Southern Pacific Resource Corp.

Southern Pacific Resource Corp.
Rochester Energy Corp.

December 17, 2008 18:05 ET

Southern Pacific to Acquire Rochester Energy

CALGARY, ALBERTA--(Marketwire - Dec. 17, 2008) - Southern Pacific Resource Corp. ("Southern Pacific" or the "Corporation") (TSX VENTURE:STP) and Rochester Energy Corp. ("Rochester") (TSX VENTURE:ROH) are pleased to announce they have signed a binding arrangement agreement whereby Southern Pacific will issue 10 million shares to acquire all the currently issued and outstanding shares of Rochester or at an exchange ratio of 0.19 Southern Pacific shares for each Rochester share (the "Exchange Ratio"). As of December 15, 2008, there were 50,575,645 Rochester shares outstanding and a total of 34,629,187 Rochester shares issuable upon the exercise of Rochester convertible securities. Each outstanding Rochester warrant and option to acquire Rochester shares will be exercisable into Southern Pacific shares in lieu of one common share of Rochester on the same terms and conditions as the original warrant, option or other right after taking into consideration the Exchange Ratio. Rochester's board has unanimously approved the terms of the agreement and recommends that its shareholders support the transaction.

This transaction is conditional upon the receipt of shareholder, Court of Queen's Bench and regulatory approval, and receipt of third-party consents and other conditions customary in a transaction of this nature. The acquisition is expected to close in early 2009. Rochester has agreed to pay a break fee of $500,000 to Southern Pacific if Rochester terminates the transaction.

Although Southern Pacific and Rochester had announced an agreement on June 24, 2008 to combine their businesses and assets, the original agreement was terminated on August 15, 2008 due to certain conditions of the agreement not being met. The agreement has been renegotiated on new terms.

Rochester's key assets include its 100% working interest in 50 sections of oil sands leases and an average 19% working interest in certain producing natural gas assets in the Medicine Lodge field in northwest Alberta. After consolidation, Southern Pacific will have an average 84% working interest in 269 sections of oil sands leases. Rochester's 50 sections of oil sands leases are split into two areas: Long Lake and MacKenzie.

At Long Lake, Rochester owns 32 sections of land that directly complement Southern Pacific's 80% working interest in 43 sections, bringing the total to 75 sections (66.4 net). The combined land assets create a dominant position to move forward to further delineate and ultimately develop a commercial project in an area where Southern Pacific encountered excellent bitumen thicknesses (38.5 m and 29.5 m respectively) during last winter's corehole exploration program.

At MacKenzie, Rochester owns 18 sections of prospective oil sands leases. Although no physical exploration work has been completed on the MacKenzie block to date, Rochester has surveyed for a corehole program on the block. Southern Pacific views this land as highly prospective and intends to incorporate the MacKenzie block into its exploration plans.

The Medicine Lodge asset consists of an average working interest of 19% in five producing natural gas wells and a 19% interest in a gas plant. The combined net production to Rochester is approximately 200 thousand cubic feet per day of natural gas and 5 barrels per day of natural gas liquids. Although the property is not core to Southern Pacific's activities in the oil sands, the property non-operated and is expected to provide cash flow for general and administrative expenses.

The Rochester acquisition adds 50 sections of oil sands leases to Southern Pacific's inventory, adds a fifth prospect area with the addition of the MacKenzie block and transforms Southern Pacific's prospect area at Long Lake into an area where the consolidated lands will likely support a commercial in-situ bitumen project.

While Southern Pacific is well positioned for the future with five prospect areas - namely Hangingstone West, Leismer South, Kirby, Long Lake and MacKenzie - the Corporation is currently focusing its efforts on its project area at McKay. Southern Pacific is on track to submit an application for its first steam-assisted gravity drainage project at McKay to the Alberta Energy Resources Conservation Board (ERCB) and Alberta Environment by mid 2009.

In relation to the McKay lands, Rochester and Southern Pacific have entered into a farmin agreement whereby Rochester will expend $7,000,000 to earn a 3.2% interest in the STP McKay Project lands. This farmin is intended to allow Rochester to complete its remaining outstanding qualifying Canadian Exploration Expenses (CEE) in relation to its flow-through renunciations from December 31, 2007. In conjunction with this farmin, the companies have entered into a loan and security package in regard to $7,000,000 that will be advanced to Rochester for these purposes.

Southern Pacific, pursuant to the provisions of its stock option plan, will grant a total of 1.9 million options to its employees, management, directors, officers and key consultants. The options have an exercise price of $0.10 per share, vest over the next year, and expire on that date that is the fifth anniversary from the grant date.

Safe Harbour

This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Rochester or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Southern Pacific, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction.

This news release contains certain "forward-looking information" within the meaning of such statements under applicable securities law including: 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 the inherent risks involved in the exploration and development 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, the Corporation 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. For a description of the risks and uncertainties facing the Corporation and its business and affairs, readers should refer to the Corporation's most recent Annual Information Form. The Corporation 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 forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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