REG - Borders & Southern - Final Results

Borders and Southern PetroleumAnnouncement

01/06/2023 07:00

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RNS Number : 2571B  Borders & Southern Petroleum plc  01 June 2023

1 June 2023

 

Borders & Southern Petroleum plc

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

 

Audited Results for the 12 month period ended 31 December 2022

 

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 2022. 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 on the
Company's website and posted to Shareholders along with the notice of the AGM
shortly.

 

Summary

 

·      Raised a total of $4 million (£3.2 million) before expenses
through two capital raises

·      Cash balance on 31 December 2022: $2.7 million (2021: $0.71
million)

·      Administrative expense for the year: $1.2 million (2021: $1.1
million)

·      Operating loss of $1.3 million (2021: $1.0 million)

·      Extended Production Licences and Discovery Area through to 31
December 2024

·      Independent study confirms lower cost Darwin development is
economically and technically robust

·      Post year-end events:

-       raised further $0.78 million (£0.65 million) (before expenses)
through the issue of 37,142,857 new Ordinary shares

-       the total number of Ordinary shares in issue is now 730,814,456

 

For further information please visit www.bordersandsouthern.com
(http://www.bordersandsouthern.com/) or contact:

 

 Borders & Southern Petroleum plc

 Howard Obee, Chief Executive

 Tel: 020 7661 9348

 Strand Hanson Limited (Nominated Adviser)

 Ritchie Balmer / James Bellman

 Tel: 020 7409 3494

 SP Angel Corporate Finance LLP (Broker)

 Richard Hail / Adam Cowl

 Tel: 020 3470 0470

 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

 

During the reporting period, the Company successfully completed two fund
raisings, renewed its Production Licences and Discovery Area in the Falkland
Islands, and commissioned an independent engineering study which validated a
phased development concept for the Group's Darwin gas condensate discovery.

 

At the end of the first quarter 2022 the Company raised $600,000 through a
Subscription Agreement and a further $1,200,000 through an oversubscribed Open
Offer. The latter was approved by shareholders at a General Meeting in April.
A total of 103,858,914 new Ordinary shares were issued. In the last quarter of
2022, the Company raised £2,500,000 through a firm and conditional Placing
and Subscription Agreement, issuing 142,857,138 new Ordinary shares. The
conditional placing and subscription agreement was approved by shareholders at
a General Meeting in January 2023. These funds will meet the Company's
overheads until end 2024. The total number of Ordinary shares now in issue is
730,814,456.

 

As a result of the successful fund raisings, the Company finished the year
with a cash balance of $2.7 million (31 December 2021: $0.714 million) and
continues to be debt-free. The Company reports an operating loss for 2022 of
$1.35 million (2021: $1.0 million). Administrative expense for the year was
$1.2 million (2021: $1.1 million). There were no major capital expenditures
during the year. We continue to keep a strong control on costs but anticipate
a small increase in expenditure during 2023 due to wider inflationary
pressures. Significant salary reductions were implemented in 2019 and have
been kept at the same level ever since.

 

In January 2022, the Company applied for, and was awarded, an extension to its
Falkland Islands Production Licences and Discovery Area. In line with other
operators in the region, the extension went out to 31 December 2022. A further
extension request was submitted in December and a two-year extension was
granted. The revised expiry date for the Production Licences and Discovery
Area is 31 December 2024. The Company is grateful to the Falkland Islands
Government for these awards.

 

As reported earlier in the year, our recent technical and commercial work has
focused on defining and validating new development concepts for the Company's
large gas condensate discovery, Darwin. The overall aim was to reduce project
risk to help attract capital. The viability of a three well (two producers,
one gas injector), conventional deep water FPSO development concept was
confirmed by an independent engineering study. This study provided up-to-date
capital and operating expenditure estimates which have been incorporated into
the Company's economic models. Based on a $60/barrel oil price and initial
production of 26,000 bpd, project payback could be achieved within two years
and project expansion could occur from free cash flow.

 

The positive conclusions from this work are currently being shared with
potential industry collaborators. This includes some of the companies that
have previously engaged with us, along with those who are considering the
project for the first time. This phase of farm-out activity will continue over
the coming months. It is supported by a relatively favourable industry
environment. Global oil and gas prices have remained resilient throughout the
reporting period and there are no obvious indications of a significant weaking
in the immediate future. Whilst competition for capital for greenfield oil
developments is strong, we believe that Darwin's appraisal and phased
development represents an attractive proposition and with its relatively small
environmental footprint can play a role in the delicate balance between energy
security and the transition to renewable energy sources.

