As part of its risk management and sustainability strategy, Southern has entered into fixed price and costless collar hedges to mitigate the effects of market volatility while retaining the ability to participate in potential natural gas price appreciation during the upcoming winter. Southern currently has hedges on a total of 6,100 Mcf/d of natural gas production based on various contracts through December 31, 2021 and 4,000 Mcf/d for calendar 2022. A complete list of the fixed price and costless collar contracts can be found within Southern’s second quarter MD&A.
Southern has a minor capital program of $1.0 million planned for the remainder of 2021, directed towards maintenance capital to support the low corporate average decline rate of approximately 12% and a modest low risk recompletion program to take advantage of the strength in commodity prices. The Company’s long-term strategy remains consistent into the second half of 2021, with an unwavering commitment to environmental, social and governance (‘ESG‘) principles that support the continued development and consolidation of prolific reservoirs that are outside of the more expensive shale basins. Cost savings and financial discipline will remain a priority through the continued enhancement of operations and the ongoing evaluation of opportunities to reduce operating and capital costs.
Southern thanks all of its stakeholders for their ongoing support and looks forward to providing future updates on operational activities supported by the Company’s recently enhanced financial flexibility and wider exposure to new pools of capital with the upcoming AIM listing.
[1] See “Non-IFRS Measures” under “Reader Advisory” below”.
[2] Comprised of 139 bbl/d light and medium crude oil, 28 bbl/d NGLs and 11,465 mcf/d conventional natural gas. “Non-IFRS Measures” under “Reader Advisory” below”.
[expand title=”Advisories & Contact”]For further information about Southern, please visit our website at www.southernenergycorp.com or contact:
Southern Energy Corp.
Ian Atkinson (President and CEO)
Calvin Yau (VP Finance and CFO)
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+1 (0) 587 287 5401
+1 (0) 587 287 5402 |
Strand Hanson Limited – Nominated & Financial Adviser
James Spinney / James Bellman
Hannam & Partners – Joint Broker
Sam Merlin / Ernest Bell
Canaccord Genuity – Joint Broker
Henry Fitzgerald-O’Connor / James Asensio
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+44 (0) 20 7409 3494
+44 (0) 20 7907 8500
+44 (0) 20 7523 8000 |
Camarco
James Crothers, Billy Clegg, Daniel Sherwen
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+44 (0) 20 3757 4980 |
About Southern Energy Corp.
Southern Energy Corp. is an oil and natural gas exploration and production company. Southern has a primary focus on acquiring and developing conventional natural gas and light oil resources in the southeast Gulf States of Mississippi, Louisiana, and East Texas. Our management team has a long and successful history working together and have created significant shareholder value through accretive acquisitions, optimization of existing oil and natural gas fields and the utilization of re-development strategies utilizing horizontal drilling and multi-staged fracture completion techniques.
READER ADVISORY
MCFE Disclosure. Natural gas liquids volumes are recorded in barrels of oil (bbl) and are converted to a thousand cubic feet equivalent (‘Mcfe‘) using a ratio of six (6) thousand cubic feet to one (1) barrel of oil (bbl). Natural gas volumes recorded in thousand cubic feet (Mcf) are converted to barrels of oil equivalent (‘boe’) using the ratio of six (6) thousand cubic feet to one (1) barrel of oil (bbl). Mcfe and boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl or a Mcfe conversion ratio of 1 bbl:6 Mcf is based in an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 mcf:1 bbl or a Mcfe conversion ratio of 1 bbl:6 Mcf may be misleading as an indication of value.
Throughout this press release, ‘crude oil’ or ‘oil’ refers to light and medium crude oil product types as defined by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (‘NI 51-101’). References to ‘NGLs’ throughout this press release comprise pentane, butane, propane, and ethane, being all NGLs as defined by NI 51-101. References to ‘natural gas’ throughout this press release refers to conventional natural gas as defined by NI 51-101.
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’ or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, statements concerning the Company’s asset base including the development of the Company’s assets, future commodities pricing, the effect of market conditions and the COVID-19 pandemic on the Company’s performance, Southern’s planned ESG initiatives, expected benefits from the Company’s AIM listing, future production levels, acquisition opportunities, costs/debt reducing activities, the Company’s capital program for the remainder of 2021 and the funding thereof.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Southern, including the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Southern’s properties, the characteristics of the its assets, the successful application of drilling, completion and seismic technology, benefits of current commodity pricing hedging arrangements, prevailing weather conditions, prevailing legislation affecting the oil and gas industry, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and the ability to source and complete asset acquisitions.
Although Southern believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Southern can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraint in the availability of services, negative effects of the current COVID-19 pandemic, commodity price and exchange rate fluctuations, changes in legislation impacting the oil and gas industry, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Southern’s MD&A and AIF.
The forward-looking information contained in this press release is made as of the date hereof and Southern undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
Future-Oriented Financial Information. Any financial outlook or future oriented financial information in this press release, as defined by applicable securities legislation, has been approved by management of Southern. Readers are cautioned that any such future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The Company and its management believe that the prospective financial information 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 activities or results.
Non-IFRS Measures. This press release provides certain financial measures that do not have a standardized meaning prescribed by IFRS. These non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Adjusted funds flow from operations, operating netback, adjusted working capital and net debt are not recognized measures under IFRS. Readers are cautioned that these non-IFRS measures should not be construed as alternatives to other measures of financial performance calculated in accordance with IFRS. These non- IFRS measures provide additional information that management believes is meaningful in describing the Company’s operational performance, liquidity and capacity to fund capital expenditures and other activities. Management uses adjusted funds flow from operations as a key measure to assess the ability of the Company to finance operating activities, capital expenditures and debt repayments. Management considers operating netback an important measure to evaluate its operational performance, as it demonstrates field level profitability relative to current commodity prices. Management monitors adjusted working capital and net debt as part of its capital structure in order to fund current operations and future growth of the Company. Southern’s method of calculating these measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. Adjusted funds flow from operations is calculated based on cash flow from operative activities before changes in non-cash working capital and cash decommissioning expenditures. Net debt is defined as long-term debt plus adjusted working capital surplus or deficit. Operating netback equals total oil and natural gas sales less royalties, production taxes, operating expenses, transportation costs and realized gain / (loss) on derivatives. Adjusted working capital is calculated as current assets less current liabilities, removing current derivative assets/liabilities, the current portion of bank debt, and the current portion of lease liabilities. Please refer to the MD&A for additional information relating to non-IFRS measures, which is available on the Company’s website at www.southernenergycorp.com and filed on SEDAR.[/expand]