23rd May 2006 07:02
Borders & Southern Petroleum plc23 May 2006 Embargoed until 07.00, 23 May 2006 Borders & Southern Petroleum plc ("Borders & Southern" or "the Company") Exploration Update •Technical evaluation indicates that Borders & Southern's Falkland Islands licences are located in a unique "sweet-spot" for trap development and source maturity on the offshore extension of the Andean fold belt trend, which has been proven prolific onshore South America €2D seismic data acquired in 2005 has revealed previously unrecognised potential •The size and quality of the Company's lead inventory has increased significantly since the Company's AIM listing in May 2005 •Numerous structural leads have been mapped that are capable of exceeding the minimum economic field size as defined by consultants Scott Pickford's independent analysis •Encouraging indirect indicators for hydrocarbons have been recognised •Cash position of £10 million at 1st April 2006 Commenting on the announcement, Howard Obee, Borders & Southern's ChiefExecutive, said, "The prospectivity of our acreage - in which we have a 100%interest - has clearly increased as a result of this technical work. Thepriority now is to further reduce risk through additional studies before takingdecisions on how best to generate value from the next phases of exploration." For further information, please call:Howard Obee, Chief Executive Simon Hudson/Richard Sunderland/Clemmie CarrBorders & Southern Petroleum plc Tavistock CommunicationsTel: 020 7661 9348 Tel: 020 7920 3150 or 07966 477256 Borders & Southern Petroleum plc ("Borders & Southern" or "the Company") Exploration Update Borders & Southern announces the completion of the first phase in the evaluationof its Falkland Islands acreage. Whilst the technical work is ongoing, aimed atfurther risk reduction, the Company is now able to report on its initialfindings of its non-exclusive 2D seismic data and independent technical studiescomprising structural modelling (undertaken by Midland Valley Exploration),geochemistry (provided by Advanced Geochemical Systems Ltd) and seismicamplitude analysis (supplied by ECL). In November 2004, the Company licensed nearly 20,000 sq km of acreage in theuntested South Falkland Basin. Its objective was to define and assess theprospectivity of a fold belt located to the south of the Falkland Islands. Thefold belt was specifically targeted due to the fact that a significantproportion of the world's hydrocarbons are found in such settings. Prior to Borders & Southern's work, only four regional seismic lines had beenacquired across the acreage. Based on an initial regional evaluation, theCompany predicted that the fold belt would extend eastwards throughout itsacreage and contain multiple structures suitable for trapping hydrocarbons. The Company acquired 2,862 km of new 2D seismic in June 2005. This has now beeninterpreted and the results have demonstrated that the fold belt does exist, isbest developed in the Company's acreage, and appears to be very prospective. Mapping has defined numerous structural and stratigraphic leads. Three key playsare recognised: Tertiary / Upper Cretaceous folds, Upper Cretaceous tilted faultblocks, and Upper Cretaceous channel fills. At this stage, work has focused onthe structural leads, as the folds provide a good focus for migratinghydrocarbons. Ten structural leads have been selected for detailed analysis, inorder to best describe the scale and range of plays within the acreage. The ten leads have mapped areas of closure ranging from 11 to 138 sq km, sevenof which are over 50 sq km. These structures occur in water depths ranging from1300 metres to 2040 metres. Many of the structures display structural closureover vertical sections exceeding 2 km, allowing for the possibility of stackedreservoirs. As this is an untested basin, it is unrealistic to provide resource estimates atthis stage as there is no close well control. However, the size of thestructures would allow significant volumes of hydrocarbons to be trapped. Forinstance, if 30 metres of net pay was encountered across a 50 sq km structure,and average porosity and hydrocarbon saturations were assumed, then a resourceof some 500 million barrels could be trapped. An independent study commissioned by the Company in April 2006, undertaken byScott Pickford, assessed the minimum economic field size for a deep waterdevelopment in the South Falklands. The study revealed that recoverable reservesof approximately 100 mmbbl would be required for a commercial development (basedon a $34 per barrel oil price and well flow rates of 7,000 bopd). Thehydrocarbons would be developed using a moored Floating Production System withoffshore loading to ocean going tankers. Such schemes are common in deep waterdevelopments. In addition to defining the size of structures, the technical evaluation hasalso revealed positive indirect indications for hydrocarbons within theCompany's acreage. These include BSR's* (which may represent gas hydrates), andamplitude anomalies within the cores of the folds and channel fills, some ofwhich have strong AVO** anomalies. Because this is an untested basin, the exploration risks remain relatively highin comparison to proven hydrocarbon basins around the world. However, as anexample of frontier exploration acreage, the Directors believe the Company'sblocks to be very attractive. This assessment is based on the positive evidencefor a working source rock, realistic models for sand presence and the mappeddefinition of numerous structural and stratigraphic traps. If this assessment iscorrect, then Borders & Southern is well positioned to benefit from a potentialproject of significant scale. In the coming months, the Company will assess the best way to continue tomitigate the technical risks along with reviewing the options for financingfuture exploration whilst retaining as much value as possible for shareholders.Partners are likely to be brought in at an appropriate stage. Future work mightinclude the acquisition of 3D seismic prior to drilling a well. The exact timingof drilling will be subject to completion of further technical work,negotiations with potential partners and rig availability. *BSR: Bottom Simulating Reflector - a high amplitude seismic reflection thatapproximately parallels the seabed and often represents the base of the gashydrate stability zone **AVO: Amplitude Versus Offset - a seismic technique used to detect the presenceof hydrocarbons in a reservoir REVIEW BY QUALIFIED PERSON, QUALITY CONTROL AND REPORTS The results of the Company's technical evaluation have been reviewed, verifiedand compiled by the Company's geological staff (which includes a qualifiedperson, Dr Howard Obee) for the purpose of the Guidance Note for Mining, Oil andGas Companies issued by the London Stock Exchange in respect of AIM companies,which outline standards of disclosure for mineral projects. Notes to Editors Borders & Southern was formed as a public limited company in June 2004. At thattime, the Company submitted an application for its first project, offshoreexploration acreage (19,598 square kilometers) in the South Falkland Basin,southeast of the Falkland Islands. The Company was subsequently granted fiveproduction licences by the Governor of the Falkland Islands with effect from 1November 2004. The Company raised £9.1 million via a placing at 20p per share and was admittedto AIM in May 2005. Borders & Southern is chaired by Harry Dobson and is run bya management team with proven experience of acquiring, evaluating and developingoil and gas exploration plays for major international companies. Since Admission, the management team, led by Howard Obee, has focused on theexploration programme on its Falklands acreage but the Company intends, in themedium term, to capture and manage a geographically diversified portfolio ofinternational oil and gas exploration projects. It intends to focus on gainingearly entry into projects where it can demonstrate: basins with proven playelements, play fairways with high impact prospects and prospects that havefollow up potential. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Borders & Sth.