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Southern Pacific Announces Financial and Operational Results for the Year Ended June 30, 2013 and August Operational Update

Southern Pacific Announces Financial and Operational Results for the Year Ended 
June 30, 2013 and August Operational Update 
CALGARY, ALBERTA -- (Marketwired) -- 09/11/13 -- Southern Pacific
Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) today
announced its financial and operational results for the year ended
June 30, 2013 and provided an operational update for the month of
August 2013.  
OVERALL PERFORMANCE HIGHLIGHTS 


 
--  Total Company production including the capitalized bitumen production
    from STP-McKay Phase 1 and heavy oil production from STP-Senlac was
    4,254 barrels per day ("bbl/d") for the three months ended June 30, 2013
    and 3,660 bbl/d for the fiscal year ended June 30, 2013. Subsequently,
    total Company production averaged 4,782 bbl/d for the month of August
    2013, representing a 7% increase from the prior month; 
    
--  At STP-McKay, production averaged 1,890 bbl/d for the month of August,
    representing a 39% increase over the month of July. Since first oil was
    achieved in late October 2012, STP-McKay continued to progress with
    production averaging 1,297 bbl/d during the fiscal quarter and 882 bbl/d
    for the fiscal year; 
    
--  At STP-Senlac, production averaged 2,892 bbl/d for the month of August,
    averaged 2,957 bbl/d during the quarter and 2,778 bbl/d for the fiscal
    year; 
    
--  Increased year-over-year total proved ("1P"), proven and probable ("2P")
    and proved, probable and possible ("3P") reserves by 2%, 11% and 12%,
    respectively; 
    
--  The Company's rail marketing strategy continues to be successful,
    improving the overall price received by $7.61/bbl during the quarter at
    STP-Senlac. The Company has also committed a portion of its oil sales by
    rail at STP-Senlac for the remainder of the calendar year, which will
    benefit from U.S. Gulf Coast pricing. At STP-McKay, the Company had
    secured a one-year oil marketing deal with a major U.S. Gulf Coast
    refiner, effective April 1, 2013. This deal provides U.S. Gulf Coast
    pricing for its bitumen product at STP-McKay that is being shipped under
    the Company's rail transportation arrangements; and  
    
--  On January 25, 2013, the Company completed a senior secured second lien
    note issue for $260 million that retired the previous higher interest
    rate second lien term loan facility and on May 9, 2013, the Company
    increased its previous $75 million revolving credit facility to $100
    million. This has provided additional financial liquidity of $55
    million, removed potentially restrictive covenants and lowered overall
    borrowing costs. The credit facility includes provisions to increase the
    borrowing base as the Company's production base expands during ramp-up. 
    
 
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(thousands, except per share and per boe amounts)  Fiscal 2013   Fiscal 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Petroleum revenue, net of royalties                    $50,998       $71,750
Cash from operating activities before net changes                           
 in non-cash working capital                           $20,696       $46,906
  Per share basic and diluted                            $0.05         $0.14
Net income (loss)                                     ($12,580)      $11,150
  Per share basic and diluted                           ($0.03)        $0.03
Total assets                                        $1,004,119      $916,826
Combined average product prices ($ per boe)             $60.73        $63.41
Operating netback ($ per boe)(1)                        $35.18        $41.93
Weighted average common shares outstanding                                  
  basic                                                383,772       340,179
  diluted                                              383,772       346,002
Production                                                                  
  Heavy oil (bbl/day)                                    2,778         3,648
                                                  --------------------------
Total (boe/day)(2)                                       2,778         3,648
----------------------------------------------------------------------------
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1.  Operating netback is a non-GAAP measure defined as petroleum sales less
    royalties and less operating costs. 
2.  Total production excludes the capitalized production of 882 bbl/day from
    STP-McKay, which commenced production ramp up in late October 2012.
    Total Company production, including capitalized production was 3,660
    bbl/d.

 
Southern Pacific has filed its Annual Consolidated Financial
Statements and Management Discussion and Analysis for the year ended
June 30, 2013. Southern Pacific has also filed its Form 51-101F1 -
Statement of Reserves Dataand Other Oil and Gas Information, Form
51-101F2 - Report on Reserves Data by Independent Qualified
ReservesEvaluator, and Form 51-101F3 - Report of Management and
Directors on Oil and Gas Disclosure, under NationalInstrument 51-101
Standards of Disclosure for Oil and Gas Activities. The oil and gas
information is included in the Annual Information Form filed by
Southern Pacific. Such filings can be accessed electronically on
SEDAR at www.sedar.com. Copies are also available on the Company's
website at www.shpacific.com.  
AUGUST OPERATIONAL UPDATE  
Total Corporate Production  
Total Company production, including bitumen production from STP-McKay
and heavy oil from STP-Senlac, averaged 4,782 bbl/d for the month of
August 2013, representing a 7% increase from the prior month.  
STP-McKay Thermal Project  
Average bitumen production for the month of August at STP-McKay was
1,890 bbl/d, a 39% increase over the month of July. Improvements in
production are largely attributed to increasing rates in the Pad 102
wells, however, there have been some improvements in Pad 101 as well.
The High Pressure Steam Stimulation ("HPSS") treatments have been
successfully completed on two wells to date (1P1 and 1P3). The wells
have been running in stable SAGD mode since their treatments with
much better temperature conformance down the well pair lengths,
however, the steam chambers are relatively immature and it is
expected to take several months before significant production
improvements are noticed from these well pairs. As part of the
ongoing strategy to maximize production at STP-McKay, one SAGD well
pair (1P4) had its producing wellbore perforated in August. The
purpose of perforating a wellbore is to ensure the horizontal liner
slots are not plugged with fines or scale which should assist in
improvements to wellbore conformance. The workover, which involved
shutting in and cooling down the well pair, perforating and the
subsequent start up, occupied most of the month of August. The well
pair has recently been restarted, beginning with a circulation period
to be followed by a conversion to SAGD mode. Southern Pacific plans
to test the well in SAGD mode prior to an HPSS treatment, and then if
deemed appropriate, will conduct an HPSS treatment on this well pair
at a later date. The Company has regulatory approval to continue with
the HPSS treatments on the remaining well pairs on Pad 101. However,
some of the well pairs on Pad 101 have recently demonstrated
considerable performance improvement under normal SAGD operation, so
the application of the HPSS treatment will be evaluated on a pair by
pair basis.  
STP-Senlac Thermal Project  
STP-Senlac heavy oil production averaged 2,892 bbl/d for the month of
August. One of the project's newest SAGD well pairs, K3, encountered
further mechanical problems during the month of August, subsequent to
the electric submersible pump failure that occurred in late July. It
is apparent that there is a breach in the casing (liner system) of
the producer that is allowing excessive sand to enter the wellbore. A
workover is now underway to diagnose and repair the well. The Company
expects the well to return to production by the end of September.  
YEAR END RESERVES AND CONTINGENT RESOURCES  
In a report prepared by GLJ Petroleum Consultants ("GLJ"), the
Company's independent reserves evaluator, effective June 30, 2013
(the "GLJ Report"), the Company increased year-over-year 1P, 2P and
3P reserves by 2%, 11% and 12%, respectively, primarily as a result
of a small core hole exploration program completed at STP-McKay this
past winter. The program focused on delineating lands to the north of
the Company's current STP-McKay project and involved the drilling of
10 core holes. Additionally, the Company had positive technical
revisions in 1P and 2P reserves at STP-Senlac based on strong field
performance and a geologic mapping improvement resulting from a
stratigraphic test well drilled earlier this year to delineate Phase
L.  
Listed below is a summary of the Company's reserves and contingent
resources, effective June 30, 2013 and are available for review in
the Annual Information Form, which has been filed concurrent with
this release.  
Southern Pacific Resource Corp. Net Reserves and NPV effective June
30, 2013 


 
                              ----------------------------------------------
                                          Net Present Value (before tax- WI)
                                                             (Cdn $ million)
                                          ----------------------------------
                                   Working                                  
                                  Interest                                  
                               Recoverable                                  
                                   (MMBOE)         8%        10%         12%
----------------------------------------------------------------------------
Reserves                                                                    
Total Proved (1P)                    123.0     $1,084       $896        $756
Proved + Probable Reserves                                                  
 (2P)                                276.1     $1,950     $1,510      $1,177
Proved + Probable + Possible                                                
 (3P)                                383.1     $2,833     $2,178      $1,702
Contingent Resources                                                        
Low Estimate (P90) Contingent                                               
 Resource                            221.1       $538       $257         $67
Best Estimate (P50) Contingent                                              
 Resource                            508.9     $1,451       $758        $300
High Estimate (P10) Contingent                                              
 Resource                            967.6     $3,832     $2,344      $1,322
----------------------------------------------------------------------------
                                                                            
Estimated values may not represent fair market value.                       

 
OUTLOOK  
Southern Pacific remains confident and dedicated to adding
significant production growth throughout fiscal 2014. Operationally,
the initial start-up at STP-McKay has been slower than expected,
however, the Company believes that the project has reached a turning
point as it is starting to show meaningful productivity improvements
with the ultimate goal of reaching the project design capacity of
12,000 bbl/d for Phase 1. At STP-Senlac, the Company has completed
Phase K with drilling operations expected to commence for Phase L in
calendar Q2 2014.   
Your continued support of Southern Pacific is appreciated as we
continue to strive towards our objective of long-term value creation
for all of our stakeholders.  
CONFERENCE CALL  
A conference call will be held to review the fiscal 2013 results at
8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday,
September 12, 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 September 19,
2013 at midnight Mountain Time. To listen to the recording, please
call (800) 408-3053 or (905) 694-9451 and enter passcode 6975472.  
An updated corporate presentation is now available on Southern
Pacific's website at www.shpacific.com.  
ANNUAL GENERAL MEETING AND APPROVAL OF ADVANCE NOTICE POLICY  
Southern Pacific's annual meeting will be held at 2:30 p.m. (Mountain
Time), November 21, 2013 in the Bow Valley Square Conference Centre
(Bow Valley Square II), at 205 - 5 Avenue S.W., Calgary, Alberta.  
The Corporation is also pleased to announce that the Board of
Directors of the Corporation has approved certain amendments to the
by-laws of the Corporation (the "Amendments"). Included in the
Amendments is the addition of a provision requiring advance notice to
the Corporation in circumstances where director nominations are made
by shareholders of the Corporation other than pursuant to a proposal
or a requisition of shareholders made in accordance with the Business
Corporations Act (Alberta). Among other things, the advance notice
provision fixes a deadline by which holders of record of common
shares of the Corporation must submit director nominations to the
Corporation prior to any annual or special meeting of shareholders
and sets forth the information that a shareholder must include in the
notice to the Corporation.  
The Amendments are subject to the approval of the TSX and
ratification by the shareholders of the Corporation, which
shareholder ratification is being sought at the Annual General and
Special Meeting of Shareholders of the Corporation to be held on
November 21, 2013 in Calgary, Alberta.  
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."  
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 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. 
Contacts:
Greg Foofat, Investor Relations
403-930-5621
gfoofat@shpacific.com 
Byron Lutes, President & CEO
403-269-1529
blutes@shpacific.com 
Howard Bolinger, CFO
403-269-2640
hbolinger@shpacific.com
www.shpacific.com