Mr. Ian Atkinson reports

SOUTHERN ENERGY CORP. ANNOUNCES SECOND QUARTER 2026 FINANCIAL AND OPERATING RESULTS AND INFORMATION REGARDING THE ANNUAL MEETING OF SHAREHOLDERS

Southern Energy Corp. has released its second quarter financial and operating results for the three and six months ended June 30, 2026. Selected financial and operational information is outlined below and should be read in conjunction with the company's unaudited condensed consolidated financial statements and related management discussion and analysis for the three and six months ended June 30, 2026, which are available on the company's website and have been filed under the company's profile on SEDAR+.

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

Second quarter 2026 highlights:

• Petroleum and natural gas sales of $4.2-million during Q2 2026, an increase of 4 per cent from the same period in 2025, primarily due to higher oil production and stronger realized oil prices;
• Average production of 10,4601,000 cubic feet equivalent per day (1,743 barrels of oil equivalent per day) (91 per cent natural gas) during Q2 2026, a decrease of 7 per cent from the same period in 2025, primarily due to the temporary shut-in of the Mechanicsburg and Greens Creek fields because of the continuing transportation dispute;
• Average realized natural gas and oil prices of $3.15 per thousand cubic feet and $99.32 per barrel, respectively, during Q2 2026, compared with $3.63 per thousand cubic feet and $62.60 per barrel in Q2 2025; Southern achieved an average natural gas price premium of 25 cents per thousand cubic feet (approximately 9 per cent) above the NYMEX Henry Hub benchmark during Q2 2026;
• Generated $700,000 of adjusted funds flow from operations in Q2 2026 (nil per share basic and diluted), an increase of 15 per cent from the same period in 2025;
• Reported a net loss of $400,000 (nil per share basic and diluted) in Q2 2026, compared with a net loss of $400,000 (nil per share, basic and diluted) in Q2 2025.

Subsequent event:

• On Aug. 11, 2026, Southern spudded the Terrible Creek 21-2 No. 2 Cotton Valley test well in the Williamsburg field.

Ian Atkinson, president and chief executive officer of Southern, commented: "Southern continued to deliver solid execution through Q2 2026, supported by premium Gulf Coast pricing realizations, additional oil production unlocked from new perforations in an oil well in the Magee area and the ongoing financial flexibility of our simplified capital structure. Having fully retired our senior secured credit facility earlier this year, the company has successfully lowered its overall cost of capital while preserving total liquidity for high-return organic opportunities.

"We enter the second half of 2026 fully funded to advance our key development targets, punctuated by the spudding of the Cotton Valley test well in August and the ongoing progression of our final Gwinville drilled but uncompleted (DUC) well. Complemented by steady hedge protection through December, 2026, and favourable macrodynamics around Gulf Coast LNG [liquefied natural gas] and power demand, Southern remains positioned to systematically build funds flow per share and drive sustainable growth."

Operations update

Southern spudded the Terrible Creek 21-2 No. 2 Cotton Valley test well in the Williamsburg field on Aug. 11, 2026. This is the first of two farmout commitment wells planned for drilling this year, whereby Southern will retain approximately 50-per-cent working interest by paying roughly 50 per cent of the gross drill and completion costs of $3.9-million per well. The well is currently drilling ahead and the company expects to reach a planned total depth of approximately 19,000 feet by early September. Completion and testing operations will follow immediately after the drilling rig has been moved off site.

Southern continues to work with Federal Energy Regulatory Commission (FERC) staff to resolve the continuing transportation dispute that resulted in the shut-in of approximately 400 barrels of oil equivalent per day of production from the Mechanicsburg and Greens Creek fields. The company continues to participate in regular settlement conferences facilitated by an FERC settlement judge and FERC trial and technical staff. If those discussions ultimately prove to be unsuccessful, the matter may proceed to an evidentiary hearing. Based on the timelines outlined in the latest FERC order, a hearing outcome could occur in the first half of 2027; however, the timing and outcome remain uncertain.

Outlook

Southern remains steadfast in its commitment to disciplined capital allocation and maximizing funds flow per share by prioritizing high-return oil and liquids-weighted opportunities across its asset base. Supported by enhanced financial flexibility and liquidity following the successful refinancing and retirement of its credit facility earlier this year, the company is expanding its operational program into the second half of 2026, including plans to complete the final City Bank DUC well at Gwinville.

With a fixed-price natural gas hedge of five billion British thermal units per day at $3.40 per million British thermal units secured through December, 2026, Southern continues to benefit from reliable downside protection and consistent cash flows. This strategic position underpins the company's commitment to executing a disciplined, value-accretive capital program focused on long-term shareholder returns.

Southern will continue to actively monitor NYMEX pricing and basis differentials and remains prepared to opportunistically hedge additional production volumes as market conditions evolve. The company appreciates the continued support of its stakeholders and looks forward to providing further updates on the first Cotton Valley test well.

Qualified person statement

Gary McMurren, chief operating officer, who has over 25 years of relevant experience in the oil industry, has 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 in chemical engineering (with distinction) from the University of Alberta.

Annual meeting of shareholders

Southern's annual meeting of shareholders is to be held at the company's offices located at Suite 2400, 333 7th Ave. SW, Calgary, Alberta, T2P 2Z1, on Wednesday, Sept. 30, 2026, at 10 a.m. Calgary time and by webcast, formal notice of which is available on the company's website and on SEDAR+.

About Southern Energy Corp.

Southern Energy is a natural gas exploration and production company characterized by a stable, low-decline production base, a significant low-risk drilling inventory and strategic access to premium commodity pricing in North America. Southern has a primary focus on acquiring and developing conventional natural gas and light oil resources in the southeast Gulf states of Mississippi, Louisiana and eastern Texas. The company's management team has a long and successful history working together and has created shareholder value through accretive acquisitions, optimization of existing oil and natural gas fields, and redevelopment strategies, including horizontal drilling and multistaged fracture completion techniques.

We seek Safe Harbor.