Sat, Sep 20, 2014, 1:42 AM EDT - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

BP Prudhoe Bay Royalty Trust Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • diogenes1234 diogenes1234 May 22, 2000 7:15 PM Flag

    Prospects of BPT

    I suspect we are in agreement, working the
    problem from opposite ends -- if I understand correctly,
    you assume the Royalty Trust Unit price efficiently
    reflects future oil price, while I assume Trust Unit
    pricing to be inefficient relative to probable future oil
    prices and CPI inflation.

    However, I wonder how
    good my model is and post here my calculations for the
    assumptions early posited. Your critique greatly
    appreciated:

    A. If WTI holds at $20 and no change in the CPI,
    payments will be $2.98 through '04, ceasing therafter.
    Present worth of Trust Units @ 6 1/4% is $2.77.

    B.
    Similarly if WTI is $25, royalties continue through '09 and
    PW is $9.82.

    C. And if WTI is $30, royalties
    continue through'10 and PW is $18.11

    My own
    approach is to assume (best guess) that WTI will average
    $25 in '00, increasing 2.5% annually thereafter, and
    that the CPI will increase 2.0% annually. With these
    assumptions, royalties will continue through '17, and
    discounted rate of return (cash on cash) is 18% on present
    Unit price of $10.50.

    Interestingly, when
    Trust Units were below $5 and WTI pushing $10, rate of
    return was zero to negative.

 
BPT
93.28-1.21(-1.28%)Sep 19 4:02 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.
TC PipeLines, LP
NYSEFri, Sep 19, 2014 4:00 PM EDT