SOUTHERN PACIFIC MAKES STRATEGIC ACQUISITION

Med detta har STP över en natt omvandlats till ett seriöst produktions bolag med eget cash flow att ligga till grund för utbyggnaden av STPs McKay (12.000 bpd) till att börja med.

SOUTHERN PACIFIC MAKES STRATEGIC ACQUISITION
AND ANNOUNCES BOUGHT DEAL FINANCING:
COMPANY TO ACQUIRE PRODUCING SAGD OIL ASSETS

October 9, 2009
Southern Pacific Resource Corp. (“Southern Pacific” or the “Corporation”) (STP –
TSX-V) is pleased to announce it has signed an agreement with a public oil and gas
company to acquire producing heavy oil interests currently averaging 5,000 barrels per day (“bbl/d”) for a net purchase price of approximately $90 million (the “Acquisition”).

The Acquisition will dramatically alter Southern Pacific by adding facilities, operations,relevant experience and significant cash flow to pursue the Corporation’s STP-McKay oil sands project and other prospects in the Athabasca oil sands. The acquired assets, located in southwest Saskatchewan, provide immediate heavy oil production from a project that uses steam assisted gravity drainage (“SAGD”) as the method of recovery. The acquired operations and technical expertise will directly complement the Corporation’s STPMcKay project, which has been designed to recover 12,000 bbl/d (9,600 bbl/d net to the Corporation at an average 80% working interest) of bitumen using similar SAGD technology.

The acquired assets have produced more than 13 million barrels of heavy oil using SAGD technology over the past 12 years and the Corporation expects a remaining projected life of approximately 15 years. Production since June 1, 2009 has averaged 5,000 bbl/d with current production over 6,000 bbl/d. Southern Pacific expects to continue the development of the acquired assets by drilling additional SAGD well pairs throughout the remaining project life.

The net purchase price of approximately $90 million, after closing adjustments, is
comprised of a total acquisition price of $110 million less approximately $20 million of working capital expected at closing.

The Acquisition includes a 100% working interest in a producing SAGD project, subject to certain royalties. Southern Pacific will be the operator of the SAGD project and, in addition to production and cash flow, will acquire technical information gathered from the historical development and production of these assets. This technical data, along with the up to 21 experienced field operations staff that are expected to join Southern Pacific as part of the Acquisition, will be invaluable as Southern Pacific moves the STP-McKay SAGD Project through development, construction and to production over the next two years.
http://www.shpacific.com/wp-files/News%20Releases/2009/stp-2009-10-09.pdf

STP news in the pipe
http://intheendwerealldebt.blogspot.com/2009/10/stp-news-in-pipe.html