STP

Sometimes you need to ask you self the question what analysts really are up to and what they are doing?

Take as an example Richard Wyman at Canaccord/Adams. He was the one that made their last analysis of STP.

In fact he has followed STP for quite some time and he also dropped the company when it really went south. But then again he came back and that's then after the Senlac aquistion when he concluded STPs target after that should be $1.50.

He came to that conclution based on the 6.000 bpd production from Senlac and also considering the expected future 12.000 bpd for the first project at McKay.

Back then STP only had some 80% of McKay however and he also based his assumtion on an average $70 oil.

Richard Wyman ....... Canaccord/Adams ……Mar 29, 2010 Maintained BUY Target raised to $2.05 from $1.50C STP Price day before: $1.06 Finish day of posting:$1.17Current:$1.17

Now and as you can see he has upgraded that target from $1.50 to instead $2.05 (I guess that .05 is important) after that STP has added TWO new 12.000 bpd opportunities - in the very same area - thus beeing able to utilise economies of scale regarding investment related to necessary production infrasture.

I mean for the first 12.000 the broken down average cost per barrel for production has to be quite a bit higher than if you in the same area and by using and sharing in parts much of the same infrastructure and thus splitting the cost can produce (12.000+12.000+12.000)?

And then in addition to this is not even two times 80% of 12.000 but an additional 100% of the same. Add to this not an average oil price of $70 but over $80 today with a clear tendency also to further increase quite substantially and is somewhat difficult to follow mr Wymans logic in this case.

Then and as STP in conjunction to this has added the 20% to McKay also got some additional land parcels in other areas it's then even harder to follow this mans logic.

If 6.000 + 80% of 12.000 bpd gave a target of $1.50 then how can adding an additional 100% of 2 x 12.000 + an additional 20% of 12.000 bpd + additional land parcels then result in a target increase of ..... .55?

At the same time when averagre oil price as well has increased some $10.

Then and as Mr Wyman also concludes below, there are other significant improvements other that the above e.g. related to financing:

Gross probable recoverable bitumen reserves have increased by about 150% to 168.1 mmbbls. Additionally, the company’s best estimates (P50) contingent resources have increased from 85 mmbbls to 116.7 mmbbls. This increase is notable for two reasons: 1) it sets the stage for additional SAGD projects to follow the McKay project; and 2) it points to potential for a larger component of debt to finance the McKay project.

To me in this case Byron Capitals target of C$3.75 certainly seems as more appropriate.

Now let's hope for yet another 12.000 bpd opportunity confirmed later this spring at Hangingstone and then of course the permit ok for the first 12.000 bpd at Mckay and an even stronger oil price and I'm sure well get more analysts agreeing on a significantely higer STP target going forward.

Based on the volumes traded last couple of weeks and days it seems many now take the opportunity to invest while STP shares are at dirt cheap levels.