Southern Pacific Resource Corp STPJF

RE:RE:Want the stock down or?

[nikehercules]

Unfortunately, ICD failure is a real possibility. We've seen multiple instances throughout the last six months (ie just prior to the November 2013 announcement & recently in the May 7th release) that hot spots and steam breakthroughs occur when the wells are run harder. What's the long term effect of having raw steam hitting the producer in sections closed off by the ICD?

Both pads appear to suffer from this malaise, so the buyer/partner had better make sure the ICD's are proven to work on future pads.

Given these circumstances, STP.DB looks like a safer way to play at the STP casino. Holders get a whopping 15-20% yield while we wait and a guaranteed 2.5 times return upon sale. If by some miracle the SP appreciates beyond $2.15 before June 2016, the debs will get a piece of that action too. As Eyeinvestor said earlier - how greedy do we need to be?

In a worst case scenario, i think STP will limp along near breakeven and continue to support the debs. Come June 2016, debholders will be offered sweeteners (ie increased interest rates, one time fees, etc. etc.) to get the necessary votes to keep them from converting over to common shares and taking over the company. The common will most likely climb and crash like an out of control airbus based on the news release of the week/month. At a near breakeven scenario - STP won't be able to refinance the 160 million due to the debs at a reasonable cost - the secured first lein is at 10%, imagine what an unsecured loan would cost?

At this point given the news availble to us, the longer STP goes on without a resolution, the less common stock I will hold. As for STP.DB - I'll think I'll hold that until June 2016 for the coupon and to keep one foot in the STP roulette table.

Stay diversified!