By J. Brock (FINN)
Borders & Southern have announced its interim financial results for the six month period ending 30 June 2012. The announcement indicates that the company
" Safely executed a two well exploration drilling programme in the Falkland Islands. " Made a gas condensate discovery with recoverable liquids in the range 130 to 250 million barrels " Identified a significant number of structural and stratigraphic prospects within the now proven Early Cretaceous play fairway " Entered negotiations with a seismic contractor to acquire additional 3D seismic " Cash balance (including restricted use cash) as of 30 June 2012, was $122m " Based on current estimates, the Company will have a cash balance of $50 to $55 million after all 2012 operations expenditures have been accounted for " In order to help fund the next phase of drilling operations, the Company will shortly look to farmout some of its 100% interest in its discovery and adjacent exploration areas. "As the Company approaches the end of its first exploration period and having safely executed its first operated drilling campaign we can take stock of our achievements. We have made a very attractive gas condensate discovery, opened up a new hydrocarbon basin, defined an exciting play fairway in the Early Cretaceous and consolidated a rich prospect inventory. This is a really great start to our activities in the Falkland Islands and provides an excellent foundation for future success." Chairman, Harry Dobson, said. The official statement reads:
The Company's first drilling programme resulted in one discovery and one well with very strong gas shows, but which failed to evaluate all reservoir targets due to abnormal pressures. The Darwin gas condensate discovery has a relatively high liquid content. Initial reservoir modelling indicates a range in recoverable resource of 130 to 250 million barrels of 46 to 49 degree API condensate. Log analysis indicates that the reservoir quality is good. The well encountered 67.8m of net pay with average porosity of 22% and average permeability of 337 mD. The well also confirmed that the seismic amplitude anomalies, identified on 3D seismic data prior to drilling, correspond directly to hydrocarbon charged reservoir. This ability to identify good quality reservoir and hydrocarbons on seismic will have significant benefits in high grading future exploration prospects. In contrast, the Stebbing well encountered a hydrocarbon charged, poorly defined reservoir interval in the Tertiary. It is clear that significant hydrocarbons have charged the structure, but the reservoir was characterised by thinly laminated siltstones and claystones. Good average porosity values of 19% were measured on logs, but due to the thin-bedded nature of the interval it was not possible to gain a clear indication of fluid type, nor hydrocarbon saturation. Again, there was a good correlation between hydrocarbons encountered in the well and seismic amplitude anomalies. Whilst these anomalies can be traced over a large area onto the adjacent FitzRoy structure, the Company's initial assessment is that this target is unlikely to be commercial. For this reason the Company believes that its short-term focus should be on the Early Cretaceous play fairway. The Company's exploration portfolio contains a number of Early Cretaceous prospects that have been identified on 2D seismic data but are located outside the 3D coverage. In order to mature these prospects and to enhance our understanding of this Early Cretaceous play fairway, the Company initiated a competitive tender for the acquisition of a new 3D seismic survey. We are currently finalising contract discussions with the selected contractor and hope to have a vessel to start acquisition in mid-January 2013. The survey area will measure approximately 1100 sq. km. and be located adjacent to the existing 3D area. Key objectives from the survey are to provide greater definition to our Covington, Childs and Bute prospects along with potentially identifying new Early Cretaceous prospects. The Company also intends to reprocess some of its existing 3D data with the aim of providing greater definition to our Chaffers and Burgess prospects. In the interim period prior to seismic acquisition there are numerous technical studies underway or about to be commissioned including: reservoir engineering, fluid analysis, sedimentology & petrology, biostratigraphy, geochemistry, petrophysics, rock physics, pore pressure analysis and drilling optimisation studies. Additionally, we have commissioned a screening facilities study to assess a range of potential development concepts along with economics in order to understand the commercial thresholds for existing and potential future discoveries. At the end of October, the first exploration term under our Production Licences comes to an end. Having exceeded our work programme obligations for the first exploration period, we have indicated to the Falkland Islands Government our intent to enter the second five-year exploration term. This will have a one well work programme commitment associated with it. At the same time, we are obliged to relinquish 50% of our current acreage which will reduce our holding to just under 10,000 sq. km. This can be done without impacting the prospectivity, and a proposed relinquishment area has been submitted to the Falkland Islands Government for approval. The Company is still in the process of closing out drilling operations from earlier in the year. Once the rig and equipment have been demobilised towards the end of the year, we will have an accurate view of costs for the operation. Based on current estimates, the Company will have a cash balance of $50 to $55 million after all 2012 operations expenditures have been accounted for. In order to help fund the next phase of drilling operations, the Company will shortly look to farmout some of its 100% interest in its discovery and adjacent exploration areas.
The full Press Release can be viewed at: