Argent Energy Trust (TSX: AET-U, OTC: ANGYF) slashed its monthly distribution rate from CAD0.0875 (CAD1.05 on an annualized basis) to CAD0.02 (CAD0.24 per year) on April 10, 2014, citing “recent market activity resulting in a significantly lower unit price” and a corresponding “significant” change in the company’s “balanced financial structure.”

“The original model of double-digit yield and growth is not supported in the current market,” noted Argent’s press release, “and as such, management believes changes must be incorporated into the forward strategic direction.

In addition to the distribution cut, Argent has suspended its dividend reinvestment plan effective immediately.

Argent is also cutting its 2014 capital program to USD55 million from USD70 million and reducing its annual production guidance to a 2014 average level of approximately 6,000 barrels of oil equivalent per day (boe/d), a more modest growth rate above 2013 production of 5,591 Management will also take steps to cut costs in the field and at its Calgary and Houston offices.

Argent is also “actively reviewing” the potential sale of assets to help cut debt.

In addition, Argent announced the resignation, effective April 30, 2014, of CEO Brian Prokop. John Elzner will succeed Mr. Prokop.

Argent’s share price declined by 66.2 percent on the Toronto Stock Exchange in the 12 months ended April 10.

Shares of fellow “new” oil-and-gas-focused Canadian income trusts Eagle Energy Trust (TSX: EGL-U, OTC: ENYTF) and Parallel Energy Trust (TSX: PLT-U, OTC: PEYTF), which cut its monthly distribution rate from its original level of CAD0.08 to CAD0.05 in November 2012, have been volatile in the aftermath of Argent’s cut, as investors question long-term viability of high payout E&P model.

Electric power provider Crius Energy Trust (TSX: KWH-U, OTC: CRIUF)–like Argent, Eagle and Parallel exploiting a loophole in Canadian law that allows use the income trust structure in a manner that sidesteps the Specified Investment Flow-Through (SIFT) rules–announced its own steep dividend cut in February 2014.

These “Cross-Border Income Trusts” avoid Canada Revenue Agency scrutiny because the SIFT rules only apply to a publicly traded Canadian trust that holds a direct or indirect interest in the assets of a business carried on in Canada, or in Canadian real estate or resource properties.

CBITs are focused on acquiring productive oil and gas and other energy assets located in the US, avoiding the SIFT rules.

But the effort to operate oil and gas exploration and production businesses and a retail power marketing business while maintaining a high distribution and yield has proven extremely difficult, as the fact that three of the four “new income trusts” have already cut their payouts. Sell Argent Energy Trust.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF) reported a 38 percent jump in first-quarter production revenue, as funds from operations per share grew by 40 percent to CAD0.80. Output was up 2 percent to 73,936 barrels of oil equivalent per day (boe/d) and operating netback rose by 39 percent to CAD27.01 per boe.

The payout ratio for the period was 26.3 percent.

Total debt is just 6.7 percent of market cap, and there are no maturities over the next two years. Recent results–driven by an improvement in commodity prices, particularly natural gas–suggest the current dividend rate of CAD0.07 per month is safe for the medium term.

With the caveat that because of the volatile nature of oil and gas commodity prices all Oil and Gas names in the How They Rate coverage universe should be considered de facto components of the Dividend Watch List, we’re removing Bonavista from the group specifically identified for particular weakness.

Bonavista, which is yielding 5.2 percent, is a buy under USD16.

Equal Energy Ltd (TSX: EQU, NYSE: EQU) announced a revision to its merger agreement with PetroFlow Energy Corp, extending the termination date to July 31, 2014, and providing for payment of two CAD0.05 per share dividends by Equal, the first on May 28, 2014.

Equal had previously announced that pursuant to its original deal with PetroFlow it would omit first- and second-quarter dividends.

According to terms of a deal announced Dec. 6, 2013, Equal shareholders will receive USD5.43 per share in cash. The stock remains a hold pending closure of the PetroFlow arrangement.

Here’s the rest of this month’s Watch List.

Argent Energy Trust’s (TSX: AET-U, OTC: ANGYF) place on the List is explained above. Sell.

Atlantic Power Corp’s (TSX: ATP, NYSE: AT) share price surged in late April on rumors that management had engaged advisers to evaluate strategic alternatives, with speculators extrapolating the move into an imminent takeover or merger situation.

Atlantic Power management did confirm on May 2, 2014, that it has indeed engaged Goldman Sachs and Greenhil & Co to weigh options, which could include, according to the company’s press release,

As previously disclosed in earnings announcements, management continues to weigh “the relative merits of additional debt reduction, investment in accretive growth opportunities (both internal and external) and other allocation of its available cash.”

