Borders & Southern Petroleum plc Final Results

RNS Number : 5490Q

Borders & Southern Petroleum plc

31 May 2024

 

31 May 2024

 

Borders & Southern Petroleum plc

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

 

Audited Results for the 12 month period ended 31 December 2023

 

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 2023. 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 a further $0.783 million (£0.65 million) before expenses through a capital raise as part of the 2022 capital raise

·      Cash balance on 31 December 2023: $1.9 million (2022: $2.7 million)

·      Administrative expense for the year: $1.1 million (2022: $1.2 million)

·      Operating loss of $1.0 million (2022: $1.3 million)

·      Post balance date, Harry Baker appointed CEO to replace Howard Obee

 

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

 

Borders & Southern Petroleum plc Harry Baker, Chief Executive Tel: [phone]

SP Angel Corporate Finance LLP (Nominated Adviser and Broker) Richard Hail / Adam Cowl Tel: [phone]   Tavistock (Financial PR) Simon Hudson / Nick Elwes Tel: [phone]

 

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. 

 

 

Chairman's and CEO's review

 

During the reporting period, the Company successfully completed the 2022 capital raise which was approved by shareholders at a General Meeting in January 2023. The total number of Ordinary shares now in issue is now 730,814,456.

 

The Company finished the year with a cash balance of $1.9 million (31 December 2022: $2.7 million) and continues to be debt-free. The Company reports an operating loss for 2023 of $1.0  million (2022: $1.35 million). Administrative expense for the year was $1.1 million (2022: $1.1 million). The company continues to have a low cost base and notwithstanding wider inflationary pressures has managed to keep these costs at similar level to previous years.

 

The company continues to focus on moving the Darwin discovery forward. Independent engineering studies have confirmed the financial robustness of our project and as we have all heard and read about, there is a growing realization that industrial change cannot keep pace with social change and as a result the world will be reliant on hydrocarbons for longer than previously thought. As a consequence, the global oil and gas industry is evolving with many companies rebalancing their capital expenditures towards increased upstream as they believe that demand for oil and gas will be higher over the next two decades than previously envisaged. As a result, in order to replace production, capital expenditures will need to increase across the industry. Darwin is an attractive investment as it could be brought into production relatively quickly and the condensate is very marketable globally, selling at or close to Brent. Few upstream oil and gas projects are like Darwin and have a 1-2 year payback at current oil prices. 

 

In addition to a conventional farm-out the Company is looking at alternative ways to finance the appraisal program and in the event these progress we will update investors. 

 

Once Darwin is in production, there are many options for the cashflow including returning it to shareholders, reinvesting in building production or a combination of both. In addition to increasing Darwin's production by drilling further wells, there are multiple prospects to grow production in the licence areas around Darwin. 

 

As we have previously reported, Howard Obee announced in early 2024 his intention to step down as CEO and board member at the end of February. We were very pleased to have appointed Harry Baker as CEO and board member effective 1 March 2024. Harry brings significant capital markets experience and industry connections to the Company which will be invaluable in the foreseeable future.

 

We would like to again pay tribute to the significant contribution Howard made to the Company's development over the last nearly twenty years and wish him well in the future. 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2023

 

 

Continuing Operations	2023	2022
	$'000	$'000
Administrative expenses	(1,141)	(1,129)
Loss from operations	(1,141)	(1,229)
Finance income	81	-
Finance expense	-	(172)
Other income	-	42
Loss before tax	(1,060)	(1,359)
Tax expense	-	-
Loss for the year and total comprehensive loss for the year attributable to equity owners of the parent	(1,060)	(1,359)
Basic and diluted loss per share (see note 4)	(0.14) cents	(0.26) cents

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2023

 

 

	2023		2022
	$'000	$'000	$'000	$'000
Assets
Non-current assets
Property, plant and equipment		8		-
Intangible assets		293,741		293,244
Total non-current assets		293,749		293,244
Current assets
Other receivables	164		576
Cash and cash equivalents	1,928		2,707
Total current assets		2,092		3,283
Total assets		295,841		296,527
Liabilities
Current liabilities
Trade and other payables		(156)		(565)
Total net assets		295,685		295,962
Equity attributable to the equity owners of the parent company
Share capital		11,155		10,718
Share premium		310,541		310,196
Other reserves		1,778		1,777
Retained deficit		(27,773)		(26,713)
Foreign currency reserve		(16)		(16)
Total equity		295,685		295,962

