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BP Prudhoe Bay Royalty Trust Message Board

  • midnightgirl01 midnightgirl01 May 8, 2003 9:49 AM Flag

    WTI Prices needed for royalties

    "During the year 2002 and the period of 2003 up to the date of this report, the WTI Prices have been above the level necessary for the Trust to receive a Per Barrel Royalty. Whether the Trust will be entitled to future distributions during the remainder of 2003 will depend on WTI Prices prevailing during the remainder of the year. "

    Does anyone know what the per barrel price level necessary to continue to receive royaltys are?

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    • Good morning,
      I am watching the refining sector, but have no investments there. You have to expect a lot of volatility. One company that comes to mind is Valero (not sure about ticker symbol), which is the largest independent.

      Crack spreads, refinery margins, have substantially improved during Q4/2002 and Q1/2003, so more profit. But what makes the sector more complicated are the approx. 40 different fuel standards in the US.

      Generally speaking, the US refineries need an overhaul in the coming years. So profits will be eroded by above average investments/repairs because of used/outdated equipment.
      Just my opinion.


    • Good morning,
      yes, that is how I read it too.

      But there is a caveat here: The EIA statistics are somewhat "foggy" because they
      a) do not include tertiary stock, which is small
      b) are politically influenced by the "Great Game" between OPEC and EIA/Washington/The West

      Since finished product inventories are also low, I expect refineries to run overtime in order to be prepared for the driving season. So additional, above average, crude imports should not show up significantly for at least another month or so. As an aside: US is continuing to buy more finished products than usual in Rotterdam now since approx. 12 months.


    • maeleoin: My experience is that institutional ownership stablizes a stock. That is not to say that a particular stock is not sometimes adversely affected (sometimes seriously) with bad news, but overall, high institutional ownership indicates bullishness on the stock's prospects.

      Below is a smattering of stocks that I've been following and their respective institutional ownership...

      CSCO 61%
      DELL 68%
      IBM 55%
      XOM 52%
      MYG 69%
      CBE 73%
      WFC 67%
      and even in royalty trusts with reasonable daily volume...
      HGT 27%
      SJT 49%

      I am wary of stocks with virtually no insider or institutional ownership. But that is just my opinion. Best of luck.

    • Agreed. I thought I mentioned that in an earlier posting. Storage stats are stated every week, and the latest one on Wednesday caused prices up on Wed, Thu, and Fri.

      But I personally try to stay away from focusing on day to day trends. (Admitedly, it is sometime hard!) I try to think about what the trend will be for the rest of the year and as best as I can into the future. My best guess right now... mid $20s ($24-27) for the rest of the year, lower in 2004.

    • I have no secrets maeleoin. I perform market research for myself and to help others. And if you can believe it, I do it because I enjoy it.

      Even in today's market, I don't think it is aggressive to assume that you can get 5% total annual return. And it does not even matter what industry... OXY (energy), CBE (industrials), and MYG (appliances) all yield ~3.5%, and have upside capital appreciation. WFC (banking) is yielding 2.5% and its price is right in the middle of its 52 week range.

      But if you want to just assume you can get a 2.5% return, the logic of scenario 1 vs. scenario 2 still applies. You are still ahead selling today at $15 and collecting $1 in total yield over the next two years, rather than holding and watching your stock price drop even counting the high yield distributions made from in BPT.

      Final disclosure... While I am in personally, or within client accounts, in some but not all of these stocks, none make up a material amount of any portfolio I manage. I rate all of them buys at this time.

    • correct

    • Street name shares are not included in most "institutional holdings" calculations.

    • your a fool

    • Valuestock:

      A mystery remains. My understanding is that reported "institutional holdings" includes street-name shares held in brokerage and trust accounts -- Schwab, Merrill Lynch, Morgan Chase, etc. etc.

      You suggest 95% of BPT trust units are held by retail customers. Why don't these show up as street-name holdings? Or am I wrong in my understanding?

    • Good afternoon valuestock2000,
      o.k., let us agree to disagree regarding inst. ownership.

      I always like to discuss with people on these boards who at least
      a) know what they are talking about
      b) can substantiate their opinion with some proof (i.e. links etc)
      c) are ready to share information
      d) accept different opinion

      That beeing said, I do not think that BPT is a buy at these prices, but if you have read previous posts of me, I am in the particular situation of having recouped all my investments in BPT.

      Your assesment of a "fair" price of U$ 8 (if I recall correctly), seems a bit too low now IMO. But it could go there if WTI goes to U$ 20.

      Iraq will come online within the next 12 months, adding 2-2.5 mbd. But given the tight situation in the NatGas market, fuel-switching will take place this winter at the latest.

      Also: low storage in US, Nuclear shutdowns in Japan (and some in the US I hear), energy hungry China (new car sales 2002 up nearly 100% I think), North Sea production declining since 2000 (UK down, Norway stable), Russia having "harvested" (i.e. revived) old wells (= next to no new fields = no additional capacity),
      I think that, apart from psycho games with statistics and rumors, WTI will stay in a 25-30 U$ range until summer 2004.


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