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

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.

http://www.dn.no/energi/article1008602.ece?WT.svl=article_title

Hydro/Statoil sket til milliardfunn
HYDRO/STATOIL WANTED FOR BILLION DISCOVERIES


Olje- og gassgiganten Hydro/Statoil kan fgullkantede kontrakter p
Falklandsene.
THE OIL GIANT HYDRO/STATOIL COULD GET LUCRATIVE CONTRACTS ON THE FALKLANDS



Pden vharde britiske gruppa er det pist noe som vise seg ve ufattelige oljereserver, skriver VG.
ON THE BRITISH ISLANDS SOMETHING THAT COULD BECOME INCREDIBLE OIL RESERVES MIGHT NOW HAVE BEEN SHOWN.

Og myndighetene pa sker toppekspertise til hente verdiene opp av havet.
AND THE LOCAL AUTHORITIES WANT TOP EXPERTISE TO GET THE OIL OUT FROM THE SEABED.

- Norge i verdentoppen
NORWAY IS A WORLD LEADER

- Norge ligger i den absolutte verdenstoppen n det gjelder offshorevirksomhet i vtfe omrer, sier Falklands lokale "olje- og energiminister", Richard Cockwell, til VG.

NORWAY IS IN THE WORLD LEAGUE WHEN IT COMES TO OFFSHORE ACTIVITIES IN ROUGH CLIMATE, THE LOCAL ENERGY MINISTER, RICHARD COCKWELL, TO VG.

Aktuell partner
POSSIBLE PARTNER

- Derfor er det naturlig henvende seg dit n vi skal e aktiviteten i . Det gjelder ikke bare leting og produksjon, men ogsprgiversiden i for eksempel miljpsm, sier Cockwell til avisen.

THEREFORE IT COMES NATURAL TO GO THERE WHEN WE SHALL INCREASE THE ACTIVITY THIS YEAR. NOT ONLY REGARDING EXPLORATION AND PRODUCTION, BUT ALSO ADVISE FOR EXAMPLE REGARDING ENVIRONMENTAL ISSUES COCKWELL SAYS.

I let av ven og sommeren skal myndighetene pFalkland vurdre hvordan de lovende funnene pden nordlige sokkelen skal videreutvikles:

BY SPRING AND SUMMER THE LOCAL AUTHORITIES ON THE FALKLANDS WILL EVALUATE HOW THE PROMISING DISCOVERIES SHOULD BE DEVELOPED FURTHER.

- Norge kan ve en aktuell partner begge steder, sier Cockwell til VG.

NORWAY COULD BE A POSSIBLE PARTNER THEN

http://www.mercopress.com/vernoticia.do?id=9749&formato=HTML

Falklands forum Opportunities for the future next April

The Falkland Islands Government is hosting a one day Forum, entitled `Opportunities for the Future`, in London on 18 April 2007 to raise awareness of the Islands and its promising commercial growth and investment prospects, particularly in the areas of oil and mineral exploration, fisheries, agriculture and tourism.

Test

http://www.cggveritas.com/popup_page.aspx?cid=1-24-139

http://www.thisisnorthscotland.co.uk/displayNode.jsp?nodeId=149212&command=displayContent&sourceNode=150624&contentPK=16636955&folderPk=85744&pNodeId=150607

FIRMS 'PANIC BUYING' FOR DRILLING RIGS
Date : 14.02.07

Oil companies are almost "panic buying" when it comes to hiring drilling rigs for the North Sea, an industry expert warned yesterday.

Bob Lyons told a major gathering of energy sector leaders in Aberdeen that the high demand for units being used for exploration and appraisal work was far outstripping supply.

Oil firms are anxious to maximise output from British waters to reverse a production decline and also cash in on high prices. But Mr Lyons revealed that the shortage of rigs was poised to get worse as three units were due to leave UK waters this year to work abroad. There are 37 rigs in action off Britain.

He was speaking at a breakfast held by the UK Offshore Operators' Association (UKOOA), where the body's latest oil and gas activity report was discussed.

Though the document highlighted many positive points, there were also worrying factors - including high costs combined with smaller fields and increased taxation, making it harder to attract investment.

Mr Lyons is a division manager with AGR Peak in Aberdeen, the biggest co-ordinator of drilling programmes in UK waters. He told the audience of more than 400 people that rig demand for 2007 and 2008 far outweighed supply.

Peak expects to be involved in drilling 19 wells offshore Britain this year, but could double this if units were available.

Nearly 60% of the world's semisubmersible rigs are already booked for 2008, and 41% are also tied up for 2009.

