Southern Pacific Resource (TSX: STP, Stock Forum) began searching for a financial way out back in December 2013 with the commencement of a strategic review process (“SRP”) following a realization that the original 12 well pairs drilled at the STP-McKay Thermal Project were unlikely to fill the process facility to design capacity of 12,000 bbl/d and that more workovers on the existing pairs as well as the addition of new pairs would be required.
According to the news release, the company brought in RBC Capital Markets to act as a strategic advisor and in March 2014, the company completed the first lien debt facility which improved its cash liquidity.
The company announced that it had fully explored all the options and proposals generated during the SRP and had even extended the SRP longer than expected to give the aforementioned proposals a full review, but unfortunately, the board felt that none of the proposals were acceptable and as a result, decided to push ahead with the development of the company's current assets with a focus on increasing production at STP-McKay.
Staff has been reduced in order to compensate for the company's decision, but a sufficient number of employees will be kept to continue its base of operations and near-term development.
Near-term development goals are to continue workovers geared to improve productivity from the SAGD well pairs at STP-McKay. The company, to date, has completed three workovers on its SAGD well pairs at STP-McKay with the installation of inflow control devices.
Regulatory approval was received to downspace the existing McKay well pads with additional well pairs as well as full regulatory approval for the company to drill the next pad of three pairs at STP-Senlac for an estimated remaining cost of $18.8 million.
The company also announced the resignation of Vice President, Projects, Mike O'Krancy, and the retirement of CEO, Ron Clarke as of September 1, 2014 as well as the exit of Director of the Board, Ward Mallabone.
Southern Pacific Resource was in the news recently when the Calgary-based company announced intstalling the third ICD configuration at STP-McKay in the middle of June.
Shares plunged 62.50% on the news to $0.045 per share.
Currently there are 398.0m outstanding shares with a market cap of $17.9 million.