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BP Prudhoe Bay Royalty Trust Message Board

  • visit_youarguedotcom visit_youarguedotcom Apr 10, 2013 10:14 AM Flag

    Fair value $51

    I laugh when the people start pumping up this royalty trust. Let's look at the facts:

    - The unitholder is entitled to 16.4246% of production
    - there are 70 million proved reserves
    - the price of oil is $95
    - there are 21.4 million unit holders.

    Without even taking the NPV and factoring in interest rates, if you combine all of that information together, the fair value per unit is $51. Look do the math yourself: 16.4246%*70MM*$95/21.4MM = $51.04
    If you factor in a interest rate, the value will be lower than 51%!
    Is oil likely to go higher or lower in the near future? Probably lower as the US is producing more and net exports will start hitting by 2020 and efficiency is increasing.
    Let's pretend that all oil will be sucked out at $120 per barrell. The fair value? $64!!

    Why are you people paying such a high price for a unit that will have a price of ZERO once the reserves are drained.?

    Sentiment: Strong Sell

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    • Recall.

    • Investor like me must be stupid. The stock has been up daily in the last session to 93.11 today.

    • mh1337 Apr 15, 2013 3:09 AM Flag

      This post is flat out bad math, the reserves are based on the 16% share you don't need to further reduce them. So go ahead and check the math again, the trust gets 70mm more barrels, not 70mm*16%.

      • 2 Replies to mh1337
      • Her math is right: 70mm barrel X 16%= 11,200,000 barrel X what ever the ANS price is. The proceed will be divided by the outstanding units 2,400,000 units. The distribution will dry out quickly.

      • This guy is right:"up to the value of the oil in the ground"

        And if the Idiot that started this thread had a clue about oil and reserves he wouldn't make 'ASSUMPTION about PROVED RESERVES' why because proved reserves go "UP" everytime they drill a new well...any oil investor knows this...This is one reason companies report probable reserves and possible reserves and sometimes Contingent reserves and even sometimes they report OIL IN PLACE and give an estimate on what percentage they think is recoverable...Thus , why higher oil prices have the effect of increasing proved reserves on financial statements and lower oil prices cause impairments to be reported on financial statement...The proved reservews are only expected oil to be recovered from currently drilled wells.(sometimes proved undeveloped is reported as proved means awaiting to be drilled)...There is such a thing a enhance oil recovery(EOR) which is water floods, co2 floods etc....Most field can produce more oil with an EOR technology applied to it,

    • The PV-10 is closer to $59 last I checked. 1,315M of discount future net cash flow / 21.4m units. = $61.21. Take out the dividend and its around $59. I think there was slightly more than 70M in reserves and there may be undeveloped reserves. Also, if oil goes up so does the reserves so if oil goes up to $100 then this could be worth $70. Lastly, in a sub 2% T-Bill environment people are more than willing to accept 5% interest on their investment.

    • Visit you
      Are there any stocks that are worth a darn priced under value now?
      I can't seem to find any if they are...Maybe RVT that has a book value of $15.40 and is selling for 14 something....

      Ruger gun (RGR) is making tons of money now but what if the Republicans make a comeback? And I think making comebacks is something the Republicans are 'very' 'very' good at.

      MJNA a medical pot stock reported record this morning but it is priced about 25 times has to have reefer madness to buy and keep it.
      The reason I think that stocks that pay out are so high I think is because there is no where good left to get a good return for your money dividend ones anyway.

      • 1 Reply to sharonandersson90
      • If you look mainly at discount to book, you might consider the Boulder group of funds: BIF, BTF, & DNY. NB: All contain large position BRK-A&-B which will probably dip in price when Buffett dies. I would look at such a dip as a buying opp because this doesn't affect the underlying value. Also, the BRKs don't pay a div only due to his miserly cash-hoarding attitude and will probably pay one once he's gone.

    • I hope some people do sell off the next few I am short for maybe as long as five day...Am hoping this will sell off to $78.00!....When I turned 18 I inherited 3,500 shares of this stock have sold all but 500...
      Worst mistake I have ever made, some I sold right away for $20.00 and bought Canadians with the money...The last I sold was at $50.00.I'm am not selling what I have left. .
      .I will short term short against what I own staying within the IRS shorting against the box rules....
      .I have sold puts on this several times and got to keep all the money...Sold some for June 85s several months ago when this was down for $17.00 and $19.00 could have3 gotten $22.00 at one point if waited....Maybe four units will be put to me, it is alright if it is.

    • Fair value of $51?

      I have a hot tip for you: Short as many shares as you can possibly and mentally finance for $51. And good luck.

      Sentiment: Hold

    • My step-grandfather paid like less than $6.00 for this in 1999 because he believed in oil and he was very conservative, would rather buy the bonds in utes for example...Oil, I think is still a cheap buy at these prices of under $200.00 a barrel !.....That is why I have sold puts on this coming Jan BP 45s....

    • I don't know if this is a strong sell or not, but I just shorted against what I inherited as this will 'probaley fall back a few dollars the next couple of days after dividend....Am I giving my dividend away? I have before and I have made some before...Love to gamble I guess.

    • I didn't realize it was up to you to decide what the 'fair value' should be!

16.86-0.05(-0.30%)Jul 22 4:02 PMEDT