REG - Southern Energy Corp - PROPOSED EQUITY FUNDING
13/03/2025 07:15
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RNS Number : 4807A Southern Energy Corp. 13 March 2025
THIS ANNOUNCEMENT (THE "ANNOUNCEMENT"), INCLUDING THE APPENDIX TO THIS
ANNOUNCEMENT (THE "APPENDIX"), AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (ITS TERRITORIES OR
POSSESSIONS), AUSTRALIA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR
ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS FOR INFORMATION PURPOSES ONLY
AND DOES NOT CONSTITUTE: (A) A PROSPECTUS OR OFFERING MEMORANDUM; (B) AN
ADMISSION DOCUMENT PREPARED IN ACCORDANCE WITH THE AIM RULES; OR (C) AN OFFER
FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT
AND THE APPENDIX DOES NOT CONSTITUTE OR CONTAIN, AND SHOULD NOT BE CONSTRUED
AS, ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY
PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF
SOUTHERN ENERGY CORP. IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION
(REGULATION 596/2014/EU) AS IT FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
SOUTHERN ENERGY ANNOUNCES FINANCINGS TO RAMP UP LIQUIDS-RICH GAS PRODUCTION
ACROSS HIGH QUALITY GULF COAST ASSETS, FEEDING A GROWING DEMAND FOR U.S.
NATURAL GAS AT PREMIUM PRICING
Calgary, Alberta - 12 March 2025 - Southern Energy Corp. ("Southern" or the
"Company") (TSXV:SOU, AIM:SOUC) is pleased to announce its intention to
conduct an equity fundraise to raise aggregate gross proceeds of approximately
US$6.0 million (approximately £4.8 million / C$8.5 million) of units of the
Company ("Units"), at a price of 4.3 pence (the "Placing Price") or C$0.08 per
Unit (the "Prospectus Price").
The fundraising consists of a placing of new Units to new and existing
institutional investors on AIM (the "Placing") and a concurrent public
offering of new Units in Canada (the "Prospectus Offering" and, together with
the Placing, the "Fundraising"), including an intended subscription by certain
Directors and members of the Company's senior management. Each Unit will
consist of one new Common Share and one half of one Common Share purchase
Warrant. Each whole Warrant will entitle the holder to subscribe for and
purchase one Common Share at an exercise price of price of 5.3 pence (in the
case of the Placing) or C$0.10 per Common Share (in the case of the Prospectus
Offering) for a period of 36 months following closing of the Fundraising.
The Fundraising will launch immediately following the release of this
Announcement. Research Capital Corporation ("RCC") is acting as sole agent and
sole bookrunner (the "Agent") in connection with the Prospectus Offering.
Tennyson Securities, a trading name of Shard Capital Partners LLP ("Tennyson
Securities") and Hannam & Partners, a trading name of H&P Advisory
Limited ("H&P") are acting as joint bookrunners (the "Joint Bookrunners")
in connection with the Placing.
Overview of the Fundraising
· Southern intends to conduct an approximate US$6.0 million equity
fundraise to accelerate the completion of its three drilled and uncompleted
("DUC") wells, drilled as part of its Q1 2023 drilling campaign on its
Gwinville acreage, as well as fully funding (alongside cashflow) the drilling
of two vertical Cotton Valley wells on its Mechanicsburg acreage;
· The Company expects to benefit from strengthening U.S. natural gas
prices in the near-term, currently
>
US$4.40/MMbtu (equivalent to C$6.40/MMbtu), further supporting the timing for
completion of the DUC wells;
· The accelerated development program in Gwinville and Mechanicsburg is
anticipated to be accretive to Southern through the addition of > US$20.0
million ((1)) in proved developed producing ("PDP") NPV10 value;
· Based on type curve estimates, the Company expects the Gwinville
DUCs, once completed, to have initial production (IP30) rates of approximately
5.5 MMcf/d per well, with expected ultimate recovery per well of approximately
3.5 Bcfe, while the Mechanicsburg wells are expected to have IP30 rates of
approximately 4.2 MMcf/d plus 75 bbl/d of liquids per well, with ultimate
recovery per well of approximately 3.7 Bcfe;
· The Gwinville DUCs are expected to have an IRR of 86% ((2)) while the
new Mechanicsburg wells are expected to have an IRR of 77%;
· Completion of the Gwinville DUCs and Mechanicsburg drilling is
expected to begin in Q2 2025 and will provide Southern with a significant
platform for organic growth, with production expected to reach > 4,000
boepd by year-end 2025, representing approximately 100% growth;
· The Company has identified over 100 additional horizontal drilling
locations at Gwinville which it will target for development in appropriate gas
price environments. Future wells are expected to achieve a ~ 30% IRR at a
natural gas price of US$3.75/MMBtu;
· The net proceeds from the Fundraising are expected to fully
fund, alongside existing cash, cash flows and undrawn debt facilities, the
completion of the Gwinville DUCs at a cost of approximately US$2.5 million per
well and the drilling of the Mechanicsburg wells at a cost of approximately
US$3.5 million;
· The Company has executed an amendment to the Credit Facility to
reduce monthly principal amortization payments to approximately 15% per annum,
which is expected to free up more than $2.5 million over the remaining term of
the loan to support continued organic growth;
· The Company intends to seek the approval of the holders of its
outstanding convertible unsecured subordinated debentures (the "Debentures"),
by way of obtaining extraordinary resolutions of greater than 66.67% of the
aggregate principal amount of the Debentures, to amend the terms of the
indenture governing the Debentures such that, subject to and concurrent with
the completion of the Fundraising, an amount equal to 102.5% of the principal
amount outstanding under the Debentures plus all accrued and unpaid interest
as of the closing date would convert into Units at the Prospectus Price (the
"Debenture Amendment"). The completion of the Debenture Amendment and the
issuance of the Units upon the conversion of the Debentures remain subject to
acceptance of the TSXV. The Units to be issued pursuant to the Debenture
Amendment will be subject to customary lock-up provisions.
Ian Atkinson, President and CEO of Southern, commented:
"I am pleased to announce the launch of our proposed fundraising today, which
will accelerate Southern's work program, starting with the completion of the
three DUC wells in our Gwinville acreage in Mississippi. After pausing our
previous development program at the end of Q1 2023, we are excited to resume
operations at Gwinville to capitalize on the significant uptick in Henry Hub
natural gas pricing and bring this high-impact production on-line. Current
Henry Hub natural gas pricing is very supportive with balance of 2025 and
calendar year 2026 averaging greater than US$4.80/MMBtu and US$4.40/MMBtu,
respectively. In addition, Southern continues to receive strong basis
premium pricing that was approximately 15% higher on average than Henry Hub in
January and February 2025. We've made a significant capital investment in
these wells, and we are now positioned to realize substantial cash flow
generation as we rapidly ramp up production in a short timeframe alongside a
very constructive natural gas price.
"We continue to see an increasingly positive macro environment for the U.S.
natural gas market, and we believe that Southern is firmly positioned to
capitalize on the opportunity presented to us through this structural
imbalance. Today's capital raise will enable us to increase our exposure to
the opportunity, as we see gas prices react to increasing LNG export capacity
from the U.S. Gulf Coast region, increasing natural gas fired power
consumption, and seasonal demand factors. I look forward to allocating the
raised capital to our portfolio of highly productive and profitable assets,
and increasing shareholder value as we enter a resurgent U.S. natural gas
market."
Summary on Fundraising
o A Placing of new Units (the "Placing Units") to new and existing
institutional investors at the Placing Price. The Placing will be conducted
through an accelerated bookbuild process (the "Bookbuild") which will launch
immediately following the release of this Announcement. The Placing is subject
to the terms and conditions set out in the Appendix to this Announcement
(which forms part of this announcement);
o A concurrent Prospectus Offering of new Units (the "Prospectus Units") on
a best efforts agency basis at the Prospectus Price. The Prospectus Offering
will be conducted pursuant to the terms and conditions of an agency agreement
to be entered into between the Company, RCC as sole bookrunner and sole agent.
The size of the Prospectus Offering will be determined in the context of the
market at the time of entering into a definitive agency agreement between the
Company and the Agent; and
o Certain directors and members of senior management of the Company forming
part of a president's list are expected to subscribe into the Fundraising
alongside investors.
· The Prospectus Offering will be conducted pursuant to the Company's
Canadian base shelf prospectus dated 28 November 2024 (the "Base Shelf
Prospectus"). A prospectus supplement (the "Prospectus Supplement") relating
to the Prospectus Offering will be filed in each of the provinces of Canada,
other than Quebec. Copies of the Prospectus Supplement and accompanying Base
Shelf Prospectus, when available, can be obtained free of charge under the
Company's profile on SEDAR+ at www.sedarplus.ca
(https://url.avanan.click/v2/___http:/www.sedarplus.ca___.YXAzOnNvdXRoZXJuZW5lcmd5Y29ycDphOm86OWU4MDJkYjBmNzBiZTBmZGM3MzJhYjBiOGUzYzc5NTA6NjpmMjg4OjUzOThjNDkwYWUxMTBiZjJiMTdmMTI1MjE3ZmI2Yzc0MGY2MTlhZjYwNDYyNDhiOGMzYzc0ZDkzZmIxZDc4NTA6cDpU)
. Delivery of the Base Shelf Prospectus and the Prospectus Supplement and any
amendments thereto will be satisfied in accordance with the "access equals
delivery" provisions of applicable Canadian securities legislation, such that
the Company intends to file the Prospectus Supplement within two business
days. The Base Shelf Prospectus and the Prospectus Supplement will contain
important detailed information about the Company and the Prospectus Financing.
