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U.S. Natural Gas Royalty Trusts

Energy Investment Research by Kurt Wulff
March 8th, 2005

New High for Six-Year Oil

Summary and Recommendation

Average oil price for the next six years as quoted in the futures market hit a new high above $44 a barrel while shorter term price has not hit a new high. A new high for the market value of roughly equal holdings in seven stocks matches the trend in six-year oil while six-year natural gas lags. We think there is money to be made for investors with a longer time horizon than short-term oil quotes and short-term natural gas quotes. Mostly concentrated on long-term natural gas, the U.S. Royalty Trusts in our coverage continue to offer a distribution yield for the next twelve months near 8% (see table The Account). Values are reasonable in the McDep framework that relates to present value calculated on a long-term real oil price of $40 a barrel for Light, Sweet Crude.

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Price					Twelve	NTM
($/un)				Market	Months	Distrib.
Symbol		24-Feb		Value	Distrib.	Yield
		2005	Units	($)	($/un)	(%/yr)
Cross Timbers Royalty Trust	CRT	44.88	400	17,952	2.89	6.4
Dorchester Minerals, L.P.	DMLP	22.50	700	15,750	2.01	8.9
Hugoton Royalty Trust	HGT	30.05	500	15,025	2.20	7.3
Mesa RoyaltyTrust	MTR	63.80	200	12,760	5.28	8.3
Permian Basin Royalty Trust	PBT	14.74	1,200	17,688	1.16	7.8
Sabine Royalty Trust	SBR	39.70	400	15,880	3.35	8.4
San Juan Basin Royalty Trust	SJT	35.71	500	17,855	2.67	7.5
	Total			112,910		7.8
Futures Strip
12 Month - Oil ($/bbl)	50.43
12 Month - Natural Gas ($/mmbtu)	6.96
72 Month - Oil ($/bbl)	44.11
72 Month - Natural Gas ($/mmbtu)	6.11

McDep Energy Investment Research by Kurt Wulff
visit: http://www.mcdep.com/

Kurt Wulff was named to the Institutional Investor All-America Research Team 25 times in oil, exploration and natural gas. Also featured in Barron’s and Oil and Gas Investor, he has been a guest on Bloomberg, CNBC, CNN and Wall Street Week with Louis Rukeyser. Mr. Wulff wrote with Bill Bruns, How to Profit from the Coming Oil Crisis, a book published by Bertelsmann three years before Saddam Hussein’s invasion of Kuwait. He is a past president of the National Association of Petroleum Investment Analysts. A Chartered Financial Analyst, Mr. Wulff belongs to the CFA Institute, the Petroleum Analysts of Boston, the Oil Analyst Group of New York, and the Boston Security Analysts Society. In his long career, he has also worked for Exxon, Chevron, and as a consultant for the governments of Alaska, Algeria, and the U.S. Born in Wisconsin, he earned degrees of Bachelor of Science in Chemical Engineering from the University of Wisconsin and Master in Business Administration from Harvard University.