Other potential options include additional asset sales or joint ventures to raise capital for growth or potential debt reduction, the acquisition of assets and a sale or merger.

The dividend level is still in play as well.

When we still held Atlantic in the CE Portfolio, following its February 2013 dividend cut we noted that the best possible outcome for shareholders was a sale to a larger, better-capitalized company with the wherewithal to absorb Atlantic’s debt and maximize cash flow from its still-attractive set of power-generation assets.

It appears management is thinking along similar lines, though of course no deal is assured, particularly as the company is looking at other moves as well.

Atlantic Power will report first-quarter results on May 12, 2014.

The company reported 2013 project income of USD64.3 million compared to a project loss of USD29.4 million in 2012, though cash available for distribution declined by USD22.8 million to USD108.8 million.

Recent strength in the share price provides a solid exit point for those who still hold Atlantic and aren’t willing to weight out a process that may or may not yield a takeover offer. Sell.

Barrick Gold Corp (TSX: ABX, NYSE: ABX) reported a 22.6 percent decline in first-quarter revenue, while adjusted earnings per share slid to USD0.20 from USD0.92.

Production and sales volumes were down, while realized prices were significantly lower than a year ago. And merger talks with Newmont Mining Corp (NYSE: NEM) that could have led to the creation of a global mining giant have broken down.

Barrick’s balance sheet is still shaky, burdened by USD12.8 billion of debt against a market cap of USD22 billion, though only USD65 million is maturing between now and the end of 2015. Sell.

Capstone Infrastructure Corp’s (TSX: CSE, OTC: MCQPF) new 20-year non-utility generator contract with the Ontario Power Authority for its 156 megawatt (MW) Cardinal combined-cycle, natural gas-fired facility removes a key question mark from the end of the company’s investment thesis. The new contract will be effective Jan. 1, 2015, and will expire Dec. 31, 2034.

Management has asserted that the new power purchase agreement (PPA) “provides certainty…on Cardinal’s longevity and contribution to Capstone’s cash flow profile and dividend sustainability following 2014.”

Management’s target average long-term payout ratio is approximately 70 percent to 80 percent of adjusted funds from operations (AFFO). Capstone expects to meet this range by 2017, when the current pipeline of wind power projects is expected to be fully commissioned and generating cash flow.

Based on an annualized dividend rate of CAD0.30 the payout ratio for 2013 was 60.9 percent, down from 95.1 percent in 2012.

Capstone’s payout ratio in 2015 and 2016 will likely exceed 100 percent of AFFO, reflecting Cardinal’s reduced cash flow contribution starting in 2015. But management believes it has sufficient liquidity to fund its needs over this period, including cash and cash equivalents on hand, operating cash flows from its various businesses, and its corporate credit facility. Hold.

Colabor Group Inc (TSX: GCL, OTC: COLFF) reported a 4.9 percent decline in first-quarter sales to CAD279.3 million, as severe winter weather and a slow economy exacerbated the impact of the termination of a large supply contract in April 2013 and exit of the company from low-margin tobacco distribution operations.

But cash flow was positive at CAD11.9 million, reversing a year-ago figure of negative CAD25.8 million. Cash flow per share was CAD0.44, leading to a payout ratio based on a CAD0.06 per share current dividend rate of 13.6 percent. Hold.

Crius Energy Trust (TSX: KWH-U, OTC: CRIUF) reported 2013 revenue of USD507.1 million and gross margin of USD103.4 million, or 20.4 percent of revenue, as electricity and natural gas customers grew by 15.1 percent during the year–its first full year in operation–to 615,373.

On Feb. 10, 2014, management cut the monthly dividend rate by 30 percent from CAD0.0833 to CAD0.0583, attributing the decision to soaring costs of energy during a particularly cold first quarter in the markets it serves as well as slowing customer growth.

Management expects to maintain the new level throughout 2014. The board will review the dividend policy at year’s end, which suggests another cut from the present annualized rate of CAD0.70 is possible.

The market is clearly pricing in another dividend cut, with the yield on the stock–based on the reduced dividend rate–as of this writing at 19.7 percent. Hold.

Eagle Energy Trust (TSX: EGL-U, OTC: ENYTF) reported an 18 percent increase in first-quarter funds from operations to CAD10.3 million, or CAD0.32 per share.

Working interest sales volume was 3,010 barrels of oil equivalent per day (boe/d), weighted 85 percent to oil, up from 2013 average sales volume of 3,004 boe/d.

