Southern Pacific Resource Corp. reported that they have completed the initial core holes at their McKay River property. Southern Pacific owns an 80% interest in 62 sections (31,744 net acres) at McKay River. The drilling began in early January and will continue at McKay River for another three weeks, until such time as all firm locations and contingent locations are completed. The drilling, coring and logging of the initial 6 core holes have shown successful results in 5 of the core holes and the results confirm the indications from the previously drilled core hole on the lands. The first 6 core holes were drilled on a contiguous land block of 6 square miles. With these results Southern Pacific has expanded the drilling program this winter within this block to include additional contingent core holes in order to further delineate the potential SAGD project area.
Southern Pacific feels that they now have two potential SAGD projects; the first potential project was discovered through last year's drilling at the Corporation's Leismer project and the second is the newly discovered project at McKay River.
The logs on 5 of 6 core holes drilled by Southern Pacific, along with the core hole previously drilled on the block have shown encouraging results within the McMurray sands including gross bitumen zones ranging from 26 to 32 meters and net bitumen zones ranging from 17 to 27 metres. The zone porosity ranges from 30% to 35%. In addition, the core holes did not show any evidence of gas or water thief zones that could technically impair SAGD viability. The one remaining core hole was a westernmost extension test, which still encountered 28 meters of gross bitumen in the McMurray sand, however, the sand was interrupted by a 4 meter and a 5 meter interval of sandy mudstone that may impede SAGD viability. The seismic, logs, core and bitumen from this block are still being analyzed and interpreted as more data is collected, and will be the basis for an updated resource report which will be prepared by McDaniel and Associates, the independent reservoir engineering firm chosen by the Corporation. Interpreted seismic data from the 212 km 2D survey at McKay River, which was completed in the fall of 2007, was the basis for in the selection of the locations for the core holes that have been drilled.
In addition, Southern Pacific has coring rigs operating on their Long Lake prospect and anticipates that operations at their other projects at Hangingstone West, Leismer and Kirby will begin shortly.
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