BP Prudhoe Bay Royalty Trust Message Board
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Looking at BPT again
Hello, all.
I was a big believer in BPT back from the '90s, when I got in for $6. I played in and out over the years, and made a few bucks. I left BPT a few years ago, when the valuations seemed consistently too high, but it never left my radar. Now, the price has taken a beating, and was wondering what the causes are.
I know that production issues (or at least perceived production issues) used to knock BPT down, as well as the periodic "we're about to run dry!" theories. Anyone care to share their thoughts about the recent beating? Is it related to potential tax-law changes, or actual production / price situation?
Many thanks!-
I think of two reasons:
1) Last year rumor was congress was going to hammer the tax benefits of royalty trusts, which did not happen. Many royalty trusts went down.
2) See the article written by Searching For Alpha, I forget the author.
I think oil prices are headed higher and so I am thinking of adding to my position down here.- 1 Reply to markseiler56
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"1) Last year rumor was congress was going to hammer the tax benefits of royalty trusts, which did not happen. Many royalty trusts went down."
They never were. It was never even considered. That was just a lot of foolish speculation on message boards.
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It is more related to the fact Jason Zweig has no concept that PV-10 in an SEC filing is unconnected to reality...........Dave
- 3 Replies to jdfunnell
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The published PV10 from the annual report significantly undervalues the Trust assets. A more realistic valuation might be the undiscounted future cash flow from the assets using current prices constant. If oil prices escalate at a rate two to three points higher than CPI, you can have a decent built in ROI.
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If you are blaming one WSJ article for this large and justified decline, then you have your head in the sand.
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Um, I think I need a little more context on that one.
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