The way Grant Hofer sees it, even when you lose you win.
Mr. Hofer, the UBS Securities guy crunching data on royalty trusts in Calgary, thinks now is the time to take a good look at the group. The trusts he covers are down 8% over the past month (but still up 34% this year), and Mr. Hofer thinks “the sector appears to us to be very well positioned and offers exceptional value today.”
Cash yields, he says, have climbed 10.7%, which makes the trusts attractive, given payout ratios of about 50% in 2009. His numbers are based on $120 per barrel oil and $10.10/mcf for natural gas. Don’t think those prices are reasonable? No sweat.
In bold, he wrote:
Should commodity prices continue to pull back, we believe that the yield should provide attractive support for unit prices.
Vermilion Energy Trust (VET) and Crescent Point Energy Trust (CPGCF.PK) were his two favorites on Thursday, given their high weightings to crude oil and growth plans and because of their acquisitive ways.
Mr. Hofer’s target on Crescent Point is $45, and he expects Vermilion to get to $49. Vermilion, he thinks, will be “essentially debt-free” by the end of the year. “With its low payout ratio, 75% weighting to crude oil (unhedged), and sector-based netbacks, the trust remains our best overall pick in the sector.”
For those of you who like to dig deeper into the numbers, Mr. Hofer notes the trust group is trading at just 83% of net asset value.
He said:
This is the lowest level that we can recall (typically the sector trades at a premium to our conservative NAVs).
When analysts get excited, they (sometimes) come up with eye-catching headlines for their reports. Looks like Mr. Hofer falls into that category on this one. At the top of his report, he wrote: “Valuation update: Back up the truck!”
Showing posts with label Crescent Point Energy Trust. Show all posts
Showing posts with label Crescent Point Energy Trust. Show all posts
Saturday, July 19, 2008
Tuesday, July 15, 2008
Using Oil & Gas Trusts to Beat Inflation
Using Oil & Gas Trusts to Beat Inflation
by Mike Stathis, Managing Principle, Apex Venture Advisors
According to Washington, the official inflation rate is around 4.1%. At this point, I think it’s obvious most consumers know this data is wrong. Of course some people accept anything Washington reports, especially the agenda-driven “experts” on television who bring in media hams as cheerleaders to spread the ludicrous propaganda of a strong economy.
You don’t need a Ph.D in economics or finance to know that inflation is approaching levels similar to those seen in the 1970s. In fact, those who have been formally trained in these disciplines are more likely to miss what is really going on because they’ve been programmed to think that fancy math is always superior to common sense. But they often neglect to consider the fact that new standards are continuously being devised to hide the real data - from inflation and unemployment numbers to GDP and poverty statistics.
Understand that most economists are in some way connected to the government. Economists in private industry often sit on Washington committees. Most academic economists too are pressured to accept government methods of data analysis without question, or else they risk losing federal grants, government consulting projects, or being appointed to sit on government committees.
Important Considerations
14% returns are much better than the market’s historical average of around 8%. So what’s the catch? Well, we obviously need to consider the risks before we make any decisions. In the end, you should understand your risk tolerance and investment horizon. After considering the risks, you will be able to determine a risk-reward profile for these investments. This is the general method to determine suitability for all investments. Let’s take a look at some of the more important variables to consider.
Oil Demand
Oil demand is obviously a very important consideration one must make. Some of the questions you might pose are:
Is demand growth accelerating?
What are the reasons for this acceleration and what are the risks for it to end?
What impact will alternative energy have on oil demand and when might a real effect be seen?
While America is the clear leader in annual oil consumption, China leads the world in oil growth demand. In other words, China is accelerating is demand for oil more so than any other nation. This is expected to continue for many years, with all of Asia on a similar course. Unlike America, where oil demand will always (until alternative and renewable energy sources are mature) be quite high due its extensive reach within the economy, China’s demand is primarily the result of its export trade commerce. As corporate America continues to enrich the living standards of China, we will soon see very strong Chinese consumers who, from auto ownership alone will create huge demands for oil. While it should be quite clear that America faces a continued weak economy for at least the next two to three years, it is unknown to what extent these effects will spill over to the rest of the globe. I would estimate that we will see a global recession. Thus, demand from China is likely to stall at some point. But going forward thereafter, you should expect China’s demand for fossil fuels to continue its long-term trajectory.
