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TOO MUCH GAS Bullish we had been on ECA Marcellus Trust I (ECT on the Big Board). Bearish we are today. There's too much gas and not enough winter. ECT is a royalty trust stocked with 66 gas wells. It owns a 90% interest in 14 of those wells, a 50% interest in 52. Each property is situated in Pennsylvania's fertile Marcellus shale formation. Energy Corp. of America, a closely held, Denver-based exploration and development company, floated the trust in June 2010 to finance a gas-exploration program. To satisfy its obligation to the trust holders, Energy Corp. was obliged to drill 52 wells by March 31, 2014. Diligent to a fault, the sponsor completed its work by Nov. 30, 2011. Because shale wells tend to deliver most of what they have to give early in their operational lives, peak production has coincided with recent persistently low gas prices. The Grant's analysis dated Oct. 15, 2010, contained the inadvisable phrase "today's depressed $3.66 gas price." It so happens that gas was quoted at $3.22 on Tuesday. Thus, in the third quarter of 2012, an 18% year-over-year rise in gas production was matched by an almost 18% year-over-year decline in net income. IMAGE1 Once upon a time, Energy Corp. owned 7.7 million ECT shares, or 43.7% of the total. It sold 2.5 million in April 2011 and will offer all but 900,000-odd shares of its remaining position to investors in Eastern American Natural Gas Trust in a future exchange transaction. When we ...

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