that would make sense, as div dropped in jan of last year too (44 cents). This being the last month of the broken well debacle, div should jump back to 50 cent plus range next Q.
2mm is a one time cost so that took 12 cents from the distribution (remaining cost of the abandoned well). Excluding that, costs are still 2mm higher than prior quarter, which would have been another 12 cents. I do not understand the latter chunk, I am assuming its for expanding the drilling program, which will lead to higher distributions later.. At least there is no change in reserves form the abandoned well and they might drill it again this year.
I think the large drop pretty much priced in the existing legal issues. What would hurt it would be new legal issues. The forthcoming march announcements are based on a case that was already lost. Nonetheless it is by far the cheapest royalty trust, and it is a perpetual. I think its the cheapest way to get long term exposure to nat gas.
that is such a blanket statement. Many times there is increased cost because of reinvestment in the fields. That might depress prices in the near term, due to the lower distribution, but benefit the trust holder in the long term.
it seems gross proceeds were roughly the same compared to last year, but that costs were 1mm higher. Also trust expense doubled.
It appears Bloomberg has shares outstanding wrong, shares outstanding is 17.6mm, so the main effect will be that locked up (subordinated) shares will be released in the exchange. No effect on valuations.
Sorry should be NGT.
Almost 4mm shares will hit the market. The NGT holders are also owning it for the zero coupon bond, not the energy exposure (which is minimal at this late stage). The way I read it is that ECT has 13.2mm outstanding, but ECA owns only 476k,per there latest filing. That means they are going to dilute the existing shares outstanding. Shares outstanding for all classes is 17.6mm. Any thoughts?
NGT Depositary Unitholders are entitled to receive $20.00 in cash for the zero coupon bond for each NGT Depositary Unit that such unitholder holds. In addition, based on ECA's agreement to acquire the perpetual net profits interest for approximately $5.9 million, each NGT Depositary Unitholder will receive approximately $0.95 in cash per NGT Depositary Unit at termination. NGT Depositary Unitholders tendering in the Offer will receive a number of ECT Common Units with a value (to be paid in ECT Common Units) of $22.55 per NGT Depositary Unit based on the 10-day volume weighted average trading price of ECT Common Units on the NYSE ending on the third day prior to the Settlement Date. For example, assuming ECT's volume weighted average trading price per unit for the 10-day period was $17.50, NGT Depositary Unitholders tendering 100 NGT Depositary Units would receive 128 ECT Common Units and a cash payment equal to the value of 0.857 ECT Common Units. The actual exchange ratio of ECT Common Units per NGT Depositary Unit will be determined three days prior to the Settlement Date. Any fractional units in ECT owed to NGT Depositary Unitholders will be paid in cash. The $22.55 per NGT Depositary Unit price offered by ECA reflects a 7.6% premium to $20.95 (the value of the zero coupon bond plus the per unit share of the proceeds attributable to the sale of the perpetual net profits interest), and, in establishing this price, ECA neither took into consideration any revenues attributable to the term net profits interest nor any costs and expenses or reserves of NGT through its liquidation.
that is not from the prospectus, it is also old news and I highly doubt it would lead to 20 cent distributions.
can you give some examples of some of the investor unfriendly items? I could only see boilerplate warnings, nothing specific that makes VOC worse than other trusts.
I quite sure trust laws are part of the energy loopholes he mentioned. Having said that, I am flummoxed by the price action of WHZ and some of the other trusts. Seeing no real reason, I am assuming its retail flow getting out because of fiscal cliff fears. I find those fears mostly unwarranted for trusts, as their distribution is not dividends. Income taxes will go up for few only.
There is absolutely zero indication that trust tax laws are going to be changed. If anything there have been reports that MLP laws will not change, which makes it more likely Trust laws will not change. If you have any reports/links which make a case that trust laws will change, I would love to see them.
the expense side was pretty much the same as the previous quarter. The main difference with distribution was that they got $84 a barrel last Q, 80 this Q and lower sales volume. I agree with you that I do not understand why the Trust expense went up to $350k, which represents a little over 1 cent. I believe there is a 2 month lag as well between the underlying energy price and the distribution, meaning that the dip in WTI you mentioned came in this distribution. I hope the 10Q will answer the trust expense question.