REG - Southern Energy Corp - OPERATIONS UPDATE

Southern EnergyAnnouncement

Tue 07:00

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RNS Number : 9631S  Southern Energy Corp.  29 July 2025

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 CORP. ANNOUNCES GWINVILLE LOWER SELMA CHALK COMPLETION RESULTS

 

Calgary, Alberta - July 29, 2025 - Southern Energy Corp. ("Southern" or the
"Company") (TSXV:SOU) (AIM:SOUC), an established producer with natural gas and
light oil assets in Mississippi, is pleased to announce the preliminary
results from its recent Lower Selma Chalk ("LSC") horizontal well completion
in the Gwinville Field.

In late June 2025, Southern successfully completed the first of its three
remaining drilled but uncompleted ("DUC") horizontal wells from the Q1 2023
drilling program, the GH LSC 13-13 #2 wellbore.  Over the first 30 days of
production, the well averaged natural gas rates of 3.6 MMcfe/d (99% gas).
 This is an increase of > 100% compared to the average of the original LSC
horizontal wells in Gwinville that were drilled and completed by previous
operators.  The well has been flowing directly to Company facilities with all
gas sold since June 26, 2025.

Southern safely and efficiently stimulated the well with 25 fracture stages,
placing over 5.3 million lbs of proppant into the wellbore.  This is a 70%
increase in proppant intensity compared to the original LSC horizontal wells
at Gwinville.  Southern implemented targeted stimulation design changes for
this first LSC horizontal completion that improved the predictability and
speed of the fracture operations, and most importantly, reduced the overall
completion cost down to US$2.2 million which is over 10% below pre-job
estimates.  Additionally, water flowback rates from the LSC reservoir have
been over 70% lower than Southern's Upper Selma Chalk horizontal wells, which
translates into significant initial operating cost savings of ~ $0.20/Mcfe,
further improving capital returns.

With these further cost improvements, the Company now estimates the total
capital required to drill, complete, tie-in and equip capital for future
Gwinville LSC horizontal wells to be approximately $4.0 million - a reduction
of over 20% from previous management estimates and significantly below the
$5.0 million estimates in the Company's third-party reserve report((1)).
Based on a revised LSC type curve with an IP30 rate of 3.6 MMcf/d and a
capital cost of $4.0 million, Southern calculates a break-even (15% IRR) at a
Henry Hub price of $3.70/MMBtu. This is consistent with previous estimates
that assumed higher initial production rates and higher costs and remains
competitive with other dry natural gas plays.

Southern will continue to monitor both regional natural gas pricing and well
performance from the GH LSC 13-13 #2 over the upcoming months before making a
decision on the completion timing of the remaining two DUC wells and will
update the market at that time.  The remaining two DUC wellbores have been
drilled in the LSC and City Bank formations.

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

"We are very pleased with the early flowback results of the GH LSC 13-13 #2
well that will help us establish a long-awaited type curve for the remaining
potential 60+ LSC horizontal locations in our vast Gwinville inventory.  We
expect the lower decline from the LSC reservoir to support the ~ 3.5 Bcfe
recovery per well predicted by both management and our third-party reserve
evaluator.  The Southern operations team has safely executed this operation
at 10% below our original completion estimate, which not only drives a much
quicker payout on this capital but will also allow Southern to start
redeveloping the Gwinville Field much sooner as natural gas prices are still
expected to improve materially into the back half of 2025 and continue into
2026.

From a revenue generation perspective, since bringing these significant new
production volumes on-line in late June with minimal incremental operating
costs, Southern has also greatly benefited from a daily natural gas basis
premium of approximately 17% above Henry Hub pricing due to the start of
warmer seasonal temperatures and associated natural gas fired power demand in
the southeast U.S. which we expect to continue or improve throughout the
summer.  We look forward to providing these improved cash flow results from
additional Q3 volumes in November 2025."

Qualified Person's Statement

Gary McMurren, Chief Operating Officer, who has over 24 years of relevant
experience in the oil industry, has approved the technical information
contained in this announcement. Mr. McMurren is registered as a Professional
Engineer with the Association of Professional Engineers and Geoscientists of
Alberta and received a Bachelor of Science degree in Chemical Engineering
(with distinction) from the University of Alberta.

 

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

 Southern Energy Corp.

 Ian Atkinson (President and CEO)                           +1 587 287 5401

 Calvin Yau (CFO)                                           +1 587 287 5402

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

 James Bellman / Rob Patrick / Edward Foulkes
 Tennyson Securities - Broker                               +44 (0) 20 7186 9033

 Peter Krens / Jason Woollard

 

About Southern Energy Corp.

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

READER ADVISORY

Product Types. Throughout this press release, "crude oil" or "oil" refers to
light and medium crude oil product types as defined by NI 51-101. References
to "natural gas" throughout this press release refers to conventional natural
gas as defined by NI 51-101.

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

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

Short Term Results. References in this press release to peak rates, production
rates since inception, current production rates, initial 30-day productions
rates and 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. The Company cautions that
such results should be considered to be preliminary.

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

Forward Looking Statements. Certain information included in this press release
constitutes forward-looking information under applicable securities
legislation. Forward-looking information typically contains statements with
words such as "anticipate", "believe", "expect", "plan", "intend", "estimate",
"propose", "project", "budget", "continue", "evaluate", "forecast", "may",
"will", "can", "target" "potential", "result", "could", "should" or similar
words (including negatives or variations thereof) suggesting future outcomes
or statements regarding an outlook. Forward-looking information in this press
release may include, but is not limited to, statements concerning: anticipated
capital required to drill, complete, tie-in and equip capital for future
Gwinville LSC horizontal wells;  expectations regarding future natural gas
pricing; expectations in respect of the remaining two DUC wells; expectations
regarding improved cash flows from Q3 volumes; and economic assumptions such
as IRR and break-even pricing. The forward-looking statements contained in
this press release are based on certain key expectations and assumptions made
by Southern. Although Southern believes that the expectations and assumptions
on which the forward-looking statements are based are reasonable, undue
reliance should not be placed on the forward-looking statements because
Southern can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors
and risks, including other risks are set out in Southern's latest Management
Discussion and Analysis for the period ended March 31, 2025 and the Company's
annual information form for the year ended December 31, 2024, which are
available on the Company's website at www.southernenergycorp.com and filed
under the Company's profile on SEDAR+ at www.sedarplus.ca
(https://url.avanan.click/v2/___http:/www.sedarplus.ca___.YXAzOnNvdXRoZXJuZW5lcmd5Y29ycDphOm86ZjM1YjU2ODI2YjJjOTcxOTQzMzUzYTcwY2YzZWFhNmM6Njo1ZjQ1OmEwMWY1NGFkMTZhNGFhZTExOThmZWNmY2YzNzc0ZGUyOTczYzY1MDY2YTA3ZTBjYjczMjEzNzA4OTAzMjMxZjU6cDpUOk4)
. The forward-looking information contained in this press release is made as
of the date hereof and Southern undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, unless required by applicable
securities laws. The forward-looking information contained in this press
release is expressly qualified by this cautionary statement.

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

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

bbl                           barrels

bbl/d                       barrels per day
Bcfe                        billion cubic feet
equivalent

bcf/d                     billion cubic feet per day

boe                          barrels of oil

IP30                        average hydrocarbon
production rate for the first 30 days of a well's life

Mcf                         thousand cubic feet

Mcfe                       thousand cubic feet
equivalent

Mcf/d                     thousand cubic feet per day

Mcfe/d                   thousand cubic feet equivalent per
day

MMcf/d                 million cubic feet per day

MMcfe/d               million cubic feet equivalent per day

MMBtu                  million British thermal units

NI 51-101              National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities

(1)      Based on the Netherland, Sewell and Associates, Inc. report
dated December 31, 2024 - Total Proved plus Probable estimate

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