TIDMBOR
RNS Number : 2747B
Borders & Southern Petroleum plc
03 April 2017
3 April 2017
Borders & Southern Petroleum plc
("Borders & Southern" or "the Company")
Unaudited Results for the 12 month period ended 31 December
2016
Borders & Southern (AIM: BOR), the London based independent
oil and gas exploration company with assets offshore the Falkland
Islands, announces preliminary unaudited results for the year
ending 31 December 2016.
2016 Highlights
-- Farm-out process is on-going.
-- Maturation of the prospect inventory.
-- Break-even oil price for a phased Darwin FPSO development is $40 per barrel.
-- Administrative expenses - 2016: $1.74 million (2015: $1.97 million).
-- Cash balance at 31 December 2016: $9.65 million (2015: $14.0 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
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 statement 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
Throughout 2016 we maintained a disciplined budget, whilst
strengthening our technical and commercial case and continuing with
our efforts to farm-out the Company's Falkland Islands project.
The year-end cash balance of $9.65 million (31 December 2015:
$14 million) was impacted by significant changes in the US
Dollar-Sterling exchange rate. Most of the Company's funds are held
in Sterling to reflect its ongoing expenditures. The drop in the
value of the pound, resulted in a nearly $2 million reduction in
the reported cash balance and increased the loss by the same
amount. The 2016 Administrative expense of $1.74 million, comparing
favourably against the previous year ($1.97 million in 2015),
partially reflects the impact of the exchange rate.
Borders & Southern's objective is to be a successful
explorer, finding hydrocarbons and monetising them for the benefit
of all its shareholders and stakeholders. The first stage was
realised in 2012 when we announced a significant, liquids rich, gas
condensate discovery (Darwin). Subsequent technical analysis proved
the scale of the discovery. Management's current un-risked P50 Best
Estimate resource is 3.5 tcf of wet gas in place with 360 million
barrels of recoverable condensate.
The second stage, of monetising the discovery, has been slower
in achievement as competent partners are sought to help fund
Darwin's appraisal and development. Our ability to deliver on this
has been impacted by the 2014 fall in oil price and the dramatic
reduction in capital expenditure by the industry in the subsequent
period. During the last year, the oil price has made a modest
recovery, underpinned by OPEC's agreed cuts in production. As a
response, many of the large and mid-sized companies, who have spent
the last couple of years reducing their costs and strengthening
their balance sheets, are now considering growth objectives again.
This gives us grounds for optimism that we can complete a
successful farm-out and get back to an operational phase and the
appraisal drilling.
We believe that the Darwin discovery and its surrounding
exploration portfolio compares very favourably with other global
opportunities. Our technical and commercial work during 2016 was
directed to test our project's commercial competitiveness. Through
facilities engineering studies and reservoir modelling we
demonstrated that the break-even oil price for an initial 270
million barrel FPSO phased Darwin development would be $40 per
barrel. If the 25% contingency included within the estimated $1.36
billion capex is reduced, through more detailed engineering work,
the break-even oil price would be appreciably lower. The attractive
economics are largely influenced by the Falkland Islands
Government's fiscal terms and the requirement for only a limited
number of development wells due to the laterally continuous, high
quality reservoir and extremely mobile hydrocarbon phase.
Over the last few years global exploration success rates have
decreased significantly. Discovery volumes have been skewed towards
dry gas, with new large liquids finds being relatively scarce. In
this context, the Darwin condensate is an important resource.
Through meticulous technical and commercial work, we have continued
to take risk out of the project, to enhance its attractiveness to
third parties. At the same time, we have matured the Company's
exciting prospect inventory, which provides significant scope to
add to the discovered volumes. As previously reported, Management's
un-risked P50 Best Estimate recoverable resource for near-field
prospects (not including Darwin) - those located within a 15km
radius of the discovery well - exceed 1 billion barrels. Many of
these prospects are supported by seismic amplitude anomalies and
are considered by Management to be relatively low risk.
The largest prospect within the near-field inventory and the
current most likely candidate for an exploration well, following
Darwin appraisal, is Sulivan. Stratigraphically older than the
Darwin reservoir, in a section not yet penetrated by a well, the
prospect is defined by a strong seismic amplitude anomaly measuring
120 square kilometres. The AVO response is very similar to that
associated with the Darwin discovery. If this anomaly does
represent another gas condensate accumulation, then Management's
un-risked P50 Best Estimate volumes comprise 5.6 tcf of gas in
place with 473 million barrels of recoverable condensate.
