Southern Energy Corp. (SOUC LN/SOU CN): 1Q25 production in line. First DUC expected to start producing in June
• 1Q25 production of 2,135 boe/d was broadly in line with our expectations.• The company’s gas production was sold a US$0.49/mcf premium to Henry Hub (+13%).
• Field operations are scheduled to commence on the 13‐13 #2 Lower Selma Chalk horizontal well in the next few weeks, and Southern with production due to commence in June. This is an important well that will boost production and potentially derisk further locations. There are 45 additional drilling locations in the Lower Selma Chalk. This represents ~26 mmboe potential additional reserves (vs. YE24 2P reserves of 28 mmboe).
• Southern will then move to second and third DUCs (one Lower Selma
Chalk and one City Bank). There are 30+ additional locations in the Gwinville City Bank (~15 mmboe potential reserves upside). This programme is expected to be completed before YE25.
• We re-iterate our target price of £0.25 per share, which is based on our ReNAV. Our Unrisked NAV for the is £0.52 per share.
Valuation
Our 2P NAV for Southern ~£0.10 per share (~3x the current s/p). The lower Selma Chalk additional 45 locations have an unrisked NAV of £0.11 per share. Derisking the 30+ City Bank locations would add a further £0.08 per share. Our ReNAV for the company is £0.25 per share. The shares trade at EV/DACF multiples of 2.2x for 2026 and 1.6x for 2027.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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