TIDMSOUC
RNS Number : 0948S
Southern Energy Corp.
01 November 2023
THIS ANNOUNCEMENT (THE "ANNOUNCEMENT"), INCLUDING THE APPIX TO
THIS ANNOUNCEMENT (THE "APPIX"), AND THE INFORMATION CONTAINED
HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES (ITS TERRITORIES OR POSSESSIONS), AUSTRALIA,
JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT, INCLUDING THE APPIX, IS FOR INFORMATION
PURPOSES ONLY AND DOES NOT CONSTITUTE: (A) A PROSPECTUS OR OFFERING
MEMORANDUM; (B) AN ADMISSION DOCUMENT PREPARED IN ACCORDANCE WITH
THE AIM RULES; OR (C) AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THE APPIX DOES NOT
CONSTITUTE OR CONTAIN, AND SHOULD NOT BE CONSTRUED AS, ANY
INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY
PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY
SECURITIES OF SOUTHERN ENERGY CORP. IN ANY JURISDICTION IN WHICH
ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE MARKET ABUSE REGULATION (REGULATION 596/2014/EU) AS IT FORMS
PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL)
ACT 2018, AS AMED. UPON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
SOUTHERN ENERGY CORP. ANNOUNCES PROPOSED EQUITY FUNDRAISING
Calgary, Alberta - 1 November 2023 - Southern Energy Corp.
("Southern" or the "Company") (TSXV:SOU) (AIM:SOUC) (OTCQX:SOUTF)
is pleased to announce its intention to conduct an equity fundraise
to raise aggregate gross proceeds of at least US$5 million
(approximately GBP4.1 million / C$6.9 million), at a price of 15.5
pence (the "Placing Price") or C$0.26 per Common Share (the
"Prospectus Price").
The fundraising consists of a placing of new Common Shares to
new and existing institutional investors (the "Placing"), a
concurrent public offering of new Common Shares in Canada (the
"Prospectus Offering"), and a Subscription by certain Directors and
members of the Company's senior management (together with the
Placing and Prospectus Offering, the "Fundraising").
The Fundraising will launch immediately following the release of
this Announcement. Stifel Nicolaus Europe Limited ("Stifel Europe")
and Tennyson Securities , a trading name of Shard Capital Partners
LLP ("Tennyson Securities") are acting as joint bookrunners (the
"Joint Bookrunners") in connection with the Placing. Stifel
Nicolaus Canada Inc. ("Stifel Canada") is acting as lead agent and
sole bookrunner in connection with the Prospectus Offering.
Overview of the Fundraising
-- Southern intends to conduct a US$5 million equity fundraise
to accelerate the completion of its four drilled and uncompleted
("DUC") wells, drilled as part of its Q1 2023 drilling campaign on
its Gwinville acreage;
-- The accelerated completion of the DUCs is anticipated to be
accretive to Southern through the addition of approximately US$20.5
million(1) in proved developed producing ("PDP") NPV10 value;
-- The Company expects the DUCs, once completed, to have initial
production (IP30) rates of approximately 5.6 MMcf/d per well, with
expected ultimate recovery per well of approximately 4.3 Bcf;
-- The DUCs are forecast to have a per-well payback period of
approximately 12 months, with an associated IRR of 108% and NPV10
of US$4.4 million per well(2) ;
-- Subject to the successful completion of the DUCs and
achieving production rates as set out above (and assuming one
completion a quarter* and strip commodity pricing as at 5 October
2023), Southern would expect to generate next 12 months total
operating cash flow (3) of approximately US$20 million, resulting
in an annualised net debt to EBITDA ratio(3) of approximately 1.0x
in Q4 2024(1) , with n ext 12 months corporate free cash flow(3)
expected to increase to approximately US$13 million, an increase of
approximately 114% on a per share basis following the planned
Fundraising(1) ;
* It is noted that timing of the completions is subject to final
confirmation following appointment of contractors and may differ
from this illustrative schedule.
-- Completion of the DUCs provides Southern with a significant
platform for organic growth, with production expected to reach up
to 4,700 boepd in 2024, an increase of 39% per share, including the
Fundraising, and with PDP reserves expected to increase by 12% per
share;
-- The Company has identified over 100 additional horizontal
drilling targets at Gwinville which it will target for development
in appropriate gas price environments. Based on the expected
drilling and completion costs for new wells of US$5.5 million,
future wells are expected to achieve a 30% IRR at a natural gas
price of US$3.78 / MMBtu;
-- The net proceeds from the Fundraising will be used alongside
existing cash, cash flows and undrawn debt facilities to fund the
completion of the DUCs at a cost of approximately US$3 million per
well;
-- The Fundraising consists of:
o A Placing of new Common Shares (the "Placing Shares") to new
and existing institutional investors at the Placing Price. The
Placing will be conducted through an accelerated bookbuild process
(the "Bookbuild") which will launch immediately following the
release of this Announcement. The Placing is subject to the terms
and conditions set out in the Appendix to this Announcement (which
forms part of this announcement);
o A concurrent Prospectus Offering of new Common Shares (the "
Prospectus Shares ") on a best efforts agency basis at the
Prospectus Price. The Prospectus Offering will be conducted
pursuant to the terms and conditions of an agency agreement to be
entered into between the Company, Stifel Canada as sole bookrunner
and lead agent, Canaccord Genuity Corp, Eight Capital, and Haywood
Securities Inc (the "Agents"). The size of the Prospectus Offering
will be determined in the context of the market at the time of
entering into a definitive agency agreement between the Company and
the Agents; and
o A subscription for new Common Shares (the "Subscription
Shares") at the Placing Price by certain Directors and members of
the Company's senior management.
-- The Prospectus Offering will be conducted pursuant to the
Company's Canadian base shelf prospectus dated 18 November 2022
(the "Base Shelf Prospectus"). A prospectus supplement (the
"Prospectus Supplement") relating to the Prospectus Offering will
be filed in each of the provinces of Canada, other than Quebec.
Copies of the Prospectus Supplement and accompanying Base Shelf
Prospectus will be available under the Company's profile on SEDAR+
at www.sedarplus.ca . The Prospectus Offering is expected to close
on or around 9 November 2023.
-- T he number of Placing Shares and Prospectus Shares to be
issued will be determined by the Company following completion of
the Bookbuild in consultation with the Joint Bookrunners and Stifel
Canada.
-- The Bookbuild is currently expected to close no later than
8.00 a.m. (GMT) on 2 November 2023, but the Joint Bookrunners and
the Company reserve the right to close the Bookbuild earlier or
later, without further notice.
Ian Atkinson, President and CEO of Southern, commented:
"I am pleased to announce our proposed Fundraising today, which
will facilitate the acceleration of Southern's work program,
specifically the completion of our four drilled and uncompleted
wells in our Gwinville acreage in Mississippi. After pausing our
previous capital program at the end of Q1 2023 due to the drop in
natural gas prices, we are excited to soon be back in the field at
Gwinville to take advantage of the recent increase in Henry Hub
natural gas pricing and bring these four uncompleted wells into
production. We have made a significant capital investment in the
four DUC wells and will now be in a position to realize the
material cashflow generation from these wells as we rapidly
increase production in a short timescale. Our current cost
estimates to complete these wells suggests at least a 10-15% drop
from the cost levels seen in Q1 2023, due to lower industry
activity levels which will help drive superior returns.
"We continue to see an increasingly positive macro environment
for the US natural gas market, and we believe that Southern is
firmly positioned to capitalize on the opportunity presented to us
through this structural imbalance. Today's capital raise will
enable us to increase our exposure to the opportunity, as we see
gas prices react to increasing export capacity through the U.S.
Gulf Coast region and increasing natural gas fired power in the US.
I look forward to allocating the raised capital to our portfolio of
highly productive and profitable assets, and increasing shareholder
value as we enter a resurgent US natural gas market."
For further information about Southern, please visit our website
at www.southernenergycorp.com or contact :
Southern Energy Corp.
Ian Atkinson (President and CEO) +1 587 287 5401
Calvin Yau (CFO) +1 587 287 5402
Stifel Nicolaus Europe Limited - Joint Bookrunner
& Joint Broker
Callum Stewart / Ashton Clanfield / Simon Mensley +44 (0) 20 7710 7600
Tennyson Securities - Joint Bookrunner & Joint
Broker
Peter Krens / Pav Sanghera +44 (0) 20 7186 9033
Strand Hanson Limited - Nominated & Financial
Adviser
James Spinney / James Bellman +44 (0) 20 7409 3494
Canaccord Genuity - Joint Broker
Henry Fitzgerald-O'Connor / James Asensio +44 (0) 20 7523 8000
Camarco
Owen Roberts / Billy Clegg / Hugo Liddy +44 (0) 20 3757 4980
Details of the Fundraising
The Placing is being conducted through an accelerated bookbuild
process to eligible institutional investors and will launch
immediately following the release of this Announcement. The Company
expects to close the Bookbuild no later than 8.00 a.m. (GMT) on 2
November 2023, but the Joint Bookrunners and the Company reserve
the right to close the Bookbuild earlier or later, without further
notice.