In addition to the near-field prospects, significant exploration
potential exists in the rest of the Company's acreage in a range of
structural and stratigraphic prospects. The scale and quality of
the prospect inventory will provide considerable growth options for
the Company in years to come. But in the near term, we will
maintain our capital discipline during this extended period of low
oil price and continue to refine and advance our technical
understanding of the sub-surface. However, the principal focus
remains the farm-out and attracting funds for the appraisal of
Darwin.
Howard Obee
31 March 2017
Unaudited consolidated statement of comprehensive income
for the year ended 31 December 2016
2016 2015
$000 $000
-------- -------
Administrative expenses (1,744) (1,968)
-------- -------
Loss from operations (1,744) (1,968)
Finance income 30 47
Finance expense (1,890) (679)
-------- -------
Loss before tax (3,604) (2,600)
Tax expense - -
-------- -------
Loss for the year and total
comprehensive loss for
the year attributable to
owners of the parent (3,604) (2,600)
======== =======
Basic and diluted loss (0.74) (0.54)
per share (see note 3) cents cents
======== =======
Unaudited consolidated statement of financial position
as at 31 December 2016
2016 2015
$000 $000 $000 $000
Assets
Non-current assets
Property, plant
and equipment 12 10
Intangible assets 290,381 289,590
---------- ----------
Total non-current
assets 290,393 289,600
Current assets
Other receivables 1,166 297
Cash and cash
equivalents 9,645 14,011
Total current
assets 10,811 14,308
Total assets 301,205 303,908
Liabilities
Current liabilities
Trade and other
payables (1,135) (283)
---------- ----------
Total net assets 300,069 303,625
========== ==========
Equity
Share capital 8,530 8,530
Share premium 308,602 308,602
Other reserves 2,418 2,370
Retained deficit (19,465) (15,861)
Foreign currency
reserve (16) (16)
Total equity 300,069 303,625
========== ==========
Unaudited consolidated statement of changes in equity
for the year ended 31 December 2016
Share Share Other Retained Foreign Total
capital Premium reserves deficit currency
reserve
$000 $000 $000 $000 $000 $000
Balance at 1
January 2015 8,530 308,602 2,280 (13,261) (16) 306,135
Loss and total
comprehensive
loss for the
year - - - (2,600) - (2,600)
Share based expense - - 90 - - 90
-------- ---------
Balance at
31 December 2015 8,530 308,602 2,370 (15,861) (16) 303,625
Loss and total
comprehensive
loss for the
year - - - (3,604) - (3,604)
Share based expense - - 48 - - 48
-------- -------- --------- -------- --------- -------
Balance at 31
December 2016 8,530 308,602 2,418 (19,465) (16) 300,069
======== ======== ========= ======== ========= =======
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.
Unaudited consolidated statement of cash flows
for the year ended 31 December 2016
2016 2015
$000 $000 $000 $000
Cash flow from operating
activities
Loss before tax (3,604) (2,600)
Adjustments for:
Depreciation 1 1
Share-based payment 48 90
Net finance expense 1,860 632
Realised foreign exchange
gains/(losses) 25 (8)
Cash flows from operating
activities before
changes in working
capital (1,670) (1,885)
Decrease/(increase)
in other receivables (869) 32
Increase in trade
and other payables 852 33
Tax paid - -
Net cash outflows
from operating activities (1,687) (1,820)
Cash flows used in
investing activities
Interest received 30 47
Purchase of intangible
assets (819) (773)
Proceeds from disposal
of intangible assets - 1,149
----- -----
Net cash from/(used)
in investing activities (761) 423
Cash flows from financing
Net decrease in cash
and cash equivalents (2,506) (1,397)
Cash and cash equivalents
at the beginning of
the year 14,011 16,079
Exchange loss on cash
and cash equivalents (1,915) (671)
Cash and cash equivalents
at the end of the
year 9,645 14,011
======= =======
Accounting policies
1. Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for 2015 or 2016. Statutory accounts
for the year 31 December 2015 have been reported on by the
Independent Auditors. The Auditors' Report for the year ended 31
December 2015 was unqualified, did not include references 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 2016 are unaudited. Statutory accounts for the
year ended 31 December 2016 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 2015 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2016, prepared under International
Financial Reporting Standards as adopted by the European union
(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 $3.6 million (2015 -
loss $2.6 million) and the weighted average number of shares in
issue for the year was 484.1 million (2015 - 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 (2015
- 6.15 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
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