Petroleum plc
Annual Report & Accounts
2006
      Borders & Southern
Contents
01 Highlights
02 Chairman’s Statement
04 Chief Executive’s Review
10 Financial Review
12 Board of Directors
14 Directors’ Report
17 Audit Committee Report
18 Remuneration Committee Report
19 Auditors’ Report
22 Consolidated Profit and Loss Account
23 Consolidated Balance Sheet
24 Company Balance Sheet
25 Consolidated Cash Flow Statement
25 Reconciliation of Net Cash Flow to Movements in Net Debt
26 Notes to the Financial Statements
36 Corporate Directory
The company is UK based and engaged in the exploration of hydrocarbons.
The company’s shares are listed on the Alternative Investment Market of
the London Stock Exchange (AIM).
Front cover: Volunteer Beach, Falkland Islands
                                            Highlights
1
Borders & Southern has completed the processing and interpretation of its Falkland
Islands 2D seismic data
The Company has commissioned and completed numerous technical studies aimed at
technical risk reduction
A new fold belt play located to the south of the Falkland Islands has been defined, the
heart of which is contained within the Company’s 100% owned licensed area
The size of the Company’s lead inventory has increased significantly, and contains 
numerous structures capable of holding giant oil or gas accumulations
The Company is currently assessing the design and cost of a focused 3D seismic 
acquisition programme aimed at further risk reduction prior to drilling
The management team is actively seeking to add new projects to its portfolio that are 
consistent with its strategy and meet its stringent screening criteria
Cash balance as at 31 December 2006 was £9.47 million
Borders & Southern Petroleum plc
     Borders & Southern Petroleum plc
2
In the last 18 months the Company has made significant progress towards
its objective of building a successful exploration and production business. 
Chairman’s
Statement
uring this period the Company has completed
the processing and interpretation of the Falkland
Islands 2D seismic data and commissioned a
number of specialist studies all aimed at reducing the
technical exploration risk. 
The results of the technical work have confirmed our
belief that an excellent fold belt play exists to the south of
the Falkland Islands. The work also confirmed the scale of
the opportunity, with numerous structural leads mapped,
seven of which exceed 50 square kilometres in size.
These structures are potentially capable of holding very
large volumes of hydrocarbons.
The evaluation has produced far better results than
expected at the outset and the Company has been fortu-
nate to find that its acreage (in which we hold a 100%
interest) contains the majority of the play fairway.
D
              Borders & Southern Petroleum plc
The management team’s strategy from the outset was to
attract large Independent and major oil companies as
partners in the projects that we pursue. The challenge is
to determine the right time to bring in such partners by
way of a farmout. We need to optimise the commercial
terms of any agreement whilst reducing the technical risk
enough to attract the partner. 
In order to understand how major oil and gas companies
would perceive the current risk profile of Borders &
Southern’s licensed acreage, the Company invited a very
limited number of companies to review the data, with a
view to them potentially becoming a joint venture partner.
We did not believe it appropriate to launch a full farmout
campaign at this time. 
The selected small number of companies took up our invi-
tation and made multiple visits to our offices to review the
data. Discussions with some of these potential partners
are ongoing. 
In the meantime, in order to maintain the pace of explo-
ration the Company is currently evaluating the best way to
further reduce the technical risk. One option being con-
sidered is a focused 3D seismic survey. Therefore the
Company is working with consultants on 3D survey
design and assessing how much data is required to deliv-
er a significant risk reduction and how much it will cost. If
we proceed with 3D seismic acquisition then it is likely to
occur in the last quarter of 2007 at the start of the Austral
summer season.
3
Ultimately, of course, we want to drill our Falkland Islands
prospects as soon as practical. The objective is to align
the drilling programme with other licence holders in the
Falkland Islands region so that we can take advantage of
the cost benefits of a combined drilling programme.
Discussions with these licence holders are ongoing.
However, if a joint venture partner is brought into our
acreage, the incoming partner is likely to assume opera-
torship of our licences and will accordingly seek input into
the timing of exploration drilling. 
In addition to progressing the evaluation of the Falkland
Islands licences the management team has been assess-
ing opportunities in other regions with the intention of
adding new licences to the Company’s portfolio. Applying
strict screening criteria, the Company has been and will
continue to be very selective when considering new
licences. Borders & Southern will ensure that any 
additions to the exploration portfolio will be consistent
with our strategy and at least equal in quality to those
assets in our current portfolio.
Exploration in frontier regions is always challenging.
However the potential rewards are great. Borders &
Southern’s current portfolio holds the potential to discover
and prove up significant volumes of hydrocarbons. We
will continue to progress towards testing this potential. 
HARRY DOBSON
Chairman
       Borders & Southern Petroleum plc
4
In November 2004 Borders & Southern gained licences to explore in 
nearly 20,000 square kilometres of the territorial waters of the Falkland
Islands. This acreage is located in the untested South Falkland Basin.
Chief
Executive’s
Review
             Borders & Southern Petroleum plc
FALKLAND ISLANDS EVALUATION
he Company’s specific objective was to investi-
gate the presence of a fold belt play to the south
of the Falkland Islands, the offshore continuation
of the Andes Mountain trend. Throughout the South American
continent, from Venezuela in the north through Colombia,
Peru, Bolivia and Argentina, fold belts provide one of the
most successful hydrocarbon plays. 
Fold belts usually contain numerous, simple geological
structures suitable for trapping hydrocarbons. Providing
there are good reservoir rocks and working source 
systems then fold belts can contain prolific hydrocarbon
provinces. Individual structures can contain billion barrel oil
fields or multi-tcf gas accumulations. Examples of such giant
fields include: El Furrial (Venezuela), Cusiana (Colombia)
and the San Martin / Cashiriari structures (Peru).
Prior to our exploration programme in the South Falkland
Basin there had been only limited evaluation of the fold
belt play. Hints that a play could exist were seen on 
legacy regional seismic data from 1992. However, this
data is insufficient to define where the play might best be
5
developed. In April / May of 2005 we acquired 2862 kilo-
metres of new 2D seismic data. Onboard processing
allowed us to confirm that the play existed and enabled us
to refine the survey during acquisition in order to cover the
most interesting structures. This is why there is a higher
density of seismic lines in the west of the licensed area.
There have been no exploration wells drilled in the basin.
Calibration of the seismic data, necessary for interpretation,
comes from Deep Sea Drilling Project (DSDP) wells located
to the east of the Falklands on the Maurice Ewing Bank and
from exploration wells located in the Malvinas Basin to the
west. These wells provide critical stratigraphic information
and demonstrate the presence of a high quality, organic rich
Cretaceous / Jurassic aged marine source rock.
Previous exploration drilling in the contiguous Malvinas
basin during the early 1980s resulted in several sub-
commercial discoveries. Oil flow rates in excess of 3000
bopd have been reported. Importantly the oil has been
typed to source rocks in the same stratigraphic interval
T
Tertiary
Cretaceous
Jurassic
Typical north-south
cross-section through
the fold belt
The Falkland Islands
        Borders & Southern Petroleum plc
Chief Executive’s Review
continued
6
as the source rocks cored in the DSDP wells. Similar
aged organic rich shales are also recorded onshore
South America, on the Antarctic Peninsula, in the Weddell
Sea, and off the west coast of South Africa. This gives a
high degree of confidence that this is a regional source
rock which will be present within Borders & Southern’s
licensed acreage.
Indirect evidence that source rocks are present and 
generating hydrocarbons within the licences come from a
clearly defined bottom simulation reflector, interpreted to
represent gas hydrates. There are also many seismic
amplitude and AVO anomalies within geologically sensi-
ble trapping configurations that might be indicative 
of hydrocarbons.
Borders & Southern’s regional work has demonstrated
that Upper Cretaceous / Tertiary sands are likely to have
been derived from the Falklands Massif to the north of the
Company’s acreage. Mapped canyons and channels 
indicate a north south sediment transport direction. 
The nearest outcrop to the licensed area is Beauchene
Island, located almost midway between the northern limit
of the acreage and the main Falkland Islands. The geology
of Beauchene Island is comprised of quartzitic sand-
stones and quartzites, interpreted to be of Devonian age
by analogy to the quartzites of the Port Stephens and Port
Stanley Formations on the main Falkland Islands. Erosion
of these sandstones and quartzites would provide 
excellent reservoirs in the contract area.
Falkland Islands
ATLANTIC  OCEAN
Argentina
0
0 50
50
100 150 Km
Miles 100
Chile
       FOLD  BELT  TREND
Oil discoveries
Gas discoveries 
Wells drilled in the late 1990s Falkland’s drilling campaign
Regional map illustrating 
the location of Borders 
& Southern’s licences in the
untested basin to the south 
of the Falkland Islands
     Borders & Southern Petroleum plc
Chief Executive’s Review
continued
7
Several prospective play fairways have been identified
and mapped, but the main targets are Late Cretaceous /
Tertiary sands within large anticlinal closures. Additional
stratigraphic plays also occur within this stratigraphic
interval. Subsidiary plays include Lower Cretaceous
sands within tilted fault blocks. This is similar to the proven
play of the Malvinas Basin.
2D SEISMIC INTERPRETATION
Detailed mapping of our new 2D seismic data has
revealed numerous structural leads. These comprise four-
way dip anticlinal closures, three-way dip thrust fault
closed structures, and tilted fault blocks. Many of these
structures are large. Seven leads have a mapped area of
closure over 50 sq km, with one structure exceeding 130
sq km. Significantly these structures display vertical 
closure in excess of 2 km which allows the possibility of
stacked reservoirs, providing multiple targets within the
same prospect. 
During the last 12 months we have undertaken a rigorous
technical evaluation. This started with a regional play fair-
way analysis taking in the whole of the South and East
Falkland Basins. Once the new data had been acquired,
we focused on the licensed area, and brought in specialist
help for specific projects, using experienced industry
consultants and experts from British universities. 
Projects have included geochemical and thermal model-
ling, structural modelling and restoration, seismic AVO
analysis, seismic reprocessing, seismic facies analysis,
and lead specific mapping. All of these studies have been
brought together to help reduce the exploration risks.
In addition to the technical studies we have commis-
sioned independent analysis of the operating environ-
ment and economics. The environment conditions are
described as similar to the West of Shetlands in the UK,
challenging but certainly within the capability of industry
practice. Due to the water depths of between 1500 and
2000 metres it is likely that a drill ship or a high specifica-
tion semi-submersible will be required for an exploration
well. Again, we will be using standard oil industry tech-
nology and the oil industry is already exploring in water
depths out to 3000 metres.
Critically, the minimum field size required for a commer-
cial development has been investigated. This was found
to be around 100 million barrels, assuming an oil price in
excess of $34 per barrel. In the exploration success case,
these volumes should be easily achievable given the size
of mapped structures.
A discovery would be developed using standard tech-
nology involving a Floating Production Storage
Offloading system whereby the crude oil is shipped
direct to market without the need for significant onshore
infrastructure.
NEXT STEPS
All the technical and commercial work we have under-
taken to date has reinforced our view that we have an
excellent position in the South Falklands Basin worthy of
exploration drilling.
In order to progress further we are currently evaluating
additional work programme options. One such option is
3D seismic acquisition. New 3D data would allow the
Company to have greater confidence in the reservoir dis-
tribution across the large structures and to better site
        Borders & Southern Petroleum plc
Chief Executive’s Review
continued
8
exploration wells. It may also provide direct hydrocarbon
indicators such as flat spots and amplitude anomalies
conforming to the mapped structure thereby significantly
reducing the technical risks. 
STRATEGY
The Company’s strategy is to build a portfolio of up to five
exploration projects in frontier basins, areas in which a
prolific petroleum system has yet to be defined. As 
frontier exploration has a higher technical risk profile than
exploration in mature basins, the scale of opportunity and
the potential rewards will need to be very large. 
One overriding technical constraint to the screening is the
focus on basins where there is a high degree of confi-
dence of a working source system, through either direct
(oil flow in wells) or indirect technical evidence (direct
hydrocarbon indicators from seismic or seeps).
The Company will seek to minimise the exploration risk
through high quality technical work and the application of
leading edge technologies.
We hope to secure large tracts of our targeted play fair-
ways so that if the drilling of the first prospect is success-
ful then there would be plenty of remaining potential. The
Company will also target those play fairways that contain
individual prospects of significant size. 
In contrast to the relatively high technical risks, the
Company intends to focus on countries where political
and commercial risks are considered to be relatively low. 
The Company sees its role in the industry as one where it
generates ideas, secures the acreage, funds the early
stage of exploration with the acquisition of 2D and/or 3D
seismic data and thereby takes out significant exploration
PL 018
Quad 61
Blocks 16 to 30
PL 019
Quad 62 
Blocks 16 to 30
PL 020
Quad 63
Blocks 16 to 30
PL 021
Quad 64
Blocks 1 to 30
PL 022
Quad 73
Block 1 to 5
3,668 sq km
3,668 sq km
3,668 sq km
7,381 sq km
1,213 sq km
100%
Operator
100%
Operator
100%
Operator
100%
Operator
100%
Operator
LICENCE AREA INTEREST
June 2005 Seismic Acquisition Programme
Fold belt trend
Contractor: Geophysical Services Incorporated
Vessel: GSI Admiral
Amount: 2862 km
A higher density of lines has help define the “sweet spot” of 
well imaged, simple folds within Falkland Islands territorial waters 
50 km
50km
61 62 63
64
73
OUR ACREAGE IN THE SOUTH FALKLAND BASIN
  Borders & Southern Petroleum plc
Chief Executive’s Review
continued
9
risk from the opportunity prior to attracting the larger com-
panies to help fund the drilling campaigns. 
Despite the sustained high price of oil and increased
pressure of reserve replacement, the industry majors are
still relatively risk averse and are not pursuing frontier
opportunities. This provides an excellent opportunity for
technically proficient small companies like Borders &
Southern for early entry and risk-reduction exploration
work prior to farming out.  
NEW OPPORTUNITIES
With the price of oil still relatively high, the competition for
acreage is fierce, particularly in proven and emerging
petroleum basins. As the Company screens opportunities
it needs to ensure the quality is as good as its existing
project and also that it focuses on projects that would
appeal to the larger companies. During the last 18 months
we have screened a number of opportunities, but as yet
have not secured a second project. The Company will
continue to take time in order to bring the right projects
into the portfolio.
During the last year we were pleased to welcome Bruce
Farrer into the Company. Bruce trained as a geologist and
joins us from BHP Billiton where he has worked for the last
15 years in various technical and project management
roles. He brings significant operational and evaluation
expertise to the Company based on his experience of
exploration and development projects in Europe, North
and West Africa and the Caribbean.
INDUSTRY OUTLOOK
During the last 18 months the price of oil increased 
to over $75 per barrel (July/August 2006) before falling
back to levels around $60 per barrel. This is still very high
when looking at a five-year trend as the early part of the
decade was characterised by prices around the $30 per
barrel level. Whilst some weakening of the price might
occur many commentators believe that it is unlikely that oil
prices will return to these levels in the short to medium term.
The impact of high oil prices on our business is two fold.
Firstly, there is increased competition for acreage, partic-
ularly in the proven hydrocarbon basins. Secondly, due to
the increased exploration, appraisal, and development
activity there is a higher demand for services, such as
seismic and drilling contractors, which flows through to
both costs and availability.
HOWARD OBEE
Chief Executive Officer
Bruce Farrer, Business Development Manager
  Borders & Southern Petroleum plc
10
Financial   
Review
          Borders & Southern Petroleum plc
uring the period under review, the Company did
not incur any significant capital expenditures,
with interest from the cash deposits offsetting the
majority of the Company’s costs.
The cash balances at the beginning and end of the 
period were as follows:
£ million
Cash at 1 July 2005 £10.42
Less:
Overheads and working capital (net of interest) £0.95
Cash at 31 December 2006 £9.47
The cash at 31 December 2006 was held in pounds 
sterling and US dollars in either current accounts or 
short- term cash deposits. It is the Company’s intention to 
continue to hold this cash on current or short-term
deposits until required and to potentially convert further
pounds sterling into US dollars at times when the
exchange rate is favourable.
The Company has sufficient funds to finance current
exploration expenditure commitments and to cover 
general overheads for the next financial year.
PETER FLEMING 
Finance Director
11
D
75
70
65
60
55
50
6,500
6.000
5,500
5,000
4,500
4,000
Rebased closing price
50
45
40
35
30
25
20
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Historical data for the FTSE AIM Oil & Gas 
index starts from May 2006
Source: London Stock Exchange
Source: London Stock Exchange
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
75
70
65
60
55
50
6,500
6.000
5,500
5,000
4,500
4,000
Rebased closing price
50
45
40
35
30
25
20
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Historical data for the FTSE AIM Oil & Gas 
index starts from May 2006
Source: London Stock Exchange
Source: London Stock Exchange
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
BORDERS & SOUTHERN SHARE PRICE (p)
FTSE AIM ALL SHARE INDEX - OIL & GAS
75
70
65
60
55
50
6,500
6.000
5,500
5,000
4,500
4,000
Rebased closing price
50
45
40
35
30
25
20
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Historical data for the FTSE AIM Oil & Gas 
index starts from May 2006
Source: London Stock Exchange
Source: London Stock Exchange
 Mar 2007 Dec 2006 Sep 2006 Jun 2006 Mar 2006 Dec 2005 Sept 2005
BRENT CRUDE OIL $/BARREL
            Borders & Southern Petroleum plc
12
Board of
Directors
NUMBER OF BOARD MEETINGS 5
Attendance:
Harry Dobson 4
Howard Obee 5
Peter Fleming 5
Steven Posford 5
Nigel Hurst-Brown 5
           PETER WILLIAM FLEMING
(Finance Director) age 45. Peter Fleming has over 12 years of
upstream oil and gas experience, the majority of which was
gained at BHP Billiton both in London and Melbourne. Whilst at
BHP Billiton, Peter held senior positions in exploration and 
business development, investment evaluation, acquisitions and 
disposals and strategic planning. Prior to joining BHP Billiton, he
worked for Bridge Oil and Banque Indosuez. He holds Masters
degrees in Business Administration and Finance.
STEPHEN JAMES DOUGLAS POSFORD 
(Non-executive Director) age 60. Stephen Posford was a part-
ner of stockbrokers W.Greenwell and Co. In 1986, he became
Managing Director of Greenwell Montagu Gilt Edged, and in
1989 moved to Salomon Brothers to head up their proprietary
trading department in London. He then became Salomon
Brothers European CEO before retiring in 1996.
CHRISTOPHER NIGEL HURST-BROWN 
(Non-executive Director) age 55. Since qualifying as a
Chartered Accountant, Nigel Hurst-Brown has pursued a
career in fund management. From 1986-1990 he was
Chairman of Lloyd’s Investment Managers. In 1990 he moved
to Mercury Asset Management as a main board Director and
following Mercury’s acquisition by Merrill Lynch in 1997
became a Managing Director of Merrill Lynch Investment
Managers. Currently he is Chief Executive of Hotchkis and
Wiley (UK) Limited and a member of the Executive Committee
of its US parent Hotchkis and Wiley Capital Management LLC.
Borders & Southern Petroleum plc
13
DAVID HARRY WILLIAMSON DOBSON 
(Non-executive Chairman) age 59. Harry Dobson is a former
investment banker and senior partner of Yorkton Securities.
He currently engages in various merchant banking and ven-
ture capital activities in North America and Europe, and has
acted as Chairman of a number of resource companies
(including American Pacific Mining Company Inc. and Lytton
Minerals Limited). He is currently the Chairman of Kirkland
Lake Gold Inc. (a Toronto Stock Exchange and AIM quoted
Company) and Rambler Metals and Mining plc (an AIM 
quoted Company). He is experienced in the organisation and
funding of resource projects, including those located in
inaccessible locations.
HOWARD KEVIN OBEE
(Chief Executive) age 47. Howard Obee was appointed Chief
Executive when the Company was incorporated in June 2004.
He has a PhD in structural geology from Imperial College,
and has spent 20 years in the oil industry, initially with BP
(1985-1992), and subsequently with BHP Billiton (1992-
2004). He trained as an exploration geologist, but has been
appointed to various technical and commercial roles, incor-
porating exploration, new ventures, strategic planning, and
business development. His most recent roles for BHP Billiton
were West Africa Asset Team Leader, and Exploration
Manager, London. He has experience of executing seismic
and drilling programmes in frontier basins, including those in
deep water.
From left to right:
Peter William Fleming
Howard Kevin Obee
David Harry Williamson Dobson
Stephen James Douglas Posford
Christopher Nigel Hurst-Brown
              Borders & Southern Petroleum plc
14
The Directors present their report and the audited consolidated financial statements for the 18 month period ended 31
December 2006.
PRINCIPAL ACTIVITY
The principal activity of the Group is the exploration for oil and gas. 
The comparative figures cover the period from the date of the Company’s incorporation, 8 June 2004 to 30 June 2005.
RESULTS AND DIVIDENDS
The Group profit and loss account is set out on page 22 and shows the result for the period.
The Directors do not recommend the payment of a dividend.
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS
On 18th October 2005 the Company’s sole subsidiary, Borders & Southern Falklands Islands Limited, was incorporated.
It is owned 100% by Borders & Southern Petroleum Plc.
Whilst the Company made a loss during the period, the Directors are comfortable with the Company’s financial position
at period end. Further details and a review on the operations of the Group are contained in the Chairman’s Statement,
Chief Executive’s Review and Financial Review on pages 2 to 11.
POST BALANCE SHEET EVENTS
No events have occurred since the period end which require reporting or disclosing in the financial statements.
CHARITABLE AND POLITICAL DONATIONS
There were no political or charitable contributions made by the Company or the Group during the period.
HEALTH, SAFETY AND ENVIRONMENT
The Group has an overriding commitment to health, safety and environmental responsibility. The Group works closely
with host governments and communities in the countries in which it operates, together with its contractors and partners,
to ensure internationally recognised standards are implemented and maintained along with compliance to local legislation.  
The Group’s exploration activities are subject to the relevant environmental protection acts. The Group closely monitors
its activities to ensure to the best of its knowledge there is no potential for the breach of such regulations. There have
been no convictions in relation to breaches of these Acts recorded against the group during the reporting period.
CREDITOR PAYMENT POLICY
It is the Group’s policy to settle the terms of payment with suppliers when agreeing the terms of the transaction, to ensure
that suppliers are aware of these terms and to abide by them.
The amounts owed to the Company and Group's trade creditors at the year end represented 23 days (2005: 66 days)
as a proportion of the total amounts invoiced by suppliers during the year.
Directors’
Report
                            Borders & Southern Petroleum plc
15
FINANCIAL INSTRUMENTS
Details of the use of financial instruments by the Company and its subsidiary undertaking are contained in note 25 of the
financial statements.
DIRECTORS AND THEIR INTERESTS
The beneficial and other interests of the Directors and their families in the share capital at the beginning of the period or
the date of their appointment to the board, whichever is earlier, and at 31 December 2006, were as follows:
At At 
31 December 1 July 
2006 2005
David Harry Williamson Dobson 25,000,000 25,000,000 
Stephen James Douglas Posford 25,000,000 25,000,000
Howard Kevin Obee 10,000,000 10,000,000
Peter William Fleming 2,200,000 2,200,000
Christopher Nigel Hurst-Brown 1,000,000 1,000,000
The ordinary shares in which Mr D H W Dobson is interested in are held by the Zila Corporation, a company owned by
the Whitmill Trust Company Limited, as trustee of The Lotus Trust of which he is a beneficiary. 
DIRECTORS SHARE OPTIONS
Number of options 
granted during the period Fair value Exercise Vesting
(and held at end of period) of options price period
Howard Kevin Obee 50,000 21p 48p 3 years
Peter William Fleming 50,000 21p 48p 3 years
SUBSTANTIAL SHAREHOLDERS
At 13 April 2007 the following had notified the Company of disclosable interests in 3% or more of the nominal value of
the Company's shares carrying voting rights:
Number of
ordinary % of share
shares capital
Stephen James Douglas Posford 25,000,000 19.58
Zila Corporation Limited 25,000,000 19.58
Lansdowne Partners Limited Partnership 11,125,000 8.71
Howard Kevin Obee 10,000,000 7.83
Morgan Stanley Securities Limited 6,756,250 5.29
Artemis UK Smaller Companies 6,260,000 4.9
Merrill Lynch & Co Inc 4,200,000 3.29
F & C Inv Funds ICVCII UK Dynamic Fund 4,200,000 3.29
                           Borders & Southern Petroleum plc
Directors’ Report
continued
16
DIRECTORS' RESPONSIBILITIES
Directors are required by company law to prepare financial statements which give a true and fair view of the state of
affairs of the Company and the Group at the end of the financial period and of the profit or loss of the Company and the
Group for the period ending on that date. In preparing those financial statements, Directors are required to:
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company
and the Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable them to ensure the financial statements comply
with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities.
Financial statements are published on the Group’s website in accordance with legislation in the United Kingdom 
governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdic-
tions. The maintenance and integrity of the Group’s website is the responsibility of the Directors. The Directors’ 
responsibility also extends to the ongoing integrity of the financial statements therein.
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any infor-
mation needed by the Company's auditors for the purposes of their audit and to establish that the auditors are aware of
that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.
AUDITORS
BDO Stoy Hayward LLP have expressed their willingness to continue in office and a resolution to reappoint them will be
proposed at the Annual General Meeting.
By order of the board
WILLIAM JOHN WALTON SLACK
Company Secretary
16 April 2007
         Borders & Southern Petroleum plc
17
Audit 
Committee Report
The Board has established an Audit Committee comprising Mr Hurst-Brown (Chairman), Mr Dobson and Mr Posford, all
Non-executive Directors. 
The Audit Committee meets at least biannually and is responsible for:
The integrity of the financial statements and related disclosures, based on adequate books, records and internal 
controls and selection and consistent application of appropriate accounting policies;
The appropriateness of the internal financial controls;
The independent auditors’ qualifications, independence, and performance; and
The compliance with legal and regulatory requirements.
     Borders & Southern Petroleum plc
18
The Board has established a Remuneration Committee comprising Mr Dobson (Chairman), Mr Hurst-Brown and 
Mr Posford, all Non-executive Directors. 
The Remuneration Committee meets at least annually and is responsible for:
Reviewing the performance of the CEO and other Executive Directors and senior management of the Company and
determines their remuneration and the basis of their service agreements with due regard to the interests of 
shareholders;
The payment of any bonuses to the CEO, other Executive Directors and senior management; and
Making recommendations to the Board with respect to equity-based incentive plans and to act as a preparatory body
for the Board of Directors in the management of any company award and option plans
DIRECTORS’ REMUNERATION AND SERVICE CONTRACTS
On 18 May 2005, all of the Company’s Directors entered into a service agreement with the Company. 
The remuneration of the Directors for the 18 month period from 1 July 2005 to 31 December 2006 was as follows:
Basic Salary 
£
David Harry Williamson Dobson –
Stephen James Douglas Posford –
Howard Kevin Obee 106,665
Christopher Nigel Hurst-Brown –
Peter William Fleming 31,670
PENSIONS
The Group does not operate a pension scheme for its Directors or employees.
Whilst the Company is not required to present a Directors’ Remuneration Report as it is not subject to the Listing Rules
of the Financial Services Authority nor the requirements of the Directors’ Remuneration Report Regulations 2002; it has
disclosed here certain information about the Directors’ policies and emoluments. 
Remuneration 
Committee Report
         Borders & Southern Petroleum plc
19
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF BORDERS & SOUTHERN PETROLEUM PLC
We have audited the Group and parent company financial statements (the “financial statements”) of Borders & Southern
Petroleum Plc for the period ended 31 December 2006, which comprise the Group profit and loss account, the Group
and parent balance sheets, the Group cash flow statement and the related notes. These financial statements have been
prepared in accordance with the accounting policies set out therein.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applica-
ble law United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out
in the Statement of Directors’ Responsibilities. 
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and have been properly 
prepared in accordance with the Companies Act 1985 and whether the information given in the Directors’ Report is 
consistent with those financial statements. We also report to you if, in our opinion, the Company has not kept proper
accounting records, if we have not received all the information and explanations we require for our audit, or if informa-
tion specified by law regarding directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. The other information comprises only the Highlights Report, the Chairman’s Statement, the Chief Executive’s
Review, the Financial Review, Board of Directors’ Report, Audit Committee’s Report, Remuneration Report and the
Corporate Directory. We consider the implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No
person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and
for the purpose of the Companies Act 1985 or has been expressly authorised to do so by our prior written consent. Save
as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in
the financial statements. It also includes an assessment of the significant estimates and judgments made by the
Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the
Group’s and Company’s circumstances, consistently applied and adequately disclosed.
Auditor’s 
Report 
          Borders & Southern Petroleum plc
Auditors’ Report
continued
20
We planned and performed our audit so as to obtain all the information and explanations which we considered 
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements.
OPINION
In our opinion:
the Group financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the Group’s affairs as at 31 December 2006 and of its loss for the period then
ended; and
the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally
Accepted Accounting Practice, of the state of the parent company’s affairs as at 31 December 2006
the financial statements have been properly prepared in accordance with the Companies Act 1985; and
the information given in the Directors’ Report is consistent with the financial statements.
BDO STOY HAYWARD LLP
Chartered Accountants & Registered Auditors 
16 April 2007
         Borders & Southern Petroleum plc
Main Heading
continued
21
Financial
Statements
for the Period from 1 July 2005 
to 31 December 2006
Borders & Southern Petroleum plc
       Borders & Southern Petroleum plc
22
Consolidated 
Profit & Loss Account 
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
Note £ £
Turnover – –
Administrative expenses (1,176,389) (204,785)
Operating loss 2 (1,176,389) (204,785)
Other interest receivable and similar income 649,365 63,539
Loss on ordinary activities before and after taxation (527,024) (141,246)
Loss for the financial period (527,024) (141,246)
Loss per share – basic and diluted (see note 3) (0.39p) (0.26p)
All amounts for both periods relate to continuing activities.
The Group has no recognised gains or losses for the period other than the results above.
for the period ended 31 December 2006
The notes on pages 26 to 35 form an integral part of these financial statements.
                                           Borders & Southern Petroleum plc
23
Consolidated 
Balance Sheet
31 December 2006 30 June 2005
Note £ £ £ £
Fixed assets
Intangible assets 9 1,637,066 1,497,668
Tangible assets 10 10,144 14,965
1,647,210 1,512,633
Current assets
Debtors 12 135,731 142,790
Cash at bank and in hand 9,468,174 10,416,100
9,603,905 10,558,890
Creditors: Amounts falling due within one year 13 (65,804) (331,546)
Net current assets 9,538,101 10,227,344
Total assets less current liabilities 11,185,311 11,739,977
Provisions for liabilities 14 – (42,955)
Net assets 11,185,311 11,697,022
Capital and reserves
Called up share capital 15 1,276,875 1,276,875
Share premium reserve 18 10,561,393 10,561,393
Other reserves 18 15,313 –
Profit and loss reserve 18 (668,270) (141,246)
Equity shareholders’ funds 17 11,185,311 11,697,022
The financial statements were approved by the Board of Directors and authorised for issue on 16 April 2007.
HOWARD KEVIN OBEE PETER WILLIAM FLEMING
Director Director
as at 31 December 2006
The notes on pages 26 to 35 form an integral part of these financial statements.
                                                         31 December 2006 30 June 2005
Note £ £ £ £
Fixed assets
Intangible assets 9 1,637,066 1,497,668
Tangible assets 10 10,144 14,965
Investments 11 1 –
1,647,211 1,512,633
Current assets
Debtors 12 156,758 142,790
Cash at bank and in hand 9,468,174 10,416,100
9,624,932 10,558,890
Creditors: Amounts falling due within one year 13 (60,804) (331,546)
Net current assets 9,564,128 10,227,344
Total assets less current liabilities 11,211,339 11,739,977
Provisions for liabilities 14 – (42,955)
Net assets 11,211,339 11,697,022
Capital and reserves
Called up share capital 15 1,276,875 1,276,875
Share premium reserve 18 10,561,393 10,561,393
Other reserves 18 15,313 –
Profit and loss reserve 18 (642,242) (141,246)
Equity shareholders’ funds 17 11,211,339 11,697,022
The financial statements were approved by the Board of Directors and authorised for issue on 16 April 2007.
