Southern Pacific Resource Corp.

Southern Pacific Resource Corp.

July 16, 2012 09:00 ET

Southern Pacific Completes Project Start-Up With Steam to Second Well Pad at McKay

CALGARY, ALBERTA--(Marketwire - July 16, 2012) - Southern Pacific ("STP" or the "Company") (TSX:STP) is pleased to announce that steam began circulating through the second pad of six steam assisted gravity drainage ("SAGD") well pairs at the STP-McKay Thermal Project on July 13. This brings the total SAGD well pair count currently being steamed to twelve. Steam began circulating to the first pad of six well pairs on July 1. Steam will now be circulated through all twelve SAGD wellbores for a period of three to four months, after which bitumen production is scheduled to begin.

After its first 15 days of official operation, the facility has been performing very well. The steam requirements for the wellbores over the period have been delivered at an impressive 98.5% 'on-time' load factor. This load factor is expected to improve over the next few months as the usual start-up fixes are ironed out.

All components of the facility have now been fully commissioned and are in use. The central process facility is generating all of its own power from two of three co-generators (the third commissioned and on standby). In addition to steam being generated, the return fluids from the wellbores are being separated, and the produced water is being treated and recycled for steam generation.

It took only three days for steam to reach the ends of the wellbores in the first pad, and consistent circulation of steam through the wellbores has occurred since. Temperatures and pressures within the well pairs are behaving as expected.

Byron Lutes, President and CEO of Southern Pacific commented, "I continue to be most impressed at the work ethic and attitudes of our field operations team, especially over the last few weeks as they have brought this new project on stream in a very safe and effective manner. They have done a tremendous job for us."

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, 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 conventional oil and gas properties and of oil sands properties, difficulties or delays in start-up operations, the uncertainties involved in interpreting drilling results and other geological data, fluctuating oil prices, 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, with some conventional production Southern Pacific faces risks including those associated with exploration, development, start-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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