Borders & Southern Petroleum : Final Results

30 March 2015

Borders & Southern Petroleum Plc

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

Preliminary Unaudited Results for the 12 months ended 31 December 2014

Borders & Southern Petroleum Plc (AIM: BOR) announces preliminary unaudited results for the year to 31 December 2014.

Chairman's Statement

2014 was a challenging year for the entire oil & gas industry, not just Borders & Southern. The oil price slid from $110 per barrel in the middle of the year to below $50 per barrel in January 2015. The short-term outlook for oil prices remains uncertain, but many analysts are predicting a medium to long-term price of around $70 per barrel once the current supply/demand imbalance corrects.

As a response to this dramatic fall, oil and gas companies have reassessed their capital expenditure plans and are focused on cost efficiencies. Discretionary expenditure on exploration and appraisal activity has been reduced significantly and prioritisation in the short-term is largely focused on current work programme commitments rather than business development.

As the industry has cut expenditure and the number of planned exploration and appraisal wells has fallen, the demand for drilling rigs has weakened. Consequently, the day-rates for deep-water rigs have reduced by as much as 40%. The costs of other well services have also started to fall.

Against this backdrop, Borders & Southern has been looking to secure partners to fund the next phase of Darwin's appraisal. Specific challenges have been to find companies prepared to commit to a multi-well deep-water programme with well-cost estimates (before the oil price drop) of approximately $100 million per well. In addition, for many potential partners, the Falkland Islands would be a new geography, a long way away from the world's current exploration hot spots.

In our favour, however, is the fact that Darwin is a very robust project due to the competitive fiscal terms offered by the Falkland Islands Government and Darwin's high quality reservoir (resulting in a low number of required production wells). Consequently, we believe that the development of Darwin would prove to be economic, even at oil prices lower than current levels. Certainly, when we benchmark Darwin with other offshore development projects on a cost curve, it is well positioned. So whilst we recognise the challenge in achieving a successful farm-out in the present environment, we remain optimistic that a project as robust as Darwin will attract a partner.

It is worth noting that companies that have entered our data room have found the technical merits of the project very attractive. Darwin is a gas condensate discovery with a high liquids component (46 to 49 degrees API). This means that it has the condensate gravity typical of an ultra light crude oil. Our current estimate of the most likely recoverable volume of condensate is 263 million barrels but, as previously stated, this could increase significantly following further successful drilling. Those potential partner companies that undertook detailed technical analysis confirmed that, following a successful appraisal programme, an FPSO development would be commercially viable.

In some cases, farm-out talks advanced from technical to commercial discussions. Unfortunately, these negotiations ended before a deal could be secured, either due to a change in the potential partner's strategic focus or because terms fair for both parties could not be agreed.

A Falkland Islands drilling campaign is currently underway but without funding we have been unable to join the programme. The Erik Raude drilling rig has embarked on a six well work programme, split between the North and South Falkland basins. Our aim is to secure partners as soon as possible in the hope that we can take advantage of the rig's location and negotiate a new contract at the end of its current work schedule. If that proves to be unachievable in the current environment, we would seek to mobilise another rig as soon as we have secured funding. In essence, this latter scenario would be similar to what we did for our 2012 programme when we negotiated the Leiv Eiriksson drilling rig with only two firm wells. With rig demand and rates now much reduced, the capital commitment is likely to be materially lower and the number of available rigs is likely to be much higher.

Meanwhile, our technical work continues to progress. Analysis of our two merged 3D seismic surveys leads us to believe that the area surrounding the Darwin discovery could represent an important sweet spot in the South Falkland Basin. Our understanding of the geology of the basin continues to grow but questions remain. Such as: Does Darwin have an oil leg? And: Do the mapped amplitude anomalies close to Darwin represent oil? Ultimately, these questions can only be answered by the drill bit. However, reservoir characterisation studies currently reaching a conclusion will certainly impact our confidence levels. We plan to report to shareholders on the first phase of our prospect evaluation in the area surrounding Darwin in the very near future.

The Company's balance sheet remains strong. We have cash reserves of $16 million and a lower overhead than many of our peer group. We will continue to run a strict budget in this current low oil price environment. Most commentators believe that the oil price will make a recovery, as it has done in the past, but perhaps not to the levels seen before the recent drop. Global exploration activity should pick up. We believe the Darwin discovery is too good to remain static, so we are still confident that funding will be found to continue the appraisal programme.

Harry Dobson, Chairman

30 March 2015

For further information please visitwww.bordersandsouthern.comor contact:

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 2,862 km of 2D seismic, 2,517 square kilometres of 3D seismic and drilled two exploration wells, making a gas condensate discovery with its first well.

Unaudited consolidated statement of comprehensive income

for the year ended 31 December 2014

Unaudited consolidated statement of financial position

as at 31 December 2014

Unaudited consolidated statement of changes in equity

for the year ended 31 December 2014

The following describes the nature and purpose of each reserve within owners' equity:

Unaudited consolidated statement of cash flows

for the year ended 31 December 2014

Accounting policies

1. Basis of preparation

The financial information set out above does not constitute the company's statutory accounts for 2013 or 2014. Statutory accounts for the year 31 December 2013 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The results for 2014 are unaudited. Statutory accounts for the year ended 31 December 2014 will be finalised based on the information presented in this announcement. The independent Auditors' Report will be based on those statutory accounts once they are complete.

Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014, prepared under IFRS, will be delivered to the Registrar in due course.

2. Going concern

The Directors believe that the company has sufficient funds, with contingency, to meet its current commitments with excess funds expected to be sufficient to fund ongoing operations for the foreseeable future. Therefore, this financial information has been prepared on a going concern basis.

3. Basic and dilutive loss per share

The calculation of the basic and dilutive loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The loss for the financial year for the group was $3.888 million (2013 - loss $2.956 million) and the weighted average number of shares in issue for the year was 484.1 million (2013 - 484.1 million). During the year the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated. At the statement of financial position date, there were 6.15 million (2013 - 6.15 million) potentially dilutive ordinary shares being the share options.

4. Post Reporting Date Events

There were no post reporting date events.

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