Desire Petroleum

<>Desire Petroleum plc (Desire) is a UK company listed on the Alternative Investment Market (AIM) dedicated to exploring for oil and gas in the North Falkland Basin.

Desire has recently completed a 6 well exploration programme. The Liz well encountered dry gas and gas condensate at 2 separate levels while other wells recorded shows.
Together with the Rockhopper Exploration Sea Lion oil discovery in the licence to the north, these wells have provided significant encouragement for the potential of the North Falkland Basin. The oil at Sea Lion is of particular interest as this has demonstrated that oil is trapped in potentially significant quantities in a fan sandstone on the east flank of the basin. It is believed that over 50% of this east flank play fairway is on Desire operated acreage.

Desire has now completed new 3D seismic acquisition which provides coverage over the east flank play, Ann, Pam and Helen prospects. The results from fast-track processing of priority areas are provided in the 2011 CPR. A farm-out to Rockhopper has been announced. The revised equities are shown on the licence map (subject to regulatory approval and completion of the farm-in well). Desire Petroleum

Rockhopper Exploration

British Geological Survey

Argos Resources



Latest Press Realeses from Desire

May 3, 2005
by H. E. the Governor Mr. Howard Pearce

Executive Council 28 April 2005
http://www.falklandnews.com/public/story.cfm?get=3227&source=3

On oil, Councillors agreed that in future work plans made by companies as part of their licensing agreement would be made public. This will enable other companies who are interested in applying for a licence see the kind of work which FIG expects them to commit to although obviously each company will have a different work plan.

On a technical note and to fill the void while Eddie takes a break....

DES held nicely above the 30.5p Fibonacci retracement level last week. My chart package shows a 'hammer' reversal candle for last Friday (not shown on the moneyam chart?) which has been confirmed by subsequent bullish candles on Tuesday and also, so far today (Wednesday).
A short while back someone mentioned 'oversold' RSI momentum. More meaningful however, is bearish divergence where the RSI forms higher lows while the price chart shows lower lows. This has happened recently (19 Apr & 29 Apr) and can also be a good indicator for a base.
While we hold over 30.5p I expect a test of the 40/41.5p window. (Also note falling trendline off the 9 Mar & 11 Apr highs comes in at 40p). A break over there would be good for a run on the 48p area!
Intraday supports are seen at 35.5p and then 33.5p (lets hope we don't see those levels again).

lynnzal ,

Thank you for filling in for Eddie why he is a way, momentum you may have sold at wrong time.

Well done Lynnzal. Poor Eddie , goes away and DES on the up. Dont hurry back! Only joking Eddie.
Come on DES .
Regards
Berlingo.

Hi all

Looks like I should stay away. Charts looking better already.

Good Luck All

Eddie

Eddie is it next week you are away?

Blue sky,fingers crossed

You were wll warned in advance about this share. I warned you! It has gone down the pan and will never return!

Complete clap-trap, pro. With so much potential we'll see a major reversal in the price; it will not be too long before an announcement of a rig contract, IMHO. After that we just need to hit the black gold. The rest will then just be history.

Pro u cant see the wood for the trees

3 wells to be drilled one which will go through 2 targets Beth and Liz and nearly a billion barrel recoverable between the 2.

Now if they are lucky and hit oil in both that alone will stick between 7 to 12 on share price and before they even drill the hype will take this share to 2 now if you can tell me difrent i would like to here why.

Explain your reasons as i would love to know why been such a pro and i a novice give us your expert opinion or can you not back up your post?

Markymar

Hi Marky
I wouldn't take pro to seriously seems to me he-she? only keeps
posting trying in vain to push the price down so he can buy himself
at a bargain price, after all we all know this is very speculative
but if the drilling goes well the upside will be massive.
Ask yourself why he keeps warning us of the dangers surely his
time would be better spent posting on stock he actually likes
and follows unless there is in fact a hidden agenda.
To keep the faith just bought again.

regards HUSTLER

ps see alexander mining is doing well
pro's tip of the year listed a couple of months
ago down 33% well done

The proverbial trumpet blower - only remembers the good calls. Here's one the 'Pro' forgot.

pro - 25 Apr'05 - 09:33 - 1138 of 1174


Could you please refer to postings 608 and 610.
Those who took the well-placed advice will be delighted at having done so. Those who did not and wish that they had done so can recoup their loss by trading in now and buying into Alexander Mining.
Incidentally, I'm not called Pro for nothing!

NOTE - AXM closed at 30p on 25 Apr and is currently 24.5p.

