Southern Pacific Resource Corp. has signed an agreement with a public oil and gas company to acquire oil interests in Saskatchewan for approximately $90-million, the company announced Friday.
The deal is expected to boost Southern Pacific's STP-McKay oil sands project and other prospects in the Athabasca oil sands.
Calgary-based Southern Pacific also gains 21 field operations staff as part of the deal.
The acquired assets provide immediate heavy oil production averaging 5,000 barrels per day using steam assisted gravity drainage.
Southern Pacific plans to develop the acquisition by drilling additional well pairs throughout the area's remaining 15-year projected life.
The cash flow from the acquisition will also be used to fund a winter core-hold program on the company's undeveloped oil sands leases.
Closing is expected at the beginning of November.
The deal will be financed with a combination of net proceeds from a syndicated $50-million bought-deal equity financing led by BMO Nesbitt Burns, funds from a new $45-million operating line of credit and Southern Pacific's existing working capital.
Southern Pacific is focused on the exploration and development of natural resource properties and is considered to be a development stage enterprise.
Its shares closed at 60 cents Thursday on the TSX Venture Exchange.