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Message: Here is the production update!!

Southern Pacific's producing STP-Senlac Thermal Project located near Unity, Saskatchewan ("STP-Senlac") continues to perform well. July's field estimate exceeded 4,000 bbl/d of heavy crude. The Company drilled, completed and equipped two infill production wells in May and June of 2010 on schedule and under budget. The first of these wells has finished its reservoir preheat cycle using steam and has just been placed on production. The second well is currently into its three week reservoir preheat cycle. The two wells are expected to add about 500 to 600 bbl/d of heavy crude to STP-Senlac by the end of August. Plans for Phase H, the next set of two SAGD well pairs, are currently being finalized. These two SAGD well pairs are expected to add about 1,500 bbl/d of heavy crude to the project by the first quarter of 2011. The spud date for these wells is expected towards the end of September. The STP-Senlac development strategy is to maintain the project's production levels between 4,000 - 5,000 bbl/d on a consistent basis over the next 10 to 15 years.

This was nice to have, but now they are going to be financing the McKay project through a combination of cash flow and debt financing. Here we go, dilution time!!

Andy

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