BOR Borders & Southern Petroleum Plc

Borders & Southern Petroleum plc

("Borders & Southern" or "the Company")

Audited Results for the 12 month period ended 31 December 2023

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 ended 31 December 2023. 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 and posted to Shareholders along with the notice of the AGM shortly.

Summary

·      Raised a total of a further $0.783 million (£0.65 million) before expenses through a capital raise as part of the 2022 capital raise

·      Cash balance on 31 December 2023: $1.9 million (2022: $2.7 million)

·      Administrative expense for the year: $1.1 million (2022: $1.2 million)

·      Operating loss of $1.0 million (2022: $1.3 million)

·      Post balance date, Harry Baker appointed CEO to replace Howard Obee

For further information please visit www.bordersandsouthern.com or contact:

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Notes to Editors:

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. 

Chairman's and CEO's review

During the reporting period, the Company successfully completed the 2022 capital raise which was approved by shareholders at a General Meeting in January 2023. The total number of Ordinary shares now in issue is now 730,814,456.

The Company finished the year with a cash balance of $1.9 million (31 December 2022: $2.7 million) and continues to be debt-free. The Company reports an operating loss for 2023 of $1.0  million (2022: $1.35 million). Administrative expense for the year was $1.1 million (2022: $1.1 million). The company continues to have a low cost base and notwithstanding wider inflationary pressures has managed to keep these costs at similar level to previous years.

The company continues to focus on moving the Darwin discovery forward. Independent engineering studies have confirmed the financial robustness of our project and as we have all heard and read about, there is a growing realization that industrial change cannot keep pace with social change and as a result the world will be reliant on hydrocarbons for longer than previously thought. As a consequence, the global oil and gas industry is evolving with many companies rebalancing their capital expenditures towards increased upstream as they believe that demand for oil and gas will be higher over the next two decades than previously envisaged. As a result, in order to replace production, capital expenditures will need to increase across the industry. Darwin is an attractive investment as it could be brought into production relatively quickly and the condensate is very marketable globally, selling at or close to Brent. Few upstream oil and gas projects are like Darwin and have a 1-2 year payback at current oil prices. 

In addition to a conventional farm-out the Company is looking at alternative ways to finance the appraisal program and in the event these progress we will update investors. 

Once Darwin is in production, there are many options for the cashflow including returning it to shareholders, reinvesting in building production or a combination of both. In addition to increasing Darwin's production by drilling further wells, there are multiple prospects to grow production in the licence areas around Darwin. 

As we have previously reported, Howard Obee announced in early 2024 his intention to step down as CEO and board member at the end of February. We were very pleased to have appointed Harry Baker as CEO and board member effective 1 March 2024. Harry brings significant capital markets experience and industry connections to the Company which will be invaluable in the foreseeable future.

We would like to again pay tribute to the significant contribution Howard made to the Company's development over the last nearly twenty years and wish him well in the future. 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2023

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

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 less transfers to retained deficit on expiry.

Retained deficit                                               Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income.

Foreign currency reserves                            Differences arising on the translation of foreign operation to US dollars.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

Notes

1. Accounting policies

Basis of preparation

The financial information for the year ended 31 December 2023 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 2023. 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 2023 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 31 December 2023 annual report has been prepared based on the going concern basis that contemplates the countinuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business.

The Parent Company is a holding entity and as such their going concern is dependent on the Group therefore the going concern assessment was performed as part of the Group's assessment.

At 31 December 2023, the Group had a net cash position of $1.9m (31 December 2022: $2.7m). The Group does not have any external borrowings or debts. The Group has a commitment to drill a well before the expiry of its production licence on 31 December 2024. The Group plans to fund the well developments through a farm-out or by raising additional capital if the farm-out is not successful. If the Group does not successfully raise the capital needed or identify a suitable farm-out partner, the Group will seek to gain an extension to the licences and the associated commitment to drill the well. This is in line with previous extensions and the Directors are confident that further extensions will be granted. Historically, the Falkland's Government has required the Group to show evidence of it's ability to pay the licence fees before an extension which currently is not certain as further funding is required.

In performing their assessment of the Group and Parent Company's ability to continue as a going concern, the Directors have prepared a cashflow forecast for the period ending 30 May 2025, which indicates that in current conditions, the Group and Parent Company will become cash negative in December 2024. At present the cost base of the business principally consists of administrative costs, listing costs and costs to maintain the licences in good-standing. Therefore, in the absence of a farm-out agreement or other funding arrangement contributing further working capital to the Group or Parent Company, additional funding will be required, before December 2024, to meet the day to day operational cashflow requirements, noted above, of the Group and Parent Company.

As the Group and Parent Company are reliant on further funding being secured, which is not guaranted, this indicates the existence of a material uncertaintly which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and therefore they may be unable to realise their assets and discharge their liabilities in the normal course of the business. 

The Directors consider that the funding will be forthcoming and therefore the going concern basis of preparation is deemed appropriate.

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 $1,060,000 (2022 - loss $1,359,000) and the weighted average number of shares in issue for the year was 730,8144,456 (2022 - 530,203,093). 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 2,700,000 (2022: 3,300,000) potentially dilutive ordinary shares being the share options (see note 8 for further details).

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