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Business model and strategy

Company

Business model and strategy

“Borders & Southern’s aim is to discover hydrocarbons and monetise them for the benefit of all its stakeholders. We create value through exploration success, then add value by progressing discoveries through appraisal and development into production.”

Our progress to date

Access

Borders & Southern Petroleum was formed in 2004 with the objective of making material hydrocarbon discoveries in frontier basins.

Our strategy is to identify opportunities early, preferably in a non-competitive situation, where we can licence large tracts of acreage with potentially multiple play types. Our focus is on frontier or emerging basins where we can demonstrate the presence of a regional source rock.

Our idea for the Falkland Islands was to test the area located to the south of the Islands where we could identify large folds and tilted fault blocks on sparsely spaced vintage regional seismic lines. Although no structures could be mapped, the fold belt trend offered potential to deliver large-scale structural traps.

Our regional work gave us confidence that a good quality Late Jurassic to Early Cretaceous regional marine source rock would be present. We were prepared to take risk on finding a good quality reservoir.

In November 2004 we applied for and were successfully awarded an area of approximately 20,000 square kilometres, covering a large section of the east-west trending fold belt.

Our initial work commitment was relatively low and financial exposure modest, reflecting the relatively high risk nature of the project. As we collected new data and our knowledge of the geology grew, the sub-surface risks started to reduce and we were able to progressively increase our investment in the area.

Exploration

Exploration commenced in 2005 with the acquisition of 2,862 kilometres of non-exclusive 2D seismic data. This data proved that numerous robust structural traps existed within our acreage. However, the 2D data did not provide enough insight into potential hydrocarbon charged reservoir.

The technical risk had been reduced, but not enough to merit drilling. Funds were raised and 1,492 square kilometres of 3D seismic was acquired in 2008. It was this data that significantly reduced the risk profile of the project giving us confidence on the presence of reservoir and hydrocarbons due to compelling direct hydrocarbon indicators – an excellent flat spot was noted on the Darwin structure.

Following a major fund raising exercise in 2009, a rig contract was signed with the objective of testing two independent prospects: Darwin and Stebbing. In 2012 the Company was successful with its first exploration well located on the Darwin prospect (61/17-1), a liquids rich (46-49 API) gas condensate discovery. Our current un-risked P50 recoverable resource estimate is 360 million barrels. The second well, Stebbing, had very strong hydrocarbon shows but failed to reach its main target due to high pressures making it unsafe to continue to drill.

Having proven the petroleum system, the next stage was to determine the lateral extent of the play fairway and focus on near-field prospects. In 2013 a new 1,025 square kilometres 3D seismic survey was acquired. Then in 2014 we reprocessed the original 3D data and merged it with the new survey, giving us 2,517 square kilometres of high quality PSDM 3D seismic data.

Exploration

The new seismic dataset provided greater resolution enabling a more refined reservoir definition at the Darwin field and facilitated an update to the reservoir modelling. To further enhance our interpretation tool kit a seismic inversion study was commissioned. The additional data sets helped further de-risk the prospect portfolio of the near field shelf area. In 2015 an independent assessment of the shelf portfolio was completed.

The seabed topography within 14 km of the field location provides alternative options for the location of the surface facilities via subsea tieback, a common practice in West Africa. Reservoir modelling and facilities studies were carried out to explore these options in addition to other studies looking a full and partial field exploitation. The CAPEX differential when not locating the facilities immediately above the field location was minimal.

In 2017 an independent resource assessment of the Darwin field was commissioned. The objective was to sense check the volumetrics and the development concept. The study highlighted the additional resource potential of the discovery. The gas condensate contained in the Darwin reservoir is rich in both liquid condensate and LPG. The independent assessment concluded that the most likely liquid resource volume at the Darwin field was 426 MMbbls ( 292 MMbbls of liquid condensate, 48 API, and 170 MMbbls of LPG).

Initial development concepts were focussed on a full field development plan which consisted of three producing wells and two gas injectors on each separate tilted fault block. Because of the changing global financial environment, a development concept that reduced the initial development capital outlay is now being considered. The ‘phased development’ scheme would provide fast payback (1 to 2 years) and the project could then be further developed using free cash flow. Recently a facilities engineering study was commissioned to explore both the phased development concept and to update the project costs from the earlier studies.    

Company

Business model and strategy

What's next?

Appraise and develop

Our short-term plan is to:

  • Keep progressing the Darwin discovery towards development and
  • Secure partners and funding to start an appraisal drilling programme

Recent steps have included:

  • Assessment of potential appraisal well locations
  • Completion of well designs
  • Reservoir modelling to assess potential development well locations, flow rates and an estimate of the recoverable volume of condensate
  • Scoping development study and commercial analysis
  • Near-field prospect resource estimates for future growth