The big boys , Seeking Alpha, or somebody is driving this stock down. Go ahead, Make my day. Let me pick up a few thousand more shares and a rock bottom price, take of advantage of the capital gain, and load my bank account with a juicy dividend in October.
No, it's the same group of people trying to drive it down based on the same inaccurate info as they used last summer and fall. (Seeking Alpha) People not familiar with the industry don't know the difference between current proven reserves and how that changes over time, so they basically do a few simple math calculations and totally miss the boat. Proven reserves change every single year, they are not static. They are reserves that meet a very specific definition. Rookies look at it and say -- oh, that's all there is and all there will ever be. But energy folks know proven reserves is a moving target.
Last year, the short interests discovered they could scare off folks in BPT and make a load of money because this has relatively low institutional ownership and a lot of retirees looking for dividends own this. It makes it vulnerable to folks with agendas trying to day trade. Higher institutional investment protects from this kind of blatant attempt at manipulation.
If you are in it for the dividends and long term, you are probably safe. However, if it's not a long term investment for you, you might be safer to sell now and buy when the price drops a bit more. My take is this will go on for several days or weeks until one of the big boys in energy comes along and writes an article explaining all the fallacies of this latest Seeking Alpha short article. Then the stock will recover, just like before. If your trading cost isn't too high, you might be better off to sell now and buy it back later.
But the "reason" is exactly the same reason it happened last year -- day traders at Seeking Alpha trying to scare people into selling. Fundamentally, nothing changed. The last report said production will continue to 2029. Oil prices have historically gone up over time. If you look at the dividend history, this is pretty much consistent with prior years' performance.
Other royalty trusts with very similar fact situations are not crashing.
You're right-a person who ID's himself as a petroleum engineer puts a finite life to an oil reservoir. That's wrong and stupid. NPV doesn't really have a meaning to the long term holder and coupon clipper. With dist reinvest and taking some off the top, my return on invested capital is close to 30%. The dist continues basis WTI price and production and the dist doesn't really matter whether the NPV is $50-$100+. I am looking to keep my portfolios in balance, so am trying to take some off the top. The article makes getting a fair price for my covered call a little more difficult. I feel at this point that the stock is a buy but from my own standpoint rate it a hold.