While there is certainly much noise over alternative energy, the fact is that it will take many years before it makes a dent in the global oil demand. And it will come gradually, allowing OPEC and non-OPEC producing nations to gradually adjust output and resources so that they are able to control demand-supply and thus pricing. Even when alternative energy becomes highly competitive with oil and other fossil fuels (which might not be before 2020), keep in mind that we will always need crude for basic materials. It is a building block for many products.
Oil Prices
Without a doubt, crude is priced way ahead of itself. And while prices could easily correct downward by 30 to 40% over as little as a two-month period, you should understand a few things before you get spooked. As we have seen, oil demand does not necessarily have a high correlation with oil prices in the short-term. Although there is certainly a correlation, OPEC agendas, military conflicts, speculation and momentum-driven trading often causes huge swings in price.
Many independent oil experts believe the long-term price trend for oil is headed much higher. So while a price of $140 per barrel might be a couple of years ahead of itself, even with a 40% correction in the near-term, it is very likely that the fair value trading price of oil will back at this level if not higher over the next two years anyway.
Many of the oil trusts were trading near or above current levels when oil was below $100 just a few months ago. So if oil does correct, this does not mean the price of these trusts will decline proportionately. As I will discuss below, these companies lock in oil prices so they can provide consistent dividends. Therefore, the trading price of these trusts is not likely to collapse with a large oil correction, as long as management is able to lock in prices. However, investors ultimately determine prices of securities so we never know. And price volatility is a reality of investing. What we really need to focus on is the dividend. Therefore we should ask whether a large correction in price will affect the forward dividends. For reasons I will get to shortly, I feel the dividends for at least my favorite two Canadian oil sands trusts (PGH and PWE) are fairly safe.
Finally, understand that many Canadian oil trusts typically hedge or lock in oil prices at certain rates so as to ensure consistent dividends for investors.
Hedging Success and Strategies
When looking at the dividend payouts of these trusts, you might wonder why in the case of Penn Growth for instance, the dividend has remained fairly constant for several months even when oil was well under the $80 mark. Rather than gamble that oil will remain at $140 per barrel, management uses oil futures contracts to lock in what it feels are reasonable prices for oil. If you examine some of the previous statements and headlines for Penn Growth, you will see the company reported losses based on futures contracts. The reason was most likely because management bet against oil going up. They did this because they wanted to play it safe. While we can never be sure whether they will continue this strategy, I would expect them to because it is the most prudent way to deliver a consistent earnings stream to investors while minimizing the downside. Thus, it would seem reasonable to conclude that even a large correction in crude of say 30% over a one or two month period would not alter the dividend by much. In fact, if traders think otherwise, these trusts could sell off as they have recently, thereby increasing the dividend yield, assuming the future dividends remain fairly consistent.
Tax Changes
As a way to encourage investment capital into the new Alberta sands region, the oil trusts were exempt from corporate taxation. Since that time, billions of dollars from all over the world have flooded into the region and now the government wants a piece of the action. A couple of years ago the Canadian government announced that the tax treatment for its trusts would be changed starting in 2011. This caused these trusts to sell off in panic. However, I would not anticipate the dividends to be effected by much. The good thing is that this news is already known and factored into the price of these trusts. But that does not mean there won’t be another correction just before 2011.
Management
The ability of each management team to run these companies with prudence is always a risk we take as investors.
Risk Comparison
When we compare the risk of oil trusts, we should look at asset classes with similar rates of return. The first type of asset class that comes to mind is REITs. After all that has happened to the real estate market, I do not think I need to discuss the risk level here. On average, the Canadian oil trusts I have mentioned are yielding around 14% annually. The only other major asset class that even comes close to this is small cap stocks. However, you should note that even small caps only return around 11% on average, and that is over a long period, such as 20 or 30 years. As well, the volatility is higher and there are some small caps that go bankrupt. I certainly wouldn’t want to be in small caps during this market.
Even if you are willing to assume the risk of small caps given current market conditions, you would most likely need to actively trade these stocks in order to secure any chance of annual double digit returns over say a 5-year horizon. Otherwise, you could end up flat or even down over that period. In contrast, the oil sands pay monthly dividends. That’s money that comes every month; money that can help neutralize the declining purchasing power of the dollar. In conclusion, whether you want to go Canadian or American, oil trusts offer an excellent solution to counter the effects of high inflation. And during this period of economic uncertainty, perhaps one of the few things we can be certain of is that oil will remain high for many years.
