REG - Southern Energy Corp - PRELIMINARY GWINVILLE COMPLETION RESULTS

Southern EnergyAnnouncement

16/01/2024 07:00

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RNS Number : 7700Z  Southern Energy Corp.  16 January 2024

SOUTHERN ENERGY CORP. ANNOUNCES

PRELIMINARY GWINVILLE COMPLETION RESULTS

 

Calgary, Alberta - January 16, 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, is pleased to announce the
preliminary results from its recent Upper Selma Chalk horizontal well
completion in the Gwinville Field.  In mid-December 2023, Southern
successfully completed the first of its four drilled but uncompleted ("DUC")
wells from the Company's Q1 2023 drilling program - the GH 14-06 #3
wellbore.  Over the first 20 days of production, natural gas rates from the
well exceeded 6.5 MMcf/d and averaged 5.3 MMcf/d under restricted flowing
conditions as the well cleans up, recovering approximately 33% of load fluid
to-date with gas produced flowing directly to Company owned facilities with
all volumes sold.

 

Southern implemented a number of stimulation design changes for this latest
Upper Selma Chalk horizontal completion that improved the predictability and
efficiency of the fracture operation and, more importantly, reduced the
overall completion cost down to US$2.1 million, well below budget estimates.
Costs for this completion operation are approximately 40% lower than the two
previous 18-10 pad Upper Selma Chalk wells that were completed earlier in
2023.

 

Southern will continue to monitor the early production performance from the GH
14-06 #3 well over the next couple of months before making a decision on the
completion timing of the remaining three DUC wells.  The remaining DUC
wellbores have been drilled in the Lower Selma Chalk (2) and City Bank
formations.

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

"We are extremely excited to deliver the results of this latest Upper Selma
Chalk horizontal well, which we expect to fall in-line with our Gen 2 IP30
type curve estimates.  The Southern operations team has successfully analyzed
and optimized our early well results to execute what may be our best well
to-date, for a fraction of the cost of the prior well completions which bodes
well for future well activity.  Southern is already selling volumes of gas
associated with its latest well at gas prices up over 30% from November lows.
 Improved production rates at lower capital costs will allow Southern to
start redeveloping the Gwinville Field on an accelerated timeline as natural
gas prices are expected to improve materially into the second half of
2024.

 

With the success of the completed well, the Company is now looking forward to
deploying these successful design changes on our first two Lower Selma Chalk
laterals and the next City Bank lateral that remain uncompleted.  Our
original City Bank horizontal completion at GH 18-10 #1 has shown no decline
since being placed on production in July 2023.  With these updates we remain
eager to highlight the benefits of an optimized completion design performance
in this formation delivering value for the business."

 

Qualified Person's Statement

 

Gary McMurren, Chief Operating Officer, who has over 23 years of relevant
experience in the oil industry, has approved the technical information
contained in this announcement. Mr. McMurren is registered as a Professional
Engineer with the Association of Professional Engineers and Geoscientists of
Alberta and received a Bachelor of Science degree in Chemical Engineering
(with distinction) from the University of Alberta.

 

 

 

 

 

For further information about Southern, please visit our website at
www.southernenergycorp.com
(https://url.avanan.click/v2/___http:/www.southernenergycorp.com___.YXAzOnNvdXRoZXJuZW5lcmd5Y29ycDphOm86MzA2NjE2OWIxMDBjM2FjM2I3ZjZhZDA1OGM0NTUwODU6NjpkYzc5OmExY2U1YzQxYTI4YWQ0NjQ0MWZhZThlYTdkZDdlNzlkNDI1NDQ5MjllNjk0M2QyOGFmNWQzZWIxZTRkMTJkNTQ6cDpU)
or contact:

 

  Southern Energy Corp.
  Ian Atkinson (President and CEO)                            +1 587 287 5401
  Calvin Yau (CFO)                                            +1 587 287 5402

  Strand Hanson Limited - Nominated & Financial Adviser       +44 (0) 20 7409 3494
  James Spinney / James Bellman

  Stifel Nicolaus Europe Limited - Joint Broker               +44 (0) 20 7710 7600
  Callum Stewart / Ashton Clanfield

  Tennyson Securities - Joint Broker                          +44 (0) 20 7186 9033
  Peter Krens / Pav Sanghera

  Camarco                                                     +44 (0) 20 3757 4980
  Owen Roberts / Billy Clegg / Hugo Liddy

 

About Southern Energy Corp.

Southern Energy Corp. is a natural gas exploration and production company
characterized by a stable, low-decline production base, a significant low-risk
drilling inventory and strategic access to premium commodity pricing in North
America. Southern has a primary focus on acquiring and developing conventional
natural gas and light oil resources in the southeast Gulf States of
Mississippi, Louisiana, and East Texas. Our management team has a long and
successful history working together and have created significant shareholder
value through accretive acquisitions, optimization of existing oil and natural
gas fields and the utilization of re-development strategies utilizing
horizontal drilling and multi-staged fracture completion techniques.

READER ADVISORY

MCFE Disclosure. Natural gas liquids volumes are recorded in barrels of oil
(bbl) and are converted to a thousand cubic feet equivalent (Mcfe) using a
ratio of six (6) thousand cubic feet to one (1) barrel of oil (bbl). Natural
gas volumes recorded in thousand cubic feet (Mcf) are converted to barrels of
oil equivalent (boe) using the ratio of six (6) thousand cubic feet to one (1)
barrel of oil (bbl). Mcfe and boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 mcf:1 bbl or a Mcfe conversion ratio of
1 bbl:6 Mcf is based in an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. In addition, given that the value ratio based on the current price
of oil as compared with natural gas is significantly different from the energy
equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf:1 bbl or a
Mcfe conversion ratio of 1 bbl:6 Mcf may be misleading as an indication of
value.

Product Types. Throughout this press release, "crude oil" or "oil" refers to
light and medium crude oil product types as defined by National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
References to "NGLs" throughout this press release comprise pentane, butane,
propane, and ethane, being all NGLs as defined by NI 51-101. References to
"natural gas" throughout this press release refers to conventional natural gas
as defined by NI 51-101.

Unit Cost Calculation. For the purpose of calculating unit costs, natural gas
volumes have been converted to a boe using six thousand cubic feet equal to
one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based
upon an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead. This
conversion conforms with NI 51-101. Boe may be misleading, particularly if
used in isolation.

Short‐Term Production. References in this press release to peak rates, IP30
and other short-term production rates are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates at which
such wells will commence production and decline thereafter and are not
indicative of long-term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such rates in
calculating the aggregate production of Southern.

Type Curves. Certain type curves disclosure presented herein represent
estimates of the production decline and ultimate volumes expected to be
recovered from wells over the life of the well. The type curves represent what
management thinks an average well will achieve. Individual wells may be higher
or lower but over a larger number of wells, management expects the average to
come out to the type curve. Over time, type curves can and will change based
on achieving more production history on older wells or more recent completion
information on newer wells.

Abbreviations. Please see below for a list of abbreviations used in this press
release.

bbl                          barrels

bbl/d                      barrels per day

boe                         barrels of oil

boe/d                     barrels of oil per day

Mcf                         thousand cubic feet

Mcf/d                     thousand cubic feet per day

MMcf                     million cubic feet

MMcf/d                 million cubic feet per day

Mcfe                       thousand cubic feet
equivalent

Mcfe/d                   thousand cubic feet equivalent per
day

Forward Looking Statements. Certain information included in this press release
constitutes forward-looking information under applicable securities
legislation. Forward-looking information typically contains statements with
words such as "anticipate", "believe", "expect", "plan", "intend", "estimate",
"propose", "project", "budget", "continue", "evaluate", "forecast", "may",
"will", "can", "target" "potential", "result", "could", "should" or similar
words suggesting future outcomes or statements regarding an outlook.
Forward-looking information in this press release may include, but is not
limited to statements concerning the Company's asset base including the
development of the Company's assets, oil and natural gas production levels,
anticipated operational activities and results including, but not limited to,
capital expenditures, drilling and completion plans and casing remediation
activities, expectations regarding commodity prices, the performance
characteristics of the Company's oil and natural gas properties, the ability
of the Company to achieve drilling success consistent with management's
expectations, the Company's anticipated results from the GH 14-06 #3 wellbore,
the Company's expectations regarding costs and completion of the remaining DUC
wellbores and timing thereof, the sources of funding for the Company's
activities, the effect of market conditions on the Company's performance,
future organic and inorganic growth and acquisition opportunities within the
resource market, and cost/debt reducing activities.

