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Howdy ....

A great link. Thanks.

As a Canadian, my perspective is slightly different and I use what is called the AECO price as part of my guide ( storage injection in Alberta for trans-shipment south and east ). That price has been in continual decline and yesterday dropped below $ 5.00 CDN to a low not seen sice October 2002.

Most producers in Canada pump both Gas and Oil and it is only the high price of the latter that has supported the stock/unit prices so far.

If the trend does not reverse, big trouble is on the horizon. Investors in the CanRoy Trusts ( depending upon how gas-weighted they are ) may suffer the double whammy of having distributions cut while the Unit prices also decline. An additional factor is that many 'hedge' ( forward sell ) production. As current hedges expire, those Trusts will become more sensitive to the spot price; or may have to renew at much lower prices due to pressure from the bankers.

Non-Trust producers are able to adapt more quickly by reducing drilling. I have not seen many announcements yet but if ( when ) they start to occur the Canadian "oil services sector" will also take a big hit. If they do, then the gas-weighted Trusts can be expected to follow suit.

I hated giving up my distributions but I have cut back my exposure to only PWE ( PWT/un.TO ) and BTE ( BTE/un.TO ). Fwiw, debt levels and payout ratios are 2 other general metrics that I consider.

I don't know which of the autor's scenarios will play out ..... but I sense extreme risk.

best 'o' luck'

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