Southern Energy Corp. (SOUC LN/SOU CN): First recompletion expected by the end of 2Q25
• Southern has raised US$5 mm in new equity at a price of 3.8p per share (C$0.07 per share). Investors participating in the transaction will also receive a full warrant for each new share, with an exercise price of 4.8p per share (C$0.09 per share).• US$3.1 mm of outstanding convertible debenture will be converted into equity on the same terms.
• This capital injection allows Southern to complete the three drilled and uncompleted (DUC) wells, drilled in 1Q23 at Gwinville and to drill two vertical Cotton Valley wells at Mechanicsburg. The completion of the first DUC is expected to occur before the end of 2Q25.
• We forecast that Southern will produce ~4.0 mboe/d in 2026, up from ~2.2 mboe/d currently.
• As we incorporate the revised terms of the financing, we have changed our target price to £0.25 per share. There are 80-90 locations at Gwinville not included in the 2P reserves. This represents >40 mmboe resources upside to the ~30 mmboe YE24 2P reserves. Derisking the 45 additional drilling locations in the Lower Selma Chalk and 30+ additional locations in the Gwinville City Bank could add £0.12 per share to our valuation.
• Our unrisked NAV for the Williamsburg and Mechanicsburg assets is £0.24 per share.
Forecast and Valuation
Our new Core NAV is ~£0.18 per share (~6x the current s/p) with a ReNAV of £0.27 per share. Our CFO forecast for FY26 and FY27 represents respectively >80% and >100% of the undiluted current market cap.
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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