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BP Prudhoe Bay Royalty Trust Message Board

  • suadela24 suadela24 Dec 6, 2012 3:26 PM Flag

    is this a buy here

    Can someone give me a heads up on this , I owned it a few years ago , but it was over a hundred than , what happened ? oil spill ? whats thse prospects ? div looks good .


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    • That is a great question, Janet.
      In August, the Wall Street Journal published an article which said "We don't think it's a good idea to buy royalty trusts like BPT, because ultimately the return is exhausted. BPT says they're not sure the oil will keep flowing after 2027." This was not a new fact, it has been in BPT's SEC filings for years. But it knocked the stock from $110 to $90.
      Then came the Fiscal Cliff. No one knows how royalty trusts, which after all are a device to avoid taxes, will be treated under the new tax laws. Other high dividend stocks, such as utilities, have suffered recently as well. This knocked BPT under 75.
      Do you own due diligence, there are plenty of blog type articles saying of course it's worth more than $75. seeking alpha, etc. As for me, I'm in with 5000 shares. I'm sure I'll get $75 in dividends over the next 15 years, and probably more after that.
      No one knows ultimately how much oil is in the ground, or what the tax structure will be next year. So uncertainty is the cause of the dive in my opinion.

      Sentiment: Strong Buy

      • 4 Replies to speakwithlove
      • I just bought some, with reasonable cliff compromise should go up big then there is the dividend.

        Sentiment: Buy

      • Here's a possible negative scenario : Some time next year there's a tax reform agreement. In it, ALL royalty trusts are lumped together and taxes increased on the trusts. Consequent dividends are reduced. I don't think there s a revenue gain for the government because currently the full tax burden is passed through to the individual. But politically, it may pass anyway. What do you think are the possibilities this will happen, and what affect will this have on the net dividends?

        Sentiment: Hold

      • Speakwithlove , Thank you sir , I appreciate your honest answer .
        I am surprised that they can't tell how fluid the well is at this time . I just sold my stares in MMR , and was really disappointed in the outcome after holding it experincing anguish for three years , guess i was lucky to make a few k's and get my money back . i am not looking for another investment like that and thought i would get more div minded and conservative even though i am only 24.
        Maybe the bestthing is to wait until washington gets there act together .


      • Between Cramer and a couple of accountant type analysts who didn't know an oil reservoir from their rearend, the stock has been bashed. Distribution down this Q ac scheduled maintenance. Am holding now but reinvesting distributions. Dists should climb back into the $2 but waiting to see on the BS out of DC.Traders and shorts moved in on the SA articles. Thinly traded so covered shorting probably not an issue.

        Sentiment: Hold

16.51+0.96(+6.17%)Apr 29 4:02 PMEDT