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

Markymar DES referred to "potential reserves" and we all know that means "pie in the sky" until the drill bit strikes oil. Also from their RNS it appears they have yet to sign the farm in agreement with the "anonymous" partner. I hope this does not turn out to be another collosall ramp up as happened a couple of years ago.

A bit like FOGL "POTENTIAL RESEVES" pie in the sky!!!

Desire have done a lot more work than FOGL on there acreage and the NFB has been drilled and plays tested and live oil has come to the surface where in the south no holes have been drilled and nothing tested.

Now it would be good to hear you justify why desire is a short in your opinion and why you hold FOGL which arent even drill ready have sold out have there acreage for two holes to be drilled and have no drilled date confirmed and are 40% owned by RAB.

Capt i see we have found an elephant at long last.

http://www.desireplc.co.uk/pdfs/annual_report_07.pdf

Page 8.

1. Prospect Inventory
All of the seismic data covering Tranches F, I and L were
re-interpreted during the year. In addition to confirming
the existing prospects, twomajor, new prospects were
identified: Jacinta and Barbara as shown in Figure 1.
The Jacinta Prospect is a large Aptian sand-pinch-out
stratigraphic trap with a recoverable potential over 1
billion barrels of oil. This sand is the same as that with
good oil shows in the 14/9-1 well. This is a high-risk
prospect as stratigraphic traps are invariably less welldefined
than structural traps.
In contrast, the Barbara Prospect is a structural trap with
a recoverable potential of 450million barrels of oil.
Both these prospects are significant additions to the
Prospect Inventory which now includes 18 prospects
and brings the potential reserves on the Desire licences
to over 4 billion barrels of recoverable oil.

Perhaps RAB feel the agreement with BHP/BLT has greater substance than the intangible (so far) words of DES directors,especially as we all remember what happened the last time DES sp went north of 1!

You still not explained why it is a sell ?

As for the directors I remember why back when Desire Petroleum has no money left and could of gone tits up and it didnt and it was all down to a Director called Colin Phipps who lent money in to the company over a 3 year period to keep it a float because he believed in what he was sitting on. Now that is a director who is going the extra mile. I also wish him well and hope he beats his cancer and gets to see Desire drill and hit the back stuff as no one deserves it more than him with his tireless work over the years.

1 x elephant and 2 x big cats Markymar.

@ $80 million dollars would buy you 51% of FOGL acreage.

It will be interesting to see some farm in details to compare like for like

Thursday, May 1, 2008
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Falklands entitled to develop a petroleum industry, says FCO
The Falkland Islands government is entitled to develop a hydrocarbons industry underlined the United Kingdom after reaffirming its sovereignty over the South Atlantic Islands following a formal protest from Argentina regarding a new oil exploration licensing round.


Zoom

"The United Kingdom has no doubts about sovereignty of the Falkland Islands and the surrounding maritime areas" said a British Embassy spokesman in Buenos Aires. "The Falkland Islands government is entitled to develop a hydrocarbons industry".

Late Wednesday and as had been anticipated by some Buenos Aires media close to the Kirchner administration, Argentina presented an energetic letter of protest to the UK Embassy regarding the new round of licensing and the announcement by several companies of oil drilling operations in Falklands waters in the near future.

Argentina energetically rejects these unilateral measures which constitute an illicit act, both for Argentine Law and International Law, said the letter delivered to Deputy Head of Mission Andrew Jackson at the UK embassy in Buenos Aires.

Allegedly the new licensing round for the exploration in the north of the Falklands was decided last April 18 but it only became known to the Argentine government this week. The decision means exploration areas awarded to oil companies in 2005 have been expanded, which was the reason behind the Kirchner administration March 2007 decision to terminate the September 1995 Joint Argentine British Declaration on hydrocarbons cooperation, signed under the government of former president Carlos Menem.

According to the official release the Argentine Foreign Affairs claims the UK has abrogated upon itself the right to award areas on the Argentine continental shelf north of the Malvinas Islands for hydrocarbons activities which is contrary to a long list of United Nations General Assembly resolutions.

