During a recent presentation at the Barclays CEO Energy-Power Conference, the new chief of Encana Corp (TSX: ECA, NYSE: ECA), Doug Suttles, indicated that, as part of a broader review of the company’s organizational structure, capital allocation and portfolio of assets, Encana’s current dividend rate is under review.

Mr. Suttles emphasized the importance of narrowing the development portfolio, with all of 28 projects being funded right now, and noted that Encana’s “capital allocation process is broken.”

Asset sales that help deemphasize the relative importance of dry natural gas within the overall portfolio are in the offing. A dividend cut, perhaps as much as 50 percent, in the face of declining cash flow and new management’s emphasis on profitability versus straight-up growth, is a strong possibility.

Encana, which has lost half of its market value since 2010, is also feeling pressure from major institutional investors to cut its payout.

The stock is down 10.7 percent on a total return basis in US dollar terms in 2013. The S&P/TSX Energy Index is up 2.45 percent.

Encana “isn’t focused enough” and needs to “clean up” its portfolio said Mr. Suttles. Mr. Suttles, who became CEO of Encana in June, estimated North American gas prices will be “range-bound” between USD3.50 per million British thermal units and USD4.50 in the next few years, from an average of USD3.69 so far this year and a low below USD2 in April 2012.

The company posted cumulative losses of USD3.7 billion from the fourth quarter of 2011 through the first quarter of 2013 due to falling gas prices. Analysts expect net income of USD139.7 million for the third quarter and USD167.3 million for the fourth.

Encana has more than 17 producing areas, compared with between one and seven for its peers, and is weighted more heavily toward less profitable dry gas. The company will likely dispose of dry gas assets as well as some emerging plays in order to reduce the number of opportunities it funds.

The goal is to focus on properties that will allow the company to remain profitable with natural gas prices at USD3.50 to USD4.50.

Encana’s stock-price decline began after natural gas prices started a slide in 2008, a year before Encana spun off its oil sands business to create Cenovus Energy Inc (TSX: CVE, NYSE: CVE). Cenovus’s market value is now 44 percent higher than its former parent.

To cope with falling gas prices, Encana has pursued a strategy of selling stakes in joint ventures to fund an expansion of its holdings in unconventional shale gas formations in regions such as northeastern British Columbia.

Encana certainly has assets that other gas producers would want to own. As attractive as these pieces are, and despite a solid record of execution on projects to which it devotes sufficient human and financial capital, Encana simply can’t get the most out of them and remain profitable, given its other cash commitments.

The company has properties in the Deep Panuke basin off the coast of Nova Scotia as well as leases in the US Rocky Mountain states that it could sell. It also has land in Alberta and northern British Columbia as well as in parts of the US, including Colorado and Texas. The company has 75 years of production at current rates.

Seven analysts currently rate the stock a “buy” according to Bloomberg’s standardization of Bay Street/Wall Street broker-speak, while 13 rate it a “hold.” Six analysts rate Encana a “sell.”

The average 12-month target price, derived from forecasts made by 23 of the 26 analysts that cover the stock, is CAD20.85. Implied upside from here–an Oct. 3 closing price on the Toronto Stock Exchange of CAD17.62–including 12 months of dividends at the currently quarterly rate of CAD0.20 per share, is 22.9 percent.

Encana, new to the Watch List this month, nevertheless earns up upgrade to speculative buy–for aggressive investors–up to USD19.

The market is likely to reward Encana for tangible signs of progress on its new strategy. Unfortunately, the process of rationalizing the company’s operations and its finances includes a dividend cut.

Please note that, because of the volatile nature of commodity pricing, all Oil and Gas companies in the How They Rate coverage universe should be considered permanent members of the “other receiving votes” section of the Dividend Watch List.

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

Barrick Gold Corp (TSX: ABX, NYSE: ABX), the biggest gold producer in the world, reported the second-biggest quarterly loss in Canadian corporate history and slashed its quarterly dividend rate by 75 percent to USD0.05 per share from USD0.20.

