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

http://www.guardian.co.uk/uk/2009/jan/28/falkland-islands-oil-drilling-impact/print

Falklands' new dawn: islanders plan future around 18bn barrels of oil

Oliver Balch in Port Stanley guardian.co.uk, Thursday 29 January 2009 00.05 GMT

Article historyEarly evening chatter in the Victory bar in Port Stanley used to touch on squid hauls and cruise liner schedules. Now, as the locals sip on imported pints of British beer, a far more lucrative proposition is grabbing their attention: oil.

According to the latest seismic surveys, the Falkland islands are sitting on an estimated 18bn barrels. Prospecting companies operating on the islands say they plan to start drilling later this year. With an already affluent population of about 3,000, Falklanders are anticipating a windfall that could make them one of the richest populations on the planet.

"Even if they [the oilfields] produce [only] a billion barrels of oil, the impacts in terms of revenues per head for the Falkland Islands is going to be gigantic," says Sam Moody, managing director of Rockhopper Exploration, one of the three companies with exploration rights to the Falklands.

But the Falklanders aren't quite the oil barons of South America yet. Several obstacles lie in their way. The first is whether the estimates prove to be true - and that will mean getting hold of a rig for preliminary drilling. During the oil price boom, rigs were prohibitively expensive, costing as much as $600,000 per day. But with oil prices coming back down, rigs are becoming more available, and concession holders are confident one can be procured.

Then there is the question of economics. Earlier attempts to prospect in the mid-1990s were abandoned when oil prices crashed below $10 a barrel.

These days, prospectors are sanguine about the latest drop in oil prices. Ben Brewerton, a spokesman for Falkland Oil and Gas, says that drilling would still be viable at prices as low as $20 per barrel, given the size of the expected finds.

The risk of spills and other environmental fallouts represents another possible threat to the oil industry's progress. As well as being a haven for penguins and seals, the Falklands boasts the world's largest breeding population of the black-browed albatross.

Phyl Rendell, director of minerals and agriculture for the Falklands, says the islands' authorities are requiring the highest environmental requirements for oil operators.

More worrying is the political risk. Three hundred miles away to the west sits Argentina, which sparked a 10-week war with the UK after invading the Falklands in 1982. Argentina continues to claim sovereignty over the islands and their natural resources. "It doesn't matter what we do in the Falklands islands, whether its developing our natural resources or strengthening our democracy, they complain about it," grumbles Mike Summers, a member of the Falklands' legislative assembly.

In Argentina, tension is brewing. The foreign ministry has already withdrawn from a joint agreement with the UK to coordinate oil exploration in the South Atlantic. It has also banned any oil company or contractor firm operating in Argentina from participating in projects in the Falklands.

Falklanders have experienced rapid economic change before. After the 1982 war, a 200-nautical mile zone was established around the islands to encourage commercial fishing. Within a few years, government revenue jumped from about 5m a year to 30m. Today, the figure is closer to 45m. "We're not unused to the idea of change," Summers notes in reference to the fishing boom. "Although with oil we're talking about a different level of magnitude."

Residents are already speculating on how the anticipated windfall should be spent. Under agreements signed with the oil prospectors, the Falklands will receive a 21% corporate tax and 9% royalties on all oil and gas produced.

Government officials are studying the experience of other small, oil-rich communities such as the Shetland islands, which benefited from the North Sea oil boom and set up a charitable fund with their oil bonanza to finance leisure centres and other community projects.

The Falklands could certainly use something similar. They have no theatre, only a handful of restaurants and precious little nightlife. A more comprehensive road network and a bigger port also appear high on wish-lists. A cinema would be a welcome addition too: at present the only widescreen is on the islands' military base, 35 miles down a gravel road.

"You can list the amount of amenities we haven't got until the cows come home," says Adam Cockwell, a 34-year-old ferry operator.

For now though, no one is promising anything. As Rendell says: "We've been careful not to plan for something we might never get."

http://www.falklandnews.com/public/story.cfm?get=5293&source=3

Falklands' Man Fined for Insider Trading

http://www.telegraph.co.uk/news/obituaries/4528103/Colin-Phipps.html

Obituaries

Colin Phipps
Colin Phipps, who died on January 10 aged 74, was a pioneer of Britain's independent oil production industry and for five years a Labour MP; jovial, bearded and unflappable, he bestrode the divide between politics and business, campaigning for Labour from his Rolls-Royce before helping to found the SDP.

