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

Hi all

Thanks to all for the updates.

Unfortunaty DES moved down again today. The 10, 20, 50 & 200 day moving averages are all now moving up again. These are good indicators of the general direction which DES is moving. The long and medium trends are up. DES is up 56.84% since the start of the medium term trend which started 08/12/05. The trend is slow moving at the moment, but fresh news of a rig/deal would speed things without a doubt. The move which took DES up to the highs, took 47 days. Which was 0.2650p to 0.7100p. I think its a matter if when rather than if. The Sell If was confirmed on Britishbulls.com today.




Good Luck All

Eddie

http://www.publications.parliament.uk/pa/cm200506/cmhansrd/cm060705/text/60705w1472.htm#column_1157WFalkland Islands



Mr. Hoyle: To ask the Secretary of State for Foreign and Commonwealth Affairs whether the British Government will play a role in supporting the secure development of oil and gas exploration facilities in the Falkland Islands waters. [79700]



Mr. Hoon: The Government will play a role in supporting the secure development of oil and gas exploration facilities in the Falkland Islands territorial sea and continental shelf. The Government are responsible for the external security and defence of the Falkland Islands. The provision of routine security and policing of oilrigs is a matter for the Falkland Islands Government and the oil exploration companies.

http://www.oilbarrel.com/home.html

11.07.2006
Rockhopper Exploration Gets Some Encouraging Preliminary Results from Its Controlled Source Electromagnetic (CSEM) Survey On Its Falkland Acreage
Rockhopper Exploration together with Desire Petroleum, Falklands Oil and Gas (FOGL) and Borders and Southern feel that explorers in 1998 were premature in turning their backs on one of the last major untapped oil and gas provinces in the world: namely the Falkland Islands.

Like Desire, which was involved in the 1998 campaign, Rockhopper feels the Falklands are worth another crack. Although it is a long haul between acquiring acreage and drilling for oil, Rockhopper, which is having its first shot at finding oil in this remotest of regions, has received good news about one of the steps on the way in that the preliminary results from a Controlled Source Electromagnetic Survey (CSEM) have proved encouraging.

Unlike Falklands Oil and Gas (FOGL), which is probing in virgin territory in the South Falklands Basin, Rockhopper has set up in the North Falklands Basin, which proved such a disappointment and put a dampener on further exploration for eight years.

There were great hopes for the drilling in 1998. Six wells were drilled back-to-back with Desire having interests in two wells. As Rockhopper and others like to point out, these wells were far from a complete disaster. The North Falklands Basin stretches 250 km from north to south and the wells drilled there all looked the same kind of play concept. Of the six only one failed to find any indication of oil and gas and was never logged. The most exciting well was Shells test of the Fitzroy structure with well 14/10 which recovered live oil to the surface of 27 degree API. Another well, 14/5, also drilled by Shell, had 32 per cent gas at the surface.

For one reason and another, the wells were never tested. Because they were drilled back-to-back there was not time for proper evaluation. The wells were drilled by the majors Shell and Amerada and these have to compete internally for scarce rigs. Why drill in expensive out of the way places when you are on to a better bet with assets in, say, the Gulf of Mexico? Matters were not helped, of course, when in 1998 the oil price had fallen to US$10 a barrel. This made it barely economic to drill for oil anywhere never mind such a high cost/high risk area.

The situation is different now. With oil at US$70 a barrel the economics have been transformed. Explorers believe the source rock regional seal where the wells were drilled prevented upward migration of hydrocarbons. High quality seismic was needed to define traps at deeper levels in the source rock.

Rockhopper, which joined Londons AIM in August 2005, owns 100 per cent of four offshore licences, covering 5,800 sq km of the North Falkland Basin. These are PL023, 024, 032 and 033.

Rockhopper believes the 1998 explorers did indeed target the wrong play type. Recently the company signed up leading seismic contractor CGG Marine to shoot a 3D seismic survey over two of its licences PL032 and PL033. The 685 sq km survey is due to get underway in December and is designed to provide further data on a number of promising leads.

Before the 3D seismic, however, there are other steps which can be taken, notably 2D seismic. Rockhopper has taken on a new tool in the search for hydrocarbons: the Controlled Source Electromagnetic (CSEM) survey. The surveys were conducted on prospect J1 and lead K in block PL023 and PL024.

The CSEM survey works through transmitting an electromagnetic field into the earth, which is modified by the presence of subsurface resistive layers. These changes in the field are measured and the resulting data is processed to provide information on the resistive structure of the subsurface. Because hydrocarbon accumulations are generally very resistive, this method could indicate the presence of oil and gas. The survey has shown there are resistive bodies co-incident with the prospects that had been identified by traditional seismic. The group still has much work to do to incorporate these results with recently acquired 2D seismic.

However, broker Kepler Teather & Greenwood Merrion, for one, believes the survey is very good news for Rockhopper. It says, although far from conclusive, it shows that any reservoir present in the targets could be charged with hydrocarbons and hence will remove significant risks in these prospects. Prior to conducting the CSEM, Scott Pickford (the independent petroleum consultant) had put the chance of success at prospect J1 of being 1 in 5 (although KT&GM believed this could well have been optimistic. This CSEM could lower the risks significantly and make the chance of success as high as 1 in 3. In the competent persons report at the IPO, the J1 prospect was deemed to have potential oil in place of 328 million barrels. On a 30 per cent recovery it would give recoverable reserves of approximately 100 million barrels.

But of course you do not know until you drill. Rockhopper also holds 7.5 per cent of Desire Petroleums licences PL003 and PL004, These blocks contain some interesting prospects and Desire plans a three well drilling programme here as soon as it can. The timing is problematic due to the shortage of rigs. Given these delays Rockhopper last year decided not to exercise an option to increase its equity in the Desire licences to 15 per cent. It stressed the decision was no reflection on its view of the prospectivity of the acreage, pointing out that it farmed in to the permits to gain early exposure to drilling, an option which no longer seems to be on the table.

The shortage of rigs and costs are a major problem for companies operating in the Falklands. Whats more the remote location will ensure a hefty mobilisation and demobilisation fee (during the last drilling campaign it took 74 days to tow a rig to the islands). It may be that the problems will have eased by the time Rockhopper comes to drill and there is always the possibility of farming out to help costs. Meanwhile the CSEM result is a positive boost on the way to drilling.

http://www.rockhopperexploration.co.uk/press/rockhopper_060711.pdf

CSEM update RKH

Hi all

DES moved down a little today giving back some of the recent gains. The moving averages are still moving up and DES is trading well above them. Britishbulls.com have DES on a Buy If tag, so all being well we may be in for some more upward movement. The bulls seem to be buying at the lower level still, but there is still some resistance which is represented by the shaddow on top of yesterdays candle. The 3 line break and Kagi charts still have DES on a buy and the candles suggesting a Buy If. DES is currently up 66.67% since 08/12/05.





Good Luck All

Eddie

http://www.economist.com/world/la/displaystory.cfm?story_id=7176722

http://www.falklandnews.com/public/story.cfm?get=4034&source=3

Hydrocarbons Daily Record (14/07/06)
July 14, 2006
by J. Brock (FINN)

Speculation is that Desire Petroleum is still in negotiations about an exploratory rig. Board members are in or have been in Norway presenting. Desire Petroleum has not issued any official information. This is thought to be because negotiations are in their final stages.

http://www.britishbulls.com/StockPage.asp?CompanyTicker=DES&MarketTicker=RESOURCES&Typ=S

BUY
CONFIRMED

Posted 28th June

Am very optimistic a deal can be done and its the best chance Desire have had for about a year now of getting a rig and this will be reflected in the share price as news is leaked out on progress good or bad.

News is leaking out slowly and is looking better with the likes of Woodside in talks!

Would be good to hear how talks with Rig Contracters is progressing in Norway!