The move will save the company about USD600 million per year as it cuts costs in the aftermath of a steep decline for the price of gold.

Barrick has reduced its long-term gold-price assumptions, with corresponding writedowns of assets.

The company posted a net loss of USD8.56 billion in the second quarter, with total impairment charges of USD9.3 billion.

Despite the cost reductions and the dividend cut, Barrick’s balance sheet is still weak, burdened by USD15.8 billion of debt, though only USD1.8 billion is maturing between now and the end of 2015. Sell.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF) reported a 4 percent increase in production volumes to 72,554 barrels of oil equivalent per day (boe/d) for the second quarter, despite scheduled and unscheduled plant turnarounds that impacted quarterly volumes by 950 boe/d. Current production is approximately 73,000 boe/d.

The company generated funds from operations of CAD123.1 million, or CAD0.63 per share, up 51 percent from CAD81.7 million, or CAD0.49 per share, a year ago. Revenue was up 26 percent to CAD244.9 million.

Management, which is focused on operating and capital efficiencies to offset low natural gas and natural gas liquids pricing, held the dividend steady at CAD0.07 on Aug. 15. Hold.

Cathedral Energy Services Ltd (TSX: CET, OTC: CETEF) reported a 12.1 percent increase in second-quarter revenue to CAD45.6 million, as its US production testing segment generated record sales. Adjusted gross margin expanded to 22 percent from 19.1 percent a year ago, as funds from operations per share were CAD0.10, up from CAD0.03

Management noted continued directional drilling growth and was upbeat about the second half of the year, particularly its operations in the US. The company has boosted its annual capital program to bolster its ongoing expansion efforts in Texas, Oklahoma and the Rocky Mountain region. Hold.

Chorus Aviation Inc (TSX: CHR/B, OTC: CHRVF) reported a 3.7 percent dip in second-quarter operating revenue to CAD410.3 million due the end of the Thomas Cook charter agreement and a 4 percent decline in billable block-hours.

The good news is the final round of evidentiary hearings on the Air Canada (TSX: AC/A, OTC: AIDIF) arbitration is complete. The bad news is it still faces potential liability should it not prevail on the merits. Chorus has expressed confidence in its position but warned that an adverse outcome would result in it owing a significant retroactive payment to Air Canada, dating back to the start of 2010, that could be as much as CAD157 million.

Chorus reduced the quarterly rate from CAD0.15 to CAD0.075 effective with the payment due in July in order to conserve cash.

CEO Joseph Randell said in a recent interview that management could revisit the dividend cut should it prevail, noting Chorus’ confidence as well as the fact that the company is “not ruling out raising the dividend.”

The biggest issue for Chorus remains the fact that approximately 99 percent of its revenue comes from its partnership with Air Canada, which is set to expire in 2020. After several failed attempts to diversify its business, there appear to be few opportunities to reduce this dependence. And competition is heating up. Sell.

Colabor Group Inc (TSX: GCL, OTC: COLFF) announced on June 17, 2013, that declarations of dividends going forward will coincide with management’s announcement of quarterly financial results.

On July 18, 2013, when it revealed second-quarter numbers, Colabor also announced a 66.7 percent reduction in its quarterly dividend to CAD0.06 per share from CAD0.18.

Colabor’s share price has rallied in the wake of the cut, as cash saved should provide room to address operating concerns and pay down debt. The hope is the company has established the flexibility to fund growth initiatives in 2014.

Colabor reported a 0.5 percent increase in comparable sales, though total sales declined by 2.4 percent to CAD345.8 million.

Net earnings for the second quarter of 2013 were CAD2.4 million, or CAD0.09 per share, down from CAD2.9 million, or CAD0.13 per share, a year ago.

Cash flow was CAD4.2 million, or CAD0.15 per share, compared to CAD7.6 million, or CAD0.33 per share, a year earlier. Hold.

Data Group Inc’s (TSX: DGI, OTC: DGPIF) second-quarter revenue was down to CAD77.8 million from CAD82.6, and gross profit slipped to CAD19.7 million from CAD21.1 million.

