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San Juan Basin Royalty Trust Message Board

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  • rrb1981 rrb1981 Apr 24, 2012 12:43 AM Flag

    Weak hands

    4% yield....the reality of low gas prices is setting in and is becoming evident with the falling monthly distributions

    Buy SJT when it hits $10

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    • What valuation model are you using that tells you it is oversold? Are you assuming a huge jump in NG prices?

    • SJT is primarily dry gas and monthly distributions are usually 2 months in arrears. So, we are getting royalties on gas sold 2 months ago. Gas has dropped since then, and give it 6 more months, with declining capex, volumes will taper off with no new wells coming online to offset natural decline, or at least, minimal wells coming online.

      Once the reality sets in of $.05/ and $/.06 per month distributions sets in, the price will start to drift down, only tempered by the hope of rising gas prices.

      I think if you buy SJT at $10/unit, you will receive a nice yield and have the potential for higher distributions and higher prices when gas rebounds to $3/mcf - $4/mcf. Patience. Wait for it to drop, then have the courage to buy when gas pricing looks its ugliest.

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