Southern Pacific Provides May Operational Update: Successful High Pressure Steam Stimulation Test at STP-McKay

Southern Pacific Provides May Operational Update: Successful High Pressure 
Steam Stimulation Test at STP-McKay 
CALGARY, ALBERTA -- (Marketwired) -- 06/13/13 -- Southern Pacific
Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) today
provided an operational update for the month of May, 2013 with
respect to the Company's STP-McKay and STP-Senlac Thermal Projects. 
STP-McKay Thermal Project - High Pressure Steam Stimulation ("HPSS") 
During the month of May, the Company focused its operations on the
successful implementation and completion of a High Pressure Steam
Stimulation ("HPSS") test on one of the existing 12 steam-assisted
gravity drainage ("SAGD") well pairs at STP-McKay.  
As previously stated, production ramp up at STP-McKay has been slower
than anticipated, largely a result of delays establishing sufficient
horizontal communication between injector and producer on some of the
well pairs. After analyzing the production data over the past seven
months, the Company believes that the conformance delay is occurring
due to several factors including sand grain sorting, higher bitumen
saturation levels, lower operating pressures and wider well pair
configuration (Pad 1 was drilled with a wider average separation
between the injector and producer in order to capture underlying oil
which would otherwise have been stranded). The Company's reservoir
modeling identified the HPSS as a low cost procedure that would
accelerate horizontal communication between the two wellbores by
geo-mechanically expanding and re-aligning the sand matrix to promote
improved communication pathways, thus reducing the time required to
enhance the well pair's horizontal conformance.  
The Company submitted an application to the Energy Resources
Conservation Board ("ERCB") in March, 2013 to conduct a HPSS test and
it received approval to proceed in late April. The approval of the
test allowed Southern Pacific to inject a finite volume of steam at a
pressure that exceeds the current maximum operating pressure of the
project. A few weeks of test preparation in the field were required,
which included shutting in the test well pair and the offset well
pair to stabilize and monitor pressures, and calibrate the
surrounding observation wells. The test commenced on May 21st and was
com
pleted on May 29th. The HPSS was performed on the well pair 1P1,
the furthest to the east of the existing 12 well pairs. This well
pair was chosen as it has been one of the well pairs which to date
had not demonstrated significant communication between the injector
and producer well bores. In addition, this well is located underneath
an existing horizontal observation well drilled into the upper
Wabiskaw zone, which was used to monitor and verify pressure impacts
to the overlying caprock. Following the HPSS, the well pair was
allowed to de-pressure and cool, and subsequently placed on SAGD
production on June 4th. While the results of the test are still being
evaluated, initial results are very encouraging, as evidenced by the
following:  


 
--  The well pair has been operating in steady SAGD mode since June 4th;
    this well pair had never operated in steady SAGD mode prior to the
    stimulation. The rate has been steadily improving to a current fluid
    rate of approximately 750 barrels per day ("bbl/d") with a 25% oil cut.
    The oil cut continues to improve as the stimulation fluid (steam
    condensed to water) is recovered; 
    
--  A significant improvement in horizontal communication along the length
    of the injector and producer wellbores was established during the HPSS; 
    
--  There were no pressure or temperature disturbances measured above the
    well pair from the overlying horizontal Wabiskaw well, nor laterally
    from the offset vertical observation wells; and 
    
--  The test planning, protocol, execution and monitoring were conducted in
    a manner that was safe, protected the wellbore integrity and provided
    the information necessary to repeat this process on other well pairs at
    negligible cost. 

 
Now that SAGD operation has been established, the well pair's steam
chamber should continue to develop, with an expected increase to
continue in oil productivity as the chamber grows both horizontally
and vertically. As a result of 1P1's proximity to the overlying
Wabiskaw horizontal well, the successful testing of this well pair
has allowed the Company to obtain valuable data demonstrating no
noticeable pressure increases in the overlying caprock. A meeting
with the ERCB discussing the test process and preliminary results has
recently occurred and a follow-up application has been filed with the
ERCB to perform similar HPSS's on the remaining five wells on Pad
101. The Company expects to conduct these over the summer. The
Company is also currently evaluating the potential to perform HPSS's
on some of the well pairs on Pad 102. 
STP-McKay Thermal Project - Production 
Production remained relatively steady for the month of May, averaging
1,024 bbl/d despite two of the well pairs being shut-in during most
of the month in order to prepare for the HPSS. Over 87% of May's
production came from five of the SAGD well pairs. These five well
pairs have settled into steady state operations with optimal subcool
and operating pressures having been achieved in late April. The
farthest well pair to the west, 2P6, was also converted to SAGD
production on May 27th and has been running steadily since. This well
pair had previously been in circulation and had never operated
successfully in SAGD mode prior to this attempt. The Company now has
all 12 of its well pairs capable of SAGD, although two of the well
pairs are periodically returned to circulation as a measure to
improve conformance.  
STP-Senlac Thermal Project 
Senlac production averaged 3,127 bbl/d for the month of May. This
represents a 10% increase over the average rate in April. Two new
SAGD well pairs from Phase K continue to ramp up and the third well
pair continues to circulate steam and prepare for SAGD mode, which
should occur in late June. 
Total Corporate Production 
Total Company production including the capitalized production from
STP-McKay phase 1 and STP-Senlac averaged 4,151 bbl/d for the month
ended May, 2013, which is an 7% increase from the previous month. As
production continues to ramp-up, the Company will continue to provide
monthly operational updates to its shareholders.  
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." An updated corporate presentation is now available on Southern
Pacific's website at www.shpacific.com. 
Visit our website at: www.shpacific.com. 
Advisory 
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 r
egulatory 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.  
Definitions  
"Barrels of oil equivalent" (boe) maybe misleading, particularly if
used in isolation. A boe conversion of 6 mcf to 1 barrel of oil is
based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the
wellhead.
Contacts:
Southern Pacific Resource Corp.
Greg Foofat
Investor Relations
403-930-5621
gfoofat@shpacific.com 
Southern Pacific Resource Corp.
Byron Lutes
President & CEO
403-269-1529
blutes@shpacific.com 
Southern Pacific Resource Corp.
Howard Bolinger
CFO
403-269-2640
hbolinger@shpacific.com
www.shpacific.com
 
 
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