Pick of the Oil & Gas Trusts: Low price/cash flow gives these 3 appeal

Article Excerpt

Many oil and gas trusts have risen lately, along with oil prices, although natural-gas prices remain near their lows. Even so, these three trusts remain cheap in relation to their forecast 2009 cash flows. ZARGON ENERGY TRUST $16 (Toronto symbol ZAR.UN; SI Rating: Speculative) (403-264-9992; www.zargon.ca; Units outstanding: 22.4 million; Market cap: $359.0 million) produces oil and gas in Alberta, Manitoba, Saskatchewan and North Dakota. Its output is weighted 51% toward natural gas and 49% to oil. In the three months ended March 31, 2009, Zargon’s production rose 2.2%, to 9,213 barrels of oil equivalent per day (this measurement includes natural gas) from 9,015. As well, Zargon recently paid $41.4 million for Masters Energy. This will add 1,275 barrels of oil equivalent per day to Zargon’s production, bringing it to an expected average of 10,200 barrels per day this year. Zargon’s $85.8-million debt is low, at around 23% of its market cap. The trust’s $0.18 monthly distribution gives the units a 13.5% yield…

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.