Prospective investors should read the Prospectus Supplement and accompanying
Base Shelf Prospectus and the other documents the Company has filed on SEDAR+
at www.sedarplus.ca before making an investment decision. The Prospectus
Offering is expected to close on or around 24 March 2025, and is conditional
on the Company obtaining the extraordinary resolutions in connection with the
Debenture Amendment, and subject customary closing conditions, including the
approval of the TSX Venture Exchange (the "TSXV").
· The number of Placing Units and Prospectus Units (and the underlying
Common Shares and Warrants) to be issued will be determined by the Company
following completion of the Bookbuild in consultation with the Joint
Bookrunners and RCC.
· The Bookbuild is currently expected to close no later than 4.00 p.m.
(GMT) on 14 March 2025, but the Joint Bookrunners and the Company reserve the
right to close the Bookbuild earlier or later, without further notice, and is
conditional on the Company obtaining the extraordinary resolutions in
connection with the Debenture Amendment.
Amendment to the Credit Facility
· On January 31, 2025, Southern repaid principal amount US$1.45 million
resulting in a current net principal balance outstanding of US$14.7 million.
· In conjunction with the Fundraising, Southern has executed an
amendment to the Credit Facility revising monthly principal amortization to
approximately 15% per annum and modifying Asset Coverage financial covenant to
1.75x until January 1, 2026 and 2.0x thereafter, with such amendments to be
made effective upon the completion of the Fundraising for aggregate gross
proceeds of at least US$6.0 million.
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
Research Capital Corporation - Sole Agent & Sole Bookrunner +1 403 750 1280
Kevin Shaw kshaw@researchcapital.com
Tennyson Securities - Joint Bookrunner & Joint Broker +44 (0) 20 7186 9033
Peter Krens / Jason Woollard
Strand Hanson Limited - Nominated & Financial Adviser +44 (0) 20 7409 3494
James Spinney / James Bellman / Rob Patrick
Hannam & Partners - Joint Bookrunner +44 (0) 20 7907 8500
Samuel Merlin / Leif Powis
Camarco +44 (0) 20 3757 4980
Owen Roberts / Sam Morris / Tomisin Ibikunle
Additional Details of the Fundraising
The Placing is being conducted through an accelerated bookbuild process to
eligible institutional investors and will launch immediately following the
release of this Announcement. The Company expects to close the Bookbuild no
later than 4.00 p.m. (GMT) on 14 March 2025, but the Joint Bookrunners and the
Company reserve the right to close the Bookbuild earlier or later, without
further notice.
Details of the results of the Placing will be announced as soon as practicable
after the close of the Bookbuild. The Placing is not being underwritten. The
Placing is conditional on Minimum Gross Proceeds of US$6.0 million being
raised pursuant to the Fundraising. The Common Shares and Warrants underlying
the Placing Units, when issued, will be fully paid and such Common Shares will
rank pari passu in all respects with the Company's existing Common Shares.
The Company has granted to the Agent an option (the "Over-Allotment Option"),
exercisable, in whole or in part, in the sole discretion of the Agent, to
purchase up to an additional number of Units, and/or the components thereof,
that in aggregate would be equal to 15% of the total number of Units to be
issued under the Prospectus Offering, to cover over-allotments, if any, and
for market stabilization purposes, exercisable at any time and from time to
time up to 30 days following the closing of the Prospectus Offering.
This Announcement should be read in its entirety. Investors' attention is
drawn to the detailed Terms and Conditions of the Placing. By choosing to
participate in the Placing and by making an oral and legally binding offer to
acquire Placing Units, investors will be deemed to have read and understood
this announcement in its entirety (including the Appendix) and to be making
such offer on the terms and subject to the conditions of the Placing contained
here, and to be providing the representations, warranties and acknowledgements
contained in the Terms and Conditions.
The Company intends that the Placing will be conducted in conjunction with the
Prospectus Offering.
Certain of the Directors and members of the Company's senior management team
have indicated their intention to participate in the Fundraising.
Application will be made to: (a) the London Stock Exchange plc for admission
of the Common Shares (including the Common Shares issuable upon the exercise
of the Warrants) underlying the Placing Units and the Prospectus Units to
trading on AIM; and (b) the TSXV for listing of the Common Shares (including
the Common Shares issuable upon the exercise of the Warrants) underlying the
Placing Units and the Prospectus Units for trading on the facilities of the
TSXV. Expected timing for admission of the Common Shares underlying the
Placing Units to trading on AIM and the Common Shares underlying the
Prospectus Units to trading on the TSXV is as set out in the 'Expected
Timetable of Principal Events' below. Final confirmation of the expected
timing for admission of such Common Shares will be confirmed in due course and
is subject to a number of conditions, including, without limitation, the
entering into of a definitive agency agreement and receipt of all regulatory
approvals, including the approval of the TSXV.
Without prior written approval of the TSXV and compliance with all applicable
Canadian securities laws, the Common Shares and Warrants underlying the
Placing Units may not be sold, transferred, hypothecated or otherwise traded
on or through the facilities of TSXV or otherwise in Canada or to or for the
benefit of a Canadian resident until the date that is four months and a day
after the date of issuance.
The relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus
has been lodged with or registered by, the Australian Securities and
Investments Commission or the Japanese Ministry of Finance or the South
African Reserve Bank; and the Placing Units have not been, nor will they be,
registered or qualified for distribution, as applicable under or offered in
compliance with the securities laws of any state, province or territory of
United States, Australia, New Zealand, Canada, Japan or South Africa.
Accordingly, the Common Shares and Warrants underlying the Placing Units may
not (unless an exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or into the
United States, Australia, New Zealand, Canada, Japan or South Africa or any
other jurisdiction in which such offer, sale, resale or delivery would be
unlawful.
The securities described herein have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act")
or with any securities regulatory authority of any state or other jurisdiction
of the United States, and accordingly, may not be offered or sold within the
United States, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the U.S. Securities Act and
applicable state or local securities laws. The securities described herein are
being offered and sold outside the United States in "offshore transactions" as
defined in and in reliance on Regulation S under the U.S. Securities Act. This
Announcement shall not constitute or form part of, and should not be construed
as, an offer or invitation to sell or issue, or any solicitation to purchase
or subscribe for, or otherwise invest in, any of the Company's securities in
any jurisdiction, nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful.
There has been and will be no public offer of the Company's securities in
Australia, New Zealand, Japan, South Africa, the United States or elsewhere,
other than the Prospectus Offering in each of the provinces of Canada, except
Québec.
Expected Timetable of Principal Events
Bookbuild Following publication of this Announcement on 12
March 2025
Completion of Bookbuild No later than 4.00 p.m. (GMT) on 14 March 2025
Admission effective and dealings in the Common Shares underlying the Placing 8.00 a.m. (GMT) on 26 March 2025
Units and the Prospectus Units on AIM
Admission effective and dealings in the Common Shares underlying the Placing 9:30 a.m. (ET) on 26 March 2025
Units and the Prospectus Units on TSX-V
Qualified Person's Statement
Gary McMurren, COO, who has over 24 years of relevant experience in the oil
industry and has reviewed and 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.
Footnotes
1. Figures based on 3 March 2025 strip pricing, and assuming 100%
working interest.
2. Figures based on flat commodity pricing of US$3.50/MMBtu for
natural gas and US$75/bbl for WTI.
3. See "Specified Financial Measures" under "Reader Advisory" below.
TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT, INCLUDING THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX
(THE "TERMS AND CONDITIONS"), IS RESTRICTED AND IS NOT FOR PUBLICATION,
RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO THE UNITED STATES, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY
OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THESE
TERMS AND CONDITIONS ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY
AT: (A) PERSONS WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND
ARE, UNLESS OTHERWISE AGREED BY THE JOINT BOOKRUNNERS, ("QUALIFIED INVESTORS")
AS DEFINED IN ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION (WHICH MEANS
REGULATION (EU) 2017/1129 AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURES IN
ANY MEMBER STATE) (THE "PROSPECTUS REGULATION"); AND/OR (B) IN THE UNITED
KINGDOM, PERSONS WHO ARE (I) QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE
2(E) OF THE PROSPECTUS REGULATION (AS IT FORMS PART OF DOMESTIC UK LAW
PURSUANT TO THE EUWA); AND (II) "INVESTMENT PROFESSIONALS" WITHIN THE MEANING
OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL
PROMOTION) ORDER 2005 (AS AMENDED) (THE "ORDER"); (II) PERSONS FALLING WITHIN
ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE
LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS
"RELEVANT PERSONS"). THESE TERMS AND CONDITIONS ARE A FINANCIAL PROMOTION,
WHICH IS EXEMPT FROM THE GENERAL RESTRICTION IN SECTION 21 OF FSMA ON THE
COMMUNICATION OF INVITATIONS OR INDUCEMENTS TO ENGAGE IN INVESTMENT ACTIVITY,
ON THE GROUNDS THAT IT IS ONLY BEING DISTRIBUTED TO RELEVANT PERSONS.
