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

www.guardian.co.uk/oil/story/0,11319,1519839,00.html

They think oil will hit 0 in 6 months time just as Desire go down with the drill bit.

Lynnzal, a good call that 'c' may terminate at 34.5p, judging by today's bounce from that level. Would be interested in knowing where you think the third wave up could take us if 34.5p proves to be a floor over the next few days.


Today's bounce all the way back to the opening price, looks like the last shake of loose holders. Now we have some press attention to look forward to linked to Rockhopper's float and maybe ,one day, an RNS confirming a semi-sub or drill ship contract - O.K. I admit I'm not holding my breath.

Desire's reserves have possibly gone up recently (3 months) in value by more than the entire capitalisation of the company simply due to the rising dollar and rising oil price. We won't know of course if this is true until they find oil and confirm the estimate for Liz of 2.2 billion STOOIP. When one day values are placed on Phyllis and 75% of Tranche F then it may be seen as laughable that during the period that the share price fell from 65p back to 35p these 2 assets were unexpectedly added to the company. It's a funny game investing in small oil stocks.

Incidently the well drilled in Lundin's sector 14/24-1 which Desire now owns 100% of was the one that had post-well shows and was therefore described somewhere as having no closure as there was no time to investigate these shows. There are clearly many prospects to try and it's a shame to be limited to 3 wells. I hope Chairman Phipps is open to fresh farm-in deals with majors such as "O.K. you're not keen on paying 30% of costs for 15% of the oil so how about if we give you 35% of the oil if you bring your own rig and start tomorrow on a 20 well campaign", that should get the share price moving. I'm perhaps a bit flippant but I suspect that if you look at the PSCs in North Africa such as the recent round in Libya then the more favourable tax regime in the NFB is worth a lot to a major if oil is found. One snag I suppose is that they might be worried about Gordon Brown's tax and spend policies which will make him want him to interfere in the FIs and get his hand in the till.

Hi all

Thanks for all your input !

Today the bears had a go at pushing DES lower, the bulls came in & pushed DES back up to the open, which was also the high & the close. This formed a dragonfly doji. Doji are not normaly good at calling bottoms, but attention should be paid to the dragonfly doji. It has bullish implications, which suggests DES may have been oversold. The doji also marks 0.3450p as the support area, which is where Lynnzal has suggested. It looks like the bulls intend to continue to push DES up, so we may see a price increase before the end of the week. Hope so !







Good Luck All

Eddie

What about the medium term? If no drilling till late this year, isnt the sp vulerable to a push down to the mid 20s, at least potentially?

Thanks for the input ariesr. Why is it vulnerable for a push down? and why the mid 20's?

Like the dragonfly Eddie. I noticed an increase in volume for Monday, which tends to be a good indicator of turning points for DES.

Luckyswimmer, if we form a base down at 34.5p (intermediate wave 2) then I would expect a minimum target for intermediate wave three to be at 51.25p. More likely is 61.5p, although given that this potentially the 3rd of a 3rd (of one degree higher) bullish extension could produce a peak at 78.25p or even 111.75p at an extreme!
Lets aim for 61.5p and see how the market develops as we go along and I will update the forecast as and when things change.
Regards all.
Lynnzal

The what's new section of falklands oil.com has been updated.
Not much about Des though.

Hi all

Thank you all for the updates.

Today the bears were at it again, they pushed DES down to 0.3375p low of the day. The bulls responded & took DES back up to the close 0.3525p, the candle that was formed was a hammer. The hammer is said to be hammering out the base. It looks like we are getting support at this level. The level of 0.3450p as Lynnzal has said is looking good. The volume for today was lower, which means the bears may have finnished, if so we may see the bullls move DES up tomorrow.





Good Luck All

Eddie

http://adserver1.harvestadsdepot.com/nscotland/ss/033089/ A long read - a summary of current activity from P&J Energy Monthly:-


WITH Falklands activity gradually reviving, why is it that the Government is taking such a casual attitude to what could turn out to be a resource base of incredible strategic importance to the UK now that North Sea output is declining rapidly while oil and gas prices are ramping up?

It will soon be 10 years since the first drilling campaign was carried out to the north of the Falklands following encouraging results from limited seismic survey work and pronouncements by British Geological Survey about the superb quality of the prevalent "source rock".

But the approach was free market, with Westminster exerting zero influence apparently. Following the late-1997 through early-1998 Austral summer campaign, the islands appeared to go to sleep in oil exploration terms, except for occasional and weakly founded media speculation about various companies sniffing around.

Only Desire Petroleum kept nibbling away consistently, though the company came close to losing its shirt over a disastrous venture offshore Portugal. It wasted a considerable amount of shareholders' money as a member of a partnership led by Mohave that drilled the Lusitania Basin-Aljubarrota prospect in 2000 and again in 2001, but with nothing to show for the effort.

In the last couple of years, there has been something of a reawakening, again with zero apparent influence by Westminster. Instead of majors, the Falklands have become the preserve of small exploration and production companies variously listed on London's Alternative Investment Market or elsewhere.

Particularly active have been Desire, which adheres to its North Falklands Basin dream of riches, and Falkland Oil and Gas (FOGL), which recently completed a 9,450km 2D seismic data acquisition programme.

In Desire's case, the accent has been on firming up on a future potential drilling campaign by surveying key targets. It was in 2001 that Desire published a map in its annual report listing the names of major North Falkland Basin prospects. Aside from presentations to oil companies and investors, this appeared to be the first time this information had been openly published.

The North Falkland Basin (Graben) is thought to have a recoverable reserves potential of 2.4billion barrels of oil, a figure that has been in the public domain for some time. What was revealing about the Desire annual report is that the company listed the eight primary targets in Tranches C and I. They are: Ann (14/4a) 282million barrels; Pan (14/14-b) 201mmb; Anna (15/11 - 15/16) 477mmb; Ninky - 396mmb; Liz (14/9a) 392mmb; Dawn (25/5a) 146mmb; Ruth (26/11a) 259mmb, and Kate (25/15a) 285mmb.

The next big step in exploration terms came in February, 2004, when Fugro Geoteam said its seismic vessel, Geo Pacific, had arrived in the North Falkland Basin and had commenced acquiring 3D seismic.

The objective was to acquire a minimum of 800sq km of 3D seismic over Tranches C and D and a small area of Tranche F. The 3D survey was designed to cover the three largest structures identified by previous 2D surveys.

Interpretation of data acquired was completed by November, with Desire announcing that, within the area covered by the 3D seismic, a number of prospects had been identified. Of these, at least six were deemed large enough to contain economic accumulations of oil in the range 100million to 1billion barrels of oil.

Desire said, too, that one of the features of the 3D seismic had been the presence of direct hydrocarbon indicators (DHIs); in particular, it said there were numerous indications of the presence of natural gas as well as oil.

Considerable volumes of gas were encountered by the first well drilled by Shell in Tranche B during the late-1997 through early-1998 campaign, but the well was not tested because, at that time, the value of the gas was too low to be economically producible in an area as remote from markets as the North Falkland Basin.

The company has since identified seven drilling locations on Tranches C and D, and at four of these locations, dual targets have been identified, resulting in a total of 11 prospects that it believes have a potential of more than 2billion barrels of recoverable oil.

Ian Duncan, Desire CEO, said in a statement: "The more we work on the 3D seismic data, the more prospectivity we see in this basin.

"The identification of these five new prospects means that in the planned three-well drilling campaign, all of the wells will have dual objectives."

In February this year, Desire announced its intention to raise up to 25.15million via a placing and open offer. In the event, it raised just over 24million after expenses.

In May, the company hired Peak Group of Aberdeen for the well design and drilling project management of a planned three-well programme in the North Falkland Basin.

The contract will involve the Peak group delivering a complete well project management service.

This will include detailed well and test design, tendering and contracting for all services and execution of the drilling programme, including materials and logistics.

According to Peak's managing director, Bob Lyons, Desire intends to charter a drilling rig from Brazil. The question is when, at what cost and, other than Rockhopper - which is referred to later with whom else as a farm-in partner, as with rig rates doaring and with Desire's past failure, going to the market for yet more money would seem a tall order.

It is not known at this stage when drilling might start, but Austral summer 2005-06 would be the absolute earliest.

