The NSAI Report was ready by Southern’s impartial certified reserves evaluator, Netherland, Sewell and Associates, Inc. (“NSAI”). All foreign money quantities are in United States {dollars} (except in any other case said) and comparisons check with December 31, 2020. The Firm anticipates asserting its fourth quarter and audited 12 months finish 2021 monetary outcomes and submitting an annual info kind (“AIF”) for the 12 months ended December 31, 2021, in April 2022.
Highlights:
• Relative to year-end 2020, the NSAI Report states
• a rise in proved developed producing (“PDP”) reserves by 9% to five.7 MMboe,
• constant complete proved (“1P”) reserves at 10.5 MMboe and
• a rise in complete proved plus possible (“2P”) reserves by 73% to twenty.2 MMboe in 2021;
• a PDP reserve life index (“RLI”) of 9 years and 15 12 months RLI for 2P reserves
• Further drilling places recognized at Gwinville, based mostly on earlier Selma Chalk horizontal drilling successes, which may add materials ranges of manufacturing;
• Earlier than-tax web current worth (“NPV”) of reserves, discounted at 10% (“NPV10”), is $32.4 million on a PDP foundation, $53.5 million on a 1P foundation and $88.3 million on a 2P foundation evaluated utilizing the common forecast pricing of 4 impartial reserve evaluators as at January 2022
• Materials development of earlier than tax NPV-10 per share to CAD$0.53/share, CAD$0.88/share, and CAD$1.45/share for PDP, 1P, and 2P classes;
• The continuing three effectively drilling program at Gwinville continuing on schedule and on price range, with completion operations anticipated to start in early April 2022
• Disposition of two non-core oil properties for $1.3 million, web of closing changes
• Combination manufacturing from the 2 properties was roughly 40 boe/d(1)
Along with the abstract info disclosed on this press launch, extra detailed info concerning Southern’s oil and gasoline reserves shall be included within the Firm’s AIF to be filed on SEDAR (www.sedar.com).
Ian Atkinson, President and Chief Govt Officer of Southern commented:
“We’re delighted to report our 2021 year-end reserves report which highlights the standard of our asset base, our distinctive operational experience and the aptitude for vital reserves development potential in our property as we progress our natural development program.
“We’re significantly excited by the extra possible drilling places recognized at Gwinville, that are based mostly on outcomes from earlier Selma Chalk horizontal drilling successes and doesn’t incorporate our new effectively completion design. Identification of those drilling places demonstrates how our technique of making use of trendy completion strategies can carry new life, and manufacturing, to prime quality, mid-life property.
“The NSAI report demonstrates that we’ve got considerably prolonged the working room and future growth potential of our asset which can complement our technique to generate long run sustainable free funds stream and natural development in growth of our current asset base.”
2021 Impartial Certified Reserve Analysis
The next tables spotlight the findings of the NSAI Report, which has been ready in accordance with definitions, requirements and procedures contained in Nationwide Instrument 51-101 – Requirements of Disclosure for Oil and Gasoline Actions (“NI 51-101”) and the latest publication of the Canadian Oil and Gasoline Analysis Handbook (“COGEH”). All evaluations and summaries of future web income are said previous to the availability for curiosity, debt service expenses or basic and administrative bills and after deduction of royalties, working prices, estimated effectively abandonment and reclamation prices, and estimated future capital expenditures. The NSAI Report was based mostly on the common forecast pricing of the next 4 impartial exterior reserves evaluators: GLJ Ltd, Sproule Associates Restricted, McDaniel & Associates Consultants Ltd and Deloitte. Further reserves info as required below NI51-101 shall be included in Southern’s AIF, which shall be filed on SEDAR in April 2022. The numbers within the tables beneath could not add because of rounding.
Abstract of Reserves Volumes as at December 31, 2021
The Firm’s reserve volumes and undiscounted future growth capital prices are summarized beneath as at December 31, 2021:
| SUMMARY OF RESERVE VOLUMES (1) | Gentle and Medium Oil (Mbbls) | Condensate (Mbbls) | NGL (Mbbsl) | Standard Pure Gasoline (MMcf) | Whole Mboe | FDC Prices ($M) |
| Proved Developed Producing | 117 | 211 | 78 | 31,804 | 5,707 | – |
| Proved Developed Non-Producing | 55 | 68 | 1 | 9,724 | 1,745 | 8,240 |
| Proved Undeveloped | – | 312 | 136 | 15,476 | 3,027 | 19,845 |
| Whole Proved | 172 | 591 | 215 | 57,004 | 10,479 | 28,085 |
| Possible | 61 | 169 | 18 | 56,711 | 9,699 | 50,809 |
| Whole Proved Plus Possible | 233 | 761 | 233 | 113,715 | 20,178 | 78,894 |
(1) Gross working curiosity reserves earlier than royalty deductions.
The next desk outlines the modifications in Southern’s reserves and reserve life index as at December 31, 2021 in comparison with December 31, 2020:
| CHANGE IN RESERVES AND RESERVE LIFE INDEX(1) | 2021 | 2020 | % |
| Reserves (mboe) | |||
| Proved Developed Producing | 5,707 | 5,237 | 9% |
| Whole Proved | 10,479 | 10,438 | 0% |
| Whole Proved Plus Possible | 20,178 | 11,690 | 73% |
| PDP as % of 2P | 28% | 45% | (37%) |
| 1P as % of 2P | 52% | 89% | (42%) |
| Reserve Life Index (years) | |||
| Proved Developed Producing | 8.5 | 7.0 | 21% |
| Whole Proved | 15.6 | 14.0 | 12% |
| Whole Proved Plus Possible | 30.0 | 15.6 | 92% |
(1) The Reserve Life Index (“RLI”) as at December 31, 2021 is calculated as gross working curiosity reserves divided by the projected annual PDP manufacturing for 2022. See “Reader advisories – Oil and Gasoline Advisories”
Southern’s complete 2P reserves elevated by 73% to twenty.2 MMboe leading to a 2P reserve life index of 30.0 years on projected annual PDP manufacturing for 2022. Southern’s 2021 recompletion program resulted in an 9% improve in PDP reserves to five.7 MMboe.
Web Current Worth of Future Web Income as at December 31, 2021
The next desk summarizes the web current worth of the Firm’s reserves (before-tax) as at December 31, 2021. The reserves worth on a $/boe foundation, discounted at 10% per 12 months, can be summarized for every class.
| NET PRESENT VALUE BEFORE-TAX | 0% (M$) | 10% (M$) | 20% (M$) | Unit Worth(1) Earlier than Revenue Tax, Discounted at 10%/12 months ($/boe) |
| Proved Developed Producing | 51,635 | 32,437 | 24,461 | 7.22 |
| Proved Developed Non-Producing | 17,008 | 6,644 | 3,684 | 4.96 |
| Proved Undeveloped | 32,544 | 14,463 | 6,759 | 5.86 |
| Whole Proved | 101,187 | 53,544 | 34,904 | 6.45 |
| Possible | 102,089 | 34,712 | 14,766 | 4.49 |
| Whole Proved Plus Possible | 203,276 | 88,256 | 49,670 | 5.50 |
(1) Unit values are based mostly on web reserves. Web reserves are the Firm’s working curiosity reserves after deduction of royalties
Forecast Costs Utilized in Estimates
The next desk outlines the forecasted future costs utilized by NSAI of their analysis of the Firm’s reserves at December 31, 2021, that are based mostly on a four-consultant common worth forecast. The forecast value and worth assumptions assume will increase in wellhead promoting costs and take into account inflation with respect to future working and capital prices.
FUTURE COMMODITY PRICE FORECAST | WTI Cushing Oklahoma US$/bbl | NYMEX Henry Hub US$/MMBtu |
2022 | 71.88 | 3.89 |
2023 | 67.91 | 3.47 |
2024 | 65.42 | 3.23 |
2025 | 66.72 | 3.29 |
2026 | 68.05 | 3.35 |
2027 | 69.42 | 3.43 |
2028 | 70.81 | 3.49 |
2029 | 72.22 | 3.57 |
2030 | 73.67 | 3.63 |
2031 | 75.14 | 3.71 |
Thereafter | + 2.0%/12 months | + 2.0%/12 months |
Reserves Reconciliation
The next desk units out the reconciliation of Southern’s gross reserves based mostly on forecast costs and prices by principal product kind as at December 31, 2021 relative to December 31, 2020. The vast majority of 2P reserves will increase, year-on-year, got here from recognition of the Gwinville Selma Chalk horizontal drilling places for constructive revisions.
