Great News..Financing Closed..Selling premium above Nymex
ORIGINAL: Southern Energy Corp. Announces Completion of Fundraising and Premium to NYMEX Pricing Contract
2022-07-07 09:30 ET - News Release
Defined terms used in this announcement have the same meaning as given to them in the Company's announcement released on June 23, 2022, unless otherwise defined herein.
CALGARY, AB / ACCESSWIRE / July 7, 2022 / Southern Energy Corp. ("Southern" or the "Company") (TSXV:SOU)(AIM:SOUC), a U.S.-focused, growth-oriented natural gas producer, is pleased to announce the closing of its previously announced Offering to raise, in aggregate, gross proceeds of US$31.0 million through the issue of 46,371,927 new Common Shares. The Underwriters will not be exercising the over-allotment option granted to them in connection with the Offering.
The net proceeds from the Offering will be used to accelerate the initiation of a continuous organic drilling programme at the Company's Gwinville field, as well as increase the Company's financial flexibility for potential acquisition opportunities.
Ian Atkinson, President and CEO of Southern, commented:
"With our strengthened financial capability, we now look ahead to further exciting operational activity at Gwinville while also being capable of considering M&A opportunities in our core area of expertise from a position of strength. With a multi-year drilling inventory in Gwinville alone, we look forward to realising our forward growth potential of our goal to reach 25,000 boe/d; with more drilling anticipated to begin later this year."
"I would like to thank all of our new and existing shareholders for their support throughout this process as well as for their continued engagement in our Company."
Financial Update
On June 27, 2022, the Company entered into basis swaps covering just under 40% of our physical price exposure with a natural gas basis swap transaction to secure an average premium to NYMEX of $0.39 per MMBtu from July 1, 2022 to December 31, 2022.
This opportunity exists due to increased natural gas demand in the southeast Gulf States where traditionally the pricing would range between NYMEX plus or minus $0.05 per MMBtu.
Strong demand in our core area is further highlighted by spot basis where our natural gas is currently selling for a $3.40 per MMBtu premium to NYMEX.
The Company continues to monitor these premium prices and is prepared to hedge additional basis exposure at these elevated basis premiums.
Calvin Yau, Chief Financial Officer of Southern, commented:
"We are now selling natural gas at a premium to NYMEX pricing which I believe is indicative of the current supply and demand dynamics we are facing in the United States, and our ability to lock in long term hedges at these elevated basis premiums is indicative that this supply demand imbalance is forecasted to remain for an extended period of time."
Admission and Total Voting Rights
Further to the Company's announcement on May 6, 2022 regarding the application to AIM for a block admission in respect of certain outstanding dilutive instruments in the Company (the "Block Admission"), the Company notes that 3,101,875 new Common Shares were issued in June 2022 pursuant to the exercise of such instruments. Accordingly, as at June 30, 2022, Southern Energy had 89,536,858 Common Shares in issue.
Following the issue of the Offering Shares, Southern has 135,908,785 Common Shares in issue. There are no Common Shares held in treasury and each Common Share entitles the holder to a single vote at general meetings of the Company. This figure may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company.
The Placing Shares were issued and admitted to trading on AIM on July 5, 2022 and the Prospectus Offering Shares are expected to be admitted to trading on AIM at 8:00 a.m. (UK) on or around July 8, 2022.
PDMR Dealings
It is noted that certain Directors and other PDMRs of the Company have participated in the Prospectus Offering, on the same terms as all other participants, to subscribe for, in aggregate, 448,274 Prospectus Shares. Further details regarding individual participation of the Company's Directors and other PDMRs are set out in the PDMR notification forms below.
About Southern Energy Corp.
Southern Energy Corp. is a natural gas exploration an