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

Still no rig available according to the update today...not for the foreseeable future.

No no rig and intrims indicte a loss,thus price of Des down by 3.5p. no surprise there, or untill 2007 if your lucky.

Desire slips into loss, farm-in talks continue
Mon 25 Sep 2006

LONDON (SHARECAST) - Desire Petroleum slipped back Monday as the Falkland Island focused oil explorer said it has yet to find a farm-in partner with access to a drill rig, although talks are ongoing.

The companys new strategy is aimed at identifying potential farm-in partners with access to drilling rigs suitable for resuming drilling in tranches C and D in the North Falkland Basin.

This strategy is now well under way and the group said it has contracted investment bank Tristone Capital Ltd to help widen the search for a suitable partner.

Although no agreement has yet been reached, discussions with several potential partners are continuing, it said.

These discussions are complex and take time, especially as all potential partners wish to undertake their own detailed interpretation of the data.

Due to the continuing high oil price, rig availability has not improved in the last six months, it said, with the strategy of seeking potential partners with rig availability being the only one likely to result in an early resumption of drilling.

On the financial front, the loss after tax for the six month period ended 30 June was 1.68m versus a 0.73m profit a year ago, almost entirely due to currency exchange losses.

Most of the company's funds are held in dollars, to match anticipated expenditure on future exploration programmes.

The strengthening of the pound against the dollar since the year-end has had the effect of unwinding much of the currency exchange gain made in 2005.

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

26.09.2006
Tullow Oil Makes 581 Million Bid For Hardman Resources In What Looks Like A Vote Of Confidence In Ugandan Exploration Project

Likewise, DES & RKH, no drilling rigs yet available?
Absolutely no news updates recently that I can find.

Not since the interims on Monday, no.

FOGL sp dropping like a stone!

Global rig demand eases

By Upstream staff


Worldwide offshore rig demand fell by one last week while the number of available rigs fell by the same number, ODS-Petrodata Group's weekly survey showed today.

Worldwide rig utilisation rose to 91.3%, with 597 rigs under contract out of a fleet of 652.

In the US Gulf, 119 rigs were under contract out of 145, with utilisation at 82.1%.

In Europe, utilisation was at 97.9%, with 94 out of 96 rigs in use, Reuters reported.

http://www.bodecott.com/picture.php?domain_name=bodecott.com

http://www.bodecott.com/picture.php?domain_name=bodecott.com

That's awfully enlightening Capn.

Aye Aye,

http://www.investegate.co.uk/Article.aspx?id=200610180700366250K


(Rockhopper update)

....New 3D seismic acquisition programme
Our 3D seismic programme with CGG Marine in licences PL032 and PL033 will now
begin at the end of October, some 2 months earlier than anticipated. This will
accelerate our work programme and could lead us to have a number of additional
drillable targets by the middle of 2007. At that point, we will be ready to join
any drilling programme in the Falkland Islands subject to funding....

Falklands-Malvinas
Saturday, 21 October


Falklands offshore survey to increase oil drillable targets



Rockhopper Exploration plc begins this Saturday (October 21) a 65-day, 3D Seismic Survey, in the South Atlantic North Falklands Basin with the purpose of increasing its drillable targets in the area.



The 3D seismic survey will be undertaken in an east-west direction by the survey vessel CGG Laurentian that will be towing 6 x 6000 meters long seismic streamers with a total deployment width of 600 meters.
Earlier in the year Rockhopper Exploration announced that data from Controlled Source Electromagnetic Surveys (CSEM) carried out by Offshore Hydrocarbon Mapping plc, when superimposed with acquired 2D seismic data, provided greater clarity of the structures surveyed and significantly de-risked the acreage.

We now have a highly de-risked drillable prospect and a number of encouraging leads reported the company at the time adding that the drillable prospect named Ernest, if successful could contain over 100 million barrels of recoverable oil.

Prospect Ernest was described by Rockhopper Exploration as a relatively low risk independent 4-way dip closed structure in 160m of water only 100km from the Islands.