The forward-looking statements contained in this press release are based on
certain key expectations and assumptions made by Southern, including, but not
limited to, the timing of and success of future drilling, development and
completion activities, the performance of existing wells, the performance of
new wells, the availability and performance of drilling rigs, facilities and
pipelines, the geological characteristics of Southern's properties, the
characteristics of the Company's assets, the successful integration of
recently acquired assets into the Company's operations, the successful
application of drilling, completion and seismic technology, the benefits of
current commodity pricing hedging arrangements, Southern's ability to enter
into future derivative contracts on acceptable terms, Southern's ability to
secure financing on acceptable terms, prevailing weather conditions,
prevailing legislation, as well as regulatory and licensing requirements,
affecting the oil and gas industry, the Company's ability to obtain all
requisite permits and licences, prevailing commodity prices, price volatility,
price differentials and the actual prices received for the Company's products,
royalty regimes and exchange rates, the impact of inflation on costs, the
application of regulatory and licensing requirements, the Company's ability to
obtain all requisite permits and licences, the availability of capital, labour
and services, the creditworthiness of industry partners, the Company's ability
to source and complete asset acquisitions, and the Company's ability to
execute its plans and strategies.

Although Southern believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance should not
be placed on the forward-looking statements because Southern can give no
assurance that they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks. These
include, but are not limited to, risks associated with the oil and gas
industry in general (e.g., operational risks in development, exploration and
production; the uncertainty of reserve estimates; the uncertainty of estimates
and projections relating to production, costs and expenses, regulatory risks,
and health, safety and environmental risks), constraint in the availability of
labour, supplies, or services, commodity price and exchange rate fluctuations,
geo-political risks, political and economic instability abroad, wars and
hostilities (including the Russo-Ukrainian War and the Israel-Hamas conflict
in Gaza), civil insurrections, inflationary risks including potential
increases to operating and capital costs, changes in legislation impacting the
oil and gas industry, adverse weather or break-up conditions, and
uncertainties resulting from potential delays or changes in plans with respect
to exploration or development projects or capital expenditures. The
Russo-Ukrainian War is particularly noteworthy, as this conflict has the
potential to disrupt the global supply of oil and gas, and its full impact
remains uncertain. These and other risks are set out in more detail in
Southern's management's discussion and analysis for the period ended September
30, 2023, and annual information form for the year ended December 31, 2022,
which are available on the Company's website at www.southernenergycorp.com and
filed under the Company's profile on SEDAR+ at www.sedarplus.ca.

The forward-looking information contained in this press release is made as of
the date hereof and Southern undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, unless required by applicable
securities laws. The forward-looking information contained in this press
release is expressly qualified by this cautionary statement.

Future Oriented Financial Information. This press release contains
future-oriented financial information and financial outlook information
(collectively, "FOFI") about Southern's prospective results of operations and
cash flows, which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above paragraphs. FOFI
contained in this document was approved by management as of the date of this
document and was provided for the purpose of providing further information
about Southern's future business operations. Southern and its management
believe that FOFI has been prepared on a reasonable basis, reflecting
management's best estimates and judgments, and represent, to the best of
management's knowledge and opinion, the Company's expected course of action.
However, because this information is highly subjective, it should not be
relied on as necessarily indicative of future results. Southern disclaims any
intention or obligation to update or revise any FOFI contained in this
document, whether as a result of new information, future events or otherwise,
unless required pursuant to applicable law. Readers are cautioned that the
FOFI contained in this document should not be used for purposes other than for
which it is disclosed herein. Changes in forecast commodity prices,
differences in the timing of capital expenditures, and variances in average
production estimates can have a significant impact on the key performance
measures included in Southern's guidance. The Company's actual results may
differ materially from these estimates.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended.

 

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