Wall Street Transcript Interview with Kevin C. Smith, Vice President at Raymond James & Associates, Inc.: For U.S. Oil and Gas Royalty Trusts, It's Location, Structure and Term

Wall Street Transcript

67 WALL STREET, New York - July 15, 2013 - The Wall Street Transcript has just published its Oil & Gas Review 2013 Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Oil and Gas Transportation Infrastructure Demand - Master Limited Partnerships Distribution Growth - Outlook for Natural Gas Liquids - Low Treasury Yields and MLP Dividends

Companies include: MV Oil Trust (MVO), SandRidge Permian Trust (PER) and many more.

In the following excerpt from the Oil & Gas Review 2013 Report, an expert analyst discusses the outlook for the sector for investors:

TWST: In your coverage universe, what are your recommendations on the royalty trust? Any particular favorites?

Mr. Smith: We've been bearish on them for quite a while. We put out a report this morning on MV Oil Trust (MVO), upgrading it from a "sell" to "neutral." The most attractive trusts at this point on a valuation basis is the SandRidge Permian Trust (PER), and the SandRidge Mississippian Trust II (SDR). The SandRidge Permian Trust has a yield to maturity of almost 10%. That one's started to look fairly attractive to us. We recently upgraded it to an "outperform" rating.

Then the second one starting to look attractive on a full yield-to-maturity basis is SandRidge Mississippian Trust II, which is trading at about a 9.3% yield to maturity. We've seen a healthy pullback in a lot of these names, and we are waiting to see where the dust settles, and then think we could hopefully see an attractive entry point sometime in the next two to three months.

TWST: Are there any names that you are especially cautious about right now?

Mr. Smith: There is one, Whiting USA Trust I (WHX). We think WHX is significantly overvalued. It's been a very volatile stock. It's now trading for north of $7; we think the fair market value of that stock is somewhere closer to $3.40, so that's a name that we'd expect to see a pretty large pullback in.

The other one that we have been cautious on is...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (3)