TIDMBOR
RNS Number : 4656J
Borders & Southern Petroleum plc
14 April 2020
14 April 2020
Borders & Southern Petroleum plc
("Borders & Southern" or "the Company")
Audited Results for the 12 month period ended 31 December
2019
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 ending 31
December 2019. 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 shortly on the
Company's website and posted to Shareholders in May.
Highlights
-- Farm-out process remains active. Progress has been impacted
by current industry capital allocation constraints.
-- The Company's prospect inventory has been updated to include
additional smaller pools close to the Darwin discovery.
-- The loss before tax for the year was $1.37 million (2018: $1.96 million).
-- Cash Balance at 31 December 2019: $3.7 million (2018: $5.6 million).
-- Reduced administrative expense for the year: $1.45 million
(2018: $1.8 million). A 25% cost reduction target has been set for
2020.
For further information please visit www.bordersandsouthern.com
or contact:
Borders & Southern Petroleum plc
Howard Obee, Chief Executive
Tel: 020 7661 9348
Strand Hanson Limited (Nominated & Financial Adviser)
James Spinney / Ritchie Balmer / Georgia Langoulant
Tel: 020 7409 3494
Mirabaud Securities Limited (Broker)
Peter Krens
Tel: 020 7878 3362
Tavistock (Financial PR)
Simon Hudson / Nick Elwes / Barney Hayward
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 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.
Competent Person Disclosure:
The technical aspects of this announcement 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.
Chairman's and CEO's review
Our principal objective for 2019 was to secure funding for the
next phase of operations in the South Falkland Basin.
Unfortunately, the team has been frustrated by the slow progress,
largely due to factors outside of its control. The industry has
experienced significant constraints on capital availability during
the last five years. Smaller companies, such as ours, are finding
it particularly challenging to raise risk capital and attract
partners for large conventional offshore projects in frontier
areas. This issue has recently been exacerbated by the unknown and
unpredictable impact of the global Covid-19 pandemic and the
simultaneous over-supply of crude caused by lack of agreement on
production levels by OPEC+ countries. Oil prices have again fallen
below $30 per barrel and the outlook over the next 12 months
appears very challenging.
Nevertheless, history suggests oil prices will bounce back and
create conditions that will allow us to proceed with Darwin's
appraisal and development. Darwin represents an exciting
opportunity for all those involved, and we remain hopeful that we
can deliver success. Our confidence is based on very strong project
fundamentals. Darwin is a liquids-rich, gas condensate that has
been independently assessed to contain an un-risked recoverable
resource of over 450 million barrels of condensate and LPGs. The
reservoir is of high quality, the hydrocarbons have good mobility
and low contaminants, which means the development does not require
a large number of wells. In the attractive Falkland Islands fiscal
regime, project economics are particularly robust, even at lower
oil prices. Our current economic model suggests the project
break-even oil price is less than $35 per barrel which compares
favourably against many other global opportunities.
During this period of slow project headway, we have been
particularly conscious of our balance sheet strength. The Company
has always maintained strict financial discipline, with a low
overhead. But we have targeted a 25% reduction in Sterling
expenditures during 2020 (the majority of the Company's current
expenditures are in Sterling). Our cash balance at year-end was
$3.68 million (2018: $5.6 million). Administrative expense was
lower at $1.45 million (2018: $1.8 million), although some of the
reduction was due to exchange rate differences. We aim to keep our
overhead base cost low in order to ensure the Company is able to
continue along its path to monetise Darwin, post these
unprecedented times.
As part of our effort to continually enhance the sub-surface
technical aspects of the project, we have been assessing the
potential small pools of hydrocarbons not previously captured in
our assessment of Darwin or the near-field prospects. Detailed
mapping and evaluation of the 3D depth migrated seismic volume has
revealed a number of interesting amplitude anomalies adjacent to
Darwin. Individual leads have un-risked best estimate prospective
resource values of up to 17 million barrels. These would not
provide stand-alone targets, but might be able to be tied into a
development at a later stage. Detailed structural mapping and
evaluation of the area to the north of Darwin has highlighted a
number of small structural closures with strong amplitude anomalies
and small associated flat spots. These have potential un-risked
prospective resource volumes of up to 29 million barrels. Again,
these structures may not represent economic stand-alone targets,
but they offer us confidence that the hydrocarbon system is working
across a large area of the Aptian shelf.
Possibly the most interesting lead to emerge from the technical
work is the newly defined Stewart prospect, mapped on the more
recently generated 3D seismic inversion volume. Measuring
approximately 20 square kilometres, it occurs at the same
stratigraphic interval as near-field prospects Sulivan and Stokes.
The un-risked prospective resource estimate is 40 million barrels.