| RESERVES(1) RECONCILIATION | PDP (Mboe) | 1P (Mboe) | Possible (Mboe) | 2P (Mboe) |
| December 31, 2020 | 5,237 | 10,438 | 1,252 | 11,690 |
| Discoveries | – | – | – | – |
| Extensions | – | – | – | – |
| Infill Drilling | – | – | 8,399 | 8,399 |
| Improved Restoration | – | – | – | – |
| Technical Revisions(2) | 982 | 564 | 19 | 583 |
| Acquisitions | – | – | – | – |
| Inclinations | (49) | (49) | – | (49) |
| Financial Elements | 303 | 292 | 29 | 321 |
| Manufacturing(3) | (766) | (766) | – | (766) |
| December 31, 2021 | 5,707 | 10,479 | 9,699 | 20,178 |
(1) Gross working curiosity reserves earlier than royalty deductions
(2) Technical revisions additionally embody reserves related to modifications in working prices and commodity worth offsets
(3) Produced volumes for the 12 months ended December 31, 2021 are internally estimated
Operations Replace
Power Drilling Rig #15 spud the primary effectively on the Gwinville three-well padsite on January 28, 2022. Floor casing has been run on all three wells, and we’re at the moment drilling the third and ultimate intermediate part previous to initiating the horizontal laterals. Southern anticipates that drilling operations will conclude in late March, with completion operations to comply with in early April 2022.
In Q1 2022, Southern entered right into a hedge contract by way of December 31, 2022, on 2,000 MMBtu/d of pure gasoline manufacturing at a set worth of $4.61/MMBtu.
Gary McMurren, Vice President of Engineering commented:
“The group may be very enthusiastic about revitalizing the Gwinville Area with trendy horizontal drilling and multistage fracture expertise and this primary padsite shall be an awesome measure of how efficient these optimized wellbore designs are at maximizing gasoline supply from Selma Chalk horizontals.
“Following the completion operations, we are going to instantly be flowing the wells again by way of our company-owned, excessive stress gathering system to gross sales, thereby eliminating any flaring emissions and misplaced income. By the top of Q2 2022 we should always have a good suggestion of how the preliminary effectively charges match our kind curve expectations.”
Non-Core Asset Disposition
Lately, in two separate transactions, Southern disposed of two small, non-core oil properties positioned outdoors of the Firm’s targeted asset base in central Mississippi. Whole working-interest manufacturing from the property was roughly 40 boe/d for a consideration of $1.3 million web of closing changes. The implied sale metrics of roughly $32,500/boepd and 3x fourth quarter 2021 annualized money stream are robust contemplating the restricted upside potential from the property.
Ian Atkinson commented:
“Divesting these small pursuits is according to our core technique to concentrate on excessive working curiosity, operated property with re-development alternatives for our shareholders.”
Change in Reporting Foreign money
Southern is electing to alter its reporting foreign money from Canadian {dollars} to U.S. {dollars} because the majority of its pure gasoline and crude oil properties are within the U.S. The change in reporting foreign money is a voluntary change which is accounted for retrospectively. All prior durations shall be restated to U.S. {dollars}.
A brand new company presentation dated March 2022 is now out there on the Firm web site at www.southernenergycorp.com.
Warrant Train and Admission to Buying and selling on AIM and Whole Voting Rights
Southern has issued 20,000 new frequent shares within the Firm (“Frequent Shares“) to fulfill an train of warrants over Frequent Shares at an train worth of CAD0.32 per Frequent Share.
Utility has been made to the London Inventory Trade plc for the admission to buying and selling on AIM of the 20,000 new Frequent Shares, which is anticipated to happen at 8.00 a.m. on or round 7 March 2022 (“Admission“). On Admission, the brand new Frequent Shares will rank pari passu with the prevailing Frequent Shares.
On Admission, the issued share capital of the Firm shall be 78,171,858 Frequent Shares and this determine could also be utilized by shareholders as a denominator for the calculations by which they may decide if they’re required to inform their curiosity in or change to their curiosity within the Firm. There aren’t any Frequent Shares held in treasury and every Frequent Share entitles the holder to a single vote at basic conferences of the Firm. Accordingly, on Admission, the whole variety of voting rights within the Firm shall be 78,171,858.
For additional info, please contact:
Southern Power Corp. | +1 587 287 5401 +1 587 287 5402 |
Strand Hanson Restricted – Nominated & Monetary Adviser Hannam & Companions – Joint Dealer Canaccord Genuity – Joint Dealer | +44 (0) 20 7409 3494 +44 (0) 20 7907 8500 +44 (0) 20 7523 8000 |
Camarco | +44 (0) 20 3757 4980 |
About Southern Power Corp.
Southern Power Corp. is a pure gasoline exploration and manufacturing firm. Southern has a major concentrate on buying and creating typical pure gasoline and light-weight oil sources within the southeast Gulf States of Mississippi, Louisiana, and East Texas. Our administration group has a protracted and profitable historical past working collectively and have created vital shareholder worth by way of accretive acquisitions, optimization of current oil and pure gasoline fields and the utilization of re-development methods using horizontal drilling and multi-staged fracture completion strategies.
Certified Individual’s Assertion
Gary McMurren, Vice President Engineering, who has over 22 years of related expertise within the oil business and has authorized the technical info contained on this announcement. Mr. McMurren is registered as a Occupation Engineer with the Affiliation of Skilled Engineers and Geoscientists of Alberta and obtained a Bachelor of Science diploma in Chemical Engineering (with distinction) from the College of Alberta.
Disclosure of Oil and Gasoline Data
AIF. Southern’s Assertion of Reserves Information and Different Oil and Gasoline Data on Type 51-101F1 dated efficient as at December 31, 2021, which can embody additional disclosure of Southern’s oil and gasoline reserves and different oil and gasoline info in accordance with NI 51-101 and COGEH forming the premise of this press launch, shall be included within the AIF which shall be out there on SEDAR at www.sedar.com in April 2022.
Unit Value Calculation. For the aim of calculating unit prices, pure gasoline volumes have been transformed to a boe utilizing six thousand cubic toes equal to 1 barrel except in any other case said. A boe conversion ratio of 6:1 is predicated upon an vitality equivalency conversion methodology primarily relevant on the burner tip and doesn’t signify a price equivalency on the wellhead. This conversion conforms with NI 51-101. Boe could also be deceptive, significantly if utilized in isolation.
Reserves and Future Web Income Disclosure. All reserves values, future web income and ancillary info contained on this press launch are derived from the NSAI Report except in any other case famous. All reserve references on this press launch are “Firm gross reserves”. Firm gross reserves are the Firm’s complete working curiosity reserves earlier than the deduction of any royalties payable by the Firm. Estimates of reserves and future web income for particular person properties could not replicate the identical degree of confidence as estimates of reserves and future web income for all properties, as a result of impact of aggregation. There is no such thing as a assurance that the forecast worth and value assumptions utilized by NSAI in evaluating Southern’s reserves shall be attained and variances might be materials. All reserves assigned within the NSAI Report are positioned within the State of Mississippi and introduced on a consolidated foundation.
All evaluations and summaries of future web income are said previous to the availability for curiosity, debt service expenses or basic and administrative bills and after deduction of royalties, working prices, estimated effectively abandonment and reclamation prices and estimated future capital expenditures. It shouldn’t be assumed that the estimates of future web revenues introduced within the tables beneath signify the truthful market worth of the reserves. The restoration and reserve estimates of Southern’s crude oil, pure gasoline liquids and pure gasoline reserves offered herein are estimates solely and there’s no assure that the estimated reserves shall be recovered. Precise crude oil, pure gasoline and pure gasoline liquids reserves could also be better than or lower than the estimates offered herein. There are quite a few uncertainties inherent in estimating portions of crude oil, reserves and the longer term money flows attributed to such reserves. The reserve and related money stream info set forth herein are estimates solely.
