Half-year Report

RNS Number : 7687B
Borders & Southern Petroleum plc
25 September 2018
 

25 September 2018

 

Borders & Southern Petroleum plc

("Borders & Southern" or "the Company")

 

Unaudited Results for the six month period ended 30 June 2018

 

Borders & Southern (AIM: BOR), the London based independent oil and gas exploration company with assets offshore the Falkland Islands, announces its unaudited results for the half-year ending 30 June 2018.

 

Summary

·      Farm-out process is actively on-going

·      Cash balance at 30 June 2018:   $6.8 million (30 June 2017 - $8.6 million); no debt.

·      Substantial increase in estimated resource from independent evaluation announced in February with un-risked Best Estimate total recoverable liquids (condensate and LPG) for Darwin East and West of 462 MMbbl. The geological chance of success of finding hydrocarbons in a well located on Darwin West was assessed to be 0.81.

·      Subsequent Company economic modelling of a combined Darwin East and West straightforward FPSO development indicated a breakeven oil price in the mid-thirties dollars per barrel.

 

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

 

Borders & Southern Petroleum plc

Howard Obee, Chief Executive

Tel: 020 7661 9348

 

Panmure Gordon (UK) Limited

Adam James / Atholl Tweedie

Tel: 020 7886 2500

 

Tavistock

Simon Hudson / Barney Hayward / 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. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

Notes:

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. 

 

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.

 

 

Chief Executive's Statement

 

From the start of the year our priority has been to focus activity on attracting partners into our Production Licences, to help fund the appraisal drilling of Darwin, whilst maintaining strict capital discipline.

 

The Company incurred a loss from operations of $961,000 for the six-month period ending 30 June 2018 ($871,000 for the corresponding period in 2017). The administrative expense was slightly lower at $783,000 ($811,000 in 2017). The cash balance at 30 June 2018 was $6.8 million. Our cash balance and the loss from operations has been negatively impacted by foreign exchange rate movements. The Company retains the majority of its funds in Sterling which has weakened against the US dollar. The Company has no debt.

 

Early in the year we reported on an independent evaluation of Darwin. This evaluation resulted in revised resource estimates for Darwin. The un-risked best estimate total contingent resource (condensate and LPG) for Darwin East was assessed to be 170 million barrels. The prospective resource for the, as yet, undrilled Darwin West fault block was 292 million barrels. The geological chance of success of finding hydrocarbons on Darwin West was independently assessed to be 0.81. Subsequent Company economic modelling of a straightforward FPSO development indicated a breakeven oil price in the mid-thirties dollars per barrel.

 

With an independently evaluated large, liquids-rich, gas condensate discovery, a completed screening development study, positive internal project economics and a clear appraisal strategy, we re-engaged with the industry to secure partners. We believe that we have a strong proposition to offer and have been pleased by the level of interest. Brent crude has stayed consistently over $65 per barrel for a large part of the year and this has had a positive impact. The rebound in oil price and a more stable industry environment has resulted in more companies prepared to consider a conventional offshore opportunity to help rebuild their portfolios. The farm-out process is active. Our data room is open and will continue to be open for a while yet. At the start of the year our outlook was optimistic and this continues to be the case.

 

Howard Obee

Chief Executive

25 September 2018

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2018

 

 

6 months ended

30 June 2018

(unaudited)

6 months

ended

30 June 2017

(unaudited)

12 months

ended

31 December 2017

(audited)

 

Notes

$000

$000

$000

 

 

 

 

 

Administrative expenses

 

(783)

(811)

(1,734)

 

 

 

 

 

 

 

 

 

 

loss from operations

 

(783)

(811)

(1,734)

 

 

 

 

 

Finance income

3

15

-

542

Finance expense

3

(193)

(60)

-

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE TAX

 

(961)

(871)

(1,192)

 

Tax  expense

 

 

 

-

 

-

 

LOSS FOR THE PERIOD AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT

 

(961)

(871)

(1,192)

 

 

 

 

 

Loss per share - basic and diluted

2

(0.2) cents

(0.2) cents

(0.25) cents

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

At 30 June 2018

 

At

30 June 2018

(unaudited)

$000

At

30 June 2017

(unaudited)

$000

At

31 December 2017

(audited)

$000

 

 

 

 

ASSETS

 

NON-CURRENT ASSETS

 

 

 

Property, plant and equipment

4

11

11

Intangible assets

291,639

289,516

290,826

 

 

 

 

Total non-current assets

291,643

289,840

290,837

 

CURRENT ASSETS

 

 

 

Other receivables

34

544

440

Cash and cash equivalents

6,784

8,608

8,251

 

TOTAL CURRENT ASSETS

 

6,818

 

9,152

 

8,691

 

TOTAL ASSETS

 

298,461

 

299,679

 

299,528

 

 

 

 

LIABILITIES

 

CURRENT LIABILITIES

 

 

 

Trade and other payables

(527)

(481)

(633)

Current tax liability

-

-

-

 

TOTAL LIABILITIES

 

(527)

 

(481)

 

(633)

 

 

 

 

TOTAL NET ASSETS

297,934

299,198

298,895

 

 

 

 

 

EQUITY

 

 

 

Share capital

8,530

8,530

8,530

Share premium account

308,602

308,602

308,602

 

Other reserve

1,773

2,418

1,773

 

Retained deficit

(20,955)

(20,336)

(19,994)

Foreign currency reserve

(16)

(16)

(16)

 

 

 

 

 

TOTAL EQUITY

 

297,934

 

299,198

 

298,895

             

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2018

 

Share premium account

$000

Retained

Deficit

$000

Foreign

currency

reserve

$000

Total

$000

Unaudited

 

 

 

 

Balance at 1 January 2018

308,602

(19,994)

(16)

298,895

Total comprehensive loss for the period

-

(961)

-

(961)

 

 

 

 

 

Balance at 30 June 2018

8,530

308,602

1,773

(20,955)

(16)

297,934

 

Unaudited

 

 

 

 

Balance at 1 January 2017

8,530

308,602

2,418

(19,465)

(16)

300,069

Total comprehensive income for the period

-

(871)

-

(871)

 

 

 

 

 

Balance at 30 June 2017

8,530

308,602

2,418

(20,336)

(19)

299,198

 

Audited

 

 

 

 

Balance at 1 January 2017

308,602

(19,465)

(16)

300,069

Total comprehensive loss for the year

-

-

-

(1,192)

-

(3,604)

Expiry of share options

 

 

(663)

663

 

 

Recognition of share based payments

-

-

-

48

 

 

 

 

 

 

 

Balance at 31 December 2017

8,530

308,602

1,773

(19,994)

(16)

298,895

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2018

 

6 months ended

30 June 2018

(unaudited)

6 months ended

30 June 2017 (unaudited)

12 months ended

31 December 2017

(audited)

Cash flow from operating activities

$000

$000

$000

loss  before tax

Adjustments for:

(961)

(871)

(1,192)

Depreciation

7

1

1

Share-based payment

-

-

18

Net finance costs/(income)

178

60

(542)

Realised foreign exchange (losses)/gains

(20)

5

(17)

 

(796)

(805)

(1,732)

Decrease in trade and other receivables

 

406

 

623

 

728

Decrease in trade and other payables

(106)

(655)

(503)

Tax paid

-

-

-

Net cash outflow from operating activities

(496)

(837)

(1,507)

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

 

Interest received

15

-

11

Purchase of intangible fixed assets

(814)

(135)

(445)

Net cash used in investing activities

(799)

(135)

(434)

 

 

 

 

Cash flows from financing activities

-

--

-

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

(1,295)

(972)

(1,941)

 

 

 

 

Cash and cash equivalents at the beginning of the period

8,251

9,645

9,645

Exchange (losses)/gains on cash and cash equivalents

(172)

(65)

547

 

 

 

 

Cash and cash equivalents at the end of the period

6,784

8,608

8,251

 

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2018

 

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 2017 and are expected to be consistent with those policies that will be in effect at the year end. 

 

The condensed consolidated financial statements for the six months ended 30 June 2018 and 30 June 2017 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 2017 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. During the period the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated. At 30 June 2018, there were 7,050,000 (30 June 2017: 6,050,000, 31 December 2017:7,050,000) potentially dilutive ordinary shares being the share options.

 

 

Loss after tax for

the period

$000

Weighted average number of shares

Loss

per share

cent

basic and diluted

 

 

 

 

 

 

 

Six months ended 30 June 2018 (unaudited)

(961)

484,098,484

(0.2)

 

 

 

 

 

 

 

 

Six months ended 30 June 2017 (unaudited)

(871)

484,098,484

(0.2)

 

 

 

 

 

 

 

 

Twelve months ended 31 December 2017 (audited)

(1,192)

484,098,484

(0.25)

 

 

 

 

 

3.   FINANCE INCOME AND EXPENSE

Finance income

6 months ended

30 June 2018

$000

6 months ended

30 June 2017

$000

12 months ended

31 December 2017

$000

Bank interest receivable

15

-

12

Foreign exchange (loss)/gain

(193)

(60)

530

 

(178)

(60)

542

 

4.   CORPORATE GOVERANCE

 

The Company has decided to adopt the Quoted Companies Alliance Corporate Governance Code and statement on compliance with the code will be on the website shortly.

 

Geological glossary

 

The resource estimates have been estimated in accordance with the Petroleum Resource Management System guidelines endorsed by the Society of Petroleum Engineers.

 

Best estimate or P50

With respect to resource categorization, this is considered to be the best estimate of the quantity that will actually be recovered from the accumulation by the project. It is the most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate

Condensate

a mixture of hydrocarbons that exist in the gaseous phase at original temperature and pressure of the reservoir, but when produced, are in the liquid phase at surface pressure and temperature conditions

Low/Best/High Estimates

The range of uncertainty reflects a reasonable range of estimated potentially recoverable volumes at varying degrees of uncertainty (using the cumulative scenario approach) for an individual accumulation or a project

Recoverable resources

those quantities of hydrocarbons that are estimated to be producible from discovered or undiscovered accumulations

 

-ends-


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