Southern Energy has announced the preliminary results from its recent Lower Selma Chalk (“LSC”) horizontal well completion in the Gwinville Field. 

In late June 2025, Southern successfully completed the first of its three remaining drilled but uncompleted (“DUC”) horizontal wells from the Q1 2023 drilling program, 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). This is an increase of > 100% compared to the average of the original LSC horizontal wells in Gwinville that were drilled and completed by previous operators. The well has been flowing directly to Company facilities with all gas sold since June 26, 2025.

Southern safely and efficiently stimulated the well with 25 fracture stages, placing over 5.3 million lbs of proppant into the wellbore. This is a 70% increase in proppant intensity compared to the original LSC horizontal wells at Gwinville. Southern implemented targeted stimulation design changes for this first LSC horizontal completion that improved the predictability and speed of the fracture operations, and most importantly, reduced the overall completion cost down to US$2.2 million which is over 10% below pre-job estimates. Additionally, water flowback rates from the LSC reservoir have been over 70% lower than Southern’s Upper Selma Chalk horizontal wells, which translates into significant initial operating cost savings of ~ $0.20/Mcfe, further improving capital returns. 

With these further cost improvements, the Company now estimates the total capital required to drill, complete, tie-in and equip capital for future Gwinville LSC horizontal wells to be approximately $4.0 million – a reduction of over 20% from previous management estimates and significantly below the $5.0 million estimates in the Company’s third-party reserve report. Based on a revised LSC type curve with an IP30 rate of 3.6 MMcf/d and a capital cost of $4.0 million, Southern calculates a break-even (15% IRR) at a Henry Hub price of $3.70/MMBtu. This is consistent with previous estimates that assumed higher initial production rates and higher costs and remains competitive with other dry natural gas plays.

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 and will update the market at that time. The remaining two DUC wellbores have been drilled in the LSC and City Bank formations.            

Ian Atkinson, President and Chief Executive Officer of Southern, commented:
“We are very pleased with the early flowback results of the GH LSC 13-13 #2 well that will help us establish a long-awaited type curve for the remaining potential 60+ LSC horizontal locations in our vast Gwinville inventory. We expect the lower decline from the LSC reservoir to support the ~ 3.5 Bcfe recovery per well predicted by both management and our third-party reserve evaluator. The Southern operations team has safely executed this operation at 10% below our original completion estimate, which not only drives a much quicker payout on this capital but will also allow Southern to start redeveloping the Gwinville Field much sooner as natural gas prices are still expected to improve materially into the back half of 2025 and continue into 2026.      

From a revenue generation perspective, since bringing these significant new production volumes on-line in late June with minimal incremental operating costs, Southern has also greatly benefited from a daily natural gas basis premium of approximately 17% above Henry Hub pricing due to the start of warmer seasonal temperatures and associated natural gas fired power demand in the southeast U.S. which we expect to continue or improve throughout the summer. We look forward to providing these improved cash flow results from additional Q3 volumes in November 2025.”

KeyFacts Energy Industry Directory: Southern Energy