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

Topped up last couple days , 14k of shares ! Hope it works out !!

Anybody any thoughts.

Is there any advantage, given the same deal and terms, to Shell being Desires
farmin partner as opposed to say Talisman (or whoever).

Are there farmin partners more suited than others to a company like desire.

Hi all

Not much gone on today. Des didn't seem to trade bellow 0.52p, so may be getting some support at this level. The lowes of the past three days have got higher but the high hasn't moved up past 0.55p. So it looks like the proffit takers have reduced. Just need buyers to get going again. I think up or sideways for tomorrow. Lets hope for up!

Good Luck All

Eddie

I think there are quite a few potential drilling co-venturers around at the moment due to the return of sentiment for the Falklands. However, it all depends on people signing up for the adventure. I guess that is the first stage.

I'm sure Desire would like to drill in 2005, rig rates will increase beyond then so it would be a good move. The more wells, the more partners, the cheaper it is for everyone and success will come earlier, but commitment is required! It all boils down to cost, .. .. .. dollars.

Marky, do you consider it likely that Desire would move forward with only one farmin partner rather than a consortium of "smaller" companies?

Surely we stand a better chance of a good deal through negotiation with only one party.

Your thoughts (or others) are very welcome

is there any history of farmin partners being split, to kick start projects like this? If you can get the support of one major then that has got to be good for stability and long term investment plus would stop wrangling with competition? That is if a major is interested in DES.......any comment/light

watcher

Yesterday on Bloomberg Shell said that it was allocating $3 billion for exploration in the Asia, Pacific region where ever that is. So don't think they will be partners with DES.

MS

I think they are likely to partner up with desire, because this is such a rich source area and Desire have the rights, they're sitting on a massive asset which once finance obtained or farm ins negotiated, (my guess is that they'll go it alone on half of it by way of further share issues), will rocket the share price up into pounds rather than pence, and lets face it, most oil majors need a big new field to sustain reserves in the coming years. I think they'll soon announce one or two deals, maybe before Xmas.

robstuff, in business terms that probably means we are round the table next week with desire and keeps the competition away. You