REG-Borders & Southern Final ResultsReleased: 28/05/2009
com:20090528:Rnsb9125S
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RNS Number : 9125S
Borders & Southern Petroleum plc
28 May 2009
Borders & Southern Petroleum plc
Preliminary Results for the 12 months ended
31 December 2008
Borders & Southern Petroleum plc (or "the Company") (AIM: BOR) is pleased to
announce its preliminary results for the 12 months to 31 December 2008.
Highlights
* Completed 3D seismic acquisition and processing
* Completed the interpretation of the fast track and fully processed data
* Integrated 3D interpretation into regional evaluation
* Compiled ranked prospect inventory
* In a position to define drilling locations
* Concluded benthic sampling programme
* Progressing Environmental Impact Assessment
* Cash balance as at 31 December 2008 was US$19.5 million
Harry Dobson, Chairman of Borders & Southern, commented "We believe that our
extensive technical programme has allowed us to define a robust, high value
prospect inventory. We now intend to seek partners for our South Falkland Basin
licenses and we are optimistic that other companies will share our positive
views on the high prospectivity"
For further information please visit www.bordersandsouthern.com or contact:
Howard Obee Simon Hudson
Borders & Southern Petroleum plc Tavistock Communications
Tel: 020 7661 9348 Tel: 020 7920 3150
Katherine Roe Guy Wilkes
Panmure Gordon (UK) Limited Ocean Equities
Tel: 020 7459 3600 Tel: 020 77864370
Chairman's Statement
Activity in 2008 has seen the Company focus on its technical objectives. During
this period we have completed the acquisition and processing of a large 3D
survey and finalised its interpretation. The results of this work have yielded
what we believe to be a very attractive and exciting prospect inventory.
Against a challenging economic background, the Company, whilst experiencing a
decrease in value along with market trends, has performed well relative to its
peer group of AIM listed Exploration & Production Companies. We also have a
strong cash balance.
During the period we have witnessed the oil price decline from $147 per barrel
down to around $35 per barrel. Recently the oil price has showed signs of
recovery with prices approaching $60 per barrel again. However, it should be
noted that our projects in the Falkland Islands are likely to be commercial at
the $35 level.
Whilst we cannot impact the external environment, we can influence the technical
evaluation by the correct choice of data acquisition and the areas we select in
which to collect the data. In this regard, the Board of Directors considers that
it has been very successful. Multiple, high quality, large volume prospects have
been defined, many of which are supported by geophysical attributes of the type
we had hoped for at the onset of the exploration programme.
With the completion of the main phase of 3D seismic interpretation there will be
no further requirement for additional data acquisition prior to drilling a well.
We are now in a position to define drilling locations on our prioritised
prospects. As we have previously reported, the first two high-graded prospects
are Darwin and Stebbing.
As we look forward, technical work will continue but our energy will be placed
into bringing a partner into the licences to help fund the wells. Given the
scale and quality of the prospect inventory we are optimistic that we can
attract a credible partner.
Chief Executive's Review
The technical programme undertaken in 2008 involved the acquisition, processing
and interpretation of 1,492 sq km of 3D seismic data. The 3D data has been fully
integrated into our regional evaluation so that we now have a comprehensive
understanding of the South Falkland Basin. As a result, not only have we been
able to define a high quality multi-billion barrel (recoverable) prospect
inventory, but also identify those play types within the basin that we think are
most likely to deliver success.
As previously reported, the step change in understanding from 2D to 3D seismic
data has been dramatic and justifies the size and expenditure of the 3D survey.
Prospect sizes are large (up to 150 sq km of mapped structural closure) and
display important geophysical attributes that help reduce the risk. These
include seismic amplitude conformance to structure, flat spot and AVO anomalies,
along with gas hydrates located above prospects. We interpret these seismic
attributes to indicate that the structures have received a hydrocarbon charge.
Individual prospect volumes in some cases exceed 1 billion barrels of
recoverable oil. The previously reported Darwin and Stebbing prospects have P50
recoverable oil volumes of 300 million and 710 million barrels respectively.
Additional stacked reservoirs on the same structures could increase these
numbers. These prospects represent different play types and have been
prioritised due to the chance of success rather than size.