Operational Update:
"Submission of Environmental Impact Assessment (EIA)

The Environmental Impact Assessment covering its southern licences in Tranches I and L and PL 034 is now substantially complete and will be ready shortly for submission to the Falkland Islands Government (FIG) for approval. This is slightly behind schedule due to a delay in receiving the results of the analysis of the benthic samples acquired last year. Desire already has a FIG approved EIA covering its northern licences in Tranches C and D.

A further update to this progress will be provided in the Company's Preliminary Results announcement in April 2009.

Update on Global Rig Market
The global economic downturn has had a marked effect on the drilling rig market, with utilisation figures decreasing for all types of rig. Most availability that has appeared over the last three months is on the basis of sub lease on existing contracts, where the holder of the term contract is looking to reduce exploration expenditure, thereby creating gaps in their programmes. Whilst some of these opportunities are attractive from a rig and timing standpoint, the rates for these units remain at the original contracted rate, as the incumbent operators are currently reticent to subsidise other drilling activities outside of their own.

However, Desire is seeing the first sign of rigs becoming available on the open market, either through contract default or end of primary contract terms, and more importantly the first indications that rates are reducing, albeit slowly. The forecast for rig activity throughout 2009 is for a reduction which is supported by the willingness of contractors to enter into discussions that were not possible three months ago. Several discussions are ongoing at the present time and it is envisaged more opportunities will present themselves in the near future. There are many factors to be taken into consideration before executing a rig contract, many of these exacerbated further by the location of the Falkland Islands, however, the most important of these remains the commercial terms. Given the information currently available to Desire it would be remiss not to evaluate all opportunities fully in order to ensure shareholder value is maximised. With US$38 million in cash and a likely four well programme,the Company is in a strong position to negotiate a very attractive contract.

Despite the falling oil price the fundamentals of Desire's projects remain unchanged and with our very attractive prospects the economics of any discoveries will be exciting."

If the oil price had not come down so steeply, goodness knows when we would have ever got a rig.As it is, hopefully we might manage to hire one sometime this year.

More delays expected in DES, I guess. Not an optimistic update.

Well if they don't contract a rig soon winter will be upon them and yet another year will have gone by without anything tangible happening.

That is usual for DES...it has been waiting for a rig for a very long time. Hasta manana seems to be its lifestyle.

http://www.offshore247.com/news/art.aspx?Id=12911

Desire hopeful for Falklands rig deal

South Atlantic explorer Desire Petroleum has held out the hope of getting a good deal for a four-well drilling programme in the North Falklands and says it is getting close to submitting an environmental impact assessment for the region.

Desire says the EIA covering three licence areas, in Tranches I, L, and in PL034 in the North Falkland basin is now substantially complete and will be submitted soon to the Falklands Island Government for approval. A further update has been promised by Desire in April when it publishes its preliminary results.

Turning to the rig market, Desire says the global economic downturn has had a marked effect on the sector with drilling units now becoming available as sub-lets from existing rig contract holders, but the prices for those drilling units are still at the original dayrates and are therefore less attractive.

However, Desire is seeing the first sign of rigs becoming available on the open market, either through contract default or end of primary contract terms, and more importantly the first indications that rates are reducing, albeit slowly, the company declared.

Reinforcing its belief in its strategy for a North Falklands exploration programme, Desire points out it has 39 m in cash and with plans for a four well programme, believes it is in a good position to negotiate a very attractive contract.

Old news marky!

Coccydynia Halifax

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

Dr Colin Phipps
Obituary

I thought you were going to say Des obituary. It would have been appropriate in the cicumstances.

I've waited for so long before buying today.

Any particular reason? It looks to be sideways trading here for a while imo.

mitzy if we drill this year you will laugh at the price you bought at today.

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

Just a hunch Harry....what price target do you have marky..?

Mitzy

At the moment no oil in commercial quantities has been found so at the moment all desires prospects are valued at very little but when Desire do resume drilling and they are successful in discovering commercial quantities of oil then every other prospect will get a value even though it may not of been drilled.

When a oil rig gets to the Falklands and before the drill bit goes in am sure you will see a share price of between 2 to 5 and if they hit oil it will go ballistic.

marky with availability of rigs easing and rates coming down don't you think FOGL with the resources of BHP/BLT behind them will be the first to drill?

Halifax

Who knows, I know there is a operators meeting to be held over in the Falklands in the near future where all operators of all oil companies and partners will be across there.

Who ever drills first will have a knock on affect on all other oil companies share price but once that EIA report is passed Desire are drill ready on all targets they wish to drill.

FOGL still need to pass the hat around to secure more money to fund a drilling campaign and there is still a lot more work to be done in the background

My money is still on Desire to drill first with Rockhopper and I think it will be this year.