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Old 10-11-2008, 02:16 PM   #201
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Ha -- on that vein, are you seeing the yields and valuation on some of these oil trusts? Some of them are yielding 15-20% and they are MUCH cheaper than they were even in 2006 when oil was at $50. Unless you expect a mid-1980s style oil bust like the one that killed Houston, these are ridiculously cheap now.
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Old 10-11-2008, 02:43 PM   #202
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Ha -- on that vein, are you seeing the yields and valuation on some of these oil trusts? Some of them are yielding 15-20% and they are MUCH cheaper than they were even in 2006 when oil was at $50. Unless you expect a mid-1980s style oil bust like the one that killed Houston, these are ridiculously cheap now.
I agree, and I have been investing in these on and off for 25 years.

The only thing that bothers me about them is that it may be hard to get a clear picture of what the reserves are. Way back in their 80s and nineties I had a good sized investment in SJT. I talked to their consultant who interfaced with the reserve engineering firms like De Golyer several times a year. Talking with him I became convinced that the tight sands and coalbed methane structures in that area are more akin to farming than hunting, and that they would produce for a very long time, given good prices. This has turned out to be true. One trust, Sabine, that always had a short reserve life index, has had that same index for at 25 years. So that gas just keeps coming out of the woodwork I guess.

Another trust I owned units in had their Hugton field wells on vacuum for years, because the well pressures were so low. I figured that was curtains, but before long fallow interests in the San Juan Basin more than made up for depletion in the Hugoton.

It is also helpful to know the exact nature of the interests- are they net profits royalties, mineral interests, or pure gross sales royalties? This information is readily available.

And the gas trusts that I own have seen their payouts and unit prices cut drastically as the NG price has fallen.

Still, I like the concept and I believe that NG will once again be a very expensive fuel.

I would much rather own DMLP, a conseratively run production MLP than government bonds at current prices. There is however much more short term price risk in the MLP.

Ha
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Old 12-05-2008, 02:43 PM   #203
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Ziggy, your plan worked too well, make it stop!

Of course even this chart from this morning's wall street journal is now out of date as oil closed at $40 today. But I still think it has some shock value.
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Old 12-05-2008, 02:46 PM   #204
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Ziggy, your plan worked too well, make it stop!

Of course even this chart from this morning's wall street journal is now out of date as oil closed at $40 today. But I still think it has some shock value.
Hey, I got out when oil was still close to 80. It's out of my hands now.
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Old 12-05-2008, 02:56 PM   #205
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Hey, I got out when oil was still close to 80. It's out of my hands now.
Too bad you didn't go short at 80...you could've made most of it back!
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