Southern Pacific Resource Corp STPJF

RE:RE:January numbers

[Eyeinvestor]

We won't know who is right until they announce which wells they are installing ICDs on in April (if they even tell us) ................................................................................................................................................................................................................................... My concern is that you are creating grounds for false optimism on Pad 1. So that if eye am right (and obviously eye think eye am right), then disappointment (versus your wildly optimistic numbers) on pad 1 will obscure the much more important progress on pad 2 and financing. You are setting up the stock to disappoint on good news. .............................................................................................................................................................................. Here are the hard facts. Well 1P5 produced a little under 50 bbd of oil on average for November, December and January. In the March announcement STP stated that fluid levels had doubled from 1P5 from the immediate previous months. That would suggest 100 bbd. BUT lets be generous. The SOR at 1p5 was running at about 8. If this improved by a factor of 2x to 4, then production could be as high as 200 bbd of oil - but nowhere near your 500. ........................................................................................................................................................................................................................................ For the first few months, all that an ICD can do is allow the operator to push more oil thru the part of the well that is ALREADY CONFORMING. It takes a lot longer to help the rest of the well conform. Existing production is a good guide to what the ICD can do in the short term. So what we have been observing from the limited data that we see is that the ICDs approximately double existing production in the short term. This ties in with the science. .............................................................................................................................................................................. Doubling production from a 300bbld well has more impact than doubling production from a 50bbd well. ................................................................................................................................................................................................................................ Eye think it was very smart of STP to install ICDs on 1P5, because now they can study and watch how long it takes for the well to gradually conform. 1P5 is going to provide long term data and insight. 2P1 and other ICDS on pad 2 are going to provide oil and money!!!!!! Right now, the focus should be on money....and so pad 2 is the way to go. .............................................................................................................................................................................. Of course, eye could be completely wrong and 1P5 could defy all previous experience with ICDs and start gushing oil. Eye would be very happy. But forecasts of 500 bbd from 1P5 are so unrealistic that you set up for potential disappointment .............................................................................................................................................................................. Eye also think that we should be prepared for the SOR on 2p1 to trend to a more normal 4 and oil production to trend back a bit before stabilizing and growing. Eye think flush production can last as long as 2 months. But at the same time eye think the additional ICDS on pad 2 will kick in and take overall production on pad 2 to a whole new level. This makes STP commercial and valuable. The numbers from pad 1 should be treated carefully....and 150-200 from 1p5 would be good not bad. That would be a 3-4x improvement. ...........................................................................................................................................................................................................................