Southern Pacific Resource considers possible sale
CALGARY, Alberta Dec 11 (Reuters) - 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 day.
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.
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