Byron Lutes STP - BNN 24th of July

http://watch.bnn.ca/#clip726812

STP.TO

WebCast Event där STPs CEO Byron Lutes berättar om bolaget. Mycket matnyttigt i denna nya genomgång och den nya företagspresentationen ni kan ta del av när ni lyssnar finns även på boalagets hemsida.

Det finns nu kortsiktigt en mycket rejäl uppsida i bolaget under slutet av oktober början av november. Lyssa och ni förstår varför.

Utöver detta dock massor av annat som företaget har i pipen..

Är man ens det minsta intresserad av energi så måste man helt enkelt nu ta del av denna genomgång.
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3660800

STP

We have some resistance at 1.75,1.9 as well as 2.01. We just need two days of closing above these levels and we'll be charging forth like nothing you have seen before. Nothing goes straight up without any sort of consolidation, strength gathering and what have you.

Nobody that has any type of insights in this play says this isn’t a great opportunity for further valuation improvements going further as far as SP is concerned.

In the mean time let's compare STP with another oil play, PXX.TO that has roughly the same reserves, same number of shares and within a year roughly the same production (note this was BEFORE yesterday’s news regarding McKay 2 as well as Wabiskaw). One difference is that PXX today is debt free but if all goes as planned with McKay phase 1 STP also will be debt free by 2015.

Now compared with STP PXX today has more than four times the valuation. Kinda gives you an idea doesn’t it about where STPs SP is heading. Can't blame Soros and his crew for entering in to this play at this particular moment. Maybe somebody right now is trying to accumulate before the real heavy blast takes us to much higher SP levels. Time sure is starting to run out if you want to accumulate at these levels.

"Soros reports that Quantum held at January 31, 2011, 20,400,000 shares and $25,000,000 aggregate principal amount of 6.00% convertible unsecured subordinated debentures due June 30, 2016 ("Debentures") of the company. The Debentures are convertible in to common shares 465.1163 common shares of the ("Company") shares per $1,000 principal amount of Debentures until June 30th, 2016. The shares and debentures, if converted, held by Quantum represents in aggregate approximately 9.18%of all outstanding shares."
http://www.sedar.com/CheckCode.do;jsessionid=00008HupafOULoEP60UF88AJxka:-1

This as now both macro and geopolitical events support much higher oil prices in the future than anticipated by most analysts. Or anybody here that sincerely believe the situation as it now has developed in the Arab world will be a quick fix?

Brent $/barrel 123,11
WTI $/barrel 109,10

In addition we now also of course have some STP specific events to strengthen our case:

- Senlac Phase H (2 SAGD well pairs) already in place by end of Mars 2011
- an additional 2 SAGD well pairs mid April
- Red Earth, Q2-2011, restart pilot project. Objective is to produce minimum 10.000 bpd.
- updating of the company´s reserves & resources after fiscal year end (June 30)
- McKay Phase 1 12.000 bpd construction updates (Road 80% completed, Plant and Pad site construction 75% completed, 200 person camp installed growing to 300 by mid March, all long lead equipment orders are placed and shop fabrication has begun.)
- McKay Phase 2 24.000 bpd application to be submitted during fall 2011.
- Senlac Phase J during third quarter 2011
- Wabiskaw Pilot project - to start Q4 2011 (Significant potential project)
- McKay phase 1 Production of 12.000 bpd to start Feb/March 2012

So then adding current and future production together we get this summary:

Senlac 4.000 - 5.000 bpd
McKay 1 12.000 bpd
McKay 2 24.000 bpd
Read Earth Pilot Project - to start during Q2 2011 (objective minimum 10.000 bpd)
Wabiskaw Pilot project - to start Q4 2011 (Significant potential project)

We-re now fast approaching a future production opportunity of beyond 50.000 bpd. More than a 10 fold increase vs. current production levels in sight. That´s then the production opportunity level we´re you start getting some real and serious attention from larger players in the market e.ge like neighboring Petro China and the alike

Clearly as STP develops its land the more interest from other players will be visible:

"The deal gives PetroChina 60 percent control of Athabasca Oil Sands Corp.´s Mac Kay and Dover oil sands deposits in Alberta. The yield from the two deposits is likely to be modest when compared with total estimates of about 175 billion barrels of oil held in the sands, the largest after Saudi Arabia.

Industry analysts said China would likely seek to expand its Canadian tar sands portfolio."

http://www.upi.com/Business_News/Security-Industry/2010/01/05/China-buys-into-Canadian-tar-sands-exploitation-project/UPI-22041262732184/#ixzz1DYFkW8BQ

Here is what BMO Capital markets has to say about this play:

"We believe the market is still overestimating the levels of execution risks associated with this story and believe that the company's ability to demonstrate ongoing construction progress at McKay, along with additional exploration and a potential regulatory application at McKay, could act as further catalysts for the shares in 2011."

Page .6 : Solid underlying
“Our valuation includes MacKay leases with phase 1 un risked , but future expansion value risked at 50% chance. We value the undeveloped resources at 0.75/bbl. Adding in Senlac generates a NAV of 3.49.”

From the BMO Capital analysis p5:
"We estimate that the value of Senlac and Mckay phase 1 alone is in the range of $1.80 - 2/share, implying little value is being given to the companys other development opportunities or resource upside."

That is we´re currenly valued at even lower levels than what can be considered relevant when only including McKay 1 and Senlac and that no value what so ever at these levels are assigned to either of Mckay 2 (24.000 bpd), Read Earth (objective minimum 10.000 bpd) as well as Wabiskaw (significant potential project). All of these are projects in the pipe but then we also in addition to these have all the other undeveloped land to be explored as well that at these valuation levels are assigned 0 value.

"Our un risked net asset value estimate is nearly $6/share, which we believe represents the real upside potential of the shares as the company works to "de-risk" the value of its oil sands recourses through development"

Comment - BMO is definitely using a VERY conservative Oil price of $90 in 2015. Remember that this is only 4 years from now. Net asset value should be adjusted accordingly if you believe that oil will be higher than $90 in 4 years.

Expect these above numbers to be upgraded as the new reserves and recourses update will be published in June.

http://research-ca.bmocapitalmarkets.com/documents/40E0D89E-3EE1-4D8F-9747-1D65A6341567.PDF

So bottom line with a severely undervalued play (by any standard), a ten times production increase in sight, with smart money like e.g. Soros buying large chunks in to this case and with reserves and production sites surrounded by large oil plays aggressively expanding their production like e.g. Petro China expanding in the very area you are developing (McKay), and with fantastic opportunities to increase both reserves as well as production within months, you got quite a lot going for you. Don't you agree?

Suthern Pacific Resources homepage
(check out the new corporate presentation)
http://www.shpacific.com/

Southern Pacific to Persue 24.000 bpd expansion of STP McKay

CALGARY, ALBERTA--(Marketwire - April 14, 2011) - Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) is pleased to report that the drilling results from this past winter's McKay exploration program have confirmed sufficient bitumen resources to support Southern Pacific's planned Phase 2 expansion, which is expected to add an incremental 24,000 barrels per day (bbl/d) of bitumen processing capacity to the 12,000 bbl/d STP-McKay Thermal Project currently under construction. Resource Update From December 2010 to March 2011 Southern Pacific drilled a total of 38 coreholes, focused primarily on the eastern side of its existing STP-McKay project area. This brings the total corehole count to 88 inside the existing 10.5 square mile project area, which provides more than adequate delineation of the resource to understand its characteristics. The Company is pleased to report that the recent drilling confirmed the high quality of the bitumen resource identified from previous drilling programs, particularly on the east side of the project area, where the project area was less delineated. The significant feature of the STP-McKay McMurray oil sands is that they are largely continuous, both laterally and vertically, and are free of lean zones or shale barriers. The east side of the project area has now been delineated to a density that is suitable for developing well pad locations and trajectories and will exceed minimum requirements for an expansion application. GLJ Petroleum Consultants Ltd., Southern Pacific's independent reserves evaluators, are currently updating the Company's reserves and resource estimates at McKay. Results will be available after the fiscal year end (June 30, 2011). Expansion Plans Based on the drilling results at McKay, Southern Pacific has decided to proceed with expansion plans designed to add 24,000 bbl/d of bitumen processing capacity to the project, bringing the total design capacity to 36,000 bbl/d. Southern Pacific estimates a total producing project life of over 20 years, based on the discovered bitumen to date, which the Company believes will provide an optimal project life to maximize the project value. Wabiskaw Pilot Project The existing STP-McKay project area includes another formation containing significant quantities of bitumen in place that will not be recovered using typical steam assisted gravity drainage ("SAGD") techniques. The Wabiskaw zone is above the McMurray formation, separated by about 10 metres of shale and shale-y sand. The zone contains high quality bitumen in a clean sand that averages six to eight metres thick, which is too thin for typical SAGD. The Company has recognized the existence of this zone as an incremental potential resource since the original coreholes were drilled within this project in 2009. Southern Pacific has now completed a significant amount of technical work on the Wabiskaw and believes bitumen is recoverable through thermal recovery taking advantage of conductive heat generated from SAGD chambers below in the McMurray formation, and cyclic steam stimulation ("CSS") in single leg horizontal wellbores drilled into the Wabiskaw. The Company views this opportunity as a means to extract additional bitumen with minimal additional capital or energy input. Southern Pacific expects to drill a horizontal observation well into the Wabiskaw zone in the fourth quarter of calendar 2011 to evaluate the concept from one of the first two well pads constructed in STP-McKay Phase 1. Provisions have already been made to accommodate additional Wabiskaw wellbores on the first two well pads that have already been constructed. An updated corporate presentation is now available on Southern Pacific's website (www.shpacific.com) that provides additional information and illustrations of the corehole results, expansion plans and Wabiskaw pilot project. http://www.shpacific.com/en/news/stp-2011-04-14.pdf

Southern Pacific Commences SAGD Drilling at STP-McKay, Appoints Director

• drilling has commenced on the first steam-assisted gravity drainage (SAGD) well pair at the Company's STP-McKay Thermal Project • Precision Drilling rig #199, a slant hole drilling rig, will be on site for approximately five months as it drills 24 individual wellbores, which will comprise the first 12 SAGD well pairs for the project. STP-McKay Phase 1 Construction • Southern Pacific completed construction of a 29 km all-season access road into the plant • majority of the earth works have been completed for the Central Process Facility (CPF) and the first two SAGD well pads • Southern Pacific constructed a 14 km, 8-inch diameter natural gas pipeline to the CPF that will be used to transport natural gas to fire the electricity/steam cogenerators and steam generators. • Source water wells and pipeline tie-ins have also been completed. • Over 90% of the major equipment purchase orders have been issued and the total cost spent to the end of February is approximately $100 million, with another $118 million of project costs fixed. • The total project cost estimate, including contingency, remains at $450 million. STP-McKay Phase 2 Expansion Plans • completed drilling 38 core holes in and around the STP-McKay project area. The core holes were drilled on time and under budget • The core hole data is currently being interpreted and results from the program are expected to be released within the next 30 days. Southern Pacific will use these interpreted results to finalize the size and timing of the STP-McKay Phase 2 expansion plans STP-Senlac Thermal Project Update • the STP-Senlac Thermal Project in southwest Saskatchewan, continues to operate smoothly • six month production rate averaging 4,150 barrels per day. • The first of two new SAGD well pairs, comprising Phase H, will be placed on production by the end of March, with the second well pair expected to come on stream about two weeks behind the first pair. • Consistent with Southern Pacific's plan, these wells should assist in maintaining the Senlac production levels between 4,000 - 5,000 bbl/d on an annual basis. • The Company expects to drill Phase J, which consists of three SAGD well pairs, in the third quarter of calendar 2011. http://www.shpacific.com/en/news/stp-2011-03-23.pdf

Maxell about Oil Supply destruction

It's really beginning to heat up now and more and more people are starting to talk about $200 dollar oil. Just to keep things in perspective this is what Senior Oil analyst George Maxwell said in September 2008. Below is what then he expects as not destruction of oil demand is the key worry but rather the constant, brutal and ever increasing destruction of oil supply kick in. Remember production peak and decline is one thing yet another and even more aggresive force then is the peak and future decline of oil exports from oil producing countries. As events in the Arab oil producing world now unfolds supply decline now is escalation due to political turmoil and unrest putting even more contraints on margins as it seens now oil is taken also from the stratecic reserves. That all spell less or no margin from that particualte source going forward.

•"We will see $300 a barrel -- or roughly $250 in today's dollars -- because oil supply will be so short. "
•"That ($300 oil) will be in 2015."
•"But even earlier, around 2010, more than 50% of the non-OPEC world will have peaked in its production of oil so the dependence on OPEC will become extreme. That will give OPEC a chance, I'm afraid, to lift prices rather more quickly on us than they are doing today."
http://seekingalpha.com/article/94294-charlie-maxwell-to-barron-s-300-oil-is-inevitable

Forbes: Well, it sounds like two very good ideas coming against the background you've outlined. Do oil sands have a more prolonged or similar kind of time frame over which to bring oil to market from them?

Maxwell: Well, it's a good point The average oil company, producing conventional oil in the way that we normally do, by drilling and pumping it out, will peak around the mid-to-late teens, along with the rest of the world, But the oil sands companies average about 2035 to 2045 for their ability to continue producing incremental barrels. So, they keep going for many, many years after the peak has been reached here in the teens by all the other conventional producing companies.

Forbes: I see. So they've got both a shorter-term set of circumstances in their favor and they're going to in fact benefit by bringing product to market down the line while building capacity?
Maxwell: That's correct. And they should become very much more valued by the market, because they will be relatively alone in their ability to bring new barrels to market
http://www.forbes.com/2010/09/13/suncor-energy-oil-intelligent-investing-cenovus.html

T.STP

Notera att STP nu flera dagar stängt över 1.90 nivån. Väl sedan över 2.01 nivån kommer det att kunna hända saker.

Fundamenta som triggar detta företag specifikt såväl som geopolitiskt finns så det räcker dessutom.

Så givet denna exeptionellt intressanta historia så bör man nog se till att ta in tillräckligt med STP för att kunna maximera sin portfölj när det nu snart börjar att dra iväg på riktigt allvar.

Jag tror att man i så fall max kan ha lite drykt tre månader på sig innan vi som nästa mål närmar oss C$3 nivån...till att börja med.

T.STP

Sure there are fantastic and truly unique fundamentals relative STP and sure geopolitical events as well as Peak Oil points at much higher oil prices going forward.

Oil demand destruction USED to be the real worry. What now is starting to daunt people is in fact that there are clear signs of SUPPLY destruction. As an example the Strategic reserves has to be used in order to compensate from Libyan oil shortages as there is not excess oil production to compensate for this. Thus strategic reserves margin will decrease and question is in that margin again ever will be filled? Then as distortions on the supply side affects prices in a much more aggressive way than what is the case with demand destruction we're in for a ride.

True this fear of demand destruction has been with us for a while, granting low oil prices. It’s been like a shotgun to the head “hike oil prices more and you’re dead”. In fact oil demand has decreased in relative term in the OECD economies all the way back since the very first oils chock in the 70ties. Sounds like kinda we need less and less oil ten as our developed world economies becomes more efficient and environmental friendly?
Well give this argument a second thought and you realize what has happened since then is that basically all of the OECD production has been moved abroad to low cost countries in the eastern European block and primarily Asia (spell China). What’s then key is that enormous amounts of energy is required to first move all commodities to these new and producing economies and the vast amounts of recourses are needed in order to schlep the ready made goods, from the underdeveloped world to the developed OECD countries.

