Management couched the announcement in positive terms, noting in the opening sentence of its second-quarter earnings release “progress towards the company’s strategy of enhancing financial flexibility.”

To go forward, however, sometimes you have to go backward, and that’s what Spyglass Resources Corp (TSX: SGL, OTC: SGLRF) is doing with its dividend.

The small oil and gas producer announced a 33.3 percent reduction in its monthly payout rate to CAD0.015 per share, or CAD0.18 on an annualized basis, from CAD0.0225, or CAD0.27 per year.

It’s a move designed to help further management’s goal of cutting debt and shoring up the balance sheet, an effort that includes selling non-core assets and cutting operating costs.

The cash saved will also help Spyglass boost its capital program and drive production growth via a more focused drilling program.

Spyglass faced significant pressure amid declining commodity prices, particularly with a CAD375 million revolving credit facility with CAD307 million outstanding due for rollover in April 2015, a reality we noted in last month’s How They Rate “Comment” on the company.

Management has sold or agreed to sell CAD51 million worth of assets in the Alberta Deep Basin, southern Saskatchewan and other non-core Alberta properties with total average production of 1,085 barrels of oil equivalent per day (boe/d), weighted 75 percent natural gas.

Dispositions also include proved reserves 5.4 million barrels of oil equivalent (boe), proved plus probable reserves of 8.5 million boe and approximately 25,000 net acres of undeveloped land.

These assets generated annual cash flow of approximately CAD7.7 million.

Exacerbating Spyglass’ cash crunch are previously announced pipeline incidents that continue to impair production from the key Dixonville field.

Management expects problems at Dixonville to cut 800 boe/d from the 2014 annualized production forecast, with a corresponding cash flow impact of approximately CAD8 million, including the CAD2.2 million hit absorbed during the second quarter.

Spyglass has restarted approximately 42 percent (1,260 boe/d) of production at Dixonville, with the remainder of the field to be brought back on line as the company completes inspection and remediation of the gathering system.

Spyglass generated funds from operations (FFO) for the second quarter of 2014 of CAD19 million, or CAD0.15 per share, up from CAD16 million in the first quarter but down from CAD20.6 million, or CAD0.16 per share, a year ago.

Production averaged 14,474 boe/d compared to 14,560 boe/d in the first quarter and 16,362 boe/d for the prior corresponding period.

Operating netbacks in the quarter improved to CAD27.31 per boe from CAD24.10 per boe in the first quarter of 2014 and CAD20.81 per boe in the second quarter of 2013, reflecting higher commodity prices and operating costs that were below guidance.

The payout ratio based on FFO was just 45 percent. But the “all-in” ratio, including capital expenditures, was 101 percent.

Spyglass, assuming the Dixonville issue is resolved in short order, remains an intriguing high-yield alternative for aggressive investors. At the reduced dividend rate it yields 12 percent based on the Sept. 4, 2014, closing price on the Toronto Stock Exchange of CAD1.50.

We are, however, reducing our buy-under target to reflect a more modest production profile. Spyglass Resources remains a buy–for aggressive investors only–under USD1.75.

Please note that Bell Aliant Inc (TSX: BA, OTC: BLIAF) won’t pay anymore dividends after agreeing to be bought out by BCE Inc (TSX: BCE, NYSE: BCE).

BCE, which owns 56 percent of the target, has formally commenced its offer to purchase the outstanding Bell Aliant shares it didn’t already own

Bell Aliant shareholders can elect to receive consideration per common share of either CAD31 in cash, subject to pro-ration; or 0.6371 of a BCE common share, subject to pro-ration; or CAD7.75 in cash and 0.4778 of a BCE common share.

The offer will be open for acceptance until 5:00 pm Eastern Time on Sept. 19, 2014, unless extended or withdrawn by BCE.

On Aug. 5, 2014, BCE obtained Competition Act clearance for the Bell Aliant privatization. All regulatory conditions have now been met.

If you haven’t already done so, tender your Bell Aliant shares to the BCE offer.

We do recommend BCE as a buy under USD45, so accepting shares or the combination of shares plus cash makes sense.

CST Trust Company is the Depositary for the offers and CST Phoenix Advisors is the Information Agent.

Any questions or requests for assistance concerning the offers or further information about tendering to the offers should be directed to the Depositary at 1-866-271-6893 (toll free in North America) or 1-416-682-3860, or by e-mail at inquiries@canstockta.com; or to the Information Agent at 1-866-822-1244 (toll free in North America) or 1-201-806-7301, or by e-mail at inquiries@phoenixadvisorscst.com.

Here’s this month’s Dividend Watch List. As always, because of this exposure to volatile oil and gas prices, dividends for all Oil and Gas names should be considered vulnerable.

Argent Energy Trust (TSX: AET-U, OTC: ANGYF) reported a 29.5 percent increase in second-quarter production to 6,373 boe/d, in line with management’s pre-announcement, as oil-weighted acquisitions in Kansas and Wyoming and new wells drilled on existing lands drove growth.