Mr Lyons could not see unit availability getting any better in the short term, with the situation possibly getting worse.

Asked about the possibility of using foreign rigs, he said that mobilising units from abroad could make a drilling programme in British waters prohibitively expensive. Mr Lyons also said that rigs were leaving Britain for foreign waters partly because of the money they could command there. The length of contracts available abroad were also a factor.

Demand for exploration and appraisal units in the UK has seen a major turnaround this decade - at the low point in 2002, nearly 20 rigs were lying unused in the Cromarty Firth.

But Mr Lyons added: "As the oil price picked up, more people wanted to drill wells."

The strong demand has also pushed up day rates dramatically.

Mr Lyons gave the example of one UK unit being hired out in 2003 for 26,000 a day, but now commanding 177,500 a day.

He could not foresee a major downturn in demand - at least not in the short term - which would see rigs again mothballed in the Cromarty Firth.

UKOOA economic director Mike Tholen told yesterday's meeting that Britain's offshore industry was responsible for many achievements in 2006, including satisfying 96% of oil and 92% of gas demand in the country.

There was also investment of 5.6billion in new production and 600million in exploration, while nearly 500,000 people were employed in the industry.

Exploration and appraisal are expected to remain strong this year, with up to 80 wells forecast - ahead of last year's figure of 69. However, Mr Tholen also said that production fell more rapidly than anticipated in 2006 - down to 2.95million barrels of oil equivalent per day compared with 3.2million in 2005.

New production investment is expected to slip to 4billion-4.5billion this year - the first slowdown since 2003.

Meanwhile, new development costs are expected to rise to 25 a barrel in 2007-09, compared with 15 in 2005.

http://www.mercopress.com/vernoticia.do?id=9860&formato=HTML

Falklands new port development plan moves on

FIDCs press release identifies the following topics to be considered by Royal Haskoning in the preparation of their report:

The growth of containerised shipping and need for improved container handling facilities.
Anticipated growth in the fisheries sector stimulated by the new, property-based rights fishery introduced by FIG.
Potential hydrocarbons exploration.
Continued growth in cruise ship visits.
Potential growth of an aquaculture industry.
Infrastructure development.
Future management options, including the potential for public-private partnerships.

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

BUY
CONFIRMED

http://www.falklandnews.com/public/story.cfm?get=4395&source=3

February 15, 2007
by J. Brock (FINN)

MINERAL RESOURCES COMMITTEE REPORT (15/02/07)
By J. Brock (FINN)

A meeting of the Mineral Resources Committee took place at 1330hrs on Thursday, 15 February 2007 in the Mineral Resources Department. Present were Cllrs Cockwell (Chair) and Summers as well as Mrs. Phyl Rendell (DMR) and Miss Ros Cheek (Attorney Generals Chambers). Apologies came from Cllr Clausen (Richard Cockwell stood in for her) and Chris Simpkins (Chief Executive).

Minutes of the meeting held on 01 December 2006 were confirmed and signed.

The Director of Agriculture and Mineral Resources, Mrs. Phyl Rendell, gave her report, which began with the news that Rockhopper Exploration have completed their 3D Seismic Survey and that bad weather slowed things down with the crew of the CGG Marine Vessel, Laurentian, contracted to carry out the work receiving high praise for a job well done. She also reported that FOGL had two 2 D Seismic Surveys on going but that severe weather was slowing things down. An electromagnetic survey (CSEM) will follow the 2D Seismic. OHM is contracted to do the CSEM. Tim Bushell and Colin Moore from FOGL visited mid January to give a detailed briefing to FIG on their current activities and data interpretation. Borders & Southern representatives Dr Howard Obee and Mr. Bruce Farrer visited the Falklands in January to update FIG, with Mr Farrer giving the Mineral Resources Committee a full briefing on the companys acreage. Dr. Obee briefed the committee about plans for future work. Desire Petroleum will come to the Falklands later on but are at present consulting with British Geological Survey (BGS)and the Department of Trade and Industry (DTI) about their drilling programme They are working closely with BGS and FIG in anticipation of contracting a rig to work in the North Falkland Basin.

Mrs Rendell went on to say that FGML, in accordance with their licencing agreement, have relinquished 50% of their acreage on 16 January 2007. This was brought out during the FGML AGM held in the Falklands in November 2006. A notice will appear in the Gazette. Mrs Rendell said that this will not affect the on-going exploration work. Fieldwork has progresses well throughout the summer. Dr. Phil Stone, FIGs consultant, will be in the Islands from the 28th of February. It is hoped that there will be yearly meetings of the FGML Board in the Falklands.

