I am no tax expert, but this is easy. All the numbers I giving are assuming the top marginal tax rate, which is where most of our income will be if the drills prove what we believe is there.

It all depends on where you live. From a tax perspective, Alberta is where you want to be. Dividend income is 17.72%, while on capital gains it is 19.5%. In BC dividend is 23.91%, while cap gain is 21.85%. Ontario dividend is 23.2%, cap gain is 28.19%. Nova Scotia dividend is 34.85%, while cap gain is 25%. So clearly if you live in NS, you do not want the buy out to be paid as a dividend.

My guess is that any buyout would not be paid as a dividend. Why? The people controlling this company live in BC, so there is a tax advantage for them to go with capital gain. Also I believe any buy out offer will be a combination of shares and cash. Most of these deals that I have looked at have not been paid out as a capital gain. My guess is that we get some cash, some shares in XYZ company that buys SLI, and the SLI properties outside of the tesoro get spun into another company that we will keep the same % ownership that we currently have in SLI.

Having said all this, it is my guess only, what do I know?

BTW, there are many good tax tips/tax calculators on line.