What do "We" think of Penn West" ?

[Mega]

Your thoughts?
Mike

[ldgirod]

Re: What do "We" think of Penn West" ?

Your thoughts?
Mike

I've been curious about this too. I'm by no means an expert, but it looks like a profitable, fairly low risk choice to me.

You should note that about 1/2 their production is hedged with "costless collars" which means they offset the cost of buying a price floor by selling a contract with a price cap. They are currently hedged below market rates, set in US$:

Crude oil collars

10,000 bbls/d Jan/08 – Jun/08US$ 60.00 to 94.55/bbl

20,000 bbls/d Jan/08 – Dec/08 US$ 67.50 to 79.18/bbl

10,000 bbls/d Jul/08 – Dec/08US$ 67.00 to 79.23/bbl

total production 73,300 bbls/d

(from edgar online reports)

So those parts of their production would underperform given further declines in the US$ or price spikes. On the other hand, they are protected against price declines, and the dividend is quite good (13%?).

I don't know what to think about commodity prices right now (too high? too low?), but this gives a good dividend and I think isn't much of an inflation risk.

However, I'd love to hear from someone who knows what they are talking about ;)

-L

[phirang]

Re: What do "We" think of Penn West" ?

pls review canadian tax stance on these trusts...

[Jim Nickerson]

Re: What do "We" think of Penn West" ?

I've been curious about this too. I'm by no means an expert, but it looks like a profitable, fairly low risk choice to me.

You should note that about 1/2 their production is hedged with "costless collars" which means they offset the cost of buying a price floor by selling a contract with a price cap. They are currently hedged below market rates, set in US$:

Crude oil collars

10,000 bbls/d Jan/08 – Jun/08US$ 60.00 to 94.55/bbl

20,000 bbls/d Jan/08 – Dec/08 US$ 67.50 to 79.18/bbl

10,000 bbls/d Jul/08 – Dec/08US$ 67.00 to 79.23/bbl

total production 73,300 bbls/d

(from edgar online reports)

So those parts of their production would underperform given further declines in the US$ or price spikes. On the other hand, they are protected against price declines, and the dividend is quite good (13%?).

I don't know what to think about commodity prices right now (too high? too low?), but this gives a good dividend and I think isn't much of an inflation risk.

However, I'd love to hear from someone who knows what they are talking about ;)

-L

Here is an opinion involving commodities that to posting here is about 4th hand gossip and assumes those quoting it haven't screwed up what GaveKal originally noted.

“Moreover, as the brilliant GaveKal organization notes, ‘The four great momentum trades at the moment are: 1) long US Treasuries; 2) long commodities (including gold); 3) short credit [financials]; and 4) short the US dollar/long the euro. All of these trades are getting rather crowded, and, in our view, the fundamentals argue that they are due for a turnaround.’ Plainly, we agree!”

Still about Mega's question, I know nothing.

[FRED]

Re: What do "We" think of Penn West" ?

Here is an opinion involving commodities that to posting here is about 4th hand gossip and assumes those quoting it haven't screwed up what GaveKal originally noted.



Still about Mega's question, I know nothing.

Curious, how is GaveKal's record long term and short term? They appear to have a "bullish" bias.

[raja]

Re: What do "We" think of Penn West" ?

Your thoughts?
Mike

I'm afraid to buy any commodities at this time . . . as the recession deepens, demand will drop.

If it looks like things are turning around, that's the time to buy . . . but I'm not expecting that for some years. :eek:

I'm one of the least experienced guys around here , so better not listen to me. :rolleyes:

[phirang]

Re: What do "We" think of Penn West" ?

careful, india announced $300B oil drilling program, and so clearly the DEMAND is and will remain there.

i suggest some power simulations to see just how bad the world energy situation is: it makes agriculture look like cakewalk by comparison!

i, too, am not sanguine most metals, although i do hold gold as inflation/currency-chaos hedge and i'm eyeing molybdenum, too.

[algerwetmore]

Re: What do "We" think of Penn West" ?

I would suggest you check out Kurt Wulff on freebuck.com. for his analysis using the McDep ratios. He has recommended Penn West based on their ebitda. I would use caution - there is a 15% witholding tax in
canada for foreign investors, but you can get a partial tax credit.
My wife and I have invested in penn west, but it is balanced by an equal amount in San Juan Basin Royalty Trust (U.S.) which yields about 6-8%. Her IRA also consists of Merk Hard Currency Fund and Central Fund of Canada. We like the monthly dividend checks of San Juan and Penn West.

[ldgirod]

Re: What do "We" think of Penn West" ?

pls review canadian tax stance on these trusts...

Yes, I had seen that. Though it looks like that doesn't kick in until 2011?

[MatCha]

Re: What do "We" think of Penn West" ?

Both Jim Puplava and Zapata George recommend PennWest. I hold it in my IRA, and re-invest the dividend every month. So far, my 500 shares have gone to 560, and instead of buying ~5 shares a month, I now get 6!

SO, you see how this compounding thing works. Go to ZapataGeorge.Com and check his reco on this. PS. Note that ZG is also calling for imenent oil to 160!! This guy is not a pussy. He definately calls it as he sees it.

[Raz]

Re: What do "We" think of Penn West" ?

I have had a large position in the CanRoys since January '07.
The very best ones are: Crescent Point Energy Trust(CPGCF), Arc Energy Trust(AETUF), Enerplus Resources(ERF), Progress Energy Trust(PGXFF) (this one is heavily weighted to natural gas), and Penn West Energy Trust(PWE), in that order. That's MY opinion, based on a LOT of research both from 2006 and ongoing. I will try to share research with members if you will contact me by private E-mail.:cool:

[Mega]

Re: What do "We" think of Penn West" ?

Many thanks to ALL!
Mike

[GRG55]

Re: What do "We" think of Penn West" ?

Your thoughts?
Mike

The reason to consider PWT.UN is the potential long life resource they hold - heavy oil at Peace River and light sweet crude in the Pembina Cardium (the latter a property group that I am very familiar with from one of my previous [career] incarnations). You have to be a believer in the longer term prospects for oil, and also have a desire to hold reserves in one of the most onerous tax and royalty regimes in the world - yes, the average netbacks are less than even the UK Sector North Sea. Nevertheless, there is not much risk of outright ownership confiscation in Alberta.

The Canadian gas sector has had a nice run after I mentioned it a couple of times a few months back. Trusts like TET.UN and PMT.UN have finally woken up.

That, IMO, is the difficult part of your decision...is it better to play crude oil levered companies/trusts or those levered more to gas in North Amerca.

[Guest]

Re: What do "We" think of Penn West" ?

Miker -

Why buy Penn West (not a bad stock) when you can buy PETROBRAS instead? Soon to be the most dynamic petroleum major stock in the world - and will keep that position for a good long while.

Brasil - some of the strongest growth fundamentals of any large nation - powerhouse commodities exporter.

Brasilian currency - will be among the most healthy and firm currencies globally for the next couple of decades.

Petrobras - world leader in 'real' alternative energy - world's biggest, most accomplished producer of sustainable ethanol. This company will eclipse even the Russian Federation oil majors in the next decade in terms of upside performance.

Skip Penn West - put your money more safely in PETROBRAS, it's a large cap, so far safer, and one of the most dynamic oil majors now, and for the foreseeable future.

http://edition.cnn.com/2007/WORLD/am....ap/index.html

[Mega]

Re: What do "We" think of Penn West" ?

Nice one Luke
I chat to Euro-pac about it in the next few days.....i think thats a VERY good call !!!!!!!

Now, about my American wife project, what news?
Mike