GL Limited (formerly: Guoco Leisure)

[Hotelking]

you missed a lot.

when oil price drops, the production will fall because of both high cost and certain reserve not feasible to extract, so triple whammy for the royalties. Just check royalties payment history, only in recent years, when oil price above 100, royalties starts to make meaningful contribution.

also, there is time value concept. If production falls, certain production will be postponed to the future if the reserve is still feasible to extract. as future money is not as valuable as present because of inflation, so quadruple whammy for royalties.

So wouldnt you say that the previous management of Guocoleisure, when it was still known as BIL International, was smart to have monetised the Bass Straits Royalty from 1997 -2007 by forming the BSO trust? Oil prices wasnt that fantastic back then.

This royalty relates to gas production as well. And if you read the above article which I posted, its really positive that the BHP/ESSO JV is pushing the Aussie government to link the gas produced to international prices.

As extraction technologies improve over time, the Bass Straits area should be able to yield more hydrocarbons due to utilisation of more efficient techniques.

I do not forsee Oil prices coming down in the forseeable future ahead. As the world population increase, so would demand for oil.

Inflation is what will push up the price of oil and gas as well.