Just about every investor on the planet should be slightly envious of anyone who bought units of the BP Prudhoe Bay Royalty Trust (NYSE:BPT) years ago. An investment in the trust 15 years ago would have you sitting pretty today with a 9,000% total return. No, that's not a typo, and yes, I'm just as flabbergasted as you are. However, royalty trusts are designed to die one day, and this trust's reserve-to-production ratio suggests it only has 14.5 years left.
With such a short time horizon, it's hard to see the distributions from the trust covering the price you pay and producing a decent return before the wells run dry. Tune into the video below to find out why the current characteristics of the oil field, the price of the trust, and the current distribution should give you pause before buying the BP Prudhoe Bay trust.