Shares in Borders & Southern Petroleum (AIM:BOR), the AIM-listed oil and gas explorer with licences in the Falkland Islands, fell 15% to 9.78p on Friday.
The drop came after Argentina's president, Javier Milei, said he would speed up sanctions against companies involved in oil extraction projects near the islands.
In a televised address on Thursday night, Milei named British firm Rockhopper Exploration and its partner Navitas Petroleum as the primary targets of the measures.
He also referenced other companies holding exploration licences in the region, a group that includes Borders & Southern.
The AIM-listed group holds a 100% interest in three production licences and a discovery area licence covering nearly 10,000 square kilometres of the South Falkland Basin.
Its main asset is the Darwin discovery, part of licences estimated to contain 462 million barrels of recoverable liquid hydrocarbons.
Milei's speech came as he cited comments from Donald Trump, who suggested this week that the US could reconsider its historic position on the islands' sovereignty.
The Argentine president said "winds of change" now favoured his country's claim to the territory, which Argentina calls the Malvinas.
He argued the sanctions were necessary to stop foreign companies from securing rights to oil reserves he considers Argentine.
Milei also signed a decree to expand the defence ministry's budget for a new naval base in Tierra del Fuego.
The UK government has said its position on the islands remains "long-standing and unwavering", pointing to a 2013 referendum in which 99.8% of islanders voted to remain a British overseas territory.
Friday's fall extends a volatile period for Borders & Southern, whose stock has swung sharply in recent months on news tied to farm-out talks over Darwin and renewed activity at the offshore Sea Lion project.
