Southern Pacific Resource Corp · OTC:STPJF
Southern Pacific Resource — Investor Presentation (June 2013)
31 slides from Southern Pacific Resource's investor presentation, June 2013
Slide 1: Full Steam Ahead
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Slide 2: 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 100% of our production and 87% of our lands, allowing us to develop at a pace that fits our objectives. DEMONSTRATED EXECUTION: We have solid oper
Slide 3: STP Overview
STP Overview Common Shares (as of June 3, 2013) Trading Symbol TSX: STP Shares Outstanding - basic 398 Shares Outstanding - fully diluted 422 Insider Ownership - fully diluted 4% Average Daily Trading Volume (last 6 mo avg.) 2.3 million Market Capitalization $203 million 6.00% Convertible Debentures
Slide 4: Strategic Assets
Strategic Assets • Alberta: 402 sections of oil sands leases with 87% average working interest (224,312 net acres) • Saskatchewan: Average of ~3,300 barrels per day (bbl/d) in 2012 of 100% working interest heavy oil 4
Slide 5: STP Reserves and Resources
STP Reserves and Resources (effective June 30, 2012) 344 350 • Consistent growth in all reserve categories over the past 3 years 300 249 • All reserves are split between 250 STP-Senlac and STP-McKay 2009 • Before tax net present value MMbbl 200 2010 (discounted @10%): 120 2011 150 o 1P = $1.0 B 2012
Slide 6: STP-Senlac Thermal Project
STP-Senlac Thermal Project Phase K - 1st Steam Jan 27, 2013 K1 - first oil March 9th K2 – first oil April 24th K3 – first oil expected late June • 100% STP owned and operated for 3 years • Average 2013 Production Rate approx. 3,300 bbl/d • Average SOR = 2.5 • Experienced operations personnel • One p
Slide 7: STP-Senlac: Production History
STP-Senlac: Production History 3,500 3,000 2,500 Average Monthly Oil (bbl/d) 2,000 1,500 1,000 500 0 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Refer to slide 29 and 30 for cautionary statements about forward-looking information. 7 Volumes are field estimates and su
Slide 8: STP-Senlac: Strong Netbacks
STP-Senlac: Strong Netbacks $120.00 $100.00 $80.00 Heavy Diff Quality/Trans. $60.00 Diluent Royalties Fuel & Power $40.00 Fixed Opex Operating Netback $20.00 WTI ($C/bbl) $41.62 $41.27 $36.63 $37.40 $37.94 $37.45 $48.34 $38.61 $52.13 $46.14 $36.10 $39.21 $35.55 $24.97 $0.00 FQ3 2010 FQ3 2011 FQ3 201
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 Design: • 12,000 bbl/d oil • +37,400 bbl/d steam STP Lands • Phase 1 Expansion (6,000 bbl/d) Suncor MacKay and Phase 2 (18,000 bbl/d) are in SAGD Project application process (Analog) S
Slide 10: STP-McKay: Central Process Facility
STP-McKay: Central Process Facility • Facility is running very well • On Time Load Factor since July 1, 2012 is greater than 99% • Generating all electrical power through 2 cogens, a 3rd on standby • Entire water system (treatment, recycle, steam generation) is up and running • Emulsion treating and
Slide 11: SAGD Start-up Phases
SAGD Start-up Phases Circulation Circulation Semi-SAGD SAGD mainly conductive heat, communication steam injection in top steam injection in steam is circulated established well (convective heat), top well, bottom through wellbore, but between injector steam circulation in well placed on not forcibly
Slide 12: High Pressure Steam Stimulation (HPSS)
High Pressure Steam Stimulation (HPSS) • In May, a HPSS was conducted on a single well pair • Objective was to improve horizontal communication between injector and producer • Initial results appear successful, plans to perform additional HPSS’s on other well pairs are underway Clearwater Shale (cap
Slide 13: STP-McKay Well Layout
STP-McKay Thermal Project Well Layout • 12 well pairs capable of SAGD production • 2 of these periodically return to circulation 13
Slide 14: Current Ramp-Up Strategy
Current Ramp-Up Strategy Example SAGD Pair - 2P3 2,500 1 1. Reduced pressure drop across pair 2,000 3 2 Increased sub- 3. 1 cool (liquid above producer) level in 1,500 Rate (bbl/d) steam chamber 3 3 Increased steam 4. injection rates which 1,000 has increased operating pressure 4 Initial production
Slide 15: STP-McKay: Production History
STP-McKay: Production History 1,600 1,400 1,200 Average Monthly Bitumen (bbl/d) 1,000 800 600 400 200 0 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Rates expected to approach permitted capacity (12,000 bbl/d) in calendar Q2 - 2014 Refer to slide 29 and 30 for caution
Slide 16: U.S. Gulf Coast by Rail Market Strategy
STP-McKay: U.S. Gulf Coast by Rail Market Strategy • 5 year deal started Jan. 1, 2013 • 4,500 km by rail • Terminals in Lynton, AB, and Natchez, MS • Reduces diluent requirements • Improved netbacks • Secure access to market • Access to US Gulf Coast sourced diluent 16