Thus what seemed to be a reduction of oil in the OECD was in fact cased by the fact all production in those countries now have been outsourced to these new and producing economies at the same time as an ever increasingly ww web of transportation then is required in order to keep this system going. Then you also need to realize - the energy efficiency is quite different for a worker working in a OECD facility vs. a worker working in a developing production site. A fair estimate is that the same type of job done in a developing production site thus requires some 4-5 time as much energy as is the case in a developed world industrial plant. Consider this and this idea about less oil dependence in the OECD world really is nothing but a cute idea.

Oil producing countries will produce less oil as Peak Oil unfolds and at the same time they will increase consumption domestically thus exports of oil from oil producing countries will go down very aggressively from now on. Remember that OPEC together with Russia and Mexico in fact is a twice as large oil consumption market as is China today. As consumers in oil producing countries pay a very different and significantly lower oil price in their own countries there are sure then not any real incentives to save oil to any great extent and at the same time this idea about demand destruction due to higher world oil market prices will not happen at all to the same extent as will be the case for the rest on the non oil producing world.

Then read the following and understand that also regarding another matter "this time it's different". With QE excess liquidity pumped not only pumped out of the system, that liquidity will not only create inflation increased commodity prices of all sorts it also needs to be placed somewhere. And that somewhere will be hard assets. Even if there will be less oil available on the world markets and as oil really is the engine for our economy oil will be much more valuable and considered the real currency going forward.

Gold and silver may protect your investment against currency devaluations but oil will not only protect your worth but in addition increase in value in relative terms.

Then the the QE programs will continue as the level of debt all over the world in every aspect of our economy is such that there is no option but to continue pushing that excess money out in the system.

So add up the real true fundamentals relative STP, oil and this is a great story. Then add the QE story as well and this play will reach valuations nobody today even can comprehend.

"So here we are, waiting for the “event” which triggers a loss of confidence across the system. Will it be a sovereign, a US state, a bank, QE3 or QE5, the oil price, Chinese fixed investment, a false flag event (a convenient distraction/excuse) or a revolution?

There is no solution whatsoever until there is a MAJOR crisis
http://intheendwerealldebt.blogspot.com/2011/02/there-is-no-solution-whatsoever-until.html

Then also consider the environmental aspects of this globalized economy and you realise what an absolute no gainer it in fact is. Really it's all about moving jobbs to where you need to pay the least wages. Nothing else.

"China is also not energy efficient, producing a third more carbon dioxide emissions per unit of energy than the United States, largely because it relies on coal for two-thirds of its total energy needs.

"There are more coal plants in China today than there are in the United States, the U.K. and India combined," Mr. Rubin and Mr. Tal write. At its current rate of one new coal plant per week, it will see 30 more coal plants built before the "green" Olympic games this summer. Plans call for 560 new coal-fired generation plants by 2012.

"You can't have the OECD making a long-term commitment to decarbonize their economy and have the developing world ? rapidly carbonize their economies," Mr. Rubin said. "It makes absolutely no sense.

The savings the [OECD] makes on their own emissions are going to be dwarfed by the rate of growth ? in the developing world."
http://www.worldtradereview.com/news.asp?pType=N&iType=A&iID=179&siD=3&nID=40188&pPage=Y

STP

We have some resistans at 1.9 as well as 2.01. We just need two days of closing above these levels and we'll be charging forth like nothing you have seen before. Nothing goes straight upp without any sort of consolidation, strength gathering and what have you.

However, nobody that has any type of insights in this play says this isen't a great opportunity for further valuation improvements going further as far as SP is concerned.

In the mean time let's compare STP with another oil play, PXX.TO that has roughly the same reseves, same number of shares and within a year roughly the same production. One difference is that PXX today is debt free but if all goes as planned with McKay phase 1 STP also will be debt free by 2015.

Now compared with STP PXX today has more than four times the valuation. Kinda gives you an idea doesen't it about where STPs SP is heading. Can't blaim Soros and his crew for entering in to this play at this particulare moment. Maybye somebody right now is trying to accumulate before the real heavy blast takes us to much higer SP levels. Time sure is starting to run out if you want to accumulate at these levels.

"Soros reports that Quantum held at January 31, 2011, 20,400,000 shares and $25,000,000 aggregate principal amount of 6.00% convertible unsecured subordinated debentures due june 30, 2016 ("Debentures") of the company. The Debentures are convertible in to common shares 465.1163 common shares of the ("Company") shares per $1,000 principal amount of Debentures untill June 30th, 2016. The shares and debentures, if converted, held by Quantum represents in aggregate approximately 9.18% of all outstanding shares."
http://www.sedar.com/CheckCode.do;jsessionid=00008HupafOULoEP60UF88AJxka:-1

This as now both macro and geopolitical events support much higher oil prices in the future than anticipated by most analysts. Or anybody here that sincerely belive the situation as it now has developed in the Arab world will be a quick fix?

Brent $/barrel 114,58
WTI $/barrel 99,49

In addition we now also of course have some STP specific events to strenghten our case:

- Senlac Phase H (2 SAGD well pairs) expected to be producing in March 2011
- Red Earth, Q2-2011, restart pilot project. Objective is to produce 10.000 bpd.
- Results from this winter core holes drilling program
- McKay Phase 1 construction updates. Production of 12.000 bpd to start Feb/March 2012
- McKay Phase 2 application to be submitted during summer 2011. Already a 10.000 bpd opportunity at McKay 2 identified but this may, after this winter core hole drilling program, to grow up to be a 20.000 bpd opportunity.
- Senlac Phase J possibly in October 2011.

Then we have these guys lurking in the shaddows.

"The deal gives PetroChina 60 percent control of Athabasca Oil Sands Corp.´s Mac Kay and Dover oil sands deposits in Alberta. The yield from the two deposits is likely to be modest when compared with total estimates of about 175 billion barrels of oil held in the sands, the largest after Saudi Arabia.

Industry analysts said China would likely seek to expand its Canadian tar sands portfolio."

http://www.upi.com/Business_News/Security-Industry/2010/01/05/China-buys-into-Canadian-tar-sands-exploitation-project/UPI-22041262732184/#ixzz1DYFkW8BQ

So bottom line with a severely undervalued play (by any standard), with smart money like e.g. Soros buying large chunks in to this case and with reserves and production sites sourrounded by large oil plays agressively expanding their production like e.g. PetroChina expaning in the wery area you are developing (McKay), and with fantastic opportunitys to increase both reserves as well as production within months, you got quite a lot going for you. Don't you agree?

Here is what BMO Capital markets has to say about this play:

"We beleive the market is still overestimating the levels of execution risks associated with this story and beleive that the company's ability to demostrate ongoing construction progress at McKay, along with additional exploration and a potential regulatory application at Mckay, could act as further cathalysts for the shares in 2011."

"Our unrisked net asset value estimate is nearly $6/share, which we beleive represents the real upside potential of the shares as the company works to "de-risk" the value of it's oil sands recourses through development"

Comment - BMO is definitely using a VERY conservative Oil price of $90 in 2015. Remember that this is only 4 years from now. Net asset value should be adjusted accordingly if you believe that oil will be higher than $90 in 4 years.
http://research-ca.bmocapitalmarkets.com/documents/40E0D89E-3EE1-4D8F-9747-1D65A6341567.PDF

STP

STP Analysis - Byron Capital Markets (Jan 12th 2011)
Rating: Strong Buy
Target price C$3.75

http://www.byroncapitalmarkets.com/reports/Southern%20Pacific%20Resource%20Corp%20%20Note%20(01-12-2011).pdf

PS, Note Byron Capiltal base their analysis on an estimated WTI oil price for the year 2011 of $80 and that neither McKay phase 2 nor Read Earth are included in the analysis.

STP

Given where oil now is trading, just imagine what could happen to this company if, by any chance, STP would be able to not only get some positive results from that Read Earth pilot project (supposed to start by the end of Q2) but also could as that project progresses, would be able to indicate somehow how production from that site could be ramped up going forward.

Sure STP already have indicated that their objective here is to get a production in the future from Read Earth close to some 10.000 bpd, but not many seems to have taken that in to any consideration as of now, at least not valuation vice.

Not many it seems following STP e.g. analysts and the like seems to have noticed this Read Earth opportunity, or at least so far they have not included that project to any greater extent in their estimates, it seems.

Thus ANY positive outcome from that project would then imply a lot as far as STP valuation is concerned. Add then now also the price of oil and it's even clearer this might have a real inpact on the market.

In the meanwhile we all hope the winter core hole drilling program is progressing well and that the schedule related to production at McKay 1 as well as related to the application relevant for McKay 2 is moving forward as expected.

A well developed McKay project with future growth opportunity must be something worth while considering for the neigbouring PetroChina?

As we speak: we have WTI above $101 and Brent above $115. Now that's as we have discussed here earlier oil prices on new levels that indicates they may have a a long ways to go uppwards from here..

STP

As more and more people really will begin to understand the issue with Peak Oil, the fiat currency debacly, the dire inflationary trend, the geopolitical challenges (e.g. like Mexico that used to be one of the largest exporter of oil to the US soon to become a net importer of oil), the immence risks and humongeous costs associated with off shore deep sea drilling not mentioning the geopolitical risks in places like e.g. the middle east, Venezuela and Nigeria, they not only want but need to invest in the Canadian oil sands.

The really big guys, the investors "in the know" like e.g. PetroChina and Soros have started to move and soon they´ll move even more aggressively in to the canadian oil sands and sure enough when that starts to sink in also with the broader investor community, well that's then when the real frenzy will begin. Thrust me - we have seen nothing yet!

There aren´t that many plays around in the oil sector able to radically improve not only their reserves but also ramp up their future production. Definately STP is one amongst these very few. Thus the future belongs to STP, Mr Lutes and his great management team.

"The deal gives PetroChina 60 percent control of Athabasca Oil Sands Corp.´s Mac Kay and Dover oil sands deposits in Alberta. The yield from the two deposits is likely to be modest when compared with total estimates of about 175 billion barrels of oil held in the sands, the largest after Saudi Arabia.

Industry analysts said China would likely seek to expand its Canadian tar sands portfolio."

http://www.upi.com/Business_News/Security-Industry/2010/01/05/China-buys-into-Canadian-tar-sands-exploitation-project/UPI-22041262732184/#ixzz1DYFkW8BQ

Future now for STP sure looks bright to say the least.Any STP valuation below C$4 is nothing but ridiceoulous.

That is as long as not a big investors starts trying to manipulate STP SP in order to try to get in real cheap.

All the best to all longs and now we look forward to great news regarding e.g. the Senlac new wells, Read Earth pilot as well as the results from this winters core hole drilling program a new application by summer and procuction at McKay phase 1 early next year.

