REG - Borders & Southern - Final Results

Borders and Southern PetroleumAnnouncement

31/05/2022 07:00

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RNS Number : 2921N  Borders & Southern Petroleum plc  31 May 2022

31 May 2022

 

Borders & Southern Petroleum plc

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

 

Audited Results for the 12 month period ended 31 December 2021

 

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 2021. 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

·   Cash balance on 31 December 2021: $0.714 million (2020: $2.18 million)

·   Administrative expense for the year: $1.1 million (2020: $1.0 million)

·   Operating loss of $1.0 million (2020: $1.0 million)

·   Farm-out process continues

·   Post year-end events:

-     extended Production Licences and Discovery Area through to 31
December 2022

-     raised $1.8 million (before expenses) through the issue of
103,858,914 new Ordinary shares

-     the total number of Ordinary shares in issue is now 587,957,318

-     the Open Offer for excess shares was significantly over-subscribed

-     currently evaluating different development options including an
accelerated production development

 

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, Financial Adviser & Joint Broker)

 Ritchie Balmer / James Bellman

 Tel: 020 7409 3494

 Auctus Advisors LLP (Joint Broker)

 Jonathan Wright

 Tel: 07711 627449

 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

 

The Company reports an operating loss for 2021 of $1.0 million (compared to
$1.0 million in 2020). Administrative expense for the year was $1.1 million
(compared to $1.0 million in 2020) The cash balance at year end was $0.714
million (2020: $2.18 million). The Company continues to be debt-free. Due to
the declining cash balance the Company decided in late 2021 to raise
additional funds. This was completed in April this year through a $600,000
Subscription for 34,702,000 new Ordinary Shares and an Open Offer for $1.2
million through the issue of 69,156,914 new Ordinary Shares. The response to
the Open Offer was extremely positive and resulted in a significant
over-subscription and we are grateful for the support from existing
shareholders. The funding was approved by shareholder resolutions at a General
Meeting in April 2022.

 

The funding coincided with a significant upturn in oil price. Brent crude
started to strengthen from the beginning of the 2022 but spiked significantly
higher (towards $130 per barrel) during March as a response to the tragic
events in Eastern Europe. It is always difficult to predict future oil price
movements, but there are clearly new considerations now in play for the energy
transition, such as energy security. It is uncertain what impact this will
have on oil & gas company strategies and from our perspective, what
bearing it will have on our ability to attract partners to the Darwin project,
but we will continue, with the help of our advisors, to promote the strong
merits of a development.

 

Our technical and commercial work recently has concentrated on investigating a
range of Darwin development scenarios. This focus has been on reducing initial
capital expenditure, delivering a fast payback on that capital, minimising the
environmental footprint and, at the same time, ensuring the break-even oil
price is below $40 a barrel.

 

As a result we have prioritised a phased development concept starting with
around 25,000bpd of liquids production and using that cash flow to increase
production after a few years. Initial production could come from 2 wells with
a further well for gas re-injection. Our initial studies have concluded that
this approach greatly reduces capital expenditure and results in a payback of
that capital within two years.

 

Over the coming months we plan to commission an externally led technical study
to scrutinise these plans and assumptions and will be in a position to report
these results when available. If this study supports our internal findings, we
believe this will make the Darwin development project much more attractive to
incoming investors and partners as it will offer an investment with lower
capital commitments, robustness under most near term oil price scenarios and a
quick pay back on the invested capital.

 

In January we applied for, and were granted, an extension to our Production
Licences and Discovery Area. The revised expiry date is 31 December 2022. This
is the maximum extension currently available and did not come with additional
work obligations.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

 

                                                                              2021          2020
                                                                              $'000         $'000
 Administrative expenses                                                      (1,096)       (1,046)
 Loss from operations                                                         (1,096)       (1,046)
 Finance income                                                               74            55
 Finance expense                                                              (1)           (11)
 Loss before tax                                                              (1,023)       (1,002)
 Tax expense                                                                  -             -
 Loss for the year and total comprehensive loss for the year attributable to  (1,023)       (1,002)
 equity owners of the parent
 Basic and diluted loss per share (see note 4)                                (0.21) cents  (0.21) cents

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2021

 

                                                                 2021             2020
                                                                 $'000  $'000     $'000  $'000
 Assets
 Non-current assets
 Property, plant and equipment                                          22               151
 Intangible assets                                                      292,746          292,241
 Total non-current assets                                               292,768          292,392
 Current assets
 Other receivables                                               183              225
 Cash and cash equivalents                                       714              2,184
 Total current assets                                                   897              2,409
 Total assets                                                           293,665          294,801
 Liabilities
 Current liabilities
 Trade and other payables                                               (126)            (240)
 Total net assets                                                       293,539          294,561
 Equity attributable to the equity owners of the parent company
 Share capital                                                          8,530            8,530
 Share premium                                                          308,602          308,602
 Other reserves                                                         1,778            1,777
 Retained deficit                                                       (25,355)         (24,332)
 Foreign currency reserve                                               (16)             (16)
 Total equity                                                           293,539          294,561

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

 

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

                                                 $'000          $'000          $'000           $'000             $'000                     $'000
 Balance at 1 January 2020                       8,530          308,602        1,777           (23,330)          (16)                      295,563
 Loss and total comprehensive loss for the year  -              -              -               (1,002)           -                         (1,002)
 Balance at 31 December 2020                     8,530          308,602        1,777           (24,332)          (16)                      294,561
 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           (25,355)          (16)                      293,539

 

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 2021

 

                                                                            2021            2020
                                                                            $'000  $'000    $'000  $'000
 Cash flow from operating activities
 Loss before tax                                                                   (1,023)         (1,002)
 Adjustments for: Depreciation                                                     129             95
 Share-based payment                                                               1               -
 Finance costs                                                                     1               11
 Finance income                                                                    (74)            (54)
 Unrealised foreign currency movements                                             -               2
 Cash flows used in operating activities before changes in working capital         (966)           (948)
 Decrease in other receivables                                                     42              8
 Increase/(decrease) in trade and other payables                                   10              (61)
 Net cash outflow from operating activities                                        (914)           (1,000)
 Cash flows used in investing activities
 Interest received                                                          -               2
 Purchase of intangible assets                                              (505)           (476)
 Net cash used in investing activities                                             (505)           (474)
 Cash flows used in financing activities
 Lease interest                                                             (1)             (11)
 Lease payments                                                             (124)           (62)
 Net cash used in financing activities                                             (125)           (73)
 Net decrease in cash and cash equivalents                                         (1,544)         (1,547)
 Cash and cash equivalents at the beginning of the year                            2,184           3,682
 Exchange gain on cash and cash equivalents                                        74              49
 Cash and cash equivalents at the end of the year                                  714             2,184

 

Notes

 

1. Accounting policies

 

Basis of preparation

 

The financial information for the year ended 31 December 2021 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 2021. 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 2021 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.

 

Subsequent to balance date, the Company raised US$1.8 million (£1.35 million)
before expenses through a subscription and open offer to existing
shareholders. We believe this provides sufficient funding for the company
until early 2023 so in the absence of a farm-out agreement bringing in working
capital into the Company, additional funds may need to be raised before mid
2023. These events or conditions indicate the existence of a material
uncertainty which may cast doubt on the Group and Parent Company's ability to
continue as a going concern and therefore that the Group and Company may be
unable to realise their assets in the normal course of business.

 

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 date events

 

In January 2022, the Company was advised that its licences in The Falkland
Islands had been renewed until end 2022 in line with current practices.

 

In March 2022 the Company announced that it had raised $600,000 through a
share placement and it planned an open offer to existing shareholders to raise
up to a further $1,200,000. The open offer was oversubscribed so the
applications were scaled back to raise the full $1.8 million before expenses.
Both capital raises were approved at the general meeting in April.

 

-ends-

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