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

Ditto, Marky. Looks to me like they were bought at mid price.

120K buy trade just gone through.

Marky and Oily, I assumed that because the price fell yesterday the 250ks were sells but I hope you're right and they were buys at mid price.

Hmm, the 120K buy from this morning has been deleted from the trade page. How bizarre.

I see that Oily....." lad" but still shows on AD web pages and then a 120,000 at 4.29pm today,

The last few days some big buys have come through........most strange!!

Hi all

Thanks to all for the recent updates.

DES is looking good and has been since moving off the 0.2400p support level. The market may go as far as testing the green fibonacci line, however todays candle has got smaller and is within the shadow of recent traiding. This level is being tested again (0.3550p). If the support holds tomorrow DES should be on the move back up. The information I have for todays trading is total trade value 91.9K, (buy 27.1k) (sell 28.2k) (unknown 36.0k). If the unknown turns out to be a buy, we may see DES open with a gap up. The oil and gas sector is now moving up which may have a knock on effect. DES is up 27.08% since the support of 0.2400p.





Good Luck All

Eddie

Hi all

We can use the chart above.

Unfortunatly it wasn't to be today. DES is in a good position to buy, however the rig situation may slow this a little. The hammer is said to be hammering out the bottom, all things bieng well DES should be on the move up again soon.

Good Luck All

Eddie

Desire share price is being overtaken by by an outfit that hasn't even started a 3D survey yet. With FOGL talking about 10 billion barrels spread over 25,000 km2 the price rises today to an all time high. However I doubt that the city is excited about a drilling campaign that will probably not start til 2008 so something must be happening behind the scenes. A farm-in is the obvious conclusion particularly as Shell and her fellow global titans are awash with cash. With Venezuela suddenly grumbling about British interests in the Falklands it looks like a deal is close. I hope Desire is part of it, the share price doesn't seem to think so.

Thank you Eddie for our evening chart, I look forward to the day when Fibonacci is overcome by good news.

Hi all

Thanks to all for the updates

DES looking prety strong today, the candle has bullish implications. The trades seemed a bit odd though. Never the less a nice gain. DES opend up higher than yesterdays close and finnished on the days high. If you blend the candles of the past 2 or 3 days, we have a bullish hammer. All being well we should see a continuation as DES is in a good area for more buying.





Good Luck All

Eddie

I don't think candles mean anything...we need news...good news.

Thanks for the update Eddie

All the Falkland plays seem to have a good day today

BOR up 11.5%

DES up 4.2%

FKL up 11.7%

FOGL up 13.6%

RKH up 5%

FOGL market Cap is astonishing 156.92m

Hi hlyeo98

Yes good news would boost DES or any other share for that matter. The shaddows on the candles do suggest areas of support and resistance. Long shadows on top after trading up, suggest resistance. If you look at the chart the resitance is at about 0.3600p. The support is about 0.2900p, so this is my reason for saying DES is looking good for a buy. Depending on how you trade a 7p move on stock may be worth trading for a short term trader. If DES is sitting on top of the yellow line tomorrow, chances are 0.3600p will be the target.


Kind Regards

Eddie

http://business.guardian.co.uk/story/0,,1709740,00.html

Among the small caps, rumours of a link-up with an Indian oil company saw Falklands Oil & Gas advance 20.5p to 171p

PR by FOGL working over time

A tight rig market but not overly so hopefully.

Snip from a trade mag.

Latin America
At the moment, activity in this market is humming along, although concerns about Mexico continue to surface. While initial beliefs were that Pemex was going to release rigs, this has proven not to be the case, and in fact, the company has tendered for additional rigs. The concern now appears to be over the upcoming presidential election this summer. Assuming the governments stance on offshore drilling remains the same, Pemex will bring in two or three additional jackups in 2006 and will continue to renew existing contracts when they expire. The operator has proven recently that it is willing to step up and pay the rates necessary to keep rigs in the region. In 2006, rates for new awards will eclipse $100,000 (up from rates in the $30,000s fixed in 2002/2003), rising to over $140,000 for larger units. In the other active country in this region, Trinidad, three of the five working jackups come up for renewal this year, with two likely to receive long-term extensions. Also, the Rowan Gorilla III will arrive this summer to begin a one-year plus one-year option contract with EOG Resources.

The floating rig fleet in this region is essentially tied up to mid-2008. Despite the fact that it will lose two drillships in the first-half of this year, Petrobras extended contracts for its floating rig fleet in 2005 and signed new contracts that will bring additional rigs to the area. Coupled with other operators plans for drilling in the area, no fewer than five floaters will mobilize to the area for contracts starting over the next few years. Elsewhere in the region, only one of seven semis will come up for renewal off Mexico in 2006 and that is not until October, so the market should remain balanced for the entire year

In finalizing its extensions earlier in 2005, Petrobras was able to avoid the meteoric rise in rates that occurred later in the year. The highest rate the operator fixed was $220,000 for a rig that today would likely command over $400,000 in any other market. In comparison, Shell signed two much shallower-rated units later in the year at $240,000 and $280,000, respectively

17.02.2006
Exploration - What Is Happening In The Falklands?

By David Bamford
______________________________________________________________




The year 2005 saw a lot of trailing of the hydrocarbon delights of the Falkland Isles, by the main licence holders Desire Petroleum, Rockhopper Exploration, Falklands Oil & Gas and Borders & Southern Petroleum, aided and abetted by the British Geological Survey (BGS). If one were to take at face value everything thats been said or written, then this is an area that has been by-passed, ignored or written-off by the majority of the worlds explorers, big and small, and yet may have the potential for billions of barrels of oil.

Its been argued that the whole area has been overlooked by the oil industry because water depths (between 500 and 1,500 metres) were previously out of reach, it is very remote and there was a hangover from the disappointing drilling campaign of the late 1990s in the North Falklands Basin, which in any case has a completely different geological make-up from the areas to the south of the Falklands.

Actually, the first two arguments seem a bit unlikely, given the global industrys willingness to tackle water depths up to 2000 metres (in Angola and the Gulf of Mexico, for example) and the long queues of companies - all with cheque book in hand - that form up anywhere on the planet nowadays, given the apparent dearth of good exploration opportunities (see my earlier article on "Twilight of Exploration).

So perhaps theres really something fundamentally wrong with the rocks offshore the Falklands?

Possibly the first thing to agree is that we are dealing with some geological variety between the North Falklands Basin, where Desire and Rockhopper have their licences and 6 exploration wells were drilled back-to-back in 1998, and the un-drilled South Falklands Basin, where Falklands Oil & Gas and Borders & Southern have dominant positions in two somewhat different geological settings.

Reading Desire Petroleums various presentations and trying to get behind them to what is being said about the rocks, its difficult to be sure that their technical advisers actually believe that there is a working hydrocarbon system in the North Falkland Basin, the further drilling of which will lead to discoveries.

The South Falklands Basin has, at first sight, rather more in its favour. For a source rock, one can appeal to Upper Jurassic to Aptian age marine black shales proven in scientific (DSDP project) wells on the Falklands Plateau to the east and also in exploration wells in the Malvinas Basin, offshore Argentina, to the west. For reservoir, the appeal is to the variety of Cretaceous and Tertiary reservoirs found in the Malvinas Basin, especially to the Lower Cretaceous Springhill Formation which forms the main reservoir there. However, the BGS has highlighted that drilling in the Argentine sector near the axis of the Malvinas Basin has been only partly successful, due largely to the unpredictable nature of the reservoir targets in the area and perhaps also because of a need for long-distance lateral migration of oil. In fact, Exxon, YPF and Oxy drilled 17 wells there; only 5 of them had encouraging shows of oil and gas in the under-charged Lower Cretaceous reservoir and just one, Calamar x-1 flowed oil (about 3,200 bpd of 37 API).

So a fundamental question for the South Falklands Basin is whether there is any evidence that it will be better than the Malvinas Basin in the matters of reservoir and the migration of generated oil and/or gas into prospects (the plumbing). In reality, the most likely loose end for the South Falklands Basin is that the plumbing may actually deteriorate as one moves a further 500km+ to the East from the Malvinas Basin. In addition, the equivalent, dry, basins in Southern Africa dont offer much support either when one reconstructs the South Atlantic to the pre-sea floor spreading period.

Sometimes the response to such issues is to characterise the area as high risk but it is a demonstrable fact that when explorers describe basins or prospects as high risk, they are actually indicating either that they recognise some fundamental problem with their petroleum geology - a loose end which is the reason why the basin/prospects will not work - or that they do not believe the hydrocarbon volumes that they have attributed to the basin as a whole and/or to the prospects.

Is there anything that can be done about this?