ACCORDINGLY, THESE TERMS AND CONDITIONS MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. DISTRIBUTION OF THIS ANNOUNCEMENT IN
CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS
DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO
SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS
RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS.
THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE
SECURITIES LAWS OF ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN
OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS
ANNOUNCEMENT IS NOT AN OFFER OF OR SOLICITATION OF AN OFFER TO PURCHASE OR
SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO
HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), AND MAY NOT BE OFFERED OR
SOLD DIRECTLY OR INDIRECTLY WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE U.S. SECURITIES ACT. NO PUBLIC OFFERING OF SECURITIES IS
BEING MADE IN THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO THE LEGAL, TAX,
BUSINESS AND RELATED IMPLICATIONS OF AN INVESTMENT IN PLACING SHARES AND
WARRANTS. THE PRICE OF SHARES AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS
WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON A
DISPOSAL OF THEIR SHARES.
The relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada in respect of the
issuance of the Placing Shares and grant of the Warrants; no prospectus has
been lodged with or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance, the South African Reserve Bank
or, in respect of the Placing Shares, any securities commission in Canada; and
the Placing Shares and Warrants have not been, nor will they be, registered or
qualified for distribution, as applicable under or offered in compliance with
the securities laws of any state, province or territory of Australia, Canada,
Japan or South Africa. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be offered, sold,
resold or delivered, directly or indirectly, in or into Australia, Canada,
Japan or South Africa or any other jurisdiction in which such offer, sale,
resale or delivery would be unlawful.
Solely for the purposes of the product governance requirements contained
within the FCA Handbook Product Intervention and Product Governance Sourcebook
(the "UK Product Governance Rules"), and disclaiming all and any liability,
whether arising in tort, contract or otherwise, which any "manufacturer" (for
the purposes of the UK Product Governance Rules) may otherwise have with
respect thereto, the Placing Shares and Warrants have been subject to a
product approval process, which has determined that the Placing Shares and
Warrants are: (i) compatible with an end target market of retail investors and
investors who meet the criteria of professional clients and eligible
counterparties, each defined in the FCA Handbook Conduct of Business
Sourcebook ("COBS"); and (ii) eligible for distribution through all
distribution channels as are permitted by the UK Product Governance Rules (the
"UK Target Market Assessment").
Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive
(EU) 2017/593 supplementing MiFID II; and (c) local implementing measures
(together, the "MiFID II Product Governance Requirements"), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which
any "manufacturer" and/or "distributor" (for the purposes of the MiFID II
Product Governance Requirements) may otherwise have with respect thereto, the
Placing Shares and Warrants have been subject to a product approval process,
which has determined that the Placing Shares and Warrants are: (i)
compatible with an end target market of retail investors and investors who
meet the criteria of professional clients and eligible counterparties (each as
defined in MiFID II); and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the "EU Target Market
Assessment").
Notwithstanding the UK Target Market Assessment and the EU Target Market
Assessment, distributors should note that: the price of the Common Shares may
decline and investors could lose all or part of their investment; the Common
Shares offer no guaranteed income and no capital protection; and an investment
in the Common Shares is compatible only with investors who do not need a
guaranteed income or capital protection, who (either alone or in conjunction
with an appropriate financial or other adviser) are capable of evaluating the
merits and risks of such an investment and who have sufficient resources to be
able to bear any losses that may result therefrom.
Each of the UK Target Market Assessment and the EU Target Market Assessment is
without prejudice to any contractual, legal or regulatory selling restrictions
in relation to the Placing. Furthermore, it is noted that, notwithstanding the
UK Target Market Assessment and the EU Target Market Assessment, the Joint
Bookrunners will only procure investors who meet the criteria of professional
clients and eligible counterparties each as defined under COBS or MiFID II, as
applicable.
For the avoidance of doubt, each of the UK Target Market Assessment and the EU
Target Market Assessment does not constitute: (a) an assessment of suitability
or appropriateness for the purposes of Chapters 9A or 10A respectively of COBS
or MiFID II, as applicable; or (b) a recommendation to any investor or group
of investors to invest in, or purchase, or take any other action whatsoever
with respect to the Common Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and Warrants and determining
appropriate distribution channels.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Announcement
(or any part of it) should seek appropriate advice before taking any action.
These terms and conditions apply to persons making an offer to acquire Placing
Shares and Warrants. Each Placee hereby agrees with the Joint Bookrunners and
the Company to be bound by these terms and conditions as being the terms and
conditions upon which Placing Shares will be issued or acquired and Warrants
granted. A Placee shall, without limitation, become so bound if a Bookrunner
confirms to such Placee its allocation of Placing Shares and Warrants.
Upon being notified of its allocation of Placing Shares and Warrants, a Placee
shall be contractually committed to acquire the number of Placing Shares
allocated to it at the Placing Price and Warrants and, to the fullest extent
permitted by law, will be deemed to have agreed not to exercise any rights to
rescind or terminate or otherwise withdraw from such commitment.
In this Terms and Conditions, unless the context otherwise requires, "Placee"
means a Relevant Person (including individuals, funds or others) on whose
behalf a commitment to subscribe for or acquire Placing Shares and Warrants
has been given.
Details of the Placing Agreement and the Placing Shares
The Joint Bookrunners and the Company have entered into a Placing Agreement,
under which the Joint Bookrunners have, on the terms and subject to the
conditions set out therein, undertaken to use their reasonable endeavours to
procure subscribers for Placing Shares at the Placing Price. The Placing is
not being underwritten by either of the Joint Bookrunners or any other person.
For every two Placing Shares subscribed for, the Placee will also be granted
one Warrant. Each Warrant will entitle the Placee to subscribe for one Common
Share at a price of 5.3 pence per Common Share for a period of 36 months. The
Warrants will be unlisted and no application will be made for the Warrants to
be admitted to trading on AIM or any other stock exchange.
The number of Placing Shares and Warrants will be determined following
completion of the Bookbuild. The timing of the closing of the Bookbuild, the
number of Placing Shares and Warrants and their allocations are at the
discretion of the Joint Bookrunners, following consultation with the Company.
Allocations will be confirmed orally or by email by the relevant Bookrunner
following the close of the Bookbuild. An announcement confirming these details
will then be made by the Company as soon as practicable following completion
of the Bookbuild.
The Placing Shares will, when issued, be subject to the Articles, will be
credited as fully paid and non-assessable and rank equally in all respects
with the existing Common Shares (and the new Common Shares to be issued
pursuant to the Prospectus Offering), including the right to receive all
dividends and other distributions (if any) declared, made or paid on or in
respect of Common Shares after the date of issue of the Placing Shares.
Subject to Admission, the Placing Shares will trade on AIM under the trading
symbol "SOUC" and with ISIN CA8428133059.
Other than in accordance with TSXV Rules and compliance with all Canadian
Securities Laws, the Placing Shares may not be sold, transferred, hypothecated
or otherwise traded on or through the facilities of TSXV or otherwise in
Canada or to or for the benefit of a Canadian resident until the date that is
four months and a day after the date of issuance of such Placing Shares.
Application for admission to trading
Application will be made to: (a) the London Stock Exchange plc for admission
of the Placing Shares and the Prospectus Shares to trading on AIM; and (b) the
TSXV for listing of the Placing Shares and the Prospectus Shares for trading
on the facilities of the TSXV. It is expected that settlement of any such
shares (via Depositary Interests) and Admission will become effective at 8.00
a.m. on or around 26 March 2025 and that dealings in the Placing Shares and
Prospectus Shares will commence at that time.
Bookbuild
The Joint Bookrunners are conducting a bookbuilding process to determine
demand for participation in the Placing by potential Placees at the Placing
Price. This Appendix gives details of the terms and conditions of, and the
mechanics of participation in, the Placing. No commissions will be paid to
Placees or by Placees in respect of any Placing Shares or Warrants.
The Joint Bookrunners and the Company shall be entitled to effect the Placing
by such alternative method to the Bookbuild as they may, in their sole
discretion, determine.
The principal terms of the Placing are as follows:
1. The Joint Bookrunners are arranging the Placing as agents
for, and brokers of, the Company.
2. Participation in the Placing is only available to persons
who are lawfully able to be, and have been, invited to participate by a
Bookrunner.
3. The Bookbuild will establish the number of Placing Shares
to be issued at the Placing Price and Warrants granted, which will be
determined by the Joint Bookrunners, in consultation with the Company,
following completion of the Bookbuild. The number of Placing Shares will be
announced by the Company on a Regulatory Information Service following the
completion of the Bookbuild.
4. In order to participate in the Placing, prospective Placees
should communicate their bid by telephone or email to their usual contact at
the relevant Bookrunner. Each bid should state the number of Placing Shares
and Warrants which the prospective Placee wishes to subscribe for or purchase
at the Placing Price. Bids may be scaled down by the relevant Bookrunner on
the basis referred to in paragraph 8 below.
5. The timing of the closing of the Bookbuild will be at the
discretion of the Joint Bookrunners. The Company reserves the right to reduce
or seek to increase the amount to be raised pursuant to the Placing, in its
absolute discretion.
6. Allocations of the Placing Shares and Warrants will be
determined by the Joint Bookrunners, following consultation with the Company.
Each Placee's allocation will be confirmed to Placees orally, or by email, by
the relevant Bookrunner following the close of the Bookbuild and a trade
confirmation or contract note will be dispatched as soon as possible
thereafter. Oral or emailed confirmation from the relevant Bookrunner will
give rise to an irrevocable, legally binding commitment by that person (who at
that point becomes a Placee), in favour of that Bookrunner and the Company,
under which it agrees to acquire by subscription the number of Placing Shares
at the Placing Price and Warrants allocated to it and otherwise on the terms
and subject to the conditions set out in these Terms and Conditions and in
accordance with the Articles. Except with the relevant Bookrunner's consent,
such commitment will not be capable of variation or revocation.
7. The Company will make an announcement following the close
of the Bookbuild detailing the number of Placing Shares to be issued at the
Placing Price and Warrants to be granted to Placees.
8. Subject to paragraphs 4 and 5 above, the relevant
Bookrunner may choose not to accept bids and/or to accept bids, either in
whole or in part, on the basis of allocations determined at its discretion
(after consultation with the Company) and may scale down any bids for this
purpose on such basis as it may determine. The Joint Bookrunners may also,
notwithstanding paragraphs 4 and 5 above, subject to the prior consent of the
Company, allocate Placing Shares and Warrants after the time of any initial
allocation to any person submitting a bid after that time.
9. A bid in the Bookbuild will be made on the terms and
subject to the conditions in this Announcement (including these Terms and
Conditions) and will be legally binding on the Placee on behalf of which it is
made and except with the relevant Bookrunner's consent will not be capable of
variation or revocation from the time at which it is submitted.
10. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing Shares to be
acquired pursuant to the Placing will be required to be made at the same time,
on the basis explained below under "Registration and Settlement".
11. All obligations of the Joint Bookrunners under the Placing
will be subject to fulfilment of the conditions referred to below "Conditions
of the Placing" and to the Placing not being terminated on the basis referred
to below under "Right to terminate under the Placing Agreement".
12. By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate only in the
circumstances described below and will not be capable of rescission or
termination by the Placee.
13. To the fullest extent permissible by law and the applicable
rules of the Financial Conduct Authority, neither of the Joint Bookrunners,
nor any of their respective affiliates, agents, directors, officers or
employees shall have any liability to Placees (or to any other person whether
acting on behalf of a Placee or otherwise whether or not a recipient of these
terms and conditions) in respect of the Placing. In particular, neither of the
Joint Bookrunners, nor any of their respective affiliates, agents, directors,
officers or employees shall have any liability (including to the extent
permissible by law, any fiduciary duties) in respect of the Joint Bookrunners'
conduct of the Placing or of such alternative method of effecting the Placing
as the Joint Bookrunners and the Company may determine.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional
and not having been terminated in accordance with its terms. Each of the Joint
Bookrunners' obligations under the Placing Agreement in respect of the Placing
Shares and Warrants are conditional on, inter alia:
1. the application for Admission being delivered to the London
Stock Exchange on or before 24 March 2025;
2. each of the conditions to the Prospectus Offering which are
to be fulfilled prior to Admission having been fulfilled or (if capable of
waiver) waived by 24 March 2025 and not having become incapable of being
fulfilled, in each case by the respective time(s) and date(s) (if any)
specified therein;
3. the Minimum Gross Proceeds being raised (which, for the
avoidance of doubt, may be raised in entirety through any of the Placing or
Prospectus Offering);
4. receipt by the Company of the TSXV approval;
5. the delivery by the Company to the Joint Bookrunners of
certain documents required under the Placing Agreement;
6. the Company having performed its obligations under the
Placing Agreement to the extent that such obligations fall to be performed
prior to Admission;
7. the issue and allotment of the Placing Shares, conditional
only upon Admission;
8. Admission taking place no later than 8.00 a.m. (London
time) on 26 March 2025 or such other date and time as may be agreed between
the Company and the Joint Bookrunners, not being later than 8.00 a.m. (London
time) on 7 April 2025 (the "Long Stop Date"); and
9. the Placing Agreement not having been terminated by the
Joint Bookrunners in accordance with its terms.
If: (i) any of the conditions contained in the Placing Agreement, including
those described above, are not fulfilled or (where applicable) waived by the
Joint Bookrunners by the respective time or date where specified (or such
later time or date as the Joint Bookrunners may notify to the Company, being
not later than the Long Stop Date);
(ii) any of such conditions becomes incapable of being fulfilled; or (iii) the
Placing Agreement is terminated in the
circumstances specified below, the Placing will not proceed and the Placees'
rights and obligations hereunder in relation to the Placing Shares and
Warrants shall cease and terminate at such time and each Placee agrees that no
claim can be made by the Placee in respect thereof.
The Joint Bookrunners may, at their discretion and upon such terms as they
thinks fit, waive, or extend the period for (subject to the Long Stop Date),
compliance by the Company with the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement save that
the condition relating to Admission taking place may not be waived. Any such
extension or waiver will not affect Placees' commitments as set out in these
Terms and Conditions.
Neither the Joint Bookrunners, the Company nor any of their respective
affiliates, agents, directors, officers or employees shall have any liability
to any Placee (or to any other person whether acting on behalf of a Placee or
otherwise) in respect of any decision they may make as to whether or not to
waive or to extend the time and/or date for the satisfaction of any condition
to the Placing nor for any decision they may make as to the satisfaction of
any condition or in respect of the Placing generally and, by participating in
the Placing, each Placee agrees that any such decision is within the absolute
discretion of the Joint Bookrunners.
Right to terminate the Placing Agreement
The Joint Bookrunners are entitled, at any time before Admission, to terminate
the Placing Agreement by giving notice to the Company in certain
circumstances, including, inter alia, if before Admission:
1. any of the warranties given in the Placing Agreement are
not true and accurate and not misleading when given at the date of the Placing
Agreement or would not be true and accurate or would be misleading if they
were repeated on Admission;
2. the Company has failed to comply with its obligations under
the Placing Agreement, or with the requirements of any applicable laws or
regulations (including MAR, the AIM Rules, the TSXV Rules and Canadian
Securities Laws) in relation to the Placing;
3. any of the conditions set out in the Placing Agreement are
not fulfilled or (if capable of waiver) waived by the Joint Bookrunners or
shall have become incapable of being fulfilled by the respective time(s) and
date(s) (if any) specified in the Placing Agreement;
4. there has been any development or event which will or is
likely to have a material adverse effect on the condition (financial,
operational, legal or otherwise), prospects, solvency, liquidity, management,
results of operations, financial position, business or general affairs of the
Group taken as a whole, whether or not foreseeable and whether or not arising
in the ordinary course of business; or
5. there has been a change in national or international
financial, political, economic, monetary or stock market conditions (primary
or secondary) or an imposition of or compliance with any law or governmental
or regulatory order, rule, regulation, restriction or direction,
which, in the opinion of the Joint Bookrunners, would or would be likely to
prejudice materially the Company or render the Placing (or any material part
thereof) or Admission impractical or inadvisable.
The rights and obligations of the Placees will not be subject to termination
by the Placees or any prospective Placees at any time or in any circumstances.
By participating in the Placing, Placees agree that the exercise by the Joint
Bookrunners of any right of termination or other discretion under the Placing
Agreement shall be within the absolute discretion of the Joint Bookrunners and
that the Joint Bookrunners need not make any reference to Placees in this
regard and that neither the Joint Bookrunners nor any of their respective
affiliates shall have any liability to Placees whatsoever in connection with
any such exercise or failure so to exercise.
No Admission Document or Prospectus
The Placing Shares and Warrants are being offered to a limited number of
specifically invited persons only and have not been nor will be offered in
such a way as to require the publication of a prospectus in the United
Kingdom. No offering document, admission document or prospectus has been or
will be submitted to be approved by the FCA or the London Stock Exchange in
relation to the Placing, and Placees' commitments will be made solely on the
basis of the information contained in these Terms and Conditions and the
business and financial information that the Company is required to publish in
accordance with the AIM Rules and the TSXV Rules, including this Announcement
(the "Exchange Information"). Neither the Base Prospectus nor the Company's
Prospectus Supplement is a prospectus for the purposes of Section 85(1) of
FSMA and, accordingly, will not be examined or approved as a prospectus by the
FCA under Section 87A FSMA or by the London Stock Exchange and it will not be
filed with the FCA pursuant to the FCA's Prospectus Regulation Rules nor will
it be approved by a person authorised under FSMA, for the purposes of Section
21 FSMA. Each Placee, by accepting a participation in the Placing, agrees that
the content of the Exchange Information (including this Announcement) is
exclusively the responsibility of the Company and confirms that it has not
relied on any other information, representation, warranty, or statement made
by or on behalf of the Company, the Joint Bookrunners (or either Bookrunner)
or any other person and neither of the Joint Bookrunners, the Company nor any
other person will be liable for any Placee's decision to participate in the
Placing based on any other information, representation, warranty or statement
which the Placees may have obtained or received and, if given or made, such
information, representation, warranty or statement must not be relied upon as
having been authorised by the Joint Bookrunners (or either of them), the
Company or their respective officers, directors, employees or agents. Each
Placee acknowledges and agrees that it has relied on its own investigation of
the business, financial or other position of the Company in accepting a
participation in the Placing. Neither the Company nor the Joint Bookrunners
are making any undertaking or warranty to any Placee regarding the legality of
an investment in the Placing Shares and Warrants by such Placee under any
legal, investment or similar laws or regulations. Each Placee should not
consider any information in this Announcement to be legal, tax or business
advice. Each Placee should consult its own solicitor, tax adviser and
financial adviser for independent legal, tax and financial advice regarding an
investment in the Placing Shares and Warrants. Nothing in this paragraph shall
exclude the liability of any person for fraudulent misrepresentation.
Registration and Settlement
Following the close of the Bookbuild, each Placee allocated Placing Shares in
the Placing will be sent a trade confirmation or contract note in accordance
with the standing arrangements in place with the relevant Bookrunner, stating
the number of Placing Shares allocated to it at the Placing Price, the
aggregate amount owed by such Placee (in pounds sterling) and a form of
confirmation in relation to settlement instructions.
Each Placee will be deemed to agree that it will do all things necessary to
ensure that delivery and payment is completed as directed by the relevant
Bookrunner in accordance with the standing CREST settlement instructions which
they have in place with that Bookrunner.
Settlement of transactions in the Placing Shares via the Depositary Interests
(ISIN: CA8428133059) following Admission will take place within the system
administered by Euroclear UK & International Limited ("CREST") provided
that, subject to certain exceptions, each Joint Bookrunner reserves the right
to require settlement for, and delivery of, the Placing Shares (or a portion
thereof) to Placees by such other means that it deems necessary if delivery or
settlement is not possible or practicable within CREST within the timetable
set out in these Terms and Conditions or would not be consistent with the
regulatory requirements in any Placee's jurisdiction.
It is expected that settlement will take place on 26 March 2025 in accordance
with the instructions set out in the contract note.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of 4
percentage points above the prevailing LIBOR rate as determined by the
relevant Bookrunner.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the relevant Bookrunner may sell any or all of the Placing Shares
and Warrants allocated to that Placee on such Placee's behalf and retain from
the proceeds, for that Bookrunner's account and benefit (as agent for the
Company), an amount equal to the aggregate amount owed by the Placee plus any
interest due. The relevant Placee will, however, remain liable and shall
indemnify the relevant Bookrunner on demand for any shortfall below the
aggregate amount owed by it and may be required to bear any stamp duty or
stamp duty reserve tax or securities transfer tax (together with any interest
or penalties) which may arise upon the sale of such Placing Shares and
Warrants on such Placee's behalf. By communicating a bid for Placing Shares,
each Placee confers on the relevant Bookrunner such authorities and powers
necessary to carry out any such sale and agrees to ratify and confirm all
actions which that Bookrunner lawfully takes in pursuance of such sale. Legal
and/or beneficial title in and to any Placing Shares and Warrants shall not
pass to the relevant Placee until it has fully complied with its obligations
hereunder.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the form of confirmation is copied and delivered
immediately to the relevant person within that organisation.
Insofar as Placing Shares or Warrants are registered in a Placee's name or
that of its nominee or in the name of any person for whom a Placee is
contracting as agent or that of a nominee for such person, such Placing Shares
and Warrants should, subject as provided below, be so registered free from any
liability to UK stamp duty or stamp duty reserve tax or securities transfer
tax. Neither of the Joint Bookrunners nor the Company will be liable in any
circumstances for the payment of stamp duty, stamp duty reserve tax or
securities transfer tax in connection with any of the Placing Shares and
Warrants. Placees will not be entitled to receive any fee or commission in
connection with the Placing.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person acting on such
Placee's behalf) makes the following representations, warranties,
acknowledgements, agreements and undertakings (as the case may be) to the
Company and each Joint Bookrunner:
1. that it has read and understood this Announcement,
including these Terms and Conditions, in its entirety and that its
subscription for or purchase of Placing Shares and Warrants is subject to and
based upon all the terms, conditions, representations, warranties,
acknowledgements, agreements and undertakings and other information contained
therein and undertakes not to redistribute or duplicate this Announcement;
2. that its obligations are irrevocable and legally binding
and shall not be capable of rescission or termination by it in any
circumstances;
3. that the exercise by the Joint Bookrunners of any right or
discretion under the Placing Agreement shall be within the absolute discretion
of the Joint Bookrunners and the Joint Bookrunners need not have any reference
to it and shall have no liability to it whatsoever in connection with any
decision to exercise or not to exercise any such right and each Placee agrees
that it has no rights against the Joint Bookrunners or the Company, or any of
their respective officers, directors, employees agents or advisers, under the
Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act
1999;
4. that these terms and conditions represent the whole and
only agreement between it, the relevant Bookrunner and the Company in relation
to its participation in the Placing and supersedes any previous agreement
between any of such parties in relation to such participation. Accordingly,
each Placee, in accepting its participation in the Placing, is not relying on
any information or representation or warranty in relation to the Company or
any of its subsidiaries or any of the Placing Shares or Warrants other than as
contained in the Exchange Information (including this Announcement), such
information being all that it deems necessary to make an investment decision
in respect of the Placing Shares and Warrants. Each Placee agrees that neither
the Company, the Joint Bookrunners nor any of their respective officers,
directors or employees will have any liability for any such other information,
representation or warranty, express or implied;
5. that in the case of any Placing Shares and Warrants
acquired by it as a financial intermediary, as that term is used in Article
5(1) of the Prospectus Regulation and Article 5(1) of the Prospectus
Regulation (as it forms part of domestic UK law pursuant to the EUWA), (i) the
Placing Shares and Warrants acquired by it in the Placing have not been
acquired on behalf of, nor have they been acquired with a view to their offer
or resale to, persons in any Member State of the European Economic Area which
has implemented the Prospectus Regulation or the UK, respectively, other than
Qualified Investors or in circumstances in which the prior consent of the
Joint Bookrunners has been given to the offer or resale; or (ii) where Placing
Shares and Warrants have been acquired by it on behalf of persons in any
member state of the EEA, or the UK respectively, other than Qualified
Investors, the offer of those Placing Shares and Warrants to it is not treated
under the Prospectus Regulation or the Prospectus Regulation (as it forms part
of domestic UK law pursuant to the EUWA) (as the case may be) as having been
made to such persons;
6. that neither it nor, as the case may be, its clients expect
the Joint Bookrunners to have any duties or responsibilities to such persons
similar or comparable to the duties of "best execution" and "suitability"
imposed by the FCA's Conduct of Business Source Book, and that the Joint
Bookrunners are not acting for it or its clients, and that the Joint
Bookrunners will not be responsible for providing the protections afforded to
customers of the Joint Bookrunners or for providing advice in respect of the
transactions described in this Announcement;
7. that it has made its own assessment of the Placing Shares
and Warrants and has relied on its own investigation of the business,
financial or other position of the Company in accepting a participation in the
Placing and that it shall not be entitled to rely upon any material regarding
the Placing Shares or Warrants or the Company (if any) that the Joint
Bookrunners (or either of them) or the Company or any of their respective
affiliates, agents, directors, officers or employees or any person acting on
behalf of any of them has provided, other than the information in the Exchange
Information (including this Announcement); nor has it requested any of the
Joint Bookrunners, the Company or any of their respective affiliates, agents,
directors, officers or employees or any person acting on behalf of any of them
to provide it with any such information;
8. that it understands and accepts that, other than in
accordance with TSXV Rules and compliance with all Canadian Securities Laws,
the Placing Shares may not be sold, transferred, hypothecated or otherwise
traded on or through the facilities of TSXV or otherwise in Canada or to or
for the benefit of a Canadian resident until the date that is four months and
a day after the date of issuance of such Placing Shares;
9. that it is located outside the United States and is
subscribing for and/or purchasing the Placing Shares and Warrants only in
"offshore transactions" as defined in and pursuant to Regulation S;
10. that neither the Joint Bookrunners or the Company or any of
their respective affiliates, agents, directors, officers or employees has made
any representation or warranty to it, express or implied, with respect to the
Company, the Placing or the Placing Shares or the accuracy, completeness or
adequacy of the Exchange Information;
11. that it is not a national or resident of Canada, Australia,
the Republic of South Africa or Japan or a corporation, partnership or other
entity organised under the laws of Canada, Australia, the Republic of South
Africa or Japan and that it will not (unless an exemption under the relevant
securities laws is applicable) offer, sell, renounce, transfer or deliver,
directly or indirectly, any of the Placing Shares or Warrants in Canada,
Australia, the Republic of South Africa or Japan or to or for the benefit of
any person resident in Canada, Australia, the Republic of South Africa or
Japan and each Placee acknowledges that the relevant clearances or exemptions
are not being obtained from the Securities Commission of any province or
territory of Canada, that no prospectus has been or will be lodged with, filed
with or registered by the Australian Securities and Investments Commission,
the Japanese Ministry of Finance, the South African Reserve Bank or, in
respect of the Placing Shares or Warrants, any securities commission of
Canada, and that the Placing Shares and Warrants are not being offered for
sale and may not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or indirectly, in
or into the United States, Australia, Canada, Japan or South Africa or any
other jurisdiction in which such offer, sale, resale or delivery would be
unlawful;
12. that it does not have a registered address in, and is not a
citizen, resident or national of, any jurisdiction in which it is unlawful to
make or accept an offer of the Placing Shares or Warrants and it is not acting
on a non- discretionary basis for any such person;
13. that it is entitled to subscribe for and/or purchase Placing
Shares and Warrants under the laws of all relevant jurisdictions which apply
to it and that it has fully observed such laws and obtained all governmental
and other consents which may be required thereunder or otherwise and complied
with all necessary formalities and that it has not taken any action which will
or may result in the Company or the Joint Bookrunners (or either of them) or
any of their respective directors, officers, employees or agents acting in
breach of any regulatory or legal requirements of any territory in connection
with the Placing or its acceptance;
14. that it has obtained all necessary consents and authorities to
enable it to give its commitment to subscribe for and/or purchase the Placing
Shares and Warrants and to perform its subscription and/or purchase
obligations;
15. that where it is acquiring Placing Shares or Warrants for one
or more managed accounts, it is authorised in writing by each managed account:
(a) to acquire the Placing Shares and Warrants for each managed account; (b)
to make on its behalf the representations, warranties, acknowledgements,
undertakings and agreements in these Terms and Conditions; and (c), if
applicable, to receive on its behalf any investment letter relating to the
Placing in the form provided to it by the relevant Bookrunner;
16. that it is either: (a) a person of a kind described in
paragraph 5 of Article 19 (persons having professional experience in matters
relating to investments and who are investment professionals) of the Order; or
(b) a person of a kind described in paragraph 2 of Article 49(2)(A) to (D)
(high net worth companies, unincorporated associations, partnerships or trusts
or their respective directors, officers or employees) of the Order; or (c) a
person to whom it is otherwise lawful for this Announcement to be
communicated;
17. that, unless otherwise agreed by the relevant Bookrunner, it
is a Qualified Investor;
18. that, unless otherwise agreed by the relevant Bookrunner, it
is a "professional client" or an "eligible counterparty" within the meaning of
Chapter 3 of the FCA's Conduct of Business Sourcebook and it is purchasing
Placing Shares or Warrants for investment only and not with a view to resale
or distribution;
19. it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of section 21 of FSMA)
relating to the Placing Shares or Warrants in circumstances in which section
21(1) of FSMA does not require approval of the communication by an authorised
person;
20. that any money held in an account with the relevant Bookrunner
(or its nominee or agent) on its behalf and/or any person acting on its behalf
will not be treated as client money within the meaning of the rules and
regulations of the FCA. Each Placee further acknowledges that the money will
not be subject to the protections conferred by the FCA's client money rules.