HOWARD KEVIN OBEE PETER WILLIAM FLEMING
Director Director
Borders & Southern Petroleum plc
as at 31 December 2006
24
Company 
Balance Sheet
The notes on pages 26 to 35 form an integral part of these financial statements.
                                                            for the period ended 31 December 2006
Borders & Southern Petroleum plc
25
31 December 2006 30 June 2005
Note £ £ £ £
Net cash flow from operating activities 19 (1,456,917) (140,147)
Returns on investment and servicing of finance 654,221 63,539
Capital expenditure and financial investment
Purchase of intangible fixed assets (139,398) (1,326,875)
Purchase of tangible fixed assets (5,832) (18,685)
(145,230) (1,345,560)
Cash outflow before management of 
liquid resources and financing (947,926) (1,422,168)
Financing
Issue of shares (net of issue costs of £804,232) – 11,838,268
Change in cash on deposit 928,867 (10,000,000)
928,867 1,838,268
Net cash flow (19,059) 416,100
25
Consolidated 
Cash Flow Statement
31 December 30 June
2006 2005
£ £
(Decrease)/increase in cash in the period (19,059) 416,100
Change in short term deposits (928,867) 10,000,000
Change in net debt resulting from cash flows (947,926) 10,416,100
Net funds at the start of the period 10,416,100 –
Net funds at the end of the period 9,468,174 10,416,100
Reconciliation of Net Cash
Flow to Movement in Net Debt
The notes on pages 26 to 35 form an integral part of these financial statements.
                                                    1. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with the historical cost convention and in accordance with
the applicable accounting standards and the Statement of Recommended Practice “Accounting for Oil and Gas
Exploration, Development, Production and Decommissioning Activities”.
In preparing these financial statements, the Group has adopted FRS20 ‘share-based payment’ for the first time. The
impact for the current period is to increase the loss by £15,335. There is no change in net assets. There is no impact on
the prior period as there were no share-based payments in existence. Further details are given in note 16.
The consolidated financial statements include the financial statements of the Company and its subsidiary undertaking
made up to 31 December 2006. The acquisitions method of accounting has been adopted. Under this method, the result
of the subsidiary undertaking acquired in the period is included in the consolidated profit and loss account from the date
of acquisition.
Under section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to present its own profit
and loss account. Its loss for the financial period was £500,996 (2005 – £141,246).
Turnover
At the end of the period the Group had not commenced commercial production from its exploration sites and therefore
has no turnover in the period.
Depreciation
Depreciation is provided on tangible fixed assets so as to write off the cost or valuation, less any estimated residual
value, over their expected useful economic life as follows:
Office equipment 33
1
⁄ 3%
Assets are depreciated from the date of acquisition, and on a straight line basis.
Exploration and evaluation expenditure
The Group has adopted the full cost accounting policy for expenditure on oil and gas projects. All costs associated with
oil exploration are capitalised on a project-by-project basis, pending determination of feasibility of the project. Costs
incurred include appropriate technical and administrative expenses but not general overheads. If an exploration project
is successful, the related expenditures will be transferred to tangible fixed assets and amortised over the estimated life
of the commercial reserves. Where a licence is relinquished, a project is abandoned, or is considered to be of no further
value to the Group the related costs are written off. All capitalised costs are reviewed annually against the underlying
value of oil and gas reserves, unless the expenditure relates to an area where it is too early to make a decision about
the value of the assets.
Impairment tests
When there is an indication that the value of an asset may be impaired, the net amount at which the asset is recorded
is assessed for recoverability against the discounted future estimated net cash flows expected to be generated from the
estimated remaining commercial reserves. The assessment is made on the basis of future oil prices, exchange rate and
cost levels as forecast at the balance sheet date. A provision is made by way of an additional depreciation charge, where
the carrying value of the asset exceeds the discounted future net cash flows to be derived from its estimated remaining
commercial reserves.
Borders & Southern Petroleum plc
for the period ended 31 December 2006
26
Notes to the 
Financial Statements
                   Foreign currencies
Profit and loss account transactions in foreign currencies are translated into sterling at the exchange rate ruling at the
date of the transaction. Assets and liabilities denominated in foreign currencies are translated into sterling at the closing
rates at the balance sheet date and the exchange differences are included in the profit and loss account.
Operating leases
Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the
lease term.
Share based incentives
In accordance with Financial Reporting Standard 20 the fair value of equity-settled share-based payments to Directors
and employees is determined at the date of grant and is expensed over the vesting period. Fair value is measured by
a Black-Scholes-Merton pricing model.
Financial instruments
In relation to the disclosures made in Note 25: 
Other than the information about the Group’s exposure to foreign exchange risk, short-term debtors and creditors
have been excluded from the financial instrument disclosures in note 25.
The Group does not hold or issue derivative financial instruments for trading purposes; and
Forward exchange contracts are used to fix the exchange rate of committed and anticipated foreign currency
transactions. Gains and losses arising on such hedges are not recognised until until the transaction occurs.
The Group has not made use of any derivative financial instruments in the period.
Deferred taxation
Deferred tax is provided in full on timing differences which represent a liability at the balance sheet date, at rates
expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion
of items of income or expenditure in tax computations in periods different from those in which they are included in the
financial statements. Deferred tax balances are not discounted. 
Liquid resources
For the purpose of the cash flow statement, liquid resources are defined as current asset investments and short-
term deposits, held on a rolling monthly basis.
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
27
               2. OPERATING LOSS
Operating loss is stated after charging:
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Exploration and evaluation expenditure 144,422 16,667
Auditors’ remuneration – audit services
Company 15,000 12,500
Group 17,500 12,500
Auditors’ remuneration – non audit services
Company – taxation 3,000 5,500
Group – taxation 3,000 5,500
Exchange differences 392,486 –
Depreciation of owned tangible fixed assets 10,653 3,720
Hire of other assets – operating leases 102,284 21,150
Equity settled share-based payment 15,335 –
3. EARNINGS/(LOSS) PER SHARE
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by
the weighted average number of shares in issue during the period. The loss for the financial period for the Group
was £527,024 (2005 – £141,246) and the average number of shares in issue for the year was 127,687,500 
(2005 – 55,413,437). The effect of the share options in issue is anti-dilutive (see note 16 for details of share options). 
4. SEGMENTAL ANALYSIS
For the purpose of segmental information the operations of the Group consist of one class of business, the exploration
for hydrocarbons. 
During the period the Group’s exploration and evaluation activities took place outside the UK, substantially in the
Falkland Islands. These costs are capitalised, where appropriate, in accordance with the accounting policies as set out
in note 1 above.
The operating loss of the Group is analysed as follows:
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
United Kingdom 1,031,967 204,785
Falkland Islands 21,028 –
Worldwide (excluding UK and Falkland Islands) 123,394 –
1,176,389 204,785
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
28
                                                       4. SEGMENTAL ANALYSIS continued
Net assets are analysed as follows:
Group Company
31 December 30 June 31 December 30 June
2006 2005 2006 2005
£ £ £ £
United Kingdom 9,527,511 10,363,420 9,553,539 10,363,420
Falkland Islands 1,657,800 1,333,582 1,657,800 1,333,582
11,185,311 11,697,002 11,211,339 11,697,002
5. EMPLOYEES (INCLUDING DIRECTORS)
The aggregate payroll costs of the Group and Company’s employees and Directors were as follows:
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Wages and salaries 233,302 36,744
Social security 27,884 3,216
Share-based payment 15,313 –
276,499 39,960
The average number of employees (including Directors) employed during the period by the Company was 6 (2005 – 4)
and for the Group was 6 (2005 – 4).
The Group granted to Directors and staff of Borders and Southern Petroleum Plc, for nil consideration, share options with
a total fair value of £105,457 (2005 – £nil), of which £15,313 (2005 – £nil) has been expensed during the year.
6. DIRECTORS’ EMOLUMENTS
The Directors’ emoluments for the period are as follows:
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Directors’ remuneration 138,335 35,000
The Group granted to two Directors of Borders and Southern Petroleum Plc, for nil consideration, 50,000 share options
each, with a total fair value of £21,091. Of this amount £3,063 has been expensed during the year.
7. INTEREST RECEIVABLE
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Bank interest 649,365 63,539
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
29
                                                                             8. TAXATION ON LOSS ON ORDINARY ACTIVITIES
Analysis of current period tax charge
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Taxation on loss on ordinary activities – –
Factors affecting current period tax charge
The tax assessed on the loss on ordinary activities for the period is higher than the standard rate of corporation tax in
the UK of 30.00% (8 June 2004 to 30 June 2005 – 30.00%).
The differences are reconciled below:
8 June
18 months 2004
ended to
31 December 30 June
2006 2005
£ £
Loss on ordinary activities before and after taxation (527,024) (141,246)
Standard rate corporation tax charge (158,107) (42,374)
Expenses not deductible for tax purposes 6,227 830
Depreciation in excess of capital allownces 1,320 (1,682)
Unutilised tax losses carried forward 150,560 43,226
Total current tax for the period – –
Factors that may affect future tax charges
The Group has a deferred tax asset of £193,786 (2005 – £43,226) in respect of unrelieved tax losses of £645,953 at
31 December 2006 (2005 – £144,085), and a deferred tax liability of £371 in respect of accelerated capital allowances
(2005- £1,682). The net deferred tax asset has not been recognised in the financial statements as the transfer of
economic benefit is uncertain.
9. INTANGIBLE FIXED ASSETS
Group and Company
Exploration
and
evaluation
costs
£
Cost
As at 1 July 2005 1,497,668
Additions 139,398
As at 31 December 2006 1,637,066
Net book value
As at 31 December 2006 1,637,066
As at 30 June 2005 1,497,668
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
30
                                                10. TANGIBLE FIXED ASSETS
Group and Company
Office
equipment
£
Cost
As at 1 July 2005 18,685
Additions 5,832
As at 31 December 2006 24,517
Depreciation
As at 1 July 2005 3,720
Charge for the period 10,653
As at 31 December 2006 14,373
Net book value
As at 31 December 2006 10,144
As at 30 June 2005 14,965
11. INVESTMENTS HELD AS FIXED ASSETS
Company
Group shares
31 December 30 June
2006 2005
£ £
Cost
Additions 1 –
Net book value
As at 31 December 2006 1 –
The Company owns the one ordinary £1 subscriber share, being 100% of the issued share capital, in Borders and
Southern Falkland Islands Limited. The Company was incorporated in England on 18 October 2005 and its principal
activity is oil and gas exploration. 
12. DEBTORS
Group Company
31 December 30 June 31 December 30 June
2006 2005 2006 2005
£ £ £ £
Amounts owed by group undertakings – – 21,027 –
Other debtors 32,939 62,166 32,939 62,166
Prepayments and accrued income 102,792 80,624 102,792 80,624
135,731 142,790 156,758 142,790
All amounts shown under debtors fall due for payment within one year.
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
31
                                               13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
31 December 30 June 31 December 30 June
2006 2005 2006 2005
£ £ £ £
Trade creditors 28,436 167,735 28,436 167,735
Social security and other taxes – 10,198 – 10,198
Other creditors 1,367 29,831 1,367 29,831
Accruals and deferred income 36,001 123,782 31,001 123,782
65,804 331,546 60,804 331,546
14. PROVISION FOR LIABILITIES
Group and Company
31 December 30 June
2006 2005
£ £
Demobilisation costs:
Provision brought forward 42,955 –
(Released)/provided for in the period (42,955) 42,955
Provision carried forward – 42,955
The Company was obliged to pay for seismic demobilisation costs to a pre-agreed sum and this was paid during the
period.
15. SHARE CAPITAL
31 December 30 June
2006 2005
£ £
Authorised
750,000,000 Ordinary  shares of 1 pence each 7,500,000 7,500,000
Allotted, called up and fully paid
127,687,500 Ordinary  shares of 1 pence each 1,276,875 1,276,875
16. SHARE-BASED PAYMENT
On 25th July 2006, the Group granted 500,000 share options to two of its Directors and one other employee of Borders
and Southern Petroleum Plc, for nil consideration. The options will be cancelled if the Director/employee leaves the
Company. There were no other options at the start of the period and those options granted in the period were outstanding
at the balance sheet date. The vesting period is three years.
The fair value of each option granted during the year was 21p. The following information is relevant in the determination
of the fair value of the options granted during the period, and outstanding at the end of the period, under the equity-
settled share based remuneration scheme operated by the Company.
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
32
                                                                    16. SHARE-BASED PAYMENT continued
31 December
2006
Equity-settled scheme
Option pricing model used Black-Scholes
Weighted average share price at grant date 48p
Exercise price 48p
Weighted average contractual life (days) 1,460
Expected volatility 50%
Expected dividend growth rate 0%
Risk-free interest rate 4.72%
Share-based remuneration expense for the period in respect of the equity-settled scheme (note 5) £15,313
The volatility assumption measured at the standard deviation of expected share price returns is based on a statistical
analysis of daily share prices over the last 21 months.
17. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Group Company
31 December 30 June 31 December 30 June
2006 2005 2006 2005
£ £ £ £
Loss for the period (527,024) (141,246) (500,996) (141,246)
Share-based payment  for the period 15,313 – 15,313 –
New share capital subscribed – 11,838,268 – 11,838,268
Net (reduction)/addition to shareholders’ funds (511,711) 11,697,022 (485,683) 11,697,022
Opening equity shareholders’ funds 11,697,022 – 11,697,022 –
Closing equity shareholders’ funds 11,185,311 11,697,022 11,211,339 11,697,022
18. RESERVES
Group
Share Profit
premium Other and loss
reserve reserves reserve Total
££££
Balance at 1 July 2005 10,561,393 – (141,246) 10,420,147
Share-based payment – 15,313 – 15,313
Loss for the period – – (527,024) (527,024)
Balance at 31 December 2006 10,561,393 15,313 (668,270) 9,908,436
Company
Share Profit
premium Other and loss
reserve reserves reserve Total
£ £ £ £
Balance at 1 July 2005 10,561,393 – (141,246) 10,420,147
Share-based payment – 15,313 – 15,313
Loss for the period – – (500,996) (500,996)
Balance at 31 December 2006 10,561,393 15,313 (642,242) 9,934,464
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
33
                                                   19. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS
31 December 30 June
2006 2005
£ £
Operating loss (1,176,389) (204,785)
Depreciation of tangible fixed assets 10,653 3,720
Decrease/(increase) in debtors 2,203 (142,790)
(Decrease)/increase in creditors (265,742) 160,753
(Decrease)/increase in provisions (42,955) 42,955
Issue of share options 15,313 –
Net cash outflow from operating activities (1,456,917) (140,147)
20. ANALYSIS OF CHANGES IN NET FUNDS
At start At end
of period Cash flow of period
£ ££
Cash at bank 416,100 (19,059) 397,041
Short term deposit 10,000,000 (928,867) 9,071,133
Total 10,416,100 (947,926) 9,468,174
21. CONTROLLING ENTITY
So far as the Directors are aware there are not any persons who, directly or indirectly could exercise control over
the Group.
22. RELATED PARTY TRANSACTIONS
During the year Borders & Southern Petroleum Plc paid expenses of £21,028 on behalf of Borders & Southern Falkland
Islands Limited. This amount was due from the subsidiary at the balance sheet date, and has been set against the £1
unpaid share capital due from Borders & Southern Petroleum Plc to the subsidiary.
23. OPERATING LEASE COMMITMENTS
As at 31 December 2006 the Group and Company had annual commitments under non-cancellable operating leases
as follows:
Land and Buildings
31 December 30 June
2006 2005
£ £
Within one year 57,300 21,810
24. CONTINGENT LIABILITIES
The Group and Company had no contingent liabilities at 31 December 2006.
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
34
                                            25. FINANCIAL INSTRUMENTS
This note provides the narrative and numerical disclosures required by Financial Reporting Standard 13 “Derivatives and
Other Financial Instruments: Disclosures”. As permitted by FRS 13, short term debtors and creditors have been
excluded from the disclosures, other than where they relate to currency disclosures. 
The main risks arising from the Group’s operations are interest rate risk and foreign currency translation risk. The Group
monitors risk on a regular basis and takes appropriate measures to ensure risks are managed in a controlled manner.
a) Interest rate risk
The Group’s financial assets and liabilities accrue interest at prevailing floating rates in the United Kingdom or at pre-
arranged fixed rates, as described further below. The Group does not currently use derivative instruments to manage its
interest rate risk.
b) Foreign currency translation risk
The operational currency of the oil and gas exploration and evaluation activities of the Group is USD dollars, services
and treasury functions is pound sterling. Balances are held in £ sterling and USD dollars are purchased when required
and used to meet exploration and evaluation needs.
Interest rate risk profile of financial assets of the Group:
£
Held in pounds sterling 6,197,041
Pound sterling equivalent of amounts held in US dollars 3,271,133
At 31 December 2006 the Company held cash at bank and in deposits under its control of £9,468,174 (2005 –
£10,416,100), which forms the majority of the Group’s working capital. Of this £397,041 (2005 – £416,100) relates to
deposits placed with banking institutions that are available on demand which carry interest at prevailing United Kingdom
deposit floating rates. The balance represents restricted deposits of £9,071,133 (2005 – £10,000,000) with weighted
average fixed interest rate of 4.613% for three months.
Fair values
The fair values of the Group’s financial assets and liabilities at 31 December 2006 are materially equivalent to their
carrying value as disclosed in the balance sheet and related notes.
Borders & Southern Petroleum plc
Notes to the Financial Statements
continued
35
              Borders & Southern Petroleum plc
36
Corporate
Directory
DIRECTORS
David Harry Williamson Dobson
Stephen James Douglas Posford
Howard Kevin Obee
Christopher Nigel Hurst-Brown
Peter William Fleming
SECRETARY
William John Walton Slack
REGISTERED OFFICE
3 Copthall Avenue
London
EC2R 7BH
BUSINESS ADDRESS
33 St James's Square
London
SW1Y 4JS
NOMINATED ADVISOR
Insinger de Beaufort
131 Finsbury Pavement
London
EC2A 1NT
SOLICITORS TO THE COMPANY AS TO ENGLISH LAW
Denton Wilde Spate
1 Fleet Place
London
EC4M 7WS
STOCKBROKER
Ocean Equitites Limited
3 Copthall Avenue
London
EC2R 7BH
REGISTRARS
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
BANKERS
Lloyds TSB Bank plc 
19-21 The Quadrant 
Richmond 
Surrey 
PW9 1BP
INDEPENDENT AUDITORS
BDO Stoy Hayward LLP 
Chartered Accountants & Registered Auditors 
8 Baker Street
London 
W1U 3LL
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(registration number UK-S-00011) Beacon Press is a Carbon Neutral com-
pany. On average 84% of any waste associated with this product is recycled.
Designed and Produced by
Punching Above Your Own Weight Limited
Telephone:  +44(0)1444 415134
  33 St James’s Square
London SW1Y 4JS
United Kingdom
Telephone: +44 (0)20 7661 9348
Fax: +44 (0)20 7661 8055
info@bordersandsouthern.com
www.bordersandsouthern.com
Petroleum plc