AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Southern Energy’s third-quarter sales fell by 34%, with natural gas production dropping by 17%.
- The company reduced its net debt by $1.4 million during the quarter, while monetizing excess inventory equipment for $3.4 million in proceeds.
- Southern has secured $10 million in unused credit facility capacity, positioning itself for future growth and operational flexibility,
Southern Energy Corp. (LSE:SOUC), a leading producer of natural gas and light oil in Mississippi, has released its financial and operational results for the third quarter of 2024, showing notable declines in production and revenue. Despite these setbacks, the company has taken strategic measures to manage costs and optimize operations, positioning itself for future growth as it navigates a challenging market environment.
Third Quarter Performance Shows Revenue Decline
For the three months ended September 30, 2024, Southern Energy reported petroleum and natural gas sales of $3.5 million, representing a 34% decrease from the same period last year. The decline was attributed to lower natural gas prices and a reduction in production. The company’s average production for the quarter stood at 14,018 Mcfe/d (2,336 boe/d), with natural gas making up 97% of the total output. This marked a 17% drop in production volume compared to Q3 2023.
Despite the reduced revenues, Southern generated $0.6 million in adjusted funds flow from operations during the quarter. This figure translated to $0.00 per share, both on a basic and fully diluted basis. However, the company also posted a net loss of $2.1 million for Q3 2024, which was slightly improved from the net loss of $2.4 million reported for the same period in 2023.
Operational Adjustments Amid Challenging Market Conditions
The quarter’s results were further influenced by lower commodity prices, with average realized natural gas prices falling to $2.40 per Mcf, compared to $2.83 per Mcf in Q3 2023. Oil prices also saw a decrease, averaging $73.78 per barrel in Q3 2024, down from $82.65 per barrel a year earlier. Additionally, the company’s natural gas benchmark price dropped to $2.16 per Mcf during the period.
To offset the financial pressures, Southern has been proactive in managing costs. The company monetized excess inventory equipment during the first nine months of 2024, generating net proceeds of $3.4 million. The sale of equipment helped to reduce the company’s net debt by $1.4 million from the previous quarter and by $3.9 million from the fourth quarter of 2023. Southern’s efforts to streamline operations are part of a broader strategy to enhance its balance sheet and preserve liquidity in the face of fluctuating market conditions.
Strategic Outlook and Future Plans
Southern Energy is focused on navigating the volatility in natural gas prices by reducing operating costs and optimizing maintenance capital. With a current unused credit facility capacity of $10.0 million, the company is prepared to take advantage of counter-cyclical growth opportunities when conditions improve. Additionally, Southern has entered into a fixed-price swap contract for natural gas, securing a price of $3.40 per MMBtu for 5,000 MMBtu/d from May 2024 to December 2026. This move is part of the company’s risk management strategy to mitigate price volatility in the natural gas market.
