Q3 2024 Financial And Operating Results

Calgary, Alberta - November 29, 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 third quarter financial and operating results for the three and nine months ended September 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 nine months ended September 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.

THIRD QUARTER 2024 HIGHLIGHTS

• Petroleum and natural gas sales of $3.5 million in Q3 2024, a decrease of 34% compared to the same period in 2023
• Average production of 14,018[1] Mcfe/d (2,336 boe/d) (97% natural gas) during Q3 2024, a decrease of 17% from the same period in 2023
• Generated $0.6 million of adjusted funds flow from operations[2] in Q3 2024 ($0.00 per share - basic and fully diluted)
• Net loss of $2.1 million in Q3 2024 ($0.01 net loss per share - basic and fully diluted), compared to a net loss of $2.4 million in Q3 2023
• Average realized natural gas and oil prices for Q3 2024 of $2.40/Mcf and $73.78/bbl compared to $2.83/Mcf and $82.65/bbl in Q3 2023 and a Q3 2024 natural gas benchmark price of $2.16/Mcf
• Monetized excess inventory equipment in the first nine months of 2024 for net proceeds of $3.4 million
• Reduced net debt2 by $1.4 million from Q2 2024 and $3.9 million from Q4 2023

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

"Southern remains steadfast in preserving its balance sheet amid the challenging natural gas price environment of 2024. With natural gas prices on track to be the second-lowest in 24 years, we have proactively focused on optimizing our value chain. This includes generating $3.4 million in proceeds through the sale of excess equipment inventory in 2024 and reducing our abandonment liabilities by divesting non-core, non-producing wellbores during Q3.

"Despite the market challenges, Southern has leveraged the strategic locations of its assets and sales points, achieving a $0.24/Mcf premium (~11% basis premium) over Henry Hub benchmark pricing in Q3 2024. Additionally, our financial hedge of 5,000 MMBtu/d at $3.40, which was initiated in Q2 2024, has provided stable cash flows, enabling us to navigate ongoing volatility.

"Looking ahead, there are encouraging signs of price improvement as we enter winter and progress into 2025. Increased feed gas demand from Corpus Christi and Plaquemines LNG export facilities, coupled with rising domestic consumption driven by gas-fired power demand for artificial intelligence data centers and vehicle electrification, are expected to tighten the supply-demand balance. The longer-term structural case for natural gas also looks promising, as the lack of new storage capacity built will continue to tighten markets and geo-political events in Europe are expected to make US LNG more attractive.

"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".

Subsequent Events

On October 30, 2024, Southern entered into the eighth amendment (the "Eighth Amendment") with the Company's senior secured term loan (the "Credit Facility"), which includes an extension to the pause of monthly repayment of principal to December 31, 2024 and a condition that Southern shall repay $1.7 million of the outstanding principal at January 31, 2025 in the absence of a use of proceeds acceptable to the lender (see "Liquidity, Capital Resources and Going Concern - Credit Facility" in the September 30, 2024 MD&A for full details of the amendment)

Outlook

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. In Q3 2024, Southern sold excess equipment inventory for net proceeds of $2.0 million. The Company expects to continue these initiatives for the remainder of 2024 and into 2025, in order to preserve its balance sheet.

Southern has $10.0 million in unused capacity on its Credit Facility, which can be utilized to complete the three remaining Gwinville drilled but uncompleted wells 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 will continue to monitor NYMEX prices and the basis differential prices and is prepared to hedge additional volumes strategically as needed.

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

Short Form Base Shelf Prospectus

On November 28, 2024, Southern filed and obtained a final receipt for a final base shelf prospectus (the "Prospectus") in each of the provinces of Canada. The Prospectus enables Southern to qualify the distribution of up to C$150 million of any combination of ordinary shares, warrants, subscription receipts, debt securities and units during the 25-month period that the Prospectus remains effective. In connection with the receipt for the Prospectus, Southern will cease any distributions under its prior base shelf prospectus dated November 18, 2022. The specific terms of any future offerings of securities, including the use of proceeds from an offering, will be established in a prospectus supplement filed with the applicable Canadian regulatory authorities. The Prospectus provides the Company, as a dual listed entity, with future flexibility with respect to the issuance of various securities. Copies of the Prospectus may be obtained on request without charge from the Company and can be found under Southern's SEDAR+ profile at www.sedarplus.ca. Southern currently has no contemplated plan to raise capital.

Owen Roberts / Sam Morris / Tomisin Ibikunle

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 (including negatives and variations thereof). 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 growth strategy and the expectation that it will continue to enhance shareholder value, forecasted natural gas pricing including that expectations of price improvement in the winter and moving into 2025, Southern's ability to re-initiate growth in completing one of the there remaining Gwinville drilled and uncompleted wells ("DUCs"), capital expenditures, Southern's plans to delay the completion timing of the remaining three DUCs until natural gas pricing improves (or their potential for counter-cyclical inorganic growth opportunities)and the anticipated timing thereof, repayment of principal under the Credit Facility and timing thereof, drilling and completion plans and casing remediation activities, expectations regarding commodity prices and service costs, expectations regarding increased demand for gas (including demand stemming from artificial intelligence data centers, vehicle electrification and certain export facilities) 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 Company's ability to find a use of proceeds acceptable to the lender, 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)), the Company's ability to meet its financial obligations and covenants, 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 September 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 66 bbl/d light and medium crude oil, 9 bbl/d NGLs and 13,568 Mcf/d conventional natural gas

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