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

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.




Zoom

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

.
Edit: I was about to ask what de-mining was, but I figure it is 'mine clearance'.
Not a very safe place to take a stroll then if there are still uncleared mines?!!!

http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=9938977

Freed from Desire?

All Good Like FOGL ONE TO WATCH IN 2009 !!

Desire Petroleum plc

(the 'Company')


Holding in Company

The Company was notified on 14 July 2008 that, following an acquisition of Ordinary Shares on 9 July 2008, Barclays PLC has a notifiable interest in 5.01% of the issued share capital of the Company.


This information is provided by RNS
The company news service from the London Stock Exchange

http://www.smallcapnews.co.uk/article/Rock_star_Rockhopper_Exploration_plc/5359.aspx

Rock star: Rockhopper Exploration plc


Friday, July 18, 2008

Four years ago Sam Moody swapped his job as an investment manager in London to start a new life with his family in the Wiltshire countryside. But it wasnt long before his City expertise was being called upon again this time to lead an oil and gas venture 8,000 miles away in the south Atlantic ocean.

Today, the managing director of AIM-listed Rockhopper Exploration plc is talking over his companys next move in a chase to find oil in the Falkland Islands.

Earlier this summer Rockhopper began sounding out potential farm-in partners ahead of test drilling on its North Falkland Basin acreage. After four years of detailed surveying and scoping, the company is pondering whether or not to bring in big company help or opt to raise more cash through the City and do the drilling work itself. For Moody, its a delicate balance.

When youre a focused company like us the most important thing is to maximise shareholder value, he says. We cant lose sight of the fact that we dont have anything anywhere else in the world so the normal rules of spreading the risk dont apply to us in terms farming out.

What we will do over the next weeks and months is compare the relative merits of doing an industry deal with doing a deal in the equity markets. And until weve run the farm-out campaign for a bit longer we wont know what the answer is. But we do think that there will be money available in both camps.

Rock steady

It was during his migration to the countryside that Moody crossed the path of Richard Visick, an entrepreneur hed worked with on previous deals it was a chance meeting that set the course of the next four years.

Richard rang me up one day and said Im thinking about starting an oil exploration company, he says. I offered to help and somewhere along the line fell completely in love with the idea of oil exploration.

Moody was tasked with building a company around acreage that Visick had secured in the North Falkland Basin. Through a personal contact I found Pierre Jungels, the ex-chief exec of Enterprise Oil, to become chairman. We needed proper oil experience but it was Pierres idea that I stayed on with Rockhopper to run the company side of the business - as opposed to the technical side.

Running the company side means that I get the money, I make sure everything gets done and I deal with the stock market. But Ive learned a lot in the past five years about the oil industry.

Rockhopper's acreage lies to the north of the Falklands in an area with a history of oil discoveries. In 1998 Shell, Amerada Hess, Lasmo and IPC between them drilled six wells, five of which found oil or gas. One of the Shell wells, which is on acreage Rockhopper now holds, recovered live oil to the surface which bled in to the borehole of the well at its target depth of 3,000 metres.

So its true to say you know theres oil and gas down there, but you dont know whether you can ever commercialise it, Moody says. In 1998 the price of oil was $12 per barrel, in 1999 it fell to less than $10 per barrel and when youre in a remote location with little or no infrastructure in the late nineties you cant make it work at that oil price.

Now youve got a dramatic increase in the price of oil and gas, youve got much better and accurate exploration technology, youve got an increasing demand for oil, youve got a decreasing availability of high quality acreage in the world. So all of those things come together to make the Falklands look attractive again.

The rising oil price has changed things out of all recognition. If youd set this company up at $12 per barrel you would never have got anywhere. Were now at $130-plus per barrel and all of a sudden lots and lots of parts of the world that were never of interest before start to make sense. But the magic number for the North Falkland Basin, as opposed to the much deeper waters south and east of the Falkland Islands, is as low as $25 or $30 per barrel.

The question for us now is not whether there is oil in the North Falkland Basin, the question is whether you can find enough oil that flows quickly enough to commercialise it.

To try and answer that question Rockhopper has been relentless in surveying its acreage. Since 2004 it has conducted two 2D seismic surveys totalling around 1,500 sq km. Those were followed by 850 sq km of 3D seismic over the earlier Shell discovery, which at the time was the biggest 3D survey ever done in the Falklands. There have also been four controlled source electromagnetic (CSEM) lines.

All the work weve done in the past has led us to believe that there is a good chance of finding commercial hydrocarbons in the North Falklands basin, he says.

Of course theres no guarantee, but its a good starting point. What I would say is that at every stage of the exploration its just looked a little bit better than it did before. So weve been very pleased with the work that weve done.

