Darwin Independent Evaluation

28 February 2018

 

Borders & Southern Petroleum plc

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

 

Darwin Independent Evaluation

 

Borders & Southern (AIM: BOR), the London based independent oil and gas exploration company with assets offshore the Falkland Islands, announces the results of an independent evaluation of the Darwin East discovery and the adjacent Darwin West untested fault block.

 

Highlights

 

·   Substantial increase in estimated resource. Un-risked Best Estimate total recoverable liquids (condensate and LPG) for Darwin East and West is 462 MMbbl.

·   The geological chance of success of finding hydrocarbons in a well located on Darwin West is assessed to be 0.81.

 

Borders & Southern asked Gaffney, Cline & Associates (GCA) to perform an independent evaluation of the Darwin East gas condensate discovery along with the adjacent, technically similar fault block, Darwin West. GCA was given access to the Company's extensive 3D seismic and well data, including technical studies, interpretations and dynamic models of the reservoir.

 

GCA's comprehensive analysis confirmed Borders & Southern's geological interpretations and derived the following estimate for Wet Gas Initially in Place:

 

Estimated Wet Gas Initially In-Place (Bscf)

	Low	Best	High
Darwin East	659	1,096	1,759
Darwin West	1,361	2,110	3,160

Note: Borders & Southern is the operator with a 100% working interest

 

It was noted that the untested Darwin West fault block displayed very similar seismic characteristics and attributes to the Darwin East fault block. The geological chance of success of finding hydrocarbons in Darwin West was assessed to be 0.81.

 

Composition analysis of the hydrocarbon samples collected in the Darwin discovery well (61/17-1) demonstrated that the gas is a very rich, sweet gas capable of producing liquid condensate and LPG. Borders & Southern has previously discussed development concepts whereby the liquid condensate could be produced and the "dry" gas re-injected back into the reservoir, allowing it to be available for a future LNG project, subject to commerciality. GCA's work investigated the potential to produce the LPGs (Propane and Butane) in addition to the condensate. They prepared a revised Equation of State model of the rich gas and updated the dynamic reservoir model for Darwin East and Darwin West. Utilising six vertical production wells and four vertical gas injector wells (five wells on each fault block) they derived the following best estimate:

 

Best Estimate Gross Contingent & Prospective Resources (un-risked)

	Condensate (MMSTB)	Condensate & LPG (MMbbl)
Darwin East (Contingent Resources (2C))	115	170
Darwin West (Prospective Resources)	202	292

Note: Borders & Southern is the operator with a 100% working interest

 

The above volumes were based on a combined development of the core areas of both structures into a single FPSO, with 480 MMscf produced gas. Total recovery of liquids from the 25 year period evaluated is 462 MMbbl. The combined liquids production of condensate and LPG peaks at 91,100 bbl/day.

 

The Company will comment further on the economic impact of these new resource estimates in the announcement of final results for 2017, due at the end of March 2018.

 

Chief Executive, Howard Obee, commented:

 

"We are delighted with the results of this independent evaluation. It reaffirms our belief that Darwin East and West represent a very material resource. And with the recent recovery of Brent crude we are optimistic that this evaluation will assist in our efforts to secure partners and funding for the next phase of drilling."

 

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

 

Howard Obee, Chief Executive Borders & Southern Petroleum plc Tel: 020 7661 9348

Adam James/Atholl Tweedie Panmure Gordon (UK) Limited Tel: 020 7886 2500

Simon Hudson / Barney Hayward Tavistock Tel: 020 7920 3150

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

 

Notes: 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.

 

This statement has 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 30 years relevant experience, Fellow of the Geological Society and member of the American Association of Petroleum Geologists and the Petroleum Exploration Society of Great Britain.

 

Glossary

 

The above resource estimates have been estimated in accordance with the Petroleum Resource Management System guidelines endorsed by the Society of Petroleum Engineers.

 

2C	Denotes best estimate scenario of Contingent resources
Best estimate or P50	With respect to resource categorization, this is considered to be the best estimate of the quantity that will actually be recovered from the accumulation by the project. It is the most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate
Bscf	Billion standard cubic feet
Condensate	a mixture of hydrocarbons that exist in the gaseous phase at original temperature and pressure of the reservoir, but when produced, are in the liquid phase at surface pressure and temperature conditions
Contingent resources	Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies
Initially in Place	quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production plus those estimated quantities in accumulations yet to be discovered
Low/Best/High Estimates	The range of uncertainty reflects a reasonable range of estimated potentially recoverable volumes at varying degrees of uncertainty (using the cumulative scenario approach) for an individual accumulation or a project
MMbbl	Million barrels
MMscf	Million of standard cubic feet
MMSTB	Millions of barrels of stock tank oil
Prospective resources	Petroleum deposits that are estimated, on a given date, to be potentially recoverable from accumulations yet to be discovered
Recoverable resources	those quantities of hydrocarbons that are estimated to be producible from discovered or undiscovered accumulations
Unrisked	without incorporating the probability of failure
Wet gas	natural gas from which no liquids have been removed prior to the reference point

 

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