Falkland Islands

The Falkland Islands are located in the South Atlantic, approximately 500 km from the mainland of South America. The Islands have a population of about 2,400 with an economy based on sheep ranching and fishing industries.

Borders & Southern holds a 100% equity interest and operatorship of five Production Licences covering an area of nearly 20,000 sq km in the South Falkland Basin. The acreage is located approximately 150 km south-east of the Islands. The Production Licences, with an effective date of 1 November 2004, provide exclusive rights for surveying, drilling and production within the specified area.

The fiscal regime operating in the Falkland Islands is a Tax and Royalty system. There is a variable acreage rental, a 9% royalty on production and 26% corporation tax on profits.

The South Falkland Basin is unexplored. The geology and stratigraphy in Borders & Southern’s acreage is expected to be similar to the adjacent Magallanes and Malvinas sub-basins located to the west of the Falkland Islands, where working petroleum systems are proven. It is also anticipated to be similar to geology recorded in DSDP wells 511 and 330 drilled to the east of the Falkland Islands in the Falkland Plateau sub-basin.

This regional geological data helps provide a high degree of confidence on the occurrence of a good oil prone source rock. Late Jurassic to Aptian aged organic rich shales have been well documented both to the east and west of Borders & Southern’s acreage. Further afield the source rocks are noted off the coast of South Africa and the Antarctic peninsula. This indicates that the source rock is regionally extensive and therefore likely to be present within the Company’s licensed area.

Borders & Southern’s objective is to test the hydrocarbon potential of the east–west trending fold belt, located approximately 150 km to the south of the Falkland Islands. This fold belt trend contains numerous large simple structures (up to 150 sq km in area), including thrust cored anticlines and tilted fault blocks. The clear definition of these structures has been achieved through the acquisition of 2,862 km of 2D seismic and 1,492 sq km of 3D seismic.

The interpretation of the 3D seismic data has significantly increased the company’s understanding of the geology and prospectivity of the area. It has provided confidence on the presence of reservoirs in the Tertiary, Upper Cretaceous and Lower Cretaceous, along with the presence of a working hydrocarbon system.

The company has compiled a large prospect inventory comprising multiple play types and multi-billion barrel recoverable resource potential. Geophysical attributes such as flat spot and AVO anomalies and amplitude conformance to structure help to reduce risk of the mapped prospects.