Last checked at 14 Apr 2020 07:00
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
| Share capital $000 | Share premium $000 | Other reserves $000 | Retained deficit $000 | Foreign currency reserve $000 | Total $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-