15th Nov 2005 07:01
Borders & Southern Petroleum plc15 November 2005 Borders & Southern Petroleum plc ("Borders & Southern" or "the Company") Maiden preliminary results Borders & Southern Petroleum plc (AIM: BOR), the international oil and gasexploration and production business, announces preliminary results for the yearended 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 anexciting period for Borders & Southern. Following an initial evaluation of theFalklands basin and the granting of our acreage, we raised £10 million poundsand floated on AIM, giving us the funds to pursue our activities in theFalklands and to screen new projects. We completed the acquisition of 2D seismicdata ahead of schedule. Initial findings are very exciting and we expect toprovide a further update in the coming months." For further information:Howard Obee Simon Hudson, Richard Sunderland,Chief Executive Clemmie CarrBorders & Southern Petroleum plc Tavistock CommunicationsTel: 020 7661 9348 Tel: 020 7920 3150 Borders & Southern Petroleum plc Chairman's Statement Borders & Southern Petroleum has experienced an exciting 12 months. The Companyhas made significant advances from its incorporation in June 2004, ending thefinancial 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 goodblend of commercial and technical oil industry experience. In October 2004 the Company was awarded its first exploration acreage, an areaof nearly 20,000 sq km in the South Falkland Basin. In particular, we wanted totest the fold belt trend located some 150 km to the south of the FalklandIslands. This east-west oriented belt contains numerous large simple structuresthat could form effective traps for hydrocarbons. The 2D seismic acquired inJune 2005 was focused on defining these structures and assessing theirprospectivity. In May 2005 the Company listed on the Alternative Investment Market of theLondon Stock Exchange and raised £10 million (gross). This was in order to fundits initial work programme in the Falkland Islands and the screening of newprojects. Within the next couple of months we anticipate that the interpretation of theFalkland Islands 2D seismic will be completed, giving us a better understandingof the hydrocarbon potential of the basin and in particular the fold belt. Anoperational update will be released before the end of the year together with anoutline of our future work programme. We currently have a strong balance sheet with enough cash reserves to coverfurther seismic acquisitions in the Falkland Islands should it be needed. Overthe next 12 months we will also be looking to develop our exploration portfolioby adding new projects in countries and basins that meet our strategy andinvestment criteria. Borders & Southern Petroleum has made great progress over the last 12 months andwe look forward to further developments in the coming year. Harry DobsonNon-Executive Chairman14 November 2005 Borders & Southern Petroleum plc Operational Review Licence awardIn June 2004, having screened the legacy offshore seismic database in theFalkland Islands, we applied for exploration acreage in the South FalklandBasin, and were subsequently awarded five production licences with an effectivedate of 1 November 2004. The licences cover an area of 19,598 sq km and occur inwater depths of between 200 to 3,000 metres. Very little seismic data hadpreviously been acquired in this area, but the few lines that did exist showedevidence of a fold belt trend, oriented east-west, extending from Argentina inthe west into international waters in the east. Globally, many fold belts formprolific hydrocarbon provinces and our aim was to investigate the potential ofthis one. There have been no wells drilled in the South Falkland Basin to date. The Production Licences were awarded with a work programme obligation thatcomprised seismic reprocessing and play fairway mapping in the first twelvemonths, the acquisition of 2,500 km of 2D seismic within three years, and thedrilling of one well in years four to six. Optional exit points were placedafter twelve months and three years, to mitigate the situation where theprospectivity could not be confirmed. Regional evaluationThe evaluation of the basin commenced in November 2004 with regional playfairway mapping and petroleum system analysis, utilising all the existingseismic and well data. This regional analysis was undertaken to provide insightinto our own acreage, particularly the distribution of source rocks, reservoirsand seals. The evaluation included the Magallanes and Malvinas Basins located tothe west of the Falkland Islands, the Falkland Plateau Basin to the east, andthe Bredasdorp Basin off the south coast of South Africa. The completed regionalstudy demonstrated that the geology is similar across all these basins and thathydrocarbon discoveries have been made in all the basins that have been testedby exploration wells. This provides great encouragement to our efforts in theuntested South Falkland Basin. Seismic acquisitionTo 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 assesstheir prospectivity. The completion of the seismic survey in June 2005 hassignificantly accelerated our work programme. After only seven months of theinitial three year licence term, we had completed our 2D seismic obligation. Atotal of 2,862 km of new data was acquired, which exceeded our minimum workprogramme obligation of 2,500 km. The survey, acquired by the GSI Admiralvessel, was conducted without major health, safety or environmental incidents. Seismic interpretationThe 2D seismic data has recently been processed by GSI in Calgary and theinterpretation is underway. An operational update will be given once theinterpretation has been completed. However, a preliminary review of the highquality seismic data has confirmed the presence of a major fold and thrust beltwith its associated foreland basin within the Company's acreage. These seismiclines reveal considerably more structures than originally anticipated andinclude numerous large anticlines, tilted fault blocks and sub-thrust structurescapable of trapping significant volume of hydrocarbons. The data also revealsseismic amplitude anomalies associated with many of the structures. Building the portfolioThe Company's strategy is to build a portfolio of exploration acreage indifferent basins and countries. We are targeting large acreage positions thathave the potential to contain multiple high value prospects and where thegeological risks can be constrained by rigorous technical work. Industry outlookWhilst there may be some softening over the next 12 months, oil prices areanticipated to remain at relatively high levels. This is likely to cause anincrease in exploration activity throughout the industry, creating increaseddemand for seismic vessels and drilling rigs, which will be reflected in higherprices for these services. Additionally, greater competition for acreage islikely to occur. We will take time to build the portfolio, ensuring any newproject meets our stringent investment criteria, and is of similar high qualityto the South Falkland Basin acreage. Howard ObeeChief 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 profitand 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 142,790Cash 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 1,276,875Share premium account 10,561,393Profit 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 63,539Interest 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 concernThe accounts have been prepared in accordance with the historical costconvention and in accordance with the applicable accounting standards and theStatement 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. TheCompany's ability to continue as a going concern is contingent upon its abilityto raise sufficient funds to cover future exploration and developmentcommitments. 2. Earnings/(Loss) per shareThe calculation of the basic earnings per share is based on the lossattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the period. The loss for the financial period is £141,246and 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 andaccordingly 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) Increase in creditors 203,708 --------- Net cash outflow from operating activities (140,147) 4. Analysis of changes in net funds At Cash At 8 June flows 30 June 2004 2005 £ £ £ Cash at bank - 416,100 416,100 ------------------------------------ - 416,100 416,100 Short term deposit - 10,000,000 10,000,000 ------------------------------------ Total - 10,416,100 10,416,100 ==================================== 5. FINANCIAL INFORMATIONThis preliminary statement which does not comprise statutory accounts isextracted from the audited accounts of the Company. The Company's accounts forthe period ended 30 June 2005 have been reported on by the auditors. The reportof the auditors was unqualified and did not contain a statement under section237(2) or (3) of the Companies Act 1985. 6. AVAILABILITY OF FINANCIAL STATEMENTSThe Financial Statements for the period to 30 June 2005 are being posted toshareholders and copies are available from the Company's registered office at 3Copthall Avenue, London EC2R 7BH and are available on the Company's web site atwww.bordersandsouthern.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Borders & Sth.