The UN resolutions call on Argentina and UK to resume sovereignty negotiations for a peaceful solution to the dispute but one in particular, Resolution 31/49 calls on both sides to abstain from adopting decisions which introduce unilateral modifications to the situation while the Islands are going through the process of bilateral negotiation.

Regarding Rockhopper Exploration, and other British companies, (presumably Desire Petroleum), recent announcements that they are operating to the north of the Malvinas Islands, Argentina reiterates once again that the activities of that company in particular, as well as another involved, have been formally protested to the United Kingdom since 2005.

The release reveals that the rejection mechanism for such activities not only involves formal protests to the UK but also discouragement letters to the companies warning them that because of their illicit actions they are liable to legal sanctions.

Similarly any company which directly or indirectly is commercially linked to the companies illegally authorized by the UK has received identical warning. Such is the case of the French "Compagnie Gale de Gphysique and its Houston branch which were notified by Argentina in 2007 and 2006 when it became public they had been contracted by Rockhopper Exploration for seismic surveying in the North Malvinas basin.

Finally the release recalls that on 29 March 2007, the Energy Secretary adopted Resolution 407/2007 to perfect the mechanisms which the Argentine government has to dissuade, and if necessary, sanction illegal hydrocarbons activities in the Argentine continental shelf.

markymar, I have noticed halifax does try to deramp a share that is performing well presumably because he missed the boat as otherwise why bother unless he intends picking them up. to short desire would be extremely risky knowing how they can gush on news, only a complete nutcase could seriously consider it. Everyone knows the oil is there, not least Argentina but the costs and political pressures have dissuaded the majors. I believe the time has come and Shell probably are looking at taking over B&S or maybe even Desire before it's too late/much more expensive to get a foothold on what will be possibly the biggest oil discovery for years and a much needed one. Time will tell but 5 10yrs ago will look cheap soon

halifax cant see the wood from the trees! coundnt of wrote it beter myself

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/06/cxmktrep106.xml

Falklands oil explorers tap Aim market investors' enthusiasm
By Ben Bland
Last Updated: 1:03am BST 06/05/2008



If a lack of liquidity is Aim's biggest problem, then the Falkland Islands oil explorers are fortunate to be blessed with the interest of thousands of excitable retail investors.


Port Stanley, Falkland Islands: the shares
of oil prospectors in the region have soared


In March, I wrote about the Falklands oil mania that was sweeping the market after one of the prospectors, Desire Petroleum, announced that it had signed up an unnamed farm-in partner. Since then, the feverish atmosphere has refused to die down.

While the Aim All-share index is down just over 1pc since mid-March, Borders & Southern has surged by 33pc, Rockhopper Exploration has soared by 26pc, Desire Petroleum has leapt by 24pc and Falkland Oil & Gas has jumped by 18pc. That is despite the fact that there has been a distinct lack of earth-shattering news from any of the four companies hoping to find commercially exploitable reserves of oil off the Falklands.

"Most of the share prices have been detached from reality," said one analyst who covers the sector.

More on oil
Falklands Oil & Gas (FOGL) is the only company to have a publicly confirmed, heavy hitting partner - BHP Billiton, the mining and oil and gas giant. FOGL is exceptional in other ways, with an investor base that is much more institutional than retail (hedge fund RAB Capital has a 40pc stake). So, although analysts believe it is the closest of the four to starting drilling, FOGL has largely managed to steer clear of the market madness.

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While Desire has refused to name its farm-in partner until it has completed negotiations with the Falklands government, sources confirmed to The Daily Telegraph that it is Arcadia, the London-based oil trading group. Arcadia is partly owned by John Fredriksen, the Norwegian-Cypriot shipping billionaire who controls a number of oil services companies.

The talks with the Falklands government are taking longer than expected because Desire and Arcadia are also applying for a number of new exploration licences, the sources added.

News of the farm-in also boosted Rockhopper, which is working alongside Desire in the North Falklands basin (FOGL and Borders & Southern operate in the South Falklands basin).

