Fourth Quarter And Year End 2023 Results

Calgary, Alberta - April 26, 2024 - Southern Energy Corp. ("Southern" or the "Company") (TSXV:SOU) (AIM:SOUC)(OTCQX:SOUTF), an established producer with natural gas and light oil assets in Mississippi, announces its fourth quarter and year end December 31, 2023 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, 2023, as well as the Company's annual information form for the year ended December 31, 2023, (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.

FOURTH QUARTER AND YEAR END 2023 HIGHLIGHTS

• Average production of 16,755[1] Mcfe/d (2,793 boe/d) (96% natural gas) during Q4 2023 and 16,305[2] Mcfe/d (2,718 boe/d) (95% natural gas) for the year ended December 31, 2023, an increase of 4% and 5% from the same periods in 2022, respectively
• On June 1, 2023, Southern completed a strategic and highly synergistic acquisition in Gwinville of assets producing approximately 400 boe/d (99% natural gas) for cash consideration of $3.2 million (the "Gwinville Acquisition")
• Generated $0.8 million of adjusted funds flow from operations[3] in Q4 2023 ($0.01 per share basic and diluted) and $3.2 million for the year ended December 31, 2023 ($0.02 per share basic and diluted)
• Petroleum and natural gas sales were $5.1 million in Q4 2023 and $19.3 million for the year ended December 31, 2023, a decrease of 48% and 57% from the same periods in 2022, respectively, largely due to a significant depreciation in the natural gas price
• Average realized natural gas and oil prices for Q4 2023 of $2.95/Mcf and $76.97/bbl compared to $6.35/Mcf and $81.98/bbl in Q4 2022
• Net loss of $39.6 million ($0.26 per share basic and diluted) and $46.8 million ($0.33 per share basic and diluted) for the three and twelve months ended December 31, 2023, respectively, due to a $38.0 million non-cash impairment charge recorded at December 31, 2023
• Year-end 2023 proved developed producing ("PDP") reserves were 7.5 MMboe and total proved plus probable ("2P") reserves were 29.6 MMboe, an increase of 21% and 16% from year-end 2022 and reflecting a reserve life index of eight years and 31 years, respectively
• Reserve replacement of 229% in PDP, 96% in total proved ("1P"), and 521% in 2P 2023 reserve categories
• Drilled six net wells at Gwinville in Q1 2023 from three padsites, with each subsequent pad drilling operation resulting in fewer drilling days per well depth adjusted
• On November 9, 2023, successfully closed an equity financing raising aggregate gross proceeds of $5.0 million
• In December 2023, Southern successfully completed the first of its four high quality uncompleted horizontal wells ("DUCs") from the Q1 2023 drilling program - the GH 14-06 #3 wellbore. The operation was completed safely and under budget

SUBSEQUENT EVENTS

• On February 28, 2024, entered into the sixth amendment (the "Sixth Amendment") to the Company's senior secured term loan (the "Credit Facility"), which among other amendments, included extending the term of the Credit Facility from August 31, 2025 to December 31, 2026 (see "Liquidity and Capital Resources - Credit Facility" in the December 31, 2023 MD&A for full details of the amendment)
• Southern monetized its fixed price swap derivative contracts to take advantage of the positive unrealized gain position, realizing net proceeds of $1.1 million.
• Entered into a fixed price swap derivative contract of 5,000 MMBtu/d for the period of May 2024 - December 2026 at a price of $3.40/MMBtu

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

"Looking at 2023, Southern is pleased to have made significant progress re-developing its large scale Gwinville asset, highlighted by the recent completion of the GH 14-06 #3 well, which achieved an IP30 rate of 5.2 MMcf/d, while deploying 40% less capital than early 2023 completion costs. We have three remaining high impact DUCs at Gwinville that we plan to complete and bring online as natural gas prices are expected to continue to recover into Q3 and Q4 of 2024. Completing the highly accretive acquisition at Gwinville in Q2 2023 illustrates our ability to execute on the inorganic focus of our business plan in lower commodity price cycles. Southern believes the strategy of accretive acquisitions in commodity price troughs, coupled with cost-effective organic growth heading into commodity price peaks, strikes a balance to create long term shareholder value in volatile commodity price environments.

