The Forensic Accountant
Research analyst, oil & gas, energy

Dominion Resources Black Warrior Trust Grossly Overvalued - 75% Downside, 90% Of Wells May Be Losing Money

Dominion Resources Black Warrior Trust (NYSE:DOM) is an all-gas trust that owns royalties to wells in Alabama operated by a subsidiary of Walter Energy. DOM's revenues, yield, and NPV have all benefited from the recent rise in natural gas prices and its shares, which are openly traded on the NYSE, have doubled this year, from $5.50 in early January to a high of $11.00 during Monday's session.

However, the market price rise has exceeded any possible price and production upsides. DOM's wells are in their twilight years and Walter Energy has begun the process of abandoning them. DOM's own reserve report suggests that the trust may have a lifetime of only 4-5 years. Estimates from this reserve report,...

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