Tel Offshore Trust: Solid 15% From American Based Oil

TEL Offshore (TELOZ) is a trust that was founded in 1983 and is based in Austin, Texas. As of October, 2006, the Partnership's reserves comprised 390,369 barrels of oil and condensate, and 2,233,123 thousands of cubic feet of natural gas. Oil wells are offshore Louisana (Gulf of Mexico).

Two years ago, two hurricanes knocked the socks off of TELOZ, dividend was stopped, and it took more than a year for repairs to be completed. At this point, almost ALL repairs are done and the dividend is back!

Here's a brief history:

• May 27 2007 - Quarterly Dividend of .245727 was paid out.
• June 29 2007 - Quarterly Dividend of .432 was paid out.
• Sept 27 2007 - Quarterly Dividend of .597051 was paid out.
• Dec 27 2007 - Estimated** dividend ranges from .60 to .80

With oil prices staying high and NO HURRICANES, this trust will reap the benefits and should be able to pay out .70 per quarterly dividends for the next couple of quarters - as crude prices stay high. In addition, TELOZ is American based, therefore US based share holders get 100% of the dividend, rather than having some held out with the Canadian Royals like Pengrowth (PGH) and Harvest (HTE).

TELOZ has touched 22.00 just a week ago and is now trading at 16.00 now. Let's see how this calculates in the annual dividend yield.

Conservative calculations with .60 dividend per quarter:

• Using 2.40 dividend per year at 16.00 per share = 15% ----- NOW
• Using 2.40 dividend per year at 24.00 per share = 10%
• REAL-WORLD CALCULATIONS with .70 dividend per quarter
• Using 2.80 dividend per year at 16.00 per share = 17.5% ---- Interesting
• Using 2.80 dividend per year at 24.00 per share = 11.67% ---- In 2008

In my opinion, TELOZ is very undervalued and the current sell-off is showing a way of making a nice yield (15% or better), with stock appreciation. Many high yielding investments that are stable - appear to settle in the 10 to 12% range for the high side. Assuming that TELOZ continues to prove itself with regular high yielding dividends, the stock should appreciate into the 22 to 25 range.

Conclusion

Anice gem that is already cut, beautiful, and at a bargain price! Did we say anything about the continued economies of China, India, and other emerging countries? These new consumers in China and India are energy consumers as well. Their new cars, homes, and manufacturing facilities take energy to run. High oil prices are here for a good number of years!

Disclosure: Author has a long position in TELOZ

Comments

[Philip Obal:]

TELOZ has climbed up significantly. I locked in my gain and sold out of of TELOZ. Good luck to all investors, but imho TELOZ is now fully valued at today's parameters.

2007 Dec 06 10:21 AM

[Philip Obal:]

TELOZ dropped today (hit as low as 27.50). Just a normal correction, where the stock price is AHEAD of any good earnings announcement. This TELOZ rose fast... still have until the end of the month to find out whether the quarterly dividend is .60 .70 .80 .90 or 1.00

Please note: If the dividend becomes a regular .80 (estimated) each quarter, it would yield 11.5% at 28.00 a share.

TIME WILL TELL - HAVE PATIENCE

2007 Dec 07 11:11 AM

[User 129340:]

so what happened now that the stock went down 30-35%? what's the reason?

2007 Dec 11 09:10 AM

[Philip Obal:]

Investors (including momentum players) stroked & pushed the stock price up way too fast.... They did not do what long term investors do... wait for the earnings to come out FIRST - THEN make a healthy decision on whether to invest or not.

Because of the very fast up... it has retreated fast. Blame on the momentum players (day traders) AND the TELOZ longs that thought TELOZ would never get to 28 and above. I suspect that a good number of these (out of fear) pushed the sell button, when share prices were retreating.

Approximately 18 days before dividend announcement. Should be VERY INTERESTING on what happens during the next 30 days. Nice potential buying opportunity (share price below 20) now. At .80 dividend estimated - this is 16% annually. Less at .70 dividend - but still significant. Again, study, analyze the company, and do your own due diligence.

IMHO, we will probably will see this see-saw action repeat itself one or two more times during the next 30 days or so!

2007 Dec 11 05:38 PM

[Philip Obal:]

Share price is now at 20.50 and some investors are estimating a .80 to .85 dividend. We shall see if they are correct. If so - at $20.50 a share, that translates to 16.39% dividend yield. N I C E

If this dividend does hit that estimate or above, then the share price should be hitting the 28 to 32 range during 2008.

Good luck to all and a very happy new year!

2007 Dec 16 07:18 PM

[Philip Obal:]

Share price has dropped to 17.68. On a very conservative note.... let's assume that the dividend is .70 in a week... If so - at $17.68 a share, that translates to 16% dividend yield. VERY NICE.

Do your due diligence on any investment or stock that you are considering.

TELOZ is NOT normally this up and down, but is usually a very predicatable REIT. Hopefully, after a few more solid earnings... it will stablize into a regular US dividend paying OIL & GAS REIT trust pattern that conservative investors like!

2007 Dec 18 05:38 PM

[Philip Obal:]

Dividend was .685 a share So, we were very close to .70 dividend estimate given in this article multiple times. TELOZ is now up 10% and trading at 23.00 a share. Probably will go up to 24/25 range tommorrow - for those that want to catch the dividend (must be an owner of these shares on 12/31/2007).

Last Post - Time for a NEW ARTICLE ON TELOZ

2007 Dec 26 03:44 PM

[MikeyLV:]

"Solid" my ass.

2008 Jun 30 11:48 AM