Management notes that it has “no current plans to reduce” distribution in aftermath of Argent’s 77.1 percent cut.

The small producer’s fortunes remain particularly tied to ups and downs of commodity prices. Hold.

FP Newspapers Inc’s (TSX: FP, OTC: FPNUF) 2013 revenue slipped to CAD7 million from CAD7.2 million, as sales for FP LP, the operating entity from which FP Newspapers derives its cash flow, declined by 4.7 percent to CAD106.3 million.

Earnings before interest, taxation, depreciation and amortization (EBITDA) were down 4.1 percent, as print advertising slid 6.3 percent.

Management once again maintained the CAD0.05 dividend rate for the March payment due April 30, as the full-year payout ratio came in at 87 percent. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) reported that 2013 gross revenue increased by 8 percent to CAD181.58 million, while funds from operations (FFO) per unit rose 12 percent to CAD1.79.

Average daily production was 8,913 barrels of oil equivalent per day (boe/d), up 1 percent from 8,850 boe/d in 2012, as average realized prices were up 8 percent.

The full-year payout ratio was 94 percent.

Debt reduction efforts have been significant and successful. But there’s not much margin for error for a relatively small producer that’s dependent on commodity prices rather than production growth to drive FFO growth and dividend stability. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) posted a 31 percent increase in first-quarter revenue to CAD63.9 million. Adjusted net income surged to CAD5.4 million from CAD1.1 million a year ago, as the company put a little distance between it and a rough 2013.

Earnings per share of CAD0.07 compare to nil during the first quarter of 2013 Q1. Higher investment banking and trading activity are positives, as is a payout ratio of 71.4 percent. We’ll see how the second quarter shapes up. Sell.

Labrador Iron Ore Royalty Corp (TSX: LIF, OTC: LIFZF) reported a 3.1 percent increase in first-quarter royalty income to CAD26.9 million from CAD26.1 million year ago, and adjusted cash flow nearly doubled to CAD27.7 million, or CAD0.43 per share, from CAD14.4 million, or CAD0.22 per share, a year ago on strong Iron Ore Company of Canada sales volumes.

The payout ratio for the period was 59.5 percent.

The ultimate fate of the dividend is tied to what happens with the facility that generates Labrador’s cash flow. Rio Tinto’s (London: RIO, ASX: RIO, NYSE: RIO) efforts to sell its controlling stake have thus far been unsuccessful. Hold.

Northland Power Inc (TSX: NPI, OTC: NPIFF) reported a 54.1 percent increase in 2013 revenue to CAD557.2 million, while free cash flow more than doubled to CAD130.1 million. Electricity sales volumes were up 41.4 percent, and the addition of new projects and capacity continues in early 2014.

Northland is clearly on the way toward fulfilling management’s forecast that free cash flow will cover the dividend in 2014. Hold.

Parallel Energy Trust’s (TSX: PLT-U, OTC: PEYTF) average production for 2013 was up 20.6 percent compared to 2012 to 7,147 barrels of oil equivalent per day (boe/d), as average sales prices were up 7 percent to USD42.62 per boe. Proved plus probable reserves increased by 4.9 percent.

Funds from operations (FFO) grew by 19.7 percent to CAD41.96 million, as the full-year payout ratio came in at a healthy 76 percent. 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 9 percent growth in first-quarter processing volumes and an 81 percent surge in gross profit, but management noted that the benchmark coffee commodity price rose by 60 percent during the period, increasing from USD1.11 per pound at the beginning of January to USD1.78 per pound at the end of March.

The price spike led to significant unrealized losses on the coffee futures contracts the company uses to help manage commodity fluctuations.

Although losses on these derivatives are offset by corresponding gains in the market value of inventory, the gains cannot be recorded under international accounting standards until the inventory is sold.

The losses on derivative instruments during the quarter more than offset the increase in gross profit. As a result, Ten Peaks recorded a net loss of CAD700,000 and a year-over-year decline in earnings before interest, taxation, depreciation and amortization (EBITDA) during the period. Hold.

Zargon Oil & Gas Ltd (TSX: ZAR, OTC: ZARFF) posted an 8 percent decline in 2013 production to 7,468 barrels of oil equivalent per day (boe/d) due to property sales and modest oil exploitation, though funds from operations (FFO) ticked up by 3 percent to CAD58.48 million, or CAD1.95 per share, on higher commodity prices.

The production trend is worrisome, particularly for a relatively small company so susceptible to commodity-price movements.