Sunday, March 18, 2007

Sound Energy Trust-Very Tempting

Sound Energy Trust (SND.UN : TSX : $3.96)

Sound reported Q4 and year-end 2006 results.

Q4 production was 10,536 boe/d. Q1 production levels are estimated at approximately 10,100 boe/d. 2007 production guidance is 10,200 boe/d. Management estimates their payout ratio to average approximately 50% for the year.

Based on price assumptions of US$55.00/bbl WTI and $7.00/Mcf AECO, their cash flow projections for 2007 are $78.1 million. These funds will enable to cover distributions of approximately $43.0 million and capital expenditures of $31.3 million without issuing additional equity or increasing our debt levels.

Year-end total net debt amounted to $113.0 million against an available bank line of $146.5 million.

Sound's net asset value (NAV) based on a year-end report by the trust's independent engineers, GLJ Petroleum Consultants is $5.05 (using a 10% discount rate) per unit. That's over 20% below the reported NAV.

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