Q2 2024 Financial And Operating Results

Calgary, Alberta - August 20, 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 second quarter financial and operating results for the three and six months ended June 30, 2024. Selected financial and operational information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements and related management's discussion and analysis (the "MD&A") for the three and six months ended June 30, 2024, 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.

SECOND QUARTER 2024 HIGHLIGHTS

• Petroleum and natural gas sales of $3.9 million in Q2 2024, an increase of 4% compared to the same period in 2023
• Average production of 15,465[1] Mcfe/d (2,578 boe/d) (95% natural gas) during Q2 2024, a decrease of 3% from the same period in 2023
• Generated $0.8 million of adjusted funds flow from operations[2] in Q2 2024 ($0.00 per share - basic and fully diluted)
• Net loss of $2.6 million in Q2 2024 ($0.02 net loss per share - basic and fully diluted), compared to a net loss of $3.8 million in Q2 2023
• Average realized natural gas and oil prices for Q2 2024 of $2.26/Mcf and $80.06/bbl compared to $2.18/Mcf and $72.83/bbl in Q2 2023
• 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
• Monetized excess inventory equipment in Q2 2024 for net proceeds of $1.4 million
• Extended the maturity of the existing convertible debentures one year to June 30, 2025 (see "Liquidity and Capital Resources - Debenture Financing" in the MD&A for more details)

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

"The results in Q2 2024 underscore the Company's strategic advantage stemming from the prime locations of its assets and sales points for natural gas. Despite a quarter of depressed natural gas pricing, where some basins received close to zero dollars for their natural gas, we achieved an average sale price of $2.26/Mcf, approximately a 20% premium over the Henry Hub benchmark pricing. Additionally, our financial hedge of 5,000 MMBtu/d at $3.40 that we entered into during Q2 2024, provides stable cash flow, enabling us to navigate this period of volatility without compromising our balance sheet.

"In Q2 2024, we extended the maturity of our convertible debentures to June 30, 2025. Combined with the extension of our senior secured term loan in Q1 2024, these actions were crucial steps in protecting our balance sheet while natural gas prices remain low. This strategic maneuver allows us to resume growth by completing our three remaining Gwinville drilled but uncompleted wells ("DUCs") when natural gas prices improve. We remain focused on maintaining our low-cost structure to stay resilient through this period of natural gas price volatility.

"With strong summer heat throughout the U.S., increased power burn demand in July has brought storage levels back within the 5-year average. Additionally, as Corpus Christi and Plaquemines LNG export facilities begin ramping up feed gas demand, combined with the growing domestic demand from artificial intelligence data centers and electrification of vehicles, we believe the overall supply and demand balance of natural gas should improve gas prices heading into winter.

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

Financial Highlights

Note:

• See "Reader Advisories - Specified Financial Measures".

Operations Update

Southern continues to evaluate the timing of bringing the remaining three DUCs into production, with one completion expected in Q4 2024, followed by two completions in the first half of 2025. The remaining three DUC wellbores have been drilled in the Lower Selma Chalk (2) and City Bank formations.

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. The Company expects to continue these initiatives throughout 2024 but will undertake some low-cost well workovers and recompletions in Q3 2024 to be funded out of adjusted funds flow from operations.

Strategic sales points for Southern's natural gas realized a 20% premium over the average benchmark New York Mercantile Exchange ("NYMEX") Henry Hub price in Q2 2024, helping to mitigate the challenges posed by the current pricing environment.

Outlook

Southern has $10.0 million in unused capacity on its senior secured term loan, which can be utilized to complete the DUCs when natural gas prices improve or for counter-cyclical inorganic growth opportunities.

As part of its risk management strategy, Southern continuously monitors NYMEX prices and basis differentials to mitigate some of the volatility of natural gas prices. The Company 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. Southern's current commodity hedge program includes:

Southern thanks all of its stakeholders for their ongoing support and looks forward to providing future updates on operational activities while continuing to create shareholder value.

Owen Roberts / Billy Clegg / Hugo Liddy

About Southern Energy Corp.

READER ADVISORIES

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

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

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

NI 51-101 National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities

NYMEX New York Mercantile Exchange

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", "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 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, forecasted natural gas pricing including that they will be significantly elevated from current levels in the second half of 2024, Southern's ability to re-initiate growth in completing one of the there remaining Gwinville DUCs, capital expenditures, Southern's plans to delay the completion timing of the remaining three DUCs until natural gas pricing becomes significantly elevated from current levels and the anticipated timing thereof, 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, the Company's expectation to continue actively reducing and optimizing operating costs, general and administrative expenses and maintenance capital to maximize netbacks, the Company's hedging strategy and execution thereof, the ability of the Company to achieve drilling success consistent with management's expectations, the Company's expectations regarding completion of the three remaining DUCs (including the timing thereof and anticipated costs and funding), the effect of market conditions on the Company's performance and expectations regarding the use of proceeds from all sources including the senior term loan.

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, the Company's ability to comply with ongoing obligations under the senior term loan 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.

environmental regulations (including greenhouse gas emission reduction requirements and other

decarbonization or social policies and including uncertainty with respect to the interpretation of omnibus Bill

C-59 and the related amendments to the Competition Act (Canada)), adverse weather or break-up conditions, and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Southern's MD&A for the period ended June 30, 2024 and AIF for the year ended December 31, 2023, which are available on the Company's website at www.southernenergycorp.com and filed under the Company's profile on SEDAR+ at www.sedarplus.ca.

[1] Comprised of 112 bbl/d light and medium crude oil, 9 bbl/d NGLs and 14,739 Mcf/d conventional natural gas

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