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Sabine Royalty Trust Message Board

  • mupdbb mupdbb Sep 1, 2008 8:35 PM Flag

    Quick Question

    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.

    What am I missing?

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    • johnmint@ymail.com johnmint Sep 1, 2008 11:39 PM Flag

      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.

 
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