Small North American energy producers have been under pressure since late 2011, when natural gas prices began falling in earnest. Headwinds intensified when rapid oil production growth combined with inadequate pipeline capacity to get it to market, sending crude prices plunging in many regions.

The need to get bigger fast to meet these pressures was the chief spur for the now completed merger of the former AvenEx Energy Corp, Pace Oil & Gas Ltd and Charger Energy Corp to form Spyglass Resources Corp (TSX: SGL, OTC: None).

Completed April 4, the deal created a combined company with approximately 18,000 barrels of oil equivalent of production and some ability to achieve greater scale going forward.

The chief drawback of the deal for AvenEx shareholders: a reduction in the monthly dividend to a new rate of CAD0.0225 from a former rate of CAD0.035.

On the positive side, the 35.7 percent cut was actually less than the Bloomberg consensus had projected. And given the slide in the company’s fortunes over the past year, staying independent would likely have invited much worse.

Shareholders of the former Pace, meanwhile, actually got a bonus in the form of a first-ever dividend since the company’s spinoff from the former Provident Energy Ltd.

Based on recent results from pre-merger AvenEx, Charger and Pace, there should be ample cash to fund that distribution as well as capital spending to increase scale. There’s also near-term financial flexibility, as neither AvenEx nor Pace had any debt maturing before the end of 2014.

At the current dividend rate and a 1-to-1 conversion ratio for AvenEx shares, Spyglass starts out yielding better than 11 percent. I suspect that’s largely because of confusion surrounding this deal.

This is still a smallish producer facing many challenges, and it should be noted that the deal itself was opposed by at least one major shareholder as doing little to solve that fundamental scale problem.

But at this price Spyglass deserves something AvenEx and Pace did not: a hold recommendation rather than a sell. I’m also going to leave it off the Dividend Watch List based on these companies’ fourth-quarter results. Management will report first-quarter 2013 numbers on or about May 8.

Spyglass Resources–a new entity that includes the former AvenEx Energy as well as Pace Oil & Gas and Charger Energy–is a hold.

The other dividend cutter this month should be no surprise to anyone who has followed its fortunes over the past year: Precious Metals & Mining Trust (TSX: MMP-U, OTC: PMMTF) slashed its payout by 30 percent to a new monthly rate of CAD0.07.

Unfortunately, this is unlikely to be the last move for this closed-end fund, which held 93.67 percent of its portfolio in gold and silver mining stocks at last count.

Mining stock prices had long lagged the prices of the metals they produce. Now the metals themselves have joined them on the downside, and the result has been a consistent erosion of this closed-end fund’s net asset value.

The fund’s current problem has been made infinitely worse because it’s continued to pay out a high dividend over the past year even though it has had basically zero investment income–either from dividends or capital gains from sales.

The entire dividend has basically been a return of unitholders’ capital. That’s further eroded net asset value.

For most of 2012 Precious Metals & Mining’s market price maintained a range of CAD7 to CAD8 per unit, as all too many investors were distracted by the high yield and ignored the eroding base of assets.

That appears to have changed with the dividend cut, and the fund’s price is now actually at a discount of roughly 4 percent to net asset value, in contrast to the 20 percent to 30 percent premium that prevailed up until late January.

The discount could provide a floor to the company’s market price in coming months but only if one of two things happens.

By far the more favorable would be if there’s a roaring rebound in gold and silver stocks, which replenishes net asset value and affords management some opportunity to fund dividends with capital gains.

Considerably less favorable: Prices of metals and metals stocks stay weak, there’s no opportunity for capital gains and the entire distribution remains a return of capital. In this case management will have no choice but to cut the payout again or else allow the fund to essentially pay out its entire value.

I’d rather own battered Barrick Gold Corp (TSX: ABX, NYSE: ABX), which is also trading at a 52-week low but covers its lower dividend comfortably with actual earnings and continues to grow its reserves and production.

Sell Precious Metals & Mining if you haven’t yet.

