Southern Energy Corp. Announces First Quarter 2024 Financial and Operating

CALGARY, AB / ACCESSWIRE / May 28, 2024 / Southern Energy Corp. (“Southern” or the “Company“) (TSXV:SOU)(AIM:SOUC)(OTCQX:SOUTF), an established producer with natural gas and light oil assets in Mississippi, announces its first quarter financial and operating results for the three months ended March 31, 2024. Selected financial and operational information is outlined below and should be read in conjunction with the Company’s unaudited consolidated financial statements and related management’s discussion and analysis (the “ MD&A “) for the three months ended March 31, 2024, which are available on the Company’s website at www.southernenergycorp.com and have been filed under the Company’s profile on SEDAR+ at www.sedarplus.ca.

All figures referred to in this news release are denominated in U.S. dollars, unless otherwise noted.

FIRST QUARTER 2024 HIGHLIGHTS

• Average production of 18,055 ¹ Mcfe/d (3,009 boe/d) (96% natural gas) during Q1 2024, an increase of 15% from the same period in 2023
• Petroleum and natural gas sales of $4.8 million in Q1 2024, a decrease of 8% from the same period in 2023, largely due to the decline in natural gas pricing
• Generated $2.2 million of adjusted funds flow from operations ² in Q1 2024 ($0.01 per share basic and diluted)
• Net loss of $3.1 million in Q1 2024 ($0.02 net loss per share – basic and fully diluted), compared to a net loss of $1.1 million in Q1 2023
• Average realized natural gas and oil prices for Q1 2024 of $2.53/Mcf and $74.86/bbl compared to $3.25/Mcf and $75.73/bbl in Q1 2023
• Entered into the sixth amendment (the “ Sixth Amendment “) to the Company’s senior secured term loan (the “ Credit Facility “), which among other amendments, included extending the term of the Credit Facility from August 31, 2025 to December 31, 2026 (see “ Liquidity and Capital Resources – Credit Facility ” in the March 31, 2024 MD&A for full details of the amendment)
• Monetized the Company’s fixed price swap derivative contracts to take advantage of the positive unrealized gain position, realizing net proceeds of $1.1 million

SUBSEQUENT EVENTS

• Entered into a fixed price swap derivative contract of 5,000 MMBtu/d for the period of May 2024 – December 2026 at a price of $3.40/MMBtu

Ian Atkinson, President and Chief Executive Officer of Southern, commented:

“The Company’s Q1 2024 results show the resilience of our business in an environment which experienced one of the warmest winters in U.S. recorded history. Along with the warm weather came low heating demand for natural gas and supressed pricing. Our focus has been on improving our already low-cost structure, which our operations team has done an excellent job of executing. As we look to the second quarter and second half of our financial year, we are already seeing a significant recovery in excess of 50% from the recent lows in natural gas pricing which we expect will allow us to re-initiate growth in completing one of the three remaining Gwinville drilled but uncompleted wells (“ DUCs “).

“While low natural gas prices may have been a feature for the period, the recent correction in U.S. natural gas prices along with the structural dynamics of the market are extremely encouraging for a business with Southern’s exposure to natural gas. As the price weakness during the first quarter was met with a significant cut in production from several of the large U.S. gas producers, demand from seven of the largest LNG export plants, including Freeport LNG in Texas, continue to experience significant increases. This huge demand driver for U.S. natural gas is only set to increase further as new Gulf Coast LNG export facilities start accepting feed gas later this summer as well as growing domestic demand from artificial intelligence data centers and electrification of vehicles. Additionally, with the early heat in the U.S. Southeast, we are seeing basis premiums where we sell a portion of our natural gas of close to $1.00/MMBtu for the summer.

“We remain focussed on costs with a solid balance sheet and retain our position of being able to capitalise on gas prices by bringing on increased volumes in short order. As gas maintains its position as a crucial part of future energy security in the U.S., we see a significant re-rating opportunity in the current share price and we look forward to updating shareholders as we unlock the value in our portfolio.”

Financial Highlights