Encana Corp (TSX: ECA, NYSE: ECA) has followed through on signals it’s been sending since Doug Suttles assumed the CEO mantle, announcing on Nov. 4, 2013, a 65 percent cut in its quarterly dividend rate.

Encana will pay CAD0.07 per share on Dec. 31, 2013, to shareholders of record on Dec. 13. That’s down from the CAD0.20 the company had paid since December 2009.

Since an Oct. 3, 2013, three-month closing low of CAD17.62 on the Toronto Stock Exchange, just CAD0.04 above the 12-month low set July 5, Encana shares have rallied by 8.9 percent to CAD19.19 as of this writing. It’s at USD18.24 on the New York Stock Exchange.

That’s better than the 5.3 percent gain for the S&P/TSX Composite Index and the 3.3 percent for the S&P/TSX Energy Index.

In addition to the dividend cut, Encana will reduce its workforce by 20 percent and sell shares in a new royalty company in an effort to boost cash flow.

Encana’s 2014 capital expenditure plan will focus on five core oil and liquids plays, the Duvernay, the Montney, the DJ Basin, the San Juan Basin and the Tuscaloosa Marine Shale. Overall CAPEX next year will be USD2.5 billion.

Mr. Suttles, who became CEO in June 2013, said at a September investor conference the company needed to “clean up its portfolio” and would review its dividend as part of a strategic review.

Encana will put 5 million acres of land in its Clearwater business in Alberta into a separate company, with an initial public offering due in mid-2014. Encana will retain a “significant percent” of the Clearwater business “early on,” Mr. Suttles noted during a conference call with analysts to discuss the new strategy.

And it will consider selling more assets depending on market conditions. The company will hold onto some gas properties outside the company’s primary areas of focus, in case prices rise, according to Mr. Suttles.

The gas producer’s stock 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).

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.

Investors will now be looking for execution on the five assets that are the focus of 2014 development. But execution hasn’t really been Encana’s problem; sprawl, as Mr. Suttles noted, has been the issue.

Encana, which is now off the Watch List, the damage to the dividend already done, remains a speculative buy for aggressive investors up to USD19.

Cathedral Energy Services Ltd (TSX: CET, OTC: CETEF) is also off the List after boosting its quarterly dividend rate by 10 percent to CAD0.0825, effective with the Jan. 15, 2014, payment to shareholders of record as of Dec. 31, 2013.

Management reported a 19.9 percent increase in third-quarter revenue to CAD59.7 million, as funds from operations per share rose to CAD0.22 from CAD0.21. The strong US directional drilling and production testing markets continue to buoy results

The dividend boost–the first since March 2012–and third-quarter results are enough to earn the stock an upgrade as well as removal from the List. Cathedral Energy Services is no a buy under USD6.

Management of Exchange Income Corp (TSX: EIF, OTC: EIFZF) has guided for third-quarter earnings before interest, taxation, depreciation and amortization (EBITDA) of approximately half the total for the prior corresponding period due to weaker-than-expected margins for its WesTower unit.

In other words, third-quarter EBITDA will be about CAD15 million.

Management also emphasized that revenue for the key unit remains strong and that a dividend cut is not being considered.

During a conference call to discuss the guidance management noted that it was an “extraordinary” step to issue such numbers ahead of its formal report for the period, with is due on Nov. 11, 2013.

WesTower recognizes its revenues on a “percentage of completion” basis, which requires management to estimate revenues and costs as well as the percentage completed for each job performed by the unit.

These three factors resulted in an estimate of the direct margins for work in progress. Further information obtained from job closings, negotiations with its customer AT&T Inc (NYSE: T) and Exchange Income’s changing management systems resulted in the estimated margins on existing jobs decreasing in the third quarter.

The effect of this decline in margins on revenues previously recognized is estimated at approximately CAD10 million. Third-quarter results will reflect this change.

The company will also incur approximately CAD1.5 million in external advisory costs that weren’t present during the prior corresponding period. This engagement of external advisers is expected to come to a close this month.

In additions to these items, the margins at WesTower and the new AT&T turf revenue are still weak. Consistent with disclosures made along with second-quarter 2013 results, management is continuing to invest in the necessary changes to re-engineer processes and systems that drive efficiencies to job performance and overhead cost management.

Management did acknowledge that the solution at WesTower will take some time to show up in financial results. Another important effort involves diversifying its customer base so it’s not so reliant on AT&T.

Management expressed confidence in WesTower for the long term and stressed that the unit continues to grow revenue and see strong demand for its products and services from the telecommunications sector.

At the conclusion of its call management reiterated its commitment to maintaining the current distribution policy, emphasizing that “there are no changes whatsoever planned in our dividend rate.”

Management has navigated similar challenges with other of its operating businesses, and it is addressing the current issue head-on. But, out of an abundance of caution, we are adding Exchange Income Corp to the Dividend Watch List.

Exchange Income Corp, which is yielding 8.7 percent at these levels, remains a buy up to our reduced target of USD22.

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’s (TSX: ABX, NYSE: ABX) third-quarter earnings beat estimates on solid operating performance. But a new bought-deal equity financing got a cool reception on Bay Street and Wall Street.

Management has also suspended operations at the USD8.5 billion Pascua-Lima min on the Argentina-Chile border, a move that should actually help stabilize the balance sheet.

The biggest gold producer in the world reported the second-biggest quarterly loss in Canadian corporate history for the second quarter and slashed its quarterly dividend rate by 75 percent to USD0.05 per share from USD0.20.

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.

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) reported a 1.9 percent decline in third-quarter sales to CAD343.6 million, though management emphasized the improvement compared to the second quarter and highlighted cost savings that are part of its turnaround strategy.

The dividend rate was maintained at CAD0.06 per share. 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.

Exchange Income Corp’s (TSX: EIF, OTC: EIFZF) place on the Watch List is explained above.

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 10.9 percent rise in third-quarter royalty income to CAD35.6 million, while distributable cash was up 8.1 percent to CAD20 million, or CAD0.31 per share.

Management declared CAD0.25 per share and CAD0.125 per share regular and special dividends on Sept. 17, 2013, maintaining the payout practice established during the preceding seven quarters.

Labrador is set to make its next dividend declaration on or about Dec. 9, 2013, and it looks as though the current policy will prevail.

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) reported that third-quarter production, based on field estimates, was up 17 percent year over year but was flat sequentially at 45,100 barrels of oil equivalent per day. Management also confirmed the CAD0.08 dividend rate for November.

Management, after stating time and again that the dividend is a key component of its value proposition to investors, in September finally conceded that a reduction is a possibility.

Lightstream Resources is a buy for aggressive investors up to 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.