Southern Energy Corp. Announces Fourth Quarter and Year End 2024 Financial and Operating Results

CALGARY, AB / ACCESS Newswire / April 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, announces its fourth quarter and year end December 31, 2024 financial and operating results. Selected financial and operational information is outlined below and should be read in conjunction with the Company's audited consolidated financial statements and related management's discussion and analysis (the "MD&A") for the three and twelve months ended December 31, 2024, as well as the Company's annual information form for the year ended December 31, 2024, (the "AIF"), all of which are available on the Company's website at www.southernenergycorp.com and have been filed under the Company's profile on SEDAR+ at www.sedarplus.ca.

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

FOUTH QUARTER AND YEAR END 2024 HIGHLIGHTS

• Average production of 13,556¹ Mcfe/d (2,259 boe/d) (96% natural gas) during Q4 2024 and 15,264² Mcfe/d (2,544 boe/d) (96% natural gas) for the year ended December 31, 2024, a decrease of 19% and 6% from the same periods in 2023, respectively

• Petroleum and natural gas sales of $3.9 million during Q4 2024 and $16.1 million for the year ended December 31, 2024, a decrease of 23% and 17% from the same periods in 2023, respectively, largely due to a significant depreciation in commodity prices and initial decline from the new wells drilled

• Average realized natural gas and oil prices for Q4 2024 of $2.78/Mcf and $68.59/bbl, compared to $2.95/Mcf and $76.97/bbl in Q4 2023. Southern achieved an average premium of $0.22/Mcf (approximately 10% above the NYMEX HH benchmark) throughout 2024

• Generated $0.4 million of Adjusted Funds Flow from Operations³ in Q4 2024 ($0.00 per share basic and diluted), excluding $1.1 million of one-time transaction costs, and generated $4.1 million for the year ended December 31, 2024 ($0.02 per share basic and diluted), excluding $1.3 million of one-time transaction costs

• Net loss of $3.7 million ($0.02 per share basic and diluted) and $11.5 million ($0.07 per share basic and diluted) for the three and twelve months ended December 31, 2024, respectively

• Reduced Net Debt³ for the year ended December 31, 2024 by $2.7 million from December 31, 2023

• On October 30, 2024, entered into the eighth amendment to the Company's senior secured term loan (the "Credit Facility"), which included an extension to the pause of monthly repayment of principal to December 31, 2024 and a condition that Southern would repay a portion of the outstanding principal at January 31, 2025

• Monetized excess inventory equipment in 2024 for net proceeds of $3.4 million

SUBSEQUENT EVENTS

• Effective January 31, 2025, Southern entered into the ninth amendment to the Credit Facility which included an extension to the pause of monthly repayment of principal to January 31, 2025 and reduced the repayment required from the eighth amendment to $1.45 million at January 31, 2025, which the Company paid (see "Liquidity and Capital Resources - Credit Facility" in the December 31, 2024 MD&A for full details of the amendment)

• Effective February 28, 2025, Southern entered into the tenth amendment to the Credit Facility, which amended the monthly repayment of the principal amount outstanding calculation beginning on February 28, 2025, to the aggregate principal amount then outstanding on all loans multiplied by 60% multiplied by the fraction 1 / A, where A equals the sum of the number of whole or partial calendar months remaining to the maturity date plus 24 months (see "Liquidity and Capital Resources - Credit Facility" in the December 31, 2024 MD&A for full details of the amendment)

• Effective March 31, 2025, Southern entered into the eleventh amendment to the Credit Facility. This amendment amended the asset coverage ratio down to 1.5x from 1.75x in 2025 and reduced Tranche B capacity to $5.0 million (see "Liquidity and Capital Resources - Credit Facility" in the December 31, 2024 MD&A for full details of the amendment)

• On April 8, 2025, Southern closed an equity financing raising aggregate gross proceeds of $5.0 million through the issuance of a total of 102,482,673 new units (see "Shareholders' Equity - Share Capital" in the December 31, 2024 MD&A for full details)

• On April 8, 2025, Southern converted the remaining convertible debentures in the amount of $3.1 million into 62,759,286 new units and issued 1,627,170new units for all accrued and unpaid interest (see "Liquidity and Capital Resources - Debenture Financing" in the December 31, 2024 MD&A for full details of the conversion)

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

"Southern had a quiet year in the field in 2024 due to low natural gas pricing, which ended the year as the second-lowest in the past 24 years. The focus for Southern was balance sheet preservation, led by the monetization of excess inventory equipment for $3.4 million, reducing our abandonment liabilities by divesting non-core, non-producing wellbores during Q3 2024 and working with our credit lender to amend the Credit Facility to support the Company. We ended the year having reduced net debt and substantially decreased the burden of short term liabilities on our balance sheet, which in light of the operating environment was a positive achievement.

