CALGARY, ALBERTA--(Marketwire - Oct. 31, 2012) - Southern Pacific Resource Corp. (TSX:STP) ("STP" or the "Company") is pleased to announce that sales of diluted bitumen ("dilbit") have commenced from its STP-McKay Thermal Project near Fort McMurray, Alberta.

On October 24, 2012 the first load of dilbit was hauled by truck for sale to an intra-Alberta market. Since then, approximately 9,000 barrels of dilbit have been hauled for sale to several local markets. Bitumen needs to be diluted on site in order to separate the bitumen from produced water. Most of the dilbit loads from the facility's sales tanks have contained less than one percent by volume of residual water and sediment, indicating that the facility has been performing well in terms of separating the produced fluids and effectively treating the dilbit product to remove impurities. Southern Pacific will continue to deliver its dilbit volumes to Alberta markets until such time as its rail marketing arrangement, announced on June 27, 2012, is ready to commence transporting volumes to the US Gulf Coast. The rail marketing arrangement is scheduled to commence on January 1, 2013.

The start-up of the STP-McKay Thermal Project continues to advance as scheduled. To date, two steam assisted gravity drainage ("SAGD") well pairs have been successfully converted from the warm-up circulation phase to production. Combined production from these two wells is currently averaging about 700 barrels per day (bbl/d) at intentionally restricted rates; this will allow the SAGD steam chambers to build as uniformly as possible along the horizontal wellbores. There are another five SAGD well pairs in various stages of conversion to the production phase and five SAGD well pairs that will likely remain in the circulation phase until the aforementioned conversions are complete. As the Company has stated previously, it is expected to take approximately 12 to 18 months for steam injection and production levels to ramp up to the full capacity of the facility. Phase 1 is capable of generating up to 37,500 bbl/d of steam and producing up to 12,000 bbl/d of bitumen under its existing approval.

Southern Pacific also filed an application in November 2011 to increase the bitumen processing capacity of STP- McKay Phase 1 to 18,000 bbl/d. Regulatory approval for this Phase 1 Expansion plus an additional 18,000 bbl/d of bitumen processing capacity in Phase 2 is expected late in 2013.