Management maintained the CAD0.075 dividend rate for October payment, despite recording a net loss of CAD4.8 million.

Data Group continues to push an aggressive turnaround strategy focused on generating new revenue, cutting costs and reducing debt. Its attempt to evolve into a business process outsourcing provider faces significant challenges. Hold.

Eagle Energy Trust (TSX: EGL-U, OTC: ENYTF) reported a 3 percent sequential and a 26 percent year-over-year increase production to 3,022 barrels of oil equivalent per day. Field operating costs were 13 percent compared to the first quarter and 40 percent compared to the second quarter of 2012.

The company reported a payout ratio of 67 percent, and management reiterated its full-year output target. The small producer’s fortunes remain particularly tied to ups and downs of commodity prices. Hold.

FP Newspapers Inc (TSX: FP, OTC: FPNUF) declared CAD0.05 per share monthly dividends in mid-July and early August, the latter announcement coinciding with management’s report of a slight uptick in second-quarter net income to CAD1.5 million, or CAD0.217 per share, from CAD1.3 million, CAD0.19 per share, a year ago.

FP LP, of which FP Newspapers owns 49 percent, reported a 2.6 percent decline in revenue and a 4.6 percent advertising slide. The slow deterioration of this business continues. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) reported a 3 percent increase in second-quarter average production to 8,714 barrels of oil equivalent per day, as average realized prices were up 20 percent, driving a 22 percent year-over-year increase in gross revenue.

Management also lifted its full-year forecast for production from Freehold’s lands. The dividend was once again covered by free cash flow. And debt reduction continues.

There’s little margin for error here, though improving differentials will continue to help support the dividend. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) posted a 3.8 percent decline in second-quarter revenue to CAD60.3 million, though net income of CAD4.8 million improved on a year-ago loss of CAD400,000. That was accomplished largely through the sale of contracts to provide advisory services to managed funds that generated CAD10.8 million. Excluding items the company posted a net loss of CAD300,000, as underlying business conditions remain difficult.

Management maintained the dividend rate, but the payout ratio for the second quarter was negative. Sell.

Labrador Iron Ore Royalty Corp (TSX: LIF, OTC: LIFZF) reported a 15.8 percent increase in second-quarter royalty income to CAD41.7 million, as adjusted cash flow ticked up to CAD23.4 million, or CAD0.37 per share, from CAD22.3 million, or CAD0.35 per share, a year ago. Results were driven by higher production from Iron Ore Company of Canada.

Management declared CAD0.25 per share and CAD0.125 per share regular and special dividends on June 12, 2013, maintaining the payout practice established during the preceding six quarters.

Labrador is set to make its next dividend declaration on or about Sept. 13, 2013, and it looks as though the current policy will prevail.

Management has confirmed that bidding for IOC has reached the second stage, but it hasn’t held talks with parties involved. It’s possible that an eventual buyer will consolidate the IOC holding and Labrador, for tax reasons among other considerations.

The ultimate fate of the dividend is tied to what happens with the facility that generates Labrador’s cash flow. But if it sells itself all questions are answered. Hold.

Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF) management, after stating time and again that the dividend is a key component of its value proposition to investors, last month finally conceded that a reduction is a possibility.

In a Sept. 5, 2013, phone interview with Bloomberg First Word, CEO John Wright said options to reduce the company’s debt-to-cash flow ration to 2.0 or less over the long term from its current level above 3.0 include additional asset sales, controlling capital expenditure and growing its production base.

Responding to a question about whether a dividend cut would also be considered, Mr. Wright said, “All those things are on the table. We’ve always said we don’t see a reason to cut the dividend. On the other hand, we’ve said we will never say ‘never.’”

That’s enough to earn Lightstream a place on the Dividend Watch List, despite the fact that the company hasn’t cut its dividend since listing on the Toronto Stock Exchange (TSX) as PetroBakken Energy Ltd in 2009.

