TIDMBOR
RNS Number : 7812I
Borders & Southern Petroleum plc
30 March 2015
30 March 2015
Borders & Southern Petroleum Plc
("Borders & Southern" or "the Company")
Preliminary Unaudited Results for the 12 months ended 31
December 2014
Borders & Southern Petroleum Plc (AIM: BOR) announces
preliminary unaudited results for the year to 31 December 2014.
Chairman's Statement
2014 was a challenging year for the entire oil & gas
industry, not just Borders & Southern. The oil price slid from
$110 per barrel in the middle of the year to below $50 per barrel
in January 2015. The short-term outlook for oil prices remains
uncertain, but many analysts are predicting a medium to long-term
price of around $70 per barrel once the current supply/demand
imbalance corrects.
As a response to this dramatic fall, oil and gas companies have
reassessed their capital expenditure plans and are focused on cost
efficiencies. Discretionary expenditure on exploration and
appraisal activity has been reduced significantly and
prioritisation in the short-term is largely focused on current work
programme commitments rather than business development.
As the industry has cut expenditure and the number of planned
exploration and appraisal wells has fallen, the demand for drilling
rigs has weakened. Consequently, the day-rates for deep-water rigs
have reduced by as much as 40%. The costs of other well services
have also started to fall.
Against this backdrop, Borders & Southern has been looking
to secure partners to fund the next phase of Darwin's appraisal.
Specific challenges have been to find companies prepared to commit
to a multi-well deep-water programme with well-cost estimates
(before the oil price drop) of approximately $100 million per well.
In addition, for many potential partners, the Falkland Islands
would be a new geography, a long way away from the world's current
exploration hot spots.
In our favour, however, is the fact that Darwin is a very robust
project due to the competitive fiscal terms offered by the Falkland
Islands Government and Darwin's high quality reservoir (resulting
in a low number of required production wells). Consequently, we
believe that the development of Darwin would prove to be economic,
even at oil prices lower than current levels. Certainly, when we
benchmark Darwin with other offshore development projects on a cost
curve, it is well positioned. So whilst we recognise the challenge
in achieving a successful farm-out in the present environment, we
remain optimistic that a project as robust as Darwin will attract a
partner.
It is worth noting that companies that have entered our data
room have found the technical merits of the project very
attractive. Darwin is a gas condensate discovery with a high
liquids component (46 to 49 degrees API). This means that it has
the condensate gravity typical of an ultra light crude oil. Our
current estimate of the most likely recoverable volume of
condensate is 263 million barrels but, as previously stated, this
could increase significantly following further successful drilling.
Those potential partner companies that undertook detailed technical
analysis confirmed that, following a successful appraisal
programme, an FPSO development would be commercially viable.
In some cases, farm-out talks advanced from technical to
commercial discussions. Unfortunately, these negotiations ended
before a deal could be secured, either due to a change in the
potential partner's strategic focus or because terms fair for both
parties could not be agreed.
A Falkland Islands drilling campaign is currently underway but
without funding we have been unable to join the programme. The Erik
Raude drilling rig has embarked on a six well work programme, split
between the North and South Falkland basins. Our aim is to secure
partners as soon as possible in the hope that we can take advantage
of the rig's location and negotiate a new contract at the end of
its current work schedule. If that proves to be unachievable in the
current environment, we would seek to mobilise another rig as soon
as we have secured funding. In essence, this latter scenario would
be similar to what we did for our 2012 programme when we negotiated
the Leiv Eiriksson drilling rig with only two firm wells. With rig
demand and rates now much reduced, the capital commitment is likely
to be materially lower and the number of available rigs is likely
to be much higher.
Meanwhile, our technical work continues to progress. Analysis of
our two merged 3D seismic surveys leads us to believe that the area
surrounding the Darwin discovery could represent an important sweet
spot in the South Falkland Basin. Our understanding of the geology
of the basin continues to grow but questions remain. Such as: Does
Darwin have an oil leg? And: Do the mapped amplitude anomalies
close to Darwin represent oil? Ultimately, these questions can only
be answered by the drill bit. However, reservoir characterisation
studies currently reaching a conclusion will certainly impact our
confidence levels. We plan to report to shareholders on the first
phase of our prospect evaluation in the area surrounding Darwin in
the very near future.
The Company's balance sheet remains strong. We have cash
reserves of $16 million and a lower overhead than many of our peer
group. We will continue to run a strict budget in this current low
oil price environment. Most commentators believe that the oil price
will make a recovery, as it has done in the past, but perhaps not
to the levels seen before the recent drop. Global exploration
activity should pick up. We believe the Darwin discovery is too
good to remain static, so we are still confident that funding will
be found to continue the appraisal programme.
