1./ Much of the income you will receive will be treated as interest not dividend income.

2./ The income trust only have until 2011 to convert to real companies. Many of them have tax credits that will delay the effect of this.

3./ You need to look at the reserve life of the company you are investing in. Some of the money returned to investors is return of capital.

i usually refer to those as distributions, and not dividends, for just those reasons. some may convert (or be acquired) in 2011, but i think their assets are currently undervalued because of the low oil price. everyone wanted oil when it was $140/bbl but no one wants it at $40.

these are the prices some oil producing countries need to balance their budgets (not their production costs) so you can see that in addition to market forces, there are geopolitical factors at work that want higher oil prices, courtesy of casey research:

The IMF recently compiled a list of break-even prices that various oil-producing nations require in order to avoid a budget deficit in 2009. Those figures are as follows: Bahrain $84, Kuwait $34, Oman $78, Qatar $24, Saudi Arabia $54, United Arab Emirates $24, Algeria $60, Azerbaijan $35, Iran $90 (!), Iraq ($94), Kazakhstan $67, and Libya $53.

While there is some internal debate here at Casey Research on the outlook for oil prices, my personal sense is that it is approaching oversold. One of many recent developments in the energy scene supporting that view occurred this week when we learned that the output at PEMEX, Mexico’s state oil company, fell 9 percent in 2008. This is, unfortunately, a trend solidly in motion: from its peak production of 3.8 million barrels per day in 2004, Mexican production is now ringing in at just 2.8 million bbl/d, a startling drop of 1 million bbl/d in just four years.

The consequences of this decline are serious, starting with the simple fact that the already embattled Mexican government derives over 40% of its revenue from PEMEX. As the underlying cause of the production decline is that the giant Cantarell field is well past peak, this is not a situation that will be quickly or easily resolved.

While this heightens the odds that Mexico will become a failed state, it also supports Jeffrey Brown’s time line that by 2014 – if not sooner – Mexico will stop exporting oil.

So, sure, oil and gas might stay under pressure for a bit longer… but the time will come, and probably sooner rather than later, when you’ll want to begin positioning yourself for some exceptional contrarian profits.

http://caseyresearch.com/drpRoom.php...