As a consequence, this money will not be segregated from the Bookrunner's (or
its nominee's or agent's) money in accordance with such client money rules and
will be used by the relevant Bookrunner in the course of its own business and
each Placee will rank only as a general creditor of the relevant Bookrunner;
21. that it will (or will procure that its nominee will) if
applicable, make notification to the Company of the interest in its Common
Shares in accordance with the Articles (which incorporate by reference the
requirements of Chapter 5 of the Disclosure Guidance and Transparency Rules of
the FCA);
22. that it is not, and it is not acting on behalf of, a person
falling within subsections (6), (7) or (8) of sections 67 or 70 respectively
or subsections (2) and (3) of section 93 or subsection (1) of section 96 of
the Finance
Act 1986;
23. that it will not deal or cause or permit any other person to
deal in all or any of the Placing Shares or Warrants which it is subscribing
for and/or purchasing under the Placing unless and until Admission becomes
effective;
24. that it appoints irrevocably any director of the relevant
Bookrunner as its agent for the purpose of executing and delivering to the
Company and/or its registrars any document on its behalf necessary to enable
it to be registered as the holder of the Placing Shares and Warrants;
25. that this Announcement does not constitute a securities
recommendation or financial product advice and that neither of the Joint
Bookrunners nor the Company has considered its particular objectives,
financial situation and needs;
26. that it has sufficient knowledge, sophistication and
experience in financial, business and investment matters as is required to
evaluate the merits and risks of subscribing for or purchasing the Placing
Shares and Warrants and is aware that it may be required to bear, and it,
and any accounts for which it may be acting, are able to bear, the economic
risk of, and is able to sustain, a complete loss in connection with the
Placing;
27. that it will indemnify and hold the Company, each Joint
Bookrunner and their respective affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and expenses) arising
out of or in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in these Terms and Conditions
and further agrees that the Company and each of the Joint Bookrunners will
rely on the truth and accuracy of the confirmations, warranties,
acknowledgements and undertakings herein and, if any of the foregoing is or
becomes no longer true or accurate, the Placee shall promptly notify the
relevant Bookrunner and the Company. All confirmations, warranties,
acknowledgements and undertakings given by the Placee, pursuant to this
Announcement (including the Terms and Conditions) are given to each Joint
Bookrunner for itself and on behalf of the Company and will survive completion
of the Placing and Admission;
28. that time shall be of the essence as regards obligations
pursuant to these Terms and Conditions;
29. that it is responsible for obtaining any legal, financial, tax
and other advice that it deems necessary for the execution, delivery and
performance of its obligations in accepting the terms and conditions of the
Placing, and that it is not relying on the Company or either of the Joint
Bookrunners to provide any legal, financial, tax or other advice to it;
30. that all dates and times in this Announcement (including these
Terms and Conditions) may be subject to amendment and that the relevant
Bookrunner shall notify it of such amendments;
31. that (i) it has complied with its obligations under the
Criminal Justice Act 1993 and MAR, (ii) in connection with money laundering
and terrorist financing, it has complied with its obligations under the
Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000 (as amended),
the Terrorism Act 2006 and the Money Laundering and Terrorist Financing
Regulations 2019 and (iii) it is not a person: (a) with whom transactions are
prohibited under the Foreign Corrupt Practices Act of 1977 or any economic
sanction programmes administered by, or regulations promulgated by, the Office
of Foreign Assets Control of the U.S. Department of the Treasury or the United
States Department of State; (b) named on the Consolidated List of Financial
Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c)
subject to financial sanctions imposed pursuant to a regulation of the
European Union or a regulation adopted by the United Nations (together, the
"Regulations"); and, if making payment on behalf of a third party, that
satisfactory evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and, if making
payment on behalf of a third party, that satisfactory evidence has been
obtained and recorded by it to verify the identity of the third party as
required by the Regulations and has obtained all governmental and other
consents (if any) which may be required for the purpose of, or as a
consequence of, such purchase, and it will provide promptly to the relevant
Bookrunner such evidence, if any, as to the identity or location or legal
status of any person which that Bookrunner may request from it in connection
with the Placing (for the purpose of complying with such Regulations or
ascertaining the nationality of any person or the jurisdiction(s) to which any
person is subject or otherwise) in the form and manner requested by the
relevant Bookrunner on the basis that any failure by it to do so may result in
the number of Placing Shares and/or Warrants that are to be subscribed for
and/or purchased by it or at its direction pursuant to the Placing being
reduced to such number, or to nil, as the relevant Bookrunner may decide in
its absolute discretion;
32. that it will not make any offer to the public within the
meaning of the Prospectus Regulation of those Placing Share or Warrants to be
subscribed for and/or purchased by it;
33. that it will not distribute any document relating to the
Placing Shares or Warrants and it will be acquiring the Placing Shares and
Warrants for its own account as principal or for a discretionary account or
accounts (as to which it has the authority to make the statements set out
herein) for investment purposes only and it does not have any contract,
understanding or arrangement with any person to sell, pledge, transfer or
grant a participation therein to such person or any third person with respect
of any Placing Shares or Warrants; save that that if it is a private client
stockbroker or fund manager it confirms that in purchasing the Placing Shares
and/or Warrants it is acting under the terms of one or more discretionary
mandates granted to it by private clients and it is not acting on an execution
only basis or under specific instructions to purchase the Placing Shares or
Warrants for the account of any third party;
34. that it acknowledges that these terms and conditions and any
agreements entered into by it pursuant to these terms and conditions shall be
governed by and construed in accordance with the laws of England and Wales and
it submits (on behalf of itself and on behalf of any person on whose behalf it
is acting) to the exclusive jurisdiction of the English courts as regards any
claim, dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make payment for the
Placing Shares or Warrants (together with any interest chargeable thereon) may
be taken by the Company or the relevant Bookrunner in any jurisdiction in
which the relevant Placee is incorporated or in which its assets are located
or any of its securities have a quotation on a recognised stock exchange;
35. that any documents sent to Placees will be sent at the Placees'
risk and that they may be sent by post to such Placees at an address notified
to the relevant Bookrunner;
36. that the Joint Bookrunners owe no fiduciary or other duties to
any Placee in respect of any representations, warranties, undertakings or
indemnities in the Placing Agreement;
37. that a Bookrunner or its respective affiliates may, at their
absolute discretion, agree to become a Placee in respect of some or all of the
Placing Shares and Warrants;
38. that no prospectus or offering document has been or will be
prepared in connection with the Placing and it has not received and will not
receive a prospectus or other offering document in connection with the
Placing; and
39. that if it has received any confidential price sensitive
information concerning the Company in advance of the publication of this
Announcement, it has not: (i) dealt in the securities of the Company; (ii)
encouraged,
required, recommended or induced another person to deal in the securities of
the Company; or (iii) disclosed such information to any person, prior to such
information being made publicly available.
