Southern Energy : 2023 Annual Information Form

SOUTHERN ENERGY CORP.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2023

April 26, 2024

TABLE OF CONTENTS
GLOSSARY	1
ABBREVIATIONS	3
CURRENCY	3
CONVERSIONS	3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	4
NON-IFRS MEASURES	6
NOTES ON RESERVES DATA AND OTHER OIL AND NATURAL GAS INFORMATION	6
CORPORATE STRUCTURE	12
GENERAL DEVELOPMENT OF THE BUSINESS	13
DESCRIPTION OF THE BUSINESS OF THE CORPORATION	15
STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION	18
ADDITIONAL INFORMATION RELATING TO RESERVES DATA	22
OTHER OIL AND GAS INFORMATION	23
INDUSTRY CONDITIONS	19
RISK FACTORS	34
DIVIDENDS	51
DESCRIPTION OF SHARE CAPITAL	51
MARKET FOR SECURITIES AND TRADING HISTORY	52
PRIOR SALES	53
DIRECTORS AND OFFICERS	54
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	56
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	57
TRANSFER AGENT AND REGISTRAR	57
MATERIAL CONTRACTS	57
INTERESTS OF EXPERTS	57
ADDITIONAL INFORMATION	57

( i )

GLOSSARY

Certain terms and abbreviations used in this annual information form are defined below:

"Abandonment" means forecasted abandonment and site reclamation costs. For more detail, please see "Other Oil and Gas Information - Additional Information concerning Abandonment and Reclamation Costs".

"ABCA" means the Business Corporations Act (Alberta), as amended from time to time.

"AIM" means the AIM market operated by the London Stock Exchange plc.

"AIF" means this annual information form dated April 26, 2024, for the financial year ended December 31, 2023.

"BLM" means the U.S. Department of the Interior - Bureau of Land Management.

"Board" means the board of directors of Southern.

"Bonus Warrants" has the meaning ascribed thereto in "General Development of the Business - Financial Year Ended December 31, 2021".

"CBCA" means the Canada Business Corporations Act, as amended from time to time.

"Central Mississippi Assets" means the oil and gas assets located in Covington, Hinds, Jasper, Jefferson Davis, Jones, Lawrence, Marion, Simpson, Smith and Yazoo Counties, Mississippi.

"COGE Handbook" means the most recent publication of the Canadian Oil and Gas Evaluation Handbook, as amended from time to time, maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter).

"Common Shares" means common shares in the capital of the Corporation.

"Credit Agreement" has the meaning ascribed thereto in "General Development of the Business - Three- Year History - Financial Year Ended December 31, 2021".

"Credit Facility" has the meaning ascribed thereto in "General Development of the Business - Three-YearHistory - Financial Year Ended December 31, 2021".

"Debentures" has the meaning ascribed thereto in "General Development of the Business - Three-YearHistory - Financial Year Ended December 31, 2021".

"EPA" means the United States Environmental Protection Agency.

"FERC" means the United States Federal Energy Regulatory Commission.

"GHG" means greenhouse gas.

"Gulf Pine LP" means Gulf Pine Energy Partners, LP, a limited partnership formed under the laws of the State of Delaware.

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"IFRS" means the International Financial Reporting Standards. "NAFTA" means the North American Free Trade Agreement.

"NI 51-101"means National Instrument 51-101- Standards of Disclosure for Oil and Gas Activities. "NI 51-102"means National Instrument 51-102- Continuous Disclosure Obligations.

"NORM" has the meaning ascribed thereto under the heading "Industry Conditions - Environmental Regulation".

"NSAI" means Netherland, Sewell and Associates Inc., independent petroleum consultants.

"NSAI Report" means the report prepared by NSAI, evaluating the crude oil, natural gas and natural gas liquids reserves of Southern, as at December 31, 2023, with a preparation date of February 20, 2024.

"NSPS" has the meaning ascribed thereto under the heading "Industry Conditions - Climate Change Regulation".

"ONRR" means the United States Office of Natural Resources Revenue.

