Energy Income Trusts Rankings

I had the benefit of reading the Red Flag Report of Energy Income Trusts produced by McLean & Partners of Calgary. I really like their thoughtful analysis but I had a problem with the binary nature of their red flags. To me it was obvious that some red flags are not as bad as others. For example, I hold Canetic and it was flagged for high levels of debt, and I said yes but it is only slightly above their threshhold (.96 versus .90) and their strong areas are really strong (e.g. Production Replacement at 566 versus a threshhold of 100 and Reserve Growth/Unit at 70 when anything greater than 0 is good).

Here is the relevant page from their report:

So I built a spreadsheet that normalizes the five measures and weights the relative goodness of each measure. For example, if being above 0 is good, then being way above 0 is better. In this revised model, anything above 0 is good, and any negative number would be Red Flagged. So that has led to the following revised rankings:

So in this view, anything above 0 is good and even further above 0 is better. Similarly, negative numbers are bad and big negative numbers are really bad. But this is also still based on equal weightings of all the five measures. So the question I have is this:
What are the rational weightings between the five measures?
For example, the fact that the yield is above 15 might be just because the Trust is undervalued at the time (April 10, 2006), and this does not seem as significant as the fact that the trust is not replacing its production. Usually high yields are considered bad so I have weighted it heavily. OTOH, I think debt is good IF Production Replacement is high so I have weighted Debt only half as much. Similarly with Adjusted Payout Ratio. I have run the model with the following weightings:

Weight Criterion Factor
2.0 >= 15% Yield: Current payout/current share price (April 10, 2006)
1.0 >= 110% Adjusted Payout Ratio: Current distribution + Forecast capital expenditure/Forecast Cash Flow
1.0 >= 0.9x Debt: Long term debt/cash flow
2.0 <= 100% Production Replacement: What percent of the past 12 month’s production has been replaced?
2.0 <= 0% Reserve Growth: 12 month reserve growth per fully diluted shares outstanding
and that has produced this ranking:

I am interested in input on any aspect of this analysis but especially the relative weights of the five factors. For an added perspective, here are

The Energy Trusts in Ranking order:

Canadian Oil Sands Trust seems to be a special case. Maybe it is unique because the existing reserves are so large and replacement is not as important as in more traditional oil production plays.

Please post your responses to the Financial Webring Forum under the topic:
Energy Income Trusts Red Flag Analysis
Thanks.

For the fun if it...Keith

Family

Weight	Criterion	Factor
2.0	>= 15%	Yield: Current payout/current share price (April 10, 2006)
1.0	>= 110%	Adjusted Payout Ratio: Current distribution + Forecast capital expenditure/Forecast Cash Flow
1.0	>= 0.9x	Debt: Long term debt/cash flow
2.0	<= 100%	Production Replacement: What percent of the past 12 month’s production has been replaced?
2.0	<= 0%	Reserve Growth: 12 month reserve growth per fully diluted shares outstanding