The Company, the Joint Bookrunners and their respective affiliates will rely
upon the truth and accuracy of each of the foregoing representations,
warranties, acknowledgements and undertakings which are given to the Company
and the Joint Bookrunners and are irrevocable.
The provisions of these Terms and Conditions may be waived, varied or modified
as regards specific Placees or on a general basis by the relevant Bookrunner.
The agreement to settle a Placee's subscription and/or purchase (and/or the
subscription of a person for whom such Placee is contracting as agent) free of
stamp duty and stamp duty reserve tax depends on the settlement relating only
to a subscription by it and/or such person direct from the Company for the
Placing Shares (via Depositary Interests) in question. Such agreement assumes
that the Placing Shares are not being subscribed for in connection with
arrangements to issue depositary receipts or to transfer the Placing Shares
into a clearance service. If there are any such arrangements, or the
settlement relates to any other subsequent dealing in the Placing Shares,
stamp duty or stamp duty reserve tax may be payable, for which neither the
Company or the Joint Bookrunners will be responsible, and the Placee to whom
(or on behalf of whom, or in respect of the person for whom it is
participating in the Placing as an agent or nominee) the allocation,
allotment, issue or delivery of Placing Shares has given rise to such UK stamp
duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp
duty reserve tax forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and the Joint Bookrunners in the event that any of the
Company and/or the Joint Bookrunners have incurred any such liability to UK
stamp duty or stamp duty reserve tax. If this is the case, each Placee should
seek its own advice and notify the relevant Bookrunner accordingly.
In addition, Placees should note that they will be liable for any stamp duty
and all other stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the UK by them or any other person on the
subscription or purchase by them of any Placing Shares and Warrants or the
agreement by them to subscribe for or purchase any Placing Shares and
Warrants.
The Exchange Information has been issued by, and is the sole responsibility,
of the Company. No representation or warranty express or implied, is or will
be made as to, or in relation to, and no responsibility or liability is or
will be accepted by the Joint Bookrunners or by any of their respective
affiliates or agents as to or in relation to, the accuracy or completeness of
the Exchange Information (including this Announcement) or any other written or
oral information made available to or publicly available to any interested
party or its advisers, and any liability therefore is expressly disclaimed.
H&P Advisory Limited, which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom is acting exclusively for the Company
and no one else in connection with the Placing and Admission, and Hannam &
Partners will not be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing advice in
relation to the Placing or Admission or any other matters referred to in this
Announcement.
Shard Capital Partners LLP (trading as Tennyson Securities), a limited
liability partnership registered in England and Wales with number OC360394),
which is authorised and regulated by the Financial Conduct Authority in the
United Kingdom is acting exclusively for the Company and no one else in
connection with the Placing and Admission, and Tennyson will not be
responsible to anyone other than the Company for providing the protections
afforded to its clients or for providing advice in relation to the Placing or
Admission or any other matters referred to in this Announcement.
Neither of Hannam & Partners or Tennyson nor any of their respective
subsidiary undertakings, affiliates or any of their respective directors,
officers, employees, advisers, agents or any other person accepts any
responsibility or liability whatsoever for, or makes any representation or
warranty, express or implied, as to the truth, accuracy, completeness or
fairness of the information or opinions contained in the Exchange Information
(or whether any information has been omitted from it) or any other information
relating to the Company, its subsidiaries or associated companies, whether
written, oral or in a visual or electronic form, and howsoever transmitted or
made available or for any loss howsoever arising from any use of the Exchange
Information or its contents or otherwise arising in connection therewith and
any liability therefore is expressly disclaimed.
Definitions
In this Announcement (including the Terms and Conditions), the following words
and expressions shall (save where the context otherwise requires) have the
following meanings:
"Admission" the admission of the Placing Shares to trading on AIM becoming
effective in accordance with the AIM Rules
"AIM" the market of that name operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies, published by London Stock Exchange from time to
time
"Announcement" this announcement (including the Appendix which forms part of this
announcement)
"Articles" the articles of continuance and by-laws of the Company from time to time
"Base Prospectus" the Company's short form base shelf prospectus dated 28 November 2024
"Bookbuild" the bookbuilding to be conducted by the Joint Bookrunners pursuant to the
Placing Agreement and this Announcement, including the Terms and Conditions
"Canadian Securities Laws" all applicable securities legislation and regulations in the Reporting
Provinces
"Common Shares" common shares of no par value in the capital of the Company
"Company" or "Southern" Southern Energy Corp.
"Depositary Interests" depositary interests representing the Common Shares
"Directors" directors of the board of the Company
"EEA" the European Economic Area
"EUWA" the European Union (Withdrawal) Act 2018, as amended
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets Act, as amended
"Fundraising" the Placing and the Prospectus Offering
"Group" the Company and its subsidiaries and subsidiary undertakings
"Hannam & Partners" H&P Advisory Limited
"Group Company" a member of the Group
"Joint Bookrunners" or Tennyson and Hannam & Partners and "Bookrunner" and "Broker" shall be
construed accordingly
"Joint Brokers"
"London Stock Exchange" London Stock Exchange plc
"MAR" the Market Abuse Regulation (2014/596/EU) (as it forms part of UK domestic law
by virtue of the EUWA)
"Minimum Gross Proceeds" the minimum gross proceeds of the Fundraising, being US$6 million
"Offering" the proposed offering of Common Shares by way of the Prospectus Offering and
the Placing
"Placees" a person who has agreed to subscribe for Placing Shares at the Placing Price
and Warrants pursuant to the Placing;
"Placing" the proposed placing by the Joint Bookrunners, on behalf of the Company, of
the Placing Shares and Warrants on the terms and subject to the conditions set
out in this Announcement (including these Terms and Conditions) and the
Placing Agreement at the Placing Price
"Placing Agreement" the agreement between the Joint Bookrunners and the Company in respect of the
Placing
"Placing Price" 4.3 pence per Placing Share
"Placing Shares" the new Common Shares to be allotted and issued by the Company pursuant to the
Placing
"Prospectus" the Base Prospectus, as supplemented by the Prospectus Supplement
"Prospectus Offering" the Company's proposed Prospectus offering of Prospectus Shares at the
Prospectus Price
"Prospectus Price" C$0.08 per Prospectus Share
"Prospectus Shares" the new Common Shares to be allotted and issued by the Company pursuant to the
Prospectus Offering
"Prospectus Supplement" the prospectus supplement to be published by the Company in connection with
the Prospectus Offering
"Regulation S" Regulation S under the U.S. Securities Act
"Regulatory one of the regulatory information services authorised by the
Information Service" FCA acting in its capacity as the UK listing authority to receive, process and
disseminate regulatory information
"Reporting Provinces" Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador,
Nova Scotia, Ontario, Prince Edward Island and Saskatchewan
"Tennyson" Tennyson Securities (a trading name of Shard Capital Partners LLP, a limited
liability partnership registered in England and Wales with number OC360394)
"TSXV" the TSX Venture Exchange
"TSXV Rules" the rules and policies of the TSXV, including the TSXV Corporate Finance
Manual and related staff notices
"TSXV Approval" means the conditional acceptance of the TSXV to the issuance, and the listing
on the TSXV, of the Placing Shares, subject only to standard listing
conditions
"U.S. Securities Act" the United States Securities Act of 1933, as amended
"Warrants" means the unlisted, transferrable warrants over Common Shares to be granted by
the Company on the basis of one warrant for every two Placing Shares or
Prospectus Shares subscribed for, and exercisable at 5.3 pence (or C$0.10 per
Common Share) for a period of 36 months from the date of grant.
"C$" Canadian dollars, the lawful currency of Canada
"£", "pounds sterling", "pence" or "p" are references to the lawful currency of the United Kingdom
"$" or "US$" United States dollars, the lawful currency of the United States of America
READER ADVISORY
Currency. All currency amounts in this Announcement are in United States
dollars (unless otherwise stated).
Disclosure of Oil and Gas Information
Unit Cost Calculation. 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. References to "natural gas" throughout this Announcement refer
to conventional natural gas as defined by National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). References
to "liquids" throughout this Announcement comprise pentane, butane, propane,
and ethane, being all natural gas liquids as defined by NI 51-101.
Reserves Disclosure. All reserves values, NPV10 and ancillary information
contained in this Announcement was prepared by the Company's internal
qualified reserves evaluator ("QRE") based on 3 February 2025 strip pricing in
accordance with NI 51-101 and the most recent publication of the Canadian Oil
and Gas Evaluation Handbook ("COGEH"), unless otherwise noted. All reserve
references in this Announcement are "company gross reserves". Estimates of
reserves for individual properties may not reflect the same level of
confidence as estimates of reserves for all properties, due to the effect of
aggregation.
Proved reserves are those reserves that can be estimated with a high degree of
certainty to be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves. Probable reserves are
those additional reserves that are less certain to be recovered than proved
reserves. It is equally likely that the actual remaining quantities recovered
will be greater or less than the sum of the estimated proved plus probable
reserves. Proved developed producing reserves are those reserves that are
expected to be recovered from completion intervals open at the time of the
estimate. These reserves may be currently producing or, if shut-in, they must
have previously been on production, and the date of resumption of production
must be known with reasonable certainty. Undeveloped reserves are those
reserves expected to be recovered from known accumulations where a significant
expenditure (e.g., when compared to the cost of drilling a well) is required
to render them capable of production. They must fully meet the requirements of
the reserves category (proved, probable, possible) to which they are assigned.
