Falklands : Borders And Southern Update
Submitted by Falkland Islands News Network (Juanita Brock) 15.11.2005 (Article Archived on 29.11.2005)
This item is a press release.
Borders & Southern Petroleum plc
15 November 2005
Borders & Southern Petroleum plc
('Borders & Southern' or 'the Company')
Maiden preliminary results
Borders & Southern Petroleum plc (AIM: BOR), the international oil and gas
exploration and production business, announces preliminary results for the year
ended 30 June 2005. Highlights include:
AIM flotation and £10 million (gross) placing to fund initial work
programme in Falkland Islands and screen new projects
exploration licences awarded for nearly 20,000 sq km in the South
Falkland Basin
2D seismic acquired in June 2005 to define structures and assess
prospectivity
- completed ahead of schedule, accelerating work programme
2D seismic interpretation underway and full report expected in early
2006
initial findings reveal more structures than originally anticipated
strong balance sheet and cash reserves
Commenting on the results, Howard Obee, chief executive said: 'This has been an
exciting period for Borders & Southern. Following an initial evaluation of the
Falklands basin and the granting of our acreage, we raised £10 million pounds
and floated on AIM, giving us the funds to pursue our activities in the
Falklands and to screen new projects. We completed the acquisition of 2D seismic
data ahead of schedule. Initial findings are very exciting and we expect to
provide a further update in the coming months.'
For further information:
Howard Obee Simon Hudson, Richard Sunderland,
Chief Executive Clemmie Carr
Borders & Southern Petroleum plc Tavistock Communications
Tel: 020 7661 9348 Tel: 020 7920 3150
Borders & Southern Petroleum plc
Chairman's Statement
Borders & Southern Petroleum has experienced an exciting 12 months. The Company
has made significant advances from its incorporation in June 2004, ending the
financial year with the completion of its first operated seismic campaign.
During this period we have put in place a strong Board of Directors with a good
blend of commercial and technical oil industry experience.
In October 2004 the Company was awarded its first exploration acreage, an area
of nearly 20,000 sq km in the South Falkland Basin. In particular, we wanted to
test the fold belt trend located some 150 km to the south of the Falkland
Islands. This east-west oriented belt contains numerous large simple structures
that could form effective traps for hydrocarbons. The 2D seismic acquired in
June 2005 was focused on defining these structures and assessing their
prospectivity.
In May 2005 the Company listed on the Alternative Investment Market of the
London Stock Exchange and raised £10 million (gross). This was in order to fund
its initial work programme in the Falkland Islands and the screening of new
projects.
Within the next couple of months we anticipate that the interpretation of the
Falkland Islands 2D seismic will be completed, giving us a better understanding
of the hydrocarbon potential of the basin and in particular the fold belt. An
operational update will be released before the end of the year together with an
outline of our future work programme.
We currently have a strong balance sheet with enough cash reserves to cover
further seismic acquisitions in the Falkland Islands should it be needed. Over
the next 12 months we will also be looking to develop our exploration portfolio
by adding new projects in countries and basins that meet our strategy and
investment criteria.
Borders & Southern Petroleum has made great progress over the last 12 months and
we look forward to further developments in the coming year.
Harry Dobson
Non-Executive Chairman
14 November 2005
Borders & Southern Petroleum plc
Operational Review
Licence award
In June 2004, having screened the legacy offshore seismic database in the
Falkland Islands, we applied for exploration acreage in the South Falkland
Basin, and were subsequently awarded five production licences with an effective
date of 1 November 2004. The licences cover an area of 19,598 sq km and occur in
water depths of between 200 to 3,000 metres. Very little seismic data had
previously been acquired in this area, but the few lines that did exist showed
evidence of a fold belt trend, oriented east-west, extending from Argentina in
the west into international waters in the east. Globally, many fold belts form
prolific hydrocarbon provinces and our aim was to investigate the potential of
this one. There have been no wells drilled in the South Falkland Basin to date.
The Production Licences were awarded with a work programme obligation that
comprised seismic reprocessing and play fairway mapping in the first twelve
months, the acquisition of 2,500 km of 2D seismic within three years, and the
drilling of one well in years four to six. Optional exit points were placed
after twelve months and three years, to mitigate the situation where the
prospectivity could not be confirmed.
Regional evaluation
The evaluation of the basin commenced in November 2004 with regional play
fairway mapping and petroleum system analysis, utilising all the existing
seismic and well data. This regional analysis was undertaken to provide insight
into our own acreage, particularly the distribution of source rocks, reservoirs
and seals. The evaluation included the Magallanes and Malvinas Basins located to
the west of the Falkland Islands, the Falkland Plateau Basin to the east, and
the Bredasdorp Basin off the south coast of South Africa. The completed regional
study demonstrated that the geology is similar across all these basins and that
hydrocarbon discoveries have been made in all the basins that have been tested
by exploration wells. This provides great encouragement to our efforts in the
untested South Falkland Basin.