"OPEC" means the Organization of Petroleum Exporting Countries, and "OPEC+" refers to OPEC plus Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan and Sudan.

"Options" means stock options to purchase new Common Shares issued under the Option Plan. "Option Plan" means the Corporation's stock option plan.

"Paris Agreement" means the international treaty on climate change sponsored by the UNFCCC and adopted in 2015.

"PSA" means a performance share award issued under the Share Award Incentive Plan. "RSA" means a restricted share award issued under the Share Award Incentive Plan. "Shareholders" means the holders of Common Shares.

"Share Awards" includes RSAs and PSAs.

"Share Award Incentive Plan" means the Corporation's share award incentive plan.

"Southern" or "Corporation" means Southern Energy Corp., a corporation existing under the ABCA.

"Southern Delaware" means Southern Energy Corporation, a corporation existing under the laws of Delaware, a wholly-owned subsidiary of the Corporation.

"TSXV" means the TSX Venture Exchange.

"UNFCCC" means the United Nations Framework Convention on Climate Change.

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"Warrants" has the meaning ascribed thereto in "General Development of the Business - Financial Year Ended December 31, 2021".

"U.S." or "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia.

"USMCA" means the Canada-UnitedStates-Mexico Agreement.

ABBREVIATIONS

In this AIF, the abbreviations set forth below have the following meanings:

bbl	Barrel	Mcf	thousand cubic feet
Mbbl	thousand barrels	MMcf	million cubic feet
bbl/d	barrels per day	Mcf/d	thousand cubic feet per day
NGLs	natural gas liquids	MMBTU	million British Thermal Units
Boe/d	barrels of oil equivalent per day	Tcf	Trillion cubic feet
API	American Petroleum Institute.
°API	An indication of the specific gravity of crude oil measured on the API gravity scale. Liquid
	petroleum with a specified gravity of 28° API or higher is generally referred to as light crude oil.
boe	Barrel of oil equivalent on the basis of 1 boe to 6 Mcf of natural gas. Boe's may be misleading,
	particularly if used in isolation. A boe conversion ratio of 1 boe for 6 Mcf is based on an energy
	equivalency conversion method primarily applicable at the burner tip and does not represent a value
	equivalency at the wellhead.
CO2	Carbon dioxide.
GHG	Greenhouse gas emissions.
Mboe	1,000 barrels of oil equivalent.
M$	Thousands of dollars.
WTI	West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude
	oil of standard grade.
NYMEX	Henry Hub, the reference price paid in U.S. dollars at Erath, Louisiana for natural gas.

CURRENCY

All currency amounts ($) expressed herein, unless otherwise indicated, are expressed in U.S. dollars. Any references to "CAD$" refer to Canadian dollars; references to "£" refer to UK pounds sterling.

CONVERSIONS

The following table sets forth certain standard conversions from Standard Imperial Units to the International System of Units (or metric units).

	To Convert From		To		Multiply By
	Mcf		Cubic metres		28.174
	Cubic metres		Cubic feet	35.494
	bbls		Cubic metres	0.159
	Cubic metres		bbls	6.290
	Feet		Metres	0.305
	Metres		Feet	3.281
	Miles		Kilometres	1.609
	Kilometres		Miles	0.621
	Acres		Hectares	0.405
	Hectares		Acres	2.471
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To Convert From		To		Multiply By
Gigajoules		Mmbtu		0.949
Mmbtu		Gigajoules	1.055

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this AIF constitute forward-looking statements. The use of any of the words "anticipate", "intend", "continue", "estimate", "expect", "may", "will", "plan", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Southern believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forwarding-looking statements speak only as of the date of this AIF. In particular, this AIF may contain forward-looking statements pertaining to the following:

• the business strategy, objectives, strengths and focus of the Corporation;
• the performance characteristics of the Corporation's oil and natural gas properties;
• oil and natural gas production levels;
• capital expenditure programs and estimates;
• the quantity of oil and natural gas proved and probable reserves;
• projections of market prices and operating costs;
• supply and demand for oil and natural gas;
• expectations regarding the ability to raise capital and to continually add to reserves through acquisitions, exploration and development;
• the ability of the Corporation to achieve drilling success consistent with management's expectations;
• the Corporation's ability to attract and retain qualified personnel;
• pressures of market prices and costs, including increased operating and capital costs due to inflationary pressures;
• expected levels of royalty rates, operating costs, general and administrative costs, costs of services and other costs and expenses; and
• expected uses of Credit Facility funds;
• expectations regarding future commodity prices;
• treatment under governmental regulatory and royalty regimes and tax laws; and
• the ability to remediate sites and remedy spills, releases or emissions of various substances that may be produced in association with the Corporation's petroleum and natural gas operations.

Although management of Southern believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this AIF:

• the ability of management to execute its business plan;
• volatility in market prices for oil and natural gas;
• risks and liabilities inherent in oil and natural gas industry, including environmental regulation;
• uncertainties associated with estimating oil and natural gas reserves, production, costs and expenses;
• competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

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• actions taken by governmental authorities, including increases in taxes and changes in government regulations and incentive programs;
• risks inherent in marketing operations, including credit risk;
• incorrect assessments of the value of acquisitions;
• geological, technical, drilling and processing problems;
• fluctuations in foreign exchange or interest rates and stock market volatility;
• changes in income tax laws and incentive programs relating to the oil and natural gas industry;
• unanticipated operating events which could reduce production or cause production to be shut- in or delayed;
• hazards such as fire, explosion, blowouts, cratering and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury;
• insufficient storage or transportation capacity;
• risks relating to the condition of the Corporation's assets, and costs relating to maintenance of same;
• encountering unexpected formations or pressures, premature decline of reservoirs and the invasion of water into producing formations;
• the ability to add production and reserves through development and exploration activities;
• the possibility that government policies or laws, including laws and regulations related to the environment, may change or governmental approvals may be delayed or withheld;
• the potential termination or expiration of the licenses, leases and working interest in licenses and leases required by the Corporation, and the risk that the Corporation may not be able to obtain all necessary licenses and permits required for its business;
• failure to obtain industry partner and other third-party consents and approvals, as and when required;
• inflation, stock market volatility and market valuations;
• third party companies' inability to manage inflationary cost pressures;
• competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel;
• inability to identify and complete potential acquisitions and/or failure to achieve anticipated benefits from such acquisitions;
• inability to add production and reserves through development and exploration activities;
• termination of or failure to extend existing licenses by regulatory or governmental authorities;
• the availability of capital on acceptable terms or at all;
• failure to realize anticipated benefits of acquisitions; and
• the other factors discussed under "Risk Factors".

Statements relating to "reserves" and "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future.

With respect to forward-looking statements contained in this AIF, Southern has made assumptions regarding, among other things:

• the legislative and regulatory environments of the jurisdictions where the Corporation carries on business or has operations;
• the ability of the Corporation to achieve drilling success consistent with management's expectations;
• the ability of the Corporation to market its oil and natural gas and to transport its oil and natural gas to market;

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• the ability of the Corporation to obtain capital to finance its exploration, development and operations;
• commodity prices and royalty regimes;
• the impact of increasing competition;
• availability of skilled labour;
• timing and amount of capital expenditures;
• the price of oil and natural gas;
• conditions in general economic and financial markets;
• royalty rates and future operating costs; and
• the Corporation's ability to obtain additional financing to finance its exploration, development and operations, and its ability to secure such financing on satisfactory terms.

Southern has included the above summary of assumptions and risks related to forward-looking information provided in this AIF in order to provide investors with a more complete perspective on Southern's current and future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this AIF are expressly qualified by this cautionary statement. Except as required by applicable securities laws, Southern does not undertake any obligation or is not under any duty to publicly update or revise any forward-looking statements. Readers should also carefully consider the matters discussed under the heading "Risk Factors" in this AIF.

NON-IFRS MEASURES

This AIF contains certain financial measures and ratios, as described below, which do not have standardized meanings prescribed by IFRS or GAAP. As these non-IFRS financial measures and ratios are commonly used in the oil and gas industry, Southern believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used. The non-IFRS financial measures and ratios used in this AIF, represented by the capitalized and defined terms outlined below, are used by the Corporation as key measures of financial performance.