Details of the results of the Placing will be announced as soon
as practicable after the close of the Bookbuild. The Placing is not
being underwritten. The Placing is conditional on Minimum Gross
Proceeds of US$5 million being raised pursuant to the Fundraising.
The Placing Shares, when issued, will be fully paid and will rank
pari passu in all respects with the Company's existing Common
Shares.
This Announcement should be read in its entirety. Investors'
attention is drawn to the detailed Terms and Conditions of the
Placing. By choosing to participate in the Placing and by making an
oral and legally binding offer to acquire Placing Shares, investors
will be deemed to have read and understood this announcement in its
entirety (including the Appendix) and to be making such offer on
the terms and subject to the conditions of the Placing contained
here, and to be providing the representations, warranties and
acknowledgements contained in the Terms and Conditions.
The Prospectus Offering is expected to close on or about 9
November 2023, subject to customary closing conditions, including
the approval of the TSX Venture Exchange (the "TSXV").
The Company intends that the Placing will be conducted in
conjunction with the Prospectus Offering.
Certain of the Directors and members of the Company's senior
management team have indicated their intention to participate in
the Fundraising.
Application will be made to: (a) the London Stock Exchange plc
for admission of the Placing Shares and the Prospectus Shares to
trading on AIM; and (b) the TSXV for listing of the Placing Shares
and the Prospectus Shares for trading on the facilities of the
TSXV. Expected timing for admission of the Placing Shares to
trading on AIM and the Prospectus Shares to trading on the TSXV is
as set out in the 'Expected Timetable of Principal Events' below.
Final confirmation of the expected timing for admission of the
Placing Shares and Prospectus Shares will be confirmed in due
course and is subject to a number of conditions, including, without
limitation, the entering into of a definitive agency agreement and
receipt of all regulatory approvals, including the approval of the
TSXV.
Without prior written approval of the TSXV and compliance with
all applicable Canadian securities laws, the Placing Shares may not
be sold, transferred, hypothecated or otherwise traded on or
through the facilities of TSXV or otherwise in Canada or to or for
the benefit of a Canadian resident until the date that is four
months and a day after the date of issuance.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with or
registered by, the Australian Securities and Investments Commission
or the Japanese Ministry of Finance or the South African Reserve
Bank; and the Placing Shares have not been, nor will they be,
registered or qualified for distribution, as applicable under or
offered in compliance with the securities laws of any state,
province or territory of United States, Australia, New Zealand,
Canada, Japan or South Africa. Accordingly, the Placing Shares may
not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or
indirectly, in or into the United States, Australia, New Zealand,
Canada, Japan or South Africa or any other jurisdiction in which
such offer, sale, resale or delivery would be unlawful.
The securities described herein have not been, and will not be,
registered under the U.S. Securities Act or with any securities
regulatory authority of any state or other jurisdiction of the
United States, and accordingly, may not be offered or sold within
the United States other than to "qualified institutional buyers"
("QIBs") as defined in and pursuant to Rule 144A under the U.S.
Securities Act, except in compliance with the registration
requirements of the U.S. Securities Act and applicable state or
local securities laws or pursuant to exemptions therefrom. This
Announcement shall not constitute or form part of, and should not
be construed as, an offer or invitation to sell or issue, or any
solicitation to purchase or subscribe for, or otherwise invest in,
any of the Company's securities in any jurisdiction, nor shall
there be any sale of these securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful. There has been
and will be no public offer of the Company's securities in
Australia, New Zealand, Japan, South Africa, the United States or
elsewhere, other than the Prospectus Offering in each of the
provinces of Canada, except Québec.
Expected Timetable of Principal Events
Bookbuild Following publication of this Announcement
on 1 November 2023
Completion of Bookbuild No later than 8.00 a.m. (GMT) on
2 November 2023
Admission effective and dealings 8.00 a.m. (GMT) on 9 November 2023
in the Placing Shares and the Prospectus
Shares on AIM
Admission effective and dealings 9:30 a.m. (ET) on 9 November 2023
in the Placing Shares and Prospectus
Shares on TSX-V
Qualified Person's Statement
Gary McMurren, COO, who has over 23 years of relevant experience
in the oil industry and has reviewed and approved the technical
information contained in this Announcement. Mr. McMurren is
registered as a Professional Engineer with the Association of
Professional Engineers and Geoscientists of Alberta and received a
Bachelor of Science degree in Chemical Engineering (with
distinction) from the University of Alberta.
Footnotes
1. Figures based on 5 October 2023 strip pricing.
2. Figures based on flat commodity pricing of US$3.50 / MMBtu
for natural gas and US$80/bbl for WTI .
3. See "Specified Financial Measures" under "Reader Advisory" below.
TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT, INCLUDING THE TERMS AND CONDITIONS SET OUT IN
THIS APPIX (THE "TERMS AND CONDITIONS"), IS RESTRICTED AND IS NOT
FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA,
JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN
WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THESE TERMS AND CONDITIONS ARE FOR INFORMATION PURPOSES
ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS WHO ARE IN A MEMBER
STATE OF THE EUROPEAN ECONOMIC AREA AND ARE, UNLESS OTHERWISE
AGREED BY THE JOINT BOOKRUNNERS, ("QUALIFIED INVESTORS") AS DEFINED
IN ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION (WHICH MEANS
REGULATION (EU) 2017/1129 AND INCLUDES ANY RELEVANT IMPLEMENTING
MEASURES IN ANY MEMBER STATE) (THE "PROSPECTUS REGULATION"); AND/OR
(B) IN THE UNITED KINGDOM, PERSONS WHO ARE (I) QUALIFIED INVESTORS
WITHIN THE MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION (AS
IT FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUWA); AND (II)
"INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005 (AS AMED) (THE "ORDER"); (II) PERSONS FALLING WITHIN
ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY
OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS "RELEVANT PERSONS"). THESE TERMS AND CONDITIONS ARE
A FINANCIAL PROMOTION, WHICH IS EXEMPT FROM THE GENERAL RESTRICTION
IN SECTION 21 OF FSMA ON THE COMMUNICATION OF INVITATIONS OR
INDUCEMENTS TO ENGAGE IN INVESTMENT ACTIVITY, ON THE GROUNDS THAT
IT IS ONLY BEING DISTRIBUTED TO RELEVANT PERSONS. ACCORDINGLY,
THESE TERMS AND CONDITIONS MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. DISTRIBUTION OF THIS
ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR
PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS.
THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN
ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL UNDER THE SECURITIES LAWS OF ANY JURISDICTION. THIS
ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION
OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER
OF OR SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR
SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN
HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMED (THE "U.S. SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN
THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO THE
LEGAL, TAX, BUSINESS AND RELATED IMPLICATIONS OF AN INVESTMENT IN
PLACING SHARES. THE PRICE OF SHARES AND THE INCOME FROM THEM (IF
ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE
FULL AMOUNT INVESTED ON A DISPOSAL OF THEIR SHARES.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada in respect of the issuance of the Placing
Shares; no prospectus has been lodged with or registered by, the
Australian Securities and Investments Commission or the Japanese
Ministry of Finance, the South African Reserve Bank or, in respect
of the Placing Shares, any securities commission in Canada; and the
Placing Shares have not been, nor will they be, registered or
qualified for distribution, as applicable under or offered in
compliance with the securities laws of any state, province or
territory of Australia, Canada, Japan or South Africa. Accordingly,
the Placing Shares may not (unless an exemption under the relevant
securities laws is applicable) be offered, sold, resold or
delivered, directly or indirectly, in or into Australia, Canada,
Japan or South Africa or any other jurisdiction in which such
offer, sale, resale or delivery would be unlawful.
Solely for the purposes of the product governance requirements
contained within the FCA Handbook Product Intervention and Product
Governance Sourcebook (the "UK Product Governance Rules"), and
disclaiming all and any liability, whether arising in tort,
contract or otherwise, which any "manufacturer" (for the purposes
of the UK Product Governance Rules) may otherwise have with respect
thereto, the Placing Shares have been subject to a product approval
process, which has determined that the Placing Shares are: (i)
compatible with an end target market of retail investors and
investors who meet the criteria of professional clients and
eligible counterparties, each defined in the FCA Handbook Conduct
of Business Sourcebook ("COBS"); and (ii) eligible for distribution
through all distribution channels as are permitted by the UK
Product Governance Rules (the "UK Target Market Assessment").
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the "MiFID
II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" and/or "distributor" (for the purposes of the
MiFID II Product Governance Requirements) may otherwise have with
respect thereto, the Placing Shares have been subject to a product
approval process, which has determined that the Placing Shares are:
(i) compatible with an end target market of retail investors and
investors who meet the criteria of professional clients and
eligible counterparties (each as defined in MiFID II); and (ii)
eligible for distribution through all distribution channels as are
permitted by MiFID II (the "EU Target Market Assessment").
Notwithstanding the UK Target Market Assessment and the EU
Target Market Assessment, distributors should note that: the price
of the Common Shares may decline and investors could lose all or
part of their investment; the Common Shares offer no guaranteed
income and no capital protection; and an investment in the Common
Shares is compatible only with investors who do not need a
guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses
that may result therefrom.
Each of the UK Target Market Assessment and the EU Target Market
Assessment is without prejudice to any contractual, legal or
regulatory selling restrictions in relation to the Placing.
Furthermore, it is noted that, notwithstanding the UK Target Market
Assessment and the EU Target Market Assessment, the Joint
Bookrunners will only procure investors who meet the criteria of
professional clients and eligible counterparties each as defined
under COBS or MiFID II, as applicable.
For the avoidance of doubt, each of the UK Target Market
Assessment and the EU Target Market Assessment does not constitute:
(a) an assessment of suitability or appropriateness for the
purposes of Chapters 9A or 10A respectively of COBS or MiFID II, as
applicable; or (b) a recommendation to any investor or group of
investors to invest in, or purchase, or take any other action
whatsoever with respect to the Common Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Placing Shares and determining
appropriate distribution channels.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Announcement (or any part of it) should seek appropriate
advice before taking any action.
These terms and conditions apply to persons making an offer to
acquire Placing Shares. Each Placee hereby agrees with the Joint
Bookrunners and the Company to be bound by these terms and
conditions as being the terms and conditions upon which Placing
Shares will be issued or acquired. A Placee shall, without
limitation, become so bound if a Bookrunner confirms to such Placee
its allocation of Placing Shares.
Upon being notified of its allocation of Placing Shares, a
Placee shall be contractually committed to acquire the number of
Placing Shares allocated to it at the Placing Price and, to the
fullest extent permitted by law, will be deemed to have agreed not
to exercise any rights to rescind or terminate or otherwise
withdraw from such commitment.
In this Terms and Conditions, unless the context otherwise
requires, "Placee" means a Relevant Person (including individuals,
funds or others) on whose behalf a commitment to subscribe for or
acquire Placing Shares has been given.
Details of the Placing Agreement and the Placing Shares
The Joint Bookrunners and the Company have entered into a
Placing Agreement, under which the Joint Bookrunners have, on the
terms and subject to the conditions set out therein, undertaken to
use their reasonable endeavours to procure subscribers for Placing
Shares at the Placing Price. The Placing is not being underwritten
by either of the Joint Bookrunners or any other person.
The number of Placing Shares will be determined following
completion of the Bookbuild. The timing of the closing of the
Bookbuild, the number of Placing Shares and allocations are at the
discretion of the Joint Bookrunners, following consultation with
the Company. Allocations will be confirmed orally or by email by
the relevant Bookrunner following the close of the Bookbuild. An
announcement confirming these details will then be made by the
Company as soon as practicable following completion of the
Bookbuild.
The Placing Shares will, when issued, be subject to the
Articles, will be credited as fully paid and non-assessable and
rank equally in all respects with the existing Common Shares (and
the new Common Shares to be issued pursuant to the Prospectus
Offering), including the right to receive all dividends and other
distributions (if any) declared, made or paid on or in respect of
Common Shares after the date of issue of the Placing Shares.
Subject to Admission, the Placing Shares will trade on AIM under
the trading symbol "SOUC" and with ISIN CA8428131059.
Other than in accordance with TSXV Rules and compliance with all
Canadian Securities Laws, the Placing Shares may not be sold,
transferred, hypothecated or otherwise traded on or through the
facilities of TSXV or otherwise in Canada or to or for the benefit
of a Canadian resident until the date that is four months and a day
after the date of issuance of such Placing Shares.
Application for admission to trading
Application will be made to the London Stock Exchange for
admission to trading on AIM of the Placing Shares and the
Prospectus Shares. It is expected that settlement of any such
shares (via Depositary Interests) and Admission will become
effective at 8.00 a.m. on or around 9 November 2023 and that
dealings in the Placing Shares and Prospectus Shares will commence
at that time.
Bookbuild
The Joint Bookrunners are conducting a bookbuilding process to
determine demand for participation in the Placing by potential
Placees at the Placing Price. This Appendix gives details of the
terms and conditions of, and the mechanics of participation in, the
Placing. No commissions will be paid to Placees or by Placees in
respect of any Placing Shares.
The Joint Bookrunners and the Company shall be entitled to
effect the Placing by such alternative method to the Bookbuild as
they may, in their sole discretion, determine.
The principal terms of the Placing are as follows:
1. The Joint Bookrunners are arranging the Placing as agents
for, and brokers of, the Company.
2. Participation in the Placing is only available to persons who
are lawfully able to be, and have been, invited to participate by a
Bookrunner.
3. The Bookbuild will establish the number of Placing Shares to
be issued at the Placing Price, which will be determined by the
Joint Bookrunners, in consultation with the Company, following
completion of the Bookbuild. The number of Placing Shares will be
announced by the Company on a Regulatory Information Service
following the completion of the Bookbuild.
4. In order to participate in the Placing, prospective Placees
should communicate their bid by telephone or email to their usual
contact at the relevant Bookrunner. Each bid should state the
number of Placing Shares which the prospective Placee wishes to
subscribe for or purchase at the Placing Price. Bids may be scaled
down by the relevant Bookrunner on the basis referred to in
paragraph 8 below.
5. The timing of the closing of the Bookbuild will be at the
discretion of the Joint Bookrunners. The Company reserves the right
to reduce or seek to increase the amount to be raised pursuant to
the Placing, in its absolute discretion.
6. Allocations of the Placing Shares will be determined by the
Joint Bookrunners, following consultation with the Company. Each
Placee's allocation will be confirmed to Placees orally, or by
email, by the relevant Bookrunner following the close of the
Bookbuild and a trade confirmation or contract note will be
dispatched as soon as possible thereafter. Oral or emailed
confirmation from the relevant Bookrunner will give rise to an
irrevocable, legally binding commitment by that person (who at that
point becomes a Placee), in favour of that Bookrunner and the
Company, under which it agrees to acquire by subscription the
number of Placing Shares allocated to it at the Placing Price and
otherwise on the terms and subject to the conditions set out in
these Terms and Conditions and in accordance with the Articles.
Except with the relevant Bookrunner's consent, such commitment will
not be capable of variation or revocation.
7. The Company will make an announcement following the close of
the Bookbuild detailing the number of Placing Shares to be issued
at the Placing Price.
8. Subject to paragraphs 4 and 5 above, the relevant Bookrunner
may choose not to accept bids and/or to accept bids, either in
whole or in part, on the basis of allocations determined at its
discretion (after consultation with the Company) and may scale down
any bids for this purpose on such basis as it may determine. The
Joint Bookrunners may also, notwithstanding paragraphs 4 and 5
above, subject to the prior consent of the Company, allocate
Placing Shares after the time of any initial allocation to any
person submitting a bid after that time.
9. A bid in the Bookbuild will be made on the terms and subject
to the conditions in this Announcement (including these Terms and
Conditions) and will be legally binding on the Placee on behalf of
which it is made and except with the relevant Bookrunner's consent
will not be capable of variation or revocation from the time at
which it is submitted.
10. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
11. All obligations of the Joint Bookrunners under the Placing
will be subject to fulfilment of the conditions referred to below
"Conditions of the Placing" and to the Placing not being terminated
on the basis referred to below under "Right to terminate under the
Placing Agreement".
12. By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
13. To the fullest extent permissible by law and the applicable
rules of the Financial Conduct Authority, neither of the Joint
Bookrunners, nor any of their respective affiliates, agents,
directors, officers or employees shall have any liability to
Placees (or to any other person whether acting on behalf of a
Placee or otherwise whether or not a recipient of these terms and
conditions) in respect of the Placing. In particular, neither of
the Joint Bookrunners, nor any of their respective affiliates,
agents, directors, officers or employees shall have any liability
(including to the extent permissible by law, any fiduciary duties)
in respect of the Joint Bookrunners' conduct of the Placing or of
such alternative method of effecting the Placing as the Joint
Bookrunners and the Company may determine.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming
unconditional and not having been terminated in accordance with its
terms. Each of the Joint Bookrunners' obligations under the Placing
Agreement in respect of the Placing Shares are conditional on,
inter alia:
1. the application for Admission being delivered to the London
Stock Exchange on or before 6 November 2023;
2. each of the conditions to the Prospectus Offering which are
to be fulfilled prior to Admission having been fulfilled or (if
capable of waiver) waived by Stifel Canada and not having become
incapable of being fulfilled, in each case by the respective
time(s) and date(s) (if any) specified therein;
3. the Minimum Gross Proceeds being raised (which, for the
avoidance of doubt, may be raised in entirety through any of the
Placing, Subscription or Prospectus Offering);
4. the delivery by the Company to the Joint Bookrunners of
certain documents required under the Placing Agreement;
5. the Company having performed its obligations under the
Placing Agreement to the extent that such obligations fall to be
performed prior to Admission;
6. the issue and allotment of the Placing Shares and the
Subscription Shares, conditional only upon Admission;
7. Admission taking place no later than 8.00 a.m. (London time)
on 9 November 2023 or such other date and time as may be agreed
between the Company and the Joint Bookrunners, not being later than
8.00 a.m. (London time) on 23 November 2023 (the " Long Stop Date
"); and
8. the Placing Agreement not having been terminated by the Joint
Bookrunners in accordance with its terms.
If: (i) any of the conditions contained in the Placing
Agreement, including those described above, are not fulfilled or
(where applicable) waived by the Joint Bookrunners by the
respective time or date where specified (or such later time or date
as the Joint Bookrunners may notify to the Company, being not later
than the Long Stop Date); (ii) any of such conditions becomes
incapable of being fulfilled; or (iii) the Placing Agreement is
terminated in the circumstances specified below, the Placing will
not proceed and the Placees' rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
in respect thereof.
The Joint Bookrunners may, at their discretion and upon such
terms as they thinks fit, waive, or extend the period for (subject
to the Long Stop Date), compliance by the Company with the whole or
any part of any of the Company's obligations in relation to the
conditions in the Placing Agreement save that the condition
relating to Admission taking place may not be waived. Any such
extension or waiver will not affect Placees' commitments as set out
in these Terms and Conditions.
Neither the Joint Bookrunners, the Company nor any of their
respective affiliates, agents, directors, officers or employees
shall have any liability to any Placee (or to any other person
whether acting on behalf of a Placee or otherwise) in respect of
any decision they may make as to whether or not to waive or to
extend the time and/or date for the satisfaction of any condition
to the Placing nor for any decision they may make as to the
satisfaction of any condition or in respect of the Placing
generally and, by participating in the Placing, each Placee agrees
that any such decision is within the absolute discretion of the
Joint Bookrunners.
Right to terminate the Placing Agreement
The Joint Bookrunners are entitled, at any time before
Admission, to terminate the Placing Agreement by giving notice to
the Company in certain circumstances, including, inter alia, if
before Admission:
1. any of the warranties given in the Placing Agreement are not
true and accurate and not misleading when given at the date of the
Placing Agreement or would not be true and accurate or would be
misleading if they were repeated on Admission;
2. the Company has failed to comply with its obligations under
the Placing Agreement, or with the requirements of any applicable
laws or regulations (including MAR, the AIM Rules, the TSXV Rules
and Canadian Securities Laws) in relation to the Placing;
3. any of the conditions set out in the Placing Agreement are
not fulfilled or (if capable of waiver) waived by the Joint
Bookrunners or shall have become incapable of being fulfilled by
the respective time(s) and date(s) (if any) specified in the
Placing Agreement;
4. there has been any development or event which will or is
likely to have a material adverse effect on the condition
(financial, operational, legal or otherwise), prospects, solvency,
liquidity, management, results of operations, financial position,
business or general affairs of the Group taken as a whole, whether
or not foreseeable and whether or not arising in the ordinary
course of business; or
5. there has been a change in national or international
financial, political, economic, monetary or stock market conditions
(primary or secondary) or an imposition of or compliance with any
law or governmental or regulatory order, rule, regulation,
restriction or direction,
which, in the opinion of the Joint Bookrunners, would or would
be likely to prejudice materially the Company or render the Placing
(or any material part thereof) or Admission impractical or
inadvisable.
The rights and obligations of the Placees will not be subject to
termination by the Placees or any prospective Placees at any time
or in any circumstances. By participating in the Placing, Placees
agree that the exercise by the Joint Bookrunners of any right of
termination or other discretion under the Placing Agreement shall
be within the absolute discretion of the Joint Bookrunners and that
the Joint Bookrunners need not make any reference to Placees in
this regard and that neither the Joint Bookrunners nor any of their
respective affiliates shall have any liability to Placees
whatsoever in connection with any such exercise or failure so to
exercise.
No Admission Document or Prospectus
The Placing Shares are being offered to a limited number of
specifically invited persons only and have not been nor will be
offered in such a way as to require the publication of a prospectus
in the United Kingdom. No offering document, admission document or
prospectus has been or will be submitted to be approved by the FCA
or the London Stock Exchange in relation to the Placing, and
Placees' commitments will be made solely on the basis of the
information contained in these Terms and Conditions and the
business and financial information that the Company is required to
publish in accordance with the AIM Rules and the TSXV Rules,
including this Announcement (the "Exchange Information"). Neither
the Base Prospectus nor the Company's Prospectus Supplement is a
prospectus for the purposes of Section 85(1) of FSMA and,
accordingly, will not be examined or approved as a prospectus by
the FCA under Section 87A FSMA or by the London Stock Exchange and
it will not be filed with the FCA pursuant to the FCA's Prospectus
Regulation Rules nor will it be approved by a person authorised
under FSMA, for the purposes of Section 21 FSMA. Each Placee, by
accepting a participation in the Placing, agrees that the content
of the Exchange Information (including this Announcement) is
exclusively the responsibility of the Company and confirms that it
has not relied on any other information, representation, warranty,
or statement made by or on behalf of the Company, the Joint
Bookrunners (or either Bookrunner) or any other person and neither
of the Joint Bookrunners, the Company nor any other person will be
liable for any Placee's decision to participate in the Placing
based on any other information, representation, warranty or
statement which the Placees may have obtained or received and, if
given or made, such information, representation, warranty or
statement must not be relied upon as having been authorised by the
Joint Bookrunners (or either of them), the Company or their
respective officers, directors, employees or agents. Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting a participation in the Placing. Neither the Company nor
the Joint Bookrunners are making any undertaking or warranty to any
Placee regarding the legality of an investment in the Placing
Shares by such Placee under any legal, investment or similar laws
or regulations. Each Placee should not consider any information in
this Announcement to be legal, tax or business advice. Each Placee
should consult its own solicitor, tax adviser and financial adviser
for independent legal, tax and financial advice regarding an
investment in the Placing Shares. Nothing in this paragraph shall
exclude the liability of any person for fraudulent
misrepresentation.
Registration and Settlement
Following the close of the Bookbuild, each Placee allocated
Placing Shares in the Placing will be sent a trade confirmation or
contract note in accordance with the standing arrangements in place
with the relevant Bookrunner, stating the number of Placing Shares
allocated to it at the Placing Price, the aggregate amount owed by
such Placee (in pounds sterling) and a form of confirmation in
relation to settlement instructions.
Each Placee will be deemed to agree that it will do all things
necessary to ensure that delivery and payment is completed as
directed by the relevant Bookrunner in accordance with the standing
CREST settlement instructions which they have in place with that
Bookrunner.
Settlement of transactions in the Placing Shares via the
Depositary Interests (ISIN: CA8428131059) following Admission will
take place within the system administered by Euroclear UK &
International Limited ("CREST") provided that, subject to certain
exceptions, each Joint Bookrunner reserves the right to require
settlement for, and delivery of, the Placing Shares (or a portion
thereof) to Placees by such other means that it deems necessary if
delivery or settlement is not possible or practicable within CREST
within the timetable set out in these Terms and Conditions or would
not be consistent with the regulatory requirements in any Placee's
jurisdiction.
