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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta.JEFF McINTOSH/The Globe and Mail

Southern Pacific Resource Corp.'s prospects look uncertain after the cash-strapped oil sands developer came up dry in a nine-month search for strategic alternatives.

The stock, already under severe pressure, tumbled 38 per cent to 7.5 cents on the Toronto Stock Exchange after the company said it had received deal proposals during the process aimed at bolstering its financial position, but found none of them acceptable.

The company has cut staff "to reflect a narrower focus," and also said two senior executives and a board member have stepped down.

Southern Pacific began looking for options in December when it became clear the the steam-assisted wells it drilled at its STP-McKay Thermal Project in northern Alberta were failing to produce enough bitumen to fill its 12,000-barrel-a-day processing facility. In the interim it has been reworking some of its wells and installing equipment called inflow control devices (ICDs) to improve performance.

However, the company does not have the money to make good on its targets for the project, making its future murky at best, said Justin Bouchard, analyst at Desjardins Securities Inc.

"The bottom line is that the STP-McKay project is not working, no one was willing to take a chance on the project and, although the company has identified some potential opportunities to improve production... it has no money to execute on its plan," Mr. Bouchard wrote in a research note.

Southern Pacific is one of a handful of small oil sands developers that have run into major hurdles in their efforts to complete expensive and tricky projects. Another, Sunshine Oilsands Ltd., said this month it had secured debt financing to complete its West Ells project, which has been suspended for a year due to insufficient funding. The $200-million (U.S.) of bonds are pricey, with a 10 per cent interest rate.

Mr. Bouchard said much is riding on the success of Southern Pacific's ICDs to boost production while its financial position remains "precarious."

The company said Mike O'Krancy, vice-president, projects, has resigned and Ron Clarke, chief operating officer, has retired. In addition, Ward Mallabone is stepping down as a director.