from the same source:
"To reflect the company's reduced value, before the open of trading on the ex-dividend date the stock exchanges automatically reduce the previous day's closing price quote of the company's stock by the amount of the dividend, calculated by dividing the total amount of the dividend by the number of shares of stock."
"So, at the opening of trading on the ex-dividend date, the previous day's closing price is reduced automatically by the stock exchange by fifty cents, and trading begins on the basis of the adjusted price. "
Here's a more technical explanation:
" It's commonly stated that the price of a stock is automatically adjusted down by the amount of the dividend on the ex-dividend date and while in practice it often looks as if that's what takes place, technically that's not really what happens. The only trade price that the exchange reduces by the exact amount of a dividend is the quote of the previous day's close, not any actual trade. But because the quote of the previous day's closing trade AND the bid and the ask of all outstanding orders are also reduced (unless placed with a Do Not Reduce restriction) by the exchange, plus the fact that the net asset value of the stock is now less (by the exact amount of the dividend), when trading begins on the ex-date the effect is usually a reduction in price approximating the size of the dividend, as traders are well aware of the reduction in the stock's net asset value."
The following is pasted from a wiki article:
"When a company pays a large dividend,the market may account for that dividend in the days preceding the ex-div date by a rise in the price of the stock. This is because buyers are willing to pay a premium to receive the dividend. However, on the ex-div date, the exchange automatically reduces the price of the stock by the amount of the dividend. If the dividend is $1, and the stock had been offered at $40 and bid at $39.50 the day before, on the ex-div date the offer price and bid price will be adjusted to $39 and the bid to $38.50 to account for the fact that the dividend is not included. When this happens, the stock is said to have gone ex-dividend and is marked with an "x" in the quote systems and newspaper stock price listings. "
Yes, it's funny. He said above that you could lower your loss by buying for $4.50 and then collecting $3.60 in distributions before the trust ends up worthless. Some way to reduce your loss by adding another 90c loss per unit. No wonder folks here lose money with math like that.
I'm not sure that they are at the end of their productive life. The trust terminates due to an arbitrary total production criteria, not because there is no more oil or gas to produce. Once the trust terminates, it reverts back to WLL and they may continue to produce from this field for a long time. That is why I guess (haven't really researched) that the distributions may hold relatively steady and then just stop, rather than decline. The reason is that this trust can do capex (unlike some other trusts with fixed drilling programs) and the field may not be near the end of its productive life, rather the trust just terminates due to an arbitrary pre-defined condition.
You are the one talking rubbish. The price is automatically adjusted and then the market takes over. You seem to be arguing that the price is not stuck at the adjusted price all day, which is not what anyone said. We said the price is marked down at the open. Nobody argued that it stays at that price the rest of the day.
"knowing that MLPs are not supposed to make money or they get taxed by the IRS unless they distribute their earnings to the unit holders or put their earnings into capital expenditures,"
This isn't true at all although is a common misconception. REITs do have to distribute 90% of their cash flow, I believe, however there is no similar rule for MLPs. The rule is that 90% of their income must come from certain classifications, mostly dealing with natural resources. They could distribute nothing and it would not change the tax situation.
However as to being optimistic, the recent earnings were not bad, so I'd say you can be optimistic if you wish.
Here is a list of all (unless I missed one) the MLP IPOs in the last few years. You could have used the same argument about any of them, yet the actual performance is all over the map and you could fit any theory you like by picking one of them at random like you are.
As discussed before, they did not indicate any expected yield, rather a minimum quarterly distribution of 40c . And SXE which IPO'd around the same time had exactly the same minimum quarterly distribution of 40c and the same proposed pricing range $19-21. So your theory applies equally to SXE as to SMLP, yet SMLP is one of the biggest MLP gainers since that IPO, while SXE is one of the bigger losers over the same time period. And there have been a dozen or more other MLP IPOs since then with a similar initial yield with performance all over the map and generally between the extremes of SXE and SMLP. So just because you pull out one of a dozen recent MLP IPOs and say it must do well because of the market being hungry for yield, I can just as easily refute it by citing a counter example which started at the same time, in the same business, with almost identical initial distributions, initial price and therefore yield which has gone in entirely the opposite direction. And both of the two are more comparable to each other than to RRMS which is in a different business.