Well, over the last 10-15 years the global industry has learned that there is much more that can be done with seismic, especially 3D seismic, above and beyond plain old structural mapping. Successful prediction of stratigraphy, facies and lithology has become the norm, and the direct detection of trapped hydrocarbons from seismic data, long a holy grail of explorers, has come close to perfection in for example deep water Angola where ExxonMobil, Total and BP have enjoyed a better than 90 per cent exploration success rate. These Majors have tried very hard, and managed, to keep their in-house techniques confidential with regard to many smaller oil & gas companies and most geophysical contractors.

Normally the problem for the interested onlooker is that seismic data is held tight within the partner companies. However, in the case of the Falklands, seeking inward investment, the interested parties have all published some seismic data in the hope of generating some excitement about the scale of their prospects. The result is that in total there is enough available for the experienced eye to take a reasonable view of what might be seen. And I must say that my sense of pessimism about the prospectivity of the Falklands has increased after looking at this data - there seems little evidence on the seismic of either improvements in reservoir or trapped hydrocarbons, at least not in the plays described by the current licence holders.

Of course, given the current global scramble for oil, its probably inevitable that there will be further drilling in the Falklands. The 1998 campaign involved an innovative rig-sharing agreement to enable the six wells to get drilled and perhaps the current operators will try something similar to drill say six to eight wells that test the envisaged plays; at current day rates for a deep sea drilling vessel, one can imagine a gross cost in excess of US$250 million.

For those with pens poised over cheque books, I offer the insightful words of one Samuel Smiles: We often discover what will do, by finding out what will not do; and probably he who never made a mistake never made a discovery.

______________________________________________________________________________

David Bamford is 58. With a Ph.D in Geological Sciences from the University of Birmingham, he had over 23 years exploration experience with BP where he was Chief Geophysicist from 1990 to 1995, General Manager for West Africa from 1995 to 1998, and acted as Vice President, Exploration, directing BP's global exploration programme, from 2001 to 2003. He retired from BP in 2003 and now is a non-executive Director of Tullow Oil plc, and of Paras Limited, a specialist oil and gas industry consulting firm, and Visiting Professor of Geophysics at the University of Leicester.

Contact: bamford_windward@hotmail.com

Desire's 25m goes nowhere in this cost scenario. It's easy to see why it is getting cold shouldered and no institutions are interested. I got rid of my shares a while back and am pleased I did.

I think your right coeliac1 Desire needs a some sort of partner with the price of renting out equipment soaring and the lack of availability its the companys with the most cash who wins not the minos

Professors?
I recall a prof.when I was at Uni in the 60`s calling me stupid when I suggested that the North Sea petrology had a similar look to some oil bearing strata , somewhere else in the world, can`t remember where-it might have been Libya.
How do experts!!!

I think David Bamford does not have a clue what he talking about as he wont have seen Desire Data and should not make assumption on it!

I trust the BGS and what conclusion they have come up with and other various geologist who have studied the basin in depth and not from a picture in a book.

5 out of 6 holes drilled last time had oil shows one had live oil on the logging tool and in the mud pits which I believe would indicate that there is a working hydrocarbon system in the North Falkland Basin.

Reading Desire Petroleums various presentations and trying to get behind them to what is being said about the rocks, its difficult to be sure that their technical advisers actually believe that there is a working hydrocarbon system in the North Falkland Basin, the further drilling of which will lead to discoveries

Marky, I hope you're right and Bamford isn't aware that we previously had hydrocarbon shows on 5 out of 6 holes and hasn't looked at the seismic carefully but it is getting strange that no deals are being struck. I suspect that it is Phipps reluctance to lose more than say 50% of the future production that is preventing a deal. Given the low probability of getting a rig at the moment even with Peaks help I hope the board is noticing other deals struck with majors in frontier zones like this weeks Exxon / PVR offshore Ireland deal where the major walks off with 80% but has to do all the work. Desire already has 3D so a 60/40% split like DNOs north sea farm-in would be a reasonable compromise. This has to be the best time for years to achieve a good farm-in deal, come on board members telephone Exxon and tell them they shouldn't have to struggle in such deep waters off Ireland when the Falklands beckons.

Hi Lucky,

Bamford didnt even know what the water depths were, if you going to write about a company you should know what youre writing about or you look an idiot.

The Desire board have never talked this share up not like FOGL and are time will come its just a bit frustrating at times and am sure if a deal is done it will be a good deal on good terms so I will stay optimistic on that front.