Southern Energy Corp. Announces Amended and Restated Credit Facility

Southern Energy Corp. ("Southern" or the "Company") (TSXV: SOU), an established natural gas and oil producer with U.S.-based assets, today announces that Southern Energy Corporation (Delaware), a wholly-owned subsidiary of the Company, has completed the redetermination of its senior secured credit facilities (the "Credit Facility").  The Company and its lender have agreed to amend the Credit Facility effective as of July 20, 2020 pursuant to an Amended and Restated Credit Agreement (the "Agreement").  The Agreement amends certain terms to provide Southern with additional financial flexibility.  Key amendments include:

Redetermination of borrowing base limit to US$13.9 million, comprised of a US$8.5 million conforming borrowing base facility (the "Conforming Facility") and a US$5.4 million non-conforming borrowing base facility (the "Non-Conforming Facility")

Southern's Non-Conforming Facility has a coupon 50 basis points above existing Credit Facility rates.  The Non-Conforming Facility has a maturity date of September 1, 2020, being the next redetermination date, and the Conforming Facility has a maturity date of February 1, 2021

Amendment of the Credit Facility financial covenants to avoid non-compliance for the balance of 2020

The Company expects that the Agreement will provide sufficient liquidity to execute on its business plan through the remainder of 2020. Upon execution of the Agreement, the Company intends to make a principal payment of US$100,000, further demonstrating Southern's commitment to strengthening its balance sheet and enhancing ongoing financial flexibility.

Strong Hedge Position In-Place

As previously disclosed on May 26, 2020, Southern has secured fixed price hedges on 6,000 Mcf/d of natural gas production, representing approximately 50% of current production volumes, at an average price of US$2.55/Mcf.  Southern also monetized its oil hedge positions through a buy-back swap for 75 bbls/d of oil production, resulting in proceeds of approximately US$68 thousand per month for the remainder of 2020.  The Company has close to 45% of its budgeted 2021 natural gas production hedged at an average price of US$2.45/Mcf through December 2021, positioning Southern well to weather further commodity price volatility.  The Company's management team anticipates that the increase in structural demand for natural gas in the United States, combined with the lack of capital spending on supply additions through drilling for dry gas or associated gas, will encourage stronger gas prices for both the coming year as well as for the longer term.

Operations Update

On June 12, 2020, Southern resumed production from its Mechanicsburg assets, which had been shut-in due to a third-party pipeline force majeure event since March 2020 (see March 26, 2020 press release for additional information).  The assets are currently producing approximately 575 boe/d (88% natural gas).  The resumption of production from the Mechanicsburg assets materially improves Southern's sustainability as the volumes represent approximately 25% of current corporate production.

Southern has continued to take steps in the first half of 2020 to weather the challenging operating environment while prioritizing protection of its balance sheet and preservation of value.  Southern's high-quality assets and low 12% decline rate is supported by maintaining a disciplined and conservative capital expenditure program of $0.25 million for the remainder of 2020.  The Company anticipates sustaining production levels and generating excess adjusted funds flow at current price levels that can be allocated to debt repayment.

About Southern Energy Corp.

Southern Energy Corp. is an oil and natural gas exploration and production company.  Southern has a primary focus on acquiring and developing conventional light oil and natural gas resources in the southeast Gulf States of Mississippi and Alabama.  Our management team has a long and successful history working together and have created significant shareholder value through accretive acquisitions, optimization of existing oil and natural gas fields and the utilization of horizontal drilling and multi-staged fracture completion techniques.

www.southernenergycorp.com