The Forensic Accountant
Research analyst, oil & gas, energy

Permian Basin Royalty Trust: Production, Distribution (And Risk) Rising

As those familiar with my articles know, I analyze trusts using a bottom-up, engineering-style model that considers forecasts of production, sales prices, and expenses and unique underlying circumstances. I recently added Permian Basin Royalty Trust (NYSE:PBT) to the stable of trusts that I follow and this article discusses the assumptions of the model and its resulting valuation.

Distribution set to rise

PBT is an oil and gas trust operated by Burlington Resources, a subsidiary of ConocoPhillips (NYSE:COP), with long-life, mature wells in the state of Texas. PBT is investing in a sizable capital investment program and, along with increased costs, is realizing increased production.

For PBT:

    Future well production assumes growth, followed by a fixed decline...
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