Harry Dobson, Chairman
30 March 2015
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
Dominic Morley/Adam James
Tel: 020 7886 2500
Tavistock
Simon Hudson
Tel: 020 7920 3150
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 2,862 km of 2D
seismic, 2,517 square kilometres of 3D seismic and drilled two
exploration wells, making a gas condensate discovery with its first
well.
Unaudited consolidated statement of comprehensive income
for the year ended 31 December 2014
2014 2013
$000 $000
----------- -----------
Administrative expenses (3,037) (2,820)
----------- -----------
Loss from operations (3,037) (2,820)
Finance income 59 71
Finance expense (910) (207)
----------- -----------
Loss before tax (3,888) (2,956)
Tax expense - -
----------- -----------
Loss for the year and total comprehensive
loss for the year attributable
to owners of the parent (3,888) (2,956)
=========== ===========
Basic loss per share (see note
3) (0.8) cents (0.6) cents
=========== ===========
Unaudited consolidated statement of financial position
as at 31 December 2014
2014 2013
$000 $000 $000 $000
Assets
Non-current assets
Property, plant and
equipment 11 13
Intangible assets 289,966 286,950
---------- ---------
Total non-current assets 289,977 286,963
Current assets
Other receivables 329 1,017
Cash and cash equivalents 16,079 23,290
Total current assets 16,408 24,307
Total assets 306,385 311,270
Liabilities
Current liabilities
Tax payables - (185)
Trade and other payables (250) (1,307)
---------- ---------
Total net assets 306,135 309,778
========== =========
Equity
Share capital 8,530 8,530
Share premium 308,602 308,602
Other reserves 2,280 2,035
Retained deficit (13,261) (9,373)
Foreign currency reserve (16) (16)
Total equity 306,135 309,778
========== =========
Unaudited consolidated statement of changes in equity
for the year ended 31 December 2014
Share Share Other Retained Foreign Total
capital Premium reserves deficit currency
reserve
$000 $000 $000 $000 $000 $000
Balance at 1 January
2013 8,530 308,602 1,608 (6,417) (16) 312,307
Loss and total comprehensive
loss for the year - - - (2,956) - (2,956)
Recognition of share
based payments - - 427 - - 427
-------- ---------
Balance at
31 December 2013 8,530 308,602 2,035 (9,373) (16) 309,778
Loss and total comprehensive
loss for the year - - - (3,888) - (3,888)
Recognition of share
based payments - - 245 - - 245
-------- -------- --------- -------- --------- -------
Balance at 31 December
2014 8,530 308,602 2,280 (13,261) (16) 306,135
======== ======== ========= ======== ========= =======
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 2014
2014 2013
$000 $000 $000 $000
Cash flow from operating
activities
Loss before tax (3,888) (2,956)
Adjustments for:
Depreciation 2 9
Share-based payment 245 427
Net finance costs 851 136
Realised foreign exchange
gains 6 49
Cash flows from operating
activities before changes
in working capital (2,784) (2,334)
Decrease in other receivables 689 528
Decrease in trade and other
payables (518) (2,088)
Tax paid (185) -
Net cash outflows from operating
activities (2,798) (3,894)
Cash flows used in investing
activities
Interest received 59 71
Purchase of intangible assets (3,555) (28,939)
Purchase of property, plant
and equipment - (1)
------- --------
Net cash used in investing
activities (3,496) (28,869)
Cash flows from financing
Net decrease in cash and
cash equivalents (6,294) (32,763)
Cash and cash equivalents
at the beginning of the year 23,289 56,435
Exchange loss on cash and
cash equivalents (916) (383)
Cash and cash equivalents
at the end of the year 16,079 23,289
======= ========
Accounting policies
1. Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for 2013 or 2014. Statutory accounts
for the year 31 December 2013 have been reported on by the
Independent Auditors. The Independent Auditors' Report on the
Annual Report and Financial Statements for 2013 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 2014 are unaudited. Statutory accounts for the
year ended 31 December 2014 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 2013 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2014, 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 $3.888 million (2013
- loss $2.956 million) and the weighted average number of shares in
issue for the year was 484.1 million (2013 - 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 6.15 million (2013
- 6.15 million) potentially dilutive ordinary shares being the
share options.
4. Post Reporting Date Events
There were no post reporting date events.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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