New trust rises from consolidation

The ranks of the Canadian energy industry have shrunk again, with NAV Energy Trust and Clear Energy announcing a stock-swap merger carrying a market value of about C$473 million.

The new entity, operating under the name of Sound Energy Trust, will produce 12,500 barrels of oil equivalent, almost two-thirds of it natural gas.

Sound will incorporate a diversified portfolio including strong prospects in central Alberta and the Peace River Arch, along with adjoining lands in the coalbed methane plays of Horseshoe Canyon and Mannville.

NAV President Thomas Stan said the combined assets will allow a more balanced year-round operation, with less reliance on winter access to properties.

Sound will have distributions of less than 60 percent of cash flow, reflecting a trend among trusts that were once counted on to channel 90 percent or more to unit holders.

But Stan believes the higher-payout trusts may have difficulty sustaining those levels.

—Gary Park