Southern Pacific Resource Corp · OTC:STPJF
Southern Pacific Resource — Investor Presentation (December 2011)
35 slides from Southern Pacific Resource's investor presentation, December 2011
Slide 1: Corporate Presentation December 2011
CORPORATE PRESENTATION DECEMBER, 2011
Slide 2: Reader's Advisory
Reader's Advisory Forward-looking Statements: from, references to "reserves". "Reserves" are those remaining quantities of oil and gas anticipated to be economically recoverable All statements other than statements of historical fact may be forward-looking statements. These statements relate to futu
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 90% of our lands, allowing us to develop at a pace that fits our objectives. DEMONSTRATED EXECUTION: Solid operations & construction experti
Slide 4: STP Overview
STP Overview Trading symbol TSX:STP Shares outstanding - basic 340 million Shares outstanding - fully diluted 364 million Average daily trading volume (Last 6 mo avg.) 1.2 million Market capitalization (Nov. 30, 2011) $496 million Working capital estimate (Sept. 30 2011) $185 million Total corporate
Slide 5: Strategic Land Position
Strategic Land Position • Alberta: 436 sections (242,176 net acres) of oil sands leases with 87% average working interest • Saskatchewan: 12 month average of ~4,300 barrels per day (bbl/d) of 100% working interest heavy oil 5
Slide 6: STP-Senlac Thermal Project
STP-Senlac Thermal Project (January on stream) • 4,000 - 5,000 bbl/d for the next 10 -15 years • Best in class SOR of 2.0 – 2.2 • Experienced operations personnel • Phase J wells ready for production in January 6 Refer to slide 2 for cautionary statements about forward-looking information.
Slide 7: STP-Senlac: Historical Production
STP-Senlac: Historical Production 7,000 STP Operates Senlac 6,000 Quarterly Average Production Rate (bbl/d) 5,000 Optimal plant throughput range 4,000 3,000 2,000 1,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 PHASE A B C D E F G H J K - AA • STP's
Slide 8: Netback Comparison: Senlac and McKay
Netback Comparison: Senlac and McKay $100.00 Forecast2013 Netbacks at ~ 90% Design Capacity Actual Netbacks from Senlac $90.00 $15.00 $15.00 $15.96 $80.00 $3.10 $2.79 $70.00 $11.08 $6.50 $10.38 $6.22 WCS Differential ($CDN/bbl) $60.00 $8.77 $5.23 $4.71 Transportation ($C/bbl) $5.19 Diluent Cost & Qu
Slide 9: STP-McKay Thermal Project
STP-McKay Thermal Project • 45 km NW Ft. McMurray • 10.5 section project area • 100% STP working interest • Regulatory approvals in place • Phase 1 construction fully STP Lands underway Suncor MacKay SAGD Project • Phase 1 Design: (Analog) • 12,000 bbl/d oil • 33,600 bbl/d steam STP-McKay Thermal Pr
Slide 10: STP-McKay Phase 1: Project Overview
STP-McKay Phase 1: Project Overview • 45 km NW Ft. McMurray • 10.5 section project area • 100% STP working interest • Regulatory approvals in place • Phase 1 construction fully underway • Phase 1 Design: • 12,000 bbl/d oil • 33,600 bbl/d steam 12 SAGD well pairs: successfully drilled through high qu
Slide 11: STP-McKay Phase 1: Overview Plan
STP-McKay Phase 1: Overview Plan Construction Camp Clay borrow pits Central Process Facility SAGD Wellpad #2 SAGD Wellpad #1 Operations Camp 11
Slide 12: STP-McKay Phase 1: Construction Update Central Process Facility
STP-McKay Phase 1: Construction Update Central Process Facility • Over 4,500 of 5,300 piles have been set • Electrical work has commenced • Largest pieces are now on site • 9 -10,000 bbl tanks about 70% complete • All major concrete pours complete • Steam generator, cogen, and water treatment all be
Slide 13: STP-McKay Phase 1: Construction Update Well Pads
