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ECA Marcellus Trust I Message Board

  • liza - you are a voice of reason and a pretty good judge of the Trusts. What are your thoughts on ECT? Do you still have a position?

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    • Yes, I still have my position and will hold.
      Not sure exactly what is going on but presumably a combination of the downgrade and collapsing NG prices.
      I'm unsure if ECT still has any hedges (they probably started with some but being a trust cannot add new ones once the initial ones roll off) and also how wet their gas is (how much liquids it contains). Maybe someone here has researched and knows more.
      Marcellus does have a lot of liquids in some areas, but whether the ECT properties are in the 'wet' part, I haven't checked (it should be laid out in the prospectus if anyone has time to look).
      IF they are unhedged AND they are mostly dry gas then the distribution could come down significantly. Maybe that's what people are thinking. Whether it is the case or not, I haven't investigated but somebody should be able to check by looking at the trust filings.
      HGT is also getting killed over the last few days...that one is clear cut - they are dry gas and unhedged, so it makes sense. SJT has held up relatively better so far but they are in the same boat so I would assume they will follow.

      Whether it is a buying opportunity depends on how long NG prices will stay low. It seems it is starting to sink in that they may be low a long time. Merrill Lynch just put out a note talking about 'an incredible glut' and just slashed their NG target prices to the low 3's for all of 2012 and 2013.

      Personally I will hold all my positions because I also have oily plays and G&Ps which will do well in an environment of low gas prices. I may add to positions like HGT if prices get much cheaper (not yet though). But whether to hold probably depends on your own individual portfolio (how much it is weighted to NG sensitive plays) and whether you can stand it if prices go much lower.

      • 2 Replies to lizahuang54321
      • Lisa, thanks for your great posts. I own several royalty trusts, including ERF, SDT, and PER. I would like to locate another more oil based trust. Any suggestions?

      • Well its a split decision. They are not unhedged, and the hedges go out to 3/31/14 on 50% of estimated production. That is the good news. But I read the s-1A last evening and scanned it again after your comment, and I find no trace of any mention of oil or oil pricing or the BOE equivalent for wet gas. All the verbiage is on nat gas pricing. I think these are dry gas wells.

        Good news is hedges are at $6.82/MCF in sub $3 market. Bad news is its only 50% and it may well be that the subordination targets will not be hit. See the recent post above on what Oppenheimer was saying, 3rd Qtr could drop below sub target and they used $3.35/MCF they said.

    • Does anyone know whether ECA is dry or wet gas?

2.10-0.04(-1.86%)Sep 27 4:02 PMEDT