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Gulf Coast Ultra Deep Royalty Trust (GULTU)

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0.0539+0.0009 (+1.70%)
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  • S
    SubPilot
    Does anyone on this board have any connections with the folks that own and operate this lease (I think there is only one lease left from the original group, because this is the only one that is producing, i.e. "held by production."

    If so, it would seem to be the ideal time to lock in a deal to supply one of the gulf coast LNG facilities for a long-term export contract.

    I think I recall that they only have until August to spud the next two wells, otherwise they will loose their permits. I think the Louisiana board declined to consider another permit extension.

    So, I am wondering what the plan is here. Maybe the owners just want to wait for the trust to run-off. I don't recall when the trust "sunsets," but I think it may be fairly soon.

    Anyone know? I used to be able to search and find the trust docs, but I think things have gotten old enough that I can't find them anymore.
  • S
    SubPilot
    A couple things to note. First, I agree that the administrative costs are too high. Hard to imagine what makes this trust more expensive to administer than others. I think they are excessive.

    But, if you look back, historically the administrative costs, as high as they are, are front-loaded in the first quarter. So, we should see smaller bites out of royalty income.

    Second, for whatever reason, we produced less gas in Q1 than Q4, and the price was lower. Maybe they sold forward, not expecting the price to continue to climb into the spring, and they reduced production to minimum contract deliveries?

    Natural gas spot price is $7.30 today, $3 more than the $4.30 average price for the Q1 sales.

    What we really need is for Magnolia to lock in a long-term production contract with a nearby LNG terminal and to drill 2-3 more wells and produce both the current deep and the shallower Tuscaloosa formations.

    Under that scenario, this could be a nice, long-term income play.
  • R
    Robert
    Interesting information from last hearing in 8/2021 before the Office of Conservation regarding the Highlander well data is that the current best estimate remains at 1.6 Tcf with a low of 1.4 Tcf and a high of 1.8 Tcf of gas in place and that production in total to date is ~100 Bcf.
  • R
    R
    The gultu train may be starting to leave the station...lord knows I have been putting wood in the firebox since the creation of the Trust. We need natgas to continue its climb, the increased dividend to continue and for Chazen to announce a second well.
  • S
    SubPilot
    Somebody knows something. Volume up and price up bigtime. Up 50% in a week at one point this morning with trades going off at 6 cents.
  • M
    Micro Value
    Quick question for those of you more up to speed on this... just after GULTU was spun (this is going back 10yrs), McMoran had about a dozen subject interests, including Davy Jones, etc. to which GULTU's royalty interest applied. Around 2019, McMoran stated that it had relinquished all of its subject interests... so are these no longer existent? What about the2 other onshore subject interests: Lineham Creek and Tortuga?
  • S
    Scott
    I share Dan's question regarding administrative expenses for GULTU. Certainly do seem excessive! For 2021 administrative expenses were reported at $564,787 while Royalty Income for the same period was $1,181,093. If the the last quarter of 2021 is excluded, as it was a historically exceptional quarter, and only the first 3 quarters of 2021 are considered administrative expenses were $476,328 with Royalty Income reported at $586,196 for the same 3 quarters. I for one think the unit holders deserve an explanation from the Trustee for why the administrative expenses are what they are and what they encompass. Does anyone on the this board have any insight into this? I looked at Mesa Royalty Trust financials and for 2020 & 2021 General & Administrative expenses were $193,947 for 2020 and $172,737 while royalty income was $832,149 for 2020 and $908,160 for 2021. Maybe there is a good explanation for GULTU's seemly excessive Administrative expenses but I would sure like to know what it is.
  • S
    Scott
    So yeah we got beat up a bit on the unit price after the weaker than expected (by some) on the latest unit royalty distribution. But as Robert pointed out in an earlier post and if I understood him correctly there is somewhat of a lag in reported price and sales from quarter to quarter. Read Robert's posts if you don't understand what I am trying to say here. 1st Quarter average price per Mcf was $4.30. NatGas is knocking around $7.50 per Mcf lately. As R says I've been putting wood in the firebox for awhile too to the tune of 400k units. If the price drops a bit more I think I'll put a little more wood in the firebox on good ol' GULTU. I think we had some nervous Nelly's driving the price up and when the distribution wasn't what they expected they bailed. I hope some of them made some money but I think in the long term there is a lot more to be made on this one.
  • S
    Scott
    4 more days or so and we should get the next distribution announcement from the Trustee. It should be interesting. Any ventures by anyone what it might be? I think it will be close to the last distribution. Someone is making a hell of a lot of money off this well considering GULTU only has a 5% interest in the property. This well must give off nat gas like no tomorrow. Sorry, nothing informative in this post.
  • R
    Ronald
    I figure with natural gas going up and up so this will too. A pure percentage off the top in natural gas.
    I also know Russia and others will attack Israel before this summers end so of course that should make things oil soar. Its it the bible see eze 38 and 39 ... I could explain why it must be this summer but if you don't believe in Gods message book it wouldn't work. Right now Russias troops are as near as they can get to Israel without the West figuring it out. Putin doesn't want Israel to supply Natural Gas in years ahead to Europe either! Just wait and see!
  • R
    R
    Annual report is out. Nothing new. Always interesting to see the largest shareholders. Does Cooperman still hold his trust units?
  • D
    Dan
    40% administrative expenses?
  • R
    R
    $gultu…top topic across all “petroleum clubs” poker tables these days.
  • R
    Robert
    Last 6 months of production shows a gradual upward trend. Two observations are that the well has been producing over the "allowable amount" from last well test date of 4/15/2021 and test result of 27,827 Mcf. The "salt water" disposal well was completed August 2021. The two events may be related as the salt water disposal well may allow a return to the 43-45,000 Mcf/d production rate. Both events may be considered a positive for this well going forward in my opinion.
  • R
    Robert
    February production was 1,083,625 Mcf or 38.7 MMcf/d a little shy of allowable of 41.7 MMcf/d.
  • R
    Robert
    November 2021 production
    11/01/2021 617775 1 0 0 1215346 0 0 SAINT MARTIN
    or ~ 40,512 Mcf/d very close to the new allowable limit of 41,653 for the first 6 months of 2022.
  • R
    Robert
    July 2018 production 1,690,645 Mcf or ~ 54.5MMcf/d.
  • J
    Jobu
    I noticed Michael F Price bought 5.7 million shares in Q3, and Miller who was buying with both hands at .13 is now selling at .03 must be to capture loss for tax purposes. I would like to have a clearer outlook for this, but nowhere can I find an educated opinion.
  • R
    Robert
    Highlander #1 May 2018 production 1,625,455 Mcf or ~52.5 MMcf/d. Looks like ramp up to 60MMcf/d has begun.
  • S
    Scott
    Nice dividend payable 02.11.2022 $.002162 per unit. Also: Commencing with the distribution to unitholders this quarter, the Trust is withholding, and in the future intends to withhold, $8,750 from the funds
    otherwise available for distribution each quarter to gradually build a cash reserve of approximately $350,000. This cash is reserved for the payment
    of future known, anticipated or contingent expenses or liabilities of the Trust. The Trustee may increase or decrease the targeted cash reserve
    amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance
    notice to the unitholders. Cash held in reserve will be invested as required by the royalty trust agreement. Any cash reserved in excess of the
    amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to
    unitholders, together with interest earned on the funds