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

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.

Hi all

Thanks to all for the updates.

DES has been moving up nicely over the past few days. The trend is still up, however todays candle is one of caution. Britishbulls.com have DES on a sell if. The moving averages are all moving up and all the indicators suggest DES will continue with the up trend. The market is unsure which direction to go, so lets hope for an upward move.



Good Luck All

Eddie

http://www.falklandnews.com/public/story.cfm?get=4073&source=3

Falkland Islands)

In answer to several e-mails I have received about information on any rig negotiations by Desire Plc, There is no new information. I can remember during the 1997/98 exploratory drilling listing to the local radio and hearing reports of gushers on the first well by Amerada Hess. In truth Amerada Hess found indicators of hydrocarbons at various depths hardly a gusher!



While the first initial reports helped to boost the share price of Desire Petroleum, subsequent more accurate reports helped to sharply drop the share price. This was quite an emotional roller coaster for investors, who deserve to have accurate information.



I have no doubts, after having looked at the seismic, that there are plenty of hydrocarbons here. Indicators have been seen with satellite imagery as well as seismic. What I dont want to do is get everyones hopes up too much when viable leaks are heard about an exploratory rig. Its better to see the share price grow as an information base grows. At the moment, Desire are saying anything. This could be an indicator that they are in a delicate stage of negotiations, or it could mean that the reports were purely speculative as stated.



Time will tell but even better, hang in there!

Weekly Offshore Rig Review: Stay in the Yard
RigLogix 8/3/2006
http://www.rigzone.com/news/article.asp?a_id=34853

This week, worldwide offshore rig utilization moved down slightly to 83.1% as one idle rig started working and two rigs came off contract. Both of these rigs are jackups that are going to be leaving the Gulf of Mexico and heading for the Persian Gulf where they will start working long-term contracts. The one idle rig that began work this week had been cold stacked and just came out of the shipyard after a 7 month reactivation stay.

An important component of the overall utilization picture is the ongoing maintenance and modifications that are performed on the world's offshore rigs on a regular basis. Whether rigs are undergoing major upgrades or in the shipyard for routine maintenance, a significant amount of rig time is spent in the maintenance yard.

Currently Under Modification
There are currently a total of 30 jackups, 18 semisubs, and 9 drillships that are in shipyards around the world for maintenance and modification. And another 8 rigs are scheduled to pass through shipyards this month. So, in total, for the month of August, it's expected that 65 rigs will be undergoing maintenance and modification work. That represents about 11% of the worldwide jackup, semisub, and drillship fleet.

The United States currently has the most rigs that are undergoing modifications. Fully half of the world's jackups that are in the shipyard for maintenance are in the Gulf of Mexico. There are 15 jackups in GOM shipyards, and another 5 semisubs, for a total of 20 offshore rigs undergoing work in the Gulf of Mexico. Those 20 total rigs account for about 14% of the GOM jackup, semisub, and drillship fleet, and the 15 jackups account for just under 15% of the total GOM jackup fleet of 101 rigs.

Besides the Gulf of Mexico, a significant number of rigs are undergoing maintenance in the shipyards of Singapore. Currently, there are only 3 jackups in Singapore that are having modification work done on them (although there are 37 jackups under construction there), but there are an additional 4 semisubs and 4 drillships, for a total of 11 rigs under modification in the country. A particular focus in the area is upgrading floaters, as 3 semis and 1 drillship are expressly in the yards undergoing modifications to increase their water depths and place them amongst the deepwater floaters.

The United Arab Emirates is currently home to the largest group of jackups undergoing maintenance outside of the GOM. There are 5 jackups in the country's shipyards that are being worked on, including one Gulf Drilling mobile production unit that is being converted to a jackup drilling unit.

How's That Compare?
Over the course of 2006, the world's shipyards, and the Gulf of Mexico's in particular, have been unusually busy handling the many rigs' maintenance, modification, and repair needs. On a month-by-month basis, more than 10% of the fleet of MODUs has been in the shipyard each month of 2006. That trend peaked in June when a total of 80 rigs, representing more than 13% of the fleet, passed through the shipyards for maintenance.