"Netback" is calculated by deducting royalties paid and productions costs, including transportation costs, from prices received, excluding the effects of hedging.

		2023		2022	2023		2022
($000s)						($/boe)		($/boe)
Revenue	$19,313		$45,217	$19.47		$59.02
Royalties		(3,737)		(9,763)		(3.77)		(12.74)
Production costs		(1,202)		(139)		(1.21)		(0.18)
Transportation costs
Other production and operating costs		(6,435)		(6,446)		(6.49)		(8.41)
Netback	$7,939		$28,869	$8.00		$37.69

NOTES ON RESERVES DATA AND OTHER OIL AND NATURAL GAS INFORMATION

Caution Respecting Reserves Information

The determination of oil and gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of proved and probable reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgment combined with geological and

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engineering knowledge to assess whether or not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions.

The recovery and reserve estimates of oil, natural gas liquids and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein. The estimated future net revenue from the production of the Corporation's natural gas and petroleum reserves does not represent the fair market value of the Corporation's reserves.

Caution Respecting BOE

In this AIF, the abbreviation BOE means a barrel of oil equivalent on the basis of 1 BOE to 6 Mcf of natural gas when converting natural gas to BOEs. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf to 1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency conversion ratio of 6 Mcf to 1 BOE, utilizing a conversion ratio of 6 Mcf to 1 BOE may be misleading as an indication of value.

Reserves Categories

"Reserves" are estimated remaining quantities of oil and natural gas and related substances anticipated to be economically recoverable from discovered resources, from a given date forward, based on: (a) analysis of drilling, geological, geophysical, and engineering data; (b) the use of established technology; and (c) specified economic conditions, which are generally accepted as being reasonable and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates.

"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.

"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.

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

"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 classification (proved, probable, possible) to which they are assigned. In multi-well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to sub-divide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimator's assessment as to the reserves that will be recorded from specific wells, facilities and completion intervals in the pool and their respective development and production status.

"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.

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Levels of Certainty for Reported Reserves

The qualitative certainty levels referred to in the definitions above are applicable to individual reserve entities (which refers to the lowest level at which reserves calculations are performed) and to reported reserves (which refers to the highest level sum of individual entity estimates for which reserves are presented). Reported reserves should target the following levels of certainty under a specific set of economic conditions:

1. for Proved reserves, at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimation; and
2. for Proved plus Probable reserves, at least a 50 percent probability that the quantities actually recovered will equal or exceed the estimation.

A quantitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods.

Drilling Locations

This AIF discloses drilling inventory in two categories: (a) Proved locations; and (b) Probable locations. Proved locations and probable locations are derived from the NSAI Report and account for drilling locations that have associated proved and/or probable reserves, as applicable. Of the 33 drilling locations identified herein, 11 are net proved locations, and 22 are net probable locations. The drilling locations on which the Corporation actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, commodity prices, costs, actual drilling results, additional reservoir information that is obtained and other factors.

Additional Definitions

The following terms, used in the preparation of the NSAI Report in accordance with NI 51-101 and this AIF, have the following meanings:

"Associated gas" means the gas cap overlying a crude oil accumulation in a reservoir.

"Crude oil" or "Oil" means a mixture that consists mainly of pentanes and heavier hydrocarbons, which may contain sulphur and other non-hydrocarbon compounds, that is recoverable at a well from an underground reservoir and that is liquid at the conditions under which its volume is measured or estimated. It does not include solution gas or natural gas liquids.

"Development costs" means costs incurred to obtain access to reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas from the reserves. More specifically, development costs, including applicable operating costs of support equipment and facilities and other costs of development activities, are costs incurred to:

1. gain access to and prepare well locations for drilling, including surveying well locations for the purpose of determining specific development drilling sites, clearing ground, draining, road building, and relocating public roads, gas lines and power lines, to the extent necessary in developing the reserves;

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