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March 30, 2015

Borders and Southern would hire its own Falkland drill rig if necessary

Borders and Southern (LON:BORS) plans to take advantage of lower rigs and carry out its own drill programme in the Falklands, if it can secure funding.


The explorer was unable to secure a farm-out deal in order to fund participation in the current drill programme is in the waters of the South Atlantic; which involves Premier Oil (LON:PMO), Rockhopper (LON:RKH), Falkland Oil & Gas (LON:FOGL) and US firm Noble Energy.


In today’s financial results statement chairman Harry Dobson said that once funded it would try to agree a new contract for the Erik Raude rig, which is already in use in the Falklands, but if that proves unachievable it would also be prepared to mobilise a separate rig.


Capital commitments would likely be materially lower than in the past, due to much reduced rig demand and rates in the sector, the company said.


Sam Wahab, analyst at Cantor Fitzgerald, said a funding via the equity route would in his view be more likely than a farm-out.


In a note Wahab repeated a ‘hold’ recommendation for the explorer, and a 9p price target.


On AIM, meanwhile, Borders shares were down slightly at 6p.


The exploration company reported a US$3.mln loss for the twelve months to December 31, and it had US$16mln of cash and equivalents at the end of the year.



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