Steven Ward

Canadian Royalty Trusts Will Never Return to Their Former Glory

Maybe I'm missing Black's point or he's missing mine or we are talking past each other.

Munny is correct and I stated in the article tax pools help only the Trust avoid Federal taxation. US investors will get an additional with holding after 2011.
How anyone could figure out that President Elect O'Bama is my buddy I have no idea.
My attitude is put him to work.

On the drilling: in the past as I stated in the article it is stepout and infill drilling. For the past 6 years PWE has trotted out the fact that they have 4 million acres of un-explored lands. I hope for the shareholders that they find significant quantities. PWE holders should keep us posted on these developments.

But what is significant is that some Canroys are going for pure exploration such as ARC and AAV in the Montney.
On Canadian politics, yes the Liberals are a disaster. And Harper wasn't much better with these results.
What I've heard so far is defense of yield chasing. What I haven't heard is someone doubling down on existing positions at these levels.

Canadian Royalty Trusts Will Never Return to Their Former Glory

Onre final thought then I'm out of this blog.
Our Canadian friend Webby said something important about foreign ownership. Non-Canadians cannot own a majority percentage of these trusts. Coutu of Syncrude fought to increase that foreign ownership percentage several years back. Coutu was partially successful.

Coutu is a true internationalist in that in his eyes all investors are "created equal".

The Canroys came to the US in dire need of equity capital. They couldn't get it in Canada for the price and the amount they wanted. That's why they put up with the paper work of dual international listings.
So we bought in.
Canada is a soverign country that has an inalienable right to change the rules and derive the benefits and the consequences of the action.
But what they don't have a right to do is to take our money and then put us on an inferior footing with a Canadian investor.
President Elect Obama has stated that part of his mission is to smooth out un fairness in free trade. He can start here with the little guy who put his money on the table and then had the table rigged.
Obama can tell Mr. Harper that we in the US have no problem with Canadian Soverignty but if you come here looking for money we want equal treatment.
The same benefit a Canadian receives holding these units in an approved pension or retirement account.
President Obama then should say to Mr. Harper that many middle class Americans placed trust in their Canadian investments and that trust is in trouble. That many Americans who bought these units need the extra income to pay everday bills and food on the table.
President Obama should futher say to Mr. Harper that while the price of commodities will fluctuate and company fortunes can wane, if you ask for our money do not make us second class investors. Which Harper has done.

This is one area where President Elect Obama can do something for the little guy and free trade.

Canadian Royalty Trusts Will Never Return to Their Former Glory

Here...hear, oops. Thinking faster than I can type.

Canadian Royalty Trusts Will Never Return to Their Former Glory

Gentlemen, I stand corrected on GAAP, not GAPP.
I did not mention MLP's because the article was on the Canroys only.
Yes, E&P's are having their difficulties as well. A prime example is Oilexco. They nedd 100 million dollars and will be pumping 50,000 barrels a day by 2012.
My point is these 5 Canroys have 100 million and then some. If they convert in 2011 why wait?
ERP's asset sale was brilliant in timming, true. But a one time event. The cash flow will be a constant stream while it may fluctuate. That's the source of any true strength with these Canroys.
To our Canadian friend, yes a portion is at times returned as capital. But as you pointed out this effects Canadians. The article was soley based for US investors. And they are getting a raw deal that may become rawer.
The step out and infill drilling does indeed raise proved reserves. But it does not mean it will raise production.
But as we have seen the raising of reserves to a proven category does not always equate with a 1 to 1 reserve replacement.
I believe the Harper regime will oppose any MLP structure domiciled in the US that has Canadian assets backing it up.
Also, MLP's carry with it an inherent risk that the General Managing Partner gets too big of a cut and can sell assets out from under the common unit holder.
I have no puts or short positions in any of these Trusts nor have I ever. Why bother they have already been clobbered. The only conspiracy here is between Flaherty and "Honest" Ed.
The enviro nuts can indeed alter new oil sands production but existing production will carry on and assume the burden as a cost of doing business
On the TLM score, yes a recommendation from me at 15 and change where it went to 22 and change. Now, I and everbody else is under water. We all should have recognized that this was only a "trader",like all the others.
Finally, I'm long Canadian Oil Sands Trust and Crescent Point Energy Trust and I wish they would slash the dividend as well. While CPG has substantially raised production over the last 3 years and stuck a bundle into new drilling it still goes through more cash flow that is internally generated. COS is probably the only trust that can pay out the high cash flow and not worry about exploring for new oil.

I don't think there is any help for me on the typing.
Finally, I enjoy these rows because it is only Canroys and MLP's the can gin them up. Everything else these days is so blase.
What I didn't here from anybody yet, is an investor doubling or tripling down on these vehicles believing in a comeback.
I rest my case and gentlemen, good hunting.

Canadian Royalty Trusts Will Never Return to Their Former Glory

To paultaut: it appears I can't type but you can. I propose a partnership, I' ll keep up on current events and you do the typing.
That will give you time to read a newspaper, see a movie and generally get ou and have some fun.
This could work.

Canadian Royalty Trusts Will Never Return to Their Former Glory

One more point, these Canroys will do well with their numbers this year. But next is the Black Swan taking his due. It will be hell. As I said, the current prices not only reflect the reality, they shape the price for the future. Future is not good.

Tax Pools are the slappy, clappy, happy spin of the PR departments. Any Canadian analyst will tell you that anybody drilling has a tax pool. Penn West has the biggest of tax pools yet it has done nothing to increase the DDA.

2007 numbers are valid. They present a recent historical cost. 2007 numbers are based on proven assets not probable assets. Which makes the number even more freighting. 2008 numbers in production costs applied to 2007 legacy costs are valid. Show me with numbers and logic why they are not. Apples and oranges comparison says nothing to refute my analysis.

ToJE: I have no idea how you might think Canadian oil is going away from article.

To bharveyalamos: why wait until I sell. Obviously many other people are selling as judged by the price collapse. Double down and tell us about it. Sell other assets buy more Canroys. Don't even tell anybody that you are placing orders you want to get your fill orders on the cheap. Go margin if you can. OK

To smsnead32: Wait until oil hits a bottom and then comes up. Buy the ones with the largest percentage of oil production. Buy the ones with a DDA greater than 1. Buy the ones where thje management is damn smart and buy the ones where management defends the shareholder in all the public arenas.

There are only two: Crescent Point Energy Trust and Canadian Oil Sands Trust. None of these trade on the NYSE, thank God. Get an international account. Crescent can be bought on the over the counter exchange along with Canadian Oil Sands Trust.
Marcel Coutu, CEO of Oil Sands Trust has the heart of a lion. Every time he has put the shareholder first.

Steve Saxeberg of Crescent along with his management team are the smartest guys out of the Canroys along with Coutu. They have the best hedging strategy for it has a single purpose onlty, to protect the payout until the end of 2010.

They are also counter cyclical in their thinking. They buy straw hats in the winter and they have developed a brilliant plan already implemented to go around the Safe Harbour Rules. gGod luck.

Canadian Royalty Trusts Will Never Return to Their Former Glory

To Thor: I'm not bearish on the Canadian Trusts if they change their model, unless they already have a DDA of greater than one. Or can achieve that figure in 12 months or less.

To Xiang2chu and searcher:: Canroys cannot make the large acquisitions due to Safe Harbor Rules. They have to become corporations. Frankly,did youn read the article? It clearly states that assets are becomming cheaper but Canroys are limited in buying them. And PGH and PWE did not share your concerns of high priced asset purchases when they bought several billion dollars worth of high priced assets from Chevron and Canetic respectively in the last 15 months..

To Harley the Brave: I have a direct ancestor that fought on the winning side in 1776. Entire family has a phobia about the word Royal

To paultaut: I have enjoyed your bullying over the last few months, now it is my turn: Youn are a partial idiot. I won't call you a complete idiot because it appears you know how to type. The Canadians already had their election on October 14th and they re-elected Harper. The anger of Canadian investors--where. Show me the grass roots ground swell that will roar the Canroys back. Also, I am pleased to hear that currency rates and swaps will soon stop the bleeding of production in the 5 Canroys I mentioned.

ToThor_9128, your argument is not with me on the numbers but rather with CIBC World markets and other Canadian houses that publish the data. Also, I've owned BPT for my account and for my moms.
I am saying this gently, unlike to paultaut. BPT is a blow down model and it is 100 percent oil and NG liquids. There is now gas portion to stink up payouts on wild fluxes. Also, it does not have debt and it it is guaranteed a percentage of the "First" 90,000 barrels pumped which generates approximately 14,500 barrels a day for BPT. So, it does not matter one whit to BPT that Prudhoe production has slid dramatically. It will never matter as long as 90,000 BOED are pumped. BPT Royalty holders will always receive their full and not a partial share. Thank you for bringing up BPT, it dramatically shows the benefit of a blow down or pure royalty trust without hedging and outrageous costs in management. BPT proves my point.

To: paultaut: stimulus will be pushing on a string. Stimulus won't kick but hyper inflation will. Like I said, you have a wait of until the last quarter of 2010. Most of these trusts are gassy. US has a lot of gas comming on stream in 2009 and 2010. Good luck.

To: yank: you have valid points. Ottawa wanted the wealth spread out to the other provinces. Kill the Trust structure first than have your buddy "Honest" Ed Stelmach whack conventional production to push it even further out. Stelmach gambled on unconventional oil and gas production that is why the Alberta hike favors un conventional producers like Ember and the deal Marcel Coutu got from Alberta this last two weeks. It was a sweetheart.
The whole thing was planned. It was planned, it was planned and it was planned. It was a conspiracy. Just look back and see how all the pieces fit together so well. This was not happen stance, it was deliberate. And so far it has worked to perfection with Harper winning re-election one month ago and Honest Ed getting re- elected earlier.

China will not take over Canadian assets in Canada unless the Harper government invites them in. Harper has hung out a "Chinese Not Welcomed" sign. The Chinese have been burned with the Northern Lights ptroject and find doing business with Chavez and African dictators more rewarding.

Also, many investors I have spoken to have used the words E&P in describing the Canroys. That is the only reason I mentioned it. But these investotrs, mostly novices, are not idiots. The Canroys constantly use the word, "sustainability" in their presentations so an investor would logically assume an E&P type company.

Canadian Royalty Trusts Will Never Return to Their Former Glory

Gentlemen, succinctly, the point is they are not replacing production. Why wait until 2011? The heck with why they did it, the government did it. The US investor fares the worse. Why wait when assets will be cheap for a period of time?
Flaherty held out the olive branch to the Canroys with a convert now and you will be included in the lower corporate tax act.
Why wait?