Independent Resource Report Confirms Significant Project Area on Southern Pacific Lands
June 26 2008 - 9:00AM
Marketwired
CALGARY, ALBERTA (TSX VENTURE: STP) is pleased to announce that
an independent evaluation of the Corporation's oil sands leases in
Athabasca has confirmed the identification of two significant
project areas at McKay and Long Lake.
McDaniel and Associates (McDaniel) of Calgary has provided the
Corporation with an estimate of the Contingent Resource within the
McMurray formation on its lands. Based on the estimate, Southern
Pacific has been able to confirm its first significant project area
at McKay. McDaniel was contracted by Southern Pacific to complete
an estimate of the Discovered Petroleum Initially In Place (PIIP)
and determine what portion of the Discovered PIIP is currently
recognized as Contingent Resource. This is McDaniel's first year
estimating Southern Pacific's bitumen resources. Southern Pacific
was pleased with McDaniel's methodology and thoroughness to ensure
the reliability and credibility of the report.
McDaniel has now completed the determination of Southern
Pacific's Contingent Resource. McDaniel's report on the
Corporation's Discovered PIIP is expected to be completed by the
end of July. Until then, Southern Pacific's management has provided
what it believes to be a conservative estimate. The following table
summarizes Southern Pacific's net resources on a pro-forma basis,
which includes the acquisition of Rochester Energy Corp.
(Rochester) announced on May 29, 2008.
Southern Pacific Net Resources (MMbbl)
as per McDaniel & Associates
----------------------------------------------------------------------------
Property Discovered Contingent(2)
PIIP(1) Low Best High
----------------------------------------------------------------------------
McKay 367.5 41.0 60.7 87.9
Long Lake(3) 235.1 40.0 54.6 76.9
Hangingstone 85.5 8.2 14.5 25.0
Leismer(4) 95.2 4.6 12.0 25.9
Kirby 10.0 0.0 0.0 0.0
----------------------------------------------------------------------------
Total 793.2 93.8 141.8 215.7
----------------------------------------------------------------------------
(1) - Currently a Management Estimate, McDaniel will complete their estimate
by July 31, 2008
(2) - Discovered PIIP resource not recognized as Contingent are classified
as Unrecoverable
(3) - Long Lake Volumes represent a pro-forma consolidation of Southern
Pacific and Rochester lands
(4) - Contingent volumes at Leismer are further classified as Sub-Economic,
the remaining Contingent volumes in this table are further classified
as Economic.
In order for McDaniel to classify resources as Contingent, the
resource must meet a rigorous set of screening criteria, including
the following:
- One well per section minimum spacing
- Net continuous bitumen pay greater than 8 m (high), 10 m
(best) and 12 m (low)
- Sufficient porosity, permeability and oil saturation within
the reservoir to be technically recoverable using existing accepted
recovery techniques. McDaniel has identified Steam Assisted Gravity
Drainage (SAGD) as the intended method of recovery.
- An economic screening to determine which Contingent resources
are economic and which are not at current pricing.
Because of the methodology employed by McDaniel for 2008, this
year's resources evaluation cannot be compared to the evaluation
conducted in 2007. The 2007 resource booking incorporated a
probabilistic method of estimation over the entire acreage
position, while McDaniel uses a deterministic method using defined
data points. Contingent Resource is assigned where well density is
no less than one well per section. Using the criteria above,
Contingent Resource has now been assigned to only 9% of Southern
Pacific's total acreage position using the high case areal extent
of the accumulations found to date. This leaves significant amounts
of Southern Pacific's land base from which to further add
Discovered and Contingent Resources through the Corporation's
future exploration and delineation programs.
Based on Southern Pacific's past winter's drilling program and
McDaniel's resource report, the Corporation is working on the
preparation of an application for a gross 10,000 barrels per day
(bbl/d) SAGD project at McKay. This application is planned to be
submitted at the conclusion of next winter's drilling season.
McDaniel's "best" or mid-range estimate of Contingent Resource
supports an 8,300 bbl/d economic SAGD project. The "high" or top
tier estimate supports a 13,000 bbl/d project. Southern Pacific
believes with further delineation of the Corporation's McKay lands
next winter, there should be sufficient resource for an expansion
to 20,000 bbl/d. The major outstanding "contingency" left at McKay
within the project area is the submission of an application for a
project to Alberta's Energy Resources Conservation Board (ERCB) and
confirmation of no major deficiencies within that application. In
order to submit the application to the ERCB, Southern Pacific plans
to increase the drilling density within the project area to eight
wells per section from the existing four wells per section, conduct
a 3D seismic survey over the project area, and complete all the
necessary environmental, consultative and engineering planning.
Southern Pacific has adequate working capital on hand to complete
this work by the end of the first quarter of 2009. The project team
is engaged and work is well underway. Southern Pacific anticipates
being able to book Probable reserves at McKay in 2009.
McDaniel's resource report also confirms the potential of the
Long Lake property, where significant Contingent Resource was
discovered over the past year. The recent transaction with
Rochester Energy adds to the resource picture at Long Lake and
substantiates a 7,300 bbl/d SAGD project as a "best" case scenario
(10,000 bbl/d is the "High" case scenario). The winter delineation
program at Long Lake is being modeled after the work program last
winter at McKay, which will allow Southern Pacific to advance a
project to an ERCB application for Long Lake the following year,
one year behind McKay.
Contingent Resource was also assigned to Hangingstone and
Leismer, however, the resource at Leismer is currently classified
as 'Sub-Economic' as the Contingent volume fell short of the
critical mass required under McDaniel's economic screening criteria
Hangingstone looks very promising for its first year of drilling as
Economic Contingent Resources were assigned to this block. Southern
Pacific remains optimistic about further economic resources in both
of these areas as additional well delineation occurs. Plans for
further step-out wells to add Contingent Resources in each of these
areas are currently being made for next winter.
With no corehole drilling to date on either block, Southern
Pacific's Kirby and MacKenzie blocks total 33 sections of
exploration upside. Discovered or Contingent Resource cannot be
assigned until wells are drilled. Southern Pacific has selected
locations at Kirby based on its seismic program last year. A winter
seismic program at MacKenzie is being prepared.
For additional information, please visit Southern Pacific's
website at www.shpacific.com for an updated corporate presentation.
The presentation includes detail on the properties, economics and
finances as the Corporation moves along its path to cash flow.
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.
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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