REG - Borders & Southern - Final Results <Origin Href="QuoteRef">BSTH.L</Origin>

Borders and Southern PetroleumAnnouncement

31/03/2016 07:06

RNS Number : 6146T
Borders & Southern Petroleum plc
31 March 2016
31 March 2016
Borders & Southern Petroleum plc
("Borders & Southern" or "the Company")
Unaudited Results for the 12 month period ended 31 December 2015 
Borders & Southern (AIM: BOR), the London based independent oil and gas exploration company with assets offshore the Falkland Islands, announces preliminary unaudited results for the year ending 31 December 2015. 
2015 Highlights
 Darwin recoverable resource upgrade: 360 million barrels of condensate (best estimate P50 un-risked)
 Farm-out process is active, but continues to be impacted by the low oil-price environment
 Reduced administrative expenses - 2015: $1.97 million (2014: $3.0 million)
 Cash balance at 31 December 2015: $14.0 million (2014: $16.1 million)
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
Tel: 020 7920 3150
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 2,862 km of 2D seismic, 2,517 square kilometres of 3D seismic and drilled two exploration wells, making a gas condensate discovery with its first well.
Chairman's Statement
Industry Setting
The industry downturn, triggered by the decline in the oil price, has had a significant impact on the Company's fortunes. Brent has fallen from around $110 per barrel in mid 2014, to around $35 per barrel at the end of 2015. This sustained low oil price has caused companies to make dramatic reductions in their expenditure, delay major capital projects and reduce or stop taking on new opportunities. This has made it a particularly challenging environment for us in which to conduct a farm-out. There are as many views on future oil price trends as there are analysts and commentators, with little consensus at the moment. Most believe a recovery will occur, but to what level and exactly when, there is no agreement. Consequently, companies are trying to re-base their operations to weather a low cost, low oil price world.
Financial Position
Borders & Southern's financial status is relatively robust in the current environment, with a strong balance sheet and no debt. We ended the year with a cash balance of $14.0 million, compared to $16.1 million at the end of 2014. Like most companies in our sector, we have reduced our expenditure. The 2015 administrative expense was $1.97 million compared to $3.04 million in the previous year. This reduced expenditure has not impacted our ability to progress technical work and advance our understanding of our assets. We intend to maintain this capital discipline throughout 2016 and beyond.
Project Status
The industry recession has delayed the timing of the next operations phase on our Production Licences. We had hoped to have secured partners and funding for a new exploration and appraisal drilling programme by now, but have had to reset our expectations. So whilst the current Production Licence period extends through to the end of October 2017, we have applied to the Falkland Islands Government for an extension. 
From a sub-surface point of view we have continued to make good progress. Earlier in 2015, we announced an upgrade in the combined Darwin East and West recoverable resource estimate (Best estimate P50: 360 million barrels of condensate) and described some of the surrounding prospects in more detail. We continue to work the Early Cretaceous shallow marine sandstone play fairway in detail, re-mapping the discovery and analysing the seismic response on near-field prospects with the aim of developing reliable predictive models for hydrocarbon presence and phase. 
Additionally, we have spent time re-assessing our basin models, incorporating the results from recent drilling activity by other operators. The Humpback well was located over 250 km northeast of Darwin and its findings have no impact on the prospectivity of our Licences. In fact, our recent regional basin analysis has re-enforced our belief that our Licences are optimally located in the South Falkland Basin. 
Current technical work is aimed at re-assessing how a Darwin development would fit into a low oil price world. We know that the combination of competitive fiscal terms in the Falkland Islands and excellent reservoir characteristics of the Early Cretaceous shallow marine sandstone makes a development competitive on the cost curve against other deep water developments. However, we need to assess just how commercial a project would be in a period of sustained low oil prices. Previously we had considered 2 to 3 appraisal wells and 10 development wells (6 producers, 4 gas re-injectors) with sub-sea tie back to an FPSO. New reservoir engineering studies are looking at reduced well count models. Outputs from this work will feed into a fresh look at facilities engineering concepts and costs and, in turn, a new economic evaluation. If we can clearly demonstrate the commercial viability of a development in a low oil price environment, it should assist the farm-out process.
Outlook
All our technical and commercial work to date suggests that Darwin is a robust project, even in a low oil price environment. The principal risk for the Company over the next 12 months is that a sustained low oil price will cause further delay to our farm-out and hence funding for the next phase of operations. We have positioned the Company so that our strong balance sheet will allow us to withstand an extended period of reduced industry activity. As we move forward, we will continue to control costs, undertake good science and maintain our resolve to monetise the Darwin discovery. 
Finally, Stephen Posford, 69, one of the Company's founders and a member of the Board since the Company's inception, has announced that he intends to retire from business activities and will step down from the Board prior to the AGM. Stephen has played an influential role in the development of the Company, which included the significant gas condensate discovery in 2012. On behalf of all the Directors I would like to thank Stephen for his contribution and wish him a healthy, happy and long retirement. 
Harry Dobson
30 March 2016
Unaudited consolidated statement of comprehensive income
for the year ended 31 December 2015


2015
$000

2014
$000
Administrative expenses

(1,968)

(3,037)
Loss from operations

(1,968)

(3,037)
Finance income
Finance expense 

47
(679)

59
(910)
Loss before tax

(2,600)

(3,888)
Tax expense

-

-
Loss for the year and total comprehensive loss for the year attributable to owners of the parent

(2,600)

(3,888)





Basic and diluted loss per share (see note 3)

(0.54) cents

(0.8) cents
Unaudited consolidated statement of financial position
as at 31 December 2015

2015
2014

$000
$000
$000
$000
Assets
Non-current assets




Property, plant and equipment

10

11
Intangible assets

289,590

286,966
Total non-current assets

289,600

289,977





Current assets




Other receivables
297

329

Cash and cash equivalents
14,011

16,079

Total current assets

14,308

16,408





Total assets

303,908

306,385





Liabilities
Current liabilities




Trade and other payables

(283)

(250)
Total net assets

303,625

306,135





Equity




Share capital

8,530

8,530
Share premium

308,602

308,602
Other reserves

2,370

2,280
Retained deficit

(15,861)

(13,261)
Foreign currency reserve

(16)

(16)
Total equity

303,625

306,135





Unaudited consolidated statement of changes in equity
for the year ended 31 December 2015

Share capital
$000
Share
Premium
$000
Other reserves
$000
Retained deficit
$000
Foreign currency reserve
$000
Total
$000







Balance at 1 January 2014
8,530
308,602
2,035
(9,373)
(16)
309,778
Loss and total comprehensive loss for the year
-
-
-
(3,888)
-
(3,888)
Recognition of share
based payments
-
-
245
-
-
245
Balance at 
31 December 2014
8,530
308,602
2,280
(13,261)
(16)
306,135
Loss and total comprehensive loss for the year
-
-
-
(2,600)
-
(2,600)
Recognition of share
based payments
-
-
90
-
-
90
Balance at 31 December 2015
8,530
308,602
2,370
(15,861)
(16)
303,625
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.
Retained deficit
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Foreign currency reserve
Differences arising on change of presentation and functional currency to US Dollars.
Unaudited consolidated statement of cash flows
for the year ended 31 December 2015

2015
2014

$000
$000
$000
$000
Cash flow from operating activities




Loss before tax

(2,600)

(3,888)
Adjustments for:




Depreciation

1

2
Share-based payment

90

245
Net finance costs

632

851
Realised foreign exchange gains

(8)

5
Cash flows from operating activities before changes in working capital

(1,885)

(2,785)
Decrease in other receivables

32

689
Increase/(decrease) in trade and other payables

33

(518)
Tax paid

-

(185)
Net cash outflows from operating activities 

(1,820)

(2,799)
Cash flows used in investing activities




Interest received
47

59

Purchase of intangible assets
(773)

(3,555)

Proceeds from disposal of intangible assets
1,149

-

Net cash from/(used) in investing activities

423

(3,496)
Cash flows from financing




Net decrease in cash and cash equivalents

(1,397)

(6,295)
Cash and cash equivalents at the beginning of the year

16,079

23,290
Exchange loss on cash and cash equivalents

(671)

(916)
Cash and cash equivalents at the end of the year

14,011

16,079
Accounting policies
1. Basis of preparation
The financial information set out above does not constitute the company's statutory accounts for 2014 or 2015. Statutory accounts for the year 31 December 2014 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2014 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 2015 are unaudited. Statutory accounts for the year ended 31 December 2015 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 2014 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2015, prepared under IFRS, will be delivered to the Registrar in due course.
2. Going concern
The Directors believe that the company has sufficient funds, with contingency, to meet its current commitments with excess funds expected to be sufficient to fund ongoing operations for the foreseeable future. Therefore, this financial information has been prepared on a going concern basis.
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 $2.6 million (2014 - loss $3.888 million) and the weighted average number of shares in issue for the year was 484.1 million (2014 - 484.1 million). 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 6.15 million (2014 - 6.15 million) potentially dilutive ordinary shares being the share options.
4. Post Reporting Date Events
There were no post reporting date events.
-ends-

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