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Stockchase Opinions

Kevin Hall BComm, CFAEsprit Energy TrustEEE.UN.TOHOLDFeb 17, 2006

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.
$11.99

Stock price when the opinion was issued

oilgas
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SELL
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).
SELL
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.
DON'T BUY
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.
DON'T BUY
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.
DON'T BUY
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.
BUY
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.
DON'T BUY
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.
DON'T BUY
About 70% gas weighted. Over the last two years, they have missed on their production numbers. Because of this, it's not popular in the market.
TRADE
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.
PAST TOP PICK
(A Top Pick Sept 2/05. Down 12%.) Very disappointed in this one. Bought it on a valuation basis. The company has not been able to meet its production targets. Has sold all his holdings. Assets are not as good as other companies.
BUY
A gas weighted Royalty trust. Has pulled back over the last few months. Likes natural gas and would use this as a buying opportunity. Will probably be taken over in 2006 or 2007.
DON'T BUY
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.
BUY
Has a high relative distribution yield (14%), good gas exposure and the payout has room to increase distributions. However, there was a downward adjustment to the production expectations for the next several quarters, which they should get through. Very attractive.
PAST TOP PICK
(A Top Pick June 3/05. Up 2.5% plus distributions.) Have very long reserve life but has stumbled a bit.