Southern Pacific Resource Corp STPJF

NR

[CatCatCat]

Southern Pacific Installs Third ICD Configuration at STP-McKay and Provides Update on Pad 102 Downspacing

CALGARY, ALBERTA--(Marketwired - June 17, 2014) - Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) has completed another Inflow Control Device ("ICD") installation on one of its SAGD well pairs at the STP-McKay Thermal Project. The ICDs were installed on the 2P5 well pair, making this the third well pair of the 12 existing well pairs equipped with these devices. The 2P5 well pair was shut-in for 14 days to cool off and complete the workover; it was placed back on production on June 10. The ICD system is intended to improve wellbore conformance in a two part process. First, the horizontal producer length is segmented with isolation packers and second, the ICD devices are installed into the segments which are designed to restrict the inflow of steam from short circuits, thus allowing other sections of the wellbore to produce without having to rate restrict the entire well pair. Southern Pacific has plans to install additional ICD configurations into more of the well pairs at McKay. The exact timing around future ICD installation is subject to further clarity on the Company's ongoing strategic alternatives process announced in December 2013, but it is expected that further installations will be completed over the next three months.

Southern Pacific also has continued to advance its regulatory application to downspace the existing McKay well pads with additional SAGD well pairs. As mentioned in the Company's December 11, 2013 press release, the Company believes additional well pairs will be required in order to fully utilize the available steam capacity at the STP-McKay Thermal Project. Southern Pacific believes the most prudent strategy is to add them between the existing well pairs, which were originally spaced 100 m apart, allowing ample room for additional well pairs to be drilled. Southern Pacific filed its application with the Alberta Energy Regulator ("AER") to downspace Pads 101 and 102 on February 18, 2014. After review of the application, the AER requested response to four supplementary information requests ("SIRs"). On June 13, Southern Pacific filed its responses to these SIRs. It is expected that final approval of the application will be obtained within the next few months. Southern Pacific plans to downspace Pad 102 first and only downspace Pad 101 if required, at a later date. The total Pad 102 downspace project cost is estimated at $51 million. This project's timing is also being affected by the Company's ongoing strategic alternatives process. A revised timing estimate of first steam to the downspaced wells on Pad 102 would be mid 2015 or later, and this is dependent upon the Company obtaining sufficient liquidity to proceed.

Southern Pacific's review of strategic and financial alternatives is ongoing. The Company does not intend to disclose developments with respect to the strategic review process until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction.