Southern Pacific Selects BMO Capital Markets to Evaluate SAGD Financing
Southern Pacific Resource Corp. announced the appointment of BMO Capital Markets as its financial advisor to help evaluate the options to finance construction of the Corporation's first SAGD oil sands project.
Southern Pacific recently achieved a significant milestone with the submission of the project application for its 80% owned 12,000 barrel per day STP-McKay Project on Alberta's Athabasca fairway. The application was submitted to the Alberta Energy Resources Conservation Board (ERCB) and Alberta Environment on May 29, 2009, and was based upon the significant body of technical work completed by the Corporation over the past 18 months. Now that this milestone has been achieved, the Corporation is in a position to move forward with a comprehensive evaluation of the financing options available for the construction of the project.
BMO Capital Markets has been retained to provide strategic advice and to assist in the evaluation of the financing options available to the Corporation. These options include bank financing, capital markets debt financing, equity financing or funding from a joint venture partner. The STP-McKay Project is expected to require gross capital expenditures of approximately C$400 million. Costs have recently been declining in response to reduced industry demand for services and the Corporation will update its capital cost estimates as necessary.
Byron Lutes, the Corporation's President and CEO, said Southern Pacific is pleased to formalize the excellent relationship developed with BMO Capital Markets over the past year.
"Throughout the market downturn, we continued to advance our STP-McKay Project and we're now ready to move into the project execution phase," Mr. Lutes said. "Southern Pacific and BMO Capital Markets will evaluate all of the options available to us, and we will move forward with funding solutions that provide the best value for our shareholders. We have a great project at STP-McKay and are excited about moving into the next phase of the company's development."
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