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 or contact:

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

The following describes the nature and purpose of each reserve within owners' equity:

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2021

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-