Slide 17: STP's Rail Marketing: Strong Netbacks
STP’s Rail Marketing: Strong Netbacks Crude Oil Differentials to WTI $30.00 Expected USGC Netbacks $100.00 $90.00 Expected STP $20.00 Plant Gate Netback $80.00 $10.00 $70.00 $60.00 $/bbl $0.00 $US/bbl $50.00 2009 2010 2011 2012 Q1 2013 Q2-Q4 2013 $40.00 -$10.00 $30.00 -$20.00 $20.00 $10.00 -$30.00 $
Slide 18: STP-McKay Growth: Phases and Layout
STP-McKay Growth: 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 • STP-McKay Phases 1 and 2 will have very similar facilities, each with 18,000 bbl/d capacity • Lower SOR on west side because of very high
Slide 19: STP-McKay Phase 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 (~ 36% less than original construction) additional SAGD well pairs Phase 1 Existing (12,000 bbl/d) $468 $39,000 •
Slide 20: STP-McKay Phase Expansion and Phase Schedule
STP-McKay Phase 1 Expansion and Phase 2 Schedule Application Approval Phase 1 Expansion Engineering & Procurement Construction First Steam First Oil 6,000 bbl/d Engineering & Procurement Phase 2 Construction First Steam First Oil 18,000 bbl/d Jan, 2012 Jan, 2013 Jan, 2014 Jan, 2015 Jan, 2016 Jan, 20
Slide 21: Existing Projects = Defined Growth
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: Oct 2012 (up to 18 months to full capacity) • STP-McKay Phase 1 Expansion: Calendar Q4 2014 • STP-McKay Phase 2:
Slide 22: STP-McKay: Future Upside
STP-McKay: Future Upside STP-McKay • 100% working interest 2012/13 Thermal Project Exploration in 59 sections boundary Program Underway • STP has full-time operations in this area Phase 1 • Other operators in area currently in application preparation or waiting Phase 2 for project approval • Explora
Slide 23: STP's Upside: Additional Oil Sands Leases
STP’s Upside: Additional Oil Sands Leases Anzac Hangingstone 14 coreholes 29 coreholes 2D seismic, ERT 2D seismic 56 Sections 66 Sections Leismer Red Earth Ells 29 coreholes CSS Pilot Project 15 coreholes 2D & 3D seismic (currently shut-in) 2D seismic 36 Sections 135 Sections 50 Sections These lease
Slide 24: Summary of STP's Recent Financing Activities
Summary of STP’s Recent Financing Activities $260 million $275 million 2nd lien notes STP-McKay 2nd lien notes (refinance) STP-McKay construction approval of STP-Senlac Phase 1 purchase $173 million STP-McKay STP-McKay Expansion and $108.4 million convertible `First Steam` `First Oil` Phase 2 equity
Slide 25: Net Asset Value Estimate
Net Asset Value Estimate ($ million) NPV @ 10% NPV @ 8% NPV of Proved Plus Probable Reserves, BT discounted (249 mmboe) $ 1,593 $ 2,009 (1) NPV of Best Estimate Contingent Resources, BT discounted (525 mmboe) $ 959 $ 1,696 (1) December 31, 2012 net debt, net of cash and working capital ($ 385) ($ 38
Slide 26: Fiscal 2013: An Exciting Year Ahead
Fiscal 2013: An Exciting Year Ahead • Only new SAGD Project started up in Alberta for 2012 STP-McKay Thermal • Continued ramp up of wells throughout the year Project • Continue to streamline plant efficiency • Start up operations and logistics for rail marketing arrangement • Continue to deliver str
Slide 27: Experienced Management
Experienced Management Years in the Name Title industry Experience Byron Lutes President and CEO 26 • 12 years in senior management positions • Former VP, Operations at Mancal, VP, Engineering at Hunt Oil and Newport • Held various management positions at both Newport and Suncor including an on- sit
Slide 28: Board of Directors
Board of Directors Name Title Experience David Antony Chairman • 15 years of experience assisting companies in structuring transactions, accessing capital and corporate governance • Currently also a director of Blackhawk Resource Corp., NorthSea Energy Inc., Iron Tank Resources Corp. and Paramax Res
Slide 29: Reader's Advisory
Reader's Advisory Forward-looking Statements: All statements other than statements of historical fact may be forward-looking statements. These statements relate to future events or Southern Pacific Resource Corp.’s (the “Company”) future performance. Forward-looking statements are often, but not alw
Slide 30: Reader's Advisory (continued)
Reader's Advisory (continued) Forward-looking Statements: NON-GAAP MEASURE This Presentation includes references to certain financial measures, as described below, which do not have standardized meanings prescribed by IFRS. Because this measure is commonly used in the oil and gas industry, the Corpo
Slide 31: Contact Information
For more information: Southern Pacific Resource Corp. Suite 1700, 205 - 5th Ave. SW Byron Lutes, President & CEO Calgary, AB T2P 2V7 blutes@shpacific.com Phone: 403-269-5243 Ron Clarke, COO Fax: 403-269-5273 rclarke@shpacific.com Email: ir@shpacific.com Howard Bolinger, CFO www.shpacific.com hboling
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