It is expected that settlement will take place on 9 November
2023 in accordance with the instructions set out in the contract
note.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of 4 percentage points above the prevailing LIBOR
rate as determined by the relevant Bookrunner.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the relevant Bookrunner may sell any or all of
the Placing Shares allocated to that Placee on such Placee's behalf
and retain from the proceeds, for that Bookrunner's account and
benefit (as agent for the Company), an amount equal to the
aggregate amount owed by the Placee plus any interest due. The
relevant Placee will, however, remain liable and shall indemnify
the relevant Bookrunner on demand for any shortfall below the
aggregate amount owed by it and may be required to bear any stamp
duty or stamp duty reserve tax or securities transfer tax (together
with any interest or penalties) which may arise upon the sale of
such Placing Shares on such Placee's behalf. By communicating a bid
for Placing Shares, each Placee confers on the relevant Bookrunner
such authorities and powers necessary to carry out any such sale
and agrees to ratify and confirm all actions which that Bookrunner
lawfully takes in pursuance of such sale. Legal and/or beneficial
title in and to any Placing Shares shall not pass to the relevant
Placee until it has fully complied with its obligations
hereunder.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the form of
confirmation is copied and delivered immediately to the relevant
person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or
that of its nominee or in the name of any person for whom a Placee
is contracting as agent or that of a nominee for such person, such
Placing Shares should, subject as provided below, be so registered
free from any liability to UK stamp duty or stamp duty reserve tax
or securities transfer tax. Neither of the Joint Bookrunners nor
the Company will be liable in any circumstances for the payment of
stamp duty, stamp duty reserve tax or securities transfer tax in
connection with any of the Placing Shares. Placees will not be
entitled to receive any fee or commission in connection with the
Placing.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) makes the following
representations, warranties, acknowledgements, agreements and
undertakings (as the case may be) to the Company and each Joint
Bookrunner:
1. that it has read and understood this Announcement, including
these Terms and Conditions, in its entirety and that its
subscription for or purchase of Placing Shares is subject to and
based upon all the terms, conditions, representations, warranties,
acknowledgements, agreements and undertakings and other information
contained therein and undertakes not to redistribute or duplicate
this Announcement;
2. that its obligations are irrevocable and legally binding and
shall not be capable of rescission or termination by it in any
circumstances;
3. that the exercise by the Joint Bookrunners of any right or
discretion under the Placing Agreement shall be within the absolute
discretion of the Joint Bookrunners and the Joint Bookrunners need
not have any reference to it and shall have no liability to it
whatsoever in connection with any decision to exercise or not to
exercise any such right and each Placee agrees that it has no
rights against the Joint Bookrunners or the Company, or any of
their respective officers, directors, employees agents or advisers,
under the Placing Agreement pursuant to the Contracts (Rights of
Third Parties) Act 1999;
4. that these terms and conditions represent the whole and only
agreement between it, the relevant Bookrunner and the Company in
relation to its participation in the Placing and supersedes any
previous agreement between any of such parties in relation to such
participation. Accordingly, each Placee, in accepting its
participation in the Placing, is not relying on any information or
representation or warranty in relation to the Company or any of its
subsidiaries or any of the Placing Shares other than as contained
in the Exchange Information (including this Announcement), such
information being all that it deems necessary to make an investment
decision in respect of the Placing Shares. Each Placee agrees that
neither the Company, the Joint Bookrunners nor any of their
respective officers, directors or employees will have any liability
for any such other information, representation or warranty, express
or implied;
5. that in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation and Article 5(1) of the Prospectus Regulation
(as it forms part of domestic UK law pursuant to the EUWA), (i) the
Placing Shares acquired by it in the Placing have not been acquired
on behalf of, nor have they been acquired with a view to their
offer or resale to, persons in any Member State of the European
Economic Area which has implemented the Prospectus Regulation or
the UK, respectively, other than Qualified Investors or in
circumstances in which the prior consent of the Joint Bookrunners
has been given to the offer or resale; or (ii) where Placing Shares
have been acquired by it on behalf of persons in any member state
of the EEA, or the UK respectively, other than Qualified Investors,
the offer of those Placing Shares to it is not treated under the
Prospectus Regulation or the Prospectus Regulation (as it forms
part of domestic UK law pursuant to the EUWA) (as the case may be)
as having been made to
such persons;
6. that neither it nor, as the case may be, its clients expect
the Joint Bookrunners to have any duties or responsibilities to
such persons similar or comparable to the duties of "best
execution" and "suitability" imposed by the FCA's Conduct of
Business Source Book, and that the Joint Bookrunners are not acting
for it or its clients, and that the Joint Bookrunners will not be
responsible for providing the protections afforded to customers of
the Joint Bookrunners or for providing advice in respect of the
transactions described in this Announcement;
7. that it has made its own assessment of the Placing Shares and
has relied on its own investigation of the business, financial or
other position of the Company in accepting a participation in the
Placing and that it shall not be entitled to rely upon any material
regarding the Placing Shares or the Company (if any) that the Joint
Bookrunners (or either of them) or the Company or any of their
respective affiliates, agents, directors, officers or employees or
any person acting on behalf of any of them has provided, other than
the information in the Exchange Information (including this
Announcement); nor has it requested any of the Joint Bookrunners,
the Company or any of their respective affiliates, agents,
directors, officers or employees or any person acting on behalf of
any of them to provide it with any such information;
8. that it understands and accepts that, other than in
accordance with TSXV Rules and compliance with all Canadian
Securities Laws, the Placing Shares may not be sold, transferred,
hypothecated or otherwise traded on or through the facilities of
TSXV or otherwise in Canada or to or for the benefit of a Canadian
resident until the date that is four months and a day after the
date of issuance of such Placing Shares;
9. that it is located outside the United States and is
subscribing for and/or purchasing the Placing Shares only in
"offshore transactions" as defined in and pursuant to Regulation
S;
10. that neither the Joint Bookrunners or the Company or any of
their respective affiliates, agents, directors, officers or
employees has made any representation or warranty to it, express or
implied, with respect to the Company, the Placing or the Placing
Shares or the accuracy, completeness or adequacy of the Exchange
Information;
11. that it is not a national or resident of Canada, Australia,
the Republic of South Africa or Japan or a corporation, partnership
or other entity organised under the laws of Canada, Australia, the
Republic of South Africa or Japan and that it will not (unless an
exemption under the relevant securities laws is applicable) offer,
sell, renounce, transfer or deliver, directly or indirectly, any of
the Placing Shares in Canada, Australia, the Republic of South
Africa or Japan or to or for the benefit of any person resident in
Canada, Australia, the Republic of South Africa or Japan and each
Placee acknowledges that the relevant clearances or exemptions are
not being obtained from the Securities Commission of any province
or territory of Canada, that no prospectus has been or will be
lodged with, filed with or registered by the Australian Securities
and Investments Commission, the Japanese Ministry of Finance ,the
South African Reserve Bank or, in respect of the Placing Shares,
any securities commission of Canada, and that the Placing Shares
are not being offered for sale and may not (unless an exemption
under the relevant securities laws is applicable) be offered, sold,
resold or delivered, directly or indirectly, in or into the United
States, Australia, Canada, Japan or South Africa or any other
jurisdiction in which such offer, sale, resale or delivery would be
unlawful;
12. that it does not have a registered address in, and is not a
citizen, resident or national of, any jurisdiction in which it is
unlawful to make or accept an offer of the Placing Shares and it is
not acting on a non-discretionary basis for any such person;
13. that it is entitled to subscribe for and/or purchase Placing
Shares under the laws of all relevant jurisdictions which apply to
it and that it has fully observed such laws and obtained all
governmental and other consents which may be required thereunder or
otherwise and complied with all necessary formalities and that it
has not taken any action which will or may result in the Company or
the Joint Bookrunners (or either of them) or any of their
respective directors, officers, employees or agents acting in
breach of any regulatory or legal requirements of any territory in
connection with the Placing or its acceptance;
14. that it has obtained all necessary consents and authorities
to enable it to give its commitment to subscribe for and/or
purchase the Placing Shares and to perform its subscription and/or
purchase obligations;
15. that where it is acquiring Placing Shares for one or more
managed accounts, it is authorised in writing by each managed
account: (a) to acquire the Placing Shares for each managed
account; (b) to make on its behalf the representations, warranties,
acknowledgements, undertakings and agreements in these Terms and
Conditions; and (c), if applicable, to receive on its behalf any
investment letter relating to the Placing in the form provided to
it by the relevant Bookrunner;
16. that it is either: (a) a person of a kind described in
paragraph 5 of Article 19 (persons having professional experience
in matters relating to investments and who are investment
professionals) of the Order; or (b) a person of a kind described in
paragraph 2 of Article 49(2)(A) to (D) (high net worth companies,
unincorporated associations, partnerships or trusts or their
respective directors, officers or employees) of the Order; or (c) a
person to whom it is otherwise lawful for this Announcement to be
communicated;
17. that, unless otherwise agreed by the relevant Bookrunner, it is a Qualified Investor;
18. that, unless otherwise agreed by the relevant Bookrunner, it
is a "professional client" or an "eligible counterparty" within the
meaning of Chapter 3 of the FCA's Conduct of Business Sourcebook
and it is purchasing Placing Shares for investment only and not
with a view to resale or distribution;
19. it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person;
20. that any money held in an account with the relevant
Bookrunner (or its nominee or agent) on its behalf and/or any
person acting on its behalf will not be treated as client money
within the meaning of the rules and regulations of the FCA. Each
Placee further acknowledges that the money will not be subject to
the protections conferred by the FCA's client money rules. As a
consequence, this money will not be segregated from the
Bookrunner's (or its nominee's or agent's) money in accordance with
such client money rules and will be used by the relevant Bookrunner
in the course of its own business and each Placee will rank only as
a general creditor of the relevant Bookrunner;
21. that it will (or will procure that its nominee will) if
applicable, make notification to the Company of the interest in its
Common Shares in accordance with the Articles (which incorporate by
reference the requirements of Chapter 5 of the Disclosure Guidance
and Transparency Rules of the FCA);
22. that it is not, and it is not acting on behalf of, a person
falling within subsections (6), (7) or (8) of sections 67 or 70
respectively or subsections (2) and (3) of section 93 or subsection
(1) of section 96 of the Finance Act 1986;
23. that it will not deal or cause or permit any other person to
deal in all or any of the Placing Shares which it is subscribing
for and/or purchasing under the Placing unless and until Admission
becomes effective;
24. that it appoints irrevocably any director of the relevant
