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Tel Offshore Trust Message Board

  • Need_High_Yield Need_High_Yield Jul 3, 2008 1:56 AM Flag

    Something to consider!

    softwareguy... quotes the 10-Q regarding Chevron saying TELOZ will have 14.7M of cap-ex for Sept.-Dec. 2008 and then asks: "QUESTION - does Chevron/TELOZ expect a large increase of oil/gas from this project??"

    No... that is NOT the question! The question is how much of that $14.7M will be spent in September? Why you ask?

    In the first quarter the distribution was about $.94/unit. That equaled about $4.5M dollars for the 4.75M Units out. So if TELOZ has to pay 1/3 or more of that $14.7M in September, there will be no third quarter distribution at all. In addition, there will very likely also be no first or second quarter 2009 distribution either.

    I missed this news since I had sold out already before the quarter report was released. But now I'm drooling to see I might get the chance to buy some TELOZ at $5.00 again or at least in single digits either by year end or by early next year.

    And that doesn't even assume any commodity price reduction this summer and any hurricane damage, disruptions or even threats in the Gulf this summer.

    So... all you bargain hunters can buy TELOZ in the $20's, but I will be patient with TELOZ and wait for much lower prices as that has always worked for me over many years of investing in TELOZ.

    Reading further it states the independent engineers estimate the future net revenues of TELOZ will be $54M before expenses. With 4.75M units, that's a gross of less than $12.00 which is not the net nor the PV-10.

    While I don't agree with the engineers report, I also don't believe they are wrong by 400% as those buying at $40.00+ must obviously believe is the case.

    For me, even paying $20.00 for TELOZ now would be keep me awake at night.

    Good luck to all you "next quarter yield estimators". There is a whole lot more to understanding an O&G trust than estimating what the yield it is likely to provide over a three month period. Reserves, decline rates, cap-ex costs. etc., etc., etc. all come into play. Unfortunately, some of you will insist on learning those facts the hard way... by ignoring them!


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    • There you go Woodstock. You don't (can't) post any analysis, or anything of value to the rest of us. Based on the comparative posts of you and NHY we learn something from him and little if anything from you.

    • TELOZ has a 25% interest, not 1/3.

      • 1 Reply to werawc
      • werawc says: "TELOZ has a 25% interest, not 1/3."

        You need to read the 10-Q again. You didn't understand at all what what it or I said.

        That $14.7M was TELOZ's portion of the cap-ex not the total amount going to cap-ex on TELOZ properties.

        My statement wasn't about TELOZ paying 1/3 of the cap-ex cost but rather if they have to pay 1/3 of their portion which totals $14.7M by September 30, 2008, that would be more than the first quarter $.94 distribution payout.

        Usually a large portion of re-working and cap-ex costs are at the beginning rather than at the end of a project. So unless Chevron waits until October to bill TELOZ, the 3rd quarter distribution is very much in jeopardy.

        Even if that is the case, the 4th Qtr. '08 and the 1st. Qtr '09 distributions will be eliminated.


    • Please let us know when you buy.

      • 2 Replies to biffiesbrother
      • He will never tell you anything that he does because when he is wrong he can't stand to hear it. Can't you see his ego in his posts? He and his profile are probably all BS.

        Super duper, hot shot, shows up after the crash and won't tell you anything? Why would a guy like him waste his time on a yahoo board? Just use your head!!!

        I buy most stocks at 1K shares at a time or more. But right now I would invest at a couple hundred at a time just to see which way this is going to go. I wish I had bought some today but just couldn't do it with a lot of my other trusts getting hammered (BPT)(PBT)(MTR). The reason that I sold (TELOZ) were I thought there were better places to park the money for awhile. there was a time when NHY and I were the only ones on this board.

      • biffiesbrot... says: "Please let us know when you buy."

        You really don't want to know that. I am infamous for buying TELOZ too soon as well as selling TELOZ too soon.

        That said, if TELOZ drops under $10.00 this year, I don't think you will get hurt buying there if you can hold for a few quarters. But knowing when to sell TELOZ is equally important as many now are finding out.

        I usually buy stocks with a 1-3 year hold time horizon, but that might change if the long-term gain tax rates change. I doubt if that will take affect before 2010 however even if it is changed.


    • I disagree with you. Whereas you are correct in your facts and numbers, you fail to recognize that Eugene Island is a "Star" block in TELOZ's list of properties. Chevron has already hit it "BIG" in the Gulf of Mexico in another project with other working interest owners. Chevron has more information as to what these sands and levels of sands hold. Therefore, with costs being put into EI 339, there must be a lot of potential. Normaly, a large oil and gas company will not do such projects with only a 1:1 payout.

      • 2 Replies to nancyfbinky
      • nancyfbinky disagree with me. No problem, that is what investing is all about, differences of opinion.

        However, according to the 10-Q. that 14.7M will not be used for new wells, but rather to bring lost production online again. So that production and reserves was included in past reserve reports.

        Yes, it will likely be good for TELOZ in the long term. But just as people buy at $40.00 when they expect a $1.00+ quarterly distribution, they will DUMP TELOZ big time when there is no distribution and none anticipated in the near future.

        If you think that is not the case, look back at the long-term price history of TELOZ. If you think TELOZ will hold in the $20's with no distributions, good luck!

        I have made my biggest investments in TELOZ during those periods when there were no distributions and few buyers and sold out when the distributions went back to normal and all the pumpers were predicting higher prices based on the expected forward yields!

        It doesn't take very much in cap-ex costs to eliminate TELOZ distributions. But history says "investors" see that as a negative, even if it were to drill additional new wells, instead of a positive thing in the future for TELOZ.

        Just giving my views after investing in TELOZ for about 10 years now.

        Everyone can do as they wish! It's your money! :-)