Whilst the exploration drilling programme will target high-graded oil prospects,
each prospect has also been considered as a gas case. If gas was the only
outcome, and we consider it unlikely, then the prospect gas volumes would be
sufficient to justify an LNG development. Individual prospect volumes can exceed
(P50) 5 trillion cubic feet of recoverable gas.
Aside from producing a ranked prospect Inventory we have conducted a benthic
sampling programme, one of the key requirements for the Environmental Impact
Assessment (EIA). The operations were completed efficiently and the analysis is
currently underway. Once the EIA has been submitted and approved we will be
ready to drill and should the opportunity arise will be able to share in a
combined drilling operation with other operators in the area.
Whilst the Company has a strong cash balance it does not have sufficient funds
to execute a two well programme. Given the economic climate the Board has
decided the best way to finance our wells is to seek a partner. Within the
coming months we will further discussions with third parties and will report
later in the year. Given the strength of the prospect inventory, scale of
opportunity and the quality of the geophysical attributes, the Board is
confident of securing a competent partner.
Borders & Southern Petroleum Plc
Consolidated Income Statement for the Year Ended 31 December 2008
2008 2007
$ $
Continuing operations
Administrative expenses (1,287,544) (1,715,392)
Loss from operations (1,287,544) (1,715,392)
Finance income 986,177 1,379,691
Finance expense - foreign exchange losses (4,426,533) -
Loss before tax (4,727,900) (335,701)
Income tax expense - -
Loss for the year (4,727,900) (335,701)
(2.43) cents
Loss per share - basic and diluted (see note 2) (0.23)cents
Borders & Southern Petroleum Plc
Consolidated Balance Sheet for the Year Ended 31 December 2008
2008 2007
$ $ $ $
Assets
Non-current assets
Property, plant and equipment 14,929 7,749
Intangible assets 36,040,860 23,155,802
Total non-current assets 36,055,789 23,163,551
Current assets
Trade and other receivables 251,788 313,400
Other financial assets 9,950,668 -
Cash and cash equivalents 9,522,035 39,064,938
Total current assets 19,724,491 39,378,338
Total assets 55,780,280 62,541,889
Liabilities
Current liabilities
Trade and other payables (194,770) (2,309,741)
Total net assets 55,585,510 60,232,148
Capital and reserves
Share capital 3,867,741 3,867,741
Share premium reserve 57,906,686 57,906,686
Other reserves 209,409 108,032
Retained earnings (6,381,930) (1,654,030)
Foreign currency reserve (16,396) 3,719
Total equity 55,585,510 60,232,148
Borders & Southern Petroleum Plc
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2008
Share capital Share premium reserve Other reserves Foreign currency reserve Retained earnings Total
$ $ $ $ $ $
Balance at 1 January 2007 brought forward 2,541,173 21,018,756 30,209 - (1,318,330) 22,271,808
Loss for the year and total recognised income and expense - - - - (335,700) (335,700)
for the year
Issue of share capital 1,326,568 36,887,930 - - - 38,214,498
Recognition of share based payments - - 77,823 - - 77,823
Foreign exchange on change in presentation currency - - - 3,719 - 3,719
Balance at 31 December 2007 3,867,741 57,906,686 108,032 3,719 (1,654,030) 60,232,148
Loss for the year and total recognised income and expense - - - - (4,727,900) (4,727,900)
for the year
Recognition of share based payments - - 101,377 - - 101,377
Foreign exchange on change in functional currency - - - (20,115) - (20,115)
Balance at 31 December 2008 3,867,741 57,906,686 209,409 (16,396) (6,381,930) 55,585,510
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 reserve Amount subscribed for share capital in excess of nominal value.
Other reserves Fair value of options issued.
Presentation currency reserve Differences arising on change of presentation and functional
currency to $.
Retained earnings Cumulative net gains and losses recognised in the consolidated
income statement.