Conclusions
Remember, before you can justify investing in oil trusts, the oil story is something you have to fully believe in because these securities are volatile. While trading opportunities are definitely available, you should be willing to hold them for several years. In fact, at current prices and assuming historical dividend payouts to continue, your cost basis (before taxes) would approach zero if you bought and held Baytex, Paramount, Bonavista, Arc, Advantage, Crescent Point, Enerplus, Freehold or Penn West over the next eight years.
by Mike Stathis, Managing Principle, Apex Venture Advisors
According to Washington, the official inflation rate is around 4.1%. At this point, I think it’s obvious most consumers know this data is wrong. Of course some people accept anything Washington reports, especially the agenda-driven “experts” on television who bring in media hams as cheerleaders to spread the ludicrous propaganda of a strong economy.
You don’t need a Ph.D in economics or finance to know that inflation is approaching levels similar to those seen in the 1970s. In fact, those who have been formally trained in these disciplines are more likely to miss what is really going on because they’ve been programmed to think that fancy math is always superior to common sense. But they often neglect to consider the fact that new standards are continuously being devised to hide the real data - from inflation and unemployment numbers to GDP and poverty statistics.
Understand that most economists are in some way connected to the government. Economists in private industry often sit on Washington committees. Most academic economists too are pressured to accept government methods of data analysis without question, or else they risk losing federal grants, government consulting projects, or being appointed to sit on government committees.
Important Considerations
14% returns are much better than the market’s historical average of around 8%. So what’s the catch? Well, we obviously need to consider the risks before we make any decisions. In the end, you should understand your risk tolerance and investment horizon. After considering the risks, you will be able to determine a risk-reward profile for these investments. This is the general method to determine suitability for all investments. Let’s take a look at some of the more important variables to consider.
Oil Demand
Oil demand is obviously a very important consideration one must make. Some of the questions you might pose are:
Is demand growth accelerating?
What are the reasons for this acceleration and what are the risks for it to end?
What impact will alternative energy have on oil demand and when might a real effect be seen?
While America is the clear leader in annual oil consumption, China leads the world in oil growth demand. In other words, China is accelerating is demand for oil more so than any other nation. This is expected to continue for many years, with all of Asia on a similar course. Unlike America, where oil demand will always (until alternative and renewable energy sources are mature) be quite high due its extensive reach within the economy, China’s demand is primarily the result of its export trade commerce. As corporate America continues to enrich the living standards of China, we will soon see very strong Chinese consumers who, from auto ownership alone will create huge demands for oil. While it should be quite clear that America faces a continued weak economy for at least the next two to three years, it is unknown to what extent these effects will spill over to the rest of the globe. I would estimate that we will see a global recession. Thus, demand from China is likely to stall at some point. But going forward thereafter, you should expect China’s demand for fossil fuels to continue its long-term trajectory.
While there is certainly much noise over alternative energy, the fact is that it will take many years before it makes a dent in the global oil demand. And it will come gradually, allowing OPEC and non-OPEC producing nations to gradually adjust output and resources so that they are able to control demand-supply and thus pricing. Even when alternative energy becomes highly competitive with oil and other fossil fuels (which might not be before 2020), keep in mind that we will always need crude for basic materials. It is a building block for many products.
Oil Prices
Without a doubt, crude is priced way ahead of itself. And while prices could easily correct downward by 30 to 40% over as little as a two-month period, you should understand a few things before you get spooked. As we have seen, oil demand does not necessarily have a high correlation with oil prices in the short-term. Although there is certainly a correlation, OPEC agendas, military conflicts, speculation and momentum-driven trading often causes huge swings in price.
Many independent oil experts believe the long-term price trend for oil is headed much higher. So while a price of $140 per barrel might be a couple of years ahead of itself, even with a 40% correction in the near-term, it is very likely that the fair value trading price of oil will back at this level if not higher over the next two years anyway.
Many of the oil trusts were trading near or above current levels when oil was below $100 just a few months ago. So if oil does correct, this does not mean the price of these trusts will decline proportionately. As I will discuss below, these companies lock in oil prices so they can provide consistent dividends. Therefore, the trading price of these trusts is not likely to collapse with a large oil correction, as long as management is able to lock in prices. However, investors ultimately determine prices of securities so we never know. And price volatility is a reality of investing. What we really need to focus on is the dividend. Therefore we should ask whether a large correction in price will affect the forward dividends. For reasons I will get to shortly, I feel the dividends for at least my favorite two Canadian oil sands trusts (PGH and PWE) are fairly safe.
