Southern Energy Corp, an established producer with natural gas and light oil assets in Mississippi, announces its second quarter financial and operating results for the three and six months ended June 30, 2025.
All figures referred to in this news release are denominated in U.S. dollars, unless otherwise noted.
SECOND QUARTER 2025 HIGHLIGHTS
- Petroleum and natural gas sales of $4.0 million during Q2 2025, an increase of 3% from the same period in 2024, largely due to the 61% increase in Q2 2025 natural gas pricing over Q2 2024
- Average production of 11,2951 Mcfe/d (1,883 boe/d) (96% natural gas) during Q2 2025, a decrease of 27% from the same period in 2024
- In June 2025, Southern successfully completed the second of its four high quality drilled uncompleted horizontal wells ("DUCs") from the Q1 2023 drilling program - the GH Lower Selma Chalk ("LSC") 13-13 #2 wellbore. The operation was completed safely and under budget
- Average realized natural gas and oil prices for Q2 2025 of $3.63/Mcf and $62.60/bbl, compared to $2.26/Mcf and $80.06/bbl in Q2 2024. Southern achieved an average premium of $0.19/Mcf (approximately 6%) above the NYMEX HH benchmark in Q2 2025
- Generated $0.6 million of Adjusted Funds Flow from Operations2 in Q2 2025 ($0.00 per share basic and diluted)
- Net loss of $0.4 million ($0.00 per share basic and diluted) in Q2 2025, compared to a net loss of $2.6 million in Q2 2024
- On April 8, 2025, Southern closed an equity financing raising aggregate gross proceeds of $5.0 million (approximately £3.9 million, C$7.2 million) through the issuance of a total of 102,482,673 new units (see "Shareholders' Equity - Share Capital" in the June 30, 2025 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 1,627,170 new units for all accrued and unpaid interest (see "Liquidity and Capital Resources - Debenture Financing" in the June 30, 2025 MD&A for full details of the conversion)
(1) Comprised of 23 bbl/d light and medium crude oil, 43 bbl/d of condensate, 5 bbl/d NGLs and 10,869 Mcf/d conventional natural gas
(2) See 'Reader Advisories - Specified Financial Measures'
Ian Atkinson, President and Chief Executive Officer of Southern, commented:
'Southern continued to build momentum through the second quarter of 2025, supported by firming natural gas prices and the successful completion in late June of the GH LSC 13-13 #2 well in our Gwinville field, marking a key milestone in the redevelopment of our LSC inventory. Early flowback results are highly encouraging and we are particularly pleased to have completed this well at 10% below our original budget, accelerating expected payouts and reinforcing the economic viability of our broader development program.
Following our $5.0 million financing in April, Southern resumed field operations with a focus on efficiency and value creation. The GH LSC 13-13 #2 well has already begun contributing significant new volumes with minimal incremental operating cost and benefited from an approximate 17% premium to Henry Hub pricing due to rising Southeast U.S. power demand during the start of summer. This premium underscores the strategic advantage of our geographic positioning and the strengthening macro backdrop.
Looking ahead, we expect these new volumes to materially enhance our Q3 2025 cash flow profile. With a constructive outlook for natural gas pricing into the back half of 2025 and into 2026, combined with two additional high-quality DUCs, a deep inventory of drilling opportunities and ongoing capital discipline, Southern is well-positioned to deliver meaningful shareholder value through the remainder of the year and beyond.'
Operations Update
In June 2025, Southern successfully completed the first of its three remaining DUC horizontal wells from the Q1 2023 drilling program, and its first LSC lateral - the GH LSC 13-13 #2 wellbore. Over the first 30 days of production the well averaged natural gas rates of 3.6 MMcfe/d (99% gas), which is an increase of over 100% compared to the average of the original LSC horizontal wells in Gwinville that were drilled and completed by the previous operators. The well has been flowing directly to Company facilities with all gas sold since June 26, 2025.
Southern safely and efficiently completed the horizontal lateral with 25 fracture stages, placing over 5.3 million lbs of proppant - a 70% increase in proppant intensity compared to the first-generation completions. The Company implemented targeted stimulation design changes that improved the predictability and speed of the fracture operations, and most importantly, reduced the overall completion cost to $2.2 million which is over 10% below pre-job estimates. Additionally, water flowback rates from the LSC reservoir have been over 70% less than Southern's Upper Selma Chalk horizontal wells, which translates into significant initial operating cost savings of ~ $0.20/Mcfe, further improving capital returns.
Southern will continue to monitor both regional natural gas pricing and well performance from the GH LSC 13-13 #2 over the upcoming months before making a decision on the completion timing of the remaining two DUC wells.
Southern continues to work with Federal Energy Regulatory Commission ("FERC") staff to resolve the ongoing transportation dispute that resulted in the shut-in of approximately 400 boe/d of production from the Mechanicsburg and Greens Creek fields. Based on prescribed FERC resolution timelines, the Company expects the rate determination process to be resolved sometime in Q3 2025, at which point these production volumes will come back on-line.
Outlook
Southern has taken meaningful steps to strengthen its financial position in 2025, including the successful $5.0 million equity financing in April 2025, conversion of convertible debentures, and restructuring of financial covenants with lender support. These actions, combined with the early success of the GH LSC 13-13 #2 well and two additional DUCs in Gwinville, provide a clear runway for disciplined growth.
The Company also continues to benefit from a fixed-price swap of 5,000 MMBtu/d at $3.40/MMBtu through December 2026, offering downside protection. With improved regional pricing and a strengthened financial foundation, Southern is well-positioned to execute its capital program and generate long-term shareholder value.
Southern will continue to monitor NYMEX prices and the basis differential prices and is prepared to hedge additional volumes in a tactical manner going forward.
We appreciate the continued support of our stakeholders and look forward to providing further updates on our operational progress as we work to drive long-term shareholder value.
Source: Southern Energy Corp