Bookrunner as its agent for the purpose of executing and delivering
to the Company and/or its registrars any document on its behalf
necessary to enable it to be registered as the holder of the
Placing Shares;
25. that this Announcement does not constitute a securities
recommendation or financial product advice and that neither of the
Joint Bookrunners nor the Company has considered its particular
objectives, financial situation and needs;
26. that it has sufficient knowledge, sophistication and
experience in financial, business and investment matters as is
required to evaluate the merits and risks of subscribing for or
purchasing the Placing Shares and is aware that it may be required
to bear, and it, and any accounts for which it may be acting, are
able to bear, the economic risk of, and is able to sustain, a
complete loss in connection with the Placing;
27. that it will indemnify and hold the Company, each Joint
Bookrunner and their respective affiliates harmless from any and
all costs, claims, liabilities and expenses (including legal fees
and expenses) arising out of or in connection with any breach of
the representations, warranties, acknowledgements, agreements and
undertakings in these Terms and Conditions and further agrees that
the Company and each of the Joint Bookrunners will rely on the
truth and accuracy of the confirmations, warranties,
acknowledgements and undertakings herein and, if any of the
foregoing is or becomes no longer true or accurate, the Placee
shall promptly notify the relevant Bookrunner and the Company. All
confirmations, warranties, acknowledgements and undertakings given
by the Placee, pursuant to this Announcement (including the Terms
and Conditions) are given to each Joint Bookrunner for itself and
on behalf of the Company and will survive completion of the Placing
and Admission;
28. that time shall be of the essence as regards obligations
pursuant to these Terms and Conditions;
29. that it is responsible for obtaining any legal, financial,
tax and other advice that it deems necessary for the execution,
delivery and performance of its obligations in accepting the terms
and conditions of the Placing, and that it is not relying on the
Company or either of the Joint Bookrunners to provide any legal,
financial, tax or other advice to it;
30. that all dates and times in this Announcement (including
these Terms and Conditions) may be subject to amendment and that
the relevant Bookrunner shall notify it of such amendments;
31. that (i) it has complied with its obligations under the
Criminal Justice Act 1993 and MAR, (ii) in connection with money
laundering and terrorist financing, it has complied with its
obligations under the Proceeds of Crime Act 2002 (as amended), the
Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the
Money Laundering and Terrorist Financing Regulations 2019 and (iii)
it is not a person: (a) with whom transactions are prohibited under
the Foreign Corrupt Practices Act of 1977 or any economic sanction
programmes administered by, or regulations promulgated by, the
Office of Foreign Assets Control of the U.S. Department of the
Treasury or the United States Department of State; (b) named on the
Consolidated List of Financial Sanctions Targets maintained by HM
Treasury of the United Kingdom; or (c) subject to financial
sanctions imposed pursuant to a regulation of the European Union or
a regulation adopted by the United Nations (together, the "
Regulations "); and, if making payment on behalf of a third party,
that satisfactory evidence has been obtained and recorded by it to
verify the identity of the third party as required by the
Regulations and, if making payment on behalf of a third party, that
satisfactory evidence has been obtained and recorded by it to
verify the identity of the third party as required by the
Regulations and has obtained all governmental and other consents
(if any) which may be required for the purpose of, or as a
consequence of, such purchase, and it will provide promptly to the
relevant Bookrunner such evidence, if any, as to the identity or
location or legal status of any person which that Bookrunner may
request from it in connection with the Placing (for the purpose of
complying with such Regulations or ascertaining the nationality of
any person or the jurisdiction(s) to which any person is subject or
otherwise) in the form and manner requested by the relevant
Bookrunner on the basis that any failure by it to do so may result
in the number of Placing Shares that are to be subscribed for
and/or purchased by it or at its direction pursuant to the Placing
being reduced to such number, or to nil, as the relevant Bookrunner
may decide in its absolute discretion;
32. that it will not make any offer to the public within the
meaning of the Prospectus Regulation of those Placing Shares to be
subscribed for and/or purchased by it;
33. that it will not distribute any document relating to the
Placing Shares and it will be acquiring the Placing Shares for its
own account as principal or for a discretionary account or accounts
(as to which it has the authority to make the statements set out
herein) for investment purposes only and it does not have any
contract, understanding or arrangement with any person to sell,
pledge, transfer or grant a participation therein to such person or
any third person with respect of any Placing Shares; save that that
if it is a private client stockbroker or fund manager it confirms
that in purchasing the Placing Shares it is acting under the terms
of one or more discretionary mandates granted to it by private
clients and it is not acting on an execution only basis or under
specific instructions to purchase the Placing Shares for the
account of any third party;
34. that it acknowledges that these terms and conditions and any
agreements entered into by it pursuant to these terms and
conditions shall be governed by and construed in accordance with
the laws of England and Wales and it submits (on behalf of itself
and on behalf of any person on whose behalf it is acting) to the
exclusive jurisdiction of the English courts as regards any claim,
dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Company or the relevant
Bookrunner in any jurisdiction in which the relevant Placee is
incorporated or in which its assets are located or any of its
securities have a quotation on a recognised stock exchange;
35. that any documents sent to Placees will be sent at the
Placees' risk and that they may be sent by post to such Placees at
an address notified to the relevant Bookrunner;
36. that the Joint Bookrunners owe no fiduciary or other duties
to any Placee in respect of any representations, warranties,
undertakings or indemnities in the Placing Agreement;
37. that a Bookrunner or its respective affiliates may, at their
absolute discretion, agree to become a Placee in respect of some or
all of the Placing Shares;
38. that no prospectus or offering document has been or will be
prepared in connection with the Placing and it has not received and
will not receive a prospectus or other offering document in
connection with the Placing; and
39. that if it has received any confidential price sensitive
information concerning the Company in advance of the publication of
this Announcement, it has not: (i) dealt in the securities of the
Company; (ii) encouraged, required, recommended or induced another
person to deal in the securities of the Company; or (iii) disclosed
such information to any person, prior to such information being
made publicly available.
The Company, the Joint Bookrunners and their respective
affiliates will rely upon the truth and accuracy of each of the
foregoing representations, warranties, acknowledgements and
undertakings which are given to the Company and the Joint
Bookrunners and are irrevocable.
The provisions of these Terms and Conditions may be waived,
varied or modified as regards specific Placees or on a general
basis by the relevant Bookrunner.
The agreement to settle a Placee's subscription and/or purchase
(and/or the subscription of a person for whom such Placee is
contracting as agent) free of stamp duty and stamp duty reserve tax
depends on the settlement relating only to a subscription by it
and/or such person direct from the Company for the Placing Shares
(via Depositary Interests) in question. Such agreement assumes that
the Placing Shares are not being subscribed for in connection with
arrangements to issue depositary receipts or to transfer the
Placing Shares into a clearance service. If there are any such
arrangements, or the settlement relates to any other subsequent
dealing in the Placing Shares, stamp duty or stamp duty reserve tax
may be payable, for which neither the Company or the Joint
Bookrunners will be responsible, and the Placee to whom (or on
behalf of whom, or in respect of the person for whom it is
participating in the Placing as an agent or nominee) the
allocation, allotment, issue or delivery of Placing Shares has
given rise to such UK stamp duty or stamp duty reserve tax
undertakes to pay such UK stamp duty or stamp duty reserve tax
forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and the Joint Bookrunners in the event that
any of the Company and/or the Joint Bookrunners have incurred any
such liability to UK stamp duty or stamp duty reserve tax. If this
is the case, each Placee should seek its own advice and notify the
relevant Bookrunner accordingly.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable outside the
UK by them or any other person on the subscription or purchase by
them of any Placing Shares or the agreement by them to subscribe
for or purchase any Placing Shares.
The Exchange Information has been issued by, and is the sole
responsibility, of the Company. No representation or warranty
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by the
Joint Bookrunners or by any of their respective affiliates or
agents as to or in relation to, the accuracy or completeness of the
Exchange Information (including this Announcement) or any other
written or oral information made available to or publicly available
to any interested party or its advisers, and any liability
therefore is expressly disclaimed.
Stifel Nicolaus Europe Limited, which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom
is acting exclusively for the Company and no one else in connection
with the Placing and Admission, and Stifel Europe will not be
responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the Placing or Admission or any other matters referred
to in this Announcement.
Shard Capital Partners LLP (trading as Tennyson Securities), a
limited liability partnership registered in England and Wales with
number OC360394) , which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom is acting
exclusively for the Company and no one else in connection with the
Placing and Admission, and Tennyson will not be responsible to
anyone other than the Company for providing the protections
afforded to its clients or for providing advice in relation to the
Placing or Admission or any other matters referred to in this
Announcement.
Neither of Stifel Europe or Tennyson nor any of their respective
subsidiary undertakings, affiliates or any of their respective
directors, officers, employees, advisers, agents or any other
person accepts any responsibility or liability whatsoever for, or
makes any representation or warranty, express or implied, as to the
truth, accuracy, completeness or fairness of the information or
opinions contained in the Exchange Information (or whether any
information has been omitted from it) or any other information
relating to the Company, its subsidiaries or associated companies,
whether written, oral or in a visual or electronic form, and
howsoever transmitted or made available or for any loss howsoever
arising from any use of the Exchange Information or its contents or
otherwise arising in connection therewith and any liability
therefore is expressly disclaimed.
Definitions
In this Announcement (including the Terms and Conditions), the
following words and expressions shall (save where the context
otherwise requires) have the following meanings:
"Admission" the admission of the Placing Shares to
trading on AIM becoming effective in accordance
with the AIM Rules
"Agents" Stifel Canada, Canaccord Genuity Corp,
Eight Capital, and Haywood Securities
Inc
"AIM" the market of that name operated by the
London Stock Exchange
"AIM Rules" the AIM Rules for Companies, published
by London Stock Exchange from time to
time
"Announcement" this announcement (including the Appendix
which forms
part of this announcement)
"Articles" the articles of continuance and by-laws
of the Company from time to time
"Base Prospectus" the Company's short form base shelf prospectus
dated 18 November 2022
"Bookbuild" the bookbuilding to be conducted by the
Joint Bookrunners pursuant to the Placing
Agreement and this Announcement, including
the Terms and Conditions
"Canadian Securities all applicable securities legislation
Laws" and regulations in the Reporting Provinces
"Common Shares" common shares of no par value in the capital
of the Company
"Company" or "Southern" Southern Energy Corp.