Finally, understand that many Canadian oil trusts typically hedge or lock in oil prices at certain rates so as to ensure consistent dividends for investors.
Hedging Success and Strategies
When looking at the dividend payouts of these trusts, you might wonder why in the case of Penn Growth for instance, the dividend has remained fairly constant for several months even when oil was well under the $80 mark. Rather than gamble that oil will remain at $140 per barrel, management uses oil futures contracts to lock in what it feels are reasonable prices for oil. If you examine some of the previous statements and headlines for Penn Growth, you will see the company reported losses based on futures contracts. The reason was most likely because management bet against oil going up. They did this because they wanted to play it safe. While we can never be sure whether they will continue this strategy, I would expect them to because it is the most prudent way to deliver a consistent earnings stream to investors while minimizing the downside. Thus, it would seem reasonable to conclude that even a large correction in crude of say 30% over a one or two month period would not alter the dividend by much. In fact, if traders think otherwise, these trusts could sell off as they have recently, thereby increasing the dividend yield, assuming the future dividends remain fairly consistent.
Tax Changes
As a way to encourage investment capital into the new Alberta sands region, the oil trusts were exempt from corporate taxation. Since that time, billions of dollars from all over the world have flooded into the region and now the government wants a piece of the action. A couple of years ago the Canadian government announced that the tax treatment for its trusts would be changed starting in 2011. This caused these trusts to sell off in panic. However, I would not anticipate the dividends to be effected by much. The good thing is that this news is already known and factored into the price of these trusts. But that does not mean there won’t be another correction just before 2011.
Management
The ability of each management team to run these companies with prudence is always a risk we take as investors.
Risk Comparison
When we compare the risk of oil trusts, we should look at asset classes with similar rates of return. The first type of asset class that comes to mind is REITs. After all that has happened to the real estate market, I do not think I need to discuss the risk level here. On average, the Canadian oil trusts I have mentioned are yielding around 14% annually. The only other major asset class that even comes close to this is small cap stocks. However, you should note that even small caps only return around 11% on average, and that is over a long period, such as 20 or 30 years. As well, the volatility is higher and there are some small caps that go bankrupt. I certainly wouldn’t want to be in small caps during this market.
Even if you are willing to assume the risk of small caps given current market conditions, you would most likely need to actively trade these stocks in order to secure any chance of annual double digit returns over say a 5-year horizon. Otherwise, you could end up flat or even down over that period. In contrast, the oil sands pay monthly dividends. That’s money that comes every month; money that can help neutralize the declining purchasing power of the dollar. In conclusion, whether you want to go Canadian or American, oil trusts offer an excellent solution to counter the effects of high inflation. And during this period of economic uncertainty, perhaps one of the few things we can be certain of is that oil will remain high for many years.
Conclusions
Remember, before you can justify investing in oil trusts, the oil story is something you have to fully believe in because these securities are volatile. While trading opportunities are definitely available, you should be willing to hold them for several years. In fact, at current prices and assuming historical dividend payouts to continue, your cost basis (before taxes) would approach zero if you bought and held Baytex, Paramount, Bonavista, Arc, Advantage, Crescent Point, Enerplus, Freehold or Penn West over the next eight years.
Thursday, October 18, 2007
Target Prices for Canadian Royalty Trusts
Please click here to download a spread sheet summary of Canadian Royalty Trust (affectionately known as Canroys) target prices by various Candadian Investment Houses as of September 28, 2007. Investors should use this information to determine good entry points into Canroy positions.
This spread sheet is courtesy of THOR on the Yahoo Canroy board.
Please note that this link will only be available until November 30, 2007.
This spread sheet is courtesy of THOR on the Yahoo Canroy board.
Please note that this link will only be available until November 30, 2007.
Friday, September 7, 2007
Canaccord on Crescent Point
Crescent Point Energy Trust (CPG.UN : TSX : $19.26)
Buy - Target: $22.00
Bruce McDonald
Comment: More of a good thing; Crescent Point announces $400 million acquisition of Innova to consolidates Bakken play.
Crescent Point announced its agreement to acquire all the issued and outstanding shares of Innova Exploration Ltd. (IXL : TSX : C$6.19-HOLD) for $360.1 million. Including assumed net debt of $39.9 million, total consideration to be paid is approximately $400 million.
We estimate thetransaction to be 5% accretive to 2008 production per unit and 7%accretive to 2008 cash flow per unit. On a debt-adjusted basis, the transaction is
only 2% accretive to cash flow. However, we believe the acquired Bakken play asset is world class. While Crescent Point is using almost all of its 2007 "safe harbour" room, which limits its future growth, the Bakken asset presents above-average growth prospects from inventory prospects.
Under the forward strip, pro forma the Innova acquisition, Crescent Point shares are currently trading at 7.0 times 2008E EV/EBITDA, above the smaller cap trust average of 6.4 times, but warranted given Crescent Point's longer RLI.
We maintain our BUY recommendation and 12-month target price of C$22.00. Our target price is based on a 2008E EV/EBITDA target multiple of 7.8 under the forward strip, above our smaller cap trust average target multiple of 7.2 given Crescent Point's distribution stability and large prospect inventory.
Buy - Target: $22.00
Bruce McDonald
Comment: More of a good thing; Crescent Point announces $400 million acquisition of Innova to consolidates Bakken play.
Crescent Point announced its agreement to acquire all the issued and outstanding shares of Innova Exploration Ltd. (IXL : TSX : C$6.19-HOLD) for $360.1 million. Including assumed net debt of $39.9 million, total consideration to be paid is approximately $400 million.
We estimate thetransaction to be 5% accretive to 2008 production per unit and 7%accretive to 2008 cash flow per unit. On a debt-adjusted basis, the transaction is
only 2% accretive to cash flow. However, we believe the acquired Bakken play asset is world class. While Crescent Point is using almost all of its 2007 "safe harbour" room, which limits its future growth, the Bakken asset presents above-average growth prospects from inventory prospects.
Under the forward strip, pro forma the Innova acquisition, Crescent Point shares are currently trading at 7.0 times 2008E EV/EBITDA, above the smaller cap trust average of 6.4 times, but warranted given Crescent Point's longer RLI.
We maintain our BUY recommendation and 12-month target price of C$22.00. Our target price is based on a 2008E EV/EBITDA target multiple of 7.8 under the forward strip, above our smaller cap trust average target multiple of 7.2 given Crescent Point's distribution stability and large prospect inventory.
Sunday, April 29, 2007
Added to my Top Pick Holdings
I have acquired more units of Harvest and Crescent Point Energy Trust last week. I am hoping for a pull back so I can acquire more units.
I also picked up 40,000 shares of Plexmar just for the fun of it.
I also picked up 40,000 shares of Plexmar just for the fun of it.
Thursday, April 12, 2007
Bought More Harvest & Crescent Point Today
Today I bought 2,000 units of Crescent Point (CPG.UN-T) and Harvest Energy Trust (HTE.UN).
I also bought 1,000 units of Vermillion Energy Trust (VET.UN-T) too.
Disclaimer;
We are not investment professionals. We often post our own opinions and identify them as such, we reserve the right to change our opinions. The fact that we sometimes disclose when we establish or sell a position in a company is no warrantee that we will publish every trade. 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.
I also bought 1,000 units of Vermillion Energy Trust (VET.UN-T) too.
Disclaimer;
We are not investment professionals. We often post our own opinions and identify them as such, we reserve the right to change our opinions. The fact that we sometimes disclose when we establish or sell a position in a company is no warrantee that we will publish every trade. 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.
Tuesday, March 20, 2007
Harvest & Crescent Point Energy Trusts Have High DRIP Participation
I was reading an RBC report today and noticed that Harvest and Crescent Point Energy Trusts have the highest DRIP (Dividend Re-Investment Plan) participation rate of the Oil and Gas Trusts.
Crescent Point has 30% of their dividends re-invested and Harvest Energy has 43% of their distribution re-invested.
This tells me that the shareholders have long term confidence in the management of these two trusts.
This is another reason why both of these trusts are my top picks.
Crescent Point has 30% of their dividends re-invested and Harvest Energy has 43% of their distribution re-invested.
This tells me that the shareholders have long term confidence in the management of these two trusts.
This is another reason why both of these trusts are my top picks.
Monday, March 19, 2007
Oil Storage Down More Than OPEC Cuts
This is an interesting post from an participant in an Investor Village Message Board
If this analysis proves correct then I would definitely hold on to my "oily" income trusts such as Harvest and Crescent Point.
---------------------------------------------------
According to March 13, 2007 Wall Street Journal the size of the drop in Oil storage levels have been:
1) IEA - Q4 93 million drop
2) EIA - 100 million in US since Oct
3) CGES - 160 million drop world in 6 months
It looks like all the estimates agree with each other, and in 6 months we fell 160 million.
How much of OPEC cuts made up that drop?
