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In April, Borders & Southern (OTC:BDRSF) (can also purchase on the LSE under BOR) announced a gas condensate find at their Darwin prospect, which is south of the Falkland Islands. B&S are currently drilling their Stebbing well and results are expected at any time. In the short term, the two main drivers of price are going to be Darwin reservoir/fluid analysis and Stebbing results.

With regards to Darwin, the most important question is, how much is there? The current mean estimate of Gas In Place is roughly 2.44 TCF. Liquids content is still unknown until fluid samples are analyzed by a lab. The lab received the reservoir fluid sample on June 18th. The reason for delay (April TD - June analysis) was that B&S decided to send the sample back to the UK by ship rather than air in order to save the cost of chartering an aircraft.

The fluid analysis is expected to take up to 10 weeks. The results of the fluid analysis are critical to the development/commerciality of Darwin. With enough liquid content, Darwin should be able to be a standalone project which is very important to B&S as Darwin is currently their only hydrocarbon find. It's also possible, depending on natural gas prices and (floating?) LNG capital costs, for Darwin to be economic on gas alone.

The hydrocarbon find at Darwin also brings two important pieces of information: there is a working hydrocarbon system in the basin and the hydrocarbons are able to migrate into the reservoirs. The source rock for the Darwin prospect was not penetrated in the well. This means the source rock is deeper than the reservoir and faulting has allowed the hydrocarbons to migrate up into the reservoir sands. One might say that the migration/presence of hydrocarbons in Darwin helps derisk the Stebbing well as Borders has constantly stated both propsects depend on the same source rock. Darwin has proved hydrocarbons are there and able to move into the reservoirs. On a related note, Falklands Oil & Gas (OTCPK:FLKOF) is also depending on faulting and fracturing for hydrocarbon migration into the sands of their Loligo prospect.

Stebbing, which is buried shallower than Darwin (source rock = less mature = oil vs gas), should be completed any day now. The original timeline given would have been for a late June TD. An oil find here would be very encouraging for B&S. I have written another article on what I think Borders would be worth on an oil find.

Ultimately, Borders has excellent potential at both of their plays. Even if Stebbing were to be a dry hole, Darwin has the potential to be standalone commercial. French utility EDF has just farmed into FLKOF's acreage in the Falklands and could be a potential partner to help develop Darwin.

Keep in mind, these junior oil stocks are very volatile and can move 5%+ in a single day. A dry hole at Stebbing will be disastrous for the share price. I wouldn't be surprised to see -50% or more on a Stebbing dry hole. On the other hand, an oil find at Stebbing will give you a multi bagger that most people only dream about. After Stebbing is drilled, the rig will go to Falklands to drill their 4.7 billion barrel Loligo prospect. Remember only play with money you can afford to lose!

Source: Borders & Southern: A Gas Condensate Discovery Plus Imminent 1 Billion Barrel Drilling Results

Additional disclosure: I am long BOR on the London Stock Exchange.