Soros has invested close to 10% in STP

"Since it´s report filed under the early warning requirements on Janyary 10th, 2011, Soros reports that Quantum, an investment fund that Soros manages, sold 3,137,600 common shares ("Shares") of Southern Pacific Resource Corp. (the "Company") in January 2011. The sale represents a net decrease of 0.9% of Quantums shareholdings procentage since it´s last filings, calculated as described below."

"Soros reports that Quantum held at January 31, 2011, 20,400,000 shares and $25,000,000 aggregate principal amount of 6.00% convertible unsecured subordinated debentures due june 30, 2016 ("Debentures") of the company. The Debentures are convertible in to common shares 465.1163 common shares of the ("Company") shares per $1,000 principal amount of Debentures untill June 30th, 2016. The shares and debentures, if converted, held by Quantum represents in aggregate approximately 9.18% of all outstanding shares.

As of the end of January 2011, neither Soros nor Quantum owned, directly or indirectly, nor exercised control or direction over, any shares of the company other than as disclosed above."

"The securities where aquired by Soros for investment purposes Quantum may from time to time, depending on market and other conditions, increase or decrease its holdings of securities of the company"

http://www.sedar.com/CheckCode.do;jsessionid=00008HupafOULoEP60UF88AJxka:-1

STP

Chineese hungry for energy. Petro China is as we all know neigbouring STP after their aquisition of Athabasca Oil one year ago.

PetroChina Co., the country’s biggest energy producer, agreed to buy a 50 percent stake in Encana Corp.’s Cutbank Ridge gas assets in Canada for C$5.4 billion ($5.4 billion) in its largest overseas acquisition.
http://www.bloomberg.com/news/2011-02-09/encana-sells-5-44-billion-cutbank-stake-to-petrochina-under-joint-venture.html

The deal gives PetroChina 60 percent control of Athabasca Oil Sands Corp.'s Mac Kay and Dover oil sands deposits in Alberta. The yield from the two deposits is likely to be modest when compared with total estimates of about 175 billion barrels of oil held in the sands, the largest after Saudi Arabia.

Industry analysts said China would likely seek to expand its Canadian tar sands portfolio.

Read more: http://www.upi.com/Business_News/Security-Industry/2010/01/05/China-buys-into-Canadian-tar-sands-exploitation-project/UPI-22041262732184/#ixzz1DYFkW8BQ

PetroChina International Investment Company Ltd. (PTR-N109.75-3.44-3.04%) will buy a 60 per cent stake in privately-owned oil sands firm Athabasca Oil Sands Corp. in a deal that oil patch insiders see as a key vote of confidence in Alberta's massive bitumen reserves.

The $1.9-billion deal will give PetroChina a large stake in a company whose assets contain about five-billion barrels of bitumen.

“Oil sands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market,” Athabasca chairman Bill Gallacher said in a release. Athabasca “therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada.”

Rumours of the impending deal pushed up shares in several small junior oil sands companies, including UTS Energy Corp. (UTS-T1.790.1710.49%) and Connacher Oil and Gas Ltd. (CLL-T1.00----%) , on a belief that major outside investment interests are once again prepared to invest in the oil sands.

“It's great news for the oil sands business. It shows that there are still large, sophisticated, deep-pocketed companies out there prepared to write big cheques,” said one Calgary banker.

Athabasca made an application last year to build two pilot oil sands projects that will use technology known as “steam-assisted gravity drainage” to exploit the crude on its lands. Unlike oil sands mines, SAGD operators use underground injections of high-pressure steam to coax the thick bitumen to the surface.

The company plans to apply for its first commercial project, a 150,000 barrel-per-day development in MacKay River, near the end of this year. It expects to begin production of a first, 35,000 barrel-per-day, phase in 2014.

The company estimates that it can turn a profit on its projects with crude prices at $50 to $60 (U.S.). Corporate documents point to potential future production from the company's lands of 500,000 barrels per day.

The company raised $400-million in secured debt last July, through a financing led by GMP Securities L.P. and Lehman Brothers Canada Inc.

http://www.theglobeandmail.com/globe-investor/petrochina-buys-60-stake-in-oil-sands-project/article1270720/

Saudi Arabia's Oil Reserves May Be Overstated By 40%

Fox News
http://www.youtube.com/watch?v=NMof8tiDNVg&feature=player_embedded

och här uppmärksammas detta även i dagens svenska media:
http://www.dn.se/nyheter/wikileaks/saudiska-oljereserven-kan-vara-overdriven

Detta är visserligen nu ingen nyhet för andra än den breda allmänheten. Hur det eg ser ut gällande Saudi Arabiens oljeproduktion och utmaningarna de står inför kunde med all önskvärt tydlighet beskrivas redan för nu snart mer än 6 år sedan när nu framlidne Matt Simmons efter flera års analyser av den Saudiska statistiken kom ut med sin bok "Twilight in the Dessert". Här en review av "The Oil Drum" från när boken kom ut på marknaden:
http://www.theoildrum.com/classic/2005/06/twilight-in-desert.html

Och här sedan själva boken:

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy - Matthew R. Simmons
http://www.amazon.com/Twilight-Desert-Coming-Saudi-Economy/dp/047173876X '

Så bevisligen visste framlidne Simmons vad han talade om och han låg här mer än ett decennium före en bredare allmänhet.

Så lyssna därför nu extra noga vad han sade bara några dagar innan han dog gällande katastrofen i den Mexicanska Gulfen:
http://www.youtube.com/watch?v=DwX9RXFRJD4&feature=fvw

En annan oljenestor Charles Maxwell har sedan många år beskrivit annars hur prisutvecklingen för olja kommer att se ut iom att tillgången nu minskar kommande år och decennier. Vi närmar oss nu i rask takt det Maxwell definierat som fas 3, dvs "a surge in oil prices".

"Maxwell forecasts $180 oil by 2015, and $300 a barrel by 2020"
http://intheendwerealldebt.blogspot.com/2008/11/elefanten-i-vardagsrummet.html

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks?CMP=twt_fd

STP

Quarterly Results Dec 31, 2010
Lots of very good stuff in this report indeed. So much in the pipe for this play and the way management progresses with the company is quite impressive.

Shorter term these items sure are of interest:

"The Phase H well pairs encountered high quality reservoir with the total contacted net pay per well exceeding the wells that were drilled to the north in Phase G. The three wells in Phase G achieved over 1,400 bbl/day each of peak oil production and have produced over 500 thousand barrels ("Mbbl") apiece since being placed on production in June 2009. Eighteen months after startup all three Phase G wells are stil l producing at rates greater than 750 bbl/day, with expected ultimate recovery of over 1.2 millon barrels ("MMbbl") per well pair. The two Phase H well pairs are expected to add similar amounts of heavy crude to STP-Senlac by April 2011"

and then also:

"Southern Pacific has also finalized it preliminary testing program for its newly acquired STP-Red Earth project. Plans are to start up the 1,000 bbl/day pilot project in April 2011 and commence cyclic steam injection on the existing two horizontal wells and one existing vertical well. Different wellbore configurations and injection schemes will be tested on the pilot project, with the intent to obtain as much technical knowledge of the reservoir and recovery methods as possible over the planned five month testing program. At the completion of the pilot testing program, results will be interpreted and a go forward development plan will be prepared."

As we all know longer term objective with Red Earth as stated from earlier communication from the comapany is to get Red Earth in to a 10.000 bpd production site. That sure then would be a nice add on as this project seems to be entierly under the radar as far as analysts are concerned. No one even mention this kind of production estimate as an option as they seem 100% fucused now on McKay phase one.

Then there are the results of this winters core hole drilling program that will be relased sometimes during this coming spring and then the application for McKay phase 2 submitted in September.

Then first production at McKay phase 1 Q1 next year.

Potential upsides are Read Earth and size of McKay Phase2 opportunity.

Given an oil price now at or about 100 per barrel future earnings for STP are bound to improve even without any production incrementals going forward. Given both short term and indeed longer term, production will increase (already by April we could have as much as a close to 100% production increase), well then the outlook looks even brighter.

http://shpacific.com/en/news/stp-2011-02-08.pdf

Om Investeringar

Det är inte långt tills dessa att vi kommer att se Zinkpriset igen upp på nivåer över $1.5 och närmare $2.Dvs mer än en dubblering från dagens (2011-01) nivåer. Den bakomliggande fundamentan som detta antagande är baserat på finner ni mer om nedan.

Samtidigt har vi nu uppenbart nått ett produktions tak gällande sk konventionell olja dvs den olja som ligge nära till hands, är lättflytande , av bra kvalitet och som är enkel att ta upp.

Kvar finns mängder av olja men detta är olja av sämre kvalitet, olja som är mer otillgänlig och som kommer att kräva betydligt mer abeta att få upp och raffinera.

Idag är det dels marginalkostnaden som kommer att avgöra hur mycket av denna olja som kommer att kunna tas upp. För att ens tänkan på att påbörja dessa nya projekt kommer det atty krävas ett minimipris på oljan på över $100/fatet. Vid lägre priser kommer det att bli olösamt och inga nya projekt kommer att initieras.

Men tillgängligheten av olja kommer även att drivas av det faktum att allt mer olja konsumeras av de länder som producerar oljan och med detta kommer nu exporten att falla dramatiskt.

Betänk att OPEC tillsammans med Ryssland och Mexico redan idag konsumerar två gånger mer olja själva jämfört med Kina.

Enligt Jeffry Browns sk "Export land Modell" kommer väldens idag fem största olje exportörer, som tillsammans exportera ca 50% av all världens olja, att ha minskat sin oljeexport med hälften redan om 10 år för att om ca 20 år i princip helt ha upphört att exportera.

Lägg till allt detta det faktum att oljan mer och mer kommer att hanteras som en geopolitisk resurs och med detta kommer tillgänligheten för olja på världsmarkanderna att minska även pga orsaker relaterade till detta.

Succesivt kommer därför det framtida oljepriset nu förskjutas uppåt och enligt analytiker som den erfarne olje nestorn Maxwell kommer om några år ovanstående miniminivå för ett fat olja ligga på ca $150 fatet för att ibland peaka upp till högre nivåer. Maxwell anger dock ett framtida prisintervall för olja på mellan $150 -$300 nivån.

Viktigt för investerare är sedan vad som generellt sett händer på finansmarknaderna och centralbankernas agerande.

Det formidabla skuldberg som idag i princip alla OECD länder inklusive dess banker sitter på är just ...formidabel. Samtidigt som under senaste finans och bankrisen den politiska lösningen varit att trycka mer pengar och tävla om att nedvärdera sina valutor.

Om det någonsin funnits en bubbla på markanden är detta idag obligations markanden. I stort setta alla privat investerare har redan slutat köpa statspapper och kvar är de egna ländernas centralbanker som ihärdigt köper sina egna papper för ny tryckta pengar. Resultatet kommer att bli succesivt lägre pappersvalutor, högre räntor och massiv inflation.

För riskbenägna är det endast därför reala tillgångar exl fastigheter dvs råvaror som gäller.

Givet kommande räntehöjningar och länders usla statsfinanser som endast kommer att kunna finansieras genom egna köp av egna statspapper i allt högre grad och att det hela kommer att sluta i att tom stater ställer in sina betalningar blir garanterat konsekvensen att köpa "säkra" stats och kommun papper en av de sämsta affärer man kan göra.

Att hålla cash givet det race av valutanedvärdering som nu pågår i världen är antagligen lika uselt. Kan vara bra kanske att känna till förresten att US dollarn tappat ca 95% av sin köpkraft sedan FEDs införande 1913.

Vi har nu framför oss en tid som kommer att kännetecknas av exeptionellt hög inflation, stora valuta nedstkrivningar och stigande räntor.

Det kommer att bli trångt, mycket trångt in i alla former av råvaror om inte alls särdeles lång tid.

De aktörer som inte bara har bevisade reserver i backen utan dessutom framöver klarar att öka dessa kommer att bli investerares enda räddning.

Glöm de stora oljebolagen vars reserver och produktion nu ständigt istället kommer att minska. Gäller fö de flesta stora befintiga råvaruaktörer runt om i världen i takt med befintliga resurser och produktion av vad det än gäller i form av råvaror kommer att minska och detta bortfall ej kunna kompenseras av ny kapacitet i tillräckligt hög grad.

I stort sett endast de mindre bolagen kommer att vara i stånd att kunna öka sina reserver. Medans stora oljebolag och andra större råvarubolag med detta redan kan sägas vara insolventa.

Som investerare väljer jag av denna anledning att endast investera i dels politisk stabila regioner (med minimal risk för nationaliseringar) och reala tillgångar.

Jag argumenterar även för att den verkliga valutan i realiteten utgörs av olja - utan olja ingen tillväxt och utan tillväxt faller vårt sk fiat currency system.

STP

Remember before the financial crisis when STP shares were up actually over $4. Then all of a sudden share prices crashed and ended up actually at the 0.4 level. What happened? Well we got hit by a liquidity crisis and there was no money to be found nowhere to get projects funded and in that process a "revaluation" of exploration and junior plays happened.

Before STPs current CEO Mr. Byron Lutes got on board all you needed to show was for more or less was land possessions. So first priority was to purchase land and only with these possessions you could get a fairly decent SP valuation. Then second priority was to explore these possession e.g. core hole drilling and work towards getting some proven oil reserves. So you where in fact able to get a very decent SP valuation and still not having earned a single buck out of own production.

That then all changed with the liquidity crises and that model of valuation simply got trashed. So with Mr. Lutes on board a new strategy was executed now it was all about getting in to production mode ASAP by focusing on smaller areas in to production rater that flying all over the pace spending mode on e.g. core drilling etc. That then was a controversial strategy and some analyst actually left analyzing STP. These people are now however back on board again.

So given these financial turmoil times you today really need production and own cash flow to finance you development and exploration. If you don't have it you'll likely get trashed. So now with STP developing from a land possessions play to a genuine and in fact experienced producer (with the acquisition of Senlac that in fact was a immensely important move ) we have seen STP move from
.04 to now close to $2.

By now everybody understand STP has the necessary recourses, skill, experience, permits etc to become real successful. Then now in that process all other not yet developed STP land possessions and opportunities will be upgraded valuation vice as well.

Then personally and as Peak Oil unfolds coming years and decades I would not be surprised if not yet another valuation model get in play. As fiat Currency’s gen more and more debased and as oil becomes increasingly valuable then why would anyone in their right mind want to pump up all that oil that just gets more valuable the longer you wait and as compensation for that valuable oil that you give to the market you get fiat currency that just keeps getting more and more debased the longer you wait? By then again it's not unlikely that company’s able to survive with own production will try to just keep their reserves as their reserves valuation keeps increasing the longer they wait getting it up from the ground.

One king of Saudi Arabia expressed something similar when he stated something along these lines just recently:
"better we keep the oil in the ground for coming future generations."
http://m.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/what-does-king-abdullah-know/article1645963/?service=mobile

Conclusion - what a blessing STP CEO Mr. Lutes has been for this company and the way he and his management team has worked towards getting STP in best shape possible. Future for STP now looks brighter than ever.

STP.V BMO analysis

"We beleive the market is still overestimating the levels of execution risks associated with this story and beleive that the company's ability to demostrate ongoing construction progress at McKay, along with additional exploration and a potential regulatory application at Mckay, could act as further cathalysts for the shares in 2011."

"Our unrisked net asset value estimate is nearly $6/share, which we beleive represents the real upside potential of the shares as the company works to "de-risk" the value of it's oil sands recourses through development"

BMO is definitely using a VERY conservative Oil price of $90 in 2015. Remember that this is only 4 years from now. Net asset value should be adjusted accordingly if you believe that oil will be higher than $90 in 4 years.

http://research-ca.bmocapitalmarkets.com/documents/40E0D89E-3EE1-4D8F-9747-1D65A6341567.PDF