Oil Favorites at Favorable Prices

Aside from our buy recommendations that we mention regularly, philosophical favorites with no debt and no hedging offer favorable prices for new long-term commitments, we believe, including hold-rated San Juan Basin Royalty Trust (SJT), as well as Dorchester Minerals, L.P. (DMLP), and Cross Timbers Royalty Trust (CRT) in order of decreasing market cap. Though there is always the potential for stock price weakness to recur, debt-free - or near debt-free - balance sheets are reassuring. Even moderate debt is causing complications for borrowers as lenders are under pressure. Hedges are a black box to evaluate while transferring risk to highly leveraged counterparties may be a false illusion.

Trusts and partnerships that do hedge may have an opportunity to unwind hedges at a profit and apply the gain to debt reduction. Meanwhile, latest estimated distribution yields surround a median of 10.4% for 2009. December 11 settlement prices for futures for next twelve months deliveries of Light, Sweet Crude Oil at $55.40 a barrel and Louisiana Natural Gas at $6.10 a million btu are in our estimates.

Originally published on December 12, 2008.

Comments

[ILL PA.:]

FCX == IS AT A GREAT PRICE NOW TO BUY FOR 2009.
S[ARKY114

Jan 07 01:21 AM