"Depositary Interests" depositary interests representing the
Common Shares
"Directors" directors of the board of the Company
"EEA" the European Economic Area
"EUWA" the European Union (Withdrawal) Act 2018,
as amended
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets Act,
as amended
"Fundraising" the Placing, the Prospectus Offering and
the Subscription
"Group" the Company and its subsidiaries and subsidiary
undertakings
"Group Company" a member of the Group
"Joint Bookrunners" Tennyson and Stifel Europe and "Bookrunner"
or and "Broker" shall be construed accordingly
"Joint Brokers"
"London Stock Exchange" London Stock Exchange plc
"MAR" the Market Abuse Regulation (2014/596/EU)
(as it forms part of UK domestic law by
virtue of the EUWA)
"Minimum Gross Proceeds" the minimum gross proceeds of the Fundraising,
being US$5 million
"Offering" the proposed offering of Common Shares
by way of the Prospectus Offering and
the Placing
"Placees" a person who has agreed to subscribe for
Placing Shares at the Placing Price;
"Placing" the proposed placing by the Joint Bookrunners,
on behalf of the Company, of the Placing
Shares on the terms and subject to the
conditions set out in this Announcement
(including these Terms and Conditions)
and the Placing Agreement at the Placing
Price
"Placing Agreement" the agreement between the Joint Bookrunners
and the Company in respect of the Placing
"Placing Price" 15.5 pence per Placing Share
"Placing Shares" the new Common Shares to be allotted and
issued by the Company pursuant to the
Placing
"Prospectus" the Base Prospectus, as supplemented by
the Prospectus Supplement
"Prospectus Offering" the Company's proposed Prospectus offering
of Prospectus Shares at the Prospectus
Price
"Prospectus Price" C$0.26 per Prospectus Share
"Prospectus Shares" the new Common Shares to be allotted and
issued by the Company pursuant to the
Prospectus Offering
"Prospectus Supplement" the prospectus supplement to be published
by the Company in connection with the
Prospectus Offering
"Regulation S" Regulation S under the U.S. Securities
Act
"Regulatory Information one of the regulatory information services
Service" authorised by the FCA acting in its capacity
as the UK listing authority to receive,
process and disseminate regulatory information
"Reporting Provinces" Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland and Labrador,
Nova Scotia, Ontario, Prince Edward Island
and Saskatchewan
"Stifel Canada" Stifel Nicolaus Canada Inc.
"Stifel Europe" Stifel Nicolaus Europe Limited
"Subscription" the subscription for the Subscription
Shares at the Placing Price, by certain
directors and members of the Company's
senior management
"Subscription Shares" the new Common Shares to be allotted and
issued by the Company to those directors
and members of the Company's senior management
participating in the Fundraising pursuant
to subscription agreements with the Company
"Tennyson" Tennyson Securities (a trading name of
Shard Capital Partners LLP, a limited
liability partnership registered in England
and Wales with number OC360394)
"TSXV" the TSX Venture Exchange
"TSXV Rules" the rules and policies of the TSXV, including
the TSXV Corporate Finance Manual and
related staff notices
"U.S. Securities Act" the United States Securities Act of 1933,
as amended
"C$" Canadian dollars, the lawful currency
of Canada
"GBP", "pounds sterling", are references to the lawful currency
"pence" or "p" of the United Kingdom
"$" or "US$" United States dollars, the lawful currency
of the United States of America
READER ADVISORY
Currency. All currency amounts in this Announcement are in
United States dollars (unless otherwise stated).
Disclosure of Oil and Gas Information
Unit Cost Calculation. Natural gas liquids volumes are recorded
in barrels of oil (bbl) and are converted to a thousand cubic feet
equivalent (Mcfe) using a ratio of six (6) thousand cubic feet to
one (1) barrel of oil (bbl). Natural gas volumes recorded in
thousand cubic feet (Mcf) are converted to barrels of oil
equivalent (boe) using the ratio of six (6) thousand cubic feet to
one (1) barrel of oil (bbl). Mcfe and boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6
mcf:1 bbl or a Mcfe conversion ratio of 1 bbl:6 Mcf is based in an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. In addition, given that the value ratio based on the
current price of oil as compared with natural gas is significantly
different from the energy equivalent of six to one, utilizing a boe
conversion ratio of 6 Mcf:1 bbl or a Mcfe conversion ratio of 1
bbl:6 Mcf may be misleading as an indication of value.
Product Types. References to "natural gas" throughout this
Announcement refer to conventional natural gas as defined by NI
51-101.
Reserves Disclosure. All reserves values and ancillary
information contained in this Announcement have been internally
estimated by the Company's Internal Qualified Reserve Evaluator
("QRE") and prepared in accordance with National Instrument 51-101
- Standards of Disclosure for Oil and Gas Activities ("NI 51-101")
and the most recent publication of the Canadian Oil and Gas
Evaluation Handbook ("COGEH"). "Internally estimated" means an
estimate that is derived by the Company's internal QRE and prepared
in accordance with NI 51-101. All reserve references in this
Announcement are "company gross reserves". Estimates of reserves
for individual properties may not reflect the same level of
confidence as estimates of reserves for all properties, due to the
effect of aggregation.
Drilling Locations. This Announcement discloses drilling
locations in two categories: (i) booked locations; and (ii)
unbooked locations. Booked locations are derived from the Company's
internal reserves evaluation as prepared by a member of management
who is a QRE in accordance with NI 51-101 and the most recent
publication of the COGEH effective 5 October 2023 and account for
drilling locations that have associated proved and/or probable
reserves, as applicable. Unbooked locations are internal estimates
based on the prospective acreage and an assumption as to the number
of wells that can be drilled per section based on industry practice
and internal review. Unbooked locations do not have attributed
reserves or resources. There is no certainty that the Company will
drill all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and gas
reserves, resources or production. The drilling locations
considered for future development will ultimately depend upon the
availability of capital, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs, actual drilling
results, additional reservoir information that is obtained and
other factors. While certain of the unbooked drilling locations
have been derisked by drilling existing wells in relative close
proximity to such unbooked drilling locations, other unbooked
drilling locations are farther away from existing wells where
management has less information about the characteristics of the
reservoir and therefore there is more uncertainty whether wells
will be drilled in such locations and if drilled there is more
uncertainty that such wells will result in additional oil and gas
reserves, resources or production.
Proved reserves are those reserves that can be estimated with a
high degree of certainty to be recoverable. It is likely that the
actual remaining quantities recovered will exceed the estimated
proved reserves. Probable reserves are those additional reserves
that are less certain to be recovered than proved reserves. It is
equally likely that the actual remaining quantities recovered will
be greater or less than the sum of the estimated proved plus
probable reserves. Proved developed producing reserves are those
reserves that are expected to be recovered from completion
intervals open at the time of the estimate. These reserves may be
currently producing or, if shut-in, they must have previously been
on production, and the date of resumption of production must be
known with reasonable certainty. Undeveloped reserves are those
reserves expected to be recovered from known accumulations where a
significant expenditure (e.g., when compared to the cost of
drilling a well) is required to render them capable of production.
They must fully meet the requirements of the reserves category
(proved, probable, possible) to which they are assigned. Certain
terms used in this Announcement but not defined are defined in NI
51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101,
Revised Glossary to NI 51-101, Standards of Disclosure for Oil and
Gas Activities ("CSA Staff Notice 51-324") and/or the COGEH and,
unless the context otherwise requires, shall have the same meanings
herein as in NI 51-101, CSA Staff Notice 51-324 and the COGEH, as
the case may be.
Glossary
"1P" proved reserves
"boepd" barrels of oil equivalent per day
"IP30" average hydrocarbon production rate for the first 30
days of a well's life
"LNG" liquidified natural gas
"Mcfe" thousand cubic feet equivalent
"MMboe" million barrels of oil equivalent
"MMBtu" million British thermal units
"NPV10" net present value at a 10% discount rate (before tax)
"NTM" next twelve months
"PDP" proved developed producing reserves
"PUD" proved, undeveloped
Share Capital
Southern's common shares are listed/quoted on the TSXV and AIM
and trade under the symbol "SOU" and "SOUC", respectively. The
volume weighted average trading price of Southern's common shares
on the TSXV was C$ 0.43 for the six months ended June 30, 2023. As
at June 30, 2023 and as of the date hereof, there are 139,041,285
and 139,088,160 common shares outstanding, respectively.
Forward Looking Information
This Announcement contains certain forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws.
Forward-looking statements are often, but not always, identified by
the use of words such as "forecast", "guidance", "outlook",
"anticipate", "target", "plan", "continue", "intend", "consider",
"estimate", "expect", "may", "will", "should", "could" (or the
negatives or similar words suggesting future outcomes.
