longoil

Canadian Royalty Trusts – Will Dividends Rise or Fall?

KNOC has made a bid for all outstanding HTE trust units:

"CALGARY, ALBERTA--(Marketwire - 10/21/09) - Harvest Energy Trust ("Harvest") (TSX:HTE.UN - News) (NYSE:HTE - News) today announces that it has entered into an agreement (the "Arrangement Agreement") with Korea National Oil Corporation ("KNOC") for the purchase of all the issued and outstanding trust units (the "Units") at a price of C$10.00 per Unit for a total cash consideration of approximately C$1.8 billion plus the assumption of C$2.3 billion of debt."

This is great new for anyone who purchased HTE over the last year at $7.00 or lower a share that stand to make a 50% profit.

However, I will be very surprised to see this deal go through. Many HTE share owners were Viking and Calpine trust unit holders who bought in at anywhere from $10 to $40 per unit and were then taken over by Harvest Trust. I doubt they would be willing to take a huge capital loss to give KNOC access to cheap Canadian oil.

The Koreans are following in th footsteps of their big brothers (The Chinese) and are scouring the world for dwindling oil resources. Given the currrent market conditions, they are taking advantage of the poor share price of HTE brought on the inept management of CEO John Zahary et al.