Final Results

RNS Number : 5698A

Borders & Southern Petroleum plc

02 April 2012

 



2 April 2012

Borders & Southern Petroleum Plc

Preliminary Unaudited Results for the 12 months ended

31 December 2011

Borders & Southern Petroleum Plc ("Borders & Southern" or "the Company") (AIM:BOR) is pleased to announce its preliminary unaudited results for the year to 31 December 2011.

Highlights

●	Established an office and supply base in the Falkland Islands
●	Finalised well engineering for the Darwin East and Stebbing wells
●	Mobilised the Leiv Eiriksson drilling rig from Greenland to the Falkland Islands
●	Spudded well 61/17-1 (Darwin East)
●	Cash Balance (including restricted use cash) as of 31 December 2011, $176.7 million

Harry Dobson, Chairman of Borders & Southern, commented: "The last twelve months have been an extremely busy period for the Company. Our drilling locations have been prepared, well engineering completed and an operations base opened in readiness for the Company's first exploration wells. The Leiv Eiriksson drilling rig was mobilised from Greenland, drilling services and supplies were brought in from Europe and people from around the world. The team has done a remarkable job. Operations in the Falkland Islands involve numerous logistical challenges and I would like to thank all our staff and contractors for making it happen.

"We spudded Well 61/17-1 on 31 January 2012 and it is still progressing. Having overcome some initial problems with rig equipment we will hopefully be able to report within a few weeks. A more comprehensive report will be given at the time and in our Annual Report that will be sent to shareholders during May."

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

Howard Obee, Chief Executive Borders & Southern Petroleum plc Tel: [phone]

Katherine Roe / Brett Jacobs Panmure Gordon (UK) Limited Tel: [phone]

Simon Hudson / Paul Youens Tavistock Communications Tel: [phone]

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 sqkm of 3D seismic.

Unaudited consolidated statement of comprehensive income

for the year ended 31 December 2011

	Note	2011 $		2010 $
Administrative expenses		(2,081,967)		(1, 504,467)
Loss from operations		(2,081,967)		(1, 504,467)
Finance income Finance expense		360,037 (13,465)		1,359,497 (20,313)
Loss  before tax		(1,735,395)		(165,283)
Tax expense		5,506		-
Loss for the year and total comprehensive loss for the year attributable to owners of the parent		(1,740,901)		(165,283)
Basic and diluted loss per share	2	(0.4) cents		(0.039) cents

Unaudited consolidated statement of financial position

as at 31 December 2011

	2011		2010
	$	$	$	$
Assets Non-current assets
Property, plant and equipment		20,629		13,110
Exploration and evaluation assets		64,643,520		37,730,165
Total non-current assets		64,664,149		37,743,275
Current assets
Other receivables	1,544,103		11,315,514
Cash and cash equivalents	95,776,313		194,130,019
Restricted use cash	80,947,886		-
Total current assets		178,268,302		205,445,533
Total assets		242,932,451		243,188,808
Liabilities Current liabilities
Trade and other payables		(1,330,112)		(271,471)
Total net assets		241,602,339		242,917,337
Capital and reserves attributable to equity holders of the company
Share capital		7,675,453		7,675,453
Share premium		238,034,095		238,034,095
Other reserves		1,046,565		620,662
Retained deficit		(5,137,378)		(3,396,477)
Foreign currency reserve		(16,396)		(16,396)
Total equity		241,602,339		242,917,337

Unaudited consolidated statement of changes in equity

for the year ended 31 December 2011

	Share capital $	Share Premium $	Other reserves $	Retained deficit $	Foreign currency reserve $	Total $
Balance at 1 January 2010	7,675,453	238,034,095	353,286	(3,231,194)	(16,396)	242,815,244
Total comprehensive loss  for the year	-	-	-	(165,283)	-	(165,283)
Recognition of share based payments	-	-	267,376	-	-	267,376
Balance at 31 December 2010	7,675,453	238,034,095	620,662	(3,396,477)	(16,396)	242,917,337
Total comprehensive loss for the year	-	-	-	(1,740,901)	-	(1,740,901)
Recognition of share based payments	-	-	425,903	-	-	425,903
Balance at 31 December 2011	7,675,453	238,034,095	1,046,565	(5,137,378)	(16,396)	241,602,339

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.
Foreign currency reserve	Differences arising on change of presentation and functional currency to US Dollars.
Retained deficit	Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

.

Unaudited consolidated statement of cash flows

for the year ended 31 December 2011

	2011		2010
	$	$	$	$
Cash flow from operating activities
Loss before tax		(1,735,395)		(165,283)
Adjustments for:
Depreciation		13,606		9,930
Share-based payment		425,903		267,376
Finance income		(360,037)		(1,359,497)
Finance expenses		13,465		20,313
Cash flows from operating activities before changes in working capital		(1,642,458)		(1,227,161)
Decrease/(increase) in other  receivables		402,423		(1,847,804)
Increase  in trade and other payables		1,058,641		26,791
Tax paid		(5,506)		-
Net cash outflow from operating activities		(186,900)		(3,048,174)
Cash flows used in investing activities
Interest received	360,743		520,830
Interest paid	(254)		(20,313)
Purchase of intangible assets	(17,545,073)		(10,479,407)
Purchase of property, plant and equipment	(21,125)		(3,524)
Net cash used in investing activities		(17,205,709)		(9,982,414)
Net decrease in cash and cash equivalents		(17,392,609)		(13,030,588)
Cash and cash equivalents at the beginning of the year		194,130,019		206,321,177
Exchange (loss)/gain on cash and cash equivalents		(13,211)		839,430
Cash and cash equivalents and restricted use cash held at the end of the year		176,724,199		194,130,019
Cash and cash equivalents		95,776,313		194,130,019
Restricted use cash		80,947,886		-
Cash and cash equivalents and restricted use cash held at the end of the year		176,724,199		194,130,019

1. Accounting policies

Basis of preparation

The financial information set out above does not constitute the Group or Company's statutory accounts for 2010 or 2011. Statutory accounts for the year 31 December 2010 have been reported on by the Independent Auditors.  The Independent Auditors' Report on the Annual Report and Financial Statements for 2010 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The results for 31 December 2011 are unaudited. Statutory accounts for the year ended 31 December 2011 will be finalised based on the information presented in this announcement.  The independent Auditors' Report will be based on those statutory accounts once they are complete.

Statutory accounts for the year ended 31 December 2010 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2011, prepared under IFRS as adopted by the European Union, will be delivered to the Registrar in due course.

Going concern

The Directors believe that the company has sufficient funds, with contingency, to drill two exploration wells in the Falkland Islands which will more than fulfill it's current license obligations. Excess funds are expected to be sufficient to fund ongoing operations for the foreseeable future. Therefore, this financial information has been prepared on a going concern basis.

2. 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 $1,740,901 (2010 - loss  $165,283) and the weighted average number of shares in issue for the year was 428,578,404 (2010 - 428,578,404).    During the year the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated. At the reporting date, there were 5,350,000 (2010: 2,450,000) potentially dilutive ordinary shares being the share options.

3. Capital Commitments

On 5 May 2011 the company entered into a contract with Ocean Rig UDW Inc. for the provision of mobile drilling rig services using the Leiv Eiriksson drilling unit. Under the contract the company committed to drill 2 wells with options to drill a further 3 wells. On 18 May 2011, the company signed an agreement to assign two of its option wells to Falkland Islands Oil and Gas Limited.

The company's committed costs for drilling 2 wells, including mobilisation and de-mobilisation, are currently estimated to be $72 million and the company anticipates these costs will be incurred within 12 months from the statement of financial position date.

4. Cash and cash equivalents

The company holds its deposits with banks. The company has a cash deposit held as security for a letter of credit issued as part of its obligations under the rig contract. The company has also placed funds into an escrow account under the terms of a project management contract.

5. Post Reporting Date Events

On 31 January 2012 the company commenced drilling operations on the first well within its Falkland Islands licences.

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