Borders & Sth. Regulatory News (BOR)

29 September 2011

Borders & Southern Petroleum plc

("the Company")

Unaudited interim financial statements for the six months ended 30 June 2011

Borders & Southern Petroleum Plc (AIM: BOR) is pleased to announce its unaudited interim financial statements for the six months to 30 June 2011. The accounts contained within this report represent the consolidation of Borders & Southern Petroleum Plc and its subsidiary Borders & Southern Falkland Islands Limited.

Highlights

Chief Executive's Review

We are now only a few months away from the start of our drilling programme in the Falkland Islands. Our project plan is on track and the logistics team are making good progress with mobilising equipment and supplies. An office has been set up in the Falklands and the supply base will be ready by the end of November. We have assembled a very experienced operations team of drilling superintendents, supervisors and engineers and they are already preparing for the arrival of the rig.

We are currently anticipating a mid January start date for drilling, although this is still somewhat fluid due to the uncertainty of when the Leiv Eiriksson will finish its current operations in Greenland. Once the rig has left Greenland and has made good progress on its voyage to the Falklands, an announcement will be made with a more accurate estimate for the spud date of the first well.

Our plan is to drill the Darwin prospect first (estimated recoverable resource of 300 to 760 million barrels), followed by Stebbing (estimated recoverable resource of 710 to 1,280 million barrels). As reported previously, our selected first two prospects are geologically independent, other than they require the same source rock to be present. Success or failure with the first well therefore has no impact on the second. Depending on the well outcomes, our extensive prospect inventory provides multiple follow up options. These include look-a-like folds and tilted fault blocks along with alternative play types such as stratigraphically trapped basin floor fans.

The combined two well programme is estimated to last approximately 90 days. The rig will then drill two wells for Falkland Oil and Gas. The two companies are working closely together by sharing resources where possible to deliver cost savings for both companies.

The Company's financial statements show a cash balance including restricted use cash of $197 million. This includes gains recorded as a result of currency movements. The funds are held in sterling and dollar treasury deposits with two UK based banks. Whilst the cash balance is net of payments already made on the long lead items such as casing and well heads, the majority of the pre- drilling expenditures are yet to be reflected in the accounts. Capital costs have started and will continue to accelerate in the second half of the year as the rig gets closer to being on location.

Based on current cost estimates, the Company believes it has sufficient funds to complete its two well drilling programme with contingency.

For further information please visit www.bordersandsouthern.com or contact:

Howard Obee

Borders & Southern Petroleum plc

Tel: 020 7661 9348

Simon Hudson

Tavistock Communications

Tel: 020 7920 3150

Katherine Roe

Panmure Gordon (UK) Limited

Tel: 020 7459 3600

Notes:

Borders & Southern Petroleum plc is an oil & gas exploration company listed on the London Stock Exchange AIM (BOR). The Company is focused on frontier or emerging basins where there is potential to identify and commercialise high value prospects. Its project in the Falkland Islands comprises five Production Licences (100% interest) in the South Falkland Basin covering an area of nearly 20,000 square kilometres. The Company has acquired 2,862 km of 2D seismic and 1,492 sq km of 3D seismic. It is currently planning its first drilling campaign.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

At 30 June 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2011

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2011

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2011

1. Basis of preparation

The unaudited condensed consolidated interim financial statements have been prepared using the recognition and measurement principles of International Accounting Standards, International Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRSs). The Group has not elected to comply with IAS 34 "Interim Financial Reporting" as permitted. The principal accounting policies used in preparing the interim financial statements are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2010 and are expected to be consistent with those policies that will be in effect at the year end. 

The condensed financial statements for the six months ended 30 June 2011 and 30 June 2010 are unreviewed and unaudited. The comparative financial information does not constitute statutory financial statements as defined by Section 435 of the Companies Act 2006. The comparative financial information for the year ended 31 December 2010 is not the company's full statutory accounts for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

2. EARNINGS per share 

The calculation of the basic earnings per share is based on the profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Due to the small number of share options granted relative to issued capital, diluted earnings per share rounds to the same number of earnings per share.

3. FINANCE INCOME AND EXPENSE

4. RESTRICTED USE CASH

The Company has placed funds with a bank as security for a letter of credit issued in favour of a company providing it services. As payment for these services is made, these funds will be released to the Company.

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