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

 

 

	Share capital $'000	Share premium $'000	Other reserves $'000	Retained deficit $'000	Foreign currency reserve $'000	Total $'000
Balance at 1 January 2022	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	-			3,782
Balance at 31 December 2022	10,718	310,195	1,778	(26,713)	(16)	295,962
Loss and total comprehensive loss for the year	-	-	-	(1,060)	-	(1,060)
Shares issue	437	346	-			783
Balance at 31 December 2023	11,155	310,541	1,778	(27,773)	(16)	295,685

 

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 2023

 

		2023		2022
		$'000	$'000	$'000	$'000
Cash flow from operating activities
Loss before tax			(1,060)		(1,359)
Adjustments for: Depreciation			-		22
Share-based payment			-		-
Finance costs			-		172
Finance income			(81)		-
Cash flows used in operating activities before changes in working capital			(1,141)		(1,165)
(Decrease)/increase in other receivables			412		(393)
Increase/(decrease) in trade and other payables			(408)		452
Net cash outflow from operating activities			(1,137)		(1,106)
Cash flows used in investing activities
Purchase of tangible assets		(8)		-
Purchase of intangible assets		(497)		(498)
Net cash used in investing activities			(505)		(498)
Cash flows used in financing activities
Lease interest		-		-
Lease payments		-		(13)
Shares issue		783		3,781
Net cash from (used in) financing activities			783		3,768
Net increase/(decrease) in cash and cash equivalents			(859)		(2,164)
Cash and cash equivalents at the beginning of the year			2,707		714
Exchange (loss)/gain on cash and cash equivalents			81		(172)
Cash and cash equivalents at the end of the year			1,928		2,707

 

Notes

 

1. Accounting policies

 

Basis of preparation

 

The financial information for the year ended 31 December 2023 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 2023. 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 2023 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 31 December 2023 annual report has been prepared based on the going concern basis that contemplates the countinuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business.

 

The Parent Company is a holding entity and as such their going concern is dependent on the Group therefore the going concern assessment was performed as part of the Group's assessment.

 

At 31 December 2023, the Group had a net cash position of $1.9m (31 December 2022: $2.7m). The Group does not have any external borrowings or debts. The Group has a commitment to drill a well before the expiry of its production licence on 31 December 2024. The Group plans to fund the well developments through a farm-out or by raising additional capital if the farm-out is not successful. If the Group does not successfully raise the capital needed or identify a suitable farm-out partner, the Group will seek to gain an extension to the licences and the associated commitment to drill the well. This is in line with previous extensions and the Directors are confident that further extensions will be granted. Historically, the Falkland's Government has required the Group to show evidence of it's ability to pay the licence fees before an extension which currently is not certain as further funding is required.

 

In performing their assessment of the Group and Parent Company's ability to continue as a going concern, the Directors have prepared a cashflow forecast for the period ending 30 May 2025, which indicates that in current conditions, the Group and Parent Company will become cash negative in December 2024. At present the cost base of the business principally consists of administrative costs, listing costs and costs to maintain the licences in good-standing. Therefore, in the absence of a farm-out agreement or other funding arrangement contributing further working capital to the Group or Parent Company, additional funding will be required, before December 2024, to meet the day to day operational cashflow requirements, noted above, of the Group and Parent Company.

 

As the Group and Parent Company are reliant on further funding being secured, which is not guaranted, this indicates the existence of a material uncertaintly which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and therefore they may be unable to realise their assets and discharge their liabilities in the normal course of the business. 

 

The Directors consider that the funding will be forthcoming and therefore the going concern basis of preparation is deemed appropriate.

 

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 $1,060,000 (2022 - loss $1,359,000) and the weighted average number of shares in issue for the year was 730,8144,456 (2022 - 530,203,093). 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 2,700,000 (2022: 3,300,000) potentially dilutive ordinary shares being the share options (see note 8 for further details).

 

 

-ends-

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

 

END

 

 

FR URRWRSSUVOAR