CALGARY, June 8 /CNW/ - Canada's energy trusts and junior oil and gas
producers have bounced back in the stock market over the past two months, a
report released Friday shows.
Although the median junior declined 13 percent in the first quarter of
2007 while the median energy trust declined one percent including cash
distributions, over the following two months juniors moved up eight percent
while the trusts surged 12 percent. In 2007, the median energy trust is now up
10 percent while the median junior is still off 12 percent.
These are just a few of the findings in the latest quarterly iQ Report by
Bryan Mills Iradesso, an investor relations firm based in Calgary and Toronto.
Bryan Mills Iradesso tracks the performance of energy trusts and junior oil
and gas companies that trade on the TSX and TSX Venture Exchange and operate
primarily in Western Canada. The comparison includes every trust that focuses
on conventional oil and gas production and every public company that produces
between 500 and 15,000 barrels of oil equivalent per day (boe/d). Bryan Mills
Iradesso's latest comparison focuses on the first quarter 2007 results of 85
juniors and 27 trusts.
Peter Knapp, president of Bryan Mills Iradesso, says the recent
resurgence in share and unit prices is noteworthy given the significant
declines in energy stocks in 2006. The average junior declined 32 percent in
2006 while the average trust declined 29 percent before distributions.
"Market sentiment for energy trusts and juniors has been negative,
especially around the end of 2006 and early 2007," Knapp said. "Fortunately
for investors it looks like the market is starting to recognize the value of
some beat up companies."
Knapp said the units of some trusts, such as Crescent Point Energy Trust,
are actually trading back to where they were when the federal government
announced it would begin to tax trusts the same as corporations starting in
Stock prices were not the only parameter measured in the iQ Report. Here
are a few additional highlights:
- During Q1, the 85 junior oil and gas companies that fit the criteria
for inclusion in the iQ Report had total production of 253,926
barrels of oil equivalent per day (boe/d). Meanwhile, the 27 trusts
that fit iQ criteria had the total production of 894,511 boe/d, more
than three times the juniors' total production.
- Trusts are showing a median reserve life index of 9.4 years. The
reserve life index indicates how long it would take to deplete
current proved plus probable reserves based on first quarter average
daily production levels. Juniors are one year behind, with a median
reserve life index of 8.4 years.
- As of May 31, 2007, juniors are trading at a median two percent
discount to a simplified estimate of their net asset value based on
reserves, debt and undeveloped land. Meanwhile, the trusts are
trading at a median 28 percent premium to their net asset value.
- Based on enterprise value (market capitalization plus net debt)
versus first quarter production rates, the median trust is valued
11 percent higher than the median junior. Trusts had a median
enterprise value of $67,218 per boe/d while juniors were at a median
enterprise value of $60,418.
- Net debt levels in relation to cash flow continued to climb in the
first quarter as low-cost capital was used to expand. Juniors and
trusts both showed median net debt of 1.6 times annualized cash flow,
slightly higher than any iQ Report over the past three years.
- Based on May 2007 record date distributions and May 31 unit prices,
the energy trusts have a median annualized distribution yield of
- Depletion, depreciation and accretion (DD&A) expenses per boe
continued to rise, reflecting higher costs for finding and developing
reserves in Western Canada and cutting into earnings. The median DD&A
expense for juniors was $24.53 per boe for Q1, while the median for
trusts was $20.85.
Bryan Mills Iradesso's complete iQ Report is available free to investors
who fill out an online form on the following website: http://iq.bmir.com.
For further information:
For further information: Peter D. Knapp, President, Bryan Mills
Iradesso, 400, 805 10th Avenue SW, Calgary, Alberta, T2R 0B4, T: (403)
503-0144 x202, email@example.com www.bmir.com