Forward-looking statements in this Announcement may contain, but
are not limited to, statements concerning: Southern's business
strategy and plan, including its objectives, strengths and focus;
the completion of the Fundraising and the terms, size and timing
thereof and the use of proceeds therefrom, including the
acceleration of the completion of up to four DUC wells; the
Company's price dependent growth and acquisition and consolidation
strategies, including targets, metrics, planned investments, and
allocation of funds, anticipated operational results; capital
expenditures and drilling plans and locations the performance
characteristics of the Company's oil and natural gas properties;
the ability of the Company to achieve drilling success consistent
with management's expectations; and the source of funding for the
Company's activities including development costs. Statements
relating to production, reserves, recovery, replacement, costs and
valuation are also deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves described exist in the quantities
predicted or estimated and that the reserves can be profitably
produced in the future.
The forward-looking statements contained in this Announcement
are based on a number of factors and assumptions made by Southern,
which have been used to develop such statements, but which may
prove to be incorrect. In addition to factors and assumptions which
may be identified in this press release, assumptions have been made
regarding and may be implicit in, among other things: the business
plan of Southern; the receipt of all approvals and satisfaction of
all conditions to the completion of the Fundraising; the timing of
and success of future drilling, development and completion
activities; the geological characteristics of Southern's
properties; prevailing commodity prices, price volatility, price
differentials and the actual prices received for the Company's
products; the availability and performance of drilling rigs,
facilities, pipelines and other oilfield services; the timing of
past operations and activities in the planned areas of focus; the
drilling, completion and tie-in of wells being completed as
planned; the performance of new and existing wells; the application
of existing drilling and fracturing techniques; prevailing weather
and break-up conditions; royalty regimes and exchange rates; the
application of regulatory and licensing requirements; the continued
availability of capital and skilled personnel; the ability to
maintain or grow the banking facilities; the accuracy of Southern's
geological interpretation of its drilling and land opportunities,
including the ability of seismic activity to enhance such
interpretation; and Southern's ability to execute its plans and
strategies. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been used.
Although management considers these assumptions to be reasonable
based on information currently available, undue reliance should not
be placed on the forward-looking statements because Southern can
give no assurances that they may prove to be correct. By their very
nature, forward-looking statements are subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward-looking statements. As a result, any
potential investor should not rely on such forward-looking
statements in making their investment decisions. No representation
or warranty is made as to the achievement, or reasonableness of,
and no reliance should be placed on such forward-looking
statements. Risks and uncertainties that can materially impact the
Company's results include, but are not limited to: incorrect
assessments of the value of benefits to be obtained from
exploration and development programs; changes in the financial
landscape both domestically and abroad, including volatility in the
stock market and financial system; wars (including Russia's war in
Ukraine and the Israel-Palestinian conflict); risks associated with
the oil and gas industry in general (e.g. operational risks in
development, exploration and production, delays or changes in plans
with respect to exploration or development projects or capital
expenditures, and environmental regulations); commodity prices;
increased operating and capital costs due to inflationary
pressures; the uncertainty of estimates and projections relating
to
production, cash generation, costs and expenses; health, safety,
litigation and environmental risks; access to capital; the
availability of future financings and divestitures; public and
political sentiment towards fossil fuels; and the effects of
pandemics and other public health events (including but not limited
to COVID-19). Due to the nature of the oil and natural gas
industry, drilling plans and operational activities may be delayed
or modified to react to market conditions, results of past
operations, regulatory approvals or availability of services
causing results to be delayed. Please refer to Southern's most
recent Annual Information Form for the year ended December 31, 2022
and management's discussion and analysis for the period ended June
30, 2023, and other continuous disclosure documents for additional
risk factors relating to Southern, which can be accessed either on
Southern's website at www.southernenergycorp.com or under the
Company's profile on www.sedarplus.ca.
The forward-looking statements contained in this Announcement
are made as of the date hereof and the Company does not undertake
any obligation to update publicly or to revise any of the included
forward-looking statements, except as required by applicable law.
The forward-looking statements contained herein are expressly
qualified by this cautionary statement.
This Announcement contains future-oriented financial information
and financial outlook information (collectively, "FOFI") about
Southern's prospective results of operations, the performance of
the DUCs, once completed, including having IP30 rates of
approximately 5.6 MMcf/d per well and ultimate recovery per well of
approximately 4.3 Bcf, operating costs, including an anticipated
costs of US$5.5 million per well which would achieve a 30% IRR at a
natural gas price of US$3.78 / MMBtu, payout of wells, including
expectations that the DUCs will payout in 12 months with associated
IRR of 108% and NPV10 of US$4.4 million per well, expectations of
generating next twelve months operating cash flow of approximately
US$20 million, resulting in an annualised net debt to EBITDA ratio
of approximately 1.0x in Q4 2024, increasing next twelve months
corporate free cash flow to approximately US$13 million; achieving
production of approximately 4,700 boepd in 2024, with PDP reserves
increasing by 12% per share cash flow, and components thereof ,
including pro forma the completion of the Fundraising, all of which
are subject to the same assumptions, risk factors, limitations, and
qualifications as set forth in the above paragraphs. FOFI contained
in this Announcement was approved by management as of the date of
this Announcement and was provided for the purpose of providing
further information about Southern's future business operations.
Southern and its management believe that FOFI has been prepared on
a reasonable basis, reflecting management's best estimates and
judgments, and represent, to the best of management's knowledge and
opinion, the Company's expected course of action. However, because
this information is highly subjective, it should not be relied on
as necessarily indicative of future results. Southern disclaims any
intention or obligation to update or revise any FOFI contained in
this Announcement, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this Announcement
should not be used for purposes other than for which it is
disclosed herein.
References in this press release to peak rates, initial
production rates, IP30 and other short-term production rates are
useful in confirming the presence of hydrocarbons, however such
rates are not determinative of the rates at which such wells will
commence production and decline thereafter and are not indicative
of long-term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production of Southern.
Specified Financial Measures
This Announcement provides various financial measures that do
not have a standardized meaning prescribed by IFRS, including
non-IFRS financial measures, non-IFRS financial ratios and capital
management measures. These specified financial measures may not be
comparable to similar measures presented by other issuers.
Southern's method of calculating these measures may differ from
other companies and accordingly, they may not be comparable to
measures used by other companies. Corporate free cash flow, EBITDA
and net debt are not recognized measures under IFRS. Readers are
cautioned that these specified financial measures should not be
construed as alternatives to other measures of financial
performance calculated in accordance with IFRS. These specified
financial measures provide additional information that management
believes is meaningful in describing the Company's operational
performance, liquidity and capacity to fund capital expenditures
and other activities. Please see below for a brief overview of all
specified financial measures used in this release and refer to the
Company's MD&A for additional information relating to specified
financial measures, which is available on the Company's website at
www.southernenergycorp.com and filed on SEDAR.
"Corporate Free Cash Flow" (capital management measure) is
calculated by taking cash-flow from operating activities and adding
back changes in non-cash working capital, expenditures on
decommissioning obligations and transaction costs and subtracting
capital expenditures, excluding acquisitions and dispositions.
Management believes that free cash flow provides a useful measure
to determine Southern's ability to improve returns and to manage
the long-term value of the business.
"EBITDA" (non-IFRS financial measure) is calculated as
consolidated net income (loss) before interest and financing
expenses, income taxes, depletion, depreciation and amortization,
adjusted for certain non-cash, extraordinary and non-recurring
items primarily relating to unrealized gains and losses on
financial instruments and impairment losses. The Company considers
this metric as key measures that demonstrate the ability of the
Company's continuing operations to generate the cash flow necessary
to maintain production at current levels and fund future growth
through capital investment and to service and repay debt. The most
directly comparable IFRS measure to EBITDA is cash provided by
operating activities.
"Net Debt" (capital management measure) is monitored by
Management, along with adjusted working capital, as part of its
capital structure in order to fund current operations and future
growth of the Company. Net debt is defined as long-term debt plus
adjusted working capital surplus or deficit. Adjusted working
capital is calculated as current assets less current liabilities,
removing current derivative assets/liabilities, the current portion
of bank debt, and the current portion of lease liabilities.
"Net Debt to EBITDA"(non-IFRS financial ratio) is calculated as
net debt at a point in time divided by EBITDA. Management considers
Net Debt to EBITDA an important measure as it is a key metric to
identify the Company's ability to fund financing expenses, net debt
reductions and other obligations. When this measure is presented
quarterly, EBITDA is annualized by multiplying by four.
"Operating Cash Flow" (non-IFRS financial measure) is calculated
as revenue less royalties, transportation, operating expenses and
production taxes.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this Announcement. This Announcement has not been
approved or disapproved by the U.S. Securities and Exchange
Commission, any state securities commission or any other regulatory
authority in the United States.
This Announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This Announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
MSCFZMGMVMKGFZM
(END) Dow Jones Newswires
November 01, 2023 12:45 ET (16:45 GMT)
Southern Energy (LSE:SOUC)
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