RE:RE:RE:RE:RE:RE:Pershing - House 143
Good question.
6 months ago to the day, STP released the June operational update.
What has changed?
Share price?
July 8: 34 cents
Today: 23 cents
Oil Price?
No.
WTI dropped from 103.03 to 92.33
Brent pretty much unchanged 107.43 vs. 107.39
WCS is fairing much better now(~$81) but I do not know the price 6 months ago.
For argument's sake, given that WTI is worse off and WCS is better, we'll say that the aggregate price of oil is the same. Some of Senlac production was shipped to intra-Canadian markets and the rest to louisiana. Like I said, what STP is getting today for its oil is just about what they were getting in July.
Production?
9% Worse. But anticipated to improve because of wells coming online after tinkering.
They produced 4347 for the month vs. 4010 recently.
If production and price are pretty much the same, why is the share price off 11 cents?
Well....
The negatives:
It's painfully obvious to everyone involved that the plant capacity of 12,000 bbl/day will not be reached, not by a longshot. In fact, Phase I expansion and Phase II numbers (totalling 36,000 bbl/day are but a pipe dream now.
STP is now short a nice chunk of land. That's 18 million bucks worth of land that was supposed to have been producing oil some 10-15 years from now. Instead, they needed to cover costs because their SAGD process is failing. I'm still peeved over the sale but that's a matter for another conversation. So yeah, STP needed to pay off debts.
Incoming debt of $51 million dollars. Why? To beat a dead horse (SAGD) into giving you something.
Senlac production issues. Senlac alone should be producing in excess of 4000 bbl/day on its own and instead is sputtering about.
Sentiment. The markets hate juniors right now. STP is a junior. The market shuns companies that miss targets. STP not only missed, but fell off a boat and missed the water. Massive debt. Not Connacher-type debt, but lots of it nonetheless.
Anyway, all this adds up to the market feeling that STP is worth 11 cents less than 6 months ago. If I had been writing this message yesterday morning the difference would have been 14 cents but I digress...
Where would I peg the near-term SP ceiling? Leading up to the the next update, should oil price remain constant, I can see the SP rising no higher than 28 cents. I'm loathe to offer a specific SP target but there it is. I know it's an arbitrary number, but we're coming off of tax-selling season and chartists will ensure that the SP rises in due course. After that, it'll run to where the operational update directs it. If the engineers' dillying and dallying manages to increase production and the upcoming months/quarters look equally promising, we'll obviously see some gains. I feel, though, that the gains will be somewhat muted because of the "negatives" listed above. And if the operational update is crappy, then the company, quite frankly, is dead.
Too much debt and not enough production.
Long-term share price? I don't even want to try. 2 years ago I thought that STP would be the company that would finance my retirement, surrounded by green Orion slave women attending to my every beck and call. Today I treat this company like a Philippine hooker from 50 cent alley. Today I flipped 30,000 shares for a 14% gain after holding for only 1 day. I used to be long on just about every company I held. Not anymore. Adapt or be devoured.
Best of luck to everyone. Trade smartly. Never 'fall in love' with a stock.
Shat