Higher spending in store for these trusts

Article Excerpt

ENERPLUS RESOURCES FUND $23.70 (Toronto symbol ERF.UN; Units outstanding: 176.8 million; Market cap: $4.2 billion; SI Rating: Extra Risk; Dividend yield: 9.1%) is one of North America’s largest oil and gas trusts. Its production is 60% natural gas and 40% oil. Enerplus continues to build a well-diversified portfolio of properties. It aims to balance these between low-risk, shorter-term assets that generate steady cash flow (such as conventional oil and gas and shallow-gas properties), and higher-risk, longer-term assets (including shale gas and oil sands). The trust’s long-term debt of $571.8 million is just 13.6% of its market cap. It pays out only around 55% of its cash flow as distributions, and yields 9.1%. Ottawa will start taxing income trusts in 2011. However, Enerplus has over $2.5 billion in tax losses that it can use to delay its conversion to a dividend-paying corporation until 2013 or later. Enerplus plans to spend $425 million on exploration and development this year. That’s up 34.9% from $315…

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