Last checked at 14 Apr 2021 07:00
14 April 2021
Borders & Southern Petroleum plc
("Borders & Southern" or "the Company")
Audited Results for the 12 month period ended 31 December 2020
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 ended 31 December 2020. 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 tomorrow on the Company's website and posted to Shareholders in May.
Summary
· Cash Balance on 31 December 2020: $2.18 million (2019: $3.68 million).
· Administrative expense for the year: $1.0 million (2019: $1.45 million).
· Operating loss of $1.01 million (2019: $1.37 million)
· The farm-out process has been extensive and far-reaching - the Company continues to investigate all possible options for funding the next drilling programme.
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 & Joint Broker) James Spinney / Ritchie Balmer / Georgia Langoulant Tel: 020 7409 3494
|
Auctus Advisors LLP (Joint Broker) Jonathan Wright Tel: 07711 627449
Tavistock (Financial PR) Simon Hudson / Nick Elwes 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 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended). 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
Borders & Southern's strategic objective is to monetise its Darwin discovery for the benefit of all its stakeholders. To achieve this and to initiate the next step, the Company's principal focus has been to acquire partners and funding for Darwin's appraisal programme. However, in the past few years, industry and capital market fundamentals have not helped our progress. 2020 continued in the same vein. But despite the challenge, the Board believes that the quality of the Darwin project merits the continuation of its strategy and the Board's commitment remains undiminished.
The loss from operations in 2020 was $1,046,000 (compared to $1,370,000 in 2019). The Company has always maintained strong financial control and a low overhead. However, further cost savings have been made during the past year, including a reduction in salaries by 50%. Administrative expense for the year was $1.0 million, compared to $1.47 million in 2019. The cash balance at year-end was $2.18 million (2019: $3.68 million). The Company remains debt-free. With a decreasing cash balance, and in the event that market conditions prevent us from sourcing partner funding, it may be necessary to raise additional capital in the coming year.
The farm-out process has been extensive and far reaching. To assist the marketing, considerable effort has been put into minimising drilling costs for the next campaign, addressing both the well designs and the service company costs. Potential savings of up to 25% have been identified and this has formed the basis of our current conversations with potential partners.
The project fundamentals are strong. Economic projections are attractive, the break-even oil price is low (less than $35 per barrel), sub-surface risks are low, and the environmental footprint low. As the industry enters the energy transition to a lower carbon future, we believe that Darwin (with its estimated 460 million barrels of condensate and LPGs) is a worthy development, comparing favourably to many global alternatives. Prior to the start of the next phase of operations, the Company commits to fully integrating climate change into its business plan. We will define measures, report transparently, and mitigate our own emissions as far as practicable.
Outlook for the industry remains challenging, although signs of optimism are noted. Brent crude has risen during the first quarter of 2021, approaching $70 per barrel before declining to around $60 later in the quarter. Whilst this has not yet impacted company expenditure patterns, if the trend were to continue, and energy demand accelerates as the world comes out of the Covid pandemic crisis, there will be a need to bring additional resources into production. Borders & Southern aim to be part of that production increase.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
| 2020 | 2019 |
$000 | $000 | |
Administrative expenses | (1,046) | (1,447) |
Loss from operations | (1,046) | (1,447) |
Finance income | 55 | 88 |
Finance expense | (11) | (11) |
Loss before tax | (1,002) | (1,370) |
Tax expense | - | - |
Loss for the year and total comprehensive loss for the year attributable to equity owners of the parent | (1,002) | (1,370) |
Basic and diluted loss per share (see note 3) | (0.21) cents | (0.28) cents |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2020
| 2020 | 2019 | ||
$000 | $000 | $000 | $000 | |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
| 151 |
| 118 |
Intangible assets |
| 292,241 |
| 291,765 |
Total non-current assets |
| 292,392 |
| 291,883 |
Current assets |
|
|
|
|
Other receivables | 225 |
| 233 |
|
Cash and cash equivalents | 2,184 |
| 3,682 |
|
Total current assets |
| 2,409 |
| 3,915 |
Total assets |
| 294,801 |
| 295,798 |
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| (240) |
| (235) |
Total net assets |
| 294,561 |
| 295,563 |
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 |
| 1,777 |
Retained deficit |
| (24,332) |
| (23,330) |
Foreign currency reserve |
| (16) |
| (16) |
Total equity |
| 294,561 |
| 295,563 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
| Share capital $000 | Share premium $000 | Other reserves $000 | Retained deficit $000 | Foreign currency reserve $000 | Total $000 |
Balance at 1 January 2019 | 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 |
Loss and total comprehensive loss for the year | - | - | - | (1,002) | - | (1,002) |
Balance at 31 December 2020 | 8,530 | 308,602 | 1,777 | (24,332) | (16) | 294,561 |
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 the translation of foreign operation to US dollars. |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
| 2020 | 2019 | ||
| $000 | $000 | $000 | $000 |
Cash flow from operating activities |
|
|
|
|
Loss before tax |
| (1,002) |
| (1,370) |
Adjustments for: Depreciation |
| 95 |
| 92 |
Share-based payment |
| - |
| 2 |
Finance costs |
| 11 |
| 11 |
Finance income |
| (54) |
| (88) |
Unrealised foreign currency movements |
| 2 |
| 27 |
Cash flows used in operating activities before changes in working capital |
| (948) |
| (1,326) |
Decrease in other receivables |
| 8 |
| 29 |
Increase/(Decrease) in trade and other payables |
| (61) |
| (176) |
Net cash outflow from operating activities |
| (1,000) |
| (1,473) |
Cash flows used in investing activities |
|
|
|
|
Interest received | 2 |
| 27 |
|
Purchase of tangible fixed assets | - |
| (11) |
|
Purchase of intangible assets | (476) |
| (398) |
|
Net cash used in investing activities |
|
(474) |
|
(382) |
Cash flows from financing |
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Lease interest | (11) |
| (11) |
|
Lease payments | (62) |
| (112) |
|
|
| (73) |
| (123) |
Net decrease in cash and cash equivalents |
| (1,547) |
| (1,978) |
Cash and cash equivalents at the beginning of the year |
| 3,682 |
| 5,626 |
Exchange gain on cash and cash equivalents |
| 49 |
| 34 |
Cash and cash equivalents at the end of the year |
| 2,184 |
| 3,682 |
Notes
1. Accounting policies
Basis of preparation
The financial information for the year ended 31 December 2020 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 2020. 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 2020 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 consolidated financial statements have been prepared on a going concern basis which assumes the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.
The Group's board of directors have reviewed the Group's cash forecasts for a period of no less than twelve months from the date of approval of the financial statements, the period to 31 March 2022. Based on these forecasts, in the absence of a farm-out, the directors have identified that further funding may be required to cover administrative costs and licence fees beyond December 2021.
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 $1.002 million (2019- loss $1.370 million) and the weighted average number of shares in issue for the year was 484.1 million (2019 - 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 (2019 - 6.1 million) potentially dilutive ordinary shares being the share options.
4. Subsequent date events
There were no subsequent date events requiring disclosure
-ends-