Independent Estimate of Southern Pacific's Discovered Resources Exceeds Management Expectations
August 18 2008 - 9:04AM
Marketwired
Southern Pacific Resource Corp. ("Southern Pacific" or the
"Corporation") (TSX VENTURE: STP) is pleased to announce that an
independent evaluation of the Corporation's oil sands leases has
resulted in an estimate of 3.6 billion barrels of Discovered
Petroleum Initially in Place (PIIP) compared with management's June
26, 2008 estimate of 793 million barrels.
Discovered Resources represent the quantities of bitumen that
have been discovered with recent exploration drilling and
historical drilling, but do not meet the stringent criteria set
forth to be commercially recoverable using accepted technology such
as Steam Assisted Gravity Drainage (SAGD). Management has been
using a conservative number to represent its Discovered PIIP
because Southern Pacific lands had not previously been evaluated by
independent engineers McDaniel and Associates (McDaniel) of
Calgary.
Southern Pacific announced the Contingent portion of the
independent estimate of the Corporation's Athabasca oil sands
leases on June 26, 2008. McDaniel's final evaluation, effective
June 30, 2008, includes both the Discovered and Undiscovered
bitumen resources within the Corporation's lands.
The following table updates the values released on June 23, 2008
in which management estimates were used for the Discovered PIIP
beyond the portion that had been classified by McDaniel as
Contingent. This table also reflects the removal of the Rochester
Energy Corp. lands at Long Lake that had been included on a pro
forma basis. As announced on August 15, 2008, the Rochester
amalgamation has been terminated.
Southern Pacific Net Resources (MMbbl)
as per McDaniel & Associates
----------------------------------------------------------------------------
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Property Discovered(i) Contingent(ii)
PIIP -----------------------
Low Best High
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McKay 1121.7 41.0 60.7 87.9
Long Lake 466.5 38.6 50.6 64.9
Hangingstone 742.5 8.2 14.5 25.0
Leismer(iii) 729.8 4.6 12.0 25.9
Kirby 547.0 0.0 0.0 0.0
----------------------------------------------------------------------------
Total 3607.4 92.4 137.8 203.7
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(i) - The Discovered volume reported represents McDaniel's Best (P50)
estimate
(ii) - Discovered PIIP resource not recognized as Contingent are further
sub-classified as Unrecoverable
(iii) - Contingent volumes at Leismer are further classified as Sub-
commercial; the remaining Contingent volumes in this table are
further classified as Commercial.
Undiscovered Resources represent the prospectivity of lands
where there has been no delineation to date. McDaniel has provided
a Best (P50) estimate of 7.7 billion barrels of Undiscovered
Resource remaining on the undrilled sections of Southern Pacific
lands.
The Discovered and Undiscovered Resource estimates represent the
inventory of resource under Southern Pacific lands. It is
management's continuing responsibility to technically analyze its
lands and existing technologies with the goal to convert this
inventory to Contingent Resource, and ultimately to Reserves as
projects become realized.
McDaniel's resource report also continues to confirm the
potential for the Long Lake property to serve as a project area for
Southern Pacific. Significant Contingent Resource was discovered
over the past year on the Corporation's lands at Long Lake. The
past winter's core hole program at Long Lake substantiates a gross
7,000 bbl/d SAGD project as a "best" case scenario (8,800 bbl/d is
the "High" case scenario). Significant upside remains, as indicated
by the Discovered and Undiscovered Resource estimates. This was
confirmed this summer by additional field work using electrical
resistivity tomography (ERT).
Southern Pacific's first project at McKay remains on track, with
environmental work being conducted this summer in the field, the
selection of a central process facility site and completion of road
access planning with other industry players and government.
Southern Pacific has sufficient capital on hand to delineate the
project area to eight wells per section and shoot a 3D seismic
program, as well as prepare the necessary project application and
submit, which it expects to do in the second quarter of 2009. Once
this application is submitted with no outstanding deficiencies,
Southern Pacific expects to able to turn contingent resources into
bitumen reserves.
Safe Harbour
Statements in this press release may contain forward-looking
information including expectations of future 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.
The reader is cautioned that assumptions used in the preparation of
such information may prove to be incorrect. Events or circumstances
may cause actual results to differ materially from those predicted,
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the company.
These risks include, but are not limited to, the risks associated
with the oil and gas industry, commodity prices and exchange rate
changes. 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. The
reader is cautioned not to place undue reliance on this
forward-looking information.
Definitions:
1) Discovered Petroleum Initially-in-Place
- Defined as that quantity of petroleum that is estimated, as of
a given date, to be contained in known accumulations prior to
production. The recoverable portion of Discovered Petroleum
Initially-in-Place includes production, reserves, and contingent
resources; the remainder of the volume is unrecoverable.
2) Undiscovered Petroleum Initially-in-Place
- Defined as that quantity of petroleum that is estimated, on a
given date, to be contained in accumulations yet to be discovered.
The recoverable portion of Undiscovered
Petroleum-Initially-in-Place is referred to as Prospective
Resources; the remainder is classified as unrecoverable.
3) Contingent Resource
- Defined as those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations
using established technology or technology under development, but
which are not currently considered to be commercially recoverable
due to one or more contingencies. Economic contingent resources are
those contingent resources that are currently economically
recoverable.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Southern Pacific Resource Corp. Dave Antony CEO (403)
269-5219 Email: dantony@shpacific.com Southern Pacific Resource
Corp. Byron Lutes President (403) 269-1529 Email:
blutes@shpacific.com Website: www.shpacific.com
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