Pip Pip

FALKLAND Oil and Gas (FOGL)
remains hopeful of discovering a
major new petroleum province
in the Islands.
The company announced its
preliminary unaudited final results
for the year ended March 31, 2006
this week.
Chairman Richard Liddell said
the company has made significant
progress in the past twelve months
and has a clear plan for the next
year. We have just completed a
further 2D seismic survey taking
the total amount of 2D seismic recorded
by FOGL to 22,450km.
The data is still to be fully evaluated
but initial indications
highly encouraging.
Within the licences there
multiple hydrocarbon plays, numerous
prospects and leads with
the potential for multi-billion barrel
discoveries.
He added, The board is confident
that FOGL can continue
progress the project at pace and
remains hopeful of discovering
major new petroleum province
the region.
FOGL: hopes remain of major petroleum discovery

Penquin News 14/7/06

Chav out of interest do you know Finns or Jaunita real name? and if you do dont post it here, email me her name just so I know where your coming from !

Pip Pip

Real name is Juanita Brock.

Thank you Chav I know where you coming from now and you dont live in the Falklands and no close ties too Finn.

I see we are range trading again!!!

aimtrader

Afraid so, without news the low 30s beckons. People will start to assume a joint drilling campaign which means back end of 2008 at best (more probable 2009) and move money into other shares. The problem with a joint campaign is'nt just the wait, there's also the substancial financing required by FOGL and RKH. FOGL must need well over 150m and RKH 30m.

Its all too quiet on the Woodside front for there to be any short term announcement to recommence drilling.

marrow

This article was originally published in the Journal of Petroleum Geology (www.jpg.co.uk) and is reproduced here with their kind permission.

http://www.bgs.ac.uk/falklands-oil/download/download_files/Exploringforfansands.pdf

http://www.bgs.ac.uk/falklands-oil/download/download_files/Exploringforfansands.pdf

I'm going off my idea that a drillship might be shared by DES, RKH and FOGL an idea triggered by the fact that RKH and FOGL have tried to ensure they are drill ready at the beginning of 2007 by using a CSEM survey. Given the strength of DES and RKH's recent SP and FOGL's weakness I am forced to assume the current rumour of a rig or drillship relates to the Northern waters of the FIs alone.

Capt, thank you for the great pictures. Fig 4 indicates that Liz is at about 2500m, the lower deltas and fans will take longer to drill than Shell's 1998 wells which didn't need to slow down as they had little to investigate. I spoke to a Petroleum engineer today to explain Desire's view on it's prospects and he thought it was worth a gamble as it has huge upside but warned me that the cost of drilling offshore wells such as those around Ireland has shot up recently and just one well could eat into most of Desire's cash so I hope we do have a farm-in deal lined up.

Hoping the current rumour has more substance than previous ones.

Des are quoting 20 days per well drilling time.

1998 drill time figures below.

http://www.bgs.ac.uk/falklands-oil/images/exp_hist_images/exp_hist_files/image026.jpg

RKH, MAYBE able to rig share in 2007 (J1 target only in my view), FOGL have stated MAYBE 2008. Phase 2 drilling time for DES with a bit of luck.

The conclusion in the paper was the interesting bit for me, also the possible sand input from the eastern flank into Phyliss.

Sorry Capt, I got my greater drilling time from the Untested Play Concepts figure in the Annual report page 6 which shows the untested basin margin sands deeper than most drills in 98, only Shells 14/05-1 deep well would have properly covered them. As the table you reminded me of gives an astonishing time of 70 days for that deep well I hope most of that was spent testing some interesting zones (3500m and 4500m?). Still, excluding 14/05-1, it looks like the average drilling time this time round will be longer even without allowing for extra logging or coring of interesting zones. My concern remains that our only option now is a farm-in.

I think you are wrong on that one Lucky,

The drilling plan and time frame is in the EIA.

20 days drilling each well (+ testing, extra 5 days each pay zone), Duckling had this confirmed at the AGM 2005 (Five) when speaking with Bob Lyons.
Dr.Duncans view was the same at the AGM 2006 (Six)

The last Shell well took 11 days to drill to 3000 metres so very much within Desires 20 days and am sure the way forward will be with a partner.

J1 target I seem to agree with Capt that this would be the only target drilled as always been told 3D will need to be done before any drilling takes place but J1 might be the exception if a partner is found.