blanco-dee

Penn West Energy Trust: An Underappreciated Gem

I began investing in the pre-cursor of this company over 8 years ago, as it was NCE Petrofund, later becoming Petrofund, and merging a couple years ago as PrimeWest, spilling back an incredible amount of $ per share as a result of the merger. I've spent to much time in the San Juan Basin in New Mexico, where nat gas prices ran at 2-3 bucks an mcf in the late 90's, and conflict of interest issues kept me from investing in the domestic plays. It was just osmosis, all my neighbors were drillers, and I dealt with lease development issues every day. At any rate, it turned out to be a triple when I sold out at the end of 2006, and I bought back in in 2007 - but when the Canadian Finance minister, Jim Flaherty announced that Canadian Trusts would be no longer after 2010 (the announcement was on Haloween 2006), the entire Canroy sector/group lost 30 billion of market capitalization in a single day.

Alberta wants to raise provincial taxes on these Canroy E&P companies, and this is one factor which has held them back. I consider them all takeover candidates by the majors, and even if they aren't bought outright, they will probabaly find some "master limited partnership" structure to morph into another suitable investment for high yield investors.

Just the fact that there are so few comments to this article/blog is an indication of how few investors really follow these. When I consider how many mortgage payments I've made off the dividends its no wonder I just can't stay away.

Some investors just can't invest in the great domestic nat gas plays - I spend too much time promoting responsible energy development, I just can't buy Anadarko,Apache,BP,COP... - and many other in the alphabet that have done incredibly well. As soon as the masses discover these canroys they'll just grow quicker in share price.

Enjoy the ride.