Cllr Summers asked if the acreage that has been relinquished had been explored. Mrs Rendell said that it was including trenching and stream bed exploration and that an electromagnetic had been conducted on it but the acreage was not that attractive.

Cllr. Summers mentioned that some of the trenches in the area were not filled in and he mentioned that the land should be left as the company found it. Mrs. Rendell said there were some difficulties in filling in the trenches but she would check it out and report back.

The draft budget for the next financial year was discussed with Mrs. Rendell saying that all of the fat had to be trimmed out of it. With reference to the 250,000.00 for consultancies, BGS would like to raise their prices but were persuaded not to at this time due to the amount of work they were doing. When things heat up then the Standing Finance Committee could be asked for more funding. Charging for acreage in the North Falkland Basin would be different than the newer acreage elsewhere. Acreage was ready to be relinquished but the rents would go up in the North Falkland Basin so income would stay the same. In the other, newer areas, income would go down once acreage was relinquished. At 300,000.00 income projected for next year, earnings are healthy.

Cllr Summers asked if the projections for income were right and Mrs. Rendell said that was an unknown because income was paid in USD and the exchange rate fluctuates. It would be open ended but would be discussed in April after the Falklands Forum in the UK.

http://www.btimes.com.my/Current_News/BT/Tuesday/Corporate/BT610441.txt/Article/

http://www.gulf-times.com/site/topics/printArticle.asp?cu_no=2&item_no=138758&version=1&template_id=48&parent_id=28

Strange for Desire to be mentioned in this story.

Global oil glut hidden by rig dearth makes drillers good bet
Publish Date: Sunday,18 March, 2007, at 08:49 AM Doha Time


Chicago/oslo: The professionals most familiar with the so-called oil shortage know there is an estimated 3tn barrels under land and sea. That is why they are making their biggest bets in drilling rigs where the scarcity is no illusion.
Oil drillers are the most attractive way to go, said Don Hodges, who holds about 160,000 shares of Transocean Inc and about 120,000 shares of GlobalSantaFe Corp among the $1.1bn managed by Dallas-based Hodges Capital Management. There is a shortage, it takes time to build one and it takes a lot of money.

Their earnings are going to go up every year for the foreseeable future.
Orders for offshore rigs have surged sixfold in the past five years, and rental rates are at the highest ever after oil prices tripled and industry profits soared. The wait for the most sophisticated rigs, which can drill in waters more than a mile deep, is a record three years, and the cost to lease one has quadrupled since 2004, climbing to more than $500,000 a day.

Its a big problem, Ashley Heppenstall, chief executive officer of Stockholm-based oil producer Lundin Petroleum AB, said in an interview. There has been a gross underinvestment in the industry for a number of years and we paid for that last year. We had delays in some of our drilling campaigns.
Lundin plans to sink wells this year in Norway, Russia and Sudan, and has permits to explore in Vietnam, Ethiopia and Congo.

ExxonMobil Corp, BP and the rest of the largest oil producers are being forced to pay more to get the rigs they need to meet the worlds ever-rising energy demand.
With crude prices above $50 for most of the past two years, investors from Boone Pickens to billionaire John Fredriksen, who controls the worlds largest oil tanker company, are betting on drilling companies to outperform producers.

We think drilling companies are going to stay very busy, hedge fund manager Pickens, who is sticking to his prediction that oil prices will reach $70 a barrel this year, said in an interview Qatar last month. The situation for drillers is very positive for profitability, he said.

The rise in rig costs contributed to the five-year jump in oil prices by driving up production costs, hindering the discovery of new deposits and slowing the development of existing finds. There is some 3.02tn barrels of crude oil left under the ground, according to the US Geological Survey.
The oil left underground in the US alone is enough to replace every barrel pumped from Iran for the next 20 years, according to statistics compiled by London-based BP, Europes second-biggest oil company.

A new deepwater rig that is capable of drilling in waters 7,500ft or more costs $525mn to $625mn to build, up from $300mn to $400mn during the late 1990s, according to the Dallas-based analyst.
The shares of drillers are poised to replace oil and gas producers as the industry leaders, Hodges said. The Standard & Poors 500 Oil & Gas Drilling Index, which includes Transocean, Noble Corp and Dallas-based Ensco International Inc, is little changed in the past year.

A measure grouping producers such as ExxonMobil and Chevron Corp, the Standard & Poors 500 Integrated Oil & Gas Index, jumped 22% in that time. The losers are smaller companies that sink wildcat wells in hopes of finding a gusher.
Desire Petroleum, a UK-based oil explorer with a permit to drill offshore the Falkland Islands near Argentina, has sought a rig since early 2005. The firm lost 1.68mn ($3.3mn) in its most recent six-month period.

