Recent worries over capital gains tax hikes and dividend decreases have driven BPT to new lows.
Current Annualized Dividend: (based on last reduced quarterly dividend)
$7.29
Div. Yield: 9.85% Yield.
Next dividend record date around Jan. 08-13, not official yet.
With Middle East tension sure to escalate next year oil prices will sky rocket benefiting BPT.
BP Prudhoe Bay Royalty Trust (the Trust) is a grantor trust. The Trust was formed for the purpose of owning and administering an overriding royalty interest (the Royalty Interest). The Royalty Interest is a non-operational interest in minerals. The Royalty Interest represents the right to receive a per barrel royalty (the Per Barrel Royalty) of 16.4246% on the lesser of the first 90,000 barrels of the average actual daily net production of oil and condensate per quarter or the average actual daily net production of oil and condensate per quarter from BP Exploration (Alaska) Inc. (BP Alaska) working interest as of February 28, 1989 in the Prudhoe Bay field, located on the North Slope of Alaska. The Prudhoe Bay field is one of four contiguous North Slope oil fields that are operated by BP Alaska, Prudhoe Bay Unit. Standard Oil and BP Alaska are indirect wholly owned subsidiaries of BP p.l.c. (BP).
My income based fair value calculation is approx 65/share, this is based only on the sum of future distributions(income) remaining until the estimated trust closure date (information straight from the contents of the last BPT Annual Report) - straight calc, not accounting for inflation and using fixed /bbl from the annual report. So it's actually getting to the point where I might step in front of this, but I am still looking for a bottom (as of Dec 28 2012 it seems like it will go lower). But I am also following KMR & PAA, which I believe have a better long term outlook. The problem with oil based securities is you can get trapped in an multi-month industry downturn, so sometimes you need to ignore the technicals, but that's not a bad thing, you just need to average in while trying to discover the bottom. The rig counts are tanking, so something is up in the oil service industry, it's one of my personal indicators, which tells me to wait until rig counts stabilize.
Since NG is now such a big US thing, WTI might be to use in a ratio. I think the Henry Hub NG to Cushing WTI would be a better ratio to follow, but there are some political (selling oil produced in the US requires us tanker - lacking), and storage (NG storage at capacity, and few LNG ship terminals) problems that make that bias the ratio indicator.
QuantitativeExhaustion
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Really enjoyed reading your analysis. I'll have to take another look at KMR and PAA. Interesting you bring up NG. NG is still near 30 to 1 compared to oil, historical average is closer to 9 to 1.
Actually I'm not going to get involved in BPT or any MLP's until after the US deals with the debt ceiling. Agree with averaging down, but only after I see where Fitch and Moodys rate United States debt.
QuantitativeExhaustion
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One might add a natural gas MLP to ones portfolio. NG ratio to US and Brent Crude still remains near historical highs. I do not think the recent multi-year 30/35 to 1 price differential will last too much longer.