Trusts gain traction

Canadian oil and gas companies are rushing to convert to royalty trusts, despite the stigma some attach to them. This is good news for the energy-hedging market, but some still have reservations about the trust sector. By Joe Marsh

Leeches, cannibals, pyramid schemes – oil and gas royalty trusts have been labelled as all these and more. This is because they return much of their cashflow to their unitholders rather than investing it back into exploration. Others see trusts as having made the oil and gas industry in Canada more efficient, by returning money to shareholders that would otherwise have been spent on uncertain exploration prospects.

Whatever your view, one thing is certain: the current environment of high energy