The rigs most in demand are known as drillships and semisubmersibles, equipment used in deep waters.
The battle for rigs has intensified as oil producers boost exploration in the Gulf of Mexico, West Africa and Brazil. The number of offshore rigs in West Africa has increased to 56 from 44 a year ago, according to industry analyst ODS-Petrodata.
In Asia and Australia, the number rose to 86 from 79. It takes three years from when you order a rig until it is delivered, and we haven't seen this before, said Martin Huseby Karlsen, an analyst with DnB NOR Markets in Oslo.

Lease rates have soared to a record. Seadrill Ltd, the Norwegian driller founded by Fredriksen, in January said it rented out a rig for an unprecedented $525,000 a day. Contracts in early 2004 were signed for about $125,000 a day.
Theres a fight for resources in the entire industry, not only rigs, Norsk Hydro chief executive officer Eivind Reiten said in an interview. That;s putting pressure on costs, and may challenge the progress of some of the projects, but my company, Hydro, is fortunate in being well positioned there.
Oslo-based Hydro is Norways second-largest oil company.

The number of offshore drilling rigs on order at shipyards, a measure of demand, has jumped to 115 from 18 five years ago, according to ODS-Petrodata. With few rigs yet delivered, the number of offshore rigs operating worldwide is little changed in the past five years, at 657.
Transoceans net income last year was $1.39bn, up from $19.2mn in 2003. The stock more than tripled during that time. Nobles net income jumped to $732mn in 2006 from $166.4mn in 2003.
Shares of the Sugar Land, Texas-based company doubled.
The retreat in oil prices from the record $78.40 a barrel in July poses no threat to exploration, said Alf Thorkildsen, chief financial officer for Seadrill Management AS, the Stavanger, Norway-based operating arm of Seadrill. Were not concerned with oil prices at around $50, said Thorkildsen. If they go below $30, thats another issue.

Seadrill is looking at buying competitors to get rigs and workers now and avoid the three-year wait. The biggest acquisition in the industry last year was when Fredriksen bought Norways Smedvig for $2.4bn.
Seadrill, based in Hamilton, Bermuda, beat out Noble and became the industrys sixth-largest following the purchase. Fredriksen declined to comment for this story.
GlobalSantaFe, the worlds second-biggest offshore driller by sales, with 61 offshore rigs, would be a perfect fit for Seadrill, because of its premium drilling fleet and high- quality management team, said Alan Laws, an analyst at Merrill Lynch & Co in New York.

While oil and gas prices rise and fall, rig owners can lock in years of revenue with long-term leases. Houston-based Transocean on February 14 estimated its so-called contract backlog, or revenue expected from existing agreements, was almost $21bn for the next nine years.
Shares of rig companies are also cheaper than oil companies including ExxonMobil. Transocean trades at more than 10 times expected earnings, while Noble, the third-largest US offshore oil and gas driller, is at 8.1 times.
Irving, Texas-based ExxonMobil trades at more than 12 times expected profit. BP Capital, the Dallas hedge fund managed by Pickens, boosted stakes in oilfield services stocks including Transocean and GlobalSantaFe in the fourth quarter, according to a filing with the US Securities and Exchange Commission.
Two of the five biggest holdings in the fourth quarter at Touradji Capital Management, a hedge fund firm founded by Paul Touradji, a former commodities trader at Julian Robertsons Tiger Management, were Diamond Offshore Drilling, an oil driller controlled by the Tisch family, and Hercules Offshore. Both of the rig owners are based in Houston.

Were bullish on offshore drillers, said Maxime Carmignac, who counts Noble, GlobalSantaFe and Transocean among the $13bn in assets she helps oversee at Carmignac Gestion in Paris. Offshore drillers are cheap, undervalued and less volatile than producers and the commodities themselves, oil and gas. They are sitting on a huge amount of cash flow and may benefit from merger and acquisition activity.

Expectations are so high the risks from falling short are mounting. Baker Hughes on February 15 said profit rose less than predicted in the fourth quarter and will trail behind estimates in the current quarter on slowing sales growth in North America. The Houston companys shares that day sank 9.4%, their biggest drop since 2001. Bloomberg

http://www.economist.com/world/la/displaystory.cfm?story_id=8972511

Argentina and the Falklands

Their island story
Apr 4th 2007 | BUENOS AIRES
From The Economist print edition