Opinions
Robert Toole
Canetic Resources Trust
CNE.UN-T
SELL
Jan 18, 2007
This one is right in the middle of its peer group in terms of payout ratio and its yield of about 14/15 percent. There is risk of continued further cuts.
$15.090
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Some concerns about their longer term sustainability. In a bit of a “show me” mode. Made a number of acquisitions leading up to the point where the government changed the rules last year and are going through a bit of an integration mode. Questions if they have deep enough technical focus and drilling inventory. Have a strong US ownership base, so could consider changing to the US.
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HOLD
Being acquired by Penn West (PWT.UN-T). Good acquisition as it gives critical mass of 2000 barrels a day production, capacity to absorb other income trusts and/or oil/gas exploration companies. Also gives them leverage to expand not only outside of Alberta, but into the US. Would wait for the merger to take position before buying Penn West.
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HOLD
Being acquired by Penn West Energy (PWT.UN-T). He will take shares rather than cash. Looking out 3 to 4 years, he likes oil and gas. Merged company will have 2 advantages. 1) Tax pools will probably defer any taxes to be paid out on until 2013/2014 and 2) It may be converted back to a corporation and will be a major challenge to other large caps.
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