Topic: How To Invest

Pat: I currently hold two energy trusts: namely, Peyto and Bonavista. I would appreciate your opinion on holding these two.

Article Excerpt

Peyto Energy Trust, $13.53, symbol PEY.UN on Toronto (Units outstanding: 115.2 million; Market cap: $1.6 billion), produces and explores for oil and gas in Alberta. Its production is weighted 83% toward natural gas and 17% to oil. At current production rates, Peyto has proven oil and natural-gas reserves that should last 14 years. Peyto’s cash flow was $0.46 a unit in the three months ended December 31, 2009. The units trade at 7.3 times the trust’s annualized cash flow, based on the latest quarter. Peyto’s long-term debt of $435 million is a reasonable 29% of its market cap. The units yield 10.6%. Peyto paid out a relatively low 78% of its cash flow as distributions in the latest quarter. That will help it keep its distributions high when Ottawa’s new tax rules take effect in 2011. As well, rising natural-gas prices would boost the trust’s cash flow and lower that payout ratio. Peyto Energy Trust is a buy. A: Bonavista Energy Trust,…

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