TIDMSOUC
RNS Number : 8011T
Southern Energy Corp.
29 November 2021
SOUTHERN ENERGY CORP. ANNOUNCES THIRD QUARTER FINANCIAL AND
OPERATING RESULTS
Calgary, Alberta - November 29, 2021 - Southern Energy Corp.
("Southern" or the "Company") (TSXV:SOU) (AIM:SOUC) today announces
the release of its third quarter financial and operating results
for the three and nine months ended September 30, 2021. The Company
also notes that an updated corporate presentation can now be found
on the Company's website at www.southernenergycorp.com.
Southern is an established producer with natural gas and light
oil assets in Mississippi and Alabama characterized by a stable,
low-decline production base, a significant low-risk drilling
inventory and strategic access to the best commodity pricing in
North America. Selected financial and operational information is
outlined below and should be read in conjunction with the Company's
consolidated financial statements (the "Financial Statements") and
related management's discussion and analysis (the "MD&A") for
the three and nine months ended September 30, 2021, which are
available on the Company's website at www.southernenergycorp.com
and have been filed on SEDAR.
All figures referred to in this news release are denominated in
Canadian dollars, unless otherwise noted.
Q3 2021 Highlights
-- $1.7 million of adjusted funds flow from operations[1] in Q3
2021, excluding $1.9 million of one-time expenses related to AIM
listing, a 51% increase from the same period in 2020
-- Average production of 12,237 Mcfe/d[2] (2,040 boe/d), 92%
natural gas in Q3 2021, a 7% decrease from the same period in
2020
-- Petroleum and natural gas sales of $6.6 million in Q3 2021,
an increase of 85% from the same period in 2020
-- As at September 30, 2021, Net Debt(1) of $19.2 million, a
reduction of $10.1 million or 35% from December 31, 2020
-- Net earnings of $5.5 million in Q3 2021 ($0.02 per share -
basic) compared to a net loss of $3.0 million in Q3 2020
-- Average realized oil and natural gas prices for Q3 2021 of
$85.50/bbl and $5.10/Mcf, respectively, reflecting the benefit of
strategic access to premium-priced US sales hubs
-- Completed a series of low-cost well recompletions and
workovers beginning in Q3 and carrying into early Q4 2021
o Work program had an overall cost of approximately $1.0 million
($0.9 million in Q3 2021) and added approximately 1,250 Mcfe/d[3]
(208 boe/d) of production (approximately 80% natural gas)
o At current strip pricing, the program is expected to payout in
approximately 4 - 5 months and add more than $1.6 million of cash
flow from operating activities in 2022 after payout
-- In August 2021, successfully completed admission of its
entire issued share capital to trading on the AIM market of the
London Stock Exchange plc
Subsequent Events
On November 24, 2021, Southern closed an equity financing for
aggregate gross proceeds of $12.7 million (US$10.1 million) through
the issuance of a total of 254.3 million common shares ("Common
Shares") (the "Offering"), of which $6.7 million was raised
pursuant to a private placement of 135.1 million Common Shares to
UK investors at a price of 2.94 pence per Common Share and the
remaining $6.0 million was raised pursuant to a short form
prospectus offering of 119.2 million Common Shares at a price of
$0.05 per Common Share.
Southern intends to use the net proceeds of the Offering to
drill up to three horizontal Selma Chalk wells in the Gwinville gas
field and for working capital and general corporate purposes. This
is expected to provide the business with additional near-term cash
flow generation.
