Southern Energy Corp. · TSXV:SOU
Southern Energy — Investor Presentation (May 2020)
22 slides from Southern Energy's investor presentation, May 2020
Slide 1: Corporate Presentation
Corporate Presentation May 2020 TSXV : SOU
Slide 2: Disclaimers
Disclaimers BOE Disclosure This presentation contains information that may be considered to be forward-looking information within the meaning of The term barrels of oil equivalent (“BOE”) may be misleading, particularly if used in isolation. A BOE conversion ratio of applicable securities laws. Such
Slide 3: About Southern Energy
About Southern Energy Company Profile Southern Energy Assets – Global Gas Export Perspective • Management and Board has extensive operating experience in the United States with a track record of creating shareholder value • Positioned to premium commodity pricing in North America • Exposure to struc
Slide 4: The Business Plan
The Business Plan Focused on Value Creation: Real Shareholder Returns • Build a high margin asset base of sufficient scale with significant low risk drilling inventory Access to Long-Term that continues to generate free cash flow Capital Sustainability • Southern will be attractive to patient, value
Slide 5: Investment Thesis
Investment Thesis Why Invest in Southern Energy? Experience • Highly experienced management team TEAM HAS SPENT 6 YEARS OPERATING IN THE U.S. GULF COAST AREA • Extensive operations experience in southeastern U.S. core area SOUTHERN IS 21% INSIDER OWNED (NON-DILUTIVE BASIS) • Management and Board hav
Slide 6: U.S. Gulf Coast Gas Demand to Increase 20+ Bcf/d in Next 5 years
U.S. Gulf Coast Gas Demand to Increase 20+ Bcf/d in Next 5 years Positioning Southern for the future Southern LNG Exposure The U.S. Gas Depletion Story: 2020 and Beyond • Unprecedented production of 100+ Bcf/d with annual decline rate of > 25% • System requires ~ 25 Bcf/d of new annual production to
Slide 7: Six Years of Operating History Has Formed Growth Strategy
Six Years of Operating History Has Formed Growth Strategy Buy Low – Drill High Focus Area • Management expects to establish a dominant production base through acquisitions during weak pricing environment • Target production of > 10,000 boe/d over 18 - 24 months • Pursuing multiple follow on acquisit
Slide 8: Environment, Social & Governance
Environment, Social & Governance Core Values at Southern – Not Buzz Words Environment • Actively engaged with Mississippi state regulators to help design best practices and policies for air emissions and freshwater usage • Meet or exceed recent EPA Standards to reduce gas emissions • Maintain a thor
Slide 9: Leadership Team
Leadership Team Management Team Board of Directors Ian Atkinson, M.Sc., P. Eng. – President & CEO Ian Atkinson, P. Eng., ICD.D Experienced and successful management team Athabasca Oil, Morpheus, Renaissance and Talisman Former founder and EVP of Athabasca Oil with a history of creating shareholder v
Slide 10: Recent Accretive Acquisition – Executing on Strategy
Recent Accretive Acquisition – Executing on Strategy THEN: Corporate Cash Flow ($/share) (1) Production (boe/d) Operating Cost ($/boe) $8.80 $0.03 2,550 $6.00 1,550 $0.01 SOU SOU SOU SOU SOU SOU (Pre-Acq) (Pro-Forma) (Pre-Acq) (Pro-Forma) (Pre-Acq) (Pro-Forma) • Significant accretion to both • Pro-f
Slide 11: Core Southern Energy Asset Base
Core Southern Energy Asset Base > 39,000 ~ 2,500 $40.2 6.3 Acres (> 80% HBP (1)) boe/d (2) $MM PDP PV10 (3) MMboe WI PDP Reserves (3) Mississippi Alabama Mechanicsburg Black Warrior Basin • Liquids rich (> 30 bbl/MMcf oil & NGL) 575 60 • Light, sweet 45° API oil • Field covered by 53 mi2 3D boe/d bo