Combining all the data and using fairly conservative assumptions leads us to believe that Ernest, as mapped to the less risky four way closure, could contain approximately 312 million barrels of oil, of which approximately 100 million could be recoverable.

The Expected Monetary Value of prospect Ernest, given the reduction in risk combined with a higher oil price environment has increased prospects of success and with an estimated 100 million barrel recoverable field at an oil price of 50 US dollars per barrel, is in the range of a billion US dollars, and should oil price fall to 30 US dollars, in the range of 323 million US dollars.

The 3D program which according to Rockhopper Exploration is advanced by an estimated two months will accelerate our program and could lead us to have a number of additional targets by the middle of 2007

At that point, we will be ready to join any drilling program in the Falkland Islands subject to funding.

The dark blue hull and white superstructure CGG Laurentian has a dark blue painted hull and a white superstructure and will be accompanied throughout the survey period by the Chase Vessel Brodospas Ibis with a green painted hull and a white superstructure.

Vessels operating in the area are requested not to pass within 10 kilometers astern of the CGG Laurentian, or within a 3 kilometer corridor along either side of the width

Do I take the silence on here to be agreement, disagreement or indifference to the wild speculation on i i i ?

I think you have hit it on the head- "wild speculation" which brings total indifference to anyone with any sense

+

http://www.mercopress.com/Detalle.asp?NUM=9332

Falklands-Malvinas
Wednesday, 29 November


The search for gold and oil goes on in the Falklands



Mrs Phyllis Rendell, Director of Mineral Resources for the Falkland Islands Government reported this week on the various exploratory activities proceeding in and around the Islands.



Onshore Activities
Falkland Gold and Minerals (FGML) Board members traveled to the Falkland Islands for a site visit and Board meeting during the week of November 13th. Chairman, Richard Linnell and directors briefed the Department of Mineral Resources and Agriculture (DMRA) that they were well satisfied with progress to date with the companys work programme.
They were particularly pleased with the way the local team led by Derek Reeves, the Project Manager, had overcome numerous logistical and technical issues and reported that the sampling programme was progressing to plan. They anticipate a further review at the end of the summer season, in May / June 2007.

Offshore Activities

The Falkland Islands Government (FIG) had an exhibition stand at the Perth, Australia meeting of the AAPG convention held from 5-8 November. 2,600 visitors attended. Phil Richards from the British Geological Survey, who are advisors to the Falkland Islands Government Mineral resources Department provided an excellent backdrop of posters that displayed opportunities for exploration in both northern and southern basins.

Mrs.Rendell was able before the convention to meet with Hardman Resources, a partner of FOGL, which has its headquarters in Perth. Howard Obee and Bruce Farrer from Borders & Southern Petroleum, attended the event and presented a paper on the prospectivity of their licensed area in the South Falkland Basin. Colin More from FOGL was present throughout the week as well. Marketing venues for the first half of 2007 are now being considered with FIGs operators.

Rockhopper Explorations contractor, CGG, has started a 3D survey in the licensees northern acreage in the North Falkland Basin. Weather conditions in late October slowed progress and a port call was required to repair damage from excessive winds but the vessel, Laurentian has, in the last week, been in steady production. CGGs support vessel Ibis, has been in and out of Stanley to transport supplies and crew to the vessel. The survey is expected to continue until early February. Keith Williams, Rockhoppers technical consultant, visited Stanley last week.

FOGLs contractor, Wavefield, has mobilised their vessel MV Bergen Surveyor to the Islands and is expected to arrive in the survey area in the South Falkland Basin this week.

FOGL also plan a CSEM or Controlled Source Electro-Magnetic survey (CSEM) in their acreage starting in mid January. OHM, a company previously employed by Rockhopper Exploration, has been contracted to do the work.

Desire Petroleum has also been active progressing their plans to drill three wells in the North Falkland Basin once a rig can be contracted. Meetings with BGS and DTi are in hand to finalise well designs and other technicalities related to drilling.

Argos Resources representative, Ian Thomson, is in the Islands this week and has been briefing the DMA on progress with their licence activities.

Phyl Rendell - Director of Minerals & Agriculture

Just about to leave the FI's and not to much excitment here at the moment regards imminent drilling.
Yokahama fenders looking decidedly perished and having a definite South heading Capt Guns!

http://www.sartma.com/art_3786.html

Falklands : FOGL's Tim Bushell Talks About Procuring and Paying for an Oil Rig
Submitted by Falkland Islands News Network (Juanita Brock) 17.01.2007 (Current Article)
FOGL's CEO, Tim Bushell, sets the record straight about getting an exploration rig to the Falklands.


FOGLS TIM BUSHELL TALKS ABOUT PROCURING AND PAYING FOR AN OIL RIG



By J. Brock (FINN)



Tim Bushell, Chief Executive Officer of Falkland Oil and Gas Limited (FOGL) is visiting the Falklands with Exploration Manager, Mr. Colin Moore to give a presentation to shareholders at the Chamber of Commerce as well as updating Councillors on progress in the South Falkland Basin.



FOGLs shareholders, who have written to FINN, have asked mainly about when exploration drilling will begin and how much will it cost. On Tuesday FINN interviewed Mr. Bushell about these concerns.



FINN: Back in 1997-1998 the crude price that made it viable for an exploratory rig to come to the North Falkland Basin was around $14.50 per barrel. Obviously this has fluctuated upwards. Would you give an explanation about what the viable price is now for the acreage FOGLE is exploring?



TB: We run various scenarios looking at the viability of oil development to the south and to the east of the Islands. We did this work last year and we had to make some assumptions so we assume that the minimum field size would be around 200Million barrels. You would need the oil price to go below $25.00 a barrel before that became uneconomical. Under current prices it is very economical. In terms of economic viability of any prospect of that size, well, we are fine at the moment so that, in itself, doesnt stop us from bringing a rig down.



FINN: We realise that the price of crude has gone down, losing 17% thus far this year and still declining. It was the high price of crude that caused the rig market to seize up. Is the market easing now that crude prices have come down?



TB: First of all, I think oil exploration companies operating in the Falklands are in slightly different positions here. Desire petroleum have been looking for a rig for some time and they have been ready for some time. They have been ahead of the game and have done a lot of work in advance of searching for a rig. Its the way it worked out. From FOGLs perspective we are actually not ready right now to have a rig. We only started exploring in 2004 with a very extensive 2D Seismic programme, which we are still finishing off. Our time-table, if you run forward it will take the rest of the year to identify which prospects we want to drill and when we have done that we will need to conduct site surveys all that takes time.



In the current market you need to order equipment at least a year to eighteen months in advance so the earliest possible time that we could drill is probably late on in 2008. Other exploration companies Rokhopper and Borders and Southern - also have different timings that are closer to ours than Desires is. One issue is that each of the exploration companies in the Falklands are not, at the moment, on the same time-table. FOGL is at least 18 months or even longer from needing a rig.



In terms of rig availability, though, it is true to say that the higher oil prices has driven the market for rigs globally. And, there is an acute shortage of available rigs. What is interesting is those rigs arent being used to explore particularly. We are living in a day where global exploration drilling has decreased 14 or 15% in the past few years. This means that the large oil producing companies are contracting rigs to try and increase their revenue and increase their cash flow. So they are taking the rigs on to drill production wells and not particularly exploring. That creates problem for exploration companies operating in the Falklands getting a hold of a rig.



When the prices are high rig owners will command a very high day rates. There are not just higher day rates, they are looking for longer contracts. In the last year or two these rigs are going for two or three year long-term contracts. And that is quite hard for a company down in the Falklands like Desire to compete with. Two or three wells is not a particularly big contract. So rig companies are not particularly interested in bringing a rig to the Falklands for three wells.



FINN: What can be done to lengthen the time a rig is in the Falklands to make a contract for an exploration rig more viable?



TB: There are a number of things you can do and one of them is to have discussions with the other operators so that we repeat what we did in 1998 and share a rig. And, we can share the large cost of mobilisation of a rig, which can be up to $20Million but it also divides a contract that is sufficiently large and we may get the attention of a rig owner. If you combine all of our operations with ourselves, Rockhopper, Borders and Southern, you get 10 wells or even more. That would be roughly a one-year contract. So a one-year contract is much more interesting than just a one or two well contract. We are talking to the other operators to form a consortium.



The other thing is in terms of trying to build a contract of interest is to get involved in other large contracts in the region. And, there are a number of companies in West Africa and Brazil that have exactly the same problem as us. They cant get a rig for their two or three well contract. But if you can get them all together and have two or three wells in Brazil, two or three wells in South Africa and 10 wells in the Falklands and you all co-operate together then you might be able to go to the rig market and offer a two-year contract for the Atlantic region. Again, this is a way of getting a rig owners attention.



Another thing we are looking at is that there are a number of rigs out there that are currently not able to drill in the water depth that we have. But with an upgrade they could drill in those depths. There are certainly upgrade elements that we are looking at and bringing in a rig that needs upgrading for the depths that we are drilling in.



Whilst it is a challenge to get a rig in the time-table that we need, I am reasonably positive that if we work at all of these different angles, one of them will work for us and that we will have a rig. I think it is achievable to have a rig in the Falklands at the back end of 2008, which is 10 years after the last rig. As soon as we can secure a rig we will let it be known. There is work going on but no specific news right now.



FINN: What would be the viability or using a drilling ship?



TB: A drill ship is interesting and it is something that we are also looking into. The water depths that we have to the south of the Islands range between 500 and 1500 metres, which requires a certain type of rig. There are two main types that would work. One is a semi-submersible rig and there are probably 35 or 40 rigs that can drill at that water depth and, of course they can also operate in the north in shallower water. The other option is a drill ship, which has some advantages and disadvantages. The disadvantage is they are generally much more expensive on a day rate basis but the advantage is they bring much more equipment with them and they can get here a lot quicker. So there are a number of drill ships that we have looked at as a possibility that may come available in a year or twos time that could come from West Africa or from Brazil. Although the day rate is high they dont have to have the supply boats and all the things that a semi submersible would need. If you drill less than three wells it is more economic to drill with a drill ship. If you go above three wells then it is actually more economic to get a semi-submersible. We can use either for the area where we are prospecting. Again, it comes down to what becomes available.



FINN: Would a lower crude price be a good bargaining tool to help lower the day rate? Do you think the rig companies will continue with the higher day rate as they are now?



TB: I think the day rates are going to stay reasonably high for some time. I dont think they are going to come down yet. The biggest factor in the drilling market is there is a lag in the system. A year or so ago people realised the oil price was going up and people secured the services of rigs. This created a demand for rigs but also created a demand for new rigs. You dont just build new rigs overnight so to build a new rig takes a couple of years. Late in 2008-2009 you will see a wave of new-build rigs. Then the supply side will catch up with demand. Then the new rigs will be expensive but those are not the types of rigs we would be looking at but others will take them in preference to the older ones. That might free up the market. We look at the rig demand curbs and in a sense, when you get to the end of next year there are potentially more rigs becoming available and there will be more choice for us the more we leave it. Thats probably not what our shareholders want to hear but there is a balance between doing it quickly and at a reasonable cost. They may fall a little bit but I dont expect it to drop much.



FINN: What is the current day rate for a rig ? A ball park figure will do.



TB: To operate down here a semi-submersible is anywhere between $250,000.00 and $400,000.00 a day. And, thats just the cost of the rig. Helicopters and supply boats are on top of that. If you wanted a drill ship you are almost starting at $400,000.00 a day going up to $600,000.00 a day for a drill ship. Thats just a global rate.

Good interview and reflects the opinions of a Desire director that I had a chat with a couple of weeks ago. Desire had their drill pipes delivered to Aberdeen around Christmas time so are already for the off but this rig problem is out of their hands and you can'nt see much happening before the others catch up. Apparently the others are having to cut back on their seismic's because of cash constraints. Argos doing nothing.

Hope it's not to drafty around Twice Brewed at the moment Markyman!