Southern Energy Corp. ("Southern" or the "Company") an established producer with natural gas and light oil assets in Mississippi, continues to progress its plans to complete its first Gwinville drilled and uncompleted ("DUC") well and has finalized procuring key services. Field operations are scheduled to commence on the 13-13 #2 Lower Selma Chalk horizontal well in the next few weeks, and Southern expects first production from the well during June 2025. This will be the Company's first of three planned DUC completions at Gwinville.
Unrelated to Southern's current growth plans at Gwinville, Southern is involved in an ongoing dispute in which it is bringing a claim regarding what it believes are excessive transportation fees being charged by a third party midstream company associated with the Mechanicsburg and Green's Creek fields. On April 29, 2025, Southern was pleased to receive confirmation that the pipelines subject to the dispute are regulated by the Federal Energy Regulatory Commission ("FERC"). The third party made its initial response filing to the regulator which includes setting maximum allowable transportation rates, subject to FERC review and approval.
Southern will work closely with FERC staff to expedite the rate determination process and, in parallel, will continue to engage with the pipeline operator to pursue an agreement on an equitable fee structure.
In the interim, Southern has elected to voluntarily shut-in approximately 400 boepd of production from the Mechanicsburg and Greens Creek Fields to avoid increasing the quantum of disputed fees. This accounts for approximately 20% of Southern's production on a volumetric basis, but only approximately 10% of the Company's operating income from Q1 2025. This will not impact the rest of Southern's operations or the proposed DUC completions in Gwinville.