As a newcomer to this stock I just waded thru the 3rd qtr financials. The ownership of this stock almost seems like a no-brainer, so I'm asking my self where's the downside Is it in the oil and gas reserves how much longer are they expected to last. Also there is such a low volume on this stock. Do the royalties/dividends show up in your account each month. So someone please let me know what I'm missing . thanks for your input
SJT is a pure play on the price of NG. The reserves are likely to be far in excess (25+ years) of the estimated 9.5 years ( we know this because the production has not gone down during the last 20 years, and they are drilling lots of new wells on property they already have leased). Since SJT does not use hedges to limit the selling price of NG, the big risk is that we are wrong about the future of NG prices. Those of us who love this stock and intend to hold it till we die believe that NG will never return to the $3-5 range again, with one exception: a flu pandemic, which could cause great demand destruction. Even this would be a temporary effect, with rapid recovery following. Of course in the case of a pandemic, the only safe place for your money is in fixed rate instruments like cds. Check out Mcdep.com for lots more information about NG royalty trusts and the future price of NG.
I agree that ownership of SJT is a no-brainer. Almost limitless reserves and a growing market (California natural gas energy generating plants) and peak in North American natural gas supplies and NIMBY activists ready to block LNG shipments to the US. Throw in high oil prices, lack of a more ecological alternative.... I think payday is tomorrow, by the way.
In an upward market (such as you're seeing right now), the ownership of these issues is a gold mine. However, the downside comes if there is ever a glut in the world oil markets (increasingly unlikely) which would cause prices to QUICKLY tumble. The other issue is that there is NOT an infinite supply. All wells are depleting on an annual basis and will eventually run dry. You should read the annual report cover-to-cover EVERY YEAR(particularly the section describing reserves) and base you decision to continue holding them on that data.