P.S. It is hardly difficult to find the distribution details and I imagine most early investors look at it. Just because it's not on yahoo doesn't make the infoirmation hard to find. It is in all the IPO materials and filings.
If you do reinvest (doesn't have to be in the same investment), then you get the power of compounding, which is what has taken the Alerian index (^AMZX) from 100 in 1997 to 1520 today. None of this is MLP specific.
The termination conditions will be spelled out in the trust SEC filings so you can find them if you look. Since there are various varieties of trusts these days, I don't remember the precise details offhand, but you may be correct in that there could be a final liquidation distribution. However at that point it would not amount to much and that is why I qualified worthless with the word 'essentially' (ie. there may be a small value but not big enough to factor into any current investment decision).
The bothering thing about HGT is that there has been very little capex for quite a few years now and as a result production has been dropping. As you say, some other trusts have recently been seeing temporarily reduced distributions because of capex for new drilling which hopefully will boost distributions and extend the producing life. I'm not sure why there has been such little capex on the HGT properties and whether that would change if NG prices rise.
It is nothing of the sort. Why don't you google the term and read what it actually means rather than guessing. In simple terms you can think of it as the historical cost basis of the trust assets.
He clearly is based on this statement "The book value is just an estimate. You may receive less over the life of the trust."
He still thinks book value is an indication of how much the trust will pay out in distributions.
It's not a company and you might have trouble calling them since there are no employees.
Why not start by reading the press releases on the yahoo summary page, just 2 mouse clicks away?
Or try reading the SEC filings, also readily available.
I also think you missed the point. In Q1, CHKR sold their gas at an average price of $2.28 and that is excluding hedging effects. NYMEX prices were far above that level throughout Q1. We know that they don't sell at Henry Hub and so don't expect to necessarily get NYMEX prices but to get not much more than half the amount? Why do they give their gas away so cheap?
A bigger threat is the amount of oil being produced from the overall North Slope (not just BPT properties) dropping to a level at which the Trans Alaska pipeline can no longer operate. In that event production would have to stop as there would be no transportation for the oil.
It's correct about the NG pipeline. BPT gets royalties only from oil production, nothing for gas. As there is no gas pipelines, the gas is re-injected which helps resevoir pressure. If a NG pipeline were constructed, that gas would not be available for injection and so oil production would drop.
They have been talking on and off about an NG pipeline for years and nothing has happened, so I wouldn't worry for now. We currently don't need Alaskan gas in the lower 48 or in Canada) but if a LNG terminal was planned for Alaska then it might be worth following.
You are right of course. If you look at a graph of global oil consumption, there is a tiny dip in 2008 after the financial crisis, otherwise global oil demand has been steadily rising for decades. The rise in oil prices from $10 to $100 didn't alter that. What did shift was where the demand is coming from - demand in developed economies has certainly been flat to down in recent years, however that drop has been more than conpensated for by increased demand in developing nations. China's demand continued to grow fast all through the financial crisis years of 2008 to 2009.
To be precise, it is demand growth in the developing world which has forced demand in the developed world down. When overall demand is greater than supply, the price rises until it reaches a point where some demand is destroyed and thus supply and demand come into balance. Economics 101. That is exactly what has happened - increased demand from the developing world resulted in the price rising to a point which forced demand destruction in the developed world (which has lower marginal utility from each barrel of oil). In effect, the developed world has been outbid by the developing world for the last barrels of production.
right in line with the 5 year average.
Look at the graph in the weekly EIA inventory report and compare the current year line versus the 5 year average since injections began. They are going up almost identical. I defy anyone to read collapsing production from that graph. So far there is no evidence that anything has changed this year.
And any threat of higher future interest rates is a pretty big reason.
Personally I don't see higher rates any time soon, but if rates do rise, utilities will certainly get whacked.