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Southern Energy Announces Financings to Ramp Up Liquids-Rich Gas Production Across High Quality Gulf Coast Assets, Feeding a Growing Demand for U.S. Natural Gas at Premium Pricing
SOSouthern Company(SO) GlobeNewswire News Room·2025-03-12 21:19

Fundraising Overview - Southern Energy Corp. intends to conduct an equity fundraise to raise approximately US6.0million(approximately£4.8million/C6.0 million (approximately £4.8 million / C8.5 million) at a price of 4.3 pence (C0.08)perUnit[3][4]−ThefundraisingconsistsofaplacingofnewUnitstoinstitutionalinvestorsonAIMandaconcurrentpublicofferinginCanada[4][5]−EachUnitwillconsistofonenewCommonShareandonehalfofoneCommonSharepurchaseWarrant,withthewholeWarrantallowingthepurchaseofoneCommonShareatanexercisepriceof5.3pence(C0.08) per Unit [3][4] - The fundraising consists of a placing of new Units to institutional investors on AIM and a concurrent public offering in Canada [4][5] - Each Unit will consist of one new Common Share and one half of one Common Share purchase Warrant, with the whole Warrant allowing the purchase of one Common Share at an exercise price of 5.3 pence (C0.10) for 36 months [4][6] Use of Proceeds - The funds will be used to accelerate the completion of three drilled and uncompleted (DUC) wells and fully fund the drilling of two vertical Cotton Valley wells [6][10] - The Company expects to benefit from strengthening U.S. natural gas prices, currently above US4.40/MMbtu(C4.40/MMbtu (C6.40/MMbtu) [6][7] - The accelerated development program is anticipated to add over US20.0millioninproveddevelopedproducing(PDP)NPV10value[6][10]ProductionExpectations−TheGwinvilleDUCsareexpectedtohaveinitialproduction(IP30)ratesofapproximately5.5MMcf/dperwell,withultimaterecoveryofapproximately3.5Bcfe[6][10]−TheMechanicsburgwellsareexpectedtohaveIP30ratesofapproximately4.2MMcf/dplus75bbl/dofliquidsperwell,withultimaterecoveryofapproximately3.7Bcfe[6][10]−Productionisexpectedtoreachover4,000boepdbyyear−end2025,representingapproximately10020.0 million in proved developed producing (PDP) NPV10 value [6][10] Production Expectations - The Gwinville DUCs are expected to have initial production (IP30) rates of approximately 5.5 MMcf/d per well, with ultimate recovery of approximately 3.5 Bcfe [6][10] - The Mechanicsburg wells are expected to have IP30 rates of approximately 4.2 MMcf/d plus 75 bbl/d of liquids per well, with ultimate recovery of approximately 3.7 Bcfe [6][10] - Production is expected to reach over 4,000 boepd by year-end 2025, representing approximately 100% growth [10] Financial Metrics - The Gwinville DUCs are expected to have an internal rate of return (IRR) of 86%, while the Mechanicsburg wells are expected to have an IRR of 77% [10] - The net proceeds from the fundraising are expected to fully fund the completion of the Gwinville DUCs at a cost of approximately US2.5 million per well and the Mechanicsburg wells at a cost of approximately US3.5million[10][12]MarketContext−TheCompanyispositionedtocapitalizeonthepositivemacroenvironmentfortheU.S.naturalgasmarket,drivenbyincreasingLNGexportcapacityandseasonaldemandfactors[8][10]−CurrentHenryHubnaturalgaspricingissupportive,withaveragesgreaterthanUS3.5 million [10][12] Market Context - The Company is positioned to capitalize on the positive macro environment for the U.S. natural gas market, driven by increasing LNG export capacity and seasonal demand factors [8][10] - Current Henry Hub natural gas pricing is supportive, with averages greater than US4.80/MMBtu for the balance of 2025 and US$4.40/MMBtu for 2026 [7][8]