October 9, 2009 / 1:01 PM / in 8 years

UPDATE 1-Southern Pacific to buy heavy oil assets for C$90 mln

* Production at acquired assets average 5,000 bbl/d

* Net purchase price of C$90 mln

* To sell 100 mln subscription receipts at C$0.50 apiece

Oct 9 (Reuters) - Southern Pacific Resource Corp STP.V said it will acquire producing heavy oil interests from a public oil and gas company for about C$90 million, a deal that will complement its STP-McKay oil sands project.

The company, which did not name the seller, said the acquired assets have produced more than 13 million barrels of heavy oil over the past 12 years and sees a remaining projected life of about 15 years.

Production since June 1 has averaged 5,000 barrels a day (bbl/d) with current production over 6,000 bbl/d, Southern Pacific said in a statement.

Southern Pacific said it will finance the deal through a new C$45 million credit facility from BMO Capital Markets and by raising C$50 million through the sale of 100 million subscription receipts on a bought-deal basis.

The deal will add facilities, operations and significant cash flow to pursue its STP-McKay oil sands project and other prospects in the Athabasca oil sands, Southern Pacific said.

In May, the company submitted the application for its STP-McKay project to Alberta’s Energy Resources Conservation Board and expects to receive approval in 2010.

Shares of the company closed at 60 Canadian cents Thursday on the Toronto Venture Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Deepak Kannan) ((isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net))

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