Proved reserves are these reserves that may be estimated with a excessive diploma of certainty to be recoverable. It’s seemingly that the precise remaining portions recovered will exceed the estimated proved reserves. Possible reserves are these extra reserves which might be much less sure to be recovered than proved reserves. It’s equally seemingly that the precise remaining portions recovered shall be better or lower than the sum of the estimated proved plus possible reserves. Proved developed producing reserves are these reserves which might be anticipated to be recovered from completion intervals open on the time of the estimate. These reserves could also be at the moment producing or, if shut-in, they will need to have beforehand been on manufacturing, and the date of resumption of manufacturing have to be identified with affordable certainty. Undeveloped reserves are these reserves anticipated to be recovered from identified accumulations the place a major expenditure (e.g., when in comparison with the price of drilling a effectively) is required to render them able to manufacturing. They need to totally meet the necessities of the reserves class (proved, possible, attainable) to which they’re assigned. Sure phrases used on this press launch however not outlined are outlined in NI 51-101, CSA Workers Discover 51-324 – Revised Glossary to NI 51-101, Revised Glossary to NI 51-101, Requirements of Disclosure for Oil and Gasoline Actions (“CSA Workers Discover 51-324”) and/or the COGEH and, except the context in any other case requires, shall have the identical meanings herein as in NI 51-101, CSA Workers Discover 51-324 and the COGEH, because the case could also be.
Oil and Gasoline Metrics. This press launch comprises metrics generally used within the oil and pure gasoline business, comparable to growth capital.
“Improvement capital” means the mixture exploration and growth prices incurred within the monetary 12 months on reserves which might be categorized as growth. Improvement capital introduced herein excludes land and capitalized administration prices however consists of the price of acquisitions and capital related to acquisitions the place reserve additions are attributed to the acquisitions. These phrases have been calculated by administration and shouldn’t have a standardized which means and is probably not corresponding to related measures introduced by different firms, and due to this fact shouldn’t be used to make such comparisons. Administration makes use of these oil and gasoline metrics for its personal efficiency measurements and to offer shareholders with measures to check Southern’s operations over time. Readers are cautioned that the knowledge offered by these metrics, or that may be derived from the metrics introduced on this press launch, shouldn’t be relied upon for funding or different functions.
Abbreviations
bbls | barrels |
Mbbls | thousand barrels |
bbls/d | barrels per day |
$M | 1000’s of US {dollars} |
boe | barrels of oil equal |
Mboe | thousand barrels of oil equal |
MMboe | million barrels of oil equal |
boe/d | barrels of oil equal per day |
GJ | gigajoule |
Mcf | thousand cubic toes |
Mcf/d | thousand cubic toes per day |
MMcf/d | million cubic toes per day |
MMBtu | million British Thermal Items |
WTI | West Texas Intermediate, the reference worth paid in U.S. {dollars} at Cushing, Oklahoma for the crude oil normal grade |
Ahead Trying Data
This press launch comprises sure forward-looking info (collectively referred to herein as “forward-looking statements”) inside the which means of relevant Canadian securities legal guidelines. Ahead-looking statements are sometimes, however not at all times, recognized by way of phrases comparable to “steering”, “outlook”, “anticipate”, “goal”, “plan”, “proceed”, “intend”, “take into account”, “estimate”, “count on”, “could”, “will”, “ought to”, “may” or related phrases suggesting future outcomes. Extra significantly, this press launch comprises statements regarding: Southern’s enterprise technique, targets, energy and focus; future consolidation exercise and natural development; future intentions with respect to return of capital; oil and pure gasoline manufacturing ranges, decline charges, free funds stream; anticipated operational outcomes for 2022 together with, however not restricted to, estimated or anticipated manufacturing ranges, capital expenditures and drilling plans; expectations concerning commodity costs; the efficiency traits of the Firm’s oil and pure gasoline properties; the power of the Firm to attain drilling success according to administration’s expectations; the supply of funding for the Firm’s actions together with growth prices. Statements regarding “reserves” are additionally deemed to be forward- trying statements, as they contain the implied evaluation, based mostly on sure estimates and assumptions, that the reserves described exist within the portions predicted or estimated and that the reserves might be profitably produced sooner or later.
