TIDMBOR
RNS Number : 7118J
Borders & Southern Petroleum plc
04 April 2018
4 April 2018
Borders & Southern Petroleum plc
("Borders & Southern" or "the Company")
Audited Results for the 12 month period ended 31 December
2017
Borders & Southern (AIM: BOR), the London based independent
oil and gas exploration company with assets offshore the Falkland
Islands, announces its audited results for the year ending 31
December 2017. Full copies of the Company's Annual Report and
Accounts, including the Company Overview, Chairman's Statement,
Remuneration Committee Report, Directors' Report, Auditor's Report
and full Financial Statements, will be available on the Company's
website later today.
2017 Highlights
-- An independent resource assessment produced an un-risked best
estimate for total recoverable liquids (condensate and LPGs) of 462
million barrels with peak liquids production of 91,100 bbl/d.
-- Company estimates new break-even oil price for a Darwin FPSO
development of mid-$30s per barrel.
-- Farm-out process is actively on-going.
-- Administrative expenses for 2017: $1.73 million (2016 - $1.74 million).
-- Cash balance at 31 December 2017: $8.25 million (2016 - $9.65 million); no debt.
For further information please visit www.bordersandsouthern.com
or contact:
Borders & Southern Petroleum plc
Howard Obee, Chief Executive
Tel: 020 7661 9348
Panmure Gordon (UK) Limited
Adam James / Atholl Tweedie
Tel: 020 7886 2500
Tavistock
Simon Hudson / Barney Hayward
Tel: 020 7920 3150
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Notes:
Borders & Southern Petroleum plc is an oil & gas
exploration company listed on the London Stock Exchange AIM (BOR).
The Company operates and has a 100% interest in three Production
Licences in the South Falkland Basin covering an area of nearly
10,000 square kilometres. The Company has acquired 2,517 square
kilometres of 3D seismic and drilled two exploration wells, making
a significant gas condensate discovery with its first well.
The technical aspects of this announcement have been reviewed,
verified and approved by Dr Howard Obee in accordance with the
Guidance Note for Mining, Oil and Gas Companies, issued by the
London Stock Exchange in respect of AIM companies. Dr Obee is a
petroleum geologist with more than 30 year's relevant experience.
He is a Fellow of the Geological Society and member of the American
Association of Petroleum Geologists and the Petroleum Exploration
Society of Great Britain.
Chief Executive's Statement
We entered 2018 with a strong balance sheet and no debt. Our
cash balance at the end of 2017 was $8.25 million. The majority of
our funds are held in sterling, so we have benefited from the
pound's recovery during the year. Capital discipline has been
maintained, reflected in a slightly lower administrative
expenditure than the previous year, $1.7 million. As the Company is
still not generating revenue, the loss after tax on operations for
the year was $1.2 million (2016 - $3.6 million loss).
Our prime focus throughout the year has been to secure partners
and funding to progress the Darwin project. Achieving this goal
continues to be challenging. Despite the progressive increase in
oil price from mid-2017, the industry has not returned to
significant investment in conventional oil and gas projects.
Furthermore, analysts have predicted that global spending on
exploration and appraisal will decrease in 2018, as it has done for
the last few years. Notwithstanding the challenges posed by the
industry's investment climate, we have still been actively talking
to companies about our project.
To enhance our efforts, we commissioned an independent
evaluation of the Darwin East and West structures. As reported in
February 2018, Gaffney, Cline and Associates (GCA) provided an
independent resource assessment of the two fault blocks. Their
un-risked best estimate for total recoverable liquids (condensate
and LPGs) is 462 million barrels, produced into a single FPSO over
25 years. The peak combined liquids production was modelled at
91,100 bbl/day.
