Click here to close now.


Microsoft Cloud Authors: Jordan Sanders, Carmen Gonzalez, Pat Romanski, Keith Mayer, Jayaram Krishnaswamy

News Feed Item

Southern Pacific Announces Financial and Operational Results for the Quarter Ended December 31, 2012

CALGARY, ALBERTA -- (Marketwire) -- 02/07/13 -- Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) is pleased to announce its financial and operational results for the quarter ended December 31, 2012.


--  Sold the first barrel of diluted bitumen "dilbit" from STP-McKay on
    October 24, 2012. The volumes in this quarter were sold primarily as
    intra-Alberta spot volumes while the Company awaited the commencement of
    its rail marketing arrangement that came into effect on January 1, 2013;
--  Achieved cash from operating activities before net changes in non-cash
    working capital of $4.0 million for the quarter; 
--  In January, Southern Pacific loaded the first rail cars of dilbit from
    STP-McKay for delivery to Natchez, Mississippi. Southern Pacific has
    completed three, one month contracts directly with major refineries in
    the U.S. Gulf Coast. These contracts, which have secured pricing through
    the end of March 2013, provide access to U.S. Gulf Coast based pricing
    for the Company's dilbit and will substantially improve overall plant
    gate netbacks; 
--  During the quarter, Southern Pacific initiated trucking of a portion of
    its total oil production from STP-Senlac to a nearby rail terminal
    instead of shipping it down its connected pipeline, which improved
    overall netbacks by approximately $2.62/bbl. The Company has since
    committed to increase its oil sales by rail at STP-Senlac to 1,500
    bbl/day for the months of January to March and has implemented new
    loading facility improvements. Southern Pacific is currently expecting
    to receive an improvement in plant gate netbacks of approximately
    $8.00/bbl as compared to a Western Canadian Select ("WCS") netback over
    total production at Senlac during the next quarter ending March 31, 2013
    (fiscal Q3 2013); and 
--  On January 25th, the Company completed both a senior secured second lien
    note issue for $260 million that retired the previous higher rate second
    lien term loan facility, and a $75 million senior secured credit
    facility. As a result, the Company expects to reduce its borrowing costs
    by over $5 million per year.

                                                 Three months   Three months
(thousands, except per share and per boe       ended December ended December
 amounts)                                            31, 2012       31, 2011
Petroleum revenue, net of royalties                   $12,124        $18,747
Cash from operating activities before net                                   
 changes in non-cash working capital                   $4,035        $11,248
 Per share basic and diluted                            $0.01          $0.03
Net income (loss)                                     ($5,600)          $224
 Per share basic and diluted                           ($0.01)         $0.00
Total assets                                         $977,977       $923,708
Net capital expenditures                              $31,390        $98,972
Total long-term debt                                 $397,023       $396,308
Combined average product prices ($ per boe)            $61.11         $73.54
Operating netback ($ per boe)(1)                       $34.75         $51.42
Weighted average common shares outstanding                                  
 basic                                                397,453        339,760
 diluted                                              401,689        345,055
 Heavy oil (bbl/day)                                    2,540          3,224
 Natural gas (mcf/day)                                     14            146
Total (boe/day) (2)                                     2,542          3,249
1.  Operating netback is a non-GAAP measure defined as petroleum sales less 
    royalties and less operating costs.                                     
2.  Total production excludes the capitalized production of 833 bbl/day from
    STP-McKay, which commenced production ramp up in late October 2012.     

Southern Pacific has filed its Interim Condensed Consolidated Financial Statements and Management Discussion and Analysis for the three months ended December 31, 2012 on SEDAR at Copies are also available on the Company's website at


Southern Pacific is in the process of adding significant production growth throughout fiscal 2013 and 2014. The Company expects to ramp up the STP-McKay volumes through the remainder of this and the next fiscal year, with production expected to reach nominal plant capacity of 12,000 bbl/day in fiscal 2014. This production base, coupled with the new wells being added at STP-Senlac, should open up new opportunities for Southern Pacific as the Company utilizes its cash flow to finance continued growth.

STP-McKay Thermal Project

The STP-McKay Thermal Project, located 45 km northwest of Fort McMurray, has been operating at high load factors and production continues to ramp up. After producing more than 1,600 bbl/d in the first week of January, one of the newly converted SAGD well pairs required a downhole repair and was shut in for most of the month. Production continued to increase from the remaining well pairs throughout the month, resulting in an average January estimated bitumen production rate of 1,500 bbl/day, an increase of over 25% from the previous month's average rate. The repaired well pair came back on stream January 31st and is currently being reheated for about 14 days before being placed back into SAGD production.

