True Energy Trust $1.25 – Toronto symbol TUI.UN

TRUE ENERGY TRUST $1.25 (Toronto symbol TUI.UN; SI Rating: Speculative) (403-264-8875; www.trueenergy.ab.ca; Units outstanding: 78.5 million; Market cap: $98.1 million) produces oil and gas, mostly in Alberta and Saskatchewan. About 65% of output is gas. In the three months ended September 30, 2008, production fell 6.4%, to 11,263 barrels of oil equivalent per day, from 14,096 barrels. The decline came because True lowered capital spending to conserve cash. To further conserve cash, and to pay down debt, True cut its monthly distribution by 50% with the January 2009 payment, to $0.02 from $0.04. Debt of $197.3 million represents a high 101% of market cap. Trilogy expects to pay out to unitholders around 53% of its forecast 2009 cash flow of $0.45 per unit. The trust now trades at just 2.8 times that estimate. Production growth is unlikely to resume while the trust cuts back on capital spending. However, it should be able to maintain its yield of 19.2%. True Energy is a buy for aggressive investors.

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