MercoPress. South Atlantic News Agency

Fourth oil company confirms Falklands’ exploratory drilling early 2011

Borders & Southern raised 184 million USD through a share placement in November

British oil exploration company Borders & Southern Petroleum (BOR) announced Thursday the launching of its exploration campaign in Falkland Islands waters at the start of next year.
The decision was taken after the AIM listed company raised 184 million US dollars.

Borders & Southern thus becomes the fourth company to announce exploration activities in the Falkland Islands following the current round launched by Desire Petroleum last February and which sent bells ringing when Rockhopper Exploration last month announced the discovery of oil in its Sea Lion prospect.

After spending much of 2009 concentrating on consolidating its prospect inventory and initiating well planning, BOR has chosen the Darwin and Stebbing wells at its “best first tests” of its acreage.

In the Thursday statement the company which is concentrated solely on the Falklands’ Southern Basin, said it was focusing on securing a deep water rig to be active in the back end of 2010 and the first quarter of 2011.

“Although exploration risk can never be eliminated, we are particularly excited about drilling these prospects. The two prospects are completely independent of each other except that they require the same source rock to be working.

”We will therefore be learning as much as we can about the geology and petroleum systems of our acreage,“ the group said.

In order to fund its drilling campaign, Borders & Southern raised 184 million USD through a share placement in November at the same time as being granted a three-year extension to its first exploration phase of its production license.

The extension was granted on the basis that it committed to drilling one exploration well during that period.

”Our successful capital raise in November allows us to comfortably fund a drilling program on our exciting prospects in the South Falkland Basin. We continue to progress out understanding of the prospects with additional technical work but the principle focus is now on drilling“ said Chairman Harry Dobson.

The news came as the group reported it had swung into profit of $3,150,736 in 2009, compared to a loss of $4,727,900 a year earlier.

Earnings per share rose to 1.54 cents versus a loss of 2.43 cents in 2008, while losses from operations narrowed to $1.2 million from the previous $1.3 million.

Borders & Southern, which has seen its shares rise over 11% in the last month alone on the back of renewed confidence in the Falkland Islands following Rockhopper's discovery on the North Falkland Basin, said it had witnessed a noticeable change in sentiment within the oil sector.

At the start of the year, the oil price was around 35 USD a barrel, with global exploration scaled back and company shares depressed. Fast forward a year and the price of oil more than doubled and was accompanied by a ”change in appetite for exploration risk, including frontier exploration”, it said.

Another company Falkland Oil and Gas Ltd in partnership with mining giant BHP Billiton is planning to drill the first well in the South Falkland Basin shortly.