TIDMBOR
RNS Number : 0281H
Borders & Southern Petroleum plc
14 May 2014
14 May 2014
Borders & Southern Petroleum Plc
("Borders & Southern" or "the Company")
Preliminary Unaudited Results for the 12 months ended 31
December 2013
Borders & Southern Petroleum Plc (AIM: BOR) announces
preliminary unaudited results for the year to 31 December 2013.
Highlights
-- Acquired 1,025 sq.km. of 3D data to the north of the Darwin gas condensate discovery.
-- Evaluation of the fast-track processed data confirms that the
Lower Cretaceous play extends to the north of Darwin. Fully
processed data, received at the end of April 2014, will enable
detailed prospect mapping.
-- Completed conceptual well design for Darwin appraisal wells and near field exploration wells.
-- Completed a preliminary reservoir engineering and facilities
studies for a Darwin gas condensate development project.
-- Initiated farm-out of acreage - currently in progress.
-- Post year end activities - final processed 3D data from the
2013 acquisition programme and the reprocessed 3D data from the
2008 3D survey have been received and are being interpreted to
produce an enhanced model of the Darwin area and a revised prospect
inventory.
-- Cash balance as at 31 December 2013: $23.2 million -
sufficient to cover forward overhead costs and all necessary
short-term technical studies
Howard Obee, Borders & Southern's Chief Executive,
commented: "The Board and senior management remain completely
focused on securing partners so that we can accelerate the
appraisal of Darwin and exploration of the adjacent areas.
Technically, our intention is to continue to work the new fully
processed and reprocessed surveys to provide an update on the
estimated recoverable resource of Darwin and a revision of our
prospect inventory."
For further information, please visit www.bordersandsouthern.com
or contact:
Howard Obee, Chief Executive Tel: 020 7661 9348
Borders & Southern Petroleum
plc
Callum Stewart / Adam James Tel: 020 7886 2500
Panmure Gordon (UK) Limited
Simon Hudson / Conrad Harrington Tel: 020 7920 3150
Tavistock Communications
Chairman's Statement
2013 was a very active year for the Company as we drove forward
the technical evaluation of our Darwin gas condensate discovery and
initiated a programme to bring partners into our Licences to help
fund the next phase of appraisal and exploration drilling. Whilst
we have been really encouraged by the on-going technical assessment
of Darwin, which has confirmed the quality of the discovery, we are
frustrated that the farm-out process is taking longer than
originally anticipated.
We believe that this is a reflection of the current commercial
environment in the international E&P sector. Whilst the oil
price has remained relatively stable, the industry has lacked
positive news stories. Exploration success has been limited,
mid-sized companies (and the majors) are in restructuring mode and
onshore US shale plays have attracted a significant proportion of
the available capital. In the UK, the AIM Oil & Gas index - a
good proxy for international early stage E&P - fell for the
third year in a rowin 2013, along with many fully listed
independents. Our challenge has been to attract the significant
capital resources we need to a remote area outside of current
industry hot spots such as Africa.
That said, we have had a good response to the farm-out and have
been extremely encouraged by other companies' views on the
sub-surface data, endorsing our own interpretations. Darwin appears
to be a relatively simple discovery with good quality reservoir. We
have been very close to completing a farm-out, having negotiated
commercial terms, only for the transaction to break down at the
last minute due to external factors unrelated to the project.
Needless to say, we will only close a farm-out transaction on terms
we believe will deliver full value to all of our shareholders.
In the last quarter of 2013, in anticipation of closing out a
farm-out, we initiated a rig search for a harsh environment, deep
water rig for the next drilling campaign. When our farm-out
negotiations broke down we passed over the lead for the rig
contract negotiations to our Falkland Islands rig consortium
partners. Even though we will not have secured a partner prior to
the signature of the rig contract, we will be able to join the
consortium at a later stage. We remain confident that a suitable
partner will be secured and that we will participate in a 2015
drilling programme to appraise Darwin.
From an operations point of view we safely acquired additional
3D seismic data in 2013. The objective of the survey was to track
the Darwin reservoir over nearby prospects that had previously been
mapped on 2D data. The fast track data has been received and
interpreted and early signs are that amplitude anomalies, that
represent hydrocarbons on the Darwin structure, can be seen on
other prospects. At this stage we are careful not to reach
conclusions too soon and have just commenced assessing prospects
and their associated risks using the final processed 2013 data and
newly reprocessed 2008 seismic data.
Looking forward, following the interpretation of the new data,
we plan to release an updated assessment of Darwin's recoverable
resource and in due course provide some comments on the Lower
Cretaceous prospects along trend from Darwin. Our main focus
however continues to be on the farm-out and we will report to
shareholders as soon as an agreement has been reached. Our balance
sheet remains strong and we have enough funds to undertake all
necessary work in the interim.
Harry Dobson, Chairman
13 May 2014
Operations Review
Following a successful year in 2012, during which we made the
Darwin gas condensate discovery, the objectives of the past year
were partially to increase our understanding of the discovery but
primarily to secure a technically competent and financially strong
partner. We have made significant strides forward with the
technical work, but have yet to sign a farm-out agreement. The
process is on-going and it remains our central focus.
The year commenced with the acquisition of new 3D seismic data.
PGS were awarded the contract for both acquisition and processing.
The survey was completed safely and within budget. In total, 1,025
square kilometres were acquired in the area immediately to the
north of our existing 3D data, which had been acquired in 2008. Our
aim was to enhance our 2D based interpretation to track the Darwin
Lower Cretaceous reservoir over adjacent look-alike prospects, gain
more information on the deeper untested plays and prospects (such
as Sulivan and Stokes) and to reduce the overall risk profile of
our prospect inventory.
A fast track processed product has already been received and
interpreted. Initial interpretations indicate that the Darwin
reservoir does indeed extend north-eastwards over the next fault
blocks. In addition, we have identified another potential reservoir
unit stratigraphically slightly younger than the Darwin reservoir.
This interval does not occur over Darwin East or Darwin West, only
clipping the edge of the older survey. We currently interpret this
younger horizon to represent laterally continuous shallow marine
sands similar to Darwin's reservoir.
Amplitude anomalies are observed over previous mapped prospects:
Covington, Childs and Clarke. However, it is too early to assess
whether these anomalies represent hydrocarbons. The final processed
data is required for us to undertake detailed analysis, but this is
now with us and a full interpretation has commenced. Reprocessing
of the 2008 3D survey occurred at the same time as the new survey
processing. This has allowed the two surveys to be merged into one,
giving us a total 2,517 square kilometres of 3D seismic data. This
will allow us to directly compare the amplitude response of proven
hydrocarbons at Darwin East with the amplitudes mapped on nearby
prospects. We can already see the quality of the combined data is
excellent. We will report further when the work has been
completed.
Reservoir engineering studies of the discovery continued during
the year. Considerable effort has been made to develop geologically
and petrophysically more sophisticated reservoir models in order to
better assess the recoverable volumes of condensate. As we have
previously reported, our current mid case recoverable resource
estimate is 200 million barrels of condensate. A potential
development would involve six production wells and four gas
re-injection wells, having stripped out the liquids. Our intention
is to update the estimated recoverable resource, incorporating the
new engineering studies and an evaluation of the reprocessed
3D.
Planning for the next drilling campaign has commenced with
initial well designs completed and coring and well testing
programmes defined. Our current plan is to target two locations on
Darwin West and one on Darwin East. This should provide sufficient
information to assess the commerciality of the discovery. Final
decisions on the appraisal well programme will be made once
partners have been brought into the Licence.
The Company reported a loss for the year of $2.9 million
compared to a loss of $1.3 million for the previous year. This
largely reflects the decrease in finance income. Administrative
expense decreased slightly to $2.8 million. During the year a
further $28.9 million was invested with a large part of this going
into a new 3D seismic acquisition programme and the reprocessing of
our existing 3D data. At the end of the year the Company held cash
and cash equivalents of $23.2 million. This is held in short term
treasury deposits, both in dollars and sterling. The cash reserves
are sufficient to cover forward overhead costs and all necessary
short-term technical studies. However, in order to finance the next
drilling campaign, partners will be necessary.
Our share price performance during the year has been
disappointing. This partially reflects the state of the oil and gas
sector, particularly our peer group of exploration-led, AIM listed
companies but it also reflects the delay in bringing a partner into
our Licences. The market has given us little credit for making what
we believe is a significant condensate discovery. The Board and
Senior Management remain completely focused on securing partners so
that we can accelerate the appraisal of Darwin and exploration of
the adjacent areas in order to deliver value to our
shareholders.
The annual report and notice of the Annual General Meeting will
be sent out to shareholders later this month.
