Post by
ShatnersRug on Mar 23, 2014 9:41am
3rd Quarter results....
... are right around the corner.
The only big capex should be the ICD installations. There were no huge workovers on any of the well-pairs at McKay or Senlac aside from that. As of March 17th, this would appear to be the case. Anything material would have been released in that update.
Price of WTI in Q3 relative to Q2 is about the same. -good
Canadian Dollar averaged $0.95USD in Q2 vs. $0.90USD in Q3(1 week to go - not much will change). -good
Production was stagnant in January.
Slightly better in February.
March will see a meaningful gain thanks to the ICDs and slightly better conformance in all the well-pairs. [Monthly prod of 4500 bbl/d = Senlac 2000 bbl/d + McKay 2500] - taking into account potential downtime of 2-3 weeks for ICD installation on an established well-pair on Pad 102.
This won't, however, be enough to get over the hump. The ICDs are a godsend for sure. It's because of them that STP (in all probability) will not spend $51mil to drill new wells on Pad 2. It's because of the ICDs that STP-McKay will not have to wait until calendar 2015Q1 to attain 7000 bbl/d. In fact, it may be possible to reach this level up to two quarters sooner.
The question is money. They'll still need a cash injection, but not as profound as originally thought. Management has always erred on the side of caution, and even if they do have enough funds to cover the next couple of months, I feel that they will want a cushion just in case. Also to consider, the recent amendment to the credit facility limits the amount of capex to $5.1mil for the period of Jan 1 to April 30. Realistically, that should be enough to finance 4 ICDs. They need to start generating cash faster, thus the need for more capex bucks.
Q2 loss was $16mil. I'm anticipating a loss in the range of $10-$12 for Q3. Better! And more manageable. The interesting part, though, will be to see revenue generated month over month. In March, 2P1 alone is producing ~800/bbl/d. Moving forward, the month-over-month numbers should look great.
May 31 deadline.
I'm anticipating the sale of Red Earth to happen shortly. Bold of me to say, I know.
STP acquired Red Earth in the Peace River deal in Sept 2010. The price tag was $16mil. Since then, STP did a test run on Red Earth that cost something like 2-3mil and determined that commerciality was feasible. Some bucks needed to drill new wells, but thats it. The building blocks are there for a 10,000 bbl/d project. Oil price back then was in the $80 range, so considering that and the successful feasibility test we can assume that STP can get at least what they paid for originally in any upcoming sale transaction.
$16mil should be enough to get them over this hump. No dilution. I despise asset sales. But this, in my opinion, would be the least of all evils. STP's ceiling might not be as high with the loss of Red Earth, but at least there will still be a ceiling to reach. A decent ceiling regardless.
Shatner says breakeven by June.
Comment by
rad10 on Mar 23, 2014 11:03am
Fingers crossed Shatner. I have confidence in this management team over and above several peer companies. Have you heard rumours of a red earth sale - or just a hunch. Whats the coffee shop talk in Calgary? Thanks for all you have done on this board - it is one of the more informative ones.
Comment by
Joelzinho on Mar 25, 2014 11:39pm
I couldn't find their previous Quarter results, or any financials on their website. Anyone know where I can pick them up?
Comment by
Joelzinho on Mar 26, 2014 12:47am
Scratch this. Was supposed to be posted to another board for a different ticker. Thanks & Cheers.