Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) has announced the successful completion of its acquisition of the remaining producing acreage in the Gwinville Field in Jefferson Davis County, Mississippi.
The deal was closed with PetroTX Energy LLC for a cash purchase price of $3.2 million. The acquisition was initially announced on May 23, 2023.
In a statement, Ian Atkinson, president and CEO of Southern Energy, expressed his satisfaction with the transaction, commenting: "We are very pleased to close this highly accretive acquisition. Our team has already begun optimizing the newly consolidated assets including through marketing opportunities, with additional volumes and access to the Florida Gas Transmission sales point, which is currently receiving a strong premium to NYMEX Henry Hub, and the rationalization of operating costs."
He added: "We will continue to achieve synergies through the further reduction of operating costs and through additional marketing opportunities. This transaction demonstrates our ability to execute high-value growth opportunities at all stages in the commodity cycle, and we will look to build on this through organic development of the Gwinville area in the future."
The assets acquired are currently producing approximately 400 barrels of oil equivalent per day (99% natural gas) from over 8,500 acres of held-by-production acreage. The assets also include significant redevelopment opportunities in the Selma Chalk formation.
Southern Energy anticipates immediate operating cost savings of over 30% through the consolidation of infrastructure, staff, and services in the Gwinville Field.
The transaction aligns with the company's strategy to consolidate stable, low-decline, cash-flowing assets that have been historically under-capitalized. It represents a significant discount to the PDP PV10 value, including operational synergies, the company noted.
Southern Energy also said it has granted restricted share awards (RSAs) to certain employees, officers, and directors as part of its compensation and employee retention program. The RSAs, totaling 1,255,800, will vest over a three-year period.
Southern Energy is focused on natural gas exploration and production, with operations primarily in the southeast Gulf States of Mississippi, Louisiana, and East Texas.
Contact the author at jon.hopkins@proactiveinvestors.com