It takes 6 weeks for a drop in production to reach the market, so in the 10 weeks of 2007, only 4 weeks worth of cuts at 1 million a day are in the data. At 1 milion a day of lower production that will be about 30 million reduction reaching the market.
The other 6 weeks of 2007 had cuts from the end of 2006 and were at .5 million a day, so add another 20 million.
In 2006 we then had 3 months at much less than .5 average, but I will use .5 for this analysis, or 45 million.
Total OPEC cuts reaching the market are at best 95 million barrels (I suspect I am 20 million too high), while world inventories during this time dropped by 160 million.
If OPEC had been pumping at their max rate, world inventories would have dropped by 65 million barrels over the last 6 months.
What this says is that this winter world oil demand was higher than max world oil production capacity for the first time ever!
For 2007, world oil demand is projected to be up by around 1.5 million barrels a day, while production growth appears after depletion to be having a problem to grow.
OPEC has engineered a drop in stroage level such that going into 2007 Q3 this year without a storage cussion. With growth in overall demand, and cycle demand coming in during Q3/Q4, the swing in demand could be 3 to 4 million a day by Q4.
With 1 million of spare capacity, and questionable net growth in production, next fall will be interesting.
If this analysis proves correct then I would definitely hold on to my "oily" income trusts such as Harvest and Crescent Point.
---------------------------------------------------
According to March 13, 2007 Wall Street Journal the size of the drop in Oil storage levels have been:
1) IEA - Q4 93 million drop
2) EIA - 100 million in US since Oct
3) CGES - 160 million drop world in 6 months
It looks like all the estimates agree with each other, and in 6 months we fell 160 million.
How much of OPEC cuts made up that drop?
It takes 6 weeks for a drop in production to reach the market, so in the 10 weeks of 2007, only 4 weeks worth of cuts at 1 million a day are in the data. At 1 milion a day of lower production that will be about 30 million reduction reaching the market.
The other 6 weeks of 2007 had cuts from the end of 2006 and were at .5 million a day, so add another 20 million.
In 2006 we then had 3 months at much less than .5 average, but I will use .5 for this analysis, or 45 million.
Total OPEC cuts reaching the market are at best 95 million barrels (I suspect I am 20 million too high), while world inventories during this time dropped by 160 million.
If OPEC had been pumping at their max rate, world inventories would have dropped by 65 million barrels over the last 6 months.
What this says is that this winter world oil demand was higher than max world oil production capacity for the first time ever!
For 2007, world oil demand is projected to be up by around 1.5 million barrels a day, while production growth appears after depletion to be having a problem to grow.
OPEC has engineered a drop in stroage level such that going into 2007 Q3 this year without a storage cussion. With growth in overall demand, and cycle demand coming in during Q3/Q4, the swing in demand could be 3 to 4 million a day by Q4.
With 1 million of spare capacity, and questionable net growth in production, next fall will be interesting.
Sunday, March 11, 2007
Crescent Point Energy Trust CPG.UN-TSX
Last week I purchased 1,000 units of Crescent Point Energy Trust in my wife's RRSP account.
I am slowly acquiring units in the four "Top Picks" listed on my web site.
Please perform your own due diligence.
I am slowly acquiring units in the four "Top Picks" listed on my web site.
Please perform your own due diligence.
Monday, February 26, 2007
Crescent Point Energy Trust CPG.UN-TSX
Today I bought 1,000 units of Crescent Point Energy Trust. This trust is 80% oil and their acqusition of Mission Oil makes them the largest oil producer in the Province of Saskatchewan.
This Trust has lots of drilling targets and will not need to go to the market to fund capital expenditures.
With enhanced recovery techniques such as Carbon Dioxide flooding I think they have a good chance of increasing reserves per unit while at the same time paying out a healthy distribution of $0.20 per month which is an annualized yield of 13.3%.
So I get growth plus a healthy yield. This meets my investing for income strategy.
I also think that with the carbon dioxide sequestering they will pick up future global warming credits if they come to pass.
This Trust has lots of drilling targets and will not need to go to the market to fund capital expenditures.
With enhanced recovery techniques such as Carbon Dioxide flooding I think they have a good chance of increasing reserves per unit while at the same time paying out a healthy distribution of $0.20 per month which is an annualized yield of 13.3%.
So I get growth plus a healthy yield. This meets my investing for income strategy.
I also think that with the carbon dioxide sequestering they will pick up future global warming credits if they come to pass.
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