CHKR is down a little over 21% since ex-date. SDR is down about 18.5% and PER is down a touch over 14%. Sounds like CHKR has been punished more than the others, as it should have been for missing the sub level, but it certainly has not been "holding up" compared to the SD trusts. SDT is down just over 20% since ex-date for reference. The fact that CHKR is down more than SDT when it still has a sub level to support distributions (even if it does not fully reach the sub level) until the end of 2015 as currently estimated is a joke.
Why do you think that? PER is in an entirely different and better basin (Permian), is nearly all oil compared to more gas for SDR/SDT, and has been performing better. It also has longer than SDR/SDT until drilling is complete. For that matter, SDR will eventually trade higher than SDT as it has more oil production and more time until drilling is complete and the subordinate level ends. SDT will soon be without a subordinate distribution level and will see it distributions drop like a rock. The share price will follow.
PER will not go anywhere near $10. This is the best of the fixed drilling trusts, performing well, almost all oil, and is simply being wrongly drug down by the performance of some of the other trusts.
The next distribution will be a minimum of $0.56 to common unit holders as that is the subordination threshold level and SDR is in no risk of missing that level this quarter. It's possible it could be higher, but it will not be lower.
There is ZERO reason for SDT to trade at a premium to SDR. ZERO. However, you can list several reasons why SDR should trade at a premium to SDT: oil/gas mix, development wells left to drill, subordinate thresholds, subordinate unit time frame, distributions, etc.
I guess we just have to trust the market and investors will eventually wake up and "fix" the price of SDR....
"near term" is a year or two or even three. You need to re-think your perspective.
Comparing LINE and EVEP is laughable. There is no comparison between the events effecting the two companies.
The secondary was necessary for financial reasons DUE to the sale of the Utica property and therefore is not highly dilutive.
Again, this management team WAS considered "one of the best" until the Utica sale issues. They made a big mistake, got greedy, what have you, but they still know this industry and the recent moves regarding the Utica land and midstream development are a step in the right direction and a step towards regaining investor confidence. The future looks a LOT brighter than the recent past.
You two are funny. Remember that this management team was considered one of the best before the Utica land sale events. Did they get greedy, yep. Did they mislead investors because of their greed, yep. But at the end of the day they are still a good management team that knows this industry. They are basically guilty of thinking too highly of their assets and refusing to agree on lower prices than what they thought the assets were worth. It has proven to be a near term error, one anybody could make give the hype around the Utica, but it may prove less of an error long term as Utica land prices are rising again and so are well results.
I'm here for the long term and sitting on over 100,000 acres of Utica land and midstream assets/royalties, looks very good long term.
I think we can all agree you have to throw the prospectus out the window for these trusts, with the exception of the sub distribution levels, since we need to know what those are. Otherwise, you need to look at the analysis and projections of someone who is taking actual, present day trust performance and commodity projections into account. That person is Dan Moore.
Liza, I agree Mark knows what he is talking about in general, but he also has a very different view than Dan Moore. They can't both be right ;)
Maybe Mark is right in the short term and Dan Moore is right in the long term. Then they CAN both be right!
They are targeted to finish drilling in the end of 2014 per Moore's latest article. Again, I was just doing some quick and dirty numbers since you said the numbers aren't pretty. A 10% return is pretty in my eyes. I target an average return of 8% in my accounts. If I do that, I am beating the vast majority of financial advisers.
I was just doing some quick back of a napkin numbers there. I leave the detailed estimates to Dan Moore. I just took a look at what his latest articles say and damn, I did pretty darn good! He estimates $19.50 in payout from now to termination. And that is based on the current low future estimates for natural gas, liquids, and oil. Based on his calculations, $19.50 would represent a 10% return at $11.80 a share price.
In general, I hear what you are saying Mark, but I think you are looking at these trust with too much gloom and doom.
Mark, I only think it can hit some of the future sub levels or atleast get close. That is it, that is all the faith I have.
I completely disagree with you on these trusts being broken, atleast SDR and PER. CHKR is a borderline/maybe. Dan Moore's most recent articles on SDR, PER and CHKR estimate distributions from now until termination of $25.50, $26.50, and $19.50 respectively. That is a VERY nice return at today's prices, even if the share price goes to $0.00 in 2031 when these trusts terminate.
What is broken is how people are viewing and trading these trusts at this point. No offense, but you are one of them. These trusts will not settle down until the sub units convert and the traders go away. There is still real money to be made on these trusts, particularly SDR and PER.
Apply similar logic to a better performing trust like PER, which can actually hit or exceed its sub level until termination, and you will see just how oversold some of these trusts are.
Well, if CHKR pays an average of 80% of the sub level until the sub period ends in the second quarter of 2017, that would be $6.83 in distributions. Even at an average of half of the final sub level (2nd Qtr 2017 = $0.37) or $0.185 a quarter until termination, the trust would pay $10.36 over the remaining 14 years after the sub period. If you buy the trust at $11 now and keep it until it terminates (even assuming it is worth nothing when it terminates) you would collect a reasonably estimated $17.19 per unit......that's not a bad return. Remember that well depletion curves level off over time. Production is not going to go to zero at the same rates of decline we are seeing on these young wells. I think a lot of people are missing that point.
Based on that realistic $17 distribution estimate, I think this trust should trade up in the $15-17 range in a logical world. ESPECIALLY, since those numbers above are based on ZERO increase in commodity prices over the next 14 years and we all know that is HIGHLY unlikely.
If Dan Moore's value was based on PV-10 then it can also trade higher than $11 depending on what commodity prices do and revisions in reserves. These trusts are being oversold, with the exception of SDT which has completed its wells and thus has a very clear picture of the end of the sub threshold and the resulting distribution estimates. Shoot, it is an absolute joke that SDT trades higher than SDR. It shows very clearly that these trusts are being traded on something other than fundamentals. I hate when that happens.
There is just no way this goes to $7. Mark, even you have to admit this is looking pretty oversold having just missed the sub level by a few pennies with very low natural gas prices for the quarter. CHK has slowed down drilling in this trust so the subordinate threshold levels are not in danger of going away anytime soon and CHKR should be able to get close to them or exceed them if commodity prices rebound (ie. natural gas) of they hit some good wells. A correction was needed for missing the sub threshold, but this is overdone.