The rate of production has a significant impact on the project
economics. Our previous economic models have been based on peak
condensate production of 56,000 bbl/day. The impact of producing
more condensate, along with additional LPG, sooner, is to lower the
break-even oil price. Assuming the combined development of Darwin
East and West, using six production wells and four gas injection
wells, a leased FPSO and capex of $1.8 billion (including 25%
contingency), the Company estimates the break-even oil price to be
in the mid-30's dollars per barrel. Based on a $65 per barrel oil
price, the project pay back would be within two/three years. As
mentioned on other occasions, the positive economics are grounded
in the attractive fiscal terms offered by the Falkland Islands
Government and the high quality reservoir which does not require a
large number of development wells.
The commercial attractiveness of the project is compelling, but
we still require further drilling to prove up the resource
estimates and confirm the deliverability of the reservoir. Our
current plan is to drill a well on Darwin West with a possible
side-track. This would provide two penetrations of the main
reservoir and would test additional reservoir intervals, fluid
contacts and investigate the possibility of an oil rim. Darwin West
has very similar seismic characteristics and attributes as Darwin
East. The independent assessment of the geological chance of
success of finding hydrocarbons in Darwin West is 0.81. We consider
that a well drilled on Darwin West would be very low risk.
Our outlook for 2018 is optimistic. The independent evaluation
has reaffirmed our confidence in the quality of the Darwin
discovery. Globally, there have been very few large conventional
liquid discoveries made in recent years. We believe that on a
commercial basis, Darwin stands out. We will maintain our focus on
securing partners and funding for the next phase of operations. If
the oil price remains at the current level, then the chance of
success will be enhanced. Additionally, we will continue with
technical work to increase our understanding of the sub-surface and
further improve the attractiveness of the project.
Howard Obee
3 April 2018
Consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
$000 $000
------- --------
Administrative expenses (1,734) (1,744)
------- --------
Loss from operations (1,734) (1,744)
Finance income 542 30
Finance expense - (1,890)
------- --------
Loss before tax (1,192) (3,604)
Tax expense - -
------- --------
Loss for the year and total
comprehensive loss for
the year attributable to
owners of the parent (1,192) (3,604)
======= ========
Basic and diluted loss (0.25) (0.74)
per share (see note 3) cents cents
======= ========
Consolidated statement of financial position
as at 31 December 2017
2017 2016
---------------- ------------- ------- ---------
$000 $000 $000 $000
-------------------- ---------------- ------------- ------- ---------
Assets
Non-current assets
Property, plant
and equipment 11 12
Intangible assets 290,826 290,381
-------------------- ---------------- ------------- ------- ---------
Total non-current
assets 290,837 290,393
-------------------- ---------------- ------------- ------- ---------
Current assets
Other receivables 440 1,167
Cash and cash
equivalents 8,251 9,645
-------------------- ---------------- ------------- ------- ---------
Total current
assets 8,691 10,812
-------------------- ---------------- ------------- ------- ---------
Total assets 299,528 301,205
-------------------- ---------------- ------------- ------- ---------
Liabilities Current
liabilities
Trade and other
payables (633) (1,136)
-------------------- ---------------- ------------- ------- ---------
Total net assets 298,895 300,069
-------------------- ---------------- ------------- ------- ---------
Equity
Share capital 8,530 8,530
Share premium 308,602 308,602
Other reserves 1,773 2,418
Retained deficit (19,994) (19,465)
Foreign currency
reserve (16) (16)
-------------------- ---------------- ------------- ------- ---------
Total equity 298,895 300,069
-------------------- ---------------- ------------- ------- ---------
Consolidated statement of changes in equity
for the year ended 31 December 2017
Share Share Other Retained Foreign Total
capital Premium reserves deficit currency
reserve
$000 $000 $000 $000 $000 $000
---------------------- -------- -------- --------- -------- --------- -------
Balance at 1
January 2016 8,530 308,602 2,370 (15,861) (16) 303,625
Loss and total
comprehensive
loss for the
year - - - (3,604) - (3,604)
Recognition of
share based payments - - 48 - - 48
---------------------- -------- ---------
Balance at
31 December 2016 8,530 308,602 2,418 (19,465) (16) 300,069
Loss and total
comprehensive
loss for the
year - - - (1,192) - (1,192)
Expiry of share
options - - (663) 663 - -
Recognition of
share based payments - - 18 - - 18
---------------------- -------- -------- --------- -------- --------- -------
Balance at 31
December 2017 8,530 308,602 1,773 (19,994) (16) 298,895
====================== ======== ======== ========= ======== ========= =======
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Share capital This represents the nominal value
of shares issued.
