Borders & Southern Petroleum plc is pleased to announce its unaudited interim financial statements for the six months to 30 June 2020. The accounts contained within this report represent the consolidation of Borders & Southern Petroleum plc and its subsidiary, Borders & Southern Falkland Islands Limited.
Chief Executive's Statement
The Company reports a loss from operations of $579,000 for the six-month period ending 30 June 2020. This compares to $820,000 for the corresponding period last year. The cash balance at 30 June 2020 was $2,560,000 (30 June 2019: $4,407,000), with no debt.
Tough economic conditions have prevailed throughout the first part of the year and in response to this we have made additional cutbacks to the 2020 budget. The Company has always maintained a low overhead, outsourcing many of its non-core disciplines. But further savings have been made, including staff salaries. Executive directors have taken a 50% reduction in salary since 2019. Our objective has been to preserve cash during this industry downturn.
The low oil price, currently around $40 per barrel, has resulted in a dramatic fall in exploration and appraisal activity within the industry, along with a decrease in capital expenditure on new developments. In this setting we have continued our farm-out pursuit. Our endeavors have been far reaching, not only having discussions with other oil companies, but also exploring potential collaborations with service and engineering companies. We continue to investigate all options.
Undoubtedly, within the current climate we face a significant challenge, like so many companies our size. This year, our industry has faced an oil supply surplus coupled with a decrease in demand due to the Covid-19 global pandemic, at a time when the world is starting to transition towards renewable energy. Many commentators believe that hydrocarbons will continue to play a very important role during the transition, but we will potentially see a high-grading of new developments, based on quality of reservoir, break-even oil price and environmental footprint. We believe that Darwin stands out on this basis, with its break-even oil price of less than $35 per barrel, quick payback, excellent reservoir and a relatively small environmental footprint. We therefore remain optimistic that progress towards appraisal and development will be achieved.