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

Interim Results for the six months ended 30 June 2004

Chairman's Statement

Following the completion of the acquisition of the 804 sq.kms. of
three-dimensional (3-D) seismic data over Tranches C and D in the North Falkland
Basin on 1st April 2004, it has been a particularly busy time for the Company.
As stated in the 2003 Annual Report, the final processing of the 3-D data will
not be completed until September but, in order to begin detailed geological
interpretation of the data prior to September, it was decided to implement a
fast-track, processing programme which would produce processed data in near
final form. This fast-track processing was completed in July and detailed
interpretation, which is being carried out by Hydrosearch Associates Limited,
has begun. This interpretive work will still be subject to any modifications
which the final processing may require but data quality appears to be such that
few, if any, major modifications are anticipated. The fast-track interpretation
will, therefore, provide the Company with an early basis for continuing
discussions with potential farm-in partners.

It has already been established that the North Falkland Basin contains one of
the World's richest oil-source rocks and that substantial quantities of oil have
been generated and expelled from it. The principal objective of the geological
interpretation is, therefore, to identify potential oil accumulations which, in
turn, involves the identification of suitable structures (both tectonic and
sedimentary) and reservoirs in which economically producible reserves of oil may
have accumulated. At current oil prices, reserves as low as thirty million
barrels of recoverable oil would be commercial and the main tasks are to map the
structures and/or sand bodies most likely to be prospective. Structural mapping
is already underway and it is intended to apply various forms of attribute
analysis to aid in the identification of reservoir sands. At the same time, work
will be undertaken to identify direct hydrocarbon indicators (DHI's) which may
enhance drilling confidence levels.

Interpretation of all of these factors is still at an early stage but a number
of significant features are already emerging. The 3-D seismic data quality is
very much better than the existing 2-D data and it is now clear that there are
many more structural leads than previously recognised. It follows that, if there
is good reservoir development, there are likely to be many more drilling targets
than those defined by the 2-D seismic. Accordingly, interpretive work is being
directed at defining the largest prospects first.

Attribute analysis designed to identify sand bodies has not yet begun but
initial, geological interpretations indicate that the new geological model
developed by the Company appears to be a valid one.

Given the amount of oil generated in the North Falkland Basin, it is not
surprising that several DHI's are discernable. In particular, gas chimneys and
amplitude anomalies are present. In themselves, these do not always indicate oil
accumulations (much less commercial accumulations) but, taken together with the
geological and attribute analysis data, they are a welcome indication of
potential oil-bearing prospects.

In general, the 3-D seismic has certainly enhanced the prospectivity of the
North Falkland Basin. It is still expected that final interpretation of the
combined 3-D and 2-D data will be ready later in the year. However, even prior
to a final report being available, discussions are continuing with potential
farm-in partners and it is still hoped that drilling could restart at some time
during 2005. Much will depend upon the final size and quality of the prospects
generated and on rig availability, but, failing any major setbacks, the
prospects for a resumption of drilling look much better than for some time.

The Company remains sufficiently well-funded to complete the farm-out process,
the result of which will determine what additional funding, if any, may be
required.

Yours sincerely

Dr Colin Phipps


Comment: Not sure why the big price drop, sometimes investors expect fireworks to light up the sky and suddnely provide the exact results that they ask for. The results indicate that drilling will start in 2005 which is as early as can be expected and discussions with farm in partners are ongoing so the short termers who are now probably selling at a loss are again shooting themselves in the foot but I guess that is their choice. As the statement is braodly positive on drilling next year, I think that the outlook is positive rather than negative for the company.

ehall

Hope you're right. A 14% drop did make me splutter over my cornflakes. Hope Dr Phipps isn't just trying to keep us on board and that all will come good albeit next year. I get a bit twitchey when I get the feeling I'm been blinded by science. I've invested heavely in oils recently, so something positive from any of them would be nice.

I think that something altogether different could be happeining, given the scale of the selling I would have expected a bigger drop but there hasn't really been one, I wonder why?

I think it was good news and this bit i liked, more oil than expected?

Interpretation of all of these factors is still at an early stage but a number
of significant features are already emerging. The 3-D seismic data quality is
very much better than the existing 2-D data and it is now clear that there are
many more structural leads than previously recognised. It follows that, if there
is good reservoir development, there are likely to be many more drilling targets
than those defined by the 2-D seismic. Accordingly, interpretive work is being
directed at defining the largest prospects first.

And this bit says there is oil there.

It has already been established that the North Falkland Basin contains one of
the World's richest oil-source rocks and that substantial quantities of oil have
been generated and expelled from it.

Its all there in black and white more fool the sellers .

Why such a big drop today 16%+. Ouch it's starting to hurt.Down too much now will stay in.

markymar,

I think they need to confirm they have found oil that is commercially extractable, there is a big difference from simply finding oil, and being able to extract it commercially, economically, and at a profit.

I have to admit I sold early yesterday, I was hoping we were further down the line, and figured I can invest elsewhere and be back here later, perhaps when DES has found a base.

Looking at today's price action, it does look as though I made the right call for a change.

I suspected there would be a few T traders in there, and that may well be causing such a dramatic fall.

Hopefully it will hold and start to build again soon, good luck to all.

The SP seems to have found a base moving up after the early sells which would be expected after yesterday anyway. I agree with Markymar, there is nothing bad in this news so why all of the sells. All holders were looking for a rig drilling next year and this appears to be the case, a good time to buy possibly because if the SP goes much lower then predators will surely appear. any potential farm in partner would be looking at a bid at this prices rather than giving a royalty to DES!

Andy from interims:

It has already been established that the North Falkland Basin contains one of
the World's richest oil-source rocks and that substantial quantities of oil have
been generated and expelled from it.

Read between the lines and its there in black and white, Anna has some on her desk and i keep saying this that shell when drilled was free flowing and had to be capped. When they cap a well they come back later for it.

This maybe the last chance you have to buy at this price ever, there was nothing bad in the interims at all i thought it was all good news but this time Phipps is in charge and it will be done right not like last time.

Phipps knows what he's on about his record in buisness speaks for its self and a little time is needed by us to let things cool down a little wave told me every thing is ok in the camp, am hopeing to get some more news.

I will be topping up again when i know what is left in bank in the next couple of days.

A little more time is needed for that news thats all.

Totally agree yr comments markymar, suffering some short term burnt paws but having been in on this for the last 6 years and topped in Jan and May big time plus a few interim top ups I'm holding. Think its been way over sold and prospects from the statement look to me very positive. price drop seems to be due to short termers cutting and running and time value. Getting a feeling that we have a good couple of months before conclusive news but not discounting that there may be a further rights issue as part of a farmout agreement. Yacht and ferrari on hold for couple of months yet!

Working on my pricing model at mo and hope to get some px targets together in next couple of days. Mainly post on iii so they will be posted there first.

Would be interested to hear views on this weeks moves from the likes of the Capt, Oil Brat and meic.

Had a dabble in sefton and chaco (sort of high risk hedge) plus keeping a bit of cash in reserve to pump into FOGL when they list, I see FKL had a drop which is probably means that float price for FOGL may be lowered but just a guess.

Off topic - with gas px rising its worth keeping an eye on Dana and Tullow me thinks!!

Catchya & happy hunting
JPDM FM

P.S. Got roasted by the girlfriend re the spivs party posting, didn't realise she would read my posts!!!!

mrkymar / FM,

well the market didn't like the results either!

Down 11% today, and my sale is looking to be well timed, although I appreciate that may change.

I haven't invested the money yet, so I'll watch tomorrow before deciding, but I still think DES may have further to fall before forming a base.

I hope to be back, because I want them to suceed.

the 100,000 @9.25am 28p....and 50,000 @ 8.33 am 28p could be buys?????

If its of use -from my posting on III -

Ladies and Gentlemen,

My two weeks in iceland and the mountains back in August meant that I lost some valueable data for my pricing model and I have been busy updating it together with building in px targets going forward following the company announcement.

To recap - 2nd richest source rocks known on the planet, previous wells drilled in not the most favourable positions still had oil shows, geological data indicates similarities to North sea rock structures, high oil prices, increasing oil demand, political/terrorist unrest, Desire ownership of vast acreage.

My hunch is that early Dec is now the crunch time as by then detailed interpretation of data will have been concluded and any potential farmout deal will be finalised (if results positive)
There has been gossip re a further rights issue and again my hunch is that to maximise gain to Desire shareholders and to reduce the % farmed out there may well be a further rights issue. Even if there isn't and the data is very positive the potential will dilute the potential share price maximum prior to a conclusive announcement.

We have had a substancial shakeout over the past week or so and the share price now seems to be recovering and seeking a new level. I believe this level in the short term (September) will not exceed much over 30p (mid px).

I am aware that some of you may not wish me to post PX targets any more so rather than take the easy route and not post any at all I will post some now and if they are felt of use and balance then I will continue to do so, if it is felt that they are not required then I will continue to try to add value to this board but will honour you folks by no longer posting specificPX targets.

So, maybe for the last time here goes:-

Rest of Sept - Trading band of 24p - 32p, Strong BUY below 25p and consider taking profits above 30p.

October - The tempo starts again to increase and to settle, - model comes out with 28p - 34p, if you are positive like me then could be last chance to pick up at a reasonable price prior to final announcement.

End Oct and into Nov - Expect the new punters to return, MM's will get nervous and spreads will potentially increase together with volatility. Model indicates 32p - 44p.

End Oct and into Nov but prior announcement - wild time but bearing in mind the chance of a rights issue which could dilute share potential the model has a general line indicating 36p - 48p. Note that 38p is a very key resistance level so if/when it approaches this level stay glued to your screens!!!

In the event of a successful announcement then we are off to 100p and possibly higher.

I hope the above is of help and as I mentioned if the feedback is that no further PX targets are wished for then I will refrain from posting them

Good luck everyone, no risk no champagne!

Happy hunting
JPDM FM

JPDM FM

I'm in pretty heavy on this one so as far as I'm concerened any info is good I don't like silence.

Regards
MS

JPDM FM

Assuming a rights issue what sort of dilution would you expect to see?

MS

FROM OIL BARREL TODAY 7.9.04


Desire Excited By The Preliminary Results From Its Falklands 3D Shoot
Desire Petroleum has had a busy summer, digesting the results of an 804 sq km 3D seismic shoot over its acreage off the Falkland Islands in the southern Atlantic. The seismic survey over Tranches C and D in the North Falkland Basin was completed in April, using Fugro Geoteams seismic vessel, the Geo Pacific.

In the months following, Desire has fast-tracked the processing of the data to provide the basis for ongoing discussions with potential farm-in partners while detailed interpretation of the data is being undertaken by Hydrosearch Associates.

The company is already optimistic about the preliminary results from its investment. The 3-D seismic has certainly enhanced the prospectivity of the North Falkland Basin, director Colin Phipps said in a statement, adding that the new data quality is much higher than the existing 2D data. It is now clear that there are many more structural leads than previously recognised.

AIM-quoted Desire - named after HMS Desire, which discovered the Falkland Islands in 1592 - was formed in 1996 to participate in the first round of licensing offshore the Falkland Islands. The company holds 100 per cent of Tranches C, D, I and L, which cover a total of 3,650 sq km or the equivalent of 13.5 UK North Sea blocks. Desire also holds 12.5 per cent in the Talisman Energy-operated Tranche F.

The team remains committed to the Falklands, despite the disappointment of drilling in 1998 when high hopes of major oil strikes faltered on the reality of the drillbit. Yet although the pre-drill hype failed to materialise into commercial discoveries, five out of the six wells sunk during the initial drilling season recorded oil or oil and gas shows and established the presence of one of the richest source rocks in the world, the lacustrine.

According to Desire, this source rock has generated and expelled substantial quantities of oil. The company believes the thick source rock has acted as a basin-wide seal, preventing the migration of oil to the sandstone reservoirs above, which were the target of the 1998 drilling campaign. Only one well penetrated any depth below the source rock: it failed to encounter hydrocarbons because, says Desire, it was drilled in the centre of the Basin, farthest from a potential sand source.

Desire believes Tranches C and D straddle the main oil-generating kitchen in the North Falkland Basin and has identified three structures with the potential to hold up to one billion barrels of oil. The company reckons, however, that at current oil prices, recoverable reserves as low as 30 million barrels would be commercial and structural mapping is already underway in a bid to identify the most prospective targets for drilling. Desire hopes to be able to conclude farm-out discussions in time to start drilling next year.

FALKLANDS OIL PROSPECTS:



Several North American companies have expressed an interest in Falklands oil exploration, the Mineral Resources Committee heard this morning. Phil Richards of the British Geological Survey is to accompany Desire Petroleum on a marketing tour later this month to encourage more interest. The committee approved funding for the trip this morning. The tour comes after Desire Petroleum completed a 3-D seismic Survey of the North Falkland Basin, the preliminary results of which have been interpreted and are said to be encouraging. The trip for marketing the data will first go to Huston Texas, where around 8 companies have already expressed an interest and then move on to Canada where two other companies have enquired about oil prospects in the Falklands. Also at the meeting, Phyl Rendell gave an update on progress to the Geological guide to the Falklands that is being compiled at the moment. She said she hoped the book would be ready for print by Christmas and would provide good information for this years tourist season. So far, the book will consist of around 50 pages and will cost less than 10.00. Phil Stone from the British Geological Survey, Emma Edwards and Former BGS expert Don Elders have been working on the text and illustrations. Phyl said a draft copy would be brought to the committee before it goes to print, hopefully in the next month or two.

Hi, re rights issue, Its hard to judge due to various news just out but I if a drilling campaign was to cost 80M then with Desire capitalised at aprox 40M I could see the potential for maybe a 1 for 2 or 1 for 1 issue which would dilute stock by 1/3 / 1/2. pure guessimates and hunch thou. I see this as a medium long term buy but watch px during sept.

Happy Hunting
JPDM FM

I don't see why DES would go down the route of a rights issue - much more likely to just take a smaller percentage cut of the farm-in.

Who knows Baughfell, its just wait and see but does look intresting times ahead and now 10 intrested parties . Never been a better time and i can not wait for my Christmas present off Mr Phipps.