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ECA Marcellus Trust I Message Board

  • mbaes mbaes Nov 4, 2013 4:39 PM Flag

    Dividend reduction

    I'd like to thank Liza for helping a slow learner to these trusts... Div has been reduced and I don't see it rising anytime soon. This thing will see $6 - 7 before this time next year without Nat Gas reaching $5 - 6. Sold options on Friday. 10% profit. Not great, but better than losing it all today.

    Sentiment: Sell

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    • Don't matter what Nat gas does all these LP's and Trusts are cooking the books.

      Sentiment: Strong Sell

    • Read about CMI & WPRT, these 2 companies are developing better nat gas engines for Trucks, so far Lowe's plans to buy only nat gas trucks, and WM is now using 80% nat gas trucks, and will eliminate all trucks that use gasoline by 2017. More & more power plants are switching to nat gas.

    • mbaes,
      well, you go ahead and move on.
      to me, 0.391 is a great dividend to get. beats many many divi stocks.
      Nat gas goes up and down, with winter coming, more nat gas will be needed.
      As Buffett often said: "Always invest for the long term."
      if you find something better than this one, please let us know, thank you.

      Sentiment: Strong Buy

      • 1 Reply to oroplata68
      • "Nat gas goes up and down, with winter coming, more nat gas will be needed."

        You still don't get the most important point here. Whether or not "more nat gas will be needed", ECT's wells will be producing less and less. NG demand could go through the roof but ECT production will keep declining every quarter meaning a smaller and smaller distribution and lower and lower unit price to go along with it.

        "if you find something better than this one, please let us know, thank you"
        as for that, I could suggest almost anything in the sector. Hold this long term and losses are pretty much guaranteed due to the sum of future distributions probably exceeding current unit price. In other words, over time decline in unit price will exceed what you get in distributions.

    • You will see ECT close over 10 by EX date, after that watch out.

    • You're welcome. Not only are you correct in thinking "I don't see it rising anytime soon", but the distributions will tend lower and lower with each one. Sure, there may be the occasional one that is slightly higher than the one before (like the August one was slightly higher than the May one) but that simply means that the reduction in the following one will be even greater. As there is no new drilling or development to be done on any of the trust wells, the natural decline means that production will be lower with each quarter that passes. So it would take a very large spike in NG prices to overcome that drop in production (and a large spike is not on the cards any time soon). Even if you are thinking of LNG exports and that story you will still be disappointed. First because the amount of LNG exports that will be allowed will not be enough to push up domestic NG prices significantly. Secondly, even if domestic NG prices did spike once all the LNG export projects come on line, by that time this trust will be producing so little that it will not be enough to take much advantage of the increased prices. If you want to play LNG exports and NG prices, as least use a vehicle that will still be producing significant NG by then!!! All of this was essentially written into the prospectus for this trust - the only surprise is that we were supposed to have gotten much more of our original investment back by now and the decline rates are much steeper than originally forecast in the IPO materials.

      • 1 Reply to lizahuang54321
      • "the only surprise is that we were supposed to have gotten much more of our original investment back by now and the decline rates are much steeper than originally forecast in the IPO materials."

        Oh, and the they also rushed the drilling program so as to remove the protection of the subordination threshold a couple of years earlier than they said they would in the prospectus.
        Pretty obvious why they would do that when they realized that the well performance were not living up to expectations.

 
ECT
2.13+0.09(+4.41%)Aug 28 4:02 PMEDT