Borders & Southern Shares Plummet over 70%

PUBLISHED: 16 Jul 2012 @ 12:37 | Comments (0) | More info about Lou Gutheil

Borders & Southern (LSE:BOR) share price took a dive of Olympic proportions this morning, falling over 70% on “disappointing” news from the Falklands. The share price had fallen from 62.25p to 17.20p at 8:38am, recovering slightly to 18.50p by 11:20am.

Problems at Stebbing Well

Borders & Southern is exploring for gas and oil in the South Falkland Basin, where it holds five production licences. Expectations for the Stebbing exploration well had been high based on pre-drilling surveys. However, the company announced this morning that, although it had found evidence of gas in the shallow targets of the project at about 3,060 metres, but not in quantities that would be economically feasible to produce. Attempts to reach its primary deep target were thwarted by anomalous well flows and pressure conditions that made further drilling impossible. The company has decided, at least in the short term, to cap the well and move the rig to another location. They will continue evaluation of geological and engineering data to better understand the complexities of drilling at the Stebbing site, but gave no indication of their expectations of that evaluation. The Leiv Eiriksson rig currently at Stebbing will be re-assigned to Falkland Oil & Gas.

It’s Been a Rough Year for B&S

On April 18^th this year, Borders and Southern share price took at 50% upward leap to 131 pence on speculation that major good news would be forthcoming from its Darwin project. The news was that “a significant gas condensate discovery” had been made, but it became clear that investors had been expecting much more when the share price fell by 30% on April 23^rd. The samples from the Darwin site are currently undergoing lab analysis and results are expected to be announced between now and the end of September. A positive analysis should be a boost for the share price as quality gas condensate often brings a better price than crude oil.

Company Spotlight

Borders and Southern is a relatively young company, having been incorporated in June 2004 and admitted to AIM market of the LSE the following May. Borders and Southern attempts to balance the high risk of frontier exploration, where the rewards are also proportionately high, by developing projects located in areas where the political and commercial risks are low. The company’s initial projects are located in the South Falkland Basin where it holds a 100% equity interest in five production licences within a 20,000 sq km area in a previously unexplored region some 150 km southeast of the Falklands.

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