CALGARY, Alberta Dec 11 Southern Pacific
Resource Corp said on Wednesday it has launched a
strategic review of its business that could include an outright
sale as it looks to boost its flagging share price and find the
cash to expand its oil sands project.
The company, whose market capitalization is C$95.5 million
($89.9 million), is developing the small STP-McKay thermal oil
sands project in Alberta and produces heavy oil in Saskatchewan.
The two operations have a combined output of 4,000 barrels per
Southern Pacific shares have fallen 81 percent over the past
12 months on disappointing results from its oil sands project.
The company said on Wednesday that the year-old project,
designed to eventually produce 12,000 barrels of bitumen per
day, averaged just 1,714 bpd in November. It said it was
assessing methods to boost output from its wells.
The company forecast output of 7,000 barrels per day from
the project by the first quarter of 2015 and said it plans
additional drilling in order to boost production to the
project's capacity at an estimated cost of C$51 million.
"The determination that additional capital will be required
to fill the STP-McKay project to capacity ... has resulted in
the company's board of directors electing to initiate a process
of examining all options available to maximize shareholder
value," Southern Pacific said.
RBC Capital Markets has been hired to conduct the review,
which will include potential asset sales, recapitalization, or
the sale of all or part of the company.
The company's shares were down 35 percent to 15.5 Canadian
cents by midmorning on the Toronto Stock Exchange.