Paramount Energy Trust (PET) is an actively managed royalty trust formed to provide investors with indirect ownership in cash generating oil and gas assets, plus the market liquidity of a publicly traded equity investment. The royalty trust structure has evolved in Canada as a proven method of allowing net cash flow from producing oil and gas properties to flow directly to Unitholders in a tax efficient manner.
PET was formed through the implementation of a "Trust-on-Trust" structure with internalized management. The Trust-on-Trust structure is intended to maximize tax efficiency to Unitholders and features two trust entities:
- Paramount Energy Trust ('PET'), a publicly-traded unit trust (PMT.UN), which issues Trust Units, holds royalty interests and other investments and pays distributions to Unitholders and;
- Paramount Operating Trust ('POT'), a business trust whose sole beneficiary is PET and whose business is the acquiring, developing, exploiting and disposing of oil and natural gas properties.
Computershare Trust Company of Canada is the Trustee of PET while Paramount Energy Operating Corp. ("PEOC") is the trustee of POT and will administer, manage and operate the oil and gas business of POT on a cost-recovery basis. In addition, Computershare has effectively delegated to PEOC the significant management, administrative and governance functions with respect to PET. All of the issued and outstanding Units of POT are owned by PET
The lack of external management in this structure serves to eliminate management fees and aligns the interests of management with Unitholders through compensation based on Trust Unit performance.
