ARC ENERGY TRUST $28.25 (Toronto symbol AET.UN; SI Rating: Speculative) produces oil and gas in western Canada. Like most oil and gas trusts, ARC holds mature, low-risk properties, with a focus on short-term cash flow for payout. In the three months ended March 31, 2006, ARC’s revenue rose 34%, to $318.9 million from $238.1 million. Cash flow per unit rose 25.3%, to $0.94 from $0.75. ARC’s average daily production of 64,600 barrels of oil per day equivalent is weighted 52% toward crude oil and liquids and 48% natural gas. In the quarter, the company’s average realized price for oil was $59.53 U.S. and $8.40 U.S. for gas. ARC’s debt remains low, at approximately 30% of unitholders’ equity or just over 72% of annual cash flow. The company is spending $340 million this year on capital expenditures. ARC pays a monthly distribution of $0.20, for a current yield of 8.5%. The trust distributed 63% of its cash flow as distributions in the latest quarter. ARC Energy Trust is still a buy.
ARC Energy Trust $28.25 – Toronto symbol AET.UN
A professional investment analyst for more than 30 years, Pat has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.