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Articles 

Eastern American Natural Gas Trust Depos Reports Operating Results (10-Q)

May 07, 2012 | About:

Eastern American Natural Gas Trust Depos (NGT) filed Quarterly Report for the period ended 2012-03-31.

Eastern Amern has a market cap of $132.2 million; its shares were traded at around $22.05 with and P/S ratio of 18.1. The dividend yield of Eastern Amern stocks is 2.9%.

Highlight of Business Operations:

was decreased during the quarter ended June 30, 2011 as a result of wells sold during the second quarter. These sold wells reduced the Operating Cost Charge for the quarter ended March 31, 2012. As provided in the Conveyances, the Operating Cost Charge will fluctuate based on the lesser of (A) five percent (5%) or (B) a percentage, not less than zero percent (0%), equal to the percentage increase, if any, in the average weekly earnings of Crude Petroleum and Gas Production Workers for the last calendar year, as shown by the index of average weekly earnings of Crude Petroleum and Gas Production Workers, as published by the United States Department of Labor, Bureau of Labor Statistics, based on a December-to-December comparison.

Pursuant to the Gas Purchase Contract, ECA as successor by merger to Eastern Marketing, is obligated to purchase such gas production at a purchase price per Mcf equal to the Index Price. The Index Price for any quarter is determined solely by reference to the Variable Price component. The Variable Price for any quarter is equal to the Henry Hub Average Spot Price (as defined) per MMBtu plus $0.30 per MMBtu, multiplied by 110% to effect a fixed adjustment for Btu content. The Henry Hub Average Spot Price is defined as the price per MMBtu determined for any calendar quarter equal to the price obtained with respect to each of the three months in such quarter, in the manner specified below, and then taking the average of the prices determined for each of such three months. The price determined for any month of such quarter is equal to the average of (i) the final settlement price per MMBtu for Henry Hub Gas Futures Contracts (as defined), as reported in The Wall Street Journal, for such contracts which expired in each of the five months prior to such month; (ii) the final settlement price per MMBtu for Henry Hub Gas Futures Contracts, as reported in The Wall Street Journal, for such contracts which expire during such month; and (iii) the closing settlement price per MMBtu of

The Trust's Distributable Income was $859,886 for the three months ended March 31, 2012 as compared to $1,052,613 for the three months ended March 31, 2011. This decrease was due to a decrease in Royalty Income of $247,302 ($1,498,700 for the three months ended March 31, 2012 as compared to $1,746,002 for the three months ended March 31, 2011). This decrease in Royalty Income was related to a decrease in the price payable to the Trust under the Gas Purchase Contract as discussed below ($3.845 per Mcf for the three months ended March 31, 2012 as compared to $4.847 per Mcf for the three months ended March 31, 2011). Offsetting this decrease was an increase in production of gas attributable to the Net Profits Interests for the three months ended March 31, 2012 (391 MMcf) as compared to the three months ended March 31, 2011 of (361 MMcf). The increase in production is primarily attributable to increased production from several wells in West Virginia which are located in an area experiencing increased drilling and completion activities, partially offset by natural production declines. Taxes on Production and Property were $111,095 for the three months ended March 31, 2012 as compared to $122,857 for the three months ended March 31, 2011. The decrease in taxes is due directly to the decrease in Royalty Income as discussed above. General and Administrative Expenses were $377,839 for the three months ended March 31, 2012 as compared to $405,881 for the three months ended March 31, 2011. The decrease in General and Administrative Expenses was due primarily to a decrease in professional fees.

The price payable to the Trust for gas production attributable to the Net Profits Interests was $3.845 per Mcf for the three months ended March 31, 2012 and $4.847 per Mcf for the three months ended March 31, 2011. The price per Mcf was lower for the three months ended March 31, 2012 than for the corresponding three month period ended March 31, 2011 due to a decrease in the average spot market price for gas delivered at the Henry Hub near Henry, Louisiana ($3.195 per million British Thermal Units ("Dth") for the three months ended March 31, 2012 as compared to $4.106 per Dth for the three months ended March 31, 2011).

For the calendar quarter ended March 31, 2012, the high and low closing prices of the Treasury Obligations (which have $1,000 face principal amount), as quoted in the over-the-counter market for United States Treasury obligations were $998.80 and $996.30, respectively. On March 31, 2012, the closing price of the Treasury Obligations, as quoted on such market, was $997.20.

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10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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