Slide 12: Scalable Large Resource Assets - Gwinville Field Example
Scalable Large Resource Assets - Gwinville Field Example Significant Underdeveloped Gas Resource Mississippi’s Largest Gas Field • 1+ Tcf OGIP in Selma Chalk, current recovery ~ 15% 3 - 4+ TCF OGIP Bcf MMbbl • Multi-zone production of 1.5 Tcf, 12 MMbbl, current Wilcox 0.7 - decline < 8%, with additi
Slide 13: Low Risk, Multi-Zone Gas Resource Development
Low Risk, Multi-Zone Gas Resource Development Similar Pool Characteristics • The Baxterville field has undergone a successful HZ conversion and is a direct analog to the Gwinville Field ‒ Recent horizontal wells in the middle of the pool producing > 7 MMcf/d IP30 Gwinville ‒ Southern plans to increa
Slide 14: Significant Oil Potential in Regional Cotton Valley Fairway
Significant Oil Potential in Regional Cotton Valley Fairway Defined plan to build Cotton Valley oil assets in a regional fairway using Southern’s ‘early mover’ advantage Low Risk, Prolific Light Oil Trend • Trend is less developed with drilling as the play moves east from Texas • Similar ‘macro’ tra
Slide 15: Proven Oil Potential within Core Asset Base
Proven Oil Potential within Core Asset Base Central Mississippi Cotton Valley (CNVL) Focus Area Recent Development (1) 4,000 18 Oil - CD Well Count 3,500 16 14 3,000 Gross Oil Rate (bbl/d) 12 2,500 Well Count 10 2,000 8 1,500 6 Gwinville 1,000 4 • 2 CNVL penetrations • 1980 perf, 8 ft flare 500 2 0
Slide 16: Low Risk Cotton Valley Horizontal Oil Play
Low Risk Cotton Valley Horizontal Oil Play Cotton Valley Focus Area Fully Delineated Prospect • Southern has identified a low risk horizontal infill oil play in a member of the Cotton Valley Formation • Competitor has recently drilled several horizontal wells in the same zone, similar structure with
Slide 17: The Southern Energy Difference
The Southern Energy Difference Key Attributes Asset Character U.S. Unconventional E&P Corporate Decline Rates Low (~10%) High (>40%) Large Inventory of Undeveloped Resources Yes Yes Capital Intensity Low High Harvest Mature Production Efficiently Yes No Operating Efficiency Unit Operating Costs Low
Slide 18: Summary – Predictable Growth Strategy
Summary – Predictable Growth Strategy U.S. Gulf Coast focused energy company with a goal to create shareholder value by: Consolidating and developing high quality low risk conventional assets in under-exploited basins in U.S. Gulf Coast states • Target large scale growth through consolidation at cur
Slide 19: Appendix
Appendix TSXV: SOU www.southernenergycorp.com 18
Slide 20: Hedging Summary
Hedging Summary Hedging Position: • As at May 2020: Natural Gas: Deal Type Term Start Date End Date Volume (MMBtu/d) Index Strike Swap Option Cal20 01-Jan-20 31-Dec-20 1,000 NYMEX HH $ 2.600 Swap Option Cal20 01-Jan-20 31-Dec-20 1,500 NYMEX HH $ 2.748 Swap Option Cal20 01-Jan-20 31-Dec-20 2,000 NYME
Slide 21: Selma Chalk HZ Development
Selma Chalk HZ Development Type Curve Development Southern HZ Gen-3 Type Curve Economics Assumptions 10,000 Gen-1: 3 - 4 stages, 400 - 800 lb/ft Gen-2: 12 - 14 stages, 800 - 1,200 lb/ft WTI ($/bbl) $60.00 $60.00 EUR – Gas (Bcf) 4.3 Gen-3: 20+ stages, 2,000+ lb/ft Henry ($/MMBTU) $2.90 $3.50 EUR – Oi
Slide 22: Project Economics
Project Economics Horizontal Vertical Horizontal Southern Project Economics Selma Chalk Cotton Valley Cotton Valley Play Significant gas upside above Multi-year drilling inventory in identified oil bearing structures $2.90/MMBTU HH Oil (bbl/d) 11 160 510 IP 30 Gas (Mcf/d) 5,700 280 1,800 Oil (Mbbl)