BP Prudhoe Bay Royalty Trust (BPT)

1st it's oil, 2nd it's Nat Gas

That's what many here forget, they're concentrating so much on oil, but there's more to this.

3rd The dividend is about 9% at this point, and not too convinced it's going away anytime soon.

Finally, a little read here

The BP Prudhoe Bay Royalty Trust (NYSE: BPT) is a United States oil and natural gas royalty trust based in New York, New York. With a market capitalization of US$ 1.6 billion in early 2008, and an average trading volume of 121,000 shares, BP Prudhoe Bay Royalty Trust is the largest conventional oil and gas trust in the United States. Its assets are in the huge Prudhoe Bay Oil Field, the largest oil field in North America, and at the end of 2006 the Trust claimed to have proved reserves of 85.1 million barrels of crude oil.

The only problem with this is will it outperform the S&P, and I think it'll ride along with it, and obviously this really isn't a Growth stock per se, it's more of a dividend, but I wouldn't rate this a thumbs down at all if it didn't keep up with the S&P...the dividends alone could make up for any lost growth in the stock itself...in other words i think it's a great buy at these prices, and if it goes down by more, or just enjoy the 9% on your money. Where else can you find that with a potential to grow.

Talking to services company exec, many producers have stopped pumping and/or capped wells indicitive of possible physical supply shortage next 6-9 months, further indicating a non-speculative run-up in oil, of course, enhanced by money inflows.

In the past year I've received $7.34 in dividends per share. At around $70/share, you're looking at a 10% annual dividend. I don't see why that would change over the next 5 years...

This issue is way over-priced as a long term investment, but I'm playing the upcoming dividend strategy...

Oil can't stay down forever, and a weaking dollar will send oil prices up. This trust trades pretty much directly with the price of oil, so this will outperform.

oil up ,,will improve yield...

I bought the stock @ 24 years ago, and it's been a real money maker because I reinvest all the dividends. I sold some when it was over 100 and now I'm buying again.

testing high ROE/RGR

After 10 years the stock could be worthless!. In fact, they predict just that in their 2008 annual report (royalties expected to decline to zero by 2020 -- see note 8 on page 22 of the 10K at http://www.secinfo.com/dsVS7.s2zv.htm#2a8s ).

BPT owns nothing except rights to a percentage royalty on the first 90K barrels/day from the field, after deducting hefty "costs" (which are inflation adjusted) and tax charges. The dollar amount of the royalty is keyed to the WTI (West Texas Intermediate) price. Taxes to the State of Alaska go up with oil price, so if oil prices increase the royalty goes up by a smaller amount.

The dividend should decline sharply in 2009 (vs. 2008) because WTI was over $100/bl in 2008 but under $50 today.

Production dropped below 90K bl/day level last year and is expected to decline further as the field is depleted. Furthermore, if a proposed GAS pipeline is built, gas which is now re-injected into the ground and keeping cavity pressures up will be siphoned off; this will reduce oil extraction rate (BPT does not get royalties on gas). BP has the right to unilaterally cease production if they think is is not sufficiently economic.

So any way you look at it this is a wasting asset, like a stock option with an "expiration" date about a decade away.

Finally, the trust itself calculates that it has a net present value (as of 12/31/08) of $418.57M which is less than a third of the $1.4B current market cap. This implies the stock is 3X over-priced. However I think this calculation assumes oil prices stay unchanged, around $45/bl; if they go way up then presumably royalties would be higher.

About the only argument for buying/holding BPT I can see is as a speculation that the price of oil zooms dramatically upward in a few (but not too many!) years, temporarily increasing royalties by a large amount, and hopefully proping up the share price long enough to take the money and run before the final descent.

This looks like a materials and energy sector REIT. Doesn't look like many of the rules that apply to companies
apply. I like the dividend. The payout is a bit high, but again normal rules probably don't apply. The negative is
what kind of exposure to bank problems does it have. I will call a underperform for the near future untill the oil
market gets back on track.

Dividend is safe, they have no debt to speak of. I believe this one could go down a little from here, but at the end of the day hold it for life and after ten years they have paid you to own the stock. In either case you win.

Div. and Oil going higher

Increased oil prices will allow BPT to outperform the S&P 500.

oil prices up

think oil is destined to go back up

OIL price will stablize by the end of 09 and combined with an atttractive dividend, its fluctuations will allow for better than normal returns

The pitch for this stock can be found on the Stinky Feet discussion board at http://boards.fool.com/Message.asp?mid=27329566 . Stop by and let us know what you think of this stock.

High divi's. Oil will bounce back obviously, as we eventually lose supply in oil price will rise. Low supply, High price. Thats how things work in the economy.

Oil maybe be lagging today, just wait....