Sales were up 43.9 percent to CAD47.5 million on higher oil and gas prices, though FFO per share slipped to CAD0.25 from CAD0.28. The payout ratio for the period was 24 percent.

Management boosted its third-quarter production forecast to 6,400 to 6,500 boe/d from 6,100 to 6,200 boe/d and its full-year forecast to 6,200 to 6,300 boe/d from 6,000 boe/d. 2013 production was 5,591 boe/d. Sell.

Atlantic Power Corp (TSX: ATP, NYSE: AT) reported a second-quarter project loss of USD3.8 million compared to project income of USD20.3 million a year ago, driven by a USD14.8 million non-cash impairment charge and USD27.1 million of negative non-cash changes in the fair value of derivative contracts.

Project adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) improved by 34.2 percent to USD75 million due to fewer outages, stronger wind and waste-heat results, better hydrology and a full quarter’s contribution from the Palmer project.

Management reported cash flow from operating activities of USD34 million compared to USD7.2 million a year ago. Free cash flow was negative USD15.1 million due to USD37.5 million of term loan facility repayments, partially offset by higher operating cash flows.

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. Sell.

Barrick Gold Corp (TSX: ABX, NYSE: ABX) reported an 18 percent slide in gold production, a 16.5 percent decline in gold sales volumes and an 8.6 percent decrease in realized gold prices for the second quarter. Copper production and sales volumes were down 50 percent and 45 percent, respectively.

Total revenue was down 24 percent, as Barrick reported a net loss of USD0.23 per share for the second quarter.

Barrick’s balance sheet is still shaky, burdened by CAD12.9 billion of debt against a market cap of CAD23 billion, with CAD605 million maturing between now and the end of 2016. Sell.

Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF) posted a 13.8 percent increase in second-quarter revenue to CAD106.4 million, as adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) grew by 24.1 percent to CAD39.5 million on growth in the wind portfolio, lower expenses at Cardinal and a higher contribution from Bristol Water.

Adjusted FFO were up 33.5 percent, as management’s forecast that the current dividend rate will hold despite changes to the Cardinal plant’s status vis-à-vis the Ontario Power Authority grows more prescient by the quarter.

Capstone’s payout ratio in 2015 and 2016 will likely exceed 100 percent of adjusted funds from operations, 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 0.4 percent increase in second-quarter sales to CAD347.2 million on strong met and fish sales and improved performance for its Eastern Quebec and Maritimes divisions. EBITDA were CAD9.5 million, or 2.7 percent of sales, versus CAD9.7 million, or 2.8 percent of sales, a year ago.

Cash flow for the first six months of 2014 was positive at CAD11.5 million versus a negative figure of CAD3.9 million for the prior corresponding period.

But cash flow was positive at CAD11.9 million, reversing a year-ago figure of negative CAD25.8 million. The CAD0.06 dividend per share represented 100 percent of reported earnings per share. Hold.

Crius Energy Trust (TSX: KWH-U, OTC: CRIUF) reported a 17.6 percent increase in second-quarter revenue to USD134 million, as total electricity and natural gas customers grew by 2.2 percent quarter over quarter.

EBITDA margin expanded to 25.2 percent from 24.2 percent, a notable development following the cost-driven margin compression in the first quarter. This was in fact Crius’ best quarterly financial result since the company’s November 2012 initial public offering (IPO). The payout ratio for the period was 67.5 percent.

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. Hold.

Eagle Energy Trust (TSX: EGL-U, OTC: ENYTF) reported an 11 percent increase in second-quarter production to 3,341 boe/d, though FFO were flat sequentially at CAD10.5 million, or CAD0.32 per unit.

Management also announced the close of the sale of its Permian Basin assets for USD140 million, with the disposition pushing oil’s share of overall output to 96 percent from 82 percent.

Management noted that it has “no current plans to reduce” distribution in aftermath of Argent’s 77.1 percent cut announced in April 2014.

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

FP Newspapers Inc (TSX: FP, OTC: FPNUF) continues to maintain its dividend rate despite the fact that its core business continues to erode.

Second-quarter for FP Canadian Newspapers LP slid 5.6 percent to CAD25.8 million, with net earnings down to CAD1.1 million, or CAD0.166 per share, from CAD1.5 million, or CAD0.217 per share, a year ago.

Print advertising revenue declined by 7.5 percent, as all categories contracted.

The payout ratio for the period was 142.9 percent.

Management once again maintained the CAD0.05 dividend rate for the August payment due September 30. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) reported a 1.1 percent uptick in production from its lands for the second quarter to 8,810 boe/d. Average realized prices were up 23.4 percent and operating netback was up 24.7 percent, driving a 24 percent increase in sales revenue and a 22.2 percent increase in FFO per share to CAD0.55.

