Southern Pacific Resource Corp STPJF

Rumour has it

[sculpin2]

Senlac will be sold - minimum of $100MM with potential of up to $150MM. Bank debt will be assigned to Mackay. Should be good for stock, converts if Mackay continues to progress well with ICD's.

[ShatnersRug]

Given the debt, I prefer the sale of Red Earth. Assuming the lower end $100m sale price, isn't that overkill as far as meeting financial obligations over the next few months? $16m for RE could cover costs given increased prod at McKay. On mobile... can go more in depth later.

[Eyeinvestor]

If the stock is really going to get out of the hole, STP has to think bigger than this. STP should replace its revolver with $100-$150 million facility or sell a big enough asset to get them completely out of the hole. Eye guess selling Senlac would have the same effect (not my favorite option but I'd go with it) . ...............................................................................

[ShatnersRug]

.... And if the source of this rumour is Zanadu, you may wish to rethink any strategies concerning your STP investments. ;-)

[adamsight]

I hope they are not that stupid. Senlac could easily be back to 4000 bpd EASILY This would take them past the 5500 bpd, faster than a buffalo fart. There would be profit by septas long as icds keep doing what thy have . I would rather see dilution than that.  I think the stock would get pounded. Mackay is still iffy. Sure debt would go down but so would income.

[Awarded]

TD analysts in their Dec 12, 2013 report said "STP could look to sell its Senlac property. We estimate that this property is worth ~$120mm". Thus, the magnitude of your rumour seems plausible. However, rumours are rumours.  Please give more information that supports the assertion of your statement. If McKay is the only operating asset that is left, it is obvious that the debt

[Eyeinvestor]

The average price paid in transactions involving producing Canadian oil sands in 2013 was $58,769 per flowing bbl/d equivalent. Senlac will be at upper end of this range because it is requires less diluent etc...............................................................................................................................................................................................

[nikehercules]

I would agree with Eyeinvestor on the Senlac divestiture and its preference over a Red Earth sale. It would send a loud and clear message to the capital markets. A sale of Senlac has always been planned by STP management. The old corporate presentation contained a graph of production out to 2020, with McKay Phase 1, Phase 1 Expansion and Phase two along with Senlac. This has been removed from the

[ShatnersRug]

You guys all made some great points. If an asset sale occurs, it should be Senlac. Baby, we hardly knew you!

[Eyeinvestor]

Nike....Eye can see that you are not a frequent bond investor. Yield to maturity of Deb is a lot higher than 18%..................... But , yes, the 2nd lien senior bond is yielding 18.4%......................................................................................................... Sale of Senlac would not be my first choice but it would alleviate the cash crunch overhang. ..............

[Eyeinvestor]

Eye don't have material or immaterial non public information.........BUT surely we must be asking ourselves "What gave STP's management the confidence to announce that they are installing more ICDs (at $1million a pop), overturning their previous cautious intention, unless they have something planned in the works to address the May cash crunch?" Shat? Nike?

[Eyeinvestor]

Eye'm not selling a single share or deb. Eye's gut and the additional ICDs tells her that something is coming that will address the cash crunch. Eye don't know what it is, but something is coming.........................

[ShatnersRug]

Agreed. To commit to $10mil in capex implies that the cash crunch is, or is in the process of being resolved. Amendment to credit facility in Jan clearly stated that 5.1mil was the limit in capex up to Apr 30. We're going to witness the phoenix rising from the ashes in the coming weeks and I intend to be on board.

[inv4long]

The Seinfeld episode was over 15 years ago.  It was funny then, not so much now.