Southern Pacific continues to be conservative in the initial stages of converting the well pairs from circulation to SAGD, utilizing the downhole technology that was installed to ensure even temperature conformance and chamber development has occurred along the horizontal length of the wells before the wells are converted to steady state SAGD. This approach is designed to ensure the long-term integrity of the wellbores and assist in maximizing the total recovery of bitumen from each well pair over its producing life. As the Company has previously stated, it is expected to take 12 to 18 months from first oil production, which occurred in mid-October 2012, for total rates to approach the 12,000 bbl/day design capacity. The ramp up period is required to condition the wellbores for even temperature conformance and allow adequate time for the development and growth of the SAGD chambers within the oil sands reservoir. The 12 SAGD well pairs that were initially drilled are equipped with comprehensive subsurface measurement of temperature and pressure and have multiple steam delivery and production recovery points within each well.

To date, 8 of the 12 well pairs have been converted to SAGD production. The remaining 4 well pairs are at various stages of circulation and will be converted to full SAGD operation when Southern Pacific's technical staff deem appropriate. Although the process of circulation and conversion takes time, steady progress is occurring and once the conversion to SAGD operation has been completed, the well pairs are operating predictably. On the four most mature SAGD well pairs, the steam oil ratio (SOR) has averaged approximately 4.0 in January, which has exceeded Management expectations for well pairs at this early stage of production. The overall field SOR is currently approximately 7.0, and Management expects this will continue to drop as additional wells are converted to SAGD and as the steam chambers grow.

The surface facilities at McKay continue to perform well despite having been exposed to extended periods of bitterly low temperatures. All systems within the facilities continue to run well and there has been no significant downtime since the plant was commissioned this past summer.

Southern Pacific has also commenced an exploration core hole program on its McKay lands. The program is focused on delineating lands to the north of the Company's current project and involves the drilling of 10 to 13 core holes, with completion expected by the middle of March 2013. Depending upon results, the program could add incremental reserves to justify a further expansion or be integrated into the Company's existing expansion options.

STP-McKay Phase 1 Expansion and Phase 2 Update

On May 10, 2012, Southern Pacific announced plans to expand STP-McKay to a design capacity of 18,000 bbl/day. The expansion is anticipated to significantly reduce future overall per-barrel capital costs in the entire project and accelerate the Company's production growth forecast. Southern Pacific's internal technical team identified a unique opportunity to expand the existing STP-McKay Phase 1 central process facilities by as much as 50% (6,000 bbl/day of bitumen based on a SOR of 2.8). The entire expansion should fit comfortably within the existing Phase 1 central process facility site, making this expansion both cost effective and environmentally responsible. Detailed engineering for the Phase 1 Expansion is currently underway and should be completed in June 2013.

Southern Pacific continues to work on the regulatory approval process for both the Phase 1 Expansion, as well as Phase 2, which also has a design capacity of 18,000 bbl/d of STP-McKay. These two expansion projects, once approved, will allow Southern Pacific to expand STP-McKay to a total bitumen capacity of 36,000 bbl/d. The Company submitted response to the first round of Supplementary Information Requests (SIRs) on October 31, 2012 and anticipates approval of the application towards the end of calendar 2013.

STP-Senlac Thermal Project

At Senlac near Unity, Saskatchewan, the drilling of Pad K has been completed and Southern Pacific is pleased with the results. The first well pair began steaming in mid-January, with the remaining well pairs following close behind. A warm up period of six to eight weeks is then required before the wells are placed on production. Phase K is expected to provide a significant increase to base production.

Rail Marketing Arrangement

On December 22, 2012, the first shipment of Southern Pacific's dilbit left the Lynton rail terminal, located just south of Fort McMurray, and landed in Mississippi on January 6, 2013. This first shipment and future shipments will be offloaded at the Genesis Natchez terminal where Southern Pacific has exclusive terminal capacity. Steady rail shipments of dilbit from STP-McKay have now commenced and are being shipped to Natchez, Mississippi.

To initiate its Gulf Coast marketing strategy, Southern Pacific has secured contracts directly with major refineries in the US Gulf Coast. These contracts, which have secured pricing through the end of March 2013, provide access to US Gulf Coast based pricing for the Company's product and will substantially improve overall plant gate netbacks. Net of all transportation and diluent costs, the Company expects its plant gate netbacks over this period to average approximately $45/bbl. Southern Pacific has also completed a purchase arrangement to supply its diluent requirements. The diluent has been sourced from the U.S. Gulf Coast and is being shipped via rail, using Southern Pacific's returning rail cars to the Lynton terminal, where it is currently being transported by truck to the STP-McKay plant site to be used in the bitumen/water separation process.

