Good buy for Zargon

Article Excerpt

ZARGON ENERGY TRUST $19.63 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 23.7 million; Market cap: $465.2 million; Dividend yield: 11.0%) has bought privately held Oakmont Energy for about $9.45 million. The purchase price consists of 336,000 Zargon units, plus Zargon will assume about $3.45 million of net debt (including adjustments and transaction costs). Oakmont produces about 280 barrels of oil equivalent per day (this measurement includes natural gas). This will only increase Zargon’s daily output by about 2.8%, bringing it to roughly 10,330 barrels per day. However, Oakmont holds about $7.6 million of unused tax losses that Zargon can use to offset its earnings when the federal government’s tax on income trusts comes into effect on January 1, 2011. Along with its producing properties, Oakmont also brings significant oil-development potential. Zargon is still a buy. buy…