Howard Obee, Chief Executive
13 May 2014
Unaudited consolidated statement of comprehensive income
for the year ended 31 December 2013
2013 2012
$ $
----------- -----------
Administrative expenses (2,819,593) (3,125,685)
----------- -----------
Loss from operations (2,819,593) (3,125,685)
Finance income 71,163 2,023,224
Finance expense (207,096) -
----------- -----------
Loss before tax (2,955,526) (1,102,461)
Tax expense - (178,043)
----------- -----------
Loss for the year and total comprehensive
loss for the year attributable
to owners of the parent (2,955,526) (1,280,504)
=========== ===========
Basic loss per share (see note
3) (0.6) cents (0.3) cents
=========== ===========
Unaudited consolidated statement of financial position
as at 31 December 2013
2013 2012
$ $ $ $
Assets
Non-current assets
Property, plant and
equipment 12,801 20,773
Intangible assets 286,950,378 258,011,250
------------- -------------
Total non-current assets 286,963,179 258,032,023
Current assets
Other receivables 1,017,040 1,544,557
Cash and cash equivalents 23,258,717 44,715,158
Restricted use cash 30,736 11,719,899
------------ ------------
Total current assets 24,306,493 57,979,614
Total assets 311,269,672 316,011,637
Liabilities
Current liabilities
Tax payables (185,327) (178,043)
Trade and other payables (1,306,889) (3,527,721)
------------- -------------
Total net assets 309,777,456 312,305,873
============= =============
Equity
Share capital 8,530,461 8,530,461
Share premium 308,602,131 308,602,131
Other reserves 2,034,668 1,607,559
Retained deficit (9,373,408) (6,417,882)
Foreign currency reserve (16,396) (16,396)
Total equity 309,777,456 312,305,873
============= =============
Unaudited consolidated statement of changes in equity
for the year ended 31 December 2013
Share Share Other Retained Foreign Total
capital Premium reserves deficit currency
reserve
$ $ $ $ $ $
Balance at 1 January
2012 7,675,453 238,034,095 1,046,565 (5,137,378) (16,396) 241,602,339
Total comprehensive
loss for
the year - - - (1,280,504) - (1,280,504)
Issue of shares 855,008 73,158,509 - - - 74,013,517
Share issue costs - (2,590,473) - - - (2,590,473)
Recognition of share
based payments - - 560,994 - - 560,994
----------- ---------
Balance at
31 December 2012 8,530,461 308,602,131 1,607,559 (6,417,882) (16,396) 312,305,873
Total comprehensive
loss for
the year - - - (2,955,526) - (2,955,526)
Recognition of share
based payments - - 427,109 - - 427,109
--------- ----------- --------- ----------- --------- -----------
Balance at 31 December
2013 8,530,461 308,602,131 2,034,668 (9,373,408) (16,396) 309,777,456
========= =========== ========= =========== ========= ===========
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 presentation
reserve and functional currency to US Dollars.
Unaudited consolidated statement of cash flows
for the year ended 31 December 2013
2013 2012
$ $ $ $
Cash flow from operating
activities
Loss before tax (2,955,526) (1,102,461)
Adjustments for:
Depreciation 9,248 4,000
Share-based payment 427,109 560,994
Net finance costs/(income) 135,933 (2,023,224)
Realised foreign exchange
gains 49,243 532,591
Cash flows from operating
activities before changes
in working capital (2,333,993) (2,082,100
(Increase)/decrease in other
receivables 527,517 (454)
Increase in trade and other
payables (2,087,083) 11,248
Tax paid - -
Net cash outflows from operating
activities (3,893,559) (2,017,306)
Cash flows used in investing
activities
Interest received 71,163 225,545
Purchase of intangible assets (28,939,128) (191,181,369)
Purchase of property, plant
and equipment (1,276) (4,144)
------------ -------------
Net cash used in investing
activities (28,869,241) (190,959,968)
Cash flows from financing
Proceeds from issue of shares - 71,423,044
Net decrease in cash and
cash equivalents (32,762,800) (121,554,230)
Cash and cash equivalents
at the beginning of the year 56,435,057 176,724,199
Exchange (loss)/gain on cash
and cash equivalents (382,804) 1,265,088
Cash and cash equivalents
and cash held in escrow at
the end of the year 23,289,453 56,435,057
============ =============
Cash and cash equivalents 23,258,717 44,715,158
Restricted use cash 30,736 11,719,899
============ =============
Accounting policies
1. Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for 2012 or 2013. Statutory accounts
for the year 31 December 2012 have been reported on by the
Independent Auditors. The Independent Auditors' Report on the
Annual Report and Financial Statements for 2012 was unqualified,
did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
The results for 2013 are unaudited. Statutory accounts for the
year ended 31 December 2013 will be finalised based on the
information presented in this announcement. The independent
Auditors' Report will be based on those statutory accounts once
they are complete.
Statutory accounts for the year ended 31 December 2012 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2013, prepared under IFRS, will be
delivered to the Registrar in due course.
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 $2,955,526 (2012 -
loss $1,280,504) and the weighted average number of shares in issue
for the year was 484,098,484 (2012 - 463,145,812). 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 6,150,000 (2012: 5,750,000)
potentially dilutive ordinary shares being the share options.
4. Capital Commitments
On 1 October 2012 the Company entered into an agreement with PGS
Geophysical AS for the acquisition of 3D seismic. This seismic was
acquired during 2013 and there is $750,000 outstanding under this
contract which will be paid during 2014 according to the terms of
the contract.
5. Cash and cash equivalents
The company holds its deposits with banks. At the balance date,
the company had a cash deposit held as security for a letter of
credit issued as part of its obligations under the rig contract
which now been released. The company has also placed funds into an
escrow account under the terms of a project management
contract.
6. Post Reporting Date Events
There were no post reporting date events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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