that it was planning to start taxing them in four years. But since then, the government's found that they don't have the votes in the parliament to pass this legislation, so the chances are that there will be some sort of compromise settlement, and my expectation is it's definitely going to be for the better, and so we'll see some spike in the price while you're collecting this dividend.

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