Southern Pacific Resource Corp STPJF

RE:Eye's Forecast Road Map for STP

[nikehercules]

Thanks Eyeinvestor for the excellent post.

I believe the infill wells on Pad 2 are a likely use for the funds. STP can begin drilling immediately with the remaining 51 million. I hadn't realized that STP is paying 10% immediately upon close, thanks Eye for pointing that out.

A new pad on Phase 1 expansion is possible, but I believe less likely. A road and a new pad will need to be surveyed, cleared, and graded along with the piping. This assumes that all front-end engineering and surveying has taken place. LOC, PLA and MSL applications with SRD don't happen overnight. Just putting the pad together could cost an additional $5 to $10 million. Plus, there are construction risks with cost overruns. I've been onsite at Husky Sunrise and things take forever there. Trying to grade a new pad with snow on the ground is alot harder than in the summer (imagine a giant mud pit surrounded by stumpy trees). Getting the necessary engineers in place in a big hurry is expensive - we know when the client is in a hurry and add 10%.

Additionally, Phase 1 expansion isn't expected to be approved until Q2 of 2015.

Pad 2 infills with ICD's would be the quickest, easiest and least risky way of using the $50 million. I'd say along with Eye that that's where the money is headed once breakeven is achieved. They have already completed the detailed engineering study according to the Dec. 11 release.

Volume is pretty light on the debs, so anyone showing up with $50 million in cash to take them out would probably cause a boost in deb SP. I boosted the SP from $33.01 to $33.75 with my puny $100k face value purchase two weeks ago. Those things are pretty illiquid.

@poorgrammer - we have entered the STP steady state SP mode. The bots have decided that 33 cents is where we are going to stay for now. STP is a lousy daytrading stock. There's hardly any liquidity at this stage so any buy or sell over 100k volume is going to move the SP. It may wander around a bit but such moves in the short term are irrelevant. It is a good time to sit back an accumulate.