Note that I’m adding Aggressive Portfolio Holding Wajax Corp (TSX: WJX, OTC: WJXFF) to the Dividend Watch List. As I noted in the March Portfolio Update, the company’s fourth-quarter earnings weakened as sales fell to reduced drilling in the energy patch.

Management guided to a second-half 2013 recovery, and Bay Street is hanging in on that basis. But as we’ve seen in past cycles Wajax earnings’ can fluctuate, and if conditions get bad enough–as they did in 2008-09–the company hasn’t been shy about reducing distributions until conditions improve.

That seems priced in currently with the yield at nearly 9 percent. And my view is that the energy patch–and Wajax’ earnings–will recover enough later this year to safeguard the payout. But until we see numbers that support that thesis, starting with first quarter results in early May, the stock belongs on the Watch List. Wajax is a hold.

Here’s the rest of the Dividend Watch List. Not all members are sells, though the most conservative investors should avoid all of them.

Bonavista Energy Corp’s (TSX: BNP, OTC: BNPUF) position should stabilize, as the recovery in natural gas prices this winter should have provided some opportunities to lock in favorable prices for some future output.

That should help the company follow through on development plans and preserve the current dividend level. Next numbers are due out on or about May 3. Hold.

Cathedral Energy Services Ltd (TSX: CET, OTC: CETEF) took a harder hit to profits in the fourth quarter than most rivals in the energy services space.

That’s disturbing for the near term, though it likely means the company will do better than most when energy industry conditions rebound. The stock’s for the aggressive only though. Hold.

Chorus Aviation Inc (TSX: CHR/B, OTC: CHRVF) insiders have been heavy net buyers of the stock the past six months. But there’s been no additional word from management since the company essentially backed away from previous guidance.

It’s all about the Air Canada Inc (TSX: AC/A, OTC: AIDIF) dispute in the near term. But the long-term doesn’t look much better with competitive threats intensifying. Sell.

CML Healthcare Inc’s (TSX: CLC, OTC: CMHIF) fourth-quarter 2012 results did support the reduced dividend level, and they were basically stable with third-quarter numbers.

The primary uncertainty is the prospective sale of the diagnostic imaging division. But assuming there’s a decent offer and first-quarter numbers, which will be released May 9, hold up again CML will come off the Watch List by summer. Hold.

Data Group Inc’s (TSX: DGI, OTC: DGPIF) fortunes may at last be stabilizing, as it launches new digital products and paper offerings hold their own. Bay Street also may be softening its outlook, with TD Securities boosting its rating to “hold” from “reduce.”

I’m still not a big fan of company financial reporting, however, and given the record of deterioration at paper-to-digital businesses the burden of proof is with management. First-quarter numbers are expected out on or about May 9. Hold.

Eagle Energy Trust (TSX: EGL-U, OTC: ENYTF), a recent addition to the How They Rate coverage universe, is already seeing its dividend under pressure as a small producer in a tight environment.

But fourth-quarter results were basically in line with expectations, the payout was covered and debt-to-cash flow is a modest 1.1-to-1. Hold.

Extendicare Inc’s (TSX: EXE, OTC: EXETF) dividend level will be subject to question as long as so much is unresolved in the US healthcare system. But the stock’s suitable for aggressive investors as it adapts well to changing circumstances.

The first post-US sequestration numbers are due out around May 8. Buy under USD8.

FP Newspapers Inc (TSX: FP, OTC: FPNUF) covered its payout with free cash flow in the fourth quarter by almost a 2-to-1 margin. On the other hand, it lost circulation and advertising revenue remained unpredictable as ever.

Insider control (they own 30.5 percent of outstanding FP stock) or no, it’s still hard to see how they keep paying at the current rate indefinitely with a shrinking business. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) got a lift as producers drilled more on its lands during the quarter, boosting royalty volumes by 22 percent. That was partly offset by weaker pricing, but the company still managed to generate enough free cash flow to fund the payout and cut debt.

