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, 2025.

THIRD QUARTER 2025 HIGHLIGHTS

• Petroleum and natural gas sales of $4.3 million during Q3 2025, an increase of 25% from the same period in 2024, largely due to the 50% increase in Q3 2025 natural gas pricing over Q3 2024
• Average production of 12,457(1) Mcfe/d (2,076 boe/d) (97% natural gas) during Q3 2025, a decrease of 11% from the same period in 2024 and an increase of 10% from Q2 2025
• Average realized natural gas and oil prices for Q3 2025 of $3.59/Mcf and $63.53/bbl, compared to $2.40/Mcf and $73.78/bbl in Q3 2024. Southern achieved an average premium of $0.52/Mcf (approximately 17%) above the NYMEX HH benchmark in Q3 2025
• Generated $1.0 million of Adjusted Funds Flow from Operations in Q3 2025 ($0.00 per share basic and diluted)
• Net earnings of $0.5 million ($0.00 per share basic and diluted) in Q3 2025, compared to a net loss of $2.1 million in Q3 2024

SUBSEQUENT EVENTS

• The Company successfully completed an oil well in the Magee Field at the end of September 2025. The well produced approximately 3,000 bbl of oil in the month of October and is currently producing at steady rates ~ 85 bbl/d of oil. The final costs for the completion were $85,000, which resulted in a payout of less than three weeks on the project.

(1)  Comprised of 23 bbl/d light and medium crude oil, 35 bbl/d of condensate, 0 bbl/d NGLs and 12,109 Mcf/d conventional natural gas 

Ian Atkinson, President and Chief Executive Officer of Southern, commented: 
“Southern delivered another strong quarter, underpinned by a successful oil recompletion in the Magee Field and the continued strong performance of the GH LSC 13-13 #2 well. These achievements have enhanced our cash flow and reaffirmed the depth and quality of our development inventory. With realized natural gas pricing averaging a 17% premium to Henry Hub during the quarter, our strategic positioning and disciplined execution continue to drive meaningful value for shareholders.” 

Operations Update  

In late June 2025, Southern brought online the first of its three remaining drilled but uncompleted (“DUC”) horizontal wells from the Q1 2023 drilling program, and its first Lower Selma Chalk (“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 continued to flow throughout the quarter as per expectations, achieving an IP90 rate of 2.9 MMcfe/d.   

Southern implemented stimulation design changes that improved the predictability and speed of the fracture operations, and most importantly, reduced the Company’s overall expected completion cost for future horizontal wells down to ~ $1.8 million per well.  Incorporating planned design changes on the drilling side, Southern now expects the full drill, complete, equip and tie-in cost for future Gwinville horizontal wells (5,000’ lateral) to be ~ $4.0 million, which is 20% lower than the current capital estimates in the Company’s third-party reserve report. 

Southern will continue to monitor regional natural gas pricing 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. In September 2025, FERC requested certain data from the pipeline operator. Based on prescribed FERC resolution timelines and past rate determination processes, the Company now expects this issue to be resolved sometime in Q4 2025, at which point these production volumes will come back on-line. The ongoing US government shutdown has contributed to further unforeseen delays in the process.  

Outlook 

With the recent operational success of the GH LSC 13-13 #2 well completion and the Magee oil recompletion, Southern plans to leverage the resulting increase in cash flow to further strengthen its balance sheet and advance additional oil focused projects and the two remaining DUCs at Gwinville.  

The Company continues to benefit from a fixed-price natural gas swap of 5,000 MMBtu/d at $3.40/MMBtu through December 2026, providing meaningful downside protection. Combined with improved regional pricing and a stronger financial position, Southern is well-positioned to execute a disciplined capital program focused on sustainable growth and long-term shareholder value creation. 

MISSISSIPPI INTERIOR SALT BASIN

The MISB is the most productive basin in the northeastern Gulf Coast Region, having produced more than 1.5 billion barrels of oil and 8.0 Tcf of gas. Located on the north flank of the Gulf Coast Plain, with an average width of 125 miles and covering a total area of 6,000 square miles, it extends from northeastern Louisiana to southwest Alabama.

Southern Energy’s three main assets in the MISB are the Gwinville, Mechanicsburg, and Mount Olive East fields, which comprise over 88% of its Proved plus Probable reserves and approximately 85% of the present value of such reserves, with the remainder of the company’s assets comprising a number of lower value fields in the MISB.

KeyFacts Energy Industry Directory: Southern Energy