Southern Pacific Resource Corp STPJF

Careful with comparisons

[mjh9413]

CLL is being hit with $21MM finance costs in that qtr while STP 'has the luxury' of capitalising their finance costs, hence no hit to bottom line until this ends!!! Okay, so CLL are not capitalising revenues but STP's Mckay revenues are quite small at the moment ($1000blls/day) so small against actual finance charges being capitalised by them. The STP MD&A stated they had enuf liquidity to get them to this end of capitalisation period(not clear if that was with the undrawn line at Mar 31 or counting on the additional $25MM extended by the report date) , so would seem encouraging. However the debt per share ratios for the two are 'interesting.' CLL about $1.60/share in debt and with the new credit all counted STP would be about $1.25..very rough numbers.Bottom line is that STP need that 4,5 or 6000bopd pdq in order to turn this into less than a nightmare...else the liquidity will be strained and financial performance will be grossly impaired.
By the way, what do these companies do with their rail car commitments if they can sell into Alta market at $80/bbl?? Do they still have to pay for the assigned rail cars (CLL has 350 which they say they also use to sell into Cdn market).One interesting thing to me, although probably insignificant or even bad news in some ways is that STP had built up $4MM+ of diluent in inventory...and hopefully it is costing less than CLL's $115/bbl!!!!
So many considerations but the pace of ramp up is THE thing.