DES closed at 37.75p on 25 April

Hi Hustler,

I think we all no what Pro agenda is, just thought he could give us the wisdom of been such a knowledgable pro trader.

I'll update the chart tomorrow...needless to say things are looking well for DES at the moment and my comment #1166 (4 May) still stands. I've read elsewhere that 38p was key level on the topside. I have never suggested this (due to the amount of trading that has been seen either side of 38p on the way down), so I'm not be suprised that DES hasn't taken off. More significant remains the 40/41.5p window. Let's break the latter and see what happens....
Supports at 35.5p (Wednesday's low & intraday trendline) then 33.5p.
More tomorrow.

Good luck all.
Lynnzal

The last two candlesticks formed a Bearish Doji Star Pattern . This is a bearish reversal pattern that marks a potential change in trend. However, its reliability is not very high and it requires confirmation.

I know its not about Desire but of FOGL and its PR and about the Falklands and that is postive news.

http://www.falklandnews.com/public/story.cfm?get=3231&source=2

Section 1:



Oil News



ENCOURAGING RESULTS FROM FALKLANDS OIL AND GAS


(A Report for BBC World Service Calling the Falklands by Dee Palmer (DP) 03 May 2005



Falklands Oil and Gas Limited has released the preliminary results of the seismic surveys its carried out in its licence area IN THE South Falklands Basin. They more than justify the hopes the Company expressed when it listed on Londons Alternative investment market last October. Disclosure of the seismic results was made today (Tuesday) in Australia, where the Companys Chairman, John Armstrong (JA), is based. I (DP) phoned him up and asked him how things are looking.



JA: We havent mapped the data completely but weve had people look at the early records and I must say that they are very encouraging and they certainly exceed our expectations a lot more than we had expected at this stage of the project.



DP: So, are you able to even begin to estimate how much oil and gas there might be there?



JA: I think its probably a bit early to do that. We only listed the Company last year on the basis there were only 8 possible targets there that would warrant further investigation. And, now, weve got something over 100 possible targets.



DP: Wow. That is a big increase, isnt it?



JA: It certainly is. Our progress to date has been quite remarkable and our announcement today was intended to inform the market that we had made good progress and things are looking very good.



DP: So whats the next step, John?



JA: The next step here is more detailed mapping of the information we have already acquired. And, that will take place over the next few months. And, then we will probably engage contractors to do further work to define some prospects for drilling.



DP: Any idea how many prospects there might be for those initial test wells?



JA: We think that if we can survey the area sensibly that we should be able to produce perhaps 20 drillable prospects maybe by the middle or second half of next year. And, then we marked the end to begin drilling a programme in 2007.



DP: Right, so the summer after next in the South Atlantic?



JA: The Southern summer 06/07 or maybe somewhere into 2007 and so on.



DP: Right. Now, of course you now have onboard Patrick Byrd as your operations manager a very experienced oil man. So, hes got something to get his teeth into.



JA: I think he has. I mean, Patrick has only been with us for a few weeks and I think when he joined he thought that this was a pretty interesting project. He was out with us in Australia a couple of weeks ago looking over the data because we are going to make the transition from managing the project from Brisbane in Australia to London. And, I think Patrick was quite surprised at the attributes and the opportunities that he saw.



DP: John Armstrong is the Chairman of Falklands Oil and Gas Limited.

Chart update...
As markymar pointed out late yesterday, Thursday's evening star has prompted a pullback in the market. Whether it will reverse the recovery rally off the 31.5p low remains to be seen, but while we are above support at 35.5p there is no reason to suspect that it is anything more than consolidation ahead of further strength.
Stochastics remain firm which supports further bullish action, although we still need to fill the 40/41.5p window to trigger stronger recovery towards 48p.
Supports are at 36.5p (intraday rising trendline), 35.5p (Wednesday's low) then 33.5p. Below the latter is needed to suggest further weakness to/through the recent low, but lets hope we don't get there...
Enjoy the weekend!
Lynnzal

http://www.falklands.com/Detalle.asp?NUM=5613

Desire confirms exploratory drilling in 2006



Desire Petroleum is set to begin early 2006 exploratory drilling in the Falkland Islands northern basin with an overall investment of forty million US dollars, reports the Argentine press.



In a phone interview with Clarin, Mr. Colin Phipps, Desires president said offshore drilling in three wells has been encouraged by recent tri-dimensional surveys in the north of the Islands which indicate the zone has at least a billion barrels of crude waiting to be exploited.
Mr. Phipps added that the billion barrels represent a 25/30 years oil reserve, and if successfully exploited will generate a daily income for the Islanders of half a million US dollar, -royalties and taxes-, adding up to 182 million dollars annually, to be shared among the 2,500 inhabitants.

Clarin recalls that since the 1982 war Islanders became immensely rich with the sale of fisheries licences but the diminishing squid catches have forced the Falklands government to look for other options such hydrocarbons offshore but also gold and diamonds on shore.

In 1998, four oil companies, including Desire, drilled six wells in the northern basin with signs of oil but not commercially viable. At the time according to Mr. Phipps 100 million US dollars were invested, of which Desire participated with 30 million, but further plans were cancelled when the international price of oil dropped to 10 US dollars per barrel. All drilling took place in the 150/200 miles South Atlantic area adjacent to the Falklands.

With price of oil averaging 50 US dollars per barrel companies are returning to the Islands and Desire is confident, based on the data from the northern basin, of the existence of huge deposits of hydrocarbons.

Desire will be the first company to begin exploratory drilling in the margins of the basin, in this new stage, since other companies also present, such as Falkland Islands Oil & Gas Limited and Borders and Southern, have plans for 2007 and 2008.

Clarin finally reports that Desire Petroleum is currently involved in the search for an oil rig, probably from Brazil. The operation, involving a serious environmental risk, will need 100 men working offshore and another fifteen in Stanley (Puerto Argentino).

http://www.falklandnews.com/public/story.cfm?get=3237&source=3

WELL WORTH A READ AND VERY INTRESTING


Caught in the Net with Rendell and Luxton
May 8, 2005
by Sian Ferguson

CAUGHT IN THE NET WITH RENDELL AND LUXTON



A Report for FIBS by Sian Ferguson (SF) 06 May 2005



Sians guests today are Director of Minerals and Agriculture, Phyl Rendell (PR) and Cllr. Stephen Luxton (SL), who holds the Minerals Portfolio. She asked if anyone could explain who the licence holders are for offshore oil exploring at the moment.



PR: Well weve got quite a number of licence holders at the moment. The ones that are best known probably are Desire Petroleum, who have got licences in the North Falkland Basin and FOGL or Falklands Oil and Gas Limited, with open door licences in the south. In addition to that we have a company called Boarders and Southern Petroleum, who were licensed last year. Their area in the south is being surveyed right now by the GSI Admiral the vessel that people will have seen coming in and out of Stanley. Further to that, weve got Argos resources, who still have a licence in the North Falkland Basin and we have Talisman Energy with a licence in the North Falkland Basin.



SF: How much of the basin that can be licensed has actually been licensed to these companies?



PR: Thats rather difficult to estimate.



SL: Its a relatively small area. Its a proportion of the actual 150 200 mile zone. But in terms of the areas of interest, I think they are the main areas of interest are now licensed. The North Falkland Basin the several licence holders in that. I think they are covering most of the juicy bits. But there is a lot of unlicensed acreage. Some of it may be of interest in the future depending on what is found by the existing license holders but other areas arent actually sedimentary basins. They wont have any oil or gas potential.



PR: And, I forgot to mention Rockhopper Exploration having licences in the North Falkland Basin that were awarded last year. And, theres a few areas just further north of the areas that are licensed that are interesting as Stephen says, quite juice bits. That perhaps companies will be interested in later on after we get more data on the region.



SF: Whats the difference between the North Falkland Basin and the south one?



PR: Way back in 1996/97, we tried licensing both areas to spread the effort. But the companies chose to all explore in the north because the water depths are much shallower under 500 metres and, generally speaking the geology looked more straight forward than the south. And, met-ocean conditions, too are more straight forward in the north. Its quite a challenge in the south with the currents and the much deeper water depth. So the effort has been focused on the north until more recently and now we are pleased to have companies looking at the south, which is completely unexplored and no wells have been drilled down there.



SF: At the moment, do you have interests from any other companies who may be wishing to explore in the south?



PR: Theres interest from companies now because oil prices are so high so theres a number of companies enquiring. And we are handling the enquiries as and when they approach us.



SF: The open door policy that Government is now exercising has this changed the interest you are getting from companies or not?



PR: It did change when we introduced it in 2000. It means that companies can come to us and say they would like to make an offer on an interesting area. And, they will do this amount of work for it. The other system that we worked when Desire Petroleum and Talisman and Argos got their licenses was competitive licensing, where the Government identified areas up for licenses and asked what the company would offer us. So now, weve given the industry the opportunity to be in the driving seat for the time being.



SF: Its all about making it easier for your oil companies to get involved and to get interested here. At the moment, because we dont have any working oil fields, we still are a frontier area, therefore, its still high risk, so its down to us to make it easy for companies to get involved as and when somebody actually makes a commercial find. I should say, if somebody makes a commercial find, obviously, our licensing terms are liable to change because then it will be far more interesting, actually. If there is a known working oil system here, then we may change the licensing systems so that there is more in it for the Falklands so that we can get more of the potential wealth, if you like, for the Falkland Islands Government.



PR: Following on from Stephen, its important for people to realise. Where we are at the moment is probably about the equivalent of the North Sea in the 1960s. We are at a very early stage. And, even the companies making quite a lot of statements at the moment about what they think the potential might be, its still very early days and weve got to get the wells drilled and actually have a commercial discovery before we can bank on anything.



SF: Have you seen the results of any of the surveys and do they look encouraging to you?



PR: Certainly the more mature area for the Falklands in the North Falkland Basin the Desire Acreage their data looks very interesting and as you know the result of that is that they plan to drill some wells up there. Thats great. They are really committed and moving forward. But the Falkland Islands Government has yet to see the data from the south that FOGL have acquired. Its still being processed. And, once its completed its processing, our consultants, British Geological Survey, will get a set of that and they will do diligence on that data and advise us as to what their opinion is of it.



SF: When you award licenses to companies, is it at the sole discretion of the Falkland Islands Government or does the UK and Foreign and Commonwealth Office have some input?



SL: The FCO does have some input and ultimately the licenses have to be approved by the Secretary of State. But basically if something comes to us, which is not acceptable to us, then we have the veto over it. First of all, a license will go to the Mineral Resources Committee and then Executive Council and, if Executive Council approves this, it will then be referred to the Secretary of State for the FCOs consent. But we effectively have the say over any applications but if we approve something it has to go on to the FCO as well.



SF: How long are these licenses actually granted to these companies?



PR: They vary. The competitive licensing terms are quite different to open door terms and there are stages through which we have to go. They have a first exploration phase and then they have to drop some acreage and then they can have another exploration phase. They vary depending on the amount of work that the company is prepared to do. If they are prepared to commit and drill wells in the first stage, we can make that 5 years in length but if not, and they are acquiring seismic only, it will be three. Its complicated and we have that listed out for people to read on our website.



SF: if oil was found in commercial quantities down in the Islands, what sort of measures environmentally will be taken to ensure that there werent any spills or damage to the environment?



PR: Theres Health & Safety and Environmental measures already in place at exploration stage. (inaudible sounds like nevorlan) at a discovery and production stage. So, I think the Falkland Islands Government takes that very seriously. And, indeed, with increasing activity, and interest now, we will be reviewing that legislation and probably strengthening it. It was 5 or 6 years since it was drafted and approved. Oil companies have their own operating procedures and, of course, the last thing they want is to have a spill. But that doesnt mean that the Government should be complacent. We have legislation in place, companies have to have oil spill contingency plans as well as national plans. In the case of drilling, companies have to produce an environmental impact assessment that has to be approved before they can proceed.



SL: I think its important to stress that there is a degree of nervousness here about potential environmental impacts but I think its important to stress that these days, to be honest, that the days of cowboy oil companies horrible spills in other parts of the world I think those days have gone because, to be honest, no investors these days put their money into somebody who doesnt have a good environmental track record. Its something theyve got to be 110% on in the environmental front before anybody will look at funding them from the stock market. So, I dont think there are any concerns on that front about any of the licensees. Theyve got very strong environmental programmes.



PR: Not trying to defend the actual oil industry, but most spills occur when hydrocarbons are being transported from place to place, as we saw only recently with ships and vessels. We will be looking at double hulled tankers for transportation of oil from oilfields etc. but thats very much down the line. And, any company that were thinking of going into production will have to produce a development plan for the Falkland Islands Government, which would become a public document for public discussion and debate before they could proceed to development.



SF: So, would any companies be planning on transporting the oil via tanker from the oilrig or will the oil be coming to the Falklands for the holding stage?



