Is there an issue with this trust eventually running out of gas and oil? I can not quite understand the reason for such a high yield? I understand the fluctuations in oil and gas but even when you back out say 20% discount the dividend seems compelling for a long term hold.
The Trust is a depleting asset -- additional properties cannot be added to the Trust to increase its oil and natural gas reserves.
To figure out the life of SBR, go to its website and look at its 2007 annual report (aka 10K). Find its total proved reserves as of 12/31/07 for both oil and natural gas and divide them by their respective annual production. This will give a rough estimate of how many more years the Trust will continue assuming constant production.
For the reason that john gave this is indeed a depleting asset, but it is not depleting as rapidly as john would imply.Over the last eight or nine years production is down by about 30% but reserves are unchanged. There is a fair amount of property here and if it has not been drilled it is not proven. New wells are being drilled.