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

Not de-ramping just stating the facts as known at present. It is unlikely DES will start drilling before 2010 after FOGL/BLT have drilled and been successful or otherwise.

well thats not what was inferred at agm yesterday......it is feasible to drill end of this year, if not it will be 1st half of next year

scotty inferred is not a fact.

Halifax you know very little when it comes to facts,hence you own FOGL shares who arnt even drill ready or have enough funds to drill a hole.

http://www.desireplc.co.uk/presentations.php

AGM PRESENTATIONS
11th June 2008

Halifax maybe have a read up and then you may learn some thing as you make people sound thick who come from halifax

yes i do know that halifax!!!

were u at agm yesterday? i doubt it from your stupid comments......your nickname reminds me of that crap building society which is going into oblivion.....suppose taxpayers will need to bail it out with billions of pounds

scotty/ marky sticks and stones......time to grow up!!

ok, i'll break your bones then!! haha

need to get a big stick

Halifax - markets don't work like that as you and IC should know.

A share will never move from a 20p (no oil found) price to say 10 on the day that a gusher (or more than one) is drilled.

Investors have to position themselves so that they do not 'miss the boat'.

This is why last time the price reached a peak in excess of 4 pre-drilling.

You may call this speculation or positioning - it doesn't matter but it is the way markets work.

IC would be better valuing FTSE 100 companies.

Although investors may be reticent to bid prices up following the previous dissapointment, it is worth noting that the crude iol price was less than a third of what it is today - which puts a hugely higher value on the value of the prize if drilling is succesfull.

sp into blue territory after all the scare mongering yesterday and 1st thing today.

hyleo.....i bought a share from ic tip 20 years ago.....it tipped STRONG BUY 3 TIMES....yes 3 times over 6 months as sp tanked.....company went bankrupt!

never again do i even read ic or shares mag.....they r rubbish mags and prob ramping by the so called journos on it

Marky,

You've nicked my picture. lol.

Were you there yesterday?

Llol Kiwi,


How you get a pdf picture up?

Been away from the mine for a while so havent been able to click them clogs,i was there in spirt!

What you know Kiwi,u have know return address!

Try ********

I took a screen print (Alt+ PrtScr) of the pdf image, copied that to MS Paint, fiddled with it and then saved it as a jpg and loaded that on to tinypic.

Desire Petroleum is much too overvalued...it should be in the region of 20-30p only.

is that from shorters viewpoint? as theres supposed to be news shortly from update at agm

You're like a bad smell 98 - wafting around from thread to thread getting up peoples' noses.

Brokers note from Oriel

This note initiates coverage on four companies (Falklands Oil and Gas*,
Desire Petroleum, Borders & Southern, Rockhopper Exploration). The
group offers UK investors the opportunity to participate in high-impact
exploration in one of the last frontier exploration areas in the E&P
industry. All of these companies offer massive upside potential, but
they already have a combined EV of over 500mn, suggesting that
investors need to understand the key risks in each investment case.
Massive upside potential

The Falkland Islands is one of the few remaining frontier areas in the E&P
sector. It is divided into two independent areas, the North Falkland basin, and the Southern Falkland basins. The North is possibly lower risk as drilling in 1998 indicated the presence of an active hydrocarbon system, but individual prospect sizes are smaller although still material, in the order of 150-500mmb. The South is currently virgin exploration territory, but prospects identified to date are typically an order of magnitude larger 1,000-3,000mmb each and the BHP Biliton farm-in on Falkland Oil and Gas*
acreage has provided industry validation of the prospectivity of the area.
Fiscal terms are excellent, befitting the frontier nature of the basins, with a commercial undeveloped discovery likely to be worth cUS$15/bbl based on current oil prices. On the downside, we would point out the chance of outright failure is significant. Valuations are speculative Ascribing sensible valuations for all four companies is highly subjective given they have no tangible assets and the exploration portfolios are high-risk with little well control in either basin on targeted plays. However, in this note we highlight the upside in the event of success which is material based on just
the wells expected from the first drilling programmes. Near-term newsflow centred on securing rigsdrilling likely 2009/10
For most of the companies (Borders & Southern excepted), prospect
identification has been completed and planning has moved to securing rigs
for future drilling campaigns. The farm-out by Falklands Oil and Gas* and the proposed farm-out by Desire to an unnamed party has ignited investor
interest in the region as the prospect of drilling comes closer to reality. If rigs can be contracted over the next few months (and funding secured) then drilling could take place as early as next year.

Summary views
We initiate Falklands Oil and Gas* and Desire Petroleum with
SPECULATIVE BUY recommendations, with these stocks holding the prime
acreage in the respective Southern and Northern Basins. Borders and
Rockhopper are initiated with HOLD recommendations.


Falklands overviewfrontier exploration
The Falklands is split into two separate provinces the North Falklands Basin and the East (or Falklands Plateau) and South Falklands Basins, collectively referred to as the Southern Basins. Whilst there was limited drilling in 1998 in the North Falklands, confirming the presence of oil, the South Falklands Basins have yet to be drilled. There are four quoted companies in the region two in the North (Desire Petroleum and Rockhopper Exploration) and two in the South (Falklands Oil and Gas and Borders & Southern). Over the last 3 years significant volumes of seismic data have been acquired by the companies along with CSEM surveys, and they are now at the point of having derisked their prospect inventories as much as they can (Borders work nearing completion) and are ready to drill.

Company Summary
All four companies have focussed portfolios, only holding acreage in the
Falklands area. Borders is looking for other low-cost, high return opportunities but has yet to find an area as attractive as the Falklands to add to the portfolio. This focus maximises investor returns in the event of a discovery, but the lack of internal competition may mean that the wells remain high risk even when they are drilled. Therefore third party validation through a farm-in, preferably from a major international oil company, is very important to ensure that prospects are really drill ready, hence the significance of the BHP deal with Falklands Oil and Gas.

Falklands Oil & Gas* (FOGL, BUY, 150p)
Falklands Oil and Gas (FOGL) has a large acreage position in the South
Falklands covering 49,000 sq km. Its licences cover multiple play types and
over 100 identified leads and prospects have been identified to date which have resource potential of c60bnboe (individual prospect sizes range from 500-3,500mmb). A number of prospects have positive AVO and CSEM indicators. The lack of drilling to date in the Southern Basins means that source will remain the key risk until tested although adjacent basins and test drilling to the east give some cause for optimism.
FOGL farmed down its interests to BHP Billiton last year and the partner group is now actively seeking a rig for a likely 4 well drilling campaign, allowing a number of independent play types to be tested. FOGL is partially carried by BHP on its 49% interest (2 wells) but a 4 well programme will require additional funding over and above current cash resources of c12mn (or a secondary farm-out). The company has the ability to farm-down its equity further and we have assumed a fully carried 25% interest in our indicative valuations. Based on our current oil price assumptions, we see risked upside of 14x the current share price based on the first 4 prospects to be drilled and >90x on an unrisked basis.
We initiate with a SPECULATIVE BUY recommendation. The company has put together a robust geological profile for the Southern Basins which has
addressed a large number of risks pre-drill and the size and number of
prospects is impressive. The BHP Billiton farm-out has added credibility to the acreage and FOGLs technical work but the prospects clearly remain high risk ahead of drilling.

Desire Petroleum (DES, BUY, 87.5p)
Desire holds 4000 sq kms in the North Falklands Basin, of which c50% is close to the area where the wells were drilled in the 1998 campaign, and the prospects in this area should be at least partially de-risked by the data gathered in that campaign. Desire has identified 18 prospects that are thought to contain over 4bn boe of prospective resources. As these prospects are spread across a number of different plays types, some of which have been partially tested, Desires portfolio should be comparatively lower risk. However the average prospect size is 250mmbbls, and a single small discovery (<100mmb) could be marginal due
to the remote location. Desire accepted the terms of a farm-in offer for three of the 18 prospects on 25 February 2008. The farm-in remains subject to approval by the Falklands Government, but if successfully approved it will involve the drilling of two exploration wells at no cost to Desire. The farm-in partner has yet to be announced, but industry speculation suggests that it is likely to be Arcadia, the oil trading house that farmed-into Tower Resources acreage in Namibia. Assuming the farm-in deal completes Desire is expected to be fully funded for a 4 well programme. We initiate with a SPECULATIVE BUY recommendation as we see that Desire offers substantial upside potential from a possibly lower risk exploration programme in a partially proven basin. The programme is also expected to be fully funded (assuming successful farm-out), which reduces financial risks.

