www.bordersandsouthern.com  11  Borders & Southern Petroleum plc Annual Report & Accounts 2014 STRATEGIC  REPORT DIRECTORS’  REPORT F INANCIAL  S T ATEMENTS A story of exploration and discovery… FINANCIAL REVIEW The Company reported a loss for the  year of $3.8 million compared to $2.9  million for 2013. The increase in losses is  mainly due to unrealised exchange rate  losses from deposits held in Sterling.  Administrative expenses for the year  were $3 million compared to $2.8 million  in 2013. The balance sheet remains  strong with $16 million in cash deposits.  Whilst this balance is sufficient to  cover overheads and all technical  studies that are needed to enhance our  understanding and therefore value of  the Company’s acreage, we need to  bring partners in to the licenses in order  to fund the next phase of drilling. 2004 Following incorporation the Company was awarded its first  exploration licences to the south of the Falkland Islands, effective  1st November. 2005 Borders & Southern listed on AIM of the London Stock Exchange.  Funds were raised in order to acquire a regional grid of 2D seismic  data. 2006 A comprehensive regional evaluation and detailed mapping of the  2D seismic confirmed that the acreage contained numerous robust  structural traps and that a working petroleum system was likely to  be present. 2007 Raised funds through a Placing and a Subscription Agreement in  order to acquire an extensive 3D seismic grid over high-graded  leads.  2008 Acquired and processed 1,492 square kilometres of high quality 3D  data. Detailed interpretation revealed numerous prospects, some  with direct hydrocarbon indicators. 2009 The Company raised funds for its initial drilling campaign in the  Falkland Islands.  2010 The subsurface evaluation identified the first two prospects to  be tested by the drill bit. Two different play types were selected in  order to learn most about the geology of the basin. At the end of  the year the Company negotiated a rig contract for two firm wells  plus options. 2011 In preparation for the drilling campaign the Company completed  detailed well design and logistical planning. 2012 In January Borders & Southern spudded its first operated  exploration well (Darwin). The result was a significant Gas  Condensate discovery. The second well (Stebbing) had strong  gas shows but was unable to test all target reservoir intervals.  Additional funds were raised in between the two wells. In November the Company relinquished 50% of its original licenced  area and entered the second exploration phase of its licences. 2013 The Company acquired 1,025 square kilometres of 3D seismic data  on the northern margin of its 2008 survey in order to follow the  Darwin reservoir over nearby prospects and leads. The earlier 3D  was reprocessed and merged with the new data. The Company  initiated a farm-out of its acreage. 2014 Whilst the farm-out process continued, the interpretation of the  merged 3D seismic data focused on refining the interpretation  of Darwin and providing enhanced definition of Early Cretaceous  prospects.