With interpretation of the 3D seismic drawing to a close, Moodys team is now beginning to tackle the problem of how to pay for test wells. At IPO in the summer of 2005 the company was only ever funded to carry out seismic and other exploratory work over its acreage it was never funded to actually pay for the wells.

In terms of the farm-in programme, people are interested in looking at the data and some of those companies are of a pretty meaningful size but its just too early to say, Moody says.

Timescales? I think wed like to try and get something wrapped up by the end of this calendar year if possible. We will either choose to farm out or contract a rig and drill the wells ourselves with money from the City. Thats the current timetable.

Rock and roll

Moodys confidence in Rockhoppers capacity to raise cash is well founded as recently as May this year it propped up its working capital funds with a 3.6 million share placing. He believes a combination of factors help the City discern the quality of the various companies that it chooses to invest in.

If you look at the quality of the acreage that Rockhopper has got, the quality of the work that we have done, the quality of the board, it gives the City an extra hint of confidence in the company, he says.

Thats not to say it will definitely work, because you can never say that, but we think weve got a high quality offering with a good ratio of risk to reward. We think the City will be able to see that and our recent fundraising would demonstrate that to be the case.

That just leaves the question of a discovery. Again, Moody takes a balanced view relaxed on the prospect of either shifting gear and becoming a full production operation or selling to a bigger player.

At that point you would need to talk to shareholders, he says. It depends on where the moment of maximum value for shareholders is and that can either be at the moment of a discovery or when the first drop of oil is produced.

But he is also aware that Rockhopper is not alone even in the North Falkland Basin, where there are presently two other companies operating: AIM-listed Desire Petroleum plc and private operation Argos Evergreen Ltd. In the south and the east of the Falklands there is Falklands Oil & Gas Ltd and Borders & Southern Petroleum plc.

But Rockhopper has fared well in its time as a public company. Currently capitalised at around 53m, the company raised 15m on listing at 42p per share. The recent fundraising raised 3.8m at 101p per share.

I think the AIM market has worked pretty well for us and weve had a respectable share price performance, Moody says. Weve had good liquidity on our stock this year probably turning over about 50m shares in the market out of about 80m shares in issue.

Weve got better liquidity than a lot of AIM companies which is a pretty positive sign for us because some AIM companies can suffer from a lack of liquidity.

Weve done everything weve ever said we were going to do and a bit more, and I think thats what shareholders are looking for.

Ben Hobson, SmallCapNews.co.uk

http://www.fairplay.co.uk/login.aspx?reason=denied_empty&script_name=/secure/displayMagArticles.aspx&articlename=fpnw20080515009nw&phrase=phipps

ONE OF John Frederiksens companies is about to join the race to open up the vast oil reserves believed to be beneath the Falkland Islands.

Arcadia Petroleum is said to have reached a farm-in accord with Desire Petroleum, which has been exploring in the North Falkland Basin. The area is thought to contain more than 14Bn barrels of recoverable oil.

Arcadia is an oil trading and ship management company that belongs to the same group as other Frederiksen companies such as Frontline and Golar LNG. It has offices in London and Singapore.

Under the farm-in deal, Arcadia would pay to drill two wells that would be exploited jointly; Desire would use the same rig to drill another two wells on its own account.

Desire chairman Stephen Phipps told Fairplay that he could not comment on the deal until separate talks are completed with the Falklands government. He did say, however: We have yet to find a floating rig to do the drilling. Owing to the cost of the project, we may have to collaborate with some of the other companies drilling down there.

If workers find a rig and get it down to the South Atlantic, he would hope that drilling can begin before the end of 2008.

That would put his workers ahead of another partnership that is also exploring in the same region. Falkland Oil & Gas has come to a similar accord with BHP Billiton and hopes to begin drilling in 2010.

Desire was founded by Falkland business interests and has been searching for oil since 1996. Owing to the low cost of a barrel, extraction was then unfeasible.

But todays soaring oil cost has made it an attractive proposition: oil is trading about $120 a barrel.

This old news from May 2008

Keep pumping marky.

Was thinkling of you to day Halifax i saw a loaf of bread with the words thick cut on it.

lol......bread aint that thick surely, markymar

lol Scot,Halifax is a proper thicky hence he bought FOGL shares ....there is always one mug

Marky just to make you feel better I took my nice profit on FOGL at 149p as I didnt see any upside in Falkland oilies for another year as no rigs in sight. Dont understand how DES sp is so high as they havent delivered on their farm out rumour.
Never the less FOGL is by far the best bet with BHP/BLT as their partner. What have DES and RKP got so far just wind and...... and there is certainly plenty of that in the Falkland Islands.