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SandRidge Mississippian Trust I Message Board

  • greg_sorter greg_sorter Feb 13, 2013 12:55 PM Flag

    Big move in SD, buy SDT, PER, SDR in that order

    I follow quite a bit of oil royalty trusts. I note the big +5% move in SD just now. I am today buying SDT, PER, and SDR in that order, based on valuation vs peers. If I take SDT as an example, here are the most recent production levels
    151,000 bbl oil, 1,607,000 MCF gas over 90 days. I value a MCF of gas at 1/25 of oil, giving me 215,280 MBOE last quarter. Divide that by number of shares and number of days in the quarter and I get $192,600 per flowing BOE, with 70% oil, 30% gas. Now, compare that to a trust like SJT, which is all gas. SJT, using the same method, yields $191,700 per MBOE and is 96% oil. So, for the same price as SJT, I get a trust that is mostly oil, vs one that is all gas. The only trust I see that is much cheaper is HGT, but they are dealing with some legal issues that change their payout substantially.

    Sentiment: Strong Buy

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    • I added an little SDT today and bought some PER today also. While the ex div was announced pretty much on the same day for both stocks 02-12-13 for PER and 02-13-13 for SDT, I suspect these will be up in April when most are trying to just pay their taxes. The divy is an added plus and I love my positions in American oil and Canadian and think things will be looking up. In the meantime, I will gladly take the divy as an consolation prize!

    • Seems to be adding too much risk here just after ex. Will get in about month before ex as I fully expect the trusts to sell down more from here. Really, with the surprise reports for last quarter I am thinking more of the same in the future. Just looking at a chart is nothing to cheer about.

    • SJT is a perpetual, which should give a it a much higher valuation (to PV10) imo. My order of the three would be PER (more oily and cheaper valuation), then SDT, then SDR.

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