Frequently Asked Questions
WHAT ARE 'NON–Operated' WORKING INTERESTS?
Non-operated working interests and royalties in relation to Maple
Leaf Energy Income programs are a percentage ownership entitlement in
the production from oil and gas wells that provide income to investors.
WHAT ARE SOME OF THE ADVANTAGES OF NON - OPERATED WORKING INTERESTS?
- Ownership of oil and gas production without responsibility for daily operations.
- Provide investors with significant tax deductions (up to 100% of investment).
- No premiums are paid, unlike traditional energy focused flow through shares.
- Monthly income is paid to the owners for as long as the wells are economic.
- No direct exposure to capital market sentiment/volatility associated with ownership of publicly traded shares.
- Exclusive asset class typically available only to institutional investors.
How does Maple Leaf Energy Income programs compare to traditional flow-through funds?
Maple Leaf Energy Income programs provide investors with a monthly income generating investment and tax deductible alternative to traditional flow-through limited partnership programs. Click here to see a comparison table.
WHAT ARE SOME OF THE RISKS RELATED TO THIS TYPE OF INVESTMENT?
Perhaps the most significant risk is commodity (oil and natural gas) price volatility, and to a lesser extent, risks associated with engineering and production activities.
Maple Leaf Energy Income programs mitigate much of the risk through the tax deduction of up to 100% of investment that investors can realize. This tax deduction returns back to investors about 40% of the original amount invested through tax savings.
WHO MANAGES THE JOINT VENTURE PROGRAMS IN WHICH MAPLE LEAF ENERGY INCOME Programs INVEST?
Our Calgary based Oil & Gas Investment Management Team led by Joseph Durante and Glen Tanaka, P.Eng. and a team of engineers at Toscana Energy Corporation (“Toscana”) will manage the joint venture programs in which Maple Leaf Energy Income programs invests. Together Toscana’s management team has over 100 successful years of experience in oil and gas investing and will identify high quality oil and gas investment opportunities that provide income and capital appreciation potential to investors.
WHAT CORPORATE ACTIVITIES QUALIFY FOR THE TAX DEDUCTIONS?
The Canada Revenue Agency (the ”CRA”) has stringent requirements that must be met in order to determine whether an activity is classified as development or exploration in nature. The key difference between the two is the amount of write-off allowed. To encourage exploration and certain development activities, the CRA allows for up to a maximum of 100% tax deduction in the year the capital is invested. The Partnership intends to focus on development drilling projects.
When is the Full 100% Tax deduction achieved?
Investors may claim approximately 30-40% against income in the year in
which the investment is made. The balance is deductible over the next
few years up to 100%.
HOW MUCH IS MY TAX DEDUCTION FOR THE TAX YEAR IN WHICH I INVEST?
Maple Leaf intends to invest 100% of available funds into development drilling programs. Therefore, the expected tax deduction for a limited partner in the year of purchase is approximately 35% of the amount invested with the balance deductible over the next four years. Because of these tax deductions, investors may be able to reduce their effective net ‘at-risk’ capital to approximately 58% of their original investment (please see the prospectus of the Partnership for a full description of these calculations).
ARE THERE ENOUGH QUALITY OIL & GAS COMPANIES WILLING TO ISSUE NON-OPERATED WORKING INTERESTS?
Yes! Many oil and gas companies are willing to issue non-operated working interests because they are a friendly source of capital which helps finance and accelerate the development of their proven reserves. This increased production from proven reserves can significantly help oil & gas companies by providing cash flow to the companies without these companies having to finance the development through dilutive equity issues or through debt which can impair their balance sheets. This financing option further protects oil & gas companies from exposing themselves to unfriendly industry competition through joint ventures with industry members.
When do cash distributions commence?
Maple
Leaf Energy Income programs targets a 12% annualized return through
monthly cash distributions. The programs expects to pay cash
distributions from the sale of the oil and gas produced by development
wells commencing approximately 9-12 months from the date of closing of
the original offering.
HOW AND WHEN DO I RECEIVE My T5013A TAX SLIP?
Prior to the end of April of the year following the purchase of your Maple Leaf Energy Income investment, you will be mailed a T5013A federal tax receipt from your investment dealers back office.
WHEN IS THE LIQUIDITY EVENT EXPECTED AND WHAT WILL I RECEIVE AT THAT TIME?
The investment lifecycle of the Partnership through to liquidity is expected to be approximately 3 years. Toscana Energy Corporation has agreed to use commercially reasonable efforts to establish a publicly traded company (the “Toscana PubCo”) and to cause the Toscana PubCo to make an offer for the Partnerships’ working interests at an independently determined fair value. The General Partner currently expects the liquidity event will be the sale of the investments (direct non-operated working interests) held by the Partnership to the Toscana PubCo in exchange for listed securities on a tax-deferred basis.
The Partnership would then dissolve and distribute these listed securities to the former investors. In the event of receiving shares of a publicly traded company, a tax event is typically deferred until the securities are sold.
DOES MAPLE LEAF ENERGY INCOME PAY ANY PREMIUMS LIKE FLOW-THROUGH SHARE LIMITED PARTNERSHIPS DO?
No. One of the significant advantages of a Maple Leaf Energy Income programs is that it does not pay any premiums to the oil & gas joint venture companies in which the Limited Partnership partners with.
CAN CORPORATIONS BENEFIT FROM BUYING MAPLE LEAF ENERGY INCOME LIMITED PARTNERSHIPS?
Yes, corporations have the same advantages buying units of the Partnership as does the individual investor.
About Energy Income
Investment Lifecycle
Maple Leaf Energy Income programs can provide investors up to a 100% tax deduction, monthly income, liquidity and the opportunity to convert income into capital gains.
View Investment Lifecycle in detail
Development Drilling Focus
Development drilling means drilling into already existing and producing pools of oil & gas have an 85% average rate of success.
Understand how development drilling works