Share premium Amount subscribed for share capital
in excess of nominal value.
Other reserves Fair value of options issued.
Retained deficit Cumulative net gains and losses recognised
in the Consolidated Statement of
Comprehensive Income.
Foreign currency Differences arising on change of
reserve presentation and functional currency
to US Dollars.
Consolidated statement of cash flows
for the year ended 31 December 2017
2017 2016
------ ------------ ------ ---------
$000 $000 $000 $000
------------------------------ ------ ------------ ------ ---------
Cash flow from operating
activities
Loss before tax (1,192) (3,604)
Adjustments for:
Depreciation 1 1
Share-based payment 18 48
Net finance costs - 1,860
Net finance income (542) -
Realised foreign exchange
gains (17) 25
------------------------------ ------ ------------ ------ ---------
Cash flows from operating
activities before changes
in working capital (1,732) (1,670)
Decrease/(increase)
in other receivables 728 (476)
Decrease/(increase)
in trade and other payables (503) 29
Tax paid - -
------------------------------ ------ ------------ ------ ---------
Net cash outflow from
operating activities
Cash flows used in investing
activities
Interest received 11 (1,507) 30 (2,117)
Purchase of intangible
assets (445) (849)
Proceed from disposal
intangible assets
Net cash used in investing
activities - (434) 430 (389)
------------------------------ ------ ------------ ------ ---------
Cash flows from financing
Proceeds from issue - -
of shares - -
Cash flows from financing
activities
Net decrease in cash
and cash equivalents (1,941) (2,506)
------------------------------ ------ ------------ ------ ---------
Cash and cash equivalents
at the beginning of
the year 9,645 14,011
Exchange gain/(loss)
on cash and cash equivalents 547 (1,860)
------------------------------ ------ ------------ ------ ---------
Cash and cash equivalents
at the end of the year 8,251 9,645
------------------------------ ------ ------------ ------ ---------
Notes
1. Accounting policies
Basis of preparation
The financial information for the year ended 31 December 2017
set out in this announcement does not constitute the Company's
statutory accounts. These financial statements included in the
announcement have been extracted from the Group annual financial
statements for the year ended 31 December 2017. The financial
statements have been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards adopted for use in the European Union. However, this
announcement does not itself contain sufficient information to
comply with IFRS.
The auditor has issued its opinion on the Group's financial
statements for the year ended 31 December 2017 which is unmodified
and is available for inspection at the Company's registered address
and will be posted to the Group's website.
2. Going concern
The Directors believe that the Company has sufficient funds,
with contingency, to meet its current commitments with excess funds
expected to be sufficient to fund ongoing operations for the
foreseeable future. Therefore, this financial information has been
prepared on a going concern basis.
3. Basic and dilutive loss per share
The calculation of the basic and dilutive loss per share is
based on the loss attributable to ordinary shareholders divided by
the weighted average number of shares in issue during the year. The
loss for the financial year for the group was $1.2 million (2016 -
loss $3.6 million) and the weighted average number of shares in
issue for the year was 484.1 million (2016 - 484.1 million). During
the year the potential ordinary shares are anti-dilutive and
therefore diluted loss per share has not been calculated. At the
statement of financial position date, there were 7.05 million (2016
- 7.05 million) potentially dilutive ordinary shares being the
share options.
4. Subsequent Date Events
There were no subsequent events requiring disclosure
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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