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BP Prudhoe Bay Royalty Trust Message Board

  • sawingzzs sawingzzs Apr 23, 2005 3:24 PM Flag

    A Simple Answer

    Much debate has taken place on this board recently about the reasons for BPTs stock price volitility and its relationship to crude price. They are truly related to the extent that BPTs worth is the discounted value of its income over the life of the Trust. Speculation on this value changes with every swing in crude price that is interpeted as a leading indicator of future price movement.

    With speculation running rampant about price spikes, rampaging demand, and slipping down the back side of the "peak oil" curve, BPT has been changed from a stable little income producing trust to a traders and speculators vehicle.

    Nothing will change these habits in the short term. Just visulize where you think the price of oil is going in the next 15-18 years and invest accordingly.

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    • >>Bush is lucky to be smart enough to be able to get his fly up and down.<<

      Well said. If the Democrats had put up an electable candidate (without a trial lawyer sidekick as a running mate), the dislexic geek we have for a leader would be back cutting firewood on his ranch as we speak.

    • Bush is lucky to be smart enough to be able to get his fly up and down.

    • And we "should" have responsible government.

      Bush's recent statement that there was "no quick fix" to high gas prices was a politician's way of saying "I haven't a clue as to what to do."


    • farms1804

      My "nasty pill" is a 12 hour time release one. Hence the effect (6th sense for hanky panky)that is visible. LOL

    • Bulchase--

      I thought the same thing, but I forgot to take my "nasty pill" this morning, so I was in a charitable mood this morning. (LOL).

      If the kissing and hand holding does not bring results, maybe George will consider changing his religeon to Islam or making the Prince a special consultant on energy matters--with privileges in the Lincoln bedroom!!

      Sorry--must still be some effect from yesterday's "nasty pill", or I have watching too much Jay Leno and Dave Letterman.

      farms 1804--aka Banyan

    • <<<<Was not that what I read the Saudi Prince suggested a few days ago at the ranch, as Bush
      kissed him and held his hand???>>>>

      Maybe he did more than kissing and holding !!! They were at the Ranch after all !!!

    • According to morning news reports, President Bush is now saying that we need more refining capacity to process crude oil.

      WOW! What a brilliant conclusion. I sure would never have thought of that. (LOL). Was not that what I read the Saudi Prince suggested a few days ago at the ranch, as Bush
      kissed him and held his hand???

      farms 1804--aka banyan

    • In reply to sawinzggas and r/RBT:

      sawingzass--The last paragraph of your post #7002, says it all in my simplistic way of thinking, for those that are considering BPT as a long range investment, especially for a steady income. Day trading of BPT by the speculators is another ball game.

      All of these predictions of the worth of BPT down stream five or ten years, to me, are about as nebulous as hurricane predictions here in Florida where I live. Case in point--last summer here in the Tampa Bay area where I live, we, according to predictions were going to get a direct hit to our ares. We were acting, on information that we had at the time, on predictions, by boarding up, laying in food and water, and deciding on an evacuation route if necessary. It did not happen. Twenty four hours before the predicted land fall in Tampa Bay, it suddenly veered to the East and hit the Charlotte harbor area 100 miles to the South. How quickly things can change--including BPT.

      A poor analogy, probably, but to me, predictions are just our "best guess", albeit, hopefully, an educated guess. Again, your last paragraph, says it all, that people must evaluate a situation for themselves. That has certainly reflected my thinking about BPT for a long time. JUST MY OPINION.


      JUST MY OPINION--GUESS--SPECULATION--or whatever you want to call it. It is my opinion that speculators have driven the price of BPT to a point where it makes BPT, at present prices, a more questionable investment for the long haul.

      Assuming that the dividend for this whole year will hold at $1.54 for all four quarters(about $6 for the year),--it may be higher or lower-- the return is about 9.2%. A good yield, but it does possibly carry more risk than more conservative investments.

      I am a very conservative investor. For a more reliable stream of steady income over the longer period, along with preservation of principal, there are some good REITS out there--health care for one--that yield $7.5%. The spread between the yield on BPT,at todays prices, and IMO, other less volatile investments is not enough to continue with BPT. This is one of the reasons I closed out my position with BPT when it was above $70.

      I just want to keep hitting "base hits"--I seldom go for the "home run".

      Just my opinions--as the cliche goes--worth just what you are paying for them.

      Time to go listen to Lawrence Welk on public television.

      Best to all

      farms 1804--aka Banyan

      • 1 Reply to farms1804
      • just because it is overvalued does not mean it will go down - it could go up and become more overvalued. that is why I rarely short stocks.

        also, someone a few months ago laid out the mathematical relationship between BPT's NPV and WTI. He noted at the time there was backwardation in the futures markets - meaning that contracts for near-time delivery were more expensive than 5 or 10 years out. In the span of a few months that has reversed itself, meaning that the long-dated WTI futures contracts have risen significantly in value from around $39 to more than $50. that is bullish for BPT, but it also points to how quickly the "market" can change.

    • sawingzzs: I completely agree with you that BPT has been transformed from a 'stable little income producing trust to a traders and speculators vehicle.' So in view of this state of affairs, and knowing the relationship between the discounted future revenue of BPT and the future price of WTI, would you say that speculators have caused BPT to be currently over priced or under priced based on last Friday's close of $64.71/unit?


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