These Two Resources Trusts Still Have Appeal

Article Excerpt

Ottawa’s plan to tax trust distributions in 2011 led to big drops for most income trusts. But high-quality trusts like Pengrowth and Fording have rebounded nicely. We feel they will continue to pay aboveaverage yields, even after 2011. PENGROWTH ENERGY TRUST $20 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 247.0 million; Market cap: $4.9 billion; SI Rating: Average) produces oil and natural gas from properties in Alberta and British Columbia. Oil accounts for 55% of its production, while gas supplies 45%. Pengrowth recently merged with Esprit Energy Trust in an all-stock transaction. It also acquired several properties in Western Canada from U.S.- based ConocoPhillips for $1.04 billion. Together, these purchases increased Pengrowth’s reserves by 60%, and its production by 70%. To help pay for these new assets, Pengrowth issued $416.0 million worth of new units. It also plans to sell some older properties for about $375 million. The units got as high as $27 in July 2006, but fell to $17…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.