Rockhopper's shares have doubled in value since the start of the year even though industry experts say it has been making "steady rather than spectacular" progress. This jump in the share price puts Rockhopper in a much stronger position if and when it goes back to investors to raise the money it will need for a drilling campaign. Market sources say that Rockhopper has already started talking to shareholders about the possibility of a large fundraising.

Managing director Sam Moody insisted that the company was "not in the process of raising money" at this stage. However, he admitted that Rockhopper was "pretty much at the end of its technical work programme" and would soon look at the farm-out market and the equity market as potential sources for the tens of millions of pounds it needs to fund even a basic drilling programme.

Despite the jump in Rockhopper's share price, Mr Moody dismissed the suggestion that his company has been pumped up by the retail investor mania. "We're still very cheap compared to the other three, 100m cheaper in terms of market value," he said.

He believes the re-rating of the Falklands oil prospectors is the result of investors' realisation that they are genuinely moving closer to starting drilling.

Yet he accepts that it is difficult to value companies that are effectively engaged in an all-or-nothing endeavour. "Our value is huge in the event of a discovery and rather low without one," he added. "The real current value is somewhere in the middle."

BHP says energy unit not for sale

BHP Billiton gave a briefing on its petroleum business yesterday in London in an attempt to reiterate that its upstream business is not for sale and has strong growth potential.

However, many of the post-briefing questions were about BHP's mining business, and specifically about BHP Billiton's proposed takeover of miner Rio Tinto. This underlined the perception that BHP's upstream business sits oddly aside BHP's massive mining business.

The company's chief executive Marius Kloppers and Petroleum boss Michael Yeager told the briefing that its oil and gas business had buoyant growth prospects, and was a firmly entrenched part of the wider company.

"In fact," said Koppers, "in many respects, upstream petroleum is little different to mining. We understand and nurture the differences."

Yeager then took the stage with the message that BHP Billiton Petroleum is very optimistic about its prospects thanks to rising production and a "rejuvenated" exploration strategy.

The petroleum division, which accounts for one fifth of total operating profit, has a 76% earnings gross profit margin, the highest in the company. Yeager said earnings in the division will be helped dramatically because about 60% of its natural gas and liquefied natural gas contracts have "repricing" elements that will kick in over the next few years.

The petroleum business contributed produced an average 378,000 barrels of oil equivalent per day in April this year compared to 318,000 boe per day in full-year 2006.

What is more, production is forecast to grow nearly 10% annually to 2011, underpinned by new projects that are in the construction phase. Several major LNG projects are in the project pipeline too.

BHP has proven reserves of 1.35 billion barrels of oil equivalent, and 2.24 billion barrels of probable reserves and contingent resources, Yeager added.

On the exploration front, the company plans a 75% increase in exploration spending this year to $700 million from $395 million in last year.

Its exploration and production focus remains on Western Australia and the Gulf of Mexico, but significant exploration work is planned in new venture countries like Malaysia, Colombia and The Falklands.

http://www.theaustralian.news.com.au/story/0,25197,23667843-643,00.html

Some info on the joint meeting +Dr Phipps and well designs etc.

By J. Brock (FINN)

A meeting of the Mineral Resources Committee took place at 1400hrs on Friday, 09 May 2008 in the Mineral Resources Department conference room. Present were Cllrs Hansen (IH), Summers (MS), and Birmingham (JB), as well at the Chief Executive Mr Tim Thorogood, Attorney General Mr David Pickup QC, Director of Agriculture and Mineral Resources Mrs Phyl Rendell, Miss Pippa Christie and Mrs Katrina Stephenson. Apologies came from Cllr Janet Robertson.

The minutes of the meeting held on 21 February 2008 were confirmed and only one matter, the confirmation that calcified seaweed would be extracted by contract by the farmer in question.

Mrs Phyll Rendell, Head of the Mineral Resources Department, has reported that since the last meeting in February there has been a hive of activity with two overseas visits that have been widely reported.