Second-quarter production averaged 46,045 boe/d (82 percent light oil and liquids), down 6 percent from the first quarter but up 19 percent year over year. Operating netback for the second quarter was USD50.08 per barrel of oil equivalent, a slight increase over the first quarter.

Funds from operations were CAD168 million, or CAD0.86 per share, down 5 percent sequentially but up 39 percent year over year.

Lightstream Resources is a buy for aggressive investors up to our reduced buy-under target of USD10.

New Flyer Industries Inc (TSX: NFI, OTC: NFYED) reported an 18.4 percent increase in second-quarter revenue to CAD268.7 million, primarily due to a 10.9 percent increase in bus deliveries. Free cash flow for the quarter was CAD9.2 million, up from CAD5.6 million

Management noted in its earnings release that “the current dividend rate is expected to be maintained” when the next declaration is made on Aug. 15.

A total bus order backlog of CAD3.7 billion represents an increase of CAD4 million during the quarter. But the key driver of long-term business health, spending by municipalities, remains pressured. Hold.

Northland Power Inc (TSX: NPI, OTC: NPIFF) reported second-quarter net income of CAD80.1 million versus a net loss of CAD34.9 million a year ago, as total sales surged by 45.8 percent to CAD124.4 million on higher natural gas sales, higher prices on its power-purchase agreements, strong wind conditions and fewer outages.

Management announced acquisitions of a natural gas-fired and a biomass-fired power plant in April, demonstrating it has the balance-sheet strength to continue to grow, as capacity reached 1,319 megawatts. The plants should add to cash flow in the second half of 2013.

Management still concedes, however, that the dividend won’t be covered by free cash flow until 2014. Hold.

Parallel Energy Trust’s (TSX: PLT-U, OTC: PEYTF) second-quarter production was up 10 percent to a company-record average of 7,459 barrels of oil equivalent per day (boe/d), and funds from operations surged 31 percent on a sequential basis to CAD11.3 million. The payout ratio for the period declined to 70 percent from 92 percent in the first quarter of 2013 and 139 percent in the fourth quarter of 2012.

But this small producer, although operations are beginning to steady, already has one dividend cut under its belt. The payout ratio trend is encouraging, but it remains on the List. Hold.

Precious Metals & Mining Trust’s (TSX: MMP-U, OTC: PMMTF) manager, Sentry Investments Inc, announced on June 27, 2013, that Precious Metals & Mining’s monthly cash distribution “will be changed” from CAD0.07 per unit to CAD0.035 per unit.

This 50 percent cut became effective with the Aug. 15, 2013, payment to unitholders of record on July 31, 2013, and will remain at this level until further guidance is provided by Sentry.

The Sentry board made the move “given the current environment for gold mining equities,” which comprise the bulk of Precious Metals & Mining’s portfolio.

The price of bullion increased more than five-fold from 2003 to 2011. But major gold mining companies generated little to no free cash flow. And they’re likely to generate negative free cash over the next several years. Sell.

Ten Peaks Coffee Company Inc (TSX: TPK, OTC: SWSSF) reported a 20.2 percent decline in second-quarter sales, though cash from operations increased by 26 percent.  Ten Peaks continued to benefit from declining coffee commodity prices, which led to a drop in revenue but an even larger decrease in cost of sales.

Gross profit, net income and EBITDA were all up over the same period last year, and management made solid progress reducing debt and strengthening the balance sheet.

Ten Peaks is adding market share on solid performance in the US, where volumes have grown 35 percent over the past three years. But coffee is a tough, volatile business, and it’s a hard model on which to base a dividend-paying business. Hold.

Zargon Oil & Gas Ltd’s (TSX: ZAR, OTC: ZARFF) second-quarter production declined 3 percent to 7,392 boe/d compared to the first quarter, though funds from operations were up 15 percent sequentially and 29 percent year over year to CAD16 million.

The small oil and gas producer remains highly susceptible to fluctuating commodity prices, though management maintained the CAD0.06 monthly dividend rate for payments in August, September and October. Hold.