Distribution Frequently Asked Questions
- What is Penn West's distribution amount as a percentage of cash flow and how often is it distributed?
- What is the taxability of Penn West's distributions for 2009?
- How are distributions paid out and whom do I contact if I have not received my distributions?
- What do the terms distribution date, record date and ex-distribution date refer to?
What is Penn West's distribution amount as a percentage of cash flow and how often is it distributed?
For the six months ending June 30, 2010, Penn West distributed approximately 62 percent* of its funds flow to unitholders with the remainder reinvested in exploitation and development projects. The distributions are paid monthly.
What is the taxability of Penn West's distributions for 2009?
For 2009, Penn West Energy Trust has determined that for Canadian resident unitholders, the distributions will be 100 percent taxable with no return of capital. For 2009, Penn West Energy Trust has determined that for U.S. resident unitholders, the distributions will be 100 percent taxable as a qualified dividend with no return of capital.
How are distributions paid out and whom do I contact if I have not received my distributions?
Distributions are sent out on the distribution payment date either directly to the unitholder (in the form of a cheque) if the units are registered in the name of the unitholder, or to the brokerage house or investment firm that manages the account of a beneficial unitholder. Your brokerage house or investment firm then deposits the funds into your account.
If you are a registered unitholder and you did not receive your distribution, please contact our transfer agent, CIBC Mellon at 1-800-387-0825. If you hold your units with a brokerage house or investment firm, please contact your account manager/broker.
What do the terms distribution date, record date and ex-distribution date refer to?
The distribution payment date is the date the trust sends cash distributions to unitholders (either directly to the unitholder if they are the registered unitholder, or to the brokerage or investment company that manages the beneficial trust unitholders' account).
The record date is the date by which a person must on record as being a unitholder in order to receive the next distribution. As it typically takes three business days for a trade to settle in your account, you must purchase the units three business days prior to the record date to ensure you are a unitholder of record.
The ex-distribution date is generally two business days prior to the record date. Unitholders who have purchased their trust units before the ex-distribution date are entitled to the declared distribution paid on the distribution date the following month.
* Payout ratio is calculated as distributions paid divided by funds flow.
DRIP Frequently Asked Questions
We have set out some questions and answers below to explain the main points of the Penn West Energy Trust Distribution Reinvestment and Optional Trust Unit Purchase Plan (the "Plan"). Unitholders should carefully read the circular which follows these answers before making any decisions regarding the Plan.
- What is the Penn West Energy Trust Distribution Reinvestment and Optional Trust Unit Purchase Plan (the "Plan")?
- What are the advantages of the Plan?
- What is the "Average Market Price"?
- Who is eligible to participate in the Plan?
- What is the difference between a registered holder and a beneficial owner?
- Can a unitholder who resides outside of Canada participate in the Plan?
- How do I become a participant in the Plan?
- How can I make optional cash payments?
- When does my participation in the Plan begin?
- How will the Plan purchase new units for me?
- What will the price be of the new units purchased under the Plan?
- Will certificates be issued for the units purchased under the Plan?
- How do I terminate participation in the Plan?
- What statements will I receive under the Plan?
- What are the income tax implications of participation in the Plan?
- Where can I get further information of the Plan?
What is the Penn West Energy Trust Distribution Reinvestment and Optional Trust Unit Purchase Plan (the "Plan")?
The Plan provides eligible holders of Penn West Energy Trust units the advantage of acquiring additional units by reinvesting their distributions at potentially lower prices without paying any commissions, service charges or brokerage fees. At the discretion of Penn West Petroleum Ltd., the administrator of Penn West Energy Trust, units will be acquired with distributions either at prevailing market rates or issued from treasury at 95% of the Average Market Price.
Canadian resident unitholders enrolled in the Plan may also make optional cash payments of a minimum of $500 and up to a maximum of $5,000 per month to purchase additional units. Units purchased with optional cash payments will be acquired at prevailing market rates or issued from treasury at the Average Market Price (without a discount).
What are the advantages of the Plan?
- Existing unitholders can purchase new units of the Trust each month by automatically reinvesting cash distributions.
- Participants will likely receive a 5% discount off the purchase price when reinvesting cash distributions.
- Canadian resident unitholders enrolled in the Plan can also make optional cash payments each month to purchase additional units. The optional cash payments can be a minimum of $500 up to a maximum of $5,000.
