JefferyLin mentioned Permian Basin Royalty Trust (PBT: chart, web) in a comment to an earlier post on Frontline risk.

Permian Basin is a U.S. express trust that holds overriding mineral rights in oil and gas properties in the United States, mostly in Texas.  As with many oil and gas trusts, their balance sheets have been appreciating over the last three years.

Permian Basin has had 10% quarterly growth year over year, and a quarterly earnings growth of just under 11%, year over year.  They have $4.9 million in cash, and no debt.  Not surprising for a pure royalty trust.

The company has a respectable 9.7% yield, and pays out on a monthly basis.  The payout has been continuous back to 1987, and has ridden the roller-coaster wave of oil prices for the entire trip.  Their payout ratio is 100%, which means they neither keep, nor reinvest their income back into their reserves; typical of a U.S. royalty trust.

The stock is held by a number of institutional investors, as well as a hand full of mutual funds, however none of them have taken an appreciable stake in PBT.

Burlington Resources Oil and Gas Company (now ConocoPhillips) is/was the one and only insider, and has been selling its remaining shares on an infrequent basis for the last few years.  Note that the Burlington holdings are a result of several mergers of holdings companies for which the PBT overriding interest is carved.

Recently, ConocoPhillips (COP: chart, web) announced a public offering of more than 8 million units of beneficial interest in PBT, none of which are being offered by the trust itself.  Permian Basin derives royalties from much of the oil and gas produced by Conoco in Texas.

Commentary
While Permian Basin looks enticing, and the fact that the public offering was the last to be seen from ConocoPhilips, I can’t say I’m eager to go out and buy a load of PBT.

Permian Basin, as its name suggests, is a purely trust-based fund.  They pay out 100% of their income to investors, which means they are not actively seeking to replenish their reserves like many Canadian Royalty Trusts do.

Permian Basin does offer a good dividend with a monthly payout, but I like the fact that Canadian Companies like Provident Energy (PVX: chart, web, post) withhold money to acquire additional reserves.

Additional Resources
Kurt Wolff’s analysis on PBT  (.pdf)
Permian Basin Website
PBT SEC Filings

Investing, Stock Thoughts