Certain terms used in this Announcement but not defined are defined in NI
51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101, Revised
Glossary to NI 51-101, Standards of Disclosure for Oil and Gas Activities
("CSA Staff Notice 51-324") and/or the COGEH and, unless the context otherwise
requires, shall have the same meanings herein as in NI 51-101, CSA Staff
Notice 51-324 and the COGEH, as the case may be.
Type Curves. Type curve disclosure presented herein represents estimates of
the production decline and ultimate volumes expected to be recovered from
wells over the life of the well. The reservoir engineering and statistical
analysis methods utilized are broad and can include various methods of
technical decline analyses, and reservoir simulation all of which are
generally prescribed and accepted by the most recent publication of the COGHE
and widely accepted reservoir engineering practices. These type curves were
generated by Southern's internal QRE and incorporate the most recent data from
actual well results and would only be representative of the specific drilled
locations. There is no guarantee that Southern will achieve the estimated or
similar results derived therefrom. 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.
Drilling Locations. This Announcement discloses drilling locations in two
categories: (i) booked locations; and (ii) unbooked locations. Booked
locations are derived from the report prepared by Netherland, Sewell &
Associates, Inc. dated February 20, 2024 and effective as of December 31, 2023
evaluating the crude oil, natural gas and natural gas liquids reserves of
Southern and account for drilling locations that have associated proved and/or
probable reserves, as applicable. Unbooked locations are internal estimates by
the Company's QRE based on the prospective acreage and an assumption as to the
number of wells that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed reserves or
resources. There is no certainty that the Company will drill all unbooked
drilling locations and if drilled there is no certainty that such locations
will result in additional oil and gas reserves, resources or production. The
drilling locations considered for future development will ultimately depend
upon the availability of capital, regulatory approvals, seasonal restrictions,
oil and natural gas prices, costs, actual drilling results, additional
reservoir information that is obtained and other factors. While certain of the
unbooked drilling locations have been derisked by drilling existing wells in
relative close proximity to such unbooked drilling locations, other unbooked
drilling locations are farther away from existing wells where management has
less information about the characteristics of the reservoir and therefore
there is more uncertainty whether wells will be drilled in such locations and
if drilled there is more uncertainty that such wells will result in additional
oil and gas reserves, resources or production.
Short Term Results. References in this press release to peak rates, initial
production 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.
Glossary
"1P" proved reserves
"boepd" barrels of oil equivalent per day
"IP30" average hydrocarbon production rate for the first 30 days of a well's life
"LNG" liquidified natural gas
"Mcfe" thousand cubic feet equivalent
"MMboe" million barrels of oil equivalent
"MMBtu" million British thermal units
"NPV10" net present value at a 10% discount rate (before tax)
"NTM" next twelve months
"PDP" proved developed producing reserves
"PUD" proved, undeveloped
Forward Looking Information
This Announcement contains certain forward-looking information (collectively
referred to herein as "forward-looking statements") within the meaning of
applicable Canadian securities laws. Forward-looking statements are often, but
not always, identified by the use of words such as "forecast", "guidance",
"outlook", "anticipate", "target", "plan", "continue", "intend", "consider",
"estimate", "expect", "may", "will", "should", "could" (or the negatives or
similar words suggesting future outcomes. Forward-looking statements in this
Announcement may contain, but are not limited to, statements concerning:
Southern's business strategy and plan, including its objectives, strengths and
focus; the completion of the Fundraising and the terms, size and timing
thereof and the use of proceeds therefrom (alongside existing cash, cash flows
and undrawn debt facilities), including the acceleration of the completion of
three Gwinville DUC wells and two Mechanicsburg drills; the completion of the
Debenture Amendment and the issuance of the Common Shares; the Company's price
dependent growth and acquisition and consolidation strategies, including
targets, metrics, planned investments, and allocation of funds, anticipated
operational results; capital expenditures and drilling plans and locations 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; and the source of funding for the Company's
activities including development costs. Statements relating to production,
reserves, recovery, replacement, costs and valuation are also deemed to be
forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the
quantities predicted or estimated and that the reserves can be profitably
produced in the future.
The forward-looking statements contained in this Announcement are based on a
number of factors and assumptions made by Southern, which have been used to
develop such statements, but which may prove to be incorrect. In addition to
factors and assumptions which may be identified in this press release,
assumptions have been made regarding and may be implicit in, among other
things: the business plan of Southern; the receipt of all approvals and
satisfaction of all conditions to the completion of the Fundraising; the
timing of and success of future drilling, development and completion
activities; the geological characteristics of Southern's properties;
prevailing commodity prices, price volatility, price differentials and the
actual prices received for the Company's products; the availability and
performance of drilling rigs, facilities, pipelines and other oilfield
services; the timing of past operations and activities in the planned areas of
focus; the drilling, completion and tie-in of wells being completed as
planned; the performance of new and existing wells; the application of
existing drilling and fracturing techniques; prevailing weather and break-up
conditions; royalty regimes and exchange rates; the application of regulatory
and licensing requirements; the continued availability of capital and skilled
personnel; the ability to maintain or grow the banking facilities; the
accuracy of Southern's geological interpretation of its drilling and land
opportunities, including the ability of seismic activity to enhance such
interpretation; and Southern's ability to execute its plans and strategies.
Readers are cautioned that the foregoing list is not exhaustive of all factors
and assumptions which have been used.
Although management considers these assumptions to be reasonable based on
information currently available, undue reliance should not be placed on the
forward-looking statements because Southern can give no assurances that they
may prove to be correct. By their very nature, forward-looking statements are
subject to certain risks and uncertainties (both general and specific) that
could cause actual events or outcomes to differ materially from those
anticipated or implied by such forward-looking statements. As a result, any
potential investor should not rely on such forward-looking statements in
making their investment decisions. No representation or warranty is made as to
the achievement, or reasonableness of, and no reliance should be placed on
such forward-looking statements. Risks and uncertainties that can materially
impact the Company's results include, but are not limited to: incorrect
assessments of the value of benefits to be obtained from exploration and
development programs; changes in the financial landscape both domestically and
abroad, including volatility in the stock market and financial system; wars
(including Russia's war in Ukraine and conflicts in the Middle East); risks
associated with the oil and gas industry in general (e.g. operational risks in
development, exploration and production, delays or changes in plans with
respect to exploration or development projects or capital expenditures, and
environmental regulations); commodity prices; increased operating and capital
costs due to inflationary pressures; the uncertainty of estimates and
projections relating to production, cash generation, costs and expenses;
health, safety, litigation and environmental risks; access to capital; the
availability of future financings and divestitures; public and political
sentiment towards fossil fuels; and the effects of pandemics and other public
health events. Due to the nature of the oil and natural gas industry, drilling
plans and operational activities may be delayed or modified to react to market
conditions, results of past operations, regulatory approvals or availability
of services causing results to be delayed. Please refer to Southern's most
recent Annual Information Form for the year ended December 31, 2023 and
management's discussion and analysis for the period ended September 30, 2024,
and other continuous disclosure documents for additional risk factors relating
to Southern, which can be accessed either on Southern's website at
www.southernenergycorp.com or under the Company's profile on www.sedarplus.ca.
The forward-looking statements contained in this Announcement are made as of
the date hereof and the Company does not undertake any obligation to update
publicly or to revise any of the included forward-looking statements, except
as required by applicable law. The forward-looking statements contained herein
are expressly qualified by this cautionary statement.
This Announcement contains future-oriented financial information and financial
outlook information (collectively, "FOFI") about Southern's prospective
results of operations, the performance of the Gwinville DUCs, once completed,
including having IP30 rates of approximately 5.5 MMcf/d per well and ultimate
recovery per well of approximately 3.5 Bcf, the performance of the
Mechanicsburg wells, once drilled, including having IP30 rates of
approximately 4.2 MMcf/d plus 75 bbl/d of liquids per well and ultimate
recovery per well of approximately 3.7 Bcfe, operating costs, that new wells
would achieve~30% IRR at a natural gas price of US$3.75/MMBtu, that the
Gwinville DUCs will have an IRR of 86% and that the Mechanicsburg wells will
have an IRR of 77%; achieving production of approximately 4,000 boepd in 2025,
and components thereof, including pro forma the completion of the Fundraising,
all of which are subject to the same assumptions, risk factors, limitations,
and qualifications as set forth in the above paragraphs. FOFI contained in
this Announcement was approved by management as of the date of this
Announcement and was provided for the purpose of providing further information
about Southern's anticipated 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
Announcement, 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 Announcement should not be used for purposes
other than for which it is disclosed herein. The Company's actual results
may differ materially from these estimates. Changes in forecast commodity
prices, differences in the timing of capital expenditures, and variances in
average production estimates would have a significant impact on Southern's
actual future business operations.
Neither 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 Announcement. This
Announcement has not been approved or disapproved by the U.S. Securities and
Exchange Commission, any state securities commission or any other regulatory
authority in the United States.
This Announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This Announcement is not
an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act, and may not be offered or sold in the United States, except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and applicable state or
local securities laws. No public offering of securities is being made in the
United States.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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