PR: The production scenario in the event that there were a commercial discovery and in the event that there was a company willing enough to put in the billions of dollars required to make it commercial, the scenario is that we would have floating production vessels offshore, rather like west of Shetland, that would produce the hydrocarbons and it would all be produced and processed offshore and tankers would come alongside to the loading point where the floating production vessel was and load the hydrocarbons and take that directly away to the refinery, wherever that might be. It may be Huston or wherever. The scenario that the companies have painted to us to date is that they dont expect hydrocarbons to come ashore at all to the Falklands. The Falklands would be really the base for getting men in and out of the area and there would be some loading and requirements from the port facility but we dont envisage pipelines and storage tanks and certainly never refineries in the Falkland Islands.



SL: I think thats absolutely right. For people who dont know what they are, the floating production and storage vessels are basically an oilrig mounted on top of a tanker. You wouldnt actually be looking at an oilrig that would be attached to the sea floor. Thats what people would normally expect. Basically this is a big tanker thats anchored over the well-head with a rig on it that will extract the oil, hold it on the vessel and then transfer it to other tankers that will come and go and take it to the market. Thats the sort of technology that we are looking at. There just wouldnt be a justification for bringing oil onshore in the Falklands because it would just be double handling. You would bring it here, offload it from a tanker and then put it back on a tanker and take it away again. Its far more efficient to take it straight to the markets.



SF: And, if this did happen, how would the Falkland Islands Government prosper from the discovery of oil?



PR: The Falkland Islands Government will prosper now from exploration, probably through tax paid by companies operating offshore. Just having seismic ships operating here is good for the economy. The more activity that occurs, the more money will flow through the economy and flow into the private sector and move around, which is great. But the Falkland Islands Government probably wont make large amounts of money until such time as royalties are being paid by oil companies that are in production. And, that is quite a long way off. Certainly, corporation tax paid by companies that are operating is even further off because of the fact that they can offset the many billions of dollars they are expending on getting to that stage against their profits. So, its quite a long way before the Falkland Islands Government would see large sums of money coming in to the treasury. But certainly activity in the area is good for the economy generally.



SL: It provides a lot of opportunities for local companies for support services and things as well. And, that there was quite a lot of money flowing through the economy by that means last time in the 1998 drilling round. And, the same thing would happen again in the drilling round that may occur in the early part of next year. It may happen a couple of years down the line if FOGL do some drilling. Obviously, if there is a discovery, there will be a lot of opportunities for local companies in the logistics of handling people and equipment and drilling mud all sorts of things that they need for the industry. There will be a lot of opportunities onshore for all sorts of local businesses.



SF: How much do you think the services of Stanley would have to change to cope with that?



SL: Its really a question of scale. I guess whatever happens next year will probably be on a similar scale to what happened in 1998. So, there will be a few people coming in and going out. And, people will see the ships coming and going. I dont think there are any major changes planned at FIPASS or anything like that. We will be on the same sort of scale as last time. And, I would guess in a couple of years, if FOGL get things together and do some drilling, it will probably be much the same thing again. In terms of what will change if there is actually a discovery and we are actually producing oil, really depends on how much and at what speed things develop. There could be quite a lot of infrastructure on shore just for handling drill pipes and supplies for the rig and things like that people coming and going, so there may need to be more accommodation a camp somewhere for transiting oil workers that sort of thing but I dont think theres going to be a complete change in Stanley or anything like that.



SF: We talked about offshore oil, moving on to the onshore minerals, I understand that theres activity at Goose Green at the moment.



PR: Thats correct. Falklands Gold and Minerals Limited have set up a base at Goose Green that people are well aware of because its very central for their areas that they are drilling at the moment. And, Derek Reives, the manager for that project is here in Stanley and supervising the activities out there. And, its all going very well, considering the time scale. Theyve had a lot of equipment brought in from overseas a couple of drilling rigs from Canada and a lab and so on to do testing on the cores they are getting out at the moment. Its all going to plan, in spite of moving into the winter. I think they hope to keep drilling throughout the winter.



SL: I think, really, I just would like to take the opportunity to reassure people that may be still a bit nervous that once the oil bandwagon gets underway that there will be no stopping it. I think the important thing is that the Falkland Islands Government will be in control of what happens. At the end of the day, we issue the licences and we make the laws. So, if we dont want something to happen, if we dont want a refinery onshore, if somebody decides they want to do that, then it will be up to us to say yes or no. I think we are confident that the oil industry is a fairly big enterprise but that doesnt mean to say that the Falkland Islands Government will get pushed around. I think the working relationship thus far has been extremely good and I dont think people should worry that the thing will get out of control and that there will be refineries from one end of East Falkland to the other ten years down the line. It just isnt going to happen. Its up to us what we want and where we want it.