Borders & Southern Petroleum PLC (LON: BOR) has informed investors that once oil prices rise, they’ll be able to take advantage and advance their discovery off the Falkland Islands, which is as of now undeveloped.
Development of the Darwin gas condensate discovery would require an investment of approximately US$1.36 billion. The AIM-quoted firm is not the only company looking for partners to progress various projects in the industry. At the end of June, Borders & Southern had a little over £12 million in cash.
Developing the Darwin discovery could lead to a production of 56,000 barrels of oil per day. The discovery is located in deep waters just south of the Falkland Islands. The cost of production would be US$40 per barrel, at which point the company would be breaking even.
The CEO of Borders & Southern, Howard Obee, explained that while oil prices remain low, the company has been focused on keeping strict control over their finances and has preferred to concentrate on activities that will make the Darwin condensate discovery more attractive to potential partners. He also stated that even though the company hasn’t been able to find a partner yet to assist in the financing of the appraisal drilling because of capital limitations in the industry, they have still managed to prove that the discovery is commercially competitive.
He pointed out that during H1 of 2016, the company was able to complete various technical projects that have made the Darwin discovery comparable to other opportunities for development in the gas & oil industry.
Obee believes that the Darwin discovery looks good even when compared to benchmarks of onshore US shale developments as well as a wide range of pre-sanctioned offshore projects all over the world.
The company hasn’t started earning a revenue yet, and has therefore reported a loss of US$1.1 million for the first half of 2016, stating it also had US$12.2 million in cash.
Borders & Southern also noted that since it holds most of its funds in British pounds, their balance, which is reported in US dollars, was lower than expected on the back of the pound’s weakness caused by the Brexit referendum. The company closed out 2015 with US$14 million in cash by comparison.