Southern Energy, an established producer with natural gas and light oil assets in Mississippi, announces its third quarter financial and operating results for the three and nine months ended September 30, 2024.

THIRD QUARTER 2024 HIGHLIGHTS

• Petroleum and natural gas sales of $3.5 million in Q3 2024, a decrease of 34% compared to the same period in 2023
• Average production of 14,018(1) Mcfe/d (2,336 boe/d) (97% natural gas) during Q3 2024, a decrease of 17% from the same period in 2023 
• Generated $0.6 million of adjusted funds flow from operations2 in Q3 2024 ($0.00 per share - basic and fully diluted) 
• Net loss of $2.1 million in Q3 2024 ($0.01 net loss per share - basic and fully diluted), compared to a net loss of $2.4 million in Q3 2023 
• Average realized natural gas and oil prices for Q3 2024 of $2.40/Mcf and $73.78/bbl compared to $2.83/Mcf and $82.65/bbl in Q3 2023 and a Q3 2024 natural gas benchmark price of $2.16/Mcf 
• Monetized excess inventory equipment in the first nine months of 2024 for net proceeds of $3.4 million 
• Reduced net debt by $1.4 million from Q2 2024 and $3.9 million from Q4 2023

(1) Comprised of 66 bbl/d light and medium crude oil, 9 bbl/d NGLs and 13,568 Mcf/d conventional natural gas

Ian Atkinson, President and Chief Executive Officer of Southern, commented: 
“Southern remains steadfast in preserving its balance sheet amid the challenging natural gas price environment of 2024. With natural gas prices on track to be the second-lowest in 24 years, we have proactively focused on optimizing our value chain. This includes generating $3.4 million in proceeds through the sale of excess equipment inventory in 2024 and reducing our abandonment liabilities by divesting non-core, non-producing wellbores during Q3. 

“Despite the market challenges, Southern has leveraged the strategic locations of its assets and sales points, achieving a $0.24/Mcf premium (~11% basis premium) over Henry Hub benchmark pricing in Q3 2024. Additionally, our financial hedge of 5,000 MMBtu/d at $3.40, which was initiated in Q2 2024, has provided stable cash flows, enabling us to navigate ongoing volatility. 

“Looking ahead, there are encouraging signs of price improvement as we enter winter and progress into 2025. Increased feed gas demand from Corpus Christi and Plaquemines LNG export facilities, coupled with rising domestic consumption driven by gas-fired power demand for artificial intelligence data centers and vehicle electrification, are expected to tighten the supply-demand balance. The longer-term structural case for natural gas also looks promising, as the lack of new storage capacity built will continue to tighten markets and geo-political events in Europe are expected to make US LNG more attractive. 

“We remain committed to leveraging our strategic advantages and maintaining operational efficiencies to drive growth and shareholder value.”

Outlook 

In response to continued low natural gas prices, Southern has been actively reducing and optimizing both operating costs and maintenance capital to maximize its field netbacks. In Q3 2024, Southern sold excess equipment inventory for net proceeds of $2.0 million. The Company expects to continue these initiatives for the remainder of 2024 and into 2025, in order to preserve its balance sheet.

Southern has $10.0 million in unused capacity on its Credit Facility, which can be utilized to complete the three remaining Gwinville drilled but uncompleted wells when natural gas prices improve or for counter-cyclical inorganic growth opportunities.

KeyFacts Energy Industry Directory: Southern Energy