Borders & Southern (BOR, HOLD, 100.25p)
Borders & Southern (Borders) has a large acreage position in the South
Falklands basin which covers 20,000km2. The main play is a tertiary fold belt within which Borders has identified a number of large (>50km2) anticlinal traps based on the existing 2D seismic data.
Borders is at an earlier stage than the other three Falklands companies as it has yet to identify drillable prospects on its acreage, and is currently expecting to complete processing of the recently acquired 3D data in July or August. However the initial fast track processing has confirmed the existence of the prospects seen on the 2D data and also highlighted the presence of gas hydrates above the crests of some of the anticline structures. Borders has yet to start a farm-out process and retains a 100% interest in the blocks, but with just 12.7mn of cash on the balance sheet will either need to complete a farm-out or raise further equity to fund a proposed 3 well programme that is expected to cost at least US$100mn. We initiate with a HOLD recommendation as, whilst we see that Borders has substantial upside potential, the portfolio is at an earlier stage of development and drillable prospects have yet to be identified. In addition, we see that these assets should be viewed as more risky until Borders completes the final 3D interpretation and gets third party validation through a farm-out.

Rockhopper Exploration (RKH, HOLD, 95.25p)
Rockhoppers licences are located in the northern basin and include wholly
owned interests around Desires acreage in the north and south of the basin and a promoted 7.5% interest in Desires PL03 and 04 licences.
Total prospectivity on the 100% licences is estimated at c3.5bnboe with
individual prospect sizes ranging in the order 100-250mmb. The prospects in the southern part of the basin are seen as higher risk given the lack of the drilling in this area and a different source kitchen is inferred to the proven part of the basin in the north. However, at least two prospects on this acreage have positive CSEM surveys. Rockhopper has initiated a farm-out process but has not ruled out raising equity to cover its share of any future drilling programme. We have assumed the company reduces its stake in the non-Desire licences to a 40% fully carried interest (based on a 1.5:1 promote). It is expected that Rockhopper will share a rig with Desire and drill 2 prospects on its own acreage and be exposed to 2 wells on licences PL03 and 04. Assuming a successful farmdown, we see risked upside of 3x the current share price based on this first campaign and 18x on an unrisked basis. We initiate with a HOLD recommendation. Whilst we see the northern basin as partially proven and highly prospective, we believe Desire has the better position in the sweet spot of the basin. Although Rockhopper has promoted into part of this acreage and is approximately half the market capitalisation, Desire is more leveraged to success, even after the proposed farm-out.

thanks marky

all these shares are well down from recent note....so you would think they are buys now....but who knows in this market.....forward track me into 2009 and i'm sure prices will be much higher than todays meagre price.

Thanks, Marky

You can be trusted to really add something constructed as opposed to 98.

Does anyone know when the Falklands Islands Government is due to approve the farm-in partner?

its within 3 months from agm date......but many think it will be in july as des folk seem to over-estimate dates to be on safe side

http://www.mercopress.com/vernoticia.do?id=13945&formato=HTML

PM Brown urged to discuss Falklands issues with Kirchner
A FOREIGN Affairs Select Committee has urged the Prime Minister to pin down the Argentine president about concerns relating to the Falklands when the visit by President Kirchner, which was cancelled earlier this year, is rearranged.




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They recommended that the Prime Minister call for an end to Argentinas ban on flights to the Falklands crossing its airspace and that he highlight the logistical issues if Argentine families are allowed to fly in to visit the graves of their war dead.

Also recommended was that the Prime Minister should press the Argentine president to agree to the establishment of a Regional Fisheries Management Organisation for the South West Atlantic and reiterate the Islands right to develop a hydrocarbon industry.

The Committee, which was formed to examine the way the Foreign and Commonwealth Office (FCO) had carried out its responsibilities with regard to the UKs 14 Overseas Territories, released its report on Sunday.

Among the recommendations is that consideration should be given by the FCO Secretary of State as to whether improvements could be made in the ways in which the views of Overseas Territories residents be made known in the UK Parliament.

With specific regard to the Falklands, the committee called for the FCO to work with the Falkland Islands government and the Ministry of Defence to ensure that the future air bridge allows the Islands to further develop its tourism industry.

They also recommend that in its response to their report, the FCO clearly states what, if any, it considers the UKs entitlement would be in respect of potential gas and oil revenue from the Falklands and other Overseas Territories.

The issue of de-mining is also touched on by the document. The committee reports: We conclude that there are a number of issues to be considered, including cost, practicability, safety and environmental impact, before a decision can be taken on whether to carry out demining in the Falkland Islands.

We therefore welcome the governments announcement that it has sought an extension of the deadline to meet the UKs obligations under the Ottawa Convention.

We recommend that the government should discuss the results of its recent feasibility study with Falkland Islanders before coming to any decision about landmine clearance. Penguin News