Southern Pacific Announces Financial and Operational Results for the Quarter Ended March 31, 2014

CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) today announced its financial and operational results for the quarter ended March 31, 2014 ("Q3 2014").

HIGHLIGHTS:

• Total Company production, which includes bitumen production from STP-McKay Phase 1 and heavy oil from STP-Senlac, averaged 4,071 barrels per day ("bbl/d") for the three months ended March 31, 2014;
• On March 31, 2014, the Company raised CAD$150 million under a first lien term loan replacing the previous CAD$100 million revolving credit facility, increasing liquidity and an extended maturity date enabling the Company to implement its near-term development plans; and
• On December 11, 2013 the Company announced that it has initiated a process to identify, examine and consider strategic and financial alternatives available to the Company with the ultimate view of enhancing shareholder value. This process remains ongoing.

(1) Cash from operating activities before net changes in non-cash working capital and decommissioning costs is a non-GAAP measure defined as cash flow from operating activities less changes in non-cash working capital and less decommissioning liabilities settled.

(2) Funds from operations is a non-GAAP measure defined as cash flow from operating activities less changes in non-cash working capital, less decommissioning liabilities settled and less interest paid.

(3) Operating netback is a non-GAAP measure defined as petroleum sales, net of royalties less diluents costs, less operating costs and less transportation costs.

(4) Bitumen produced at oil sands projects is mixed with diluent and sold as "dilbit". Diluent volumes have been deducted in calculating bitumen production.

Southern Pacific has filed its Interim Condensed Consolidated Financial Statements and Management Discussion and Analysis for the three and nine months ended March 31, 2014 on SEDAR at www.sedar.com. Copies are also available on the Company's website at www.shpacific.com.

OUTLOOK

STP-McKay Thermal Project

In January 2014, Southern Pacific installed a series of inflow control devices "ICDs" into the 2P1 well pair at STP-McKay with the intent to improve horizontal wellbore conformance. For the month of March, the well pair averaged 609 bbl/d of bitumen. During the second half of March, the Company intentionally restricted the well pair to about 400 bbl/d as a change in operating conditions was observed. This prudent adjustment was made in order to ensure we preserved the integrity of the ICD devices. The Company believes it has since established prudent operating parameters and has been gradually increasing the production of the well pair back up since the last week of March. As this is the Company's first operational experience with the ICD installation, and given that there is limited industry experience with ICDs as of yet, the Company will continue to exercise patience while learning the operational characteristics of the ICDs. That being said, the installation continues to outperform our initially forecasted bitumen rate expectations.

A second well pair, 1P5, had a similar set of ICDs installed in February, 2014. This well pair, for the month of March, averaged 184 bbl/d of bitumen. This well pair was less conformed prior to ICD installation than the 2P1 well pair. As stated previously, the Company expects this well pair will take longer to ramp up in production rate. Overall, the Company has been pleased with the ongoing performance of the first two ICD installations. Southern Pacific is continuing to gain operational knowledge on the ICD installations, which it plans to use for the design and operation of future installations on other SAGD well pairs.

The Company has plans to install additional ICD configurations on certain well pairs at McKay. The program is currently being finalized and once initiated, the Company intends to install several more in a consecutive manner to minimize costs. The cost of the entire program is expected to be approximately $10 million. The next set of ICD installations have been delayed, primarily due to the strategic and financial alternatives review process. This delay may impact the previously announced milestone of calendar Q1 2015, where the Company expects to see the project's aggregate potential production rates ramping to approximately 7,000 bbl/d from the original twelve well pairs.

STP-Senlac Thermal Project

Heavy oil production at STP-Senlac for Q3 2014 averaged 2,084 bbl/d. The Company has received full regulatory approval to proceed with the three well pair program at Phase L. The estimated cost to complete Phase L is $18.8 million. The development of Phase L has been delayed, primarily due to the strategic and financial alternatives review process. This delay may impact the previously announced milestone of December 2014, where the Company expects first oil from Phase L.

New First Lien Term Loan Facility

On March 31, 2014, the Company raised US$136.2 million under a first lien term loan ("term loan"), the Canadian dollar equivalent of CAD$150 million. The term loan was used to repay and replace the Company's previous CAD$100 million revolving credit facility giving the Company incremental cash liquidity of $59.4 million at March 31, 2014.

Strategic Review

On December 11, 2013 the Company announced a review of strategic and financial alternatives to enhance shareholder value. This process remains ongoing. The Company does not intend to disclose developments with respect to the strategic review process until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction.

CONFERENCE CALL

A conference call will be held to review the fiscal Q3 2014 results at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday, May 8, 2014. To participate, please dial (866) 225-2055 (toll-free in North America) or (416) 340-2218.

A replay of the conference call will be available until May 15, 2014. To listen to the recording, call (800) 408-3053 and enter passcode 2007520.

About Southern Pacific

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

Advisory

This news release contains certain "forward-looking information" within the meaning of such statements under applicable securities law including estimates as to: the new first lien facility, additional ICD installation timing, 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, workovers and any conformance acceleration techniques such as the use of ICDs, and, subject to regulatory approval and commercial factors, the commencement or approval of any SAGD project, the potential results of the strategic alternative review process and enhancement of shareholder value, disclosure intentions with respect to the strategic alternative review process, and general economic outlook.

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, strategic alternatives, conformance acceleration techniques, 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 impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as the factors are interdependent, and the Board's and management's future course of action would depend on its assessment of all information at the time.

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