Southern Energy Corp. Announces Fourth Quarter And Year End 2025 Financial And Operating Results

CALGARY, AB / ACCESS Newswire / April 28, 2026 / Southern Energy Corp. ("Southern" or the "Company") (TSXV:SOU)(AIM:SOUC), an established producer with natural gas and light oil assets in Mississippi, announces its fourth quarter and year end December 31, 2025 financial and operating results. Selected financial and operational information is outlined below and should be read in conjunction with the Company's audited consolidated financial statements and related management's discussion and analysis (the "MD&A") for the three and twelve months ended December 31, 2025, as well as the Company's annual information form for the year ended December 31, 2025, (the "AIF"), all of which are available on the Company's website at www.southernenergycorp.com and have been filed under the Company's profile on SEDAR+ at www.sedarplus.ca.

All figures referred to in this news release are denominated in U.S. dollars, unless otherwise noted.

FEBRUARY FINANCING

• On February 12, 2026, the Company completed a financing and royalty transaction with certain arm's-length investors pursuant to which it issued the 2026 Debentures (as defined below) and common shares in the capital of the Company ("Common Shares") and granted a 6% gross overriding royalty ("GORR") on its existing and future developed production (collectively, the "February Financing"). The Company issued 17,000 $1,000 face value senior secured convertible debentures (the "2026 Debentures") for gross proceeds of $17.0 million, 30.0 million new Common Shares at a price of CAD$0.07 ($0.05) per Common Share for gross proceeds of CAD$2.1 million ($1.5 million) and received $5.0 million of proceeds from the sale of the gross overriding royalty. The February Financing generated aggregate net proceeds of approximately $22.0 million, which were used in part to repay and retire the Company's senior credit facility (the "Credit Facility"), with the remainder intended to fund development capital and general corporate purposes. The 2026 Debentures mature on December 31, 2028, and bear interest at 7% per annum.

• On a pro-forma basis, following the February Financing, Southern exited Q1 2026 with no senior bank debt, extended maturities to December 31, 2028, and materially reduced its annual cash interest (15% to 7%) burden.

FOURTH QUARTER AND YEAR END 2025 HIGHLIGHTS

• Petroleum and natural gas sales of $4.6 million during Q4 2025 and $18.0 million for the year ended December 31, 2025, an increase of 17% and 12% from the same periods in 2024, respectively

• Generated $0.7 million of Adjusted Funds Flow from Operations¹ in Q4 2025 ($0.00 per share basic and diluted), and generated $3.0 million for the year ended December 31, 2025 ($0.01 per share basic and diluted) reflecting improved realized pricing and cost discipline despite lower production

• Average production of 11,600² Mcfe/d (1,933 boe/d) (93% natural gas) during Q4 2025 and 12,039³ Mcfe/d (2,007 boe/d) (96% natural gas) for the year ended December 31, 2025, a decrease of 14% and 21% from the same periods in 2024, respectively, primarily due to the voluntary shut-in of approximately 400 boe/d of production in May 2025 from the Mechanicsburg and Greens Creek Fields due to an ongoing transportation dispute with a third party pipeline operator

• Average realized natural gas and oil prices for Q4 2025 of $3.93/Mcf and $57.40/bbl, compared to $2.78/Mcf and $68.59/bbl in Q4 2024. Southern achieved an average premium of $0.41/Mcf (approximately 12% above the NYMEX HH benchmark) throughout 2025

• Net loss of $3.7 million ($0.01 per share basic and diluted) and $7.5 million ($0.03 per share basic and diluted) for the three and twelve months ended December 31, 2025, respectively

• Reduced Net Debt⁴ for the year ended December 31, 2025 by $4.1 million from December 31, 2024, prior to the transformational February Financing that fully retired the higher cost Credit Facility

• On April 8, 2025, Southern closed an equity financing raising aggregate gross proceeds of $5.0 million (approximately £3.9 million, CAD$7.2 million) through the issuance of a total of 102,482,673 units comprised of one common share and one common share purchase warrant (the "Units") (see "Shareholders' Equity - Share Capital" in the December 31, 2025 MD&A for full details)

• On April 8, 2025, Southern converted the remaining convertible debentures (the "Debentures") in the amount of $3.1 million into 62,759,286 Units and issued 1,627,170 Units for all accrued and unpaid interest (see "Liquidity and Capital Resources - Debenture Financing" in the December 31, 2025 MD&A for full details)

• In June 2025, Southern successfully completed the second of its four high quality drilled uncompleted horizontal wells ("DUCs") from the Q1 2023 drilling program - the GH Lower Selma Chalk ("LSC") 13-13 #2 wellbore. The operation was completed safely and under budget.

Ian Atkinson, President and Chief Executive Officer of Southern, commented:

"2025 marked a year of resilience and progress for Southern, as we navigated a challenging commodity environment while continuing to strengthen our financial position and demonstrate the quality of our asset base. We delivered growth in revenues and funds flow, achieved a consistent premium to NYMEX pricing of approximately 12%, and reduced Net Debt through disciplined capital management. These results highlight the strategic advantage of our Gulf Coast positioning and our focus on operational execution.

Subsequent to year-end, we completed a transformative financing that de-risked the balance sheet and represents a true inflection point for the Company. The transaction generated approximately $22 million in net proceeds, enabled the full repayment of our higher-cost senior Credit Facility, materially improved liquidity, and aligned long-term capital with asset level performance. With a simplified and more flexible capital structure, lower cost of capital and aligned funding tied to asset performance, we are now well positioned to accelerate development and unlock the value of our resource base.

