Three stable oil and gas trusts to buy now

Article Excerpt

These three royalty trusts have seen their revenue and cash flow fall because of lower oil and natural-gas prices. Nevertheless, with their reasonable debt and low payout ratios, all three are well positioned to withstand these lower prices — and to prosper when oil and gas rise again. ARC ENERGY TRUST $17.53 (Toronto symbol AET.UN; Units outstanding: 234 million; Market cap: $4.1 billion; SI Rating: Speculative) produces oil and gas in western Canada. ARC’s average daily production of 64,325 barrels of oil equivalent (this measurement includes natural gas) is weighted 50% to oil and 50% to natural gas. ARC’s revenue fell 44.8% in the three months ended March 31, 2009, to $225.2 million from $407.9 million. Cash flow per unit fell 44.9%, to $0.54 from $0.98. Lower oil and natural-gas prices were the main reason for the declines. The trust’s debt remains low, at 17% of its market cap. ARC has just lowered its monthly distribution by 16.7%, to $0.10 from $0.12. The…

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