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Gavin GrahamPengrowth Energy Trust (A)PGF.A.TODON'T BUYDec 30, 2004

A $6/7 spread between the "A" shares and the "B" shares because of government ruling on US ownership. Management hasn't done a great job in running these trusts. If you buy, buy the "B" which is cheaper as they may discontinue the US one.

Gavin Graham

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BUY

The name has been around for a long time. Have recently hired on some good people and made some good acquisitions, and are now positioned to make some good organic growth.

DON'T BUY

Acquiring Esprit Energy (EEE.UN-T), which will be positive for them. He tends to favour the more “new generation” trusts. They have taken some steps to strengthen their team and are moving in the right direction and he is watching them.

DON'T BUY

Merging with Esprit Energy (EEE.UN-T). They have good assets but anytime you have a merger in play, you're upside caps.

BUY

One of the larger oil and gas trusts. Has performed reasonably well. An undervalued situation. Operating costs are a little higher than its competition. Long reserve life.

DON'T BUY

In other oil/gas trusts you have seen an evolution in a more sustainable model of trusts. This one was one of the earlier ones and was focused on their position in replacement of production. Trying to change to a more sustainable model, but are having trouble keeping people on board.

WEAK BUY

Split into A and B depending on whether it's a Canadian or foreign holder. Now a non-issue with the Canadian government, so could eventually be merged back together. Has some really good, long life properties in Alberta. There are others that he likes a little better.

COMMENT

Doesn't like dual class shares.

DON'T BUY

Owns, but and underweight holding. One of the original trusts and the model then is very different than the model today. They grew through acquisitions, but buying today is very expensive and very tough to do. Payout ratio is about 85% not leaving much room to buy assets. Needs to improve on its technical expertise and needs to improve the model.

SELL

One of the older royalty trusts. He is going underweight on this one as he is finding better quality names. Would sell on any strength.

DON'T BUY

Feels that some of the cross-border trusts are a little over valued because of US players bidding them up. Payout ratio and operating costs are a bit high.

SELL

The cross border royalty trusts have a bit of a problem in that the government had them cut out foreign ownership and then back tracked. They don't know which way to go. He wouldn't buy until this issue clears up.

DON'T BUY

Have a concern on their payout ratio of 115%. Have a fairly large amount of debt and will probably have an offering at some time which they would consider. Good group of properties.

TOP PICK

Has a good long history of being able to cope with varying prices of the oil market.

DON'T BUY

Not a favourite.

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We paraphrase the experts by hand, we watch the shows and write down what we understood from the experts’ comments. We are human and can make mistakes, help us fix any errors. If you see something that you know is not right or if there is a problem with the site, feel free to email us at : [email protected].

Gavin GrahamPengrowth Energy Trust (A)PGF.A.TODON'T BUYDec 30, 2004

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