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San Juan Basin Royalty Trust Message Board

  • lca13 lca13 May 17, 2010 11:30 AM Flag

    May Dividend Prediction

    Let's see how my model does this month. There is a wider range of potential error as hub volumes spike dramatically in Feb.

    10 cents margin of error plus 2 cents minus 1 cent

    Another factor that could shift the above range down is that SJT is running below average on capex. If they show a large increase for February, subtract a penny from the above estimates.

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    • New here but,have been involved with SJT for 18 years including long or short.

      Currently I have sixty puts working. My reasons are the San Juan hubs pay about $3.70 today, much below recent pay outs of SJT. Based on today's pricing at Blanco(SJTs hub) the trust will report about eight cents for May(distribution announced in July).

      Capex has decreased dramatically and production is below the 3/bcf norm by 300/mcf. This is a sure route for declining future net income.

      Fair pricing for the units would be in the low teens in my estimation.

      ICA has a competent formula for projection of distributions as they have been accurate.

      desert lad

      • 1 Reply to MontanusRA
      • Well, that's what happened last year and so far the storage situation is even more bearish than same time last year. So it's reasonable to expect both distributions and unit price to drop much lower (at least 50%) over the summer. Last year we had a couple of distributions of less than 1c.

        I've been surprised how well SJT, HGT, CRT, MTR, etc have held up so far considering gas has been at $4 for several months already. Looks like there are a lot of new investors who are not aware of the seasonality here and they expect the winter distributions to continue at that level or even rising. Look for buying opportunities in late summer/fall.

    • So I am not sure then. I hold PBT and it is selling NG in the $7's... their are either hedged or doing something I don't understand in the books.... or something I don't understand. I'll dig a little when we get through this market mess we have right now.

    • But Amroys are not allowed to hedge, that's why I don't understand it.

    • From what I looked at the others, production is hedged. SJT had buyers that failed to meet contracts and thus had to renegotiate new contracts that specify something that I interpreted as spot prices. So part of this dividend was a settlement.

    • Hey Ica,
      Sounds like you have some understanding of how Amroys production is priced. I understand that Amroys are not allowed to hedge, but not clear what exactly is limited by that rule. Specifically, can they sell future production against futures prices or do they sell only into the spot market?

      The reason I wonder is that CRT's distribution announcement for the last 2 months stated that the prices they obtained for NG for those 2 periods were $8.95 and $8.19 per Mcfe. Not sure exactly which months that production corresponds to, but those prices are way higher than Henry Hub futures reached even during winter peak prices. Also not sure which hub they sell into, but I wouldn't have thought such a large discrepancy could be due to hub differentials.

      So I'd like to know...how can CRT get such high prices for their gas when they are not allowed to hedge? Did they sell future production some time back at much higher prices than current prices? PBT also received quite a high price for their gas according to the distribution announcement (price they got for oil was more predictable), but not as extreme as CRT.

      Can you explain how Amroys production is sold and priced?

    • Yeah the price is the tricky part because they do the book the gas/month in unpredictable ways.

      I had 12 cents on the high side but that was based on flat average hub prices (since I expected no delta based on previous month's books).

      Right now I have 9.3 cents for next month, also assuming flat hub prices, but that may end up as being too high as they may now be front loading the Apr #'s with more Apr as a percentage than Mar (clearly Mar #'s had a significant amounnt of Feb gas in them).

    • Strip out the $2.6m settlement and dist would have been 14.7c, still higher than I expected.
      They were still getting $5.35 per Mcfe during March so when that goes down to $4 in a month or so, we can expect to be getting 10c.

    • Sounds about right. You could probably also just check last years distribution for a month when gas price was around $4 (although I seem to remember that differential for San Juan hub was high last year, not sure if that's true this year - does your model take that into account?)

 
SJT
4.45-0.13(-2.84%)Feb 9 4:02 PMEST