"We continue to be encouraged by the outlook of supply and demand dynamics for U.S. natural gas as the new Gulf Coast LNG export facilities will start accepting feed gas later this summer, significantly increasing demand for natural gas in the region. Additionally, we are now seeing some material increases in domestic power demand through artificial intelligence ("AI") data center build out, crypto-currency mining and the electrification of transportation which will add to the overall demand for gas-fired power generation. The supply dynamic is also changing as we are starting to see the effects of large U.S. natural gas producers' willingness to both curtail current production and significantly reduce drilling and completion activity. This is manifesting into the supply side of the equation with U.S. production below 100 bcf/d at the start of April 2024, down from the Q4 2023 peak of 106 bcf/d.

"Southern is well positioned to capitalize on rising natural gas prices with production behind pipe which can be brought on stream in a short time frame and we are excited to continue to grow the business with our new and longstanding shareholders."

Financial Highlights

Note:

• See "Reader Advisories - Specified Financial Measures".

2023 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, 2023.

Estimates of the Company's reserves and related estimates of net present value of future net revenues as at December 31, 2023, 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, 2022.

Highlights:

• Relative to year-end 2022, the NSAI Report states:
• an increase in PDP reserves of 21% to 7.5 MMboe,
• unchanged 1P reserves of 14.0 MMboe,
• an increase in 2P reserves of 16% to 29.6 MMboe, and
• a PDP reserve life index of eight years and 31 years for 2P reserves based on the 2024 production forecast.
• Southern replaced 229%, 96% and 521% of 2023 production in the PDP, 1P and 2P reserve categories, respectively.
• Before-tax net present value ("NPV") of reserves, discounted at 10% ("NPV10"), is $39.9 million on a PDP basis, $63.4 million on a 1P basis and $119.3 million on a 2P basis evaluated using the average forecast pricing of four independent reserve evaluators as at January 1, 2024.
• New PDP reserves and additional Probable drilling locations booked at Gwinville following the synergistic acquisition of the remainder of the field in 2023.

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).

Gary McMurren, Chief Operating Officer of Southern commented:

"We are excited to report another year of material reserves growth for the Company, highlighted by conservative additions to our Gwinville assets following our strategic 2023 acquisition and consolidation.

"With the three remaining, high quality DUC locations in Gwinville (two Lower Selma Chalk and one City Bank) waiting on more supportive natural gas pricing before completion operations, our producing reserve bookings will be strengthened even further. The Company has yet to book any future horizontal locations in the City Bank formation, so success from that modern completion design is expected to be extremely impactful to continued reserves growth in the Gwinville Field for years to come.

"The NSAI Report continues to highlight the extensive running room and future development potential of only one of our existing core assets which could deliver long term sustainable free funds flow and organic growth for Southern shareholders."

2023 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 will 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, 2023

The Company's reserve volumes and undiscounted future development capital costs are summarized below as at December 31, 2023:

• 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, 2023 compared to December 31, 2022:

• The Reserve Life Index as at December 31, 2023 is calculated as gross working interest reserves divided by the projected annual PDP production forecast for 2024. See "Reader advisories - Oil and Gas Advisories"

Southern's total 2P reserves increased by 16% to 29.6 MMboe resulting in a 2P reserve life index of 30.9 years on projected annual PDP production for 2024. Southern's Gwinville horizontal well development program and the Gwinville asset acquisition in 2023 helped the Company achieve a 21% increase in PDP reserves to 7.5 MMboe.

Net Present Value of Future Net Revenue as at December 31, 2023

The following table summarizes the NPV of the Company's reserves (before-tax) as at December 31, 2023. The reserves value on a $/boe basis, discounted at 10% per year, is also summarized for each category.

• Unit values are based on net reserves. Net reserves are the Company's working interest reserves after deduction of royalties

Forecast Prices Used in Estimates

The following table outlines the forecasted future prices used by NSAI in their evaluation of the Company's reserves at December 31, 2023, which are based on a four-consultant average price forecast. The forecast cost and price assumptions assume increases in wellhead selling prices and consider inflation with respect to future operating and capital costs.

Reserves Reconciliation

The following table sets out the reconciliation of Southern's gross reserves based on forecast prices and costs by principal product type as at December 31, 2023 relative to December 31, 2022. The majority of 1P and 2P reserves increases, year-on-year, are attributed to the 2023 Gwinville acquisition.

• Gross working interest reserves before royalty deductions
• Technical revisions also include reserves associated with changes in operating costs and commodity price offsets

Gwinville Development Update

In late December 2023, the Company brought on-line the first of its four DUC wells from the Q1 2023 drilling program, the GH 14-06 #3 wellbore. This lateral hole was drilled and completed in the Upper Selma Chalk reservoir and achieved an IP30 natural gas rate of 5.2 MMcf/d, in-line with pre-drill expectations.

Southern implemented a number of stimulation design changes for this latest Upper Selma Chalk horizontal completion that improved the predictability and efficiency of the fracture operation and, more importantly, reduced the overall completion cost down to $2.1 million, well below budget estimates. Costs for this completion operation were approximately 40% lower than the two previous 18-10 pad Upper Selma Chalk wells that were completed earlier in 2023.

Outlook

Southern is planning to delay the completion timing of the remaining three DUC wells into the second half of 2024 when the Company expects natural gas pricing to be significantly elevated from current levels to maximize returns. These DUCs can be quickly completed and brought online through Southern's 100% owned equipment. The remaining DUC wellbores have been drilled in the Lower Selma Chalk (two) and City Bank formations. Southern currently has $10.0 million of unused capacity on its Credit Facility, which can be utilized to complete the DUCs at higher natural gas prices or can be used to be opportunistic with counter-cyclical inorganic growth opportunities.

As part of its risk management and sustainability strategy, Southern continuously monitors both the price of New York Mercantile Exchange ("NYMEX"), as well as the basis differentials, in order to mitigate some of the volatility of natural gas prices. With the extended term provided by the Sixth Amendment of the Credit Facility, Southern has taken advantage of the contango in the natural gas future strip by entering into a fixed price swap contract of 5,000 MMBtu/d for the period of May 2024 - December 2026 at a price of $3.40/MMBtu, which is approximately 106% above the current May 2024 contract price. Southern's current commodity hedge program includes:

Corporate Presentation

A new corporate presentation dated April 2024 is now available on the Company website at www.southernenergycorp.com.

Owen Roberts / Billy Clegg / Hugo Liddy

About Southern Energy Corp.

READER ADVISORIES

Short Term Results. References in this press release to peak rates, production rates since inception, current production rates, IP30 and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production of Southern. The Company cautions that such results should be considered to be preliminary.

• The reserves information and data provided in this press release presents only a portion of the disclosure required under NI 51-101. Southern's Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2023, which will include further disclosure of Southern's oil and gas reserves and other oil and gas information in accordance with NI 51-101 and COGEH forming the basis of this press release, will is included in the AIF which may be viewed on the Company's SEDAR+ profile at www.sedarplus.ca.

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Proved developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned. Certain terms used in this press release but not defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101, Revised Glossary to NI 51-101, Standards of Disclosure for Oil and Gas Activities ("CSA Staff Notice 51‐324") and/or the COGEH and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and the COGEH, as the case may be.

Abbreviations. Please see below for a list of abbreviations used in this press release.

1P total proved

2P proved plus probable

bbl barrels

bbl/d barrels per day

bcf/d billion cubic feet per day

boe barrels of oil

boe/d barrels of oil per day

IP30 average hydrocarbon production rate for the first 30 days of a well's life

Mcf thousand cubic feet

Mcf/d thousand cubic feet per day

MMcf million cubic feet

MMcf/d million cubic feet per day

Mcfe thousand cubic feet equivalent

Mcfe/d thousand cubic feet equivalent per day

MMboe million barrels of oil

MMBtu million British thermal units

MMBtu/d million British thermal units per day

NYMEX New York Mercantile Exchange

PDP proved developed producing

Forward Looking Statements. Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "budget", "continue", "evaluate", "forecast", "may", "will", "can", "target" "potential", "result", "could", "should" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to statements concerning the Company's asset base including the development of the Company's assets, positioning, oil and natural gas production levels, the Company's capital budget, anticipated operational results, Southern's 2024 outlook, growth strategy and the expectation that it will continue to grow the business with new and existing shareholders, capital expenditures, drilling and completion plans and casing remediation activities, expectations regarding commodity prices and service costs, the performance characteristics of the Company's oil and natural gas properties, expectations regarding prospective reserves and probable drilling locations at the Gwinville site, the Company's hedging strategy and execution thereof, the ability of the Company to achieve drilling success consistent with management's expectations, Southern's expectations regarding the reserve life index of its reserves, including the reserve life index of 8 and 31 years for 2023 PDP and 2P reserves, respectively, NPV of the Company's reserves (before-tax), forecasted future prices used by NSAI in their evaluation of the Company's reserves, the Company's expectations regarding completion of the three remaining DUCs (including that they will be brought online and the timing thereof and anticipated costs and funding), expectations regarding the Credit Facility and the terms thereof, the projected annual PDP production forecast for 2024, the sources of funding for the Company's activities, the effect of market conditions on the Company's performance, the anticipated use of proceeds from Southern's recent equity financing, outlook in respect of supply and demand dynamics for U.S. natural gas in respect of Gulf Coast LNG export facilities, the Company's risk management activities including hedging positions and targets, expectations regarding the use of proceeds from all sources including the Credit Facility, the availability and renewal of the Credit Facility and future amendments, and the Company's risk management and sustainability strategy. Statements relating to "reserves" and "recovery" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Southern, including, but not limited to, the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of drilling rigs, facilities and pipelines, the geological characteristics of Southern's properties, the characteristics of the Company's assets, the successful integration of recently acquired assets into the Company's operations (including the assets acquired pursuant to the Gwinville Acquisition), the Company's ability to comply with ongoing obligations under the Credit Facility and its convertible debentures and other sources of financing, the successful application of drilling, completion and seismic technology, the benefits of current commodity pricing hedging arrangements, Southern's ability to enter into future derivative contracts on acceptable terms, Southern's ability to secure financing on acceptable terms, prevailing weather conditions, prevailing legislation, as well as regulatory and licensing requirements, affecting the oil and gas industry, the Company's ability to obtain all requisite permits and licences, prevailing commodity prices, price volatility, price differentials and the actual prices received for the Company's products, royalty regimes and exchange rates, the impact of inflation on costs, the application of regulatory and licensing requirements, the Company's ability to obtain all requisite permits and licences, the availability of capital, labour and services, the creditworthiness of industry partners, the Company's ability to source and complete asset acquisitions, and the Company's ability to execute its plans and strategies.

Future Oriented Financial Information. This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Southern's prospective results of operations, cash flow, adjusted funds flow, capital expenditures, tax rates, cost estimates including forecasted operating and capital costs and undiscounted future development capital costs, wellhead selling prices, natural gas pricing and other forecasted prices used in NSAI's estimates, hedging, royalty rates, inflation, payout of wells, the before tax NPV10 of reserves and prospective results of operations and production, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Southern's future business operations. Southern and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. Southern disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. Changes in forecast commodity prices, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the key performance measures included in Southern's guidance. The Company's actual results may differ materially from these estimates.

"Positive Net Cash (Net Debt)" (capital management measure) is monitored by management, along with adjusted working capital, as part of its capital structure in order to fund current operations and future growth of the Company. Net debt is defined as long-term debt plus adjusted working capital surplus or deficit. Adjusted working capital is calculated as current assets less current liabilities, removing current derivative assets/liabilities, the current portion of bank debt, and the current portion of lease liabilities.

[1] Comprised of 98 bbl/d light and medium crude oil, 11 bbl/d NGLs and 16,101 Mcf/d conventional natural gas

[2] Comprised of 115 bbl/d light and medium crude oil, 12 bbl/d NGLs and 15,543 Mcf/d conventional natural gas

[3] See "Reader Advisories - Specified Financial Measures"