First 2 months of the quarter are in the books. Comparing the first two months of this quarter to the first two of last quarter: price of oil was up, but only about .3% and production was down less than 1% (due to having 2 less days of production and in mid Feb production dropped for about 10 days - as of yesterday, it is now close to the Nov and Dec levels). Overall, with no positive or negative impact from the new production tax law (hopefully will be positive), the dividend earned for the first two months of the quarter is basically the same as or just slightly less than last quarter. The average price of oil in Dec 2013 was $97.63, so this month is off to a good start, but hard to believe it will stay at these levels for very long (unless things worsen in the Ukraine).
For those on this board that think BPT can not be manipulated, look at the trading pattern of the last two days and explain those wild swings. One fund wants to accumulate 50k to 100k of this stock and are doing their best to get it as cheaply as possible. All this is happening with oil over $102/barrel. Tomorrow may be a good opportunity to get this below $80.
Janet, I would be very cautious about buying right now. Today, we are having the start of the mid quarter bear raid. If you look back to last quarter, today's price drop is happening almost to the day as last quarter's price drop and will last about 10 trading days. In some respect's, it is not all bad as some fund wanted in and the price was starting to get out hand with it reaching almost $84. They must think it is a pretty good buy in the $81's. There is still a good chance this will drop to $80. As for the distribution, you really need to follow the price of oil and the level of production very closely each quarter. So far with about 2/3's of this quarter in the books, the distribution level looks about equal to last quarter's (not taking into consideration any upside or downside to the new production tax), but a lot can change in March.
Sorry about that - I am still GUESSING that it will be $26m next quarter. I think the gas price increase will add about $3-4m offsetting another drop from production of around $3-4m. The quarter after that I would expect $22-$23m.
If you read the Q or the K, it says nothing about gas sales being hedged, only oil. Check out footnote 6 to the "Results of the Trust Operations" in the 10Q - only refers to hedging of oil, no mention anywhere, that I can find, in either document about hedging gas. The confusion is that the Trust reports the gas price net of production costs, so everyone seems to assume the lower gas price results from the effect of hedges. The gas price increase over the last 3 months should help the trust offset lower oil production and earn about the same as last quarter.
Jamisher. I may be wrong, but I do not believe that the trust hedges natural gas sales. I have looked through the Q and K many times and only find info related to the hedging of oil. Check out footnote 6 to the "Results of the Trust Operations" - only refers to the derivatives being associated with oil. The natural gas and oil prices you are referring to are net of production expenses.
Cowbell, everyone loves your optimism, but how can you say this is going to get almost $5 in dividends over the next 2 years. Just look at the situation with SDT, it is not even paying the minimum payment now. Do you really expect that SDR will be able to pay the minimum after the next two quarters ? Seems as if you are spending a lot of time pumping this stock - lets be more realistic about the expected dividends.
First month of the quarter is in the books. Comparing the first month of this quarter to the first month of the last quarter (Oct 2013), production was up about 10% and price of oil was down about 6%, so overall January was an ok to slightly positive month compared to October. Another good thing is that the price of oil was the highest in Oct last quarter, $100.54, while, for the month of November, oil was at $93.86 and December at $97.63. I don't expect the production to be any higher in Feb and March than in Nov and Dec, so hopefully the price of oil will stay above $95 - may be tough with the current state of affairs.
Cowbell, normally the panic selling lasts for about 3 days after an announcement like on Thursday, so if you do want to buy more (not sure why) and under $9, I would wait another day or maybe even 2 in this market. People are in a panic mode today, so best to wait a little longer to buy. It will go below $9.
titus, I think we are good, for at the most, 2 quarters. Next quarter the increase in gas prices hopefully will offset another decline in production and keep earnings around $25m and the common units will get 60 cents or whatever the minimum is. The following quarter, with a further reduction in production, will put earnings around $22m or just enough to again provide the common shares 60 cents. However, the following 4 or 5 quarters, I doubt the trust earns enough to pay the common units the minimum, but hopefully around 50 cents on average for the 4 or 5 quarters. So, imo, the distributions over the next 6-7 quarters may, at best, reach around $3.20 (6 quarters) and $3.70 (7 quarters). After that, probably lucky to get a $1/year.
Petar, the day of reckoning is coming with this stock. This stock is now a poker game. Right now, due to the lack of drilling, it looks like the subordinate shares will not convert for another 5-6 quarters. So now the bet is WHEN to you get out and leave the other guy holding the bag. You do not want to be the last person out of this stock - WHX is a perfect example. Once the people start heading for the exit on this stock, it will be a stampede.
The prospectus does not mandate that they pay those amounts, it is "only if they earn enough to pay those amounts" - they are not guaranteed. Take a look at SDT this quarter, they are only paying 50 cents when I bet the minimum, and not mandated, amount was closer to 60 cents. SDR must earn more than $22m each quarter to pay the minimum, otherwise you get just what they earned. Another small positive is that it is good to see that there is not a rush to exit SDR; the after-hours volume is only a little over 10k shares, so most people are still trying to figure out whether to give the quarter a C or a D.
Can't say that I am surprised by the results. I guess that SD has no plans to sell any more of their units this quarter. There is still some hope for the near term future as I would guess that the increase in gas prices could add up to $4m in additional revenues and, with the current drilling program, the common units may get 6 more quarters of the minimum payout if the trust can earn $22m each quarter - which is now somewhat in doubt after this quarter. The next 6 quarters minimum payout is $3.63.
Well Carmine, what does the pps trades of the last 2 days tell you? The volume today is pretty anemic. I still think if the all shares get 56 cents, then the quarter was ok. I doubt we will see anything over 56 cents.
Seems you may be right, but the last two were not issued on the last Thursday of the month - the two before that were issued on the last Thursday of the month and last January, it was issued on the 31st - so I tend to agree with you that it will be this Thursday.
Paul..... sorry to continue this discussion, but I am not sure the point you are trying to make in this note. The 10Q you are reading is for the three month period ending May 31, 2013 - this is pretty old info. The quarter ends May 31, they take 2 months to figure out the distribution and another month to pay it. SDR's quarters are fiscal and I am not sure what you achieve by trying to shift them. The last fiscal quarter (June-August) is what it is and the distribution was 54 cents, the next fiscal quarter is Sept to Nov and will be based on that period. What make you think these three months will be any better than the last three - only that you think Sept was very, very good, while June, July and August were very, very bad.
Paul.......... the recent 10Q for this trust contains info that is pretty out dated. The earnings of $34m reported in the 10Q was for the production from the months of March thru May 2013. The recent distribution was based on the months June thru August (the next 10Q will provide all that info) and the upcoming distribution will be based on Sept thru November. Also, the benefits of the recent increase in NG prices (if this trust ever sees it), will not be until the next distribution - NG prices did not exceed $4/mbtu until after Dec 1.
Cowbell, I always enjoy your notes and especially your optimism, however it is hard to see how the trust is going to earn more than the 56 cents even with over 20 new wells drilled. Last quarter over 165 wells were drilled/operating and the trust earned a little over $26m. To earn $33m (65 cent distribution and an additional $7m over last quarter), the 25 to 30 new wells would have to produce over $200k/well, which seems very high based on the history with the other wells.
A more realistic approach to looking at this quarter may be that if all the units receive 56 cents, then the quarter is ok, if all the units receive more than 56 cents, then the quarter is a success and if the subordinated units receive less than 56 cents, then the quarter is a failure. My guess is that the trust earns $27m, common unit holders get the 56 cents and the subordinated units get 50 cents. And we only have to wait until Monday afternoon to find out.