WTI (June) $96.37 +$1.97, Brent (June) $108.23 +$2.90, Diff -$11.86 +93c
USNG (May) $2.55 u/c, UKNG (May) 111.60p -0.15p, TTF (May) €45.2 +€0.045

Oil price

Oil has added another $2.73 for WTI, now back over $100 and $3.42 for Brent today, note that the differential is now just shy of $13. This rise is because the US have rejected the Iranian ideas for the Strait of Hormuz going forward, with nothing now going through at all worries grow about progress. 

The WSJ has commented today that Iran is near ‘tank top’ so not far away from being so full that fields have to shut in their producing wells, something that is bad for production and reservoir management. It probably means that the US may have the upper hand in negotiations but who knows…?

BP has released results this morning which whilst beating the whisper are far from perfect with operating costs up and a revolt at the AGM last week. And yesterday Shell bought ARC Resources in Canada with 370/- b/d of production and 2bn of 2P reserves, a decent package at quite a price but partly with expensive Shell paper which helps. Accretive from next year and $6.8/b for those 2P reserves makes it look like a great deal to me.

Southern Energy Corp

Southern has announced its fourth quarter and year end December 31, 2025 financial and operating results. Selected financial and operational information is outlined below and should be read in conjunction with the Company’s audited consolidated financial statements and related management’s discussion and analysis  for the three and twelve months ended December 31, 2025, as well as the Company’s annual information form for the year ended December 31, 2025, all of which are available on the Company’s website at www.southernenergycorp.com and have been filed under the Company’s profile on SEDAR+ at www.sedarplus.ca. 

All figures referred to in this news release are denominated in U.S. dollars, unless otherwise noted.

FEBRUARY FINANCING

• On February 12, 2026, the Company completed a financing and royalty transaction with certain arm’s-length investors pursuant to which it issued the 2026 Debentures (as defined below) and common shares in the capital of the Company (“Common Shares”) and granted a 6% gross overriding royalty (“GORR”) on its existing and future developed production (collectively, the “February Financing”). The Company issued 17,000 $1,000 face value senior secured convertible debentures (the “2026 Debentures”) for gross proceeds of $17.0 million, 30.0 million new Common Shares at a price of CAD$0.07 ($0.05) per Common Share for gross proceeds of CAD$2.1 million ($1.5 million) and received $5.0 million of proceeds from the sale of the gross overriding royalty. The February Financing generated aggregate net proceeds of approximately $22.0 million, which were used in part to repay and retire the Company’s senior credit facility (the “Credit Facility”), with the remainder intended to fund development capital and general corporate purposes. The 2026 Debentures mature on December 31, 2028, and bear interest at 7% per annum.
• On a pro-forma basis, following the February Financing, Southern exited Q1 2026 with no senior bank debt, extended maturities to December 31, 2028, and materially reduced its annual cash interest (15% to 7%) burden.
• Petroleum and natural gas sales of $4.6 million during Q4 2025 and $18.0 million for the year ended December 31, 2025, an increase of 17% and 12% from the same periods in 2024, respectively
• Generated $0.7 million of Adjusted Funds Flow from Operations in Q4 2025 ($0.00 per share basic and diluted), and generated $3.0 million for the year ended December 31, 2025 ($0.01 per share basic and diluted) reflecting improved realized pricing and cost discipline despite lower production
• Average production of 11,600 Mcfe/d (1,933 boe/d) (93% natural gas) during Q4 2025 and 12,039 Mcfe/d (2,007 boe/d) (96% natural gas) for the year ended December 31, 2025, a decrease of 14% and 21% from the same periods in 2024, respectively, primarily due to the voluntary shut-in of approximately 400 boe/d of production in May 2025 from the Mechanicsburg and Greens Creek Fields due to an ongoing transportation dispute with a third party pipeline operator
• Average realized natural gas and oil prices for Q4 2025 of $3.93/Mcf and $57.40/bbl, compared to $2.78/Mcf and $68.59/bbl in Q4 2024. Southern achieved an average premium of $0.41/Mcf (approximately 12% above the NYMEX HH benchmark) throughout 2025
• Net loss of $3.7 million ($0.01 per share basic and diluted) and $7.5 million ($0.03 per share basic and diluted) for the three and twelve months ended December 31, 2025, respectively
• Reduced Net Debt for the year ended December 31, 2025 by $4.1 million from December 31, 2024, prior to the transformational February Financing that fully retired the higher cost Credit Facility
• On April 8, 2025, Southern closed an equity financing raising aggregate gross proceeds of $5.0 million (approximately £3.9 million, CAD$7.2 million) through the issuance of a total of 102,482,673 units comprised of one common share and one common share purchase warrant (the “Units”) (see “Shareholders’ Equity – Share Capital” in the December 31, 2025 MD&A for full details)
• On April 8, 2025, Southern converted the remaining convertible debentures (the “Debentures”) in the amount of $3.1 million into 62,759,286 Units and issued 1,627,170 Units for all accrued and unpaid interest (see “Liquidity and Capital Resources – Debenture Financing” in the December 31, 2025 MD&A for full details)
• In June 2025, Southern successfully completed the second of its four high quality drilled uncompleted horizontal wells (“DUCs”) from the Q1 2023 drilling program – the GH Lower Selma Chalk (“LSC”) 13-13 #2 wellbore. The operation was completed safely and under budget.

