The oil and gas story is alive and well and looks to be into the foreseeable future. San Juan Basin Royalty Trust (SJT) looks very well positioned on the higher moving price of natural gas, but has experienced some negativity as recent costs have been higher than expected, cutting into earnings and the last few distributions.<!----> Looking forward, this trust looks to have capacity for the next ten years, as they have resources of over 50 trillion cubic feet.
Year over year we have seen oil and gas production decrease 10%, but with realized oil prices doubling last year this coming quarter could be very good for earnings. If we look at average price attained last year gas was $6.11 per Mcf, and oil $63 per barrel. Last year saw a decrease in the collected price of natural gas and that was the main contributor to negativity with respect to earnings. Capital expenditures have also been a problem as 2006 was very large and there wasn't enough of a decrease for last year. I believe we will see these expenditures come down this year more in line with 2005 numbers. The trust estimates capital expenditures will decrease by $5 million for this year.
Via Long Investment Ideas from Seeking Alpha:
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