CALGARY, Sept. 8 /CNW/ - Despite lower natural gas prices, the average
energy trust investor managed to record a gain on Canada's stock exchanges
during July and August of 2006, a report released Friday shows.
The quarterly iQ Report by Iradesso Communications, a Calgary-based
investor relations firm, tracks the performance of publicly traded energy
trusts and junior oil and gas companies that operate primarily in Western
Canada. The 84 juniors included in the comparison produce between 500 and
15,000 barrels of oil equivalent per day while the 30 trusts focus on
conventional oil and gas production.
For the trusts, the median total return - defined as the change in the
unit price combined with cash distributions - from June 30 to August 31, 2006
was four percent. Energy trusts provided a range of total returns, topping out
at 21 percent and bottoming out at minus 16 percent. The trusts that provided
the top returns during July and August 2006 were Esprit Energy Trust
(TSX-EEE.UN) at 21 percent, Fairborne Energy Trust (TSX-FEL.UN) at 15 percent
and Baytex Energy Trust (TSX:BTE.UN) at 12 percent.
While 26 of 30 energy trusts (87 percent) delivered positive returns in
July and August, the energy trusts were relatively flat in the first half of
the year. The median total return for trusts was even in the first quarter and
minus one percent for the second quarter.
Of the 84 juniors in Iradesso's report, 52 (62 percent) delivered
positive returns in July and August with a median increase of five percent. In
the first half of the year, however, juniors had median share price decreases
of eight percent in the first quarter followed by a median decrease of 12
percent in the second quarter.
"Energy trust investors have fared better than the juniors due to a
greater weighting to oil, effective commodity price hedging and monthly cash
distributions to unitholders," said Iradesso president Peter Knapp. "These
results reinforce that investors should be looking to trusts for stability
while they look to juniors for potentially extraordinary returns with greater
volatility."
During the months of July and August, the top three juniors were West
Energy Ltd. (TSX-WTL) at 44 percent, RSX Energy Inc. (TSXV-RSX) at 43 percent
and Yoho Resources Inc. (TSXV-YO) at 40 percent.
The bottom three performers for July and August were Atlas Energy Ltd.
(TSX-AED) at minus 17 percent, Cinch Energy Corp. (TSX-CNH) at minus 14
percent and Grey Wolf Exploration Inc. (TSX-GWE) at minus 13 percent.
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Other noteworthy findings in the report include the following:
- Comparative returns for juniors and trusts do not correlate to
production additions. The median junior was able to report one
percent higher production per share from the first quarter to the
second quarter while the median trust reported four percent lower
production per unit.
- The juniors and trusts in Western Canada continue to be weighted
strongly to natural gas, although oil is currently providing better
production economics. The median junior is 70 percent weighted to
natural gas while the median trust is weighted 61 percent to natural
gas.
- The number of publicly traded juniors and trusts meeting the report's
criteria seems to have peaked, settling at 84 juniors and 30 trusts
in the second quarter compared with 90 juniors and 32 trusts in the
first quarter.
- On the basis of enterprise value per flowing boe of production,
juniors are valued approximately 10 percent lower than trusts in
relation to their production. If this continues, it may pave the way
for more corporate acquisitions of juniors by trusts.
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Iradesso's iQ Report is available free of charge to investors who fill
out an online form at the following address:
www.iradesso.com/i/IOR/newsserviceform.html