The payout ratio for the period was 76.4 percent. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) reported 33 percent year-over-year revenue growth to CAD80.4 million, while adjusted net income surged to CAD13.7 million, or CAD0.16 per share, reversing a year-ago loss.

The payout ratio for the period was 86.9 percent.

Return on equity for the quarter was 15.9 percent compared to negative 5.7 percent for the second quarter of 2013.

GMP is benefitting from extremely favorable comparables, but the market is also turning in its favor as investor confidence builds. Sell.

Labrador Iron Ore Royalty Corp (TSX: LIF, OTC: LIFZF) reported second-quarter royalty income of CAD33.3 million, down from CAD41.7 million a year ago.

Adjusted cash flow was CAD33.7 million, or CAD0.53 per share, up from CAD23.4 million, or CAD0.37 per share, for the second quarter of 2013.

The higher cash flow reflected an Iron Ore Company of Canada (IOC) dividend of CAD14.8 million, or CAD0.23 per share.

Net income was CAD35.9 million, or CAD0.56 per share, down from CAD39.2 million, or CAD0.61 per share, a year ago. Equity earnings from IOC were CAD18.2 million, or CAD0.28 per share, down slightly from CAD19.3 million, or CAD0.30 per share in 2013.

Production and sales continued to be affected by the unusually harsh winter conditions that lasted well into the quarter. The phase two expansion is now basically complete and should be reflected in the production results for the balance of the year.

June saw operating conditions return closer to normal, with concentrate production exceeding an annual rate of 18 million metric tons.

Lower royalty revenue for the quarter resulted from lower sales and lower prices. The iron ore index price for the quarter was 17.4 percent lower than the first quarter of 2014 and 22.2 percent lower than the second quarter of 2013. This was partially offset by the slightly lower value of the Canadian dollar against the US dollar. Hold.

Liquor Stores NA Ltd (TSX: LIQ, OTC: LQSIF) continues to make progress, driven by management’s “Seven Point Plan.”

Second-quarter sales grew by 6.3 percent to CAD178.2 million, as same-store sales were up 4.4 percent in Canada and 1.3 percent in the US, reversing negative numbers for the first quarter.

And gross margin improved by 30 basis points to 25.1 percent. The payout ratio for the period was 87.1 percent.

There are no debt maturities before the end of 2015, though there are significant rollovers looming in 2016 and 2018, amounting to 70.3 percent of current market capitalization.

Liquor Stores earns Safety Rating points for its debt as a percentage of assets and its operation in a sector traditionally viewed as recession-resistant, alcohol. But there are serious signs of weakness here. Hold.

Norbord Inc (TSX: NBD, OTC: NBRXF) posted net earnings of CAD11 million, or CAD0.20 per share, compared with CAD53 million, or CAD0.99 per share, for the second quarter of 2014. Sales were down to CAD311 million from CAD365 million a year earlier.

Management noted that North American homebuilding activity continues to improve, though the pace has been held back by labor availability and a lack of entry-level buyers.

OSB prices, however, were “disappointing.”

Demand from Norbord’s key customers in all core segments–new home construction, home improvement and industrial–continues to grow, driving a 10 percent increase in shipments so far in 2014. And OSB cash production costs are declining due to improved productivity and lower raw material usages.

Norbord remains confident in the durability of the recovery, to the extent that it’s aggressively ramped up OSB production since 2013.

The uncertainty over when demand will catch up to the additional capacity–on top of the fact that Norbord’s CAD0.60 per share quarterly dividend represented 300 percent of second-quarter earnings–is the primary reason we added the company to the Dividend Watch List last month. Buy under USD30.

Parallel Energy Trust (TSX: PLT-U, OTC: PEYTF) reported a 3.7 percent year-over-year decline in production but a 8.7 percent sequential increase to 7,183 boe/d. Average sales prices were up 15.3 percent, but FFO nevertheless declined 5.5 percent compared to the prior corresponding period and 7.2 percent compared to the first quarter to CAD10.66 million.

The payout ratio for the period was 76.3 percent.

Leverage remains a major concern for this small producer. 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) posted a 24.8 percent increase in second-quarter sales to CAD16 million, while EBITDA surged 83.1 percent to CAD2.5 million. Processing volumes were up 18 percent, driven by a 54 percent increase in sales to specialty regional customers and 4 percent growth in sales to large national accounts.

The payout ratio for the period was 104.2 percent. Hold.

Zargon Oil & Gas Ltd (TSX: ZAR, OTC: ZARFF) reported an 11.2 percent decline in second-quarter production to 6,558 boe/d, while FFO per share were down 26.4 percent to CAD0.39 on higher royalties and increased operating costs.

Management raised its third-quarter oil production forecast but cut its gas estimate.

The production trend, though it stems from asset sales, is worrisome, particularly for a relatively small company so susceptible to commodity-price movements.

Management maintained the CAD0.06 monthly dividend rate for October, as the payout ratio for the period was just 46.2 percent. Hold.