TIDMSOUC
RNS Number : 2914O
Southern Energy Corp.
09 June 2022
SOUTHERN ENERGY CORP. ANNOUNCES INITIAL RESULTS OF 7.7 MMCF/D
FROM FIRST GWINVILLE SELMA CHALK HORIZONTAL WELL
Successful Initial Results from Generation 3 Well Design
Calgary, Alberta - June 8, 2022 - Southern Energy Corp.
("Southern" or the "Company") (TSXV:SOU) (AIM:SOUC) is excited to
announce successful early flowback results from the first well of
the three-well horizontal padsite located in the Gwinville
Field.
Highlights
-- Well GH 19-3 #2 is flowing at an initial level of 7.7 MMcf/d
(1,280 boe/d), at a highly restricted flowing pressure, exceeding
the Company's modeled type curve
-- Additional volumes from GH 19-3 #2 have increased the
Company's production approximately 60% to 3,175 boe/d, materially
increasing gas sales as no test volumes are flared
-- The Company remains largely unhedged, resulting in gas from
GH 19-3 #2 being sold at current NYMEX gas prices
-- Initial results indicate that flowback performance using the
Generation 3 completion design is far superior to any previous
Selma Chalk wells in the area
-- Flowback results are expected from two recently completed Gwinville wells shortly
The GH 19-3 #2 well was opened to flowback following the
stimulation operation. After approximately one week of clean-up,
the well is flowing at 7.7 MMcf/d (1,280 boe/d) at a highly
restricted flowing pressure of 1,100 psig. Production from the well
is flowing directly to sales creating significant additional cash
flow for the Company. The well continues to produce over 2,000
bbl/d of load fluid, with approximately 24% recovered to date.
Throughout the first week of production, as more load fluid is
recovered, the well's gas rate has consistently increased day over
day.
Southern's Generation 3 completion design increased the stage
count by over 275% and the proppant concentration by over 40% as
compared to the most recent Selma Chalk horizontal wells completed
in Mississippi between 2013 - 2015, and initial flowback
performance suggests that the increased completion intensity is
having a very positive result.
With the additional volumes from the new well, Southern's
current WI sales production has increased approximately 60% to
3,175 boe/d (96% gas). The additional natural gas production from
the new well is unhedged and being sold at current NYMEX gas
prices.
Stimulation operations on the GH 19-3 #3 and #4 wells have also
been completed, and both wells will begin flowback/clean-up
shortly.
Ian Atkinson, President and CEO of Southern, commented :
"This is a transformational moment for our company; not only are
we adding material production, reserves, and cash flow at a time
when gas prices are near 14-year highs, but we are solidifying and
executing our operational strategy to deliver multi-year
redevelopment from our assets and highlighting the significant
opportunity and optionality we have in providing equity growth for
shareholders.
"We are extremely excited by these initial results from our
Generation 3 completion design on these Gwinville Selma Chalk
horizontal wells. The flowback results from the GH 19-3 #2 well are
evidence of how our team has successfully used modern technology to
revitalize these significantly under-developed conventional assets
in the Gulf Coast area.
"While still premature to make accurate type curve predictions
for these and future Gwinville wells, we can say at this point,
that the early flowback performance is far superior to any of the
previous Selma Chalk wells in the area. Our operations team has
done an excellent job of safely managing the stimulations on the
three-well pad, and we expect costs to come in-line with AFE
estimates."
Share Issues
As at June 7, 2022, the Company is pleased to announce that 5.3
million warrants issued on April 22, 2021 ("2021 Warrants"),
representing approximately 31% of outstanding 2021 Warrants, have
been exercised for total proceeds of CAD$1.7 million to the
Company. There are 11.8 million remaining 2021 Warrants outstanding
that expire on April 30, 2023 for total proceeds of CAD$3.8 million
to the Company. In addition, as of June 7, 2022, there have been
2,923 conversions of the outstanding 8% convertible unsecured
subordinated debentures issued on June 14, 2019 and January 15,
2021 (the "Convertible Debentures") for 3.6 million new common
shares, representing approximately 35% of the 8,389 Convertible
Debentures issued.
It is noted that the above exercises include additional
conversions since the time of the Company's previous total voting
rights update on June 1, 2022, amounting to the issue of a further
468,750 new common shares since that time. These new common shares
have been admitted to trading on AIM under the block admission
announced on May 6, 2022. As of June 7, 2022, following the
aforementioned share issues, the Company had a total of 86,903,733
common shares in issue. This figure may be used by shareholders in
the Company as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change in their interest in, the share capital of the
Company.
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, Hugo Liddy, Billy Clegg 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.
Qualified Person's Statement
Gary McMurren, Vice President Engineering, who has over 22 years
of relevant experience in the oil industry and has approved the
technical information contained in this announcement. Mr. McMurren
is registered as a Profession 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.
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.
References in this press release to production test rates,
initial test production rates, 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 for Southern. A
pressure transient analysis or well--test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the test results should be considered to be
preliminary.
Abbreviations . Please see below for a list of abbreviations
used in this press release.
bbl barrels
bbl/d barrels per day
boe barrels of oil
boe/d barrels of oil per day
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
Mcfe thousand cubic feet equivalent
Mcfe/d thousand cubic feet equivalent per day
MMBtu million British thermal units
MMBtu/d million British thermal units per day
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, expectations regarding the
Company's hedging strategy, expectations regarding production from
the Company's drilling operations in Gwinville and the timing
thereof, ability to achieve production estimates set out herein,
future production levels and planned capital expenditures.
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 Company's assets, the successful application of drilling,
completion and seismic technology, Southern's ability to secure
financing on acceptable terms, 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 Company's
ability to obtain all requisite permits and licences, the
availability of capital, labour and services, the creditworthiness
of industry partners and the Company's 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, regulatory
risks, 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,
geo-political risks, political and economic instability abroad,
wars (including Russia's military actions in Ukraine), hostilities,
civil insurrections, inflationary risks including potential
increases to operating and capital costs, 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. Ongoing military actions between
Russia and the Ukraine have the potential to threaten the supply of
oil and gas from the region. The long-term impacts of the actions
between these nations remains uncertain. These and other risks are
set out in more detail in Southern's most recent management's
discussion and analysis and annual information form.
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.
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.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
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END
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