LONDON (Alliance News) - Borders and Southern Petroleum PLC Monday said its pretax loss widened in 2014 as costs increased, and admitted it has struggled to find a partner for the Darwin discovery against a backdrop of reduced investment by companies caused by the fall in oil prices.
The oil and gas exploration company that is primarily functioning in the Falkland Islands reported a pretax loss of USD3.9 million for 2014, wider than the USD3.0 million loss reported in 2013.
The loss widened as administrative expenses rose to USD3.0 million from USD2.8 million and finance expenses increased to USD910,000 from USD207,000.
At the end of December, the company had cash reserves totalling around USD16 million.
Borders and Southern said it has been looking to secure partners to fund the next phase of appraisal at the company's Darwin discovery against a backdrop of weaker oil prices, reduced expenditure but also cheaper rig and well service costs.
The company said the backdrop has made it difficult to find partners prepared to commit to a multi-well, deep-water drilling programme with each well due to cost USD100 million. The company said the USD100 million figure was calculated before the drop in oil prices, and said the location of exploration is also a barrier to some partners taking an interest.
However, it believes that the Darwin discovery is a very "robust" project due to the competitive fiscal terms offered by the Falkland Islands government and Darwin's high quality reservoir, which results in a lower number of production wells to be drilled.
"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," said the company in a statement.
Borders and Southern shares were down 1.3% to 6.02 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Borders & Sth. (BOR)