BP Prudhoe Bay Royalty Trust May Not Be Worth the Price Anymore
Just about every investor on the planet should be slightly envious of anyone who bought units of the BP Prudhoe Bay Royalty Trust years ago. An investment in the trust 15 years ago would have you sitting pretty today with a 9,000% total return. No, that's not a typo, and yes, I'm just as flabbergasted as you are. However, royalty trusts are designed to die one day, and this trust's reserve-to-production ratio suggests it only has 14.5 years left.
With such a short time horizon, it's hard to see the distributions from the trust covering the price you pay and producing a decent return before the wells run dry. Tune into the video below to find out why the current characteristics of the oil field, the price of the trust, and the current distribution should give you pause before buying the BP Prudhoe Bay trust.
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The article BP Prudhoe Bay Royalty Trust May Not Be Worth the Price Anymore originally appeared on Fool.com.Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google+, or on Twitter @TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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