Borders & Southern shares fall 11% on Falklands delay
Shares in Borders & Southern tumbled nearly 11% today after it delayed drilling its first well in the Falkland Islands.
In an interim results statement, the company said: 'At the present time we have still not secured a rig for our work and it looks like our previously targeted window for operations (Q4 2010 - Q1 2011) has slipped.
'Consequently we will not be drilling in 2010, but remain optimistic that we will sign a rig for drilling in 2011. The delay has been caused by the competition for high specification rigs and the logistical challenges associated with operations in the Falkland Islands.'
The Falkland Islands have attracted huge interest from oil explorers in the past year. And the stocks involved, such as Rockhopper, have soared as a result.
But on Tuesday, shares in Falkland Oil & Gas plunged nearly 22% after drilling in one of its two licences was delayed and joint venture partner BHP Billiton pulled out of the other.
The Falkland Islands government had to grant the firm an extension on its deadline to begin exploiting its northern prospects after it was unable to find a drilling rig in time.
Aim-listed Borders & Southern said its balance sheet remained 'robust' with a cash balance of $205m at 30th June 2010. 'This gives us the strength and independence to undertake the exploration programme that we wish,' the company said.
'We remain focused on accessing a rig and will inform investors of the likely timing of drilling as soon as we have signed a contract.'
It made a loss of $672,185 in the first half of the year.
Arbuthnot analyst Dougie Youngson told Reuters: 'The company needs to secure a rig in the short term if it is to drill in Q1 2011. If it misses this window, then drilling will not happen until Q4 2011 at the earliest.' Arbuthnot maintained a 'buy' recommendation on the company with a target price of 120p.
The shares closed down 8.5p at 72p. That was an improvement on a intra-day low of less than 68p.
The stock surged from 46p in May to a high of 93p earlier this month.
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