Since October 2012, Southern Pacific has been trucking a portion of its total oil production from STP-Senlac to a nearby rail terminal instead of shipping it down its connected pipeline. In January, Southern Pacific has committed to increase its oil sales by rail at STP-Senlac to 1,500 bbl/d and has implemented new loading facility improvements which make this easier to accomplish operationally. The Company is currently expecting to receive an improvement in plant gate netbacks of approximately $8/bbl as compared to a WCS netback on total volumes. The Company has added this flexibility to its marketing options, and will be able to direct the Senlac heavy oil product to the most favourable markets in the future.

New First Lien Credit Facility and Senior Secured Second Lien Notes Offering

On January 25, 2013 the Company closed an offering of senior secured second lien notes (the "Notes"). Southern Pacific has issued $260 million senior secured second lien notes at par, which bear interest at a rate of 8.75% per annum and mature five years from the date of issue.

Southern Pacific has used the net proceeds from the private placement, together with cash on hand, to retire its debt obligations under its existing US$272.2 million second lien term loan facility. In addition to a lower interest rate and the removal of potentially restrictive covenants, Southern Pacific has the ability to add an additional $140 million of second lien debt, subject to first lien approval, if the Company elects to do so in the future. Concurrently, the Company has also closed a $75 million senior secured first lien revolving credit facility with a syndicate of financial institutions, replacing the Company's previous $30 million first lien revolving credit facility, and providing additional financial liquidity to the Company. The new revolving credit facility includes provisions to increase the borrowing base as the Company expands with the removal of restrictive performance covenants.

As a result of the above, the Company expects to reduce its borrowing costs by over $5 million per year.

Conference Call

A conference call will be held to review the fiscal Q2 results at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Friday, February 8, 2013. To participate, please dial (888) 789-9572 (toll-free in North America) or (416) 695-7806 and enter passcode 9351795.

A replay of the conference call will be available until February 15, 2013. To listen to the recording, call (905) 694-9451 or (800) 408-3053 and enter passcode 6429090.

About Southern Pacific

Southern Pacific Resource Corp. is engaged in the exploration, development and production of in-situ thermal heavy oil and bitumen production in the Athabasca oil sands of Alberta and in Senlac, Saskatchewan. Southern Pacific trades on the TSX under the symbol "STP."


This news release contains certain "forward-looking information" within the meaning of such statements under applicable securities law including estimates as to: future production, operations, operating costs, commodity prices, administrative costs, commodity price risk management activity, acquisitions and dispositions, capital spending, access to credit facilities and lending costs, income and oil taxes, regulatory changes, and other components of cash flow and earnings anticipated discovery of commercial volumes of bitumen, the timeline for the achievement of anticipated exploration, anticipated results from the current drilling program and, subject to regulatory approval and commercial factors, the commencement or approval of any SAGD project.

Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to the inherent risks involved in the exploration and development of oil and gas properties and of oil sands properties, delays in ramp-up operations, the uncertainties involved in interpreting drilling results and other geological data, fluctuating oil prices and discounts, the possibility of unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors including unforeseen delays. As an oil sands enterprise in the development stage, Southern Pacific faces risks including those associated with exploration, development, ramp-up, approvals and the continuing ability to access sufficient capital from external sources if required. Actual timelines associated may vary from those anticipated in this news release and such variations may be material. 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. For a description of the risks and uncertainties facing Southern Pacific and its business and affairs, readers should refer to Southern Pacific's most recent Annual Information Form. Southern Pacific undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law.

The reader is cautioned not to place undue reliance on this forward-looking information.


"Barrels of oil equivalent" (boe) maybe misleading, particularly if used in isolation. A boe conversion of 6 mcf to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

"Operating netback" is a non-GAAP measure defined as petroleum and natural gas sales less royalties and less operating and transportation costs.