- No commissions, service charges or brokerage fees are payable in conjunction with the Plan.
What is the "Average Market Price"?
The Average Market Price is an average price calculated over 10 trading days. It also takes into account the number of units that traded at a certain price, and so is also called a weighted average trading price. This is intended to give a better reflection of the market price.
Who is eligible to participate in the Plan?
Holders of at least one (1) Penn West Energy Trust unit, who are Canadian or U.S. residents, may participate in the distribution reinvestment component of the Plan at any time. Beneficial owners of units whose units are not registered in their own names may participate in the distribution reinvestment component of the Plan by either having their units transferred to their own name or, if the units are held in an account with a broker, financial institution, investment dealer or other nominee, directing that nominee to enrol for them.
Upon enrolling in the distribution reinvestment component of the Plan, registered holders and beneficial owners who are Canadian residents may also participate in the optional trust unit purchase component of the Plan directly by completing the appropriate Optional Cash Payment Authorization Form B (for registered holders) or Form C (for beneficial owners), as applicable, identifying the broker, investment dealer, financial institution or other nominee who holds the units on behalf of the beneficial owner. Registered holders or beneficial holders who are U.S. residents are not eligible to participate in the optional trust unit purchase component of the Plan.
What is the difference between a registered holder and a beneficial owner?
A registered holder is a unitholder who is shown on Penn West's records as owning the securities of Penn West and holds the stock certificates in his or her own name.
A beneficial owner is a unitholder who enjoys the benefits of ownership even though the title is kept in the name of a brokerage house, financial institution or other nominee.
Can a unitholder who resides outside of Canada participate in the Plan?
Yes, U.S. resident unitholders are eligible to participate in the distribution reinvestment component of the Plan; however, U.S. residents are not eligible to participate, directly or indirectly, in the optional trust unit purchase component of the Plan. Unless otherwise determined by Penn West, unitholders who are not residents of Canada or the United States are not entitled to participate, directly or indirectly, in the Plan.
How do I become a participant in the Plan?
If you are a registered holder and wish to participate in the Distribution Reinvestment component of the Plan, please complete Form A - Distribution Reinvestment Authorization.
If you are a Beneficial owner of units, and wish to participate in the Distribution Reinvestment component of the Plan, please contact your broker, investment dealer, financial institution or other nominee who holds your units to provide instructions on how you would like to participate in the Plan.
If you are a broker, investment dealer, financial institution or other nominee holding units on behalf of one or more beneficial owners of the units who wish to participate in the distribution reinvestment component of the Plan, please contact the Canadian Depository for Securities or The Depository Trust Company in the United States.
Once you have enrolled, your participation in the Plan continues automatically until terminated by you or until the Plan is terminated by the Trust. No further action is required unless you wish to change the terms of your participation in the Plan.
How can I make optional cash payments?
If you are a Canadian resident registered holder and have enrolled in the Distribution Reinvestment component of the Plan, you can participate in the Optional Trust Unit Purchase component of the Plan by enclosing a certified personal cheque in Canadian dollars payable to "The CIBC Mellon Trust Company" with the completed Form B - Optional Cash Payment Authorization - Registered Holder and the Participant Declaration Form.
If you are a Canadian resident beneficial owners of units, who has enrolled in the Distribution Reinvestment component of the Plan through your nominee, you may directly participate in the Optional Trust Unit Purchase component of the Plan by completing Form C - Optional Cash Payment Authorization - Beneficial Owner with a certified personal cheque as well as the Participant Declaration Form. Please note that a separate account will be set up for you by the Agent to hold the units purchased through the optional cash payment plan and you will become a "registered holder" of those units.
Thereafter, optional cash payments may be made by using the portion of your plan statement sent to you each month, or with Form B, which may be obtained at any time from the Agent or from Penn West’s website. The same amount of money need not be sent each month and there is no continuing obligation to make cash payments. Optional cash payments may be made at any time but may not be less than $500 or more than $5000 per remittance. No interest will be paid on optional cash payments received by the Agent and therefore it is recommended that you make such payments as close as possible to the five business days prior to the distribution payment date.
U.S. residents are not eligible to participate, directly or indirectly, in the optional trust unit purchase component of the Plan.
When does my participation in the Plan begin?
You will become a participant under the Plan as of the first distribution record date following the receipt by the Agent of a duly completed Authorization Form for registered holders, or upon enrolment by your broker or other nominee if you are a beneficial owner. Distribution record dates are normally on or about the last day of each month. Distribution payment dates are normally about 15 days after the distribution record dates.
A Canadian resident unitholder wishing to make optional cash payments will, so long as a payment is received five business days before the distribution payment date, become a participant of the Optional Trust Unit Purchase component of the Plan for such distribution payment date.
How will the Plan purchase new units for me?
Under the Plan, the Agent will purchase units for each Participant's account, including fractions computed to four decimal places, equal to the amount of the distribution for each Participant invested under the Plan. Purchases are made following each distribution payment date.
The Agent will purchase units with optional cash payments following each distribution payment date at prevailing market prices through the facilities of the Toronto Stock Exchange (no discount) or from treasury at the Average Market Price (without a discount).
What will the price be of the new units purchased under the Plan?
The price of units purchased with distributions will, at the discretion of the Corporation, be either 95% of the Average Market Price for units issued from treasury or the prevailing market rates on the Toronto Stock Exchange. While the Company currently intends that units will be issued from treasury at a discount to satisfy the distribution reinvestment component of the Plan, no assurances can be made that the Company will not exercise its discretion at a future time to acquire units in the open market at prevailing market prices.
The price of units purchased with optional cash payments will, at the discretion of the Corporation, be either purchased at prevailing market rates through the facilities of the Toronto Stock Exchange (no discount) or issued from treasury at the Average Market Price (without a discount).
Will certificates be issued for the units purchased under the Plan?
Units purchased and held under the Plan will be registered in the name of the Agent or its nominee, as agent for the Participants, and certificates for such units will not normally be issued to Participants unless specifically requested in writing. You may request a certificate for any number of whole units held by the Agent for your account by writing to the Agent. Certificates normally will be forwarded within three weeks of receipt of the request.
How do I terminate participation in the Plan?
You may terminate your participation in the Plan at any time by providing written notice to the Agent, however, you must do so three business days prior to a distribution record date if you don’t want units purchased for you for the following distribution payment date.
When you terminate participation in the Plan, or upon termination of the Plan by the Trust, a certificate for whole units held for you under the Plan will be issued and a cash payment will be made for any fraction of a unit (based on the market price as of the termination date) and any uninvested optional cash payments received. Normally certificates and cheques will be forwarded within three weeks of receipt by the Agent of the request. However, if the notice of termination is received by the Agent between a distribution record date and a distribution payment date, settlement of your account will not be made until after the distribution payment date and certificates and cheques will normally be forwarded within three weeks thereafter.
What statements will I receive under the Plan?
With each distribution, unaudited statements will be mailed to you. The statements will be your continuing record of purchases made and should be kept for tax purposes. In addition, you will receive annually the appropriate tax information for reporting distributions paid on units subject to the Plan.
What are the income tax implications of participation in the Plan?
Generally, distributions that are invested in additional units do not relieve you of any liability for taxes that may be payable on the amount of such distributions. To the extent that a distribution from the Trust would be included in the income of unitholders, such amount will be included in the income of unitholders who elect to reinvest such amount. The amount reinvested by unitholders (plus any withholding taxes) will be added to the adjusted cost base of their units for the purpose of computing any subsequent gain or loss thereon. You should consult your tax advisors concerning the tax implications of your participation in the Plan.
U.S. residents who are participants in the Plan should be aware that the amount of any distribution designated for reinvestment under the Plan will be reduced by the non-resident withholding tax applicable thereto. For further tax implications of a U.S. resident's participation in the Plan, please consult your tax advisor.
Where can I get further information of the Plan?
Authorization Forms are available for download on this website. You may also request Authorization Forms or direct any further questions regarding the Plan to:
The CIBC Mellon Trust Company
PO Box 7010 2200
Adelaide Street Postal Station
Toronto, ON M5C 2W9
Attention: Dividend Reinvestment Services
Telephone: 1-800-387-0825
Fax: (416) 643-5020
Website: www.cibcmellon.com
OR
Penn West Energy Trust
Suite 200, 207 - 9th Avenue SW
Calgary, AB T2P 1K3
Attention: Investor Relations
Toll Free: 1-888-770-2633
Fax: (403) 777-2699
E-mail: investor_relations@pennwest.com