Southern Energy Corp. · TSXV:SOU
Southern Energy — Investor Presentation (May 2023)
26 slides from Southern Energy's investor presentation, May 2023
Slide 1: Uniquely Positioned to Deliver Sustainable Growth
Uniquely Positioned to Deliver Sustainable Growth Corporate Presentation May 2023 TSXV : SOU
Slide 2: Well Positioned for Significant Corporate Growth
Well Positioned for Significant Corporate Growth High quality assets receiving premium North American pricing SOUC, SOU.V, SOUTF • Premium natural gas pricing above NYMEX (Henry Hub), oil receives LLS pricing Trading Symbols AIM, TSXV, OTCQX • Low risk, high return drilling inventory across existing
Slide 3: Focused on Value Creation through Accretive Growth
Focused on Value Creation through Accretive Growth Acquisition Opportunities Organic Development Growth Focus Area Strong Base Production Disciplined consolidation strategy Large scale, under‐developed assets utilizing management’s proprietary with low historic recovery from & Asset Optimization
Slide 4: Synergistic Gwinville Consolidation
Synergistic Gwinville Consolidation $3.2 MM PDP Acquisition 1 mile • 2.3 MMcfe/d WI, 99% natural gas, 98% WI • Low decline (8%), ~ 8,500 net acres HBP • 204 producing wells, 35 standing (low ARO) • Purchase price equates to ~ PV35 at Strip pricing • Significant field synergies with expected operatin
Slide 5: Accretive Acquisition Metrics
Accretive Acquisition Metrics Consolidation Efficiency Premium Asset is Accretive to Southern’s Base Synergistic PDP | Additional Drilling Inventory +22% +6% $(0.70) PDP Asset Purchase Debt Adjusted Corporate G&A Expense • SOU to acquire remainder of producing Gwinville assets PDP Reserves CF/Share
Slide 6: Adding Gwinville Selma Chalk Inventory Locations
Adding Gwinville Selma Chalk Inventory Locations Acquisition Lands Low Risk Development Locations SOU Land • Adds 20+ drillable PUD locations to Southern’s Selma Potential Location Chalk inventory • Primarily Lower Selma Chalk redevelopment, although recovery optimization opportunities also exist in
Slide 7: Gwinville Horizontal Redevelopment Appraisal Program
Gwinville Horizontal Redevelopment Appraisal Program Appraisal Program Results • Successfully drilled 10 horizontal laterals in three separate reservoirs to delineate resource • Achieving pacesetter wells and associated cost efficiencies with larger program • Gathering key reservoir, geology and ope
Slide 8: Gwinville 2023 – 7 HZ Well Drilling Program
Gwinville 2023 – 7 HZ Well Drilling Program 1 mile 18‐10 Pad Completed Upper Selma Chalk Lower Selma Chalk • 18‐10 #2 Upper Selma Chalk: City Bank ‒ Complex faulting resulted in only ~ 50% of the lateral drilled in high‐grade porosity 2023 Pad ‒ 4,699’ lateral (2,538’ effective) fractured with 43 st
Slide 9: Selma Chalk Well Updates
Selma Chalk Well Updates Selma Chalk Production Update (1) Preliminary 2023 Program Results 0.40 Gen II Type Well 0.35 Successfully drilled 5 HZ Selma Chalk wells BCF / 1000’ Effective Lateral1 Gen 1 Avg. 0.30 SOU AVG NORM. 0.25 GH 19‐3 2 Executed on or under budget 0.20 GH 19‐3 3 GH 19‐3 4 0.15 Eff
Slide 10: 2023 Uncompleted Well Expectations
2023 Uncompleted Well Expectations Technical Improvements Utilizing technology to increase in‐zone lateral length Q1 2022 4 95% 5,400 DUC Wells Avg. In‐Zone Lateral Avg. Lateral length Q1 2023 Longer Laterals Results Longer in‐zone laterals are • Average effective length is 20% longer than type expe
Slide 11: Organic Development Activity Driving Growth
Organic Development Activity Driving Growth Significant Gwinville Growth Model – Selma Chalk Only Significant Growth Opportunities Based on Generation 2 type curve results Conservative single rig program < 8 months/year (15 wells) Multiple Development Opportunities 25,000 Across Mississippi Asset Ba
Slide 12: Eight Years of Operating History Has Formed Strategic Advantage
Eight Years of Operating History Has Formed Strategic Advantage Strategic Advantage Consolidation & Development Focus Area • Self‐generated opportunities utilizing proprietary database • Digital workflow has proven management successful in previous companies Oklahoma • Significant amount of work com
Slide 13: Tightening of the U.S. Gas Supply / Demand Balance
Tightening of the U.S. Gas Supply / Demand Balance Positioning Southern for the Future of Natural Gas Southern Proximity to Expanding LNG Export Markets The Short Term: 2023 price volatility • Lack of winter weather, Freeport LNG delays and Q4 ‘22 supply growth • 2023 major gas producer capital budg
Slide 14: Building our Business in the Right Place, at the Right Time
Building our Business in the Right Place, at the Right Time Public Gas Producers ‐ 2022 Field Cash Margins High Profit Margin $8.00 • Southern has minimal transportation costs as the All‐In Gathering, Processing, Transportation and Operating Cost Field Cash Margin (Before Hedging) Company owns / ope
Slide 15: Investment Thesis
Investment Thesis Why Invest in Southern Energy? Experience TEAM HAS 8 YEARS OPERATING HISTORY IN THE U.S. GULF COAST AREA • Highly experienced management team with proven track record • Extensive operations experience in southeastern U.S. core area SOUTHERN IS 7% INSIDER OWNED (NON‐DILUTIVE BASIS)
Slide 16: Appendix
Appendix TSXV: SOU, AIM: SOUC, OTCQX: SOUTF www.southernenergycorp.com 15
Slide 17: Q1 2023 Activity Recap
Q1 2023 Activity Recap 2023 Gwinville Development Program re‐start based on gas prices Balance Sheet Strength Seven wells have been successfully Three well pad drilled & completed Methodically paying down debt while drilled in the current program Four drilled & uncompleted “DUCs” expanding available
Slide 18: Mississippi Oil & Gas History – Home of Core Assets
Mississippi Oil & Gas History – Home of Core Assets Mississippi Oil & Gas Highlights > 2.0 > 10 > 34,000 Billion bbl cumulative oil Tcf cumulative gas Wells drilled to date • Significant hydrocarbon recovery – Superior production on a per well basis than Texas or Louisiana • First commercial oil wel
Slide 19: Core Southern Energy Mississippi Asset Base
Core Southern Energy Mississippi Asset Base > 29,000 Acres ~ 2,800 boe/d $142.5 MM < $5.00/boe (> 97% HBP) Current Production (1) 2P PV10 (2) All‐In Lifting/Processing Cost Mechanicsburg Magee Mississippi • Liquids rich (> 25 bbl/MMcf oil & NGL) 350 40 • Field production > 10 MMbbl • Field covered b
Slide 20: Gwinville – Large Scale Natural Gas Redevelopment
Gwinville – Large Scale Natural Gas Redevelopment Significant Underdeveloped Gas Resource Gwinville Field – Jefferson Davis County, MS • 1+ Tcf OGIP in Selma Chalk, current recovery ~ 15% Multi Tcf Gas in Place Bcf MMbbl • Multi‐zone production of 1.5 Tcf, 12 MMbbl, historical decline Wilcox 1 0.0 <
Slide 21: Leadership Team
Leadership Team Experienced and successful management team with a history of creating shareholder value together Strong technical expertise combined with a modern approach to data and workflow creates proven early mover advantage Ian Atkinson Calvin Yau Gary McMurren Erin Buschert Jim McFadyen Jeff
Slide 22: Board of Directors
Board of Directors Experienced and talented leadership to guide the Execution of Southern Energy’s Business Plan Board of Directors Ian Atkinson, P. Eng., ICD.D Bruce Beynon, P. Geol. (Chairman) Former founder and EVP of Athabasca Oil Former EVP, Exploration and Corporate Development of Baytex Energ
Slide 23: Modern Energy Company - Environment, Social & Governance
Modern Energy Company ‐ Environment, Social & Governance Southern’s near term mission is to support the U.S. transition to cleaner sources of electricity generation by delivering low cost, conventional natural gas Core Values at Southern – Not Buzz Words Central Mississippi Operations Team Environme
Slide 24: Disclaimers
Disclaimers General The information contained herein has been provided solely for information purposes and does not purport to be comprehensive or contain all the information that may be required by recipients to evaluate Southern Energy Corp. ("Southern" or the "Company"). This Presentation and the
Slide 25: Disclaimers
Disclaimers FOFI This Presentation contains future‐oriented financial information and financial outlook information (collectively, "FOFI") about Southern's prospective results of operations, production, investor yields, working capital, capital expenditures, enterprise value, share price, investment
Slide 26: Disclaimers
Disclaimers Analogous Information This Presentation provides certain information relating to properties in close proximity to the Company's properties, which is "Analogous Information" as defined by applicable securities laws. This analogous information is derived from publicly available information