Interim results for the 6 month period ended 30 June 2008

25/09/2008

Highlights

• Completed 3D seismic acquisition ahead of schedule and within budget
• Received fast track processed seismic data
• Received final processed data and commenced interpretation
  
• Cash balance as at 30 June 2008 is £12.5 million

Chief Executive’s Statement

The Board of Directors are delighted to report that our Falkland Islands exploration programme is progressing well and on track. Our current focus is on the interpretation of the new 3D data.

Within the first half of this year we completed the 3D seismic acquisition programme within our South Falkland Basin licences. The survey was completed ahead of schedule and within budget and without any safety or environmental incidents. The processing of the data commenced in mid February and a fast track product was received in April. Examples from this data were shown and discussed at our AGM in June. The Board was very pleased with the quality of this early processed data, along with the technical insights that it revealed.

At the end of July we took delivery of the fully processed 3D data. This has now provided us with spectacular imaging of the fold belt trend and will allow us to complete a comprehensive evaluation of our main plays: the simple four way dip closures and inverted tilted fault blocks.

Whilst the 3D interpretation is a long and detailed exercise which will extend into next year, our aim is to deliver drillable prospects in the fourth quarter of this year. The interpretation is at a very early stage but already we are developing new ideas on the geological history of the area and gaining a better understanding of the previously mapped prospects. The size of these prospects has not diminished and offer significant scale. (As previously reported, we have multiple structural prospects in excess of 50 square kilometres). The 3D has allowed us to confirm the structural integrity of these prospects.

One of the main early insights from the new data is the increased evidence for a working petroleum system. The Board of Directors now has a high degree of confidence of a working source rock and credible migration pathways into the structures. There is a very strong, systematic relationship between the distribution of gas hydrates and the crests of anticlines, suggesting that many of the structures have been the focus for migrating hydrocarbons.

Additionally, there are numerous examples of hydrocarbon flags on the data, seismic amplitude anomalies in geologically sensible settings such as in the footwalls of faults associated with some of the prospects. These observations are all very positive, but we will hope to gain additional insights into these anomalies when we undertake the AVO studies later in the evaluation.

Previous modelling work had predicted both oil and gas generation in our acreage, similar to the discoveries of the contiguous Malvinas and Magallanes Basins. The new 3D data will allow us to refine our thermal modelling and source maturation studies to see if we can be more predictive on a prospect by prospect basis.

Once the mapping and prospect generation exercise is completed we would anticipate a much expanded prospect inventory. New structures that fell between the coarse grid of 2D seismic lines have been identified and the enhanced imaging of the 3D will allow us to map deeper structures. We will also define the stratigraphic trapping potential of the area, previously not assessed. The final prospect inventory is likely to include many large scale structures with multiple stacked targets. The prospects will be risked and ranked to come up with the initial drilling locations.

In parallel with the technical work we will be advancing our Environmental Impact Assessment. We are currently planning the benthic sampling programme using the 3D data as a guide.

Operationally we will be ready to drill next year and will be actively pursuing all possible options for early rig access. Our current energies are being placed into defining the best prospects possible. Once we get a firm understanding of the value of these prospects then we will make a decision on whether to farmout a share of the licence or not. There are many considerations in this decision, not only financial. Strategic reasons, such as access to rigs, or the chance to drill early wells will be assessed. We will ensure that shareholder’s interests are foremost when making these important decisions.

As we look forward, the Board of Directors is very confident that it will deliver high quality prospects of significant scale that will lead to an exciting initial drilling campaign. We will update shareholders on the seismic interpretation as we progress the 3D interpretation.

For further information please contact:

Howard Obee
Chief Executive
Borders & Southern Petroleum plc
Tel: 020 7661 9348

Simon Hudson
Director
Tavistock Communications
Tel: 020 7920 3150

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