That percentage of rigs undergoing maintenance and repair work has historically been between 5 and 8 percent on a month-by-month basis for most of the last six years. So that during any given month from 2000 thru the first half of 2005, somewhere between 30 and 50 rigs were in the yards. The average number of rigs undergoing maintenance over the five-year period from August 2000 to 2005 was 39 rigs, or about 6.5% of the fleet.

Since the fourth quarter of 2005, the number of rigs in the shipyard for maintenance, modification and repair work has increased significantly. The reasons for this increase are two-fold:


Reactivations - There are currently 6 jackups, 3 drillships and 1 semisub that are in the shipyard preparing to rejoin the rig active fleet. All of these rigs were cold stacked prior to the fourth quarter of 2005, and all of them have entered the yards since September 2005.

In addition to the 10 rigs currently being reactivated, another 4 semisubs, 3 jackups, and 2 drillships have passed through the shipyard for reactivation in the last 10 months and are already back in the active fleet. All but one of those 9 rigs started its reactivation since the second half of 2005.

So, within the last year, a total of 19 rigs have undergone modifications to return from cold storage. Compared with the previous 12 months when only 2 rigs were reactivated, that is an 850% increase in reactivation activity in the last year.

Hurricane Damage - The fact that the number of rigs around the world undergoing maintenance, modifications, and repairs rocketed upwards by 23 rigs (a more than 50% increase) between the months of August and September 2005 is hardly coincidental. Hurricanes Katrina and Rita dealt a heavy blow to the Gulf of Mexico rig fleet, sending more than 20 rigs to shipyards for repairs, not to mention the rigs that were lost completely.

Looking specifically at the Gulf of Mexico, the number of rigs in the shipyard averaged 10 rigs (about 6%) from August 2000 to August 2005. That number jumped from 15 in August to 38 in September of 2005, more than doubling. That number moved even higher in October when it peaked at 43 GOM rigs, which is more than 27% of the GOM fleet, in the shipyard that month.
Since September of last year, the percentage of the GOM fleet in the shipyard has been near or above 20% until just this month when it finally moved down to 17%. That is still exceptionally high for a region that has averaged about 5% of the fleet undergoing maintenance during any given month over the previous 5 years.

An added factor that will continue to drive increased shipyard time for GOM rigs is the MMS' recent release of new mooring guidelines for offshore rigs. Drilling contractors have been and are going to be sending more Gulf of Mexico rigs to the shipyards for upgrades in order to keep them compliant with these new requirements. This is particularly pressing for many of the fleet's semisub rigs and represents a significant investment of time and money.

More ominously, with the Gulf of Mexico hurricane season moving into its peak months, the potential for more rig damage and packed shipyards is high. If this August and September produce even half as many hurricane-damaged rigs as last year, the Gulf of Mexico's shipyards will be repairing more rigs than at any point in recent history.

I sold out of DES today with me thinking that nothing will happen before 2008 in which time the sp will drop and I will buy back in.Good luck to those that are going to hang in.

chav,

Well the chart disagrees with you, but i feel you are right, this will take time to prosper IMVHO...

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

Snip.

Desire's EIA approved by EXCO
Desire Petroleums EIA was approved at the May
Executive Council Meeting. The Falkland Islands
Government had the EIA reviewed by the Centre
for Environmental Assessment and Management,
part of the Institute of Environmental Management
& Assessment. The review was generally positive.
The EIA is still awaiting the addition of information
specific to the drilling rig that will be used to drill
wells.
Desire are experiencing delays in acquiring a
drilling rig. On 26 May world-wide there were a
total of 140 semi-submersible drilling rigs and 33
drill ships. Of these 121 semi-subs and 28
drillships were drilling. A further 16 semi-subs were
under contract. There are currently 23 semi-subs
under construction, 23 being modified (some of
which are under contract), 1 ready-stacked and 7
cold-stacked. Off Brazil, 38 of the 39 rigs available
are currently under contract. The rig that is not
under contract is being modified and is contracted
from August until January 2007. There are no drill
ships available off Brazil. Another potential source
of rigs is West Africa, but a tow from West Africa
would probably take twice the time from Brazil and
the mobilisation to the Falklands would increase
the cost of the wells.(Source rigzone.com)
The rig market may slacken as new rigs are built
and the cold-stacked rigs are reactivated. Once
these rigs are commissioned they will need to be
crewed. The availability of qualified crews is also a
problem as world wide there is currently a shortage
of personnel. (Offshore Magazine)