Alberta Acts to Reduce Oil Royalties

Positive signs are emerging from Alberta where a compromise on a reduction in royalty (mostly a tax) has been reached with buy-recommended Canadian Oil Sands Trust (COSWF.PK) and fellow owners of the Syncrude oil sands mine and upgrader. In addition, the Province is postponing royalty increases on certain new wells that should be beneficial to the three remaining Canadian income stocks in our coverage including Hold-rated Penn West Energy Trust (PWE).

The collapse in economic activity that the precipitous decline in the stock market portends should prompt Alberta and other governments to do more to stimulate economic recovery. Meanwhile, we believe stocks have declined more than enough to support a change in trend. Income investors get paid while they wait as the latest median distribution yield is 11.8% for the next twelve months by our calculations. Estimates use closing quotes for stock prices and settlement prices on November 20 for next twelve months deliveries of Light, Sweet Crude Oil at $54 a barrel and Louisiana Natural Gas at $6.70 a million btu.

Originally published on November 21, 2008.

Comments

[Rayn:]

Are the dividends paid by COSWF.PK classified as MLP income, royalties, or just plain old dividends in the US?

2008 Dec 18 08:43 AM

[mared:]

They are dividends and can be qualified if you meet holding requirements. Be advised that the Canadian gov't. withholds 15% tax, even from dividends received in retirement accounts.


On Dec 18 08:43 AM Rayn wrote:

> Are the dividends paid by COSWF.PK classified as MLP income, royalties,
> or just plain old dividends in the US?

2008 Dec 18 09:08 AM

[NOWHEREMAN:]

As important is whether Obama continues to allow a 15% tax on this income? If he does it will generate a new resurgance of interest in the entire sector.

IMHO

2008 Dec 18 10:24 AM

[cyberclark:]

With our dollar at 80 cents the province is loosing 20% of our royalty in exchange. That is over 6 billion dollars of Albertans monies have gone into oil pockets as a bonus! 11 cents is light!

Because of this, Albertans are given a choice of a deficit or, do you want to pay more for gas at the pumps. Some choice!

On another front this same bunch of bandits is saying they will close rural hospitals and turn them into homes for the aging. This, forcing rural people into city hospitals for treatment.

In almost the same breath they say they are going to increase the costs of accommodation in these same buildings as a means to attract investment.

Soon enough you will hear the announcement that the hospitals have been sold to Conservative insiders for a dollar (After you have finished paying for conversations as required). This is still another big leap forward in privatization.

When Mel Knight made his lie public at the last election he put out reams of paper showing there would be increased revenue attributed to his "new deal". The figures put forward to the public includedlies about anticipated revenues from new production from new tar sands installations.

When the crunch came, the new projects were cancelled and his numbers became impossible. So much for the most expensive lie in the Conservative history!

The minster went public saying "errors had been made" In any civilized Government there would be resignations of both Stelmach and Knight but not in Alberta; they own it you know.

2008 Dec 18 07:38 PM

[buyitcheap:]

They're not entirely just plain old dividends. You'll see it on your 1099. Some of the distributions are classified as cap gains/losses, returns of capital (nontaxable), interest (plain old ordinary income), and then dividends, (some qualified, some not). Be sure to file for the foreign tax credit as well when you fill out the tax forms.

If none of the above sounds like English - find a good CPA. Best of luck!

2008 Dec 26 05:14 PM