Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) told investors its focus has been mainly on completing and integrating its acquisition of the Gwinville Field in Jefferson Davis County, Mississippi, as it released its second-quarter results.
In a statement, Ian Atkinson, the company’s president and CEO, commented: “We have started and will continue to maximize operational synergies of the assets, as well as position the company for the return to growth as commodity prices continue to improve.
“In addition to considerable synergistic value and high-quality drilling inventory, the Gwinville Acquisition provides Southern with access to sell gas into the Florida Gas Transmission system where similar to Transco Zone 4, we are realizing continuous premium pricing to the NYMEX natural gas price.”
The company said it quickly integrated the acquired Gwinville assets after closing the transaction on June 1, 2023, and has already realized immediate cost savings in the form of labour and supervision redundancies, as well as reduced maintenance contracts.
It is now in the process of installing the necessary pipeline infrastructure to consolidate the two gathering systems, allowing it to run one central compressor station versus the five that were running before the transaction.
Encouraging outlook
Atkinson said the company is also encouraged by the outlook for supply and demand dynamics for US natural gas and is well-positioned to capitalize on natural gas prices with production behind pipe which can be brought on stream in a short time frame.
“We remain committed to reaching our goal of 25,000 boe/d (barrels of oil equivalent per day) and continue to assess opportunities to grow inorganically further building shareholder value as commodity prices continue to recover to a point where we plan to re-launch our organic growth program."
For the quarter ended June 30, 2023, Southern reported petroleum and natural gas sales of $3.7, taking sales for the first six months of the year to $8.9 million.
Average production rose 13% to 2,651 boe/d (96% natural gas) and the company noted that current field sales production is approximately 2,900 boe/d (96% natural gas), with four new horizontal wellbores awaiting completion operations.
Once the company commits to completing these two pad sites, it said it expects that all four wells could be in production within approximately eight weeks.
Over the quarter, the company generated $200,000 of adjusted funds flow from operations excluding $500,000 of one-time transaction costs and general and administrative costs.
It posted a debt loss of $3.8 million for the quarter compared to net earnings of $2.8 million in 2Q 2022.
The full results statement and Gwinville operational update can be found here.
Contact the author at stephen.gunnion@proactiveinvestors.com