1. I'm not thrilled to have my Viking shares monthly distribution cut (next year after the merger is completed) from 12 cents a share a month to 9 1/2 cents a share. After Canadian witholding and currency conversion, that takes the percentage yield to around 11%. This is approximately Paramount's present percentage payout.
2. On the other hand, the combination of Viking and Harvest makes a much stronger company. Harvest's current payout ratio is 45% (Compared to Viking at 70%). This is very conservative. It is the result of a business model at Harvest that emphasizes increasing reserves, as opposed to Viking's historical emphasis on maximizing payout. This greatly reduces the liklihood of a reduction in payout should the pricing environment slump at some future point.
3. A financially stronger company with a more conservative payout policy bodes well for the long term, and provided the pricing environment in oil and NG remains buoyant, it would be reasonable to expect modestly increasing distributions going forward. Still, I feel like I have had my pocket picked this morning.