In early March a joint operators meeting took place in Edinburgh. Mrs Rendell and Councillor Rendell attended the meeting. Mrs Rendell, Phil Richards and Bob Gatliff from BGS met with company representatives privately during the main event. Meetings were also held the day before the joint session, reports Mrs Rendell

According to Mrs Rendell, Licensees have joint meetings in London every few months but it was agreed when all the companies travelled to Stanley for meetings in October last year that a joint session hosted by FIG/BGS would be appropriate to ensure that both industry and the regulators could have a further opportunity to discuss matters related to offshore exploration and coordinate activities. She went on to say that all the licensees were represented and a very useful dialogue was had, particularly in relation to data sharing and release and guidelines for well designs.

Attendance at the American Association of Petroleum Geologists (AAPG) convention in San Antonio went well with the object being to fly the flag after having taken a year off to attend the Falklands Forum. It was important to learn about innovations in the oil industry as well as meet new contacts and keep in touch with old ones.

Dr. Colin Phipps, a founder of Desire Petroleum Plc has been commended by the Director of Mineral Resources in the Falklands Mrs. Phyl Rendell. Mrs Rendell said she was sorry to hear that Dr Phipps had to retire due to ill health. He has been Chairman for te past 12 years and stuck with it, she said. Dr Phipps and his team took over abandoned blocks and were responsible for the first 3D seismic in the Falklands when other exploration companies couldnt afford it. Cllr Hansen will forward the Committees gratitude and thanks to Dr Phipps in the UK.

There are a host of promotional events that it would be good to attend if the budget allows such as an important South African event with relevant companies looking at the South Atlantic. The next AAPG meeting is in June in Denver, Colorado in the United States and a meeting of NAPE in Huston Texas in January 2009. It is important to attend these meetings and conferences to keep abreast with what the industry is doing and to keep in touch with important contacts.

http://www.internationalpavilion.com/SanAntonio_Talks/AAPG%202008%20San%20Antonio%20-%20Falklands.ppt

http://business.timesonline.co.uk/tol/business/markets/article3987826.ece

Rumour of the day

Desire Petroleum, which is exploring north of the Falkland Islands, rose 11p to 104p on talk of a bid from John Fredrikson, a billionaire Norwegian. But it is thought the company has an outline deal with Mr Fredrikson for which it is awaiting government approval. It may also have to issue new shares to finance itself if the deal collapses.

Rockhopper, the Falkland Islands explorer, rose 2p to 110p after raising 3.8 million in a share placing. It has committed to funding 15 per cent of drilling costs for Desire Petroleum, another Falklands explorer, which rose 2p to 107p. Desire has been talking up its prospects, but Tim Heeley, a Daniel Stewart analyst, pointed out that Rockhopper would need ten times more cash to fund its commitment to Desire, an indication that Desire is a long way from being able to drill. Mr Heeley reiterated sell advice on both stocks, with targets of 20p on Desire and 25p on Rockhopper.

Interesting angle on things, Nambu.
Admittedly none of these explorers have conclusively found oil yet, so the sp has been hyped up on the weak $, high crude price & hope. Also, it will be interesting to see how the sp holds up when they start to drill, as the strike rate is not going to be 100%. Dusters (or the equivalent subsea) will knock the sp down, but good for the active traders though. Maybe the safer plays are the ones with huge backing from the oil majors?

All good points HARRYCAT but I think a prediction of 20p is taking a huge gamble that oil is NOT under the sea in the Falklands. You'd have to be very brave to short DES IMO.

I hold this stock, so 20p would be very bad news & I think unlikely in the near future, hence I am still holding. But it does beg the question as to what the valuation of DES 228.8m shares is based upon. I am assuming the answer is estimated, untapped reserves @ $130 per barrel?

I recollect this valuation of Heeley as being of months back - before news of the possible farm in. How can you make a new valuation without knowing the terms of the buy in?
The new partner will have access to a lot more information than Heeley and the eventual deal will show how good it rates the Des assets. Only then can a short term price be set, that could be blown out of the water once drilling commences.

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/05/27/ccseas127.xml

Oil crisis triggers fevered scramble for the world's seabed
Last Updated: 10:49am BST 27/05/2008