We can readily understand why investors are attracted to unprofitable companies. For example, Borders & Southern Petroleum (LON:BOR) shareholders have done very well over the last year, with the share price soaring by 471%. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.
So notwithstanding the buoyant share price, we think it’s well worth asking whether Borders & Southern Petroleum’s cash burn is too risky. In this report, we will consider the company’s annual negative free cash flow, henceforth referring to it as the ‘cash burn’. We’ll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
When Might Borders & Southern Petroleum Run Out Of Money?
A company’s cash runway is calculated by dividing its cash hoard by its cash burn. As at June 2025, Borders & Southern Petroleum had cash of US$3.2m and no debt. Importantly, its cash burn was US$2.1m over the trailing twelve months. Therefore, from June 2025 it had roughly 18 months of cash runway. While that cash runway isn’t too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. Depicted below, you can see how its cash holdings have changed over time.
AIM:BOR Debt to Equity History October 3rd 2025
See our latest analysis for Borders & Southern Petroleum
How Is Borders & Southern Petroleum’s Cash Burn Changing Over Time?
Borders & Southern Petroleum didn’t record any revenue over the last year, indicating that it’s an early stage company still developing its business. So while we can’t look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time. Over the last year its cash burn actually increased by 20%, which suggests that management are increasing investment in future growth, but not too quickly. However, the company’s true cash runway will therefore be shorter than suggested above, if spending continues to increase. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.
How Easily Can Borders & Southern Petroleum Raise Cash?
Given its cash burn trajectory, Borders & Southern Petroleum shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Companies can raise capital through either debt or equity. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company’s cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year’s cash burn.
Borders & Southern Petroleum’s cash burn of US$2.1m is about 1.8% of its US$115m market capitalisation. So it could almost certainly just borrow a little to fund another year’s growth, or else easily raise the cash by issuing a few shares.
How Risky Is Borders & Southern Petroleum’s Cash Burn Situation?
Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Borders & Southern Petroleum’s cash burn relative to its market cap was relatively promising. Based on the factors mentioned in this article, we think its cash burn situation warrants some attention from shareholders, but we don’t think they should be worried. On another note, we conducted an in-depth investigation of the company, and identified 5 warning signs for Borders & Southern Petroleum (3 are significant!) that you should be aware of before investing here.
Of course Borders & Southern Petroleum may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
Discover if Borders & Southern Petroleum might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.