Ian Atkinson, President and Chief Executive Officer of Southern, commented:
“2025 marked a year of resilience and progress for Southern, as we navigated a challenging commodity environment while continuing to strengthen our financial position and demonstrate the quality of our asset base. We delivered growth in revenues and funds flow, achieved a consistent premium to NYMEX pricing of approximately 12%, and reduced Net Debt through disciplined capital management. These results highlight the strategic advantage of our Gulf Coast positioning and our focus on operational execution.

Subsequent to year-end, we completed a transformative financing that de-risked the balance sheet and represents a true inflection point for the Company. The transaction generated approximately $22 million in net proceeds, enabled the full repayment of our higher-cost senior Credit Facility, materially improved liquidity, and aligned long-term capital with asset level performance. With a simplified and more flexible capital structure, lower cost of capital and aligned funding tied to asset performance, we are now well positioned to accelerate development and unlock the value of our resource base.

With materially lower leverage, no bank debt maturities, and development capital now fully funded, Southern enters 2026 positioned to convert its extensive proved developed producing (“PDP”) and undeveloped reserve base into sustainable free cash flow.

Looking forward, the outlook for natural gas continues to strengthen, underpinned by growing LNG export capacity, increasing power demand and the emerging impact of data center-driven energy consumption. With premium market exposure, a strengthened balance sheet and a clear development runway, Southern is entering 2026 with strong momentum and a focus on executing high-return opportunities to drive meaningful, long-term value for shareholders.”

Southern is indeed in a very strong position, although these results are historic they show just how strong the company is and having ‘navigated a challenging commodity environment’ last year are now set fair with a massively strengthened financial base.

I have always championed Southern’s high quality asset base, it is flexible and gives long term optionality to the company as well as giving the company a ‘consistent premium to NYMEX pricing of approximately 12%’ which I like. 

This is a feature of the strategic advantage of the company’s positioning on the Gulf Coast and with a high degree of operational execution, the massive advantage of the growing LNG export capacity as well as increasing power demand and increasing emerging impact of data centre driven energy consumption bodes well for Southern. 

Finally I wrote earlier this year about the ‘transformative financing’ that in one stroke de-risked the balance sheet by generating a much needed cash injection that enabled the company to fully repay the previous higher cost senior credit facility. 

The company made it clear that the refinancing ‘materially improved liquidity and aligned long-term capital with asset level performance’ which gives them a simplified and more flexible capital structure which gives, as I said above great optionality, accelerates development and ‘unlocks the value of our resource base’. 

Overall I consider Southern to be in a good place, the financing has set them up well, the market is very strong, and for the long term and its asset base is first class, highly deliverable and flexible enough to provide well under almost any circumstances. 

The shares are up 12.5% today, they have also risen 20% over six months and 34% year on year, in my view that should be the base for further gains as the high quality management will deliver for shareholders. 

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog