Borders and Southern – here we go again?

The countdown to the gas condensate results is in motion and with the look of the chart over the last 10 days somebody, including Ignis, thinks that there are commercial anounts there…

On 23rd April, Borders and Southern announced that despite plenty of hype about a huge oil find from the SUN newspaper amongst others, the Darwin-East 61/17-1 well about 100 miles southeast of the Falklands had encountered a significant gas condensate find.

The well encountered good hydrocarbon shows from 4,633m down to 4,810m. The main reservoir interval, comprising good quality massive sandstone, was found to be 84.5m thick with net pay of 67.8m. Average porosity for this interval was 22%, with maximum values reaching 30%, average permeability was 337mD.

The lab testing the gas condensate find received the reservoir fluid sample on June 18th after a long trip by sea from the Falkland Islands. The two and a half month analysis period has surprised many investors but clearly the scale of the task has been significant and the company has probably allowed some time to establish the implications of the results from the laboratory.

The current mean estimate of Gas In Place is roughly 2.44 Trillion Cubic Feet (TCF) or 2400 million mmBTU (with natural gas at $2.5 or so for each mmBTU, the gas would be worth around $600 million) with a range of +18% or -23%. Additional oil could be equivalent to 20 to 200 million barrels of oil per TCF depending on the gas condensate analysis. If less than 50 million barrels equivalent the find is probably uncommercial.

With the current market cap of £99 million, clearly plenty of upside if the lab boys deliver the goods!

As ever, where there’s smoke, there is usually fire….