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Pengrowth Energy Corporation Message Board

  • MINCE38 MINCE38 Mar 17, 2005 3:17 PM Flag

    Who really knows the business model?


    Since owning PGH on and off for 2 years, Ive read many posts, as well as many newsletters, both pro and con about oil and gas trusts. Some say they are merely an elaborate ponzi scheme that can only keep the distribution up by issuing more shares and others say "because" of the high distribution that they are the best oil and gas plays on earth. However after all my research, I am still not 100% sure who is right. After all, imagine if a global giant like exxon mobile became a trust, and distributed 60% of cash flow like this puppy, their share price would double in 3 days! On the other hand, imagine if these canadian trusts cut their distribution in half, giving us still a decent divvy and re-invested the exxon and the big boys. Whats the best answer? Remember.....nothing is for free! "You pay on the front end, or you pay on the back end", my car salesman step dad always told me. -) Does anyone really completely understand how this trust structure is going to hold up indefinitely? Yes? Does anyone want to speak............ -)


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    • mince

      You mention Exxon. How many shares has Exon added over the past 25 years and for what purposes? Same as all of the rest of the market, one big ponzi scheme every place you look, I think not. It is called growth when a responsible entity does it and only called a ponzi scheme when perpetrated as a fraud by a less than reputable entity. That is why we must all perform proper Due Diligence.

      Now I believe that in todays world a little bit of fraud or misrepresentation exists in most companies as they add shares (this includes Exxon) for the sole purpose as to be part of executive compensation packages and options. This serves the purpose of greed and causes dillution of share holder value.

      The Donk

      • 1 Reply to donkeylipss
      • I agree donk! But.........Exxon "can" keep issuing more shares and noone will worry if they can stay in business. Also, they dont rely on acquisitions. What would happen if the acquisition market in canada became so tight that nothing could be acquired at fair value for oh.....say 2-3 years. In the M&A world...this has happened! This is a trust, not exxon mobile or hess or shell. How would we shareholders survive, if acquisitions become nil "and" oil and gas goes south? I am just playing devils advocate here. Hey....I own this puppy too, but id rather have owned CHK or XOM or BHP for a much greater overall return. I guess what i am asking is...."is the distribution we get, coming at too high of a price? time will tell.


    • you need to read these Canroys annual reports on Sedar. You don't seem to now about how they issue shares to aquire assets,etc.(ie not to keep distributions up by issuing more shares).If you want someone to spoon feed you an answer, get on Need High Yield's board and maybe someone there can help you.There may also be some help on how Canroys work and are structured in various financial websites.

      • 1 Reply to cangeol
      • I do read the reports electronically as posted here at yahoo! They speak but dont talk. They still dont explain how they would stay afloat without constantly issuing more shares. In fact.....THE HEAD OF THE IR DEPT TOLD ME ITS HOW THEY KEEP THE DISTRIBUTION INTACT! Thats all I need to know. Now.....can they do this for the next 10 years? 20? I suspect there is a lot more unexplored land in canada that is probable but "unproven" than we could even dream of. Next question...who are the public companies that provide the equipment to explore, especially that work with these canadian trusts?

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