Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) has announced higher petroleum and natural gas sales for the three months ended March 31, 2022 on the back of significant improvements in commodity prices during the quarter.
The established producer with natural gas and light oil assets in Mississippi posted petroleum and natural gas sales of US$5.92 million in the first quarter, compared to US$3.86 million a year ago.
Moving forward, Southern said it will continue to practise financial discipline, including enhancing its operations and evaluating opportunities to reduce operating and capital costs.
READ: Southern Energy Corp is focused on developing conventional energy in the southeast Gulf states of the USA
"With the significantly increased commodity prices experienced in Q1 2022, Southern has started the year very positively. Our balance sheet is getting stronger and we are being rewarded for our investment strategy in prior quarters with strong production yielding significant cash flow,” Ian Atkinson, president and CEO of Southern Energy said in a statement.
The average realised oil and natural gas price for the first quarter was US$95.20 per barrel of crude oil and $4.87 mcf of gas respectively, reflecting the benefit of strategic access to premium-priced US sales hubs, the company said.
Adjusted funds flow from operations was US$2.2 million, an increase of 121% from the same period in 2021, although the net loss widened to US$1.9 million in the first quarter from a loss of US$600,000 in the previous year due to an unrealized loss on derivatives of US$2.9 million.
Southern Energy said its focus remains on the efficient and safe delivery of its three well drilling program at Gwinville, which is expected imminently. The company commenced completion operations on the three-well horizontal padsite earlier this month.
The first well to begin flowback following the stimulation was the GH 19-3 #3 well, which came online on May 25, 2022. The GH 19-3 #2 and GH 19-3 #4 wells are expected to be online shortly, with the initial production results expected in the coming weeks.
“Success with these three wells may see Southern commencing a continual drilling program at Gwinville, taking advantage of our low-risk drilling inventory,” the company said, noting that the first three horizontal wells could deliver material production increases and significant near-term cash flow for the company.
As part of its risk management and sustainability strategy, Southern Energy has entered into some fixed price and costless collar hedges, which will cover its existing production wells to mitigate the effects of market volatility while retaining the ability to participate in potential natural gas price appreciation during 2022, it added.
Read here for the full financial statement.
Contact the author at jon.hopkins@proactiveinvestors.com