"Despite the market challenges, Southern has leveraged the strategic locations of its assets and sales points, achieving a $0.22/Mcf premium (~10% basis premium) over Henry Hub benchmark pricing in 2024. This premium has increased in Q1 2025 to $0.50/Mcf (~14%). Additionally, our financial hedge of 5,000 MMBtu/d at $3.40/MMBtu, which was initiated in Q2 2024, provided stable cash flows, enabling us to navigate ongoing volatility. Importantly, we have remained steadfast in sensible capital allocation in the field and have been disciplined to allow us future flexibility as commodity prices improve.

"As we enter 2025, market fundamentals continue to strengthen. Feed gas demand from LNG export facilities at Plaquemines and Corpus Christi are growing quickly with feed gas flows to Golden Pass LNG facility expected later this year. Domestic consumption is rising-driven by gas-fired electricity generation supporting data centers and transportation electrification as well as renewed growth in pipeline exports to Mexico. These dynamics are expected to tighten the U.S. natural gas balance in the coming quarters.

"Longer-term, the structural case for U.S. natural gas pricing remains intact as the U.S. has become the world's largest exporter of LNG in the past few years at the same time as production growth in the U.S has slowed with upstream producers focusing on fiscal conservatism ahead of growth.

"We remain focused on leveraging our strategic position and disciplined operations to deliver sustainable growth and enhance long-term shareholder value by using the net proceeds from the recently closed equity financing to re-ignite our growth plan. As we navigate the year with a strengthened financial position and several exciting operational growth catalysts coming up, we look forward to keeping the market updated and thank our shareholders for the support in the year."

Financial Highlights

Note:

1. See "Reader Advisories - Specified Financial Measures".

Operations Update

With the closing of the successful equity financing on April 8, 2025, the Company is preparing to execute the first of three completion operations on our previously drilled but uncompleted horizontal wells in the Gwinville Field. The Lower Selma Chalk completion is expected to cost approximately $2.5 million gross, with operations anticipated before the end of the second quarter in 2025. Timing for the second and third horizontal completions (one Lower Selma Chalk and one City Bank) will depend on the results of the first completion operation, but the Company expects to have all three wells completed before the end of the year.

Planning of the drilling operations in the Mechanicsburg Field continue and drilling is expected to commence in the third quarter of 2025 subject to rig availability.

2024 Year End Reserves Update

The Company is pleased to announce selected highlights of Southern's year end independent oil and gas reserves evaluation as of December 31, 2024.

Estimates of the Company's reserves and related estimates of net present value of future net revenues as at December 31, 2024, are based upon reports (the "NSAI Report") prepared by Southern's independent qualified reserves evaluator, Netherland, Sewell and Associates, Inc. ("NSAI"). All currency amounts are in United States dollars (unless otherwise stated) and comparisons refer to December 31, 2023.

Reserve Highlights:

The NSAI Report states:

• PDP reserves of 6.2 MMboe,

• 1P reserves of 12.7 MMboe,

• 2P reserves of 27.9 MMboe, and

• a PDP reserve life index of nine years and 39 years for 2P reserves based on the 2025 PDP production forecast.

Before-tax net present value ("NPV") of reserves, discounted at 10% ("NPV10"), is $33.0 million on a PDP basis, $58.2 million on a 1P basis and $110.1 million on a 2P basis evaluated using the average forecast pricing of four independent reserve evaluators as at January 1, 2025.

In addition to the summary information disclosed in this press release, more detailed information regarding Southern's oil and gas reserves can be found in the AIF, which is available on the Company website and has been filed on SEDAR+ (www.sedarplus.ca).

2024 Independent Qualified Reserve Evaluation

The following tables highlight the findings of the NSAI Report, which has been prepared in accordance with definitions, standards and procedures contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the most recent publication of the Canadian Oil and Gas Evaluation Handbook ("COGEH"). All evaluations and summaries of future net revenue are stated prior to the provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs, and estimated future capital expenditures. The NSAI Report was based on the average forecast pricing of the following four independent external reserves evaluators: GLJ Ltd, Sproule Associates Limited, McDaniel & Associates Consultants Ltd and Deloitte. Additional reserves information as required under NI 51-101 is included in Southern's AIF, which has been filed on SEDAR+. The numbers in the tables below may not sum due to rounding.

Summary of Reserves Volumes as at December 31, 2024

The Company's reserve volumes and undiscounted future development capital costs are summarized below as at December 31, 2024:

1. Gross working interest reserves before royalty deductions.

The following table outlines the changes in Southern's reserves and reserve life index as at December 31, 2024 compared to December 31, 2023: