Unit prices of Western Canada’s oil and gas trusts declined 16.4% on average in November. Over the same period, shares of the average junior oil and gas company declined 6.9%.

These are just two of the findings in the latest iQ Report by Iradesso Communications, a Calgary-based investor relations firm. Iradesso tracks the performance of energy trusts and junior oil and gas companies that trade on the TSX and TSX Venture Exchange and operate primarily in Western Canada.

The comparison includes every trust that focuses on conventional oil and gas production and every public company that produces between 500 and 15,000 barrels of oil equivalent per day (boe/d). Iradesso’s latest comparison focuses on the third quarter 2006 results of 84 juniors and 27 trusts.

Iradesso president Peter Knapp says much of the decline in unit and share prices in November can be attributed to investor reaction to the federal government’s proposal announced on Oct. 31, 2006 to begin taxing trusts in 2011. Knapp, however, says the report shows that juniors and trusts began their stock market decline well before anyone knew about the federal government’s trust taxation plans, likely because of slipping oil and gas prices.

“The recent sell-off may have created some investment opportunities for those prepared to look beyond the short-term uncertainty,” Knapp says. “Certain companies and trusts may have been caught in the downdraft even though their situation warrants more optimism. Companies and trusts with strong management teams, good assets and less-levered balance sheets have higher odds of flourishing regardless of the regulatory or commodity price environment.”

During the third quarter, soft commodity prices weighed on trusts even when monthly cash distributions are taken into account.

Although some investors have turned away from the oil and gas sector since the start of the third quarter and although the federal government’s October 2006 proposal to begin taxing trusts could remove a traditional exit strategy for the juniors, Knapp said the trust tax actually has the potential to benefit junior oil and gas companies.

“The growth potential of juniors will receive a boost in the near term from a more favourable competitive environment,” said Knapp. “Due to lower trust unit prices and reduced access to capital for trusts, junior oil and gas companies are now better positioned to compete for land, equipment, people and corporate deals.”

During the third quarter, the three juniors with the biggest gains in share prices were Culane Energy Corp. (TSX – CLN) at 45%, Bulldog Resources Inc. (TSX – BD) at 42% and West Energy Ltd. (TSX – WTL) at 38%.

The juniors experiencing the biggest declines in share prices in the quarter were C1 Energy Ltd. (TSX – CTT) at minus 36%, Rider Resources Ltd. (TSX – RRZ) at minus 34% and Delphi Energy Corp. (TSX – DEE) at minus 31%.

The average unit price decline of 9.5% and the average junior share price decline of 9.7% in the third quarter of 2006 represent a dramatic shift from the same period one year ago, in which trusts gained 25.7% while juniors gained 29%.