STP-McKay Phase 1: Construction Update Well Pads Service rig completing slant SAGD wells • 12 SAGD well pairs + 1 HZ CSS well successfully drilled, completions underway • Piling at pads nearly complete • Surface facilities on 1st pad have commenced construction in November SAGD Wellheads ready for i
Slide 14: STP-McKay Phase 1: Construction Update Camps and Infrastructure
STP-McKay Phase 1: Construction Update Camps and Infrastructure • 29 km all season access road Service rig completing slant SAGD wells complete 300 person operations camp – to be removed after start -up • 14 km 8” natural gas fuel pipeline complete • Over 57% of permanent operations staff positions
Slide 15: STP-McKay Phase 1: SAGD Well Completions
STP-McKay Phase 1: SAGD Well Completions: Leading Edge in Wellbore Design • Wellbores have been completed to allow optimal flexibility for steam distribution and production gathering points along wellbores • Distributed temperature and pressure monitoring along wellbores • Will provide operational f
Slide 16: STP-McKay Phase 1: Spending Update
STP-McKay Phase 1: Spending Update • Capital forecast reduced $10 million to $440 million • This includes ~ $15 million of Spend breakdown as of Sept. 30th, 2011 unbudgeted scope changes Incurred - including Committed - Reimbursable, $103 Fixed, $216.9 .0 – Additional 40,000 bbl dilbit storage tank
Slide 17: STP-McKay Phase 1: Timeline to Production
STP-McKay Phase 1: Timeline to Production Road Construction ERCB Project Approval Plant & Pad Site SAGD Drilling Facility Construction Mechanical Completion Commissioning Steam Circulation Current First Oil Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 Refer to slide 2 for cautionary statements about
Slide 18: Senlac and McKay Phase 1: Production Profile
Senlac and McKay Phase 1: Production Profile • ‘First Oil’ for Phase 1 expected in calendar Q3-2012 • Ramp up expected to take 6-12 months • 2 week turnaround expected within first 12-18 months of operation 18,000 16,000 14,000 12,000 10,000 bbl/d 8,000 6,000 4,000 2,000 0 2011 2013 2015 2017 2019 2
Slide 19: Corporate Cash Flow - Base Case Model
Corporate Cash Flow - Base Case Model (STP-Senlac and STP-McKay Phase 1 Only) $500 5 $400 $300 3 $200 $100 1 Debt/EBITDA $ million $0 2011 2016 2021 2026 2031 -$100 -1 -$200 -$300 -3 Simple model assumes cash sweep to pay down debt is first priority -$400 -$500 -5 CAPITAL EBITDA TOTAL CORPORATE DEBT
Slide 20: STP-McKay Phase 2: High Quality Resource Base
STP-McKay Phase 2: High Quality Resource Base • Total of 43 coreholes (31 drilled this past winter) on Phase 2 project area • High quality bitumen pay encountered on all wells: • No lean zones • No shale barriers • Continuous and exploitable McMurray and Wabiskaw oil sands deposits 17-22 m exploitab
Slide 21: STP-McKay: Phases 1 and 2 Layout
STP-McKay: Phases 1 and 2 Layout (circa 2014) Well pads Phase 1 Phase 2 Continuous pay fairway • STP-McKay Phase 2 is being designed to add 24,000 bbl/d of bitumen processing capacity, bringing the total to 36,000 bbl/d Refer to slide 2 for cautionary statements about forward-looking information. 21
Slide 22: STP-McKay Phase 2: Construction Strategy
STP-McKay Phase 2: Construction Strategy • Southern Pacific plans to stagger the construction of Phase 2 in two integrated 12,000 bbl/d pieces • Provides maximum Phase 2B flexibility both Highlighted in red operationally and financially • Application has been submitted on November 10th, 2011 Phase 2
Slide 23: STP-McKay Phase 2: Post Application Value Change