Whilst this is a relatively small volume, the target interval could
be tested by extending a Darwin West well approximately 385 metres
below the Darwin reservoir. The outcome would provide important
insights into the larger Sulivan (473 million barrels) and Stokes
(134 million barrels) prospects.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
2019 2018
--------------------------------------------
$000 $000
-------------------------------------------- ------------- -------------
Administrative expenses (1,447) (1,802)
--------------------------------------------- ------------- -------------
Loss from operations (1,447) (1,802)
Finance income 88 29
Finance expense (11) (193)
Loss before tax (1,370) (1,966)
Tax expense - -
Loss for the year and total comprehensive
loss for the year attributable to equity
owners of the parent (1,370) (1,966)
--------------------------------------------- ------------- -------------
Basic and diluted loss per share (see note
3) (0.28) cents (0.41) cents
--------------------------------------------- ------------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2019
2019 2018
--------------------------- ------ --------- ------ ---------
$000 $000 $000 $000
--------------------------- ------ --------- ------ ---------
Assets
Non-current assets
Property, plant and
equipment 118 15
Intangible assets 291,765 291,367
---------------------------- ------ --------- ------ ---------
Total non-current
assets 291,883 291,382
---------------------------- ------ --------- ------ ---------
Current assets
Other receivables 233 260
Cash and cash equivalents 3,682 5,626
---------------------------- ------ --------- ------ ---------
Total current assets 3,915 5,886
---------------------------- ------ --------- ------ ---------
Total assets 295,798 297,268
---------------------------- ------ --------- ------ ---------
Liabilities
Current liabilities
Trade and other payables (235) (337)
---------------------------- ------ --------- ------ ---------
Total net assets 295,563 296,931
---------------------------- ------ --------- ------ ---------
Equity attributable
to the equity owners
of the parent company
Share capital 8,530 8,530
Share premium 308,602 308,602
Other reserves 1,777 1,775
Retained deficit (23,330) (21,960)
Foreign currency
reserve (16) (16)
---------------------------- ------ --------- ------ ---------
Total equity 295,563 296,931
---------------------------- ------ --------- ------ ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Foreign
Share Share Other Retained currency
capital premium reserves deficit reserve Total
$000 $000 $000 $000 $000 $000
------------------------------ --------- --------- ---------- --------- ---------- --------
Balance at 1 January 2018 8,530 308,602 1,773 (19,994) (16) 298,895
Loss and total comprehensive
loss for the year - - - (1,966) - (1,966)
Recognition of share-based
payments - - 2 - - 2
------------------------------ --------- --------- ---------- --------- ---------- --------
Balance at 31 December
2018 8,530 308,602 1,775 (21,960) (16) 296,931
Loss and total comprehensive
loss for the year - - - (1,370) - (1,370)
Recognition of share-based
payments - - 2 - - 2
------------------------------ --------- --------- ---------- --------- ---------- --------
Balance at 31 December
2019 8,530 308,602 1,777 (23,330) (16) 295,563
------------------------------ --------- --------- ---------- --------- ---------- --------
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 change of presentation
and functional currency to US dollars.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
2019 2018
----------------
$000 $000 $000 $000
--------------------------------------- ------ -------- ------ --------
Cash flow from operating activities
Loss before tax (1,370) (1,966)
Adjustments for: Depreciation 92 1
Share-based payment 2 2
Finance costs 11 193
Finance income (88) (29)
Realised foreign exchange gains 27 21
---------------------------------------- ------ -------- ------ --------
Cash flows used in operating
activities before changes in
working capital (1,326) (1,778)
Decrease in other receivables 29 180
Decrease in trade and other payables (176) (296)
---------------------------------------- ------ -------- ------ --------
Net cash outflow from operating
activities (1,473) (1,894)
Cash flows used in investing
activities
Interest received 27 29
Purchase of intangible assets (398) (541)
Purchase of tangible fixed assets (11) (5)
Net cash used in investing activities (382) (517)
---------------------------------------- ------ -------- ------ --------
Cash flows from financing
Cash flows from financing activities
Lease interest (11) -
Lease repayments (112) -
(123) -
Net decrease in cash and cash
equivalents (1,978) (2,411)
---------------------------------------- ------ -------- ------ --------
Cash and cash equivalents at
the beginning of the year 5,626 8,251
Exchange (loss)/gain on cash
and cash equivalents 34 (214)
---------------------------------------- ------ -------- ------ --------
Cash and cash equivalents at
the end of the year 3,682 5,626
---------------------------------------- ------ -------- ------ --------
Notes
1. Accounting policies
Basis of preparation
The financial information for the year ended 31 December 2019
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 2019. 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 2019 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 Directors are of the opinion that the Group has adequate
financial resources to enable it to undertake its planned programme
of exploration and appraisal activities for 2020.
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 $1.370 million (2018
- loss $1.966 million) and the weighted average number of shares in
issue for the year was 484.1 million (2018 - 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 6.1 million (2018
- 7.05 million) potentially dilutive ordinary shares being the
share options.
4. Subsequent Date Events
There were no subsequent date events requiring disclosure
-ends-
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END
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