Southern Pacific Commences SAGD Drilling at STP-McKay, Appoints Director

• drilling has commenced on the first steam-assisted gravity drainage (SAGD) well pair at the Company's STP-McKay Thermal Project • Precision Drilling rig #199, a slant hole drilling rig, will be on site for approximately five months as it drills 24 individual wellbores, which will comprise the first 12 SAGD well pairs for the project. STP-McKay Phase 1 Construction • Southern Pacific completed construction of a 29 km all-season access road into the plant • majority of the earth works have been completed for the Central Process Facility (CPF) and the first two SAGD well pads • Southern Pacific constructed a 14 km, 8-inch diameter natural gas pipeline to the CPF that will be used to transport natural gas to fire the electricity/steam cogenerators and steam generators. • Source water wells and pipeline tie-ins have also been completed. • Over 90% of the major equipment purchase orders have been issued and the total cost spent to the end of February is approximately $100 million, with another $118 million of project costs fixed. • The total project cost estimate, including contingency, remains at $450 million. STP-McKay Phase 2 Expansion Plans • completed drilling 38 core holes in and around the STP-McKay project area. The core holes were drilled on time and under budget • The core hole data is currently being interpreted and results from the program are expected to be released within the next 30 days. Southern Pacific will use these interpreted results to finalize the size and timing of the STP-McKay Phase 2 expansion plans STP-Senlac Thermal Project Update • the STP-Senlac Thermal Project in southwest Saskatchewan, continues to operate smoothly • six month production rate averaging 4,150 barrels per day. • The first of two new SAGD well pairs, comprising Phase H, will be placed on production by the end of March, with the second well pair expected to come on stream about two weeks behind the first pair. • Consistent with Southern Pacific's plan, these wells should assist in maintaining the Senlac production levels between 4,000 - 5,000 bbl/d on an annual basis. • The Company expects to drill Phase J, which consists of three SAGD well pairs, in the third quarter of calendar 2011. http://www.shpacific.com/en/news/stp-2011-03-23.pdf