Southern Pacific Resource Corp.
Byron Lutes
President & CEO
[email protected]

Southern Pacific Resource Corp.
Howard Bolinger
[email protected]

Southern Pacific Resource Corp.
Greg Foofat
Investor Relations
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
Container technology is shaping the future of DevOps and it’s also changing the way organizations think about application development. With the rise of mobile applications in the enterprise, businesses are abandoning year-long development cycles and embracing technologies that enable rapid development and continuous deployment of apps. In his session at DevOps Summit, Kurt Collins, Developer Evangelist at, examined how Docker has evolved into a highly effective tool for application delivery by allowing increasingly popular Mobile Backend-as-a-Service (mBaaS) platforms to quickly crea...
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical to maintaining positive ROI. Raxak Protect is an automated security compliance SaaS platform and ma...
The cloud. Like a comic book superhero, there seems to be no problem it can’t fix or cost it can’t slash. Yet making the transition is not always easy and production environments are still largely on premise. Taking some practical and sensible steps to reduce risk can also help provide a basis for a successful cloud transition. A plethora of surveys from the likes of IDG and Gartner show that more than 70 percent of enterprises have deployed at least one or more cloud application or workload. Yet a closer inspection at the data reveals less than half of these cloud projects involve production...
Internet of @ThingsExpo, taking place June 7-9, 2016 at Javits Center, New York City and Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 18th International @CloudExpo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo New York Call for Papers is now open.
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York and Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound cha...
We are rapidly moving to a brave new world of interconnected smart homes, cars, offices and factories known as the Internet of Things (IoT). Sensors and monitoring devices will touch every part of our lives. Let's take a closer look at the Internet of Things. The Internet of Things is a worldwide network of objects and devices connected to the Internet. They are electronics, sensors, software and more. These objects connect to the Internet and can be controlled remotely via apps and programs. Because they can be accessed via the Internet, these devices create a tremendous opportunity to inte...
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, explored the IoT cloud-based platform technologies driving this change including privacy controls, data transparency and integration of real time context with p...
We all know that data growth is exploding and storage budgets are shrinking. Instead of showing you charts on about how much data there is, in his General Session at 17th Cloud Expo, Scott Cleland, Senior Director of Product Marketing at HGST, showed how to capture all of your data in one place. After you have your data under control, you can then analyze it in one place, saving time and resources.
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data shows "less than 10 percent of IoT developers are making enough to support a reasonably sized team....
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
DevOps is about increasing efficiency, but nothing is more inefficient than building the same application twice. However, this is a routine occurrence with enterprise applications that need both a rich desktop web interface and strong mobile support. With recent technological advances from Isomorphic Software and others, rich desktop and tuned mobile experiences can now be created with a single codebase – without compromising functionality, performance or usability. In his session at DevOps Summit, Charles Kendrick, CTO and Chief Architect at Isomorphic Software, demonstrated examples of com...
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningful and actionable insights. In his session at @ThingsExpo, Paul Turner, Chief Marketing Officer at...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
The Internet of Everything is re-shaping technology trends–moving away from “request/response” architecture to an “always-on” Streaming Web where data is in constant motion and secure, reliable communication is an absolute necessity. As more and more THINGS go online, the challenges that developers will need to address will only increase exponentially. In his session at @ThingsExpo, Todd Greene, Founder & CEO of PubNub, exploreed the current state of IoT connectivity and review key trends and technology requirements that will drive the Internet of Things from hype to reality.
Two weeks ago (November 3-5), I attended the Cloud Expo Silicon Valley as a speaker, where I presented on the security and privacy due diligence requirements for cloud solutions. Cloud security is a topical issue for every CIO, CISO, and technology buyer. Decision-makers are always looking for insights on how to mitigate the security risks of implementing and using cloud solutions. Based on the presentation topics covered at the conference, as well as the general discussions heard between sessions, I wanted to share some of my observations on emerging trends. As cyber security serves as a fou...
Continuous processes around the development and deployment of applications are both impacted by -- and a benefit to -- the Internet of Things trend. To help better understand the relationship between DevOps and a plethora of new end-devices and data please welcome Gary Gruver, consultant, author and a former IT executive who has led many large-scale IT transformation projects, and John Jeremiah, Technology Evangelist at Hewlett Packard Enterprise (HPE), on Twitter at @j_jeremiah. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
With all the incredible momentum behind the Internet of Things (IoT) industry, it is easy to forget that not a single CEO wakes up and wonders if “my IoT is broken.” What they wonder is if they are making the right decisions to do all they can to increase revenue, decrease costs, and improve customer experience – effectively the same challenges they have always had in growing their business. The exciting thing about the IoT industry is now these decisions can be better, faster, and smarter. Now all corporate assets – people, objects, and spaces – can share information about themselves and thei...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound effect on the world, and what should we expect to see over the next couple of years.