Southern Pacific Resource Corp STPJF

The past - math and optimism

[ShatnersRug]

I'd have to say that I was the most upbeat poster on STP.
Based on the information that was fed to us by the company, the math made total sense to me.
Even by conservative estimates (a la Eyeinvestor) STP was poised to do well.

Up until May 7th.

Gonna bring to light a tidbit from the last NR. It mentioned that the 3 ICD-fitted wells generated 870 bbl/d for July.

If 2P1 was at a conservative 600, 1P5 at a conservative 150, that leaves 2P5 producing 120??? 2P5 was already producing more than that pre-install! Or is it 2P1 that has plateaued at 550? 500?!? This is deemed a success? What a far cry from the astronomically magical 700-900 figure they gave us in March(2P1). These guys state that the ICDs are improving production. I think not. At least not to a level that will save the company's bacon.

--- To those with fancy subscriptions, if you can post the exact production results for each of the respective wells, it would help to illustrate my point here ---

I, for one, do not believe for a second their assertion that having McKay reach 3,000 bbl/d production will get a player to lend them more money. First off, they need to succeed in reaching 3,000 bbl/d. Second, break even is now around 7,000 bbl/d. I think it's underhanded to tell the investment community that reaching 3,000 at McKay will get them more money. Oil price is dropping, now aroung $94 WTI and no one wants to touch anything oilsand-related. 3,000 bbl/d at McKay translates to 4,500(1,500 from Senlac come December --- OPTIMISTIC) as a whole. This, in turn, translates to cash burn.

There was mention that Credit Suisse would lend them more money. Lemme ask you this: If playing poker and the river card gives you drek, will you go all-in KNOWING that your opponent knows that he has you beat? Ok, that analogy sucks but you get my meaning.

To be optimistic in the notion that STP can go at it alone and surviving in its present form.... well, I dunno what to say.

One of two things will happen in the coming months.
1) It will be recapitalized
2) Bankruptcy

Either of these scenarios spell doom for the common stock. The debs? There might be a play there. Although, admittedly it's fraught with risk and Shatner doesn't like blind risk all too much at this stage of the game. Measured risk, perhaps. Sorry boys, at this stage of the game, I do not see a happy ending.

Shat

[freedom45]

Shat, u have been here before not that long ago. It's the oil sands cycle of life and it will recycle again ! ShatnersRug D ecember 11, 2013 - 04:12 PM 483 Reads | Post# 21996237 Rate this post Some personal thoughts on STP I have been

[rad10]

Good analysis Shatner - Oil is low, but the Canadian Dollar is dropping nicely. Doesn't McKay break even at 2500 bpd, and become cash flow positive at 3000 bpd?  This looks achievable over the course of 6 months IMHO.  It's going to be a long slow process.  Get higher up the capital structure and you could do very well. Cheers

[rad10]

Sorry Shat what I meant was - where did you get the 7000bpd figure?

[ShatnersRug]

hey rad, won't be arpound much today but wanted to answer your query before heading out. We got to the break even number by taking the loss declared by the company for previous quarter (Calendar Q1 I believe) and calculating the number of barrels based on their netbacks required to make up the loss. Know that the original figure was reached in May(6,500 - 6,700 back then). Recently, I threw

[oilcansam]

Hmmm,  this sucks. does anyone know of which are in the books for ICD installs.  I assume 1P2 which has been shut in since late 2013. It's current production before shut in was about 112 boe.  Now the question is. Do you try and double the wells on pad 2 which are in the 200+ range or go after the duds on pad one.  It's to bad that can't do them all.  Then we

[freedom45]

McKay is where the available cash must go because without McKay the company is still a dud. Senlac is a guarantee with no mystery and has value as an asset sale if required. That $18M is going to come critical next few months as is nnw evident.