Financial Highlights
Three months ended Nine months ended
September 30, September 30,
(000s, except $ per share) 2021 2020 2021 2020
----------------------------------------- ---------- --------- --------- ---------
Petroleum and natural gas sales $ 6,550 $ 3,537 $ 16,022 $ 9,412
Net earnings (loss) 5,549 (2,958) 8,659 (15,045)
Net earnings (loss) per share
Basic 0.02 (0.01) 0.03 (0.07)
Fully diluted 0.01 (0.01) 0.02 (0.07)
Adjusted funds flow from operations (1) (233) 1,136 1,798 2,564
Basic (0.00) 0.01 0.01 0.01
Fully diluted (0.00) 0.01 0.01 0.01
Capital expenditures 900 78 1,016 119
Weighted average shares outstanding
Basic 360,703 220,770 298,455 220,770
Fully diluted 517,550 220,770 399,169 220,770
As at period end
Basic common shares outstanding 361,297 220,770 361,297 220,770
Total assets 47,102 36,290 47,102 36,290
Non-current liabilities 17,176 12,583 17,176 12,583
Net debt (1) $ 19,246 $ 30,719 $ 19,169 $ 30,719
----------------------------------------- ---------- --------- --------- ---------
Notes:
(1) See "Reader Advisories - Non-IFRS Measures".
Outlook
Following completion of our aforementioned fundraise, Southern
intends to drill up to three horizontal Selma Chalk wells in the
Gwinville gas field shortly, with first production anticipated in
Q1 2022. The three wells will all be drilled from a common padsite
and then completed with multi-state stimulations.
The Company's long-term strategy remains consistent into the end
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 AIM listing.
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. While the resulting realized losses on commodity contracts
had an impact on cash flow from operating activities as gas prices
rallied in the second half of 2021, Southern expects the impact
will moderate in 2022 as some of these older natural gas hedges
expire. A complete list of the fixed price and costless collar
contracts can be found within Southern's third quarter
MD&A.
Ian Atkinson, President and CEO of Southern, commented :
"This quarter has been defined by robust operational performance
from our core asset base amidst significantly increased cash flow
realisation. The results of our workover program late in Q3 are an
example of the low-cost high impact opportunities these type of
assets provide. Pairing this with our continued focus on strict
capital discipline, low debt and increased commodity prices we
receive due to our strategically located assets near to the Henry
Hub terminal, Southern finds itself in an enviable position as we
move onto our next phase of growth.
"The period ahead will include the drilling of three
high-impact, low-risk horizontal wells in the Gwinville gas field,
expected to begin production in Q1 2022, on which work will
commence imminently.
"This is an exciting time for the Company and our shareholders.
We look forward to embarking on the Gwinville work program and
updating shareholders on our progress."
For further information about Southern, please visit our website
at www.southernenergycorp.com or contact :
Southern Energy Corp.
Ian Atkinson (President and CEO) +1 587 287 5401
Calvin Yau (VP Finance and CFO) +1 587 287 5402
+44 (0) 20 7409
Strand Hanson Limited - Nominated & Financial 3494
Adviser
James Spinney / James Bellman
+44 (0) 20 7907
Hannam & Partners - Joint Broker 8500
Sam Merlin / Ernest Bell
Canaccord Genuity - Joint Broker +44 (0) 20 7523
Henry Fitzgerald-O'Connor / James Asensio 8000
Camarco +44 (0) 20 3757
James Crothers, Billy Clegg, Daniel Sherwen 4980
About Southern Energy Corp.
Southern Energy Corp. is a 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, expectations regarding Southern's well
recompletion and workover programs and the effects thereof on the
Company's financial position, expectations regarding the Company's
hedging program, expectations regarding the Offering and the use of
proceeds thereof, expected cost, production and timing of the Selma
Chalk wells, 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.
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 release
[1] See "Non-IFRS Measures" under "Reader Advisory" below".
[2] Comprised of 149 bbl/d light and medium crude oil, 23 bbl/d
NGLs and 11,205 mcf/d conventional natural gas
[3] Comprised of 39 bbl/d light and medium crude oil, 2 bbl/d
NGLs and 1,000 mcf/d conventional natural gas
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END
QRTKVLFLFFLXFBK
(END) Dow Jones Newswires
November 29, 2021 02:00 ET (07:00 GMT)
Southern Energy (LSE:SOUC)
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Southern Energy (LSE:SOUC)
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