 

As we move forward, we will continue to run the business with commercial
discipline and with the application of good science. Our focus is on the
monetisation of Darwin for the benefit of all our stakeholders.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2022

 

                                                                              2022          2021
                                                                              $'000         $'000
 Administrative expenses                                                      (1,229)       (1,096)
 Loss from operations                                                         (1,229)       (1,096)
 Finance income                                                               -             74
 Finance expense                                                              (172)         (1)
 Loss before tax                                                              42            -
 Tax expense                                                                  -             -
 Loss for the year and total comprehensive loss for the year attributable to  (1,359)       (1,023)
 equity owners of the parent
 Basic and diluted loss per share (see note 3)                                (0.26) cents  (0.21) cents

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2022

 

                                                                 2022             2021
                                                                 $'000  $'000     $'000  $'000
 Assets
 Non-current assets
 Property, plant and equipment                                          -                22
 Intangible assets                                                      293,244          292,746
 Total non-current assets                                               293,244          292,768
 Current assets
 Other receivables                                               576              183
 Cash and cash equivalents                                       2,707            714
 Total current assets                                                   3,283            897
 Total assets                                                           296,527          293,665
 Liabilities
 Current liabilities
 Trade and other payables                                               (565)            (126)
 Total net assets                                                       295,962          293,539
 Equity attributable to the equity owners of the parent company
 Share capital                                                          10,718           8,530
 Share premium                                                          310,195          308,602
 Other reserves                                                         1,778            1,778
 Retained deficit                                                       (26,713)         (25,355)
 Foreign currency reserve                                               (16)             (16)
 Total equity                                                           295,962          293,539

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2022

 

                                                 Share capital  Share premium  Other reserves  Retained deficit  Foreign currency reserve  Total

                                                 $'000          $'000          $'000           $'000             $'000                     $'000
 Balance at 1 January 2021                       8,530          308,602        1,778           (24,332)          (16)                      294,562
 Loss and total comprehensive loss for the year  -              -              -               (1,023)           -                         (1,023)
 Recognition of share-based payments             -              -              -               1                 -                         1
 Balance at 31 December 2021                     8,530          308,602        1,778           (25,354)          (16)                      293,540
 Loss and total comprehensive loss for the year  -              -              -               (1,359)           -                         (1,359)
 Shares issue                                    2,188          1,593          -                                                           3,781
 Balance at 31 December 2022                     10,718         310,195        1,778           (26,713)          (16)                      295,962

 

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 2022

 

                                                                            2022            2021
                                                                            $'000  $'000    $'000             $'000
 Cash flow from operating activities
 Loss before tax                                                                   (1,359)                    (1,023)
 Adjustments for: Depreciation                                                     22                         129
 Share-based payment                                                               -                          1
 Finance costs                                                                     172                        1
 Finance income                                                                    -                          (74)
 Cash flows used in operating activities before changes in working capital         (1,165)                    (966)
 (Decrease)/increase in other receivables                                          (393)                      42
 Increase/(decrease) in trade and other payables                                   452                        10
 Net cash outflow from operating activities                                        (1,106)                    (914)
 Cash flows used in investing activities
 Purchase of intangible assets                                              (498)                 (505)
 Net cash used in investing activities                                             (498)                      (505)
 Cash flows used in financing activities
 Lease interest                                                             -               (1)
 Lease payments                                                             (13)            (124)
 Shares issue                                                               3,781           -
 Net cash from/(used in) financing activities                                      3,768                      (125)
 Net increase/(decrease) in cash and cash equivalents                              2,164                      (1,544)
 Cash and cash equivalents at the beginning of the year                            714                        2,184
 Exchange (loss)/gain on cash and cash equivalents                                 (172)                      74
 Cash and cash equivalents at the end of the year                                  2,707                      714

 

Notes

 

1. Accounting policies

 

Basis of preparation

 

The financial information for the year ended 31 December 2022 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 2022. 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 2022 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.

 

At 31 December 2022, the Group had a net cash position of $2.706m (31 December
2021: $0.714m). Subsequent to balance date, as part of the December 2022
capital raise, an additional 37,142,857 shares were issued in January 2023 to
raise £650,000 ($780,000).

 

The Group's board of directors have reviewed the Group's forecasts for a
period of no less than twelve months from the date of approval of these
financial statements, the period to May 2024. Based on the future cashflow
forecasts the Directors consider this recent funding provides the Group and
Parent Company with sufficient funding until May 2024,

 

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 $1,023,000 (2020 - loss $1,002,000) and the weighted average number
of shares in issue for the year was 484,098,484 (2020 - 484,098,484). 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 6,200,000 (2020: 6,100,000) potentially dilutive ordinary
shares being the share options.

 

4. Subsequent events

 

Subsequent to the balance sheet date, as part of the December 2022 capital
raise, an additional 37,142,857 shares were issued in January 2023 to raise
£650,000 ($780,000).

 

-ends-

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