Seismic acquisition
To further assess the potential of our acreage Geophysical Services Incorporated
(GSI) were contracted to acquire new 2D seismic data.
Specifically, our objective was to define and map structural closures and assess
their prospectivity. The completion of the seismic survey in June 2005 has
significantly accelerated our work programme. After only seven months of the
initial three year licence term, we had completed our 2D seismic obligation. A
total of 2,862 km of new data was acquired, which exceeded our minimum work
programme obligation of 2,500 km. The survey, acquired by the GSI Admiral
vessel, was conducted without major health, safety or environmental incidents.
Seismic interpretation
The 2D seismic data has recently been processed by GSI in Calgary and the
interpretation is underway. An operational update will be given once the
interpretation has been completed. However, a preliminary review of the high
quality seismic data has confirmed the presence of a major fold and thrust belt
with its associated foreland basin within the Company's acreage. These seismic
lines reveal considerably more structures than originally anticipated and
include numerous large anticlines, tilted fault blocks and sub-thrust structures
capable of trapping significant volume of hydrocarbons. The data also reveals
seismic amplitude anomalies associated with many of the structures.
Building the portfolio
The Company's strategy is to build a portfolio of exploration acreage in
different basins and countries. We are targeting large acreage positions that
have the potential to contain multiple high value prospects and where the
geological risks can be constrained by rigorous technical work.
Industry outlook
Whilst there may be some softening over the next 12 months, oil prices are
anticipated to remain at relatively high levels. This is likely to cause an
increase in exploration activity throughout the industry, creating increased
demand for seismic vessels and drilling rigs, which will be reflected in higher
prices for these services. Additionally, greater competition for acreage is
likely to occur. We will take time to build the portfolio, ensuring any new
project meets our stringent investment criteria, and is of similar high quality
to the South Falkland Basin acreage.
Howard Obee
Chief Executive
Borders & Southern Petroleum plc
PROFIT AND LOSS ACCOUNT
FROM 8 JUNE 2004 TO 30 JUNE 2005
Notes £
Administrative expenses (204,785)
-----------
Operating loss (204,785)
Interest receivable 63,539
-----------
Loss on ordinary activities before taxation (141,246)
Taxation -
Loss retained for the period (141,246)
-----------
Loss per share - basic and diluted 2 (0.26p)
===========
All amounts above amounts are in respect of continuing activities.
All recognised gains and losses in the current period are included in the profit
and loss account.
Borders & Southern Petroleum plc
BALANCE SHEET AT 30 JUNE 2005
£ £
Fixed asssets
Intangible Assets 1,497,668
Tangible assets 14,965
-----------
1,512,633
-----------
Current assets
Debtors 142,790
Cash at bank and demand deposits 10,416,100
-----------
10,558,890
Creditors: amounts falling due
within one year (331,546)
Net current assets 10,227,344
-----------
Total assets less current liabilites 11,739,977
Provision for liabilities and charges (42,955)
-----------
Net assets 11,697,022
===========
Capital and reserves
Called up share capital 1,276,875
Share premium account 10,561,393
Profit and loss account (deficit) (141,246)
-----------
equity shareholders' funds 11,697,022
===========
Borders & Southern Petroleum plc
CASH FLOW STATEMENT FOR THE PERIOD FROM 8 JUNE 2004 TO 30 JUNE 2005
£ £
Net cash outflow from operating activities (140,147)
Return on investments and servicing of finance 63,539
Interest received
Capital expenditure and financial investment
Purchase of tangible fixed assets (18,685)
Exploration and evaluation expenditure (1,326,875)
-----------
(1,345,560)
-----------
Cash inflow before use of liquid resources
and financing (1,422,168)
Management of liquid resources
Deposit on demand (10,000,000)
Financing
Share capital issued, net of issue costs 11,838,268
-----------
Increase in cash 416,100
===========
Borders & Southern Petroleum plc
NOTES
1. Basis of preparation and going concern
The accounts have been prepared in accordance with the historical cost
convention and in accordance with the applicable accounting standards and the
Statement of Recommended Practice 'Accounting for Oil and Gas Exploration,
Development, Production and Decommissioning Activities'.
The financial statements have been prepared on a going concern basis. The
Company's ability to continue as a going concern is contingent upon its ability
to raise sufficient funds to cover future exploration and development
commitments.
2. Earnings/(Loss) per share
The calculation of the basic earnings per share is based on the loss
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the period. The loss for the financial period is £141,246
and the average number of shares in issue for the year was 55,413,437.
The Company has no outstanding warrants or options at the balance sheet date and
accordingly there are no potentially dilutive shares in issue at the period end.
3. Net cash outflow from operating activities
£
Operating loss (204,785)
Depreciation 3,720
Increase in debtors (142,790)
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