SUMTHIN GOIN ON, HERE

An Income Twofer in Energy
Wednesday February 15, 1:23 pm ET
By Stephen D. Simpson, CFA (TMFWildWeasel)


Some companies do nothing more than produce coal and/or lease the rights to mine coal on their property, and then pass along the cash to investors. There are also plenty of companies that handle natural gas distribution (called midstream operations) and pass along robust dividend checks to shareholders. And then you have Penn Virginia Resource Partners (NYSE: PVR - News). Like the combination of chocolate and peanut butter, this fusion of coal assets and midstream natural-gas-handling facilities could continue to be pretty tasty for investors.
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Fourth-quarter results were more of the same, and I mean that as a compliment. Operating income jumped 76%, and net income rose 53%. But the number that really matters to the owners here is the distributable cash flow, which increased 67% from last year. That, in turn, allowed the company to boost its dividend about 8% on a sequential basis.

In the coal business, operating income rose 50%, as production increased nearly 6% and the average royalty per ton rose 19%. For those of you who are new here, Penn Virginia doesn't actually mine the coal itself, so production levels aren't under its control, strictly speaking. Year-over-year comparisons aren't possible for the midstream business (it was purchased in the middle of last year), but volumes increased sequentially while gross processing margins fell.

I like this business quite a lot, but I'll admit that it's a bit tricky to come up with appropriate valuation targets. After all, how do you accurately forecast future acquisitions, production levels, royalty rates, and gas throughput?

Part of what I do instead is look at some of the other natural resource plays that I know and like -- companies such as Motley Fool Income Investor pick Enterprise Products (NYSE: EPD - News), Plum Creek Timber (NYSE: PCL - News), Fording (NYSE: FDG - News), Kinder Morgan (NYSE: KMI - News), and Plains All American (NYSE: PAA - News). These are all very different companies, and it's not really fair to compare ratios like price-to-book, EV/EBITDA, or even dividend yields across the board. Still, it does give me a rough idea of relative valuations and performance.

I'm ba-ack!

Coal's Cash Cow
Forbes.com, John Dobosz, 11.09.05, 11:35 AM ET

Jack Adamo, editor of Insiders Plus newsletter, recommends buying units of Fording Canadian Coal Trust. The Calgary, Alberta-based owner of coal mining and processing properties throughout Canada operates as an open-ended mutual fund.

Fording (nyse: FDG - news - people )distributes most of the income it receives from its mining interests as dividends to unit-holders. Based on annualizing the most recent payout, Fording yields 17.3%. But if you figure yield by totaling the past 12 months of payouts, the stock yields a lower 7.5%. Fording’s payout ratio is 48%.

“It holds interests in coal and other mineral mines, but primarily in Elk Valley Coal, the world's second-largest exporter of metallurgical coal,” says Adamo. “Metallurgical coal, or coking coal, as it is also called, is the extremely hot-burning coal used in the manufacture of steel. As such, it is highly correlated to economic cycles, and is, therefore, vulnerable to recessions.“

Adamo notes that the cyclicality of the business will affect the size of the payout from year to year, but that Fording shares should continue to provide a yield that “ranges from better than bonds to better than almost anything.” Adamo expects dividends in the coming year to produce a yield between 9% and 12% at today’s price.

Fording closed on Tuesday at $35.28 per share, up 59% over the past year, but down 21.8% from its 52-week high of $45.15 on Sept. 12. After falling nearly 30%, Fording found support at $32 last week and bounced 10% higher. Last Friday, Fording closed at its high for the week, and back above its 200-day moving average at $34.60.

In a recent release, Fording announced that on a year-to-date basis, cash available for distribution was $474 million (Canadian), or $3.23 per unit, compared with $121 million (84 cents per unit) in 2004--more than 290% higher. In the past 12 months, Fording produced net income of $577.6 million on revenue of $1.4 billion and $430.5 million in cash from operations.

“The company has a strong balance sheet, super interest coverage and excellent cash flow,” says Adamo. “I expect these shares to outperform the market on a total return basis for the rest of the decade.”

Adamo recommends buying Fording Canadian Coal Trust up to $37 for income portfolios.

Click here to watch a video with more on Fording Canadian Coal. http://www.forbes.com/video/?video_url=http://www.forbes.com/video/fvn/guru/jd_fdg110905&id=jd_f....

http://www.forbes.com/investmentnewsletters/2005/11/09/fording-coal-adamo-in_jd_1108gurusow_inl.html....

Penn Virginia: ATM of the Coal World
Motley Fool, By Stephen D. Simpson, CFA, Thursday November 3, 1:10 pm ET

One of these days, I'll learn to take my own advice and get in on ideas like Penn Virginia Resource Partners (NYSE: PVR - News).

I've talked for the better part of a year about how this well-run coal and mid-stream natural gas partnership continues to generate solid cash flow through prudent management of now-hot resources. In my own defense, though, I would point out that investor enthusiasm for energy plays has compressed the yield for stocks like this and has made them a little less attractive relative to past valuations.

Third-quarter performance reflected the ongoing strength in PVR's underlying business. Operating income more than doubled, and the company reported that distributable cash flow climbed 72% from last year's level. Although this metric was up sequentially by 6%, management has elected to maintain a steady dividend for now.

As the headline numbers would suggest, underlying performance in coal and gas was quite good. Operating income from coal rose 58% as Penn Virginia saw the average royalty per ton increase about 18% and the amount of coal produced rise about 6%. Those results were pretty much squarely in line with management's guidance in the second-quarter report.

In the gas business, the company booked revenue of almost $104 million as inlet volumes averaged about 126 million cubic feet per day. Gross processing margin improved almost 12% on a sequential basis, moving from $1.10 per mcf to $1.23 per mcf. As this business was acquired within the past 12 months, there are no internal year-over-year comparisons.

Management's guidance for the next quarter probably merits a little explanation. Specifically, Penn Virginia is looking for lower coal production in the next quarter. What gives? Well, PVR gets paid for coal mined from its property, but coal seams don't really respect geography -- they stretch for miles, and one seam can have several owners. So when a customer's long-wall mining equipment moves off the company's property, production drops (and vice versa).

I would strongly suggest that investors not get wrapped up in quarter-to-quarter production concerns, but rather look at what this company has done over the past few years. Furthermore, I'd expect management to continue to evaluate new potential business that could further boost distributable cash flow in the future.

There are many ways to play coal, ranging from regular companies like Peabody (NYSE: BTU - News) to trusts like Fording (NYSE: FDG - News), even to equipment makers like Joy Global (Nasdaq: JOYG - News). And then there are plenty of other income-oriented asset plays out there like San Juan Basin (NYSE: SJT - News) and PrimeWest (NYSE: PWI - News). Nevertheless, for all of the choices available, I'd still suggest that income-oriented investors at least take a gander at Penn Virginia.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).

http://biz.yahoo.com/fool/051103/113104144121.html?.v=2

FDG recovering after reduction in production estimates and Jim Cramer's bearish call!

Fording Benefits From Full Quarter of Higher Coal Prices
<PR, 10/24/05>

Record Income and Distributions

CALGARY, Oct. 24 /PRNewswire-FirstCall/ - Fording Canadian Coal Trust (TSX: FDG.UN, NYSE: FDG) today announced strong third quarter results. Cash available for distribution for the third quarter of 2005 was $253 million ($1.72 per unit) compared with $52 million ($0.36 per unit) in 2004. On a year- to-date basis, cash available for distribution was $474 million ($3.23 per unit) in 2005 compared with $121 million ($0.84 per unit) in 2004. Per unit amounts for prior periods have been restated to reflect the three-for-one unit split that occurred in the third quarter of this year.

Net income was $427 million in the third quarter, up from $41 million in 2004, largely due to higher metallurgical coal sales prices as well as the reversal of a provision for future income taxes and the gain on the completion of the Elkview transaction. Net income before unusual items and future income taxes was $239 million in the third quarter of 2005 compared with $42 million in 2004. On a year-to-date basis, net income increased to $616 million from $65 million in 2004. Year-to-date net income before unusual items and future income taxes was $461 million in 2005 compared with $89 million in 2004.

"The third quarter of 2005 provided some significant accomplishments for both the Trust and Elk Valley Coal," said Jim Popowich, President of Fording Canadian Coal Trust. "We benefited from a full quarter of the new higher coal year prices, which doubled our distribution to unitholders over that of the second quarter. We completed our reorganization as well as our three-for-one unit split."

Jim Popowich continued: "In addition, Elk Valley Coal finalized two 10-year coal sales agreements and entered into a letter of intent for a third agreement during the quarter. Mining costs continue to be a significant focus for Elk Valley Coal. We're going through a period of higher energy and mining costs, and we expect to see this continue for the near term."

Highlights for the Third Quarter:

- The reorganization of the Trust's subsidiaries to maintain a flow-through structure was completed.

- Cash available for distribution increased to $253 million from $52 million.

- Production and sales volumes both increased 6% over 2004 levels as Elk Valley Coal's expansions started to result in additional volumes.

- Revenues were $571 million, double that of 2004 on the strength of higher coal sales prices, partially offset by a higher Canadian dollar.

-Cost of product sold increased 27% to $145 million primarily due to increased mining activity and a higher cost environment.

- Transportation costs increased 38% to $140 million, reflecting higher rail rates from the new contract with Canadian Pacific Railway as well as higher port rates due to increased coal prices.

- Agreements were finalized with POSCO and Nippon Steel Corporation that provide for 10-year sales contracts with Elk Valley Coal and a 2.5% equity investment by each company in an entity that will own and operate the Elkview operations.

- In October, Elk Valley Coal announced that it entered into a letter of intent with JFE Steel Corporation wherein the two entities will enter into a 10-year sales contract for 2.5 million tonnes per annum of metallurgical coal, representing a 39% annual increase over the 2005 coal year sales contract volumes.

- The Trust further revised downward its expectations for coal sales volumes for the 2005 calendar year. Elk Valley Coal is currently estimating sales volumes for 2005 of approximately 25 million tonnes of which the Trust's share is 60%.

- The three-for-one unit split was completed.

Conference Call and Webcast

A conference call to discuss these results will be held Tuesday, October 25 at 8:00 a.m. Mountain time, 10:00 a.m. Eastern time. To participate in the conference call, please dial 1-800-814-4890 or 416-640-4127 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Trust's website www.fording.ca.

About Fording

Fording Canadian Coal Trust is an open-ended mutual fund trust. Through investments in metallurgical coal and industrial minerals mining and processing operations, the Trust makes quarterly cash distributions to unitholders. The Trust, through its wholly owned subsidiaries, holds a 60% interest in the Elk Valley Coal Partnership and is the world's largest producer of the industrial mineral wollastonite. Elk Valley Coal, comprised of Canada's senior metallurgical coal mining properties, is the world's second largest exporter of metallurgical coal, supplying high-quality coal products to the international steel industry. The Trust's shares are traded on the Toronto Stock Exchange under the ticker symbol FDG.UN and on the New York Stock Exchange under the symbol FDG.

Management's Discussion and Analysis

This management's discussion and analysis should be read in conjunction with Fording Canadian Coal Trust's unaudited consolidated financial statements and the notes thereto for the quarter ended September 30, 2005, management's discussion and analysis and consolidated financial statements for the year ended December 31, 2004, and other public disclosure documents of the Fording Canadian Coal Trust and its predecessors.

Fording Canadian Coal Trust

Fording Canadian Coal Trust (the Trust) is an open-ended mutual fund trust created pursuant to a declaration of trust and governed by the laws of Alberta. The Trust does not carry on any active business.

The Trust completed a reorganization of its investments during the third quarter of 2005. Following the reorganization, the Trust holds its investment in Elk Valley Coal Partnership (Elk Valley Coal) through its direct and indirect investment in Fording Limited Partnership (Fording LP), and its investment in NYCO directly. Prior to the reorganization, the Trust's investments in Elk Valley Coal and NYCO were held by Fording Inc. The Trust uses the cash it receives from its investments to make quarterly distributions to its unitholders.

References to "we" and "our" in management's discussion and analysis are to the Trust and its subsidiaries, and their consolidated interest in Elk Valley Coal and NYCO as the context requires.

Elk Valley Coal

Elk Valley Coal is the second largest supplier of seaborne hard coking coal in the world, with approximately 21% of the global market in 2005. Hard coking coal is a premium coal used primarily for making coke by integrated steel mills, which account for approximately 60% of worldwide steel production. The seaborne hard coking coal market is characterized by the global nature of international steel-making, the relative concentration of quality metallurgical coal deposits in Australia, Canada and the United States and the comparatively low cost of seaborne transportation.

Elk Valley Coal has an interest in six mining operations. The Fording River, Coal Mountain, Line Creek and Cardinal River operations are wholly owned by Elk Valley Coal and are accounted for as such. The Greenhills operations is a joint venture in which Elk Valley Coal has an 80% interest that is accounted for on a net basis for financial reporting purposes. As of August 1, 2005, the Elkview operations is owned by a limited partnership in which Elk Valley Coal owns a 95% interest. The Elkview operations is accounted for at 100% with the 5% non-controlling minority interest being reflected as a component of other long-term liabilities.

The Fording River, Coal Mountain, Line Creek, Elkview and Greenhills operations are located in the Elk Valley region of southeast British Columbia. The Cardinal River operations is located in west central Alberta.

Elk Valley Coal also owns numerous other properties, including the coal preparation plant and coal resources at the former Quintette operations and other coal resources in British Columbia as well as a 46% interest in Neptune Bulk Terminals (Canada) Ltd., located in Vancouver, British Columbia.

The Trust's results pertaining to its Elk Valley Coal segment consist of our proportionate interest in the operations of Elk Valley Coal and include hedging gains and losses, mineral taxes and other items recorded in Fording LP but attributable to Elk Valley Coal's operations.

NYCO

NYCO consists of subsidiaries of the Trust that operate wollastonite mining operations in New York State and Mexico and a tripoli mining operation in Missouri. NYCO is the world's leading producer of wollastonite.

Wollastonite is an industrial mineral that is used in the manufacture of automotive composites, adhesives and sealants, metallurgical fluxes, friction material, paints and corrosion-resistant coatings, fire-resistant construction wallboard, cement-based products and ceramics. Tripoli is an industrial mineral that is used primarily in buffing and polishing applications.

Important Information Regarding Comparative Financial Statements

When Elk Valley Coal was formed in February 2003, the Trust had a 65% interest with the remainder held by Teck Cominco, the managing partner. The partnership agreement permitted Teck Cominco Limited to increase its interest in Elk Valley Coal by achieving a certain level of synergies through its management of the partnership assets. Teck Cominco achieved the synergy objectives and the partners agreed that the Trust's interest would be reduced to 62% effective April 1, 2004, 61% on April 1, 2005, and to 60% on April 1, 2006.

The financial results and other information presented in this report reflect the Trust's 65% interest in Elk Valley Coal from January 1, 2004 to March 31, 2004, and 60% interest commencing with the second quarter of 2004. The Trust accounted for the estimated effect of the 5% reduction in its interest in Elk Valley Coal in its financial results in the second quarter of 2004, as well as an estimate of additional entitlements to be received until March 31, 2006. The additional distribution entitlements received since March 31, 2004, have been or will be included in cash available for distribution over the period ending March 31, 2006. Readers are cautioned that certain information included in this document for prior periods may not be directly comparable due to the reduction of the Trust's interest in Elk Valley Coal effective April 1, 2004.

All financial information in this management's discussion and analysis and financial statements is unaudited. The Trust reports its financial information in Canadian dollars and all monetary amounts set forth herein are expressed in Canadian dollars unless otherwise stated.

In addition, all per unit amounts and outstanding units disclosed herein have been restated to reflect the three-for-one unit split that occurred in the third quarter of 2005.

http://biz.yahoo.com/prnews/051024/to058.html?.v=13

Elk Valley Coal Announces 10-Year Sales Agreement With JFE Steel Corporation - Annual Sales Volume to Increase 39% from Current Level <PR, 10/24/05>

CALGARY, Oct. 24 /PRNewswire-FirstCall/ - Fording Canadian Coal Trust (TSX: FDG.UN, NYSE: FDG) and Teck Cominco Limited (TSX: TEK.A - News, TEK.B - News) today announced that Elk Valley Coal and JFE Steel Corporation of Japan have entered into a strategic collaborative relationship that seeks stable sales and supply of Elk Valley Coal hard coking coal. Based on this strategic relationship, Elk Valley Coal and JFE have signed a letter of intent that calls for the execution of a 10-year sales contract for the sale and purchase of 2.5 million tonnes per annum of metallurgical coal from the 2006 to and including the 2015 coal contract years. Coal sales volumes under the proposed contract increase Elk Valley Coal's anticipated annual shipments to the JFE by 39% over the 2005 coal year sales level. This contract represents an aggregate of 25 million tonnes over the 10-year term.

"We are very pleased to be strengthening our relationship with JFE Steel through this agreement," said Jim Popowich, President of Fording and President & Chief Executive Officer of Elk Valley Coal. "The long-term nature of the agreement brings significant value to Elk Valley Coal and the unitholders of Fording Canadian Coal Trust as it helps stabilize coal sales volumes going forward."

These agreements are subject to finalization of a detailed sales contract and a letter of intent concerning future cooperation, which is expected to be completed by December 2005.

About Fording

Fording Canadian Coal Trust is an open-ended mutual fund trust. Through investments in metallurgical coal and industrial minerals mining and processing operations, the Trust makes quarterly cash distributions to unitholders. The Trust, through its subsidiaries, holds a 60% interest in the Elk Valley Coal Partnership and is the world's largest producer of the industrial mineral wollastonite. Elk Valley Coal Partnership, comprised of Canada's senior metallurgical coal mining properties, is the world's second largest exporter of metallurgical coal, supplying high-quality coal products to the international steel industry. The Trust's shares are traded on the Toronto Stock Exchange under the ticker symbol FDG.UN and on the New York Stock Exchange under the symbol FDG.

http://biz.yahoo.com/prnews/051024/to053.html?.v=16

3:1 split and divi looking good. eom