Borders & Sth. Regulatory News (BOR)

20 May 2010

Borders & Southern Petroleum Plc

Preliminary Results for the 12 months ended

31 December 2009

Borders & Southern Petroleum Plc ("Borders & Southern" or "the Company") (AIM: BOR) is pleased to announce its preliminary results for the year to 31 December 2009.

Highlights

·; Consolidated the prospect inventory and submitted Environmental Impact Statement

·; Completed initial well designs and cost estimation study

·; Received a three year extension to the first Phase Exploration Term with an obligation to drill one exploration well

·; Raised $184 million (net of expenses) through the placement of 234,234,234 Ordinary Shares

·; Cash balance as at 31 December 2009 was $206.3 million

Harry Dobson, Chairman of Borders & Southern, commented "Our successful capital raise in November allows us to comfortably fund a drilling programme on our exciting prospects in the South Falkland Basin without diluting our 100% ownership of our acreage. We continue to progress our understanding of the prospects with additional technical work but the principal focus is now on drilling - securing a deep water rig and undertaking detailed well engineering studies.

"We look forward to updating shareholders on progress in this next, and critical, phase of the exploration programme."

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

Chairman's Statement

During the course of 2009 there was a notable change in sentiment within the oil sector. At the start of the year the oil price was around $35 per barrel, global exploration had been scaled back and share prices of oil companies had fallen. However, the oil price progressively increased towards $80 per barrel by the end of the year and this rise was accompanied by a noticeable change in appetite for exploration risk, including frontier exploration. This was partly to do with success stories in places such as Ghana, Uganda, Kurdistan and Sierra Leone. In the first half of 2010 the oil price has stabilised around the $80 to $85 per barrel mark.

Against this background, our activity during the year involved consolidating our prospect inventory and initiating preliminary well planning. We have also focused on ensuring sufficient funds are available for the initial drilling programme. Deep water wells are expensive and having commissioned a well cost analysis, the board considered that it required around $185 million to fund 2 to 3 wells with contingency, assuming 100% funding of the wells along with all the mobilisation and demobilisation costs of the rig and equipment.

In November 2009 the Board decided that the market conditions were right to support a major fundraising and the Company successfully raised $190 million (before expenses) at a price equivalent to the then market price. The response was incredible and we were delighted with the quality of the new institutional shareholders. We believe that the positive response from major funds reflects the quality of the technical case and the quality of the work undertaken to date but most importantly, the quality of the initial prospects that have been prioritised for drilling.

I would like to welcome our new shareholders and thank them for their support. I would also like to thank our new joint-brokers Mirabaud, along with existing joint-brokers Panmure Gordon and Ocean Equities, for their help in making the issue such a success.

Borders & Southern's cash balance of $206.3 million at year end allows us to move forward independently to fund the wells that we would like to drill and to set our own time line. In this regard, we are currently trying to source a deep water rig to be active in the next summer season in the Falklands (the back end of 2010 and the first quarter of 2011). There are rigs available in this time frame but it is a competitive environment with others competing for the same rigs. However, we are optimistic that we can meet our objectives and will inform shareholders once we have secured a suitable rig.

As we look forward, the next twelve months should prove the most exciting in our short history as we source a rig, finalise the well planning and begin drilling the acreage.

Harry Dobson

Chairman

19 May 2010

Chief Executive's Review

In November 2009 the first Exploration phase of our Production Licences reached a conclusion. As Borders & Southern had fulfilled all of its work programme obligations and had worked up an impressive prospect inventory, we requested a three year extension to this first phase from the Falkland Islands Government. This was subsequently granted so long as we commit to drill one exploration well during that period.

During the year we continued to work our seismic data and continued to refine our prospect inventory. In addition, we purchased more 2D non-exclusive regional seismic data covering areas outside our licensed acreage. The purpose of this was to improve our knowledge of the basin as a whole, which could be fed back into the evaluation of our prospects.

We also progressed our Environmental Impact Assessment. This led to the submission of our Environmental Impact Statement in February 2010. A public consultation was subsequently held in the Falkland Islands allowing feedback on the document and having responded to questions, we now await approval from the Falkland Islands Government.

Prior to our fundraising in November 2009, consultants AGR completed initial well designs for our Darwin and Stebbing wells along with some initial cost estimates. Darwin and Stebbing have been high graded as the best first tests of our acreage as they are robust structural traps and have impressive geophysical attributes that help to reduce risk. Also, in the case of Darwin, there are good success case analogues in the contiguous Malvinas and Magellanes basins to the west.

Although exploration risk can never be eliminated, we are particularly excited about drilling these prospects. The two prospects are completely independent of each other except that they require the same source rock to be working. We will therefore be learning as much as we can about the geology and petroleum systems of our acreage.

As I write this review, operations in the North Falkland Basin are underway. As reported previously, the geology in the North Falklands Basin is completely different from that in the South. The prime difference is that the sediments in the North were deposited in lakes whilst the sediments in the South were deposited in a marine environment. Consequently, the outcomes in the north, both positive and negative have absolutely no impact on the prospectivity of our acreage.

Shortly, the first well in the South Falkland Basin will be drilled, operated by BHP Billiton. Our understanding is that their prospect is a structural/stratigraphic trap. This contrasts with the structural traps, defined by 3D seismic, that we will be drilling. So whilst their well will be drilling similar geology, in detail the prospects are [considered] significantly different. The key differences are the age of reservoir and seal, the source kitchen and migration pathways and importantly, the trapping mechanism.

Technical work on our acreage will continue. For instance we have recently kicked off a pre-stack depth migration study of the Stebbing prospect and a pore pressure prediction study for both prospects. However, the majority of the technical activity will be focused on detailed well engineering.

Currently our energies are directed towards accessing a deep water rig. We are fully funded to cover all of the drilling and mobilisation costs. Hopefully, we will be able to share some of the mobilisation and demobilisation costs with other operators in the region.

Howard Obee

Chief Executive

19 May 2010

Borders & Southern Petroleum Plc

Consolidated Statement of Comprehensive Income

for the Year Ended 31 December 2009

Borders & Southern Petroleum Plc

Consolidated Statement of Financial Position as at 31 December 2009

Borders & Southern Petroleum Plc

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2009

Borders & Southern Petroleum Plc

Consolidated Statement of Cash Flows for the Year Ended 31 December 2009

Notes to the Financials

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 (IFRS) 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 2009 and 31 December 2008 does not constitute the company's statutory financial statements but is extracted from the audited accounts for those years. The 31 December 2008 accounts have been delivered to the Registrar of Companies. The 31 December 2009 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 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.

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.

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 year. The profit for the financial year for the group was $3,150,736 (2008: loss of $4,727,900) and the weighted average number of shares in issue for the year was 204,611,972 (2008: 194,344,170).

At 31 December 2009 there were options over 2,250,000 shares outstanding which are potentially dilutive (2008: 1,000,000). 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.

3. Post Balance Sheet Event

The exploration licenses expired on 31 December 2009. On 19 January 2010 it was confirmed by the Acting Governor of the Falkland Islands that it consented to extend the licences to 1 November 2012 with a commitment to drill one well prior to 1 November 2012. The Directors anticipate receiving a Deed of Variation reflecting the changes to the licenses shortly.

4. Annual General Meeting

The Annual General Meeting of the Company will be held at 1100h on Tuesday 22 June 2010 at the Company's registered office, 33 St James's Square London SW1 4JS. Notice convening the meeting will be sent to shareholders with the 2009 Annual Report expected to be dispatched by the end of May 2010.