Conference nyoss1::market_investing

501.0. "High yield natural gas trust" by ASDG::HORTON (Pecunia fugit) Thu Jun 17 1993 15:02

        For those of you seeking a high yield with tax benefits to boot,
        Richard Band, editor of Profitable Investing, gave an interesting
        recommendation in the June issue of his newsletter:

             Burlington Resources Coal Seam Gas Royalty Trust (whew!)
                (NYSE, symbol BRU)

        Units in this trust came to market last week in an IPO at $20.50.
        They're trading now at about $21.25 to $22.00, just like shares
        of stock.  Owners get a share of the revenue stream from extracting
        natural gas from coal deposits in a section of northwestern New
        Mexico.  Also, there are some serious tax benefits (IRC Chapter 29:
        depletion allowance and all that).  Your broker should be able to
        get you the prospectus.

        The prospectus gives a reasonable estimate for first-year income
        of about $2.06/unit.  Also, owners could claim around $1.53/unit
        in tax credits.  Note however that this is a wasting asset, and that
        the income will depend on natural gas price, production volume, etc.
        But if revenues are anywhere near the figures presented in the
        prospectus, this issue could make for a very tidy after-tax income,
        maybe around 9 to 10 percent annually for the 10-13 year lifetime
    	of the trust, net of taxes!

        The word from several brokers is that the IPO was way oversubscribed.
        
        Of course, your mileage may vary.

           -Jerry                    

    Update on this issue:
    
    Units have been trading the last week or so around 23 - 23�.
    Nice little pop for those who got in on the IPO at 20�.
    The newsletter that recommended BRU has warned against
    "chasing" it at these higher prices, but says it's a good
    buy at 21� or so.
    
    -Jerry