Southern Pacific Resource Corp STPJF

Energy Oil & Gas E&P

Southern Pacific Resource Corp. is a Canada-based company, which is engaged in the thermal production of heavy oil in Senlac, Saskatchewan on a property known as STP-Senlac, and thermal production of bitumen on a property located in the Athabasca region of Alberta known as STP-McKay, as well as exploration for and development of in-situ oil sands in the Athabasca region of Alberta. Its STP-McKay property consists of oil sands leases totaling approximately 37,760 acres. The Company’s operations also include Anzac, Hangingstone and Ells. The Company’s STP-McKay property is located approximately 45 kilometers northwest Ft. McMurray. The Anzac project covers approximately 117 kilometers of two-dimensional (2D) seismic. The Company owns 80% interest in Hangingstone project. The Ells project covers approximately 164 kilometers of two-dimensional (2D) seismic.

GREY:STPJF - Post by User

Southern Pacific Resource Corp > The Sale of Senlac - then what?

<< Previous

Bullboard Posts

Next >>

Post by ShatnersRugon Jul 16, 2014 9:20am

627 Views

Post# 22750022

The Sale of Senlac - then what?

I wonder how the market would take that news were it to become a reality?

On the one hand, STP would be swimming in cash and would be able to fund all kinds of new pads and infill wells at McKay.

On the other hand, they'd be losing guaranteed income for 10 years and would be hemorraging cash for many months until McKay reached production levels of ~8000+ bbl/d.

When Leismer was sold off, investors were jumping for joy. I couldn't undertsand why. Still don't. I despise asset sales. Always have. I understand that it was a better option than extending credit or dilution, but it's never a good thing no matter how you look at it.

The circumstances today are a little different now with McKay production finally being "figured out', and the sale of Senlac would give them the flexibility to go full bore at McKay. If only Pad 1 wasn't a near-total disaster, STP would have been able to go at it alone(barely). This has(had) been my pipe dream since February 10th.

Frankly, I am profoundly perplexed as to WHY management is not pumping some cash into Senlac. Here they have an asset that is capable of producing a nameplate 5000 bbl/d and they're letting it fritter away. Stupid. So what if she's on the chopping block? Pump the money into her and simply reflect the capex expenditure in the sale should it occur. Can it be more complicated than that? Judas Priest, given its decline, it's probably producing 1700-1800 bbl/d right now. What a waste.

For the record, and if you haven't guessed, I am against the strategic review alternative of the sale of STP-Senlac.

I apologise for the disjointed post. Still emotional this STP thing is to me.

Shat