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

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!

Perhaps you should pull out of DES and invest somewhere else in the mean time,BLR maybe!!! Personally I went for NXS which has gone very well luckily.Probably will have blown the profits by the time it comes to reinvest with DES!!

Hi Chav,

Snow at the twice brewed Yesterday when passing, quiet happy in Desire all money invested been in for longer than 2 years so happy to sit back and get tax brakes when they do go drilling.

Am still lead that things are still ongoing.

http://www.miami.com/mld/miamiherald/news/16530927.htm

http://www.timesonline.co.uk/newspaper/0,,175-2569375,00.html


Business

The Times January 27, 2007

Bursting oil bubble to force consolidation
Steve Hawkes
Half the groups on AIM vulnerable
Slump after 2004 black gold rush
A wave of consolidation is about to hit AIMs 10 billion oil and gas market as investors fall out of love with the sector.

Nearly 90 exploration and production groups are sitting on the junior market after the black gold rush of two years ago. Industry experts believe that half could disappear over the next 12 to 18 months. Some will run out of cash but most will either be taken out by a predator or merge with a rival.

The falling oil price has seen AIMs index shed 24 per cent or 1.6 billion since May. It soared 116 per cent in 2004, attracting 54 new companies.

Few fund managers are willing to bail out the strugglers after their experiences with fims such as Regal Petroleum, which nearly collapsed when a much lauded blockbuster well in Greece came up dry.

Peter Hitchens, analyst at Teather & Greenwood, said: Two years ago, people were floating anyone. Firms promising to find billions of barrels on the dark side of the moon got support. Now, there are going to be a number of casualties.

Industry insiders say that bankers are working overtime to set up potential deals. Tristone Capital is understood to be working on several transactions: it refused to comment.

Canaccord, 3i, KBC Peel Hunt and Mirabaud are also showing interest. One source said: People keep talking about . . . mopping up a few companies. All it will take is someone to pull the trigger. The rest will follow. Frank Inouye, chief executive of Coastal Energy, said he was weighing up several AIM rivals.

Bowlevens takeover of First Africa this month is seen as typical of the way much of the corporate activity will take place. First Africa gambled its future on a prospect in Gabon, suffered a reserves downgrade and struggled to raise cash. Bow-leven, which wanted assets close to its own in Cameroon, lent the company 12.7 million to keep it out of receivership, then bought the business.

EnCore Oil, led by Alan Booth, the former chief executive of EnCana UK, is another firm loosening its purse strings. Last week it completed a four-way deal to buy Grove Energy, the UK arm of Australia-based Nido Petroleum, Virgo Energy and Virgo Oil & Gas, taking EnCores asset base in the North Sea from six to 30 blocks.

Rivals say that Wham Energy, a North Sea minnow, is vulnerable to the changing sentiment a claim that has annoyed Tom Windle, its chief executive. Whams only North Sea prospect came up dry at the end of 2005 and its share price has halved since last April. Mr Windle hopes to win back shareholders by announcing a string of new prospects and partners shortly.

He could find it difficult. Analysts said that, while there are still a few potential success stories, investors are unlikely to rush back. Tony Alves, analyst at KBC Peel Hunt, said: Two years ago, you could have floated a brick if it had oil on it. Now, the bricks are sinking.

Desperate for deals

Survivors, predators
Afren, Coastal Energy, EnCore Oil, First Calgary, Imperial Energy, Northern Petroleum, ROC Oil, Sterling Energy, Urals Energy

Potential targets
Ascent Resources, Desire Petroleum, Equator Exploration, Faroe Petroleum, Granby Oil & Gas, Meridian Petroleum, Petroneft, Rockhopper, White Nile

Strugglers
Cambrian Oil & Gas, Circle Oil, Forum Energy, Ithaca Energy, Landsdowne Oil & Gas, Medoil, Ramco Energy, Wham Energy, Victoria Oil & Gas

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

29.01.2007
Desire Petroleum Stores Drill Kit But Investor Patience Required As Search For Rig Time Continues
Desire Petroleum this week issued an update on its activities but shareholders hoping for news on long-awaited drilling plans were disappointed. The AIM-listed company, which focuses on the Falkland Islands in the southern Atlantic, hopes to drill three exploration wells in the North Falkland Basin. But, in common with the other oil juniors hoping to strike black gold in these remote and frontier waters, Desire is struggling to resource the three-hole plan.

This is not to say, however, that the company hasnt made progress towards sinking that first well. Desire has taken delivery of casing, tubulars and wellheads, long lead items with a value of 2.75 million. This essential drilling equipment is now in storage near Aberdeen and will remain there until the company secures that all-important rig time.

This is the big stumbling block for Desire and other operators in the Falklands, among them fellow AIM firms Rockhopper Exploration, which in October announced it had identified a highly de-risked drillable prospect, named Ernest, with the potential to hold over 100 million barrels of recoverable oil, and Falklands Oil & Gas, which holds a huge tranche of acreage in the South Falklands Basin, where the possible prospect sizes are measured in the billions of barrels. These oil juniors lack the financial clout to finance these high risk, high cost drilling programmes, particularly given a worldwide shortage of suitable rigs that has sent day rates rocketing.

Nevertheless, Desire is talking to rig owners and has hired oil and gas investment specialist Tristone Capital to help identify potential farm-in partners that may have available rig slots and could fast-track drilling plans. It is interesting to note that last year Tristone helped Wimbledon Oil & Gas sell itself to oil services specialist Rheochem - Desire shareholders may be forgiven for wondering where the current talks will lead.
In addition to these negotiations, the Falklands operators are talking to one another about joining forces to conduct a joint drilling campaign, which would enable them to share rig mobilization costs and offer sufficient workload to tempt rig owners all the way down to the remote Southern Atlantic. This is a model that was used back in 1998, when the first - and, to date, last - wells were drilled in the Falkland Islands. Desire was a junior partner in that drilling programme, which saw six wells sunk in a largely disappointing exploration campaign, and has learnt lessons from that experience.

One of the problems back in 1998 was the back-to-back well scheduling, which didnt give the operators time to analyse well results and readjust well locations in the light of the new data. Another problem was the geological model: the 1998 wells targeted sandstones that had not been charged with oil due to a seal formed over the lacustrine source rock. Moreover, all six wells tested the same play concept, leaving plenty of unanswered questions about the prospectivity of the North Falkland Basin, which stretches 250 km from north to south.

Of the six wells, only one failed to find any indication of oil and gas and that duster was never logged because the well collapsed. The most exciting well was Shells test of the Fitzroy structure which recovered live oil to the surface - but with a prevailing oil price of US$10 per barrel there was little interest in pursuing an exploration campaign in such a high risk, high cost area.

Current oil prices mean the economics of the south Atlantic look very different today. Desire, which holds the ex-Lasmo and IPC acreage, is not alone in believing the explorers of 1998 turned their back on one of the last major untapped oil and gas provinces in the world. In the intervening years millions of dollars have been spent on seismic and CSEM surveys but the accumulated data has yet to convince Big Oil, with the required deep pockets and available rig slots, to return to these waters and most agree new drilling is now unlikely to get underway until 2008/9 making it a full decade until the potential of the Falkland Islands is tested by the drilbit.