Southern Pacific Resource Corp.

Southern Pacific Resource Corp.

November 06, 2013 19:12 ET

Southern Pacific Announces Financial and Operational Results for the Quarter Ended September 30, 2013

CALGARY, ALBERTA--(Marketwired - Nov. 6, 2013) - Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) today announced its financial and operational results for the quarter ended September 30, 2013.


  • Total Company production, which includes bitumen production from STP-McKay Phase 1 and heavy oil from STP-Senlac, was 4,767 barrels per day ("bbl/day") for the three months ended September 30, 2013 ("Q1 2014"), representing a 56% increase from the same period in the prior year("Q1 2013") and a 12% increase from the prior quarter;
  • Effective July 1, 2013 STP-McKay achieved commerciality, as such the resulting sales, royalties and associated expenses are being recorded in the quarter. During fiscal Q1 2014, STP-McKay produced an average of 1,846 bbl/day of bitumen, representing a 42% increase from the prior quarter;
  • At STP-Senlac, the Company averaged 2,921 bbl/day during the quarter and completed Phase K;
  • Cash from operating activities before net changes in non-cash working capital of $7.9 million; and
  • On September 23, 2013, Southern Pacific successfully closed the disposition of 36 sections of non-core land (80% working interest) for net cash proceeds of $18.8 million.
(thousands, except per share and per boe amounts) Three months ended September 30, 2013 Three months ended September 30, 2012
Petroleum revenue, net of royalties $ 34,486 $
Cash from operating activities before net changes in non-cash working capital(1) $ 7,885 $ 9,314
Per share basic and diluted $ 0.02 $ 0.03
Funds from operations(2) $ (1,399 ) $ 9,156
Per share basic and diluted $ (0.00 ) $ 0.03
Net income (loss) $ (11,937 ) $ 7,887
Per share basic and diluted $ (0.03 ) $ 0.02
Total assets $ 1,008,315 $ 999,089
Combined average product prices ($ per boe) $ 87.88 $ 60.61
Operating netback(3) $ 11,568 $ 10,661
Operating netback ($ per boe)(3) $ 27.88 $ 37.94
Weighted average common shares outstanding
basic 397,854 341,488
diluted 397,854 346,563
Heavy oil (bbl/day) 2,921 3,054
Bitumen (bbl/day) (4) 1,846 -
Total (boe/day) 4,767 3,054

(1) Cash from operating activities before net changes in non-cash working capital and decommissioning costs is a non-GAAP measure defined as cash flow from operating activities less changes in non-cash working capital and less decommissioning liabilities settled.

(2) Funds from operations is a non-GAAP measure defined as cash flow from operating activities less changes in non-cash working capital, less decommissioning liabilities settled and less interest paid.

(3) Operating netback is a non-GAAP measure defined as petroleum sales, net of royalties less diluents costs, less operating costs and less transportation costs.

(4) Bitumen produced at oil sands projects is mixed with diluent and sold as "dilbit". Diluent volumes have been deducted in calculating bitumen production.

Southern Pacific has filed its Interim Condensed Consolidated Financial Statements and Management's Discussion and Analysis for the three months ended September 30, 2013 on SEDAR at Copies are also available on the Company's website at


While the start-up at STP-McKay has been slower than expected, the property has shown meaningful increases in production towards its Phase 1 design capacity of 12,000 bbl/d. The Company continues to focus on improving conformance, in addition to developing steam-assisted gravity drainage (SAGD) chambers, which are expected to translate into increased production rates at STP-McKay.

In October, Southern Pacific received the second round of supplementary information requests (SIR's) from the Alberta Energy Regulator (AER) pertaining to the Phase 1 Expansion and Phase 2 application for STP-McKay. While there are no requests within the package that appear contentious, the delivery of the SIR's was significantly delayed from the original expected timing. Based on the questions contained within the SIR package and factoring a risked chance of entering into a regulatory hearing over stakeholder concerns, the Company has reforecast its expected approval date of this application to the second quarter of calendar 2015.

At STP-Senlac, the Company has completed Phase K with drilling operations expected to commence for Phase L in the first half of 2014. Southern Pacific has sufficient capital to fund all budgeted capital expenditures through currently available capital resources.

Southern Pacific's rail marketing program continues to provide access to the U.S. Gulf Coast markets and provide stronger netbacks than would be expected with intra-Alberta sales. With the delay in ramp up at McKay, the Company had an excess inventory of new rail cars, which it has successfully sub-leased short term arrangements with other parties. A portion of Southern Pacific's rail cars are also going to be utilized for shipping heavy oil from STP-Senlac.

Additionally, Chad Harris, Vice President Exploration, has left Southern Pacific to pursue other interests effective November 1, 2013.


A conference call will be held to review the fiscal Q1 2014 results at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday, November 7, 2013. To participate, please dial (866) 225-0198 (toll-free in North America) or (416) 340-8061.

A replay of the conference call will be available until November 14, 2013 at midnight Mountain Time. To listen to the recording, please call (800) 408-3053 or (905) 694-9451 and enter passcode 8950610.

An updated corporate presentation is now available on Southern Pacific's website at

About Southern Pacific

Southern Pacific Resource Corp. is engaged in the exploration, development and production of in-situ thermal heavy oil and bitumen production in the Athabasca oil sands of Alberta and in Senlac, Saskatchewan. Southern Pacific trades on the TSX under the symbol "STP."


This news release contains certain "forward-looking information" within the meaning of such statements under applicable securities law including estimates as to: future production, operations, operating costs, commodity prices, administrative costs, commodity price risk management activity, acquisitions and dispositions, capital spending, access to credit facilities and lending costs, income and oil taxes, regulatory changes, and other components of cash flow and earnings anticipated discovery of commercial volumes of bitumen, the timeline for the achievement of anticipated exploration, anticipated results from the current drilling program and, subject to regulatory approval and commercial factors, the commencement or approval of any SAGD project.

Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to the inherent risks involved in the exploration and development of oil and gas properties and of oil sands properties, delays in ramp-up operations, the uncertainties involved in interpreting drilling results and other geological data, fluctuating oil prices and discounts, the possibility of unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors including unforeseen delays. As an oil sands enterprise in the development stage, Southern Pacific faces risks including those associated with exploration, development, ramp-up, approvals and the continuing ability to access sufficient capital from external sources if required. Actual timelines associated may vary from those anticipated in this news release and such variations may be material. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. For a description of the risks and uncertainties facing Southern Pacific and its business and affairs, readers should refer to Southern Pacific's most recent Annual Information Form. Southern Pacific undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law.

The reader is cautioned not to place undue reliance on this forward-looking information.

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