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BP Prudhoe Bay Royalty Trust Message Board

  • brophy294 brophy294 Feb 14, 2013 8:28 AM Flag

    Seeking Alpha is at it again

    http://seekingalpha.com/article/1181541-bp-prudhoe-bay-likely-to-report-150-million-decrease-in-discounted-future-cash-flows?source=email_rt_article_title

    Can somebody please explain this to me. I have owned BPT for years, but when I read articles like this that make my head ache, I just feel like getting out and on with something I can understand!

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    • It's simple actually. BPT is a trust that distributes earnings from its entitlement from the fields. The variables to its earnings are simply oil price, the barrels of oil produced (up to its entitlement) and the costs.
      The bears try to perform a discounted cash flow usually based on PV-10 which is an antiquated SEC requirement which discount projected cashflow at 10%. Now, you and only you have to make the call whether 10% is the right rate to use. Considering 10 years US Treasuries at 2% and junk bonds at c6-8%, I think 10% is high.
      Bear in mind, BPT is a trust as such it will never put out press releases to defend itself. Also it is mostly a retail investor stock so it will have volatile days. Personally, I like such articles as it enables to accumulate more.
      So, between 0.25% in checking and 10% yield, it's an easy answer.

      Sentiment: Buy

    • It amazes me how often people lash out against "the haters" when discussions of BPT charge costs come up. Especially when someone lays out the math in a detailed discussion.

    • The only thing discounted here is SA's credibility. Out of all the financial news sources out there, SA's is the least useful and I usually ignore it.

    • seeking alpha has just about single handily knock this stock down. just as long as they keep paying those good dividends, i think you have nothing to lose. How they get their numbers, I will never know. Only roundrobinjack offers good analysis and simple explanations. read his posts!

 
BPT
98.51+0.70(+0.72%)Jul 9 4:02 PMEDT

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