The forward-looking statements contained on this doc are based mostly on sure key expectations and assumptions made by Southern, together with these regarding: the marketing strategy of Southern; the timing of and success of future drilling, growth and completion actions; the geological traits of Southern’s properties; prevailing commodity costs, worth volatility, worth differentials and the precise costs obtained for the Firm’s merchandise; the provision and efficiency of drilling rigs, services, pipelines and different oilfield companies; the timing of previous operations and actions within the deliberate areas of focus; the drilling, completion and tie-in of wells being accomplished as deliberate; the efficiency of recent and current wells; the applying of current drilling and fracturing strategies; prevailing climate and break-up situations; royalty regimes and change charges; the applying of regulatory and licensing necessities; the continued availability of capital and expert personnel; the power to keep up or develop the banking services; the accuracy of Southern’s geological interpretation of its drilling and land alternatives, together with the power of seismic exercise to reinforce such interpretation; and Southern’s capability to execute its plans and techniques.
Though administration considers these assumptions to be affordable based mostly on info at the moment out there, undue reliance shouldn’t be positioned on the forward-looking statements as a result of Southern can provide no assurances that they might show to be right. By their very nature, forward-looking statements are topic to sure dangers and uncertainties (each basic and particular) that would trigger precise occasions or outcomes to vary materially from these anticipated or implied by such forward-looking statements. These dangers and uncertainties embody, however are usually not restricted to: incorrect assessments of the worth of advantages to be obtained from exploration and growth packages; dangers related to the oil and gasoline business typically (e.g. operational dangers in growth, exploration and manufacturing; and delays or modifications in plans with respect to exploration or growth initiatives or capital expenditures); commodity costs; elevated working and capital prices because of inflationary pressures; the uncertainty of estimates and projections regarding manufacturing, money era, prices and bills; well being, security, litigation and environmental dangers; entry to capital; and the COVID-19 pandemic. As a result of nature of the oil and pure gasoline business, drilling plans and operational actions could also be delayed or modified to react to market situations, outcomes of previous operations, regulatory approvals or availability of companies inflicting outcomes to be delayed. Please check with the annual info kind for the 12 months ended December 31, 2020, the administration’s dialogue and evaluation for the interval ended September 30, 2021 (the “MD&A”) and different steady disclosure paperwork for extra danger components regarding Southern, which might be accessed both on Southern’s web site at www.southernenergycorp.com or below the Firm’s profile on www.sedar.com.
The forward-looking statements contained on this press launch are made as of the date hereof and the Firm doesn’t undertake any obligation to replace publicly or to revise any of the included forward-looking statements, besides as required by relevant legislation. The forward-looking statements contained herein are expressly certified by this cautionary assertion.
This press launch comprises future-oriented monetary info and monetary outlook info (collectively, “FOFI”) about Southern’s potential outcomes of operations and free funds stream, all of that are topic to the identical assumptions, danger components, limitations, and {qualifications} as set forth within the above paragraphs. FOFI contained on this doc was authorized by administration as of the date of this doc and was offered for the aim of offering additional details about Southern’s future enterprise operations. Southern and its administration imagine that FOFI has been ready on an affordable foundation, reflecting administration’s greatest estimates and judgments, and signify, to the perfect of administration’s information and opinion, the Firm’s anticipated plan of action. Nonetheless, as a result of this info is very subjective, it shouldn’t be relied on as essentially indicative of future outcomes. Southern disclaims any intention or obligation to replace or revise any FOFI contained on this doc, whether or not because of new info, future occasions or in any other case, except required pursuant to relevant legislation. Readers are cautioned that the FOFI contained on this doc shouldn’t be used for functions apart from for which it’s disclosed herein.
Neither TSX Enterprise Trade nor its Regulation Companies Supplier (as that time period is outlined within the insurance policies of the TSX Enterprise Trade) accepts accountability for the adequacy or accuracy of this launch.
The data contained inside this announcement is deemed by the Firm to represent inside info as stipulated below the Market Abuse Regulation (EU) No. 596/2014 because it kinds a part of United Kingdom home legislation by advantage of the European Union (Withdrawal) Act 2018 (as amended).
This info is offered by RNS, the information service of the London Inventory Trade. RNS is authorized by the Monetary Conduct Authority to behave as a Main Data Supplier in the UK. Phrases and situations regarding the use and distribution of this info could apply. For additional info, please contact rns@lseg.com or go to www.rns.com.
SOURCE: Southern Power Corp.
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