With materially lower leverage, no bank debt maturities, and development capital now fully funded, Southern enters 2026 positioned to convert its extensive proved developed producing ("PDP") and undeveloped reserve base into sustainable free cash flow.

Looking forward, the outlook for natural gas continues to strengthen, underpinned by growing LNG export capacity, increasing power demand and the emerging impact of data center-driven energy consumption. With premium market exposure, a strengthened balance sheet and a clear development runway, Southern is entering 2026 with strong momentum and a focus on executing high-return opportunities to drive meaningful, long-term value for shareholders."

Financial Highlights

Note:

1. See "Reader Advisories - Specified Financial Measures".

Operations Update

In late Q1 2026, Southern conducted a low-cost acid treatment on its second Gwinville LSC DUC horizontal well, the GH LSC 14-06 #4. This test was designed to evaluate whether future wells in the naturally fractured Selma Chalk could be developed using an openhole, multi-lateral design, eliminating the need for high-cost hydraulic fracture stimulation.

A 50-stage acid treatment was performed on the GH LSC 14-06 #4 lateral using approximately 2,000 gallons of 7.5% HCl per stage to access the reservoir behind the production casing cement. Total cost for the treatment was approximately $700,000, including well equipping, tie-in, and tubing installation.

The well has been producing for 22 days and has averaged approximately 500 Mcf/d over that initial flowback. Southern will continue to monitor production performance and decline trends to determine whether additional fracture stimulation is warranted.

The cost to drill and complete a single 5,000-foot horizontal lateral with multi-stage fracture stimulation is approximately $4.3 million. In contrast, an openhole, unstimulated multi-lateral well is estimated to cost $2.5 - 3.0 million, depending on the number of laterals and total openhole length, representing a cost reduction of more than 40%.

While unstimulated laterals may deliver lower initial production rates than stimulated wells, the objective of this evaluation is to determine whether the materially lower costs and reduced decline rates associated with a multi-lateral design can deliver superior overall economics. Although early production results are encouraging, the well remains in the evaluation phase and commercial repeatability has not yet been established.

With the recent rise in oil pricing, Southern also added perforations to a producing oil well ("Adcox #3 Well") in its Magee field which has yielded excellent results. The Adcox #3 Well has been producing at > 80 bbl/d of oil since April 1 and successfully paid out the capital expenditure in approximately two days.

Southern has initiated the regulatory, surface and mineral land processes to permit the drilling of its first Cotton Valley test well in the Williamsburg Field. It is expected that this well will spud as early as June 2026. More information on the location, timing and capital allocation of this well will be provided in the coming weeks.

Southern will continue to monitor regional natural gas prices over the coming months before deciding when to complete the remaining Gwinville City Bank DUC well. Because the City Bank reservoir is not suitable for a low-cost acid treatment, the well will require a multi-stage hydraulic fracture stimulation for completion.

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. On April 6, 2026, FERC issued an order ("FERC Order") directing both parties to enter immediate settlement discussions before a settlement judge. If those discussions are unsuccessful, the matter may proceed to an evidentiary hearing. Based on the timelines outlined in the FERC Order, a hearing outcome would likely occur in the second half of 2026.

2025 Year End Reserves Update

The Company is pleased to announce selected highlights of Southern's year end independent oil and gas reserves evaluation as of December 31, 2025.

Estimates of the Company's reserves and related estimates of net present value of future net revenues as at December 31, 2025, are based upon reports (the "NSAI Report") prepared by Southern's independent qualified reserves evaluator, Netherland, Sewell and Associates, Inc. ("NSAI"). All currency amounts are in United States dollars (unless otherwise stated) and comparisons refer to December 31, 2024.

Reserve Highlights:

The NSAI Report states:

• PDP reserves of 5.8 MMboe,

• Proved reserves ("1P") of 13.7 MMboe,

• Proved + Probable reserves ("2P") of 25.3 MMboe, and

• a PDP reserve life index of nine years and 38 years for 2P reserves based on the 2026 PDP production forecast.

Before-tax net present value ("NPV") of reserves, discounted at 10% ("NPV10"), is $29.6 million on a PDP basis, $58.0 million on a 1P basis and $103.7 million on a 2P basis evaluated using the average forecast pricing of four independent reserve evaluators as at January 1, 2026.

In addition to the summary information disclosed in this press release, more detailed information regarding Southern's oil and gas reserves can be found in the AIF, which is available on the Company website and has been filed on SEDAR+ (www.sedarplus.ca).

2025 Independent Qualified Reserve Evaluation

The following tables highlight the findings of the NSAI Report, which has been prepared in accordance with definitions, standards and procedures contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the most recent publication of the Canadian Oil and Gas Evaluation Handbook ("COGEH"). All evaluations and summaries of future net revenue are stated prior to the provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs, and estimated future capital expenditures. The NSAI Report was based on the average forecast pricing of the following four independent external reserves evaluators: GLJ Ltd, Sproule Associates Limited, McDaniel & Associates Consultants Ltd and Deloitte. Additional reserves information as required under NI 51-101 is included in Southern's AIF, which has been filed on SEDAR+. The numbers in the tables below may not sum due to rounding.

Summary of Reserves Volumes as at December 31, 2025

The Company's reserve volumes and undiscounted future development capital costs are summarized below as at December 31, 2025:

1. Gross working interest reserves before royalty deductions.

The following table outlines the changes in Southern's reserves and reserve life index as at December 31, 2025 compared to December 31, 2024: