Sandy McIntyre
Esprit Energy Trust
EEE.UN-T
DON'T BUY
Dec 16, 2005
Been having problems with their Olds property. Had a facilities turnaround in a June time frame. Production hasn’t come back the way it was expected to. Concerned that there will be adjustments to reserves.
Natural gas focused. Has had a bit of a rough go in terms of operating fundamentals. Natural gas prices have come off substantially. A likely takeover candidate.
Heavily into natural gas, and although oil prices have gone up natural gas has declined. Also has more debt, and has some operational problems. 2006 will probably see more mergers and acquisitions.
Was a bit disappointing. Thought they had some reasonable assets but they are mostly natural gas with quicker declining assets, so they've had trouble keeping their production numbers up.
Had some troubles over the last year by having a higher production declining then he liked. Reserve life is over 10 years. Payout ratio is low enough that it does not have to cut distributions.
About 74% of its production is in gas. Relatively cheap because a lot of their assets are gas, which has high, declines associated with gas. Possibly a takeover target. 72% payout ratio, which is high.
He prefers the $1 billion trusts and this one is too small for him. There is a limited amount of production out of a limited spread of fields. They have had problems.
70% of production is natural gas. This company has had a history of production shortfalls and disappointments. Have quite high debt. It may not be a bad time to be buying gas-weighted names but there are a better names of there.
Merging with Pengrowth Energy (PGF.UN-T). Sold his holdings. Geology in their properties is such that it is difficult for them to hit wells accurately.
Merging with Pengrowth (PGF.A/PGF.B-T). If you own, continue holding until you get your distribution and then sell. A good alternate choice would be Penn West Energy (PWT.UN-T).