Southern Pacific Resource says that after a successful winter drilling program and further technical evaluation of its oil sands lands in McKay, Alberta, the estimate of the gross Probable ("2P") recoverable bitumen reserves has increased by 149% to 168.1 million barrels (MMbbl). This equates to a net present value before tax of $368 million (discounted at 10%). Additionally, 116.7 MMbbl of recoverable bitumen has been assigned to the gross Best ("P50") Estimate contingent resources category. These numbers come from report by GLJ Petroleum Consultants of Calgary ("GLJ"), effective March 15, 2010, incorporating the past winter's 21 new coreholes drilled in the McKay area, plus all of the technical data and studies collected and analyzed over the past three winters.

The reserves, resources and values presented in this release represent a 100% working interest. Southern Pacific's interest in these lands is currently 80%. As announced on March 19, 2010, the Company's acquisition of the remaining 20% interest is expected to close on June 1, 2010. This will result in Southern Pacific owning an undivided 100% working interest in its McKay lands.

Additions and Revisions The reserves report incorporates all of the drilling and technical data recovered from STP's McKay lands up to and including the most recent corehole drilling program completed in March 2010. This past winter's program totaled 21 coreholes, 11 of which were drilled inside the 10.5-section STP-McKay project, and the remaining 10 wells were drilled on the acreage outside the current project area, particularly in the south McKay block. The Company has now drilled a total 52 coreholes within the STP-McKay project area, and 22 coreholes on the remaining McKay lands. These wells, coupled with the drilling results from the past few years on surrounding offset land, have demonstrated a significant exploitable bitumen trend in the McKay area. In addition to the further delineation of the project area, additional contingent resources were identified on the Company's south block from which the Company expects to pursue plans for development.

In addition to recognizing more bitumen in place on the Company lands in McKay, the recovery factors from the McMurray formation have also been increased. This is in recognition of the reservoir quality, offset analog performance and the recognition of infill horizontal wells as a demonstrated technology that has always been in the STP-McKay project development plan and application. On average, an overall recovery factor of 49.1% was assigned to the 2P category and a 60.1% recovery factor to the 3P category. The steam oil ratios for the reserve categories were determined to be 2.9 and 2.7 for the 2P and 3P cases respectively.

Tags: Southern Pacific Resource