03  Borders & Southern Petroleum plc Annual Report & Accounts 2014 www.bordersandsouthern.com  Natural-gas condensate Natural-gas condensate is a low  density mixture of hydrocarbon  liquids that are usually in a gas  phase in the reservoir. During  production, as the gas is brought  to surface, changes in temperature  and pressure result in the wet gas  dividing into separate gas and liquid  phases. The liquid typically has an  API of between 45 to 85 degrees  and can display a range of colours  between dark brown to almost  colourless. Those with a lower API are darker in colour similar to  crude oil. The Darwin condensate is an amber  coloured liquid with an API of 46 to  49 degrees. Borders & Southern’s acreage is located  in the South Falkland Basin, a frontier  basin extending to the south and east  of the Falkland Islands. Five wells have  been drilled in the basin so far. In 2012  Borders & Southern made the first  significant hydrocarbon discovery in the  basin with exploration well 61/17-1. The South Falkland Basin comprises  a marine depositional sequence. This  contrasts with the lacustrine sediments  found in the North Falkland Basin. Good  quality marine source rocks of Early  Cretaceous age have been proven in  the exploration wells. These source  rocks appear to have a wide distribution.  Similar Late Jurassic to Early  Cretaceous source rocks are recorded  in DSDP wells located to the east of the  Falkland Islands and in exploration wells  located in the contiguous Malvinas and  Magellanes Basins to the west.  Early Cretaceous and Tertiary clastic  reservoirs provide the main exploration  targets. Good quality Early Cretaceous  shallow marine sandstone reservoirs  have been proven in exploration wells. Whilst a large part of the basin is  represented by a simple passive  margin sequence containing mainly  stratigraphic traps, Borders &  Southern’s acreage is characterised  by abundant structural traps. These  are related to both early extensional  faulting and later folding and thrusting. North-South cross section through Borders & Southern’s acreage TECHNICAL SUMMARY EXPLORATION ACTIVITY WELL RESULTS 61/17-1 (DARWIN) TILTED FAULT BLOCK GAS CONDENSATE IN GOOD QUALITY EARLY CRETACEOUS  SANDSTONE RESERVOIR THRUST-CORED ANTICLINE VERY STRONG GAS SHOWS (C1 TO C5) IN POOR QUALITY TERTIARY RESERVOIR UNABLE TO REACH UPPER CRETACEOUS TARGETS DUE TO ANOMALOUS PRESSURES 61/25-1 (STEBBING) DARWIN S tebbing T oroa Falkland Isla nds S tebbing Darwi n 2005 ACQUIRED 2,862 KM OF 2D SEISMIC 2008  ACQUIRED 1,492 SQUARE KM  OF 3D SEISMIC 2012 DRILLED TWO EXPLORATION  WELLS 2013  ACQUIRED 1,025 SQUARE KM OF 3D SEISMIC STRATEGIC  REPORT DIRECTORS’  REPORT F INANCIAL  S T ATEMENTS