There’s little margin for error here, but narrowing differentials for oil in Canada should have helped first quarter numbers. Results are due out May 15. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) made a major move this week, announcing the purchase of a 24 percent interest in Imvescor Restaurant Group Inc (TSX: IRG, OTC: IRGIF) from private equity firm Fairfax Financial Holdings Ltd.

It’s uncertain what GMP plans to do with its interest in Imvescor, though the latter did report generally encouraging fiscal 2013 first-quarter results. The CAD26.1 million allocation is significant for an investment house with a CAD424 million market capitalization.

There doesn’t appear to be any immediate impact to the dividend from this. But it’s another reason for caution on this company, which announces its first-quarter results May 3. Hold.

IBI Group Inc (TSX: IBG, OTC: IBIBF) disappointed Bay Street with its fourth-quarter and full-year 2012 results, in part because of a somber outlook for 2013.

Management did progress with its expense controls, and the new dividend rate was covered by better than 2-to-1 by free cash flow, which should leave plenty of room for meeting debt reduction targets.

But like every company that’s recently cut dividends, IBI has a ways to go before investors get comfortable with it again. The next set of numbers is due out May 10.

In the meantime, no one should consider averaging down in it or any other fallen recommendation. Buy under USD8.

Labrador Iron Ore Royalty Corps’ (TSX: LIF, OTC: LIFZF) emerging risk here is what happens when Rio Tinto Plc (London: RIO, NYSE: RIO) sells its ownership stake in the iron ore facility that contributes all of this royalty company’s income.

An entity more concerned with growth may indeed enrich the value of the facility, but the capital needed could cut into the payout. Hold.

Manitoba Telecom Services Inc’s (TSX: MBT, OTC: MOBAF) fortunes are subject to the big issue in Canadian communications: the coming auction of more wireless spectrum.

At this point regulators have decided to restrict what larger players can purchase. That could help or hurt this company, which appears to be falling behind better-capitalized rivals.

Management is certainly denying any threat to the dividend at this point. But the big trends seem to be moving inexorably against it. Sell.

New Flyer Industries Inc’s (TSX: NFI, OTC: NFYED)  fourth-quarter free cash flow did cover the dividend for the first time in awhile. But actual results weren’t encouraging, as order volume dropped by 17.7 percent and average selling prices dipped by 3.9 percent from last year’s levels.

Cash flow swung positive, and backlog was up against the third quarter. But this is a company that’s still battling some very difficult business conditions, as governments postpone purchases of new buses. Hold.

Northland Power Inc (TSX: NPI, OTC: NPIFF) belied weakness in cash flow this month by announcing the purchase of a natural gas-fired and a biomass-fired power plant. Both deals should ultimately be accretive, but dividends, by management’s reckoning, still won’t be covered by free cash flow until 2014.

Holding this stock essentially means taking it on faith that they’ll be able to stick to a pledge to keep paying. Hold.

Parallel Energy Trust’s (TSX: PLT-U, OTC: PEYTF) fourth-quarter payout ratio is unsustainably high at 139 percent of distributable cash flow, and this small producer cut its payout as recently as January.

It’s for risk takers only. Hold.

Precious Metals & Mining Trust’s (TSX: MMP-U, OTC: PMMTF) place on the Watch List is explained above. Sell.

Ten Peaks Coffee Company Inc’s (TSX: TPK, OTC: SWSSF) fourth-quarter results were a vast improvement over those for each of the first three quarters of 2012 periods as well as 2011. Credit goes to marketing efforts, as management has refocused on its more profitable customers.

But history is clear that this is a tough business model on which to base a sustainable dividend. Sell.

Wajax Corp’s (TSX: WJX, OTC: WJXFF) place on the Watch List is explained above. Hold.

Zargon Oil & Gas Ltd’s (TSX: ZAR, OTC: ZARFF) fourth-quarter results were a vast improvement from previous periods, primarily because management was able to cut costs by improved scale.