Southern Pacific Resource Corp · OTC:STPJF
Southern Pacific Resource — Investor Presentation (May 2012)
31 slides from Southern Pacific Resource's investor presentation, May 2012
Slide 1: Corporate Presentation May 2012
CORPORATE PRESENTATION MAY 2012
Slide 2: Reader's Advisory
Reader's Advisory Forward-looking Statements: References to "contingent resources" or "resources" in this presentation do not constitute, and should be distinguished All statements other than statements of historical fact may be forward-looking statements. These statements relate to from, references
Slide 3: The Southern Pacific Strategy
The Southern Pacific Strategy FOCUSED: We develop and produce bitumen and heavy oil using horizontal wells and steam. INDEPENDENT: We control and operate 87% of our lands, allowing us to develop at a pace that fits our objectives. DEMONSTRATED EXECUTION: We have solid operations and construction exp
Slide 4: STP Overview
STP Overview Trading symbol TSX:STP Shares outstanding - basic 341 million Shares outstanding - fully diluted 365 million Average daily trading volume (Last 6 mo avg.) 1.5 million Market capitalization (Mar. 31, 2012) $560 million Working capital (Dec. 31 2011) $89 million Long-term debt (Dec. 31, 2
Slide 5: Strategic Assets
Strategic Assets • Alberta: 436 sections of oil sands leases with 87% average working interest (242,176 net acres) • Saskatchewan: 12 month average of ~4,200 barrels per day (bbl/d) of 100% working interest heavy oil Refer to slide 2 for cautionary statements about forward-looking information. 5
Slide 6: STP-Senlac Thermal Project
STP-Senlac Thermal Project • STP owned and operated for 2.5 years – Average Production Rate approx. 4,200 bbl/d – Average SOR = 2.1 • Experienced operations personnel • One pad of 2-3 SAGD well pairs drilled per year – Phase K to be drilled in 2012 6 Refer to slide 2 for cautionary statements about
Slide 7: STP-Senlac: Steady Cash Flow for STP
STP-Senlac: Steady Cash Flow for STP $25 $160 $140 $20 $120 $100 $15 Cum. Millions Millions $80 $10 $60 $40 $5 $20 $0 $0 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 Operating Income by Qtr Cum (Reflects period since STP purchased Senlac) • Average net operating in
Slide 8: STP-Senlac: Consistent Netback Pricing
STP-Senlac: Consistent Netback Pricing $120.00 $100.00 $80.00 Heavy Diff Quality/Trans. Diluent $60.00 Royalties Fuel & Power Fixed Opex $40.00 Operating Netback WTI ($C/bbl) $52.13 $48.34 $46.13 $41.62 $41.27 $38.61 $37.94 $37.45 $37.40 $36.63 $20.00 $0.00 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 20
Slide 9: STP-McKay Thermal Project
STP-McKay Thermal Project • 45 km NW Ft. McMurray • 10.5 section project area • 100% STP working interest • Phase 1 nearing completion • Phase 1 Design: • 12,000 bbl/d oil STP Lands • 33,600 bbl/d steam Suncor MacKay SAGD Project • Phase 1 Expansion and Phase 2 (Analog) are in application process ST
Slide 10: STP-McKay Phase 1: Project Overview
STP-McKay Phase 1: Project Overview Future well pairs fully approved Ultimately, entire project area will be delineated with SAGD well pairs 12 SAGD well pairs successfully drilled through high quality 90 delineation wells, reservoir 76 cored within project area 29 km all season access road & 14 km
Slide 11: STP-McKay Phase 1: Construction Update Central Process Facility (CPF)
STP-McKay Phase 1: Construction Update Central Process Facility (CPF) • Final electrical & instrumentation work is fully underway • 100% of modules and equipment packages on site • Pipelines completed and pressure tested • Siding/roofing on final buildings nearing completion Refer to slide 2 for cau
Slide 12: A Modular Approach To Construction
A Modular Approach To Construction • Modules built in fabrication shops • On site arrival with most internal work completed • Set in place, and connections (electrical & mechanical) are made • Minimized on site welding, insulation, electrical and instrumentation requirements Piperack module Inside m
Slide 13: STP-McKay Staff: Ready for Operations
STP-McKay Staff: Ready for Operations • Project is fully staffed (45 people) • Experience from 12 other thermal projects • Moved to permanent camp facilities and office in January 2012 • Commissioning and “Ready for Operations” preparations underway • Smooth transition from construction to operation
Slide 14: STP-McKay Phase 1: Commissioning Schedule
STP-McKay Phase 1: Commissioning Schedule • Start up of COGEN expected mid May • Remaining equipment will start up as per sequence below • Well Circulation (First Steam) expected by end of June • First Oil: 3 – 4 months after First Steam Refer to slide 2 for cautionary statements about forward-looki
Slide 15: STP-McKay Phase 1: Capital Cost Update
STP-McKay Phase 1: Capital Cost Update • Current total forecast: $440 million • Original budget: $450 million • This includes ~ $15 million of unbudgeted scope changes Spend breakdown estimate as of Mar. 31, 2012 including: (Amounts in Millions) – Additional 40,000 bbl dilbit storage tank – Increase
Slide 16: STP-McKay Phase Expansion
STP-McKay Phase 1 Expansion Total Bitumen Design Capacity Previous Plan Revised Plan Phase 1 12,000 bbl/d 18,000 bbl/d Phase 2 24,000 bbl/d 18,000 bbl/d Total 36,000 bbl/d 36,000 bbl/d • Lower overall capital cost • Faster timing for the next 6,000 bbl/d • Balances reserves and SOR requirements RESU
Slide 17: STP-McKay Phase 1 Expansion: Water Handling Capacities
STP-McKay Phase 1 Expansion: Water Handling Capacities (existing and proposed with Expansion) Current Facility Bottleneck Make Up Water 5% Water Treatment Steam Generation Current 44.0 Mbbl/d Current 37.4 Mbbl/d SAGD Injector Expanded 50.4 Mbbl/d Expanded 50.4 Mbbl/d Produced Water 95% Produced Wate
Slide 18: STP-McKay Phase 1 Expansion: Plot Plan
STP-McKay Phase 1 Expansion: Plot Plan Additional equipment can all be situated on original plant site, minimizing overall footprint Expanded Boiler Expanded Water Additional Steam Feed Water Treatment Generation Additional Cogeneration Refer to slide 2 for cautionary statements about forward-lookin
Slide 19: STP-McKay Phase 1 Expansion: Capital Cost
STP-McKay Phase 1 Expansion: Capital Cost Cost per design Capital Budget barrel ($ million) ($/bbl) Phase 1 Expansion (6,000 bbl/d) $150 $25,000 - costs include inflation escalation & 6 (> 33% decrease) additional SAGD well pairs Phase 1 Existing (12,000 bbl/d) $450 $37,500 - costs include civil wor
Slide 20: STP-McKay: Phases 1 and 2 Layout (circa 2016)
STP-McKay: Phases 1 and 2 Layout (circa 2016) Well pads Phase 2 18,000 bbl/d Phase 1 + SOR = 3.5 Expansion 18,000 bbl/d SOR = 2.8 Continuous pay fairway Original footprint of Phase 2 site • STP-McKay Phases 1 and 2 will have very similar facilities, each with 18,000 bbl/d capacity • Lower SOR on wes
Slide 21: STP-McKay: Excellent SAGD Reservoir
STP-McKay: Excellent SAGD Reservoir Facies Name % Shale Sample Photo Upper Clean F1 2.5% 100% Sand F1 90% F1 80% 70% Bioturbated F2 F2 9.0% Facies 60% 50% F2 40% Lower Clean F3 2.5% Sand 30% F3 20% 10% F3 F4 Interbedded 0% F4 20.0% Sand Phase 1 Phase 2 ~ 20 cm • No lean (“thief”) zones on either Pha
Slide 22: Schedule: STP McKay Phase 1 Expansion & Phase 2
Schedule: STP McKay Phase 1 Exp. & 2 Application Approval Engineering & Procurement Phase 1 Expansion Construction First Steam First Oil 6,000 bbl/d Engineering & Procurement Construction Phase 2 First Steam First Oil 18,000 bbl/d Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 • Timing for Phase 2
Slide 23: Southern Pacific's Existing Projects: Defined Growth
Southern Pacific’s Existing Projects: Defined Growth • Forecast represents real projects that are on production, being constructed or in the application process • First Oil Forecasts: • STP-McKay Phase 1: Q4 2012 (12-18 months to full capacity) • STP-McKay Phase 1 Expansion: Q4 2014 • STP-McKay Phas
Slide 24: STP-McKay: Full Bitumen Exploitation Plan
STP-McKay: Full Bitumen Exploitation Plan Conduction and cyclic steam SAGD injector SAGD producer Infill horizontal well Refer to slide 2 for cautionary statements about forward-looking information. 24
Slide 25: STP-McKay: Future Upside
STP-McKay: Future Upside STP-McKay Thermal Potential Phase 3 Expansion area • 100% working interest in Project boundary (environmental background work 59 sections underway) • Will have full-time Phase 1 operations in this area in 2012 • Other operators in area currently in application Phase 2 prepar
Slide 26: STP-Red Earth Thermal Project: Cyclic Steam Stimulation (CSS)
STP-Red Earth Thermal Project: Cyclic Steam Stimulation (CSS) Pilot Project 6 miles • 135 sections (100% WI) • Existing 1,000 bbl/d thermal project 1,000 bbl/d thermal facility • 105 MMbbl of P50 contingent resource • Pilot project tested in 2011 • Data collected being used to design next series of
Slide 27: STP's Upside: Additional Oil Sands Leases
STP’s Upside: Additional Oil Sands Leases Hangingstone 29 coreholes 2D seismic 66 Sections Anzac 14 coreholes These exploration blocks 2D seismic, ERT represent significant upside 75 Sections potential for future in-situ oil Ells 15 coreholes sands projects 2D seismic 50 Sections Leismer & Kirby 29
Slide 28: Summary of STP's Recent Financing Activities
Summary of STP’s Recent Financing Activities $108.4 million financing (STP-McKay Phase 1) $50 million - 1st lien secured bank facility $275 million USD - 2nd lien term loan facility $173 million convertible STP-McKay expected $52 million debentures STP-McKay `First Oil` production: >10,000 bbl/d fin
Slide 29: 2012: An Exciting Year for STP
2012: An Exciting Year for STP • Only new SAGD Project starting up in Alberta for 2012 STP-McKay Thermal • Commissioning of facility and circulation of steam by June 30, 2012 Project • Warm up of wells and convert to production in Q4 2012 • Continues to deliver strong cash flows STP-Senlac • Phase K
Slide 30: Risked Net Asset Value: Solidifying Assets as the Company Grows
Risked Net Asset Value: Solidifying Assets as the Company Grows Jan. 1 20111 June 30 20111 Nov. 30 20111 NAV NAV NAV Reserves Implied Value MMbbl per barrel Total Proved Reserves 2 $254 15% $726 36% $838 120 $6.97 31% Probable Reserves 2 $406 24% $383 19% $878 114 $7.72 32% Possible Reserves 2 $277
Slide 31: Contact Information
Contact Information Suite 1700, 205 - 5th Ave. SW Calgary, AB T2P 2V7 Phone: 403-269-5243 Fax: 403-269-5273 Email: info@shpacific.com www.shpacific.com TSX:STP For more information: Byron Lutes, President & CEO Ron Clarke, COO Howard Bolinger, CFO blutes@shpacific.com rclarke@shpacific.com hbolinger
Southern Pacific Resource — Investor Presentation (May 2012) on 6ix