Meanwhile, to the south of the Falklands, another consortium led by Falklands Oil & Gas (FOGL) and partnered by Australian company Hardman Resources has embarked on what also looks, at first sight, a promising exploration programme, judging by the results of its first seismic campaign.

The duo said in May that initial data interpretation yielded results that greatly exceeded initial expectatons.

FOGL said it had identified about 130 leads, many times more than the eight 200-600 million barrels potential identified at the time of its AIM initial public offering in October last year.

This consortium's licences cover an area of 33,700sq km. No wells have been drilled in these areas. However, two wells in the adjacent Malvinas Basin to the west have flowed 3,000 barrels of oil per day (Calamar-1) and 20million cu ft of gas per day (Salmon-2) from the Cretaceous Springhill Formation whose equivalents are expected to occur in the FOGL patch.

Following initial data interpretation, FOGL talked of numerous direct hydrocarbon indicators, pointing to the presence of working petroleum systems.

The DHIs include gas chimneys, amplitudes and possibly gas hydrates. The leads are both large and diverse up to 500sq km in some cases. There is also a wide range of play types.

The next step is for the consortium to prioritise by targeting some 50 of the most promising and then to refine this down to about 20 drilling targets (Hardman is doing much the same thing offshore Mauritania, where it has enjoyed significant success). This, in turn, could lead to a drilling campaign in 2007.

FOGL will almost certainly have to go back to the market with its begging bowl before kicking off such an intensive campaign. Hardman may be forced to do the same thing, even though its first Mauritania project, Chinguetti, should be a well established producer by the time the search for a rig starts.

Another company to have shot seismic lately is Borders & Southern Petroleum. Also AIM-listed, the firm said last month that it had successfully completed its 2D seismic survey within its 19,598sq km licence.

The survey was carried out on the company's behalf by Geophysical Service Incorporated, which used its vessel, the GSI Admiral, to acquire 2,860km of 2D data. This comprised a regional grid over the entire licensed area, along with an infill grid over a high-graded area of interest. Processing of that data is now in hand and the results from the 2D interpretation will be used to decide whether a 3D survey will be necessary prior to any future drilling that might take place.

Commenting on the campaign, the company's CEO, Howard Obee, said: "This is a significant milestone. We have completed our first operated seismic survey on budget, without any HSE incidents and within less than a year from the company's incorporation.

"This is an excellent result and reflects the fast-track exploration programme in the Falklands that we outlined at the time of our IPO. We now look forward to receiving the processed data so that we can fully evaluate these exciting Falkland Islands licences."

Meanwhile, Argos Resources has just been granted an extension of its exploration licence for Tranche A in the North Falklands Basin. The extension of the licence, until November, 2006, will enable the company to shoot 3D seismic within the extended deadline.

John Hogan, heritage-Lasmo and now newly appointed CEO at Argos, said: "The tranche contains several structural and stratigraphic prospects with multimillion-barrel reserves potential in play types that were not tested during the previous drilling campaign of 1998. Argos will conduct a 3D seismic programme in 2006 to further define and rank these prospects in readiness for later drilling.

"A drilling campaign covering at least three wells has already been announced for the North Falklands Basin, commencing early in 2006. This extension will allow Argos to benefit from the results of such drilling and be in a position to respond promptly to any successes."

As for energy hatchling Rockhopper Exploration, whose chairman is Pierre Jungels of Enterprise Oil fame, it has made a number of strategic appointments designed to enable it to go forward with its licences PL 032 and PL 033 both of which were previously held by Shell, which shot 3D and drilled two wells during its tenure.

The key three core appointments are:

Managing director Sam Moody, who is a co-founder of Rockhopper and has been responsible for building and managing the group from its formation in early-2004.

Exploration director Keith Williams, who claims more than 30 years' experience in the oil and gas industry, having held senior positions at Mobil, British National Oil Corporation, Hudbay Oil and Kerr-McGee Oil (UK) Ltd, where he was exploration director.

Finance director Peter Dixon-Clarke, is heritage Deloitte & Touche and Amlin.

Others include Dave Bodecott, consultant to the board, and non execs John Crowle, a geologist, and Chris Walton, who was finance director at easyJet from 1999 until 2005.

Rockhopper is working in harness with Desire, as already indicated.

With this level of activity all of it in the hands of independents and not majors perhaps the UK Government feels that the Falklands will come good without intervention. And in any case, it will argue that laissez faire worked for the North Sea, so why not the Falklands, notwithstanding the spectre of Argentina seeking to take control at some future time. In that regard, there will have to be the utmost vigilance.

Hi markymar

Great update, its clear to see who's in front.

Kind Regards

Eddie

super post marky-I'm keeping the faith,am pleased about tranche f but feel pessimistic about rig situation-I predict questions will be asked about when we'll get a rig at the 2006 agm I'm afraid.

But nevertheless,I'm in until the end but have psychologically accepted that I may have to wait until early 2007 before drilling starts-if des can afford a rig that is!

good luck all

aur

We will drill in 2006.

We have the cash in the bank, excellent prospects to target and an available rig (PSA).

There is clearly a game of politics, bluff and double bluff in the background with des/partners/rig owners. However there will be a compromise that gives each party a win win situation, its just that they have not as yet reached that point.

Do not forget that our company has stated it is happy to drill only 3 wells and the sooner the better. It is worthy of note also that the open offer document has a picture on the front cover of a drill bit sinking into the sea bed. This in itself is a clear indicator of the boards intent.

If we do not drill in 2006 our board will have lied and misled us and will give out all the wrong signals to the city and its investors. I for one do not believe the company would do that given that further monies may be required at a later date.

Like you I am down in the mouth with the current situation but with all the fundamentals still intact the good times are only round the corner.

All the best

Marrow

Hi all

No postings on DES today.

My heart goes out to the people killed and their families.

In Sympathy

Eddie

Hi all not been in long,

First of all its terrible what I have listened to on the radio today and my thoughts are with the people and families concerned and any one from that neck of the woods and total utter disgust in those terrorist who have scared so many people and familys for there own gain .

Poppies Forever

Markymar

Hi Mark,Eddie, and fellow supporters
no comment req today as a mark of respect.
It brings it home, life is not all about making a buck.
Fortunate not to have witnessed it today first hand,
the whole country is repulsed and will not stand
for it, we will hunt down and find those responsible.
Hustler

Agree Eddie, Marky and Hustler. Thoughts go out to families and anyone close to those killed and heartfelt wishes for a speedy recovery for all these injured. They have taken a disproportionate toll when the bombs were aimed at us all. It's nice to see that FTSE is up this morning incase the paymasters of the cowardly bombers of the innocents were trying to benefit financially from destabilising the markets as was rumoured after 911.

Thoughts to all involved in yesterday's attrocities from me also guys. Especially to the kid from a neighbouring school of my son's, who's entire school was sent home yesterday due to his father being killed....
It's been a quiet day here in the city (aside from the constant sound of sirens). I can see plenty of empty offices from where I'm sitting and frankly I can't blame anyone for not wanting to turn up here today.

Will post a small update over the weekend if I have the chance.
Regards
Lynnzal

cheers lyynzal

Hi all

Don't know if anyone is in the mood for a chart yet.

Today the bulls moved DES up in a strong move, which looks likley to continue. Thats not to say the bears wont have a go at pushing DES back down. On todays chart I have changed the 200 DMA for support & resistance lines. The line formed at the bottom is the support, this means if the bears do try to push DES back down the bulls should respond at or before this line. If you look at the resistance it has quite a sharp slope, it is unlikley for des to have a problem with this as it will move up each day. So if you look at where the share price is at, then compare it to the resistance line. You can see the gains which could be made. So it looks like DES has good reasons for moving up. DES was 3rd highest gainer in its sector today.






Good Luck All

Eddie

Thanks Eddie I agree totally with what you are saying.

Good to see DES on the up.. did we get wunna them dragonflies on the weekly candle chart? (Eddie will talk us through that, I'm sure). I'd like to see it break former support at 38.5p as it would endorse the impulsive nature of the gains from 33.75p. Topside targets were posted 6 Jul #1507.

From the newswires earlier today-
13:11 RTRS-G8 COMMUNIQUE CALLS FOR SIGNIFICANT INVESTMENT IN OIL EXPLORATION, PRODUCTION, ENERGY INFRASTRUCTURE

Regards all
Lynnzal