Southern Pacific Resource Corp STPJF

Conversation with the CFO

[nikehercules]

Gents:

I called up Howard and he was good enough to answer a few questions regarding the ICD's. Here are the key points:

1) STP is using the same ICD vendor on 2P5 as they did on 2P1 & 1P5. Vendor is Baker Hughes. They also are using the same installation crew. They are happy with the current ICD configuration - "proof is in the pudding"

https://public.bakerhughes.com/otc-asia-2014/presskit/Overviews/38756_EQUALIZER_SELECT_AICD_OV_Final.pdf

2)  From the 2P5 application (Application# 1796674) it looked like they were experimenting with different ICD's. They did take a look at other ICD vendors but decided to stick with Baker Hughes.

3) Reading in between the lines, it looks like the capex freeze is off. STP is paying for the installation on 2P5. Plan to do more over the summer.

4) Regardless of what happens with the review, STP should be able to reach corporate breakeven and beyond. Current ICD wells are continuing to be ramped up.

5) SAGD is a slow process. It's not like conventional where you drill a well an oil flows. Not good for the impatient types.

6) Acknowledged that current SP is nothing to be proud about. Debt is big compared to current production.

I'm thinking Deduction's scenario of "no deal" is the most likely.

NH

[budworm]

Thanks Nike.  Reassuring to know he had the conversation with you.  I appreciate the post

[ticket2ride]

Nike , Thank you, Any mention of Senlac ?? T2R

[nikehercules]

No mention on Senlac capex and he probably wouldn't have answered had I asked. I did mention that if they didn't start up the new pad, Senlac production will continue to drift down due to natural decline. His response: "I hear ya." They are well aware of the issues associated with sitting on their hands.

[JR5]

Thanks for all your efforts. STP knows they are under the microscope and they almost were able to get away without a press release about the install of the latest ICD. I suspect there is a lot more riding on this latest installation than STP is admitting. This maybe the deal maker or breaker. I have full confidence that going forward production will advance beyond the 5000 bbl mark. Just don't

[nikehercules]

Hahaha, Counting trucks, that's a good idea! Somebody remembers a scene or two from "Wall Street!" Setup a GoPro on 5 second time lapse with a big battery inside a pelican case. Throw it in the bush somewhere along the road and let it rip for a week. Post the video on youtube and get somebody else to count the trucks. Brilliant!

[demarko]

FAT CHUNK on the ASK 1/5 million......

[Eyeinvestor]

Ironically, the largest shareholder in STP also owns a good chunk of Go-Pro , pre IPO.