Borders & Southern Petroleum Plc
Consolidated Cash Flow Statement for the Year Ended 31 December 2008
2008 2007
$ $ $ $
Cash flow from operating activities
Loss before tax (4,727,901) (335,700)
Adjustments for:
Depreciation 9,850 16,074
Exploration and evaluation expenditure transferred to
income statement - 5,054
Share-based payment 101,377 77,823
Finance income (986,177) (1,379,691)
Finance expense 4,426,533 -
Foreign exchange differences (20,116) -
Cash flows from operating activities before changes in (1,196,434) (1,616,440)
working capital
Decrease/(increase) in trade and other receivables 65,881 (7,576)
(Decrease)/increase in trade and other payables (2,114,973) 2,178,754
Net cash (outflow)/inflow from operating activities (3,245,526) 554,738
Cash flows used in investing activities
Interest received 981,913 1,343,856
Purchase of other financial assets (9,950,668) -
Purchase of intangible assets (12,885,059) (19,902,084)
Purchase of property, plant and equipment (17,030) (3,543)
Net cash used in investing activities (21,870,844) (18,561,771)
Cash flows from financing activities
Proceeds from issue of shares and share options (net of
issue costs) - 38,214,498
Net cash from financing activities - 38,214,498
Net (decrease)/ increase in cash and cash equivalents (25,116,370) 20,207,463
Cash and cash equivalents at the beginning of the year
39,064,938 18,847,347
Exchange (loss)/gain on cash and cash equivalents
(4,426,533) 10,128
-
Cash and cash equivalents at the end of the year
9,522,035 39,064,938
Group and company 2008 2007
$ $
Cash available on demand 584,285 741,614
Cash on deposit 8,937,750 38,323,324
Total 9,522,035 39,064,938
Cash and cash equivalents consist of cash at bank on demand and balances on
deposit with an original maturity of three months or less.
Notes
1 Basis of preparation
The Group financial statements have been prepared and approved by the Directors
in accordance with International Financial Reporting Standards (IFRS's and IFRIC
Interpretations) issued by the International Accounting Standards Board (IASB)
as endorsed for use in the EU and those parts of the Companies Act 1985 and 2006
that are applicable to companies that prepare their financial statements under
IFRS.
The financial information for the years ended 31 December 2008 and 31 December
2007 does not constitute the company's statutory financial statements but is
extracted from the audited accounts for those years. The 31 December 2007
accounts have been delivered to the Registrar of Companies. The 31 December 2008
accounts will be delivered to Companies House within the statutory filing
deadline. The auditors have reported on those accounts; their reports were
unqualified and did not contain statements under Section 498 (2) or (3) of the
Companies Act 2006.
Effective 1 July 2008, the Company's functional currency changed from Pounds
sterling ('£') to the US dollar ('$'). This change was made as, due to
significant transactions and balances being denominated in $, the directors
considered the $ to most faithfully represent the economic effects of the
underlying transactions, events and conditions in the Company. Concurrent with
this change in functional currency, the Group adopted the $ as its presentation
currency and consequently the financial information for the year ended 31
December 2007 has been re-presented in $.
In accordance with International Accounting Standards, this change in functional
currency has been accounted for prospectively by translating all items using the
$:£ exchange spot rate on that date, being $1.9902:£1. In the parent company
accounts the resulting translated amounts for non monetary items at this date
have been treated as their historic cost.
For the purposes of changing the Group's presentation currency, the comparatives
for the year ended 31 December 2007 were translated for the balance sheet using
$:£ exchange spot rate on that date, being $1.9906:£1, for the income statement
using the average $:£ exchange rate during the year being $2.0015:£1, and for
the opening the balances as at 1 January 2007 using the $:£ spot rate on that
date being $1.9728:£1. Resulting exchange differences have been taken to the
Foreign currency reserve.
2 Loss per share
The calculation of the basic 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 $4,727,900
(2007 - $335,701) and the weighted average number of shares in issue for the
year was 194,344,170 (2007 - 144,351,668).
3 Potentially dilutive share options
At 31 December 2008 there were options over 1,000,000 shares outstanding which
are potentially dilutive (2007 - 700,000). For the majority of the options
their exercise price is greater than the weighted average share price during the
year and it would not be advantageous of the holders to exercise these,
therefore these options have been excluded from the calculation of diluted EPS.
As a result the diluted earnings per share is not materially different to the
basic earnings per share.
This information is provided by RNS
The company news service from the London Stock Exchange
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