Southern Pacific Resource Corp. has announced that an independent evaluation of the Corporation's oil sands leases has resulted in an estimate of 3.6 billion barrels of Discovered Petroleum Initially in Place (PIIP) compared with management's June 26, 2008 estimate of 793 million barrels.
Discovered Resources represent the quantities of bitumen that have been discovered with recent exploration drilling and historical drilling, but do not meet the stringent criteria set forth to be commercially recoverable using accepted technology such as Steam Assisted Gravity Drainage (SAGD). Management has been using a conservative number to represent its Discovered PIIP because Southern Pacific lands had not previously been evaluated by independent engineers McDaniel and Associates (McDaniel) of Calgary.
Southern Pacific announced the Contingent portion of the independent estimate of the Corporation's Athabasca oil sands leases on June 26, 2008. McDaniel's final evaluation, effective June 30, 2008, includes both the Discovered and Undiscovered bitumen resources within the Corporation's lands.
Undiscovered Resources represent the prospectivity of lands where there has been no delineation to date. McDaniel has provided a Best (P50) estimate of 7.7 billion barrels of Undiscovered Resource remaining on the undrilled sections of Southern Pacific lands.
The Discovered and Undiscovered Resource estimates represent the inventory of resource under Southern Pacific lands. It is management's continuing responsibility to technically analyze its lands and existing technologies with the goal to convert this inventory to Contingent Resource, and ultimately to Reserves as projects become realized.
McDaniel's resource report also continues to confirm the potential for the Long Lake property to serve as a project area for Southern Pacific. Significant Contingent Resource was discovered over the past year on the Corporation's lands at Long Lake. The past winter's core hole program at Long Lake substantiates a gross 7,000 bbl/d SAGD project as a "best" case scenario (8,800 bbl/d is the "High" case scenario). Significant upside remains, as indicated by the Discovered and Undiscovered Resource estimates. This was confirmed this summer by additional field work using electrical resistivity tomography (ERT).
Southern Pacific's first project at McKay remains on track, with environmental work being conducted this summer in the field, the selection of a central process facility site and completion of road access planning with other industry players and government. Southern Pacific has sufficient capital on hand to delineate the project area to eight wells per section and shoot a 3D seismic program, as well as prepare the necessary project application and submit, which it expects to do in the second quarter of 2009. Once this application is submitted with no outstanding deficiencies, Southern Pacific expects to able to turn contingent resources into bitumen reserves.
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