STP-McKay Phase 2: Post Application Value Change • Upon successful application submission for Phase 2 expansion, management expects a significant revision to the 2P reserve category • 2P reserves production profile will be accelerated and is estimated to increase before tax NPV10% by more than $450
Slide 24: Wabiskaw Bitumen: Additional Resource at McKay
Wabiskaw Bitumen: Additional Resource at McKay • Wabiskaw zone lies directly above McMurray over Clearwater most of McKay Phase 1 and 2 Shale (Caprock) • Approximately 200 mmbbl of OBIP (management est.) • Recovery mechanism planned: • Combination of cyclic steam stimulation (CSS) Wabiskaw and condu
Slide 25: STP-McKay: Full Bitumen Exploitation Plan
STP-McKay: Full Bitumen Exploitation Plan Conduction and cyclic steam SAGD injector SAGD producer Infill horizontal well 25
Slide 26: Southern Pacific's Existing Project Growth Plan
Southern Pacific’s Existing Project Growth Plan • Forecast represents real projects that are on production, being constructed or in the application process • Timing of STP-McKay Phase 2 represents two stages of growth, designed for optimal operating and financing flexibility 40,000 35,000 30,000 25,
Slide 27: Corporate Cash Flow - Base Case Model (Phase 1 and 2)
Corporate Cash Flow - Base Case Model (STP-Senlac and STP-McKay Phase 1 and 2) $1,000 5 $800 $600 3 $400 Debt/EBITDA $200 1 $ million $0 -$200 2011 2016 2021 2026 2031 -1 -$400 -$600 -3 -$800 Simple model assumes cash sweep to pay down debt is first priority -$1,000 -5 CAPITAL EBITDA TOTAL CORPORATE
Slide 28: STP-McKay: Future Upside
STP-McKay: Future Upside STP-McKay Potential Phase 3 Thermal 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 29: STP-Red Earth Thermal Project: Pilot Testing Underway
STP-Red Earth Thermal Project: Pilot Testing Underway Pilot Project 6 miles • 135 sections (100% WI) 1,000 bbl/d thermal facility • Existing 1,000 bbl/d thermal project • 105 MMbbl of P50 contingent resource • Pilot project started up in June 2011 • 3 wells have been tested • Results being analyzed,
Slide 30: 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 sands projects Ells 15 coreholes 2D seismic Leismer & Kirby 50 Sections 29
Slide 31: Summary of STP's Recent Financing Activities
Summary of STP’s Recent Financing Activities • $ 270.5 million – equity financings – $108.4 million in May 2010 (STP-McKay Phase 1) – $ 52 million in October 2009 (STP-Senlac) – Remaining in 4 offerings during 2006-2007 (Land and Exploration) • $ 173 million – convertible debentures – 6% annual inte
Slide 32: Commodity Hedging
Commodity Hedging $120.00 2,600 $115.00 2,300 $110.00 Hedge Volume (bbl/d) 2,000 $105.00 1,700 ($US/bbl) $100.00 1,400 $95.00 1,100 $90.00 WTI $85.00 800 $80.00 500 $75.00 200 $70.00 -100 Nov-11 May-11 Oct-11 May-12 Oct-12 Nov-12 Mar-11 Jul-11 Mar-12 Jun-11 Dec-11 Jan-12 Jul-12 Sep-11 Jun-12 Feb-11
Slide 33: Net Asset Value: Solidifying as Proven Assets Grow
Net Asset Value: Solidifying as Proven Assets Grow Jan. 1 20111 June 30 20111 Unrisked NAV Unrisked NAV Total Proved Reserves2 $254 $726 Probable Reserves2 $660 $383 Best Estimate (P50) Contingent Resources2 $970 $1,768 Stock Option Proceeds $30 $30 Working Capital $453 $260 Sub-total $2,367 million
Slide 34: 2012: What's next for STP?
2012: What’s next for STP? • Execution of STP-McKay Thermal Project – Construction on time and on budget is the primary focus of 2011/12 – 2012 will be focused on bringing production on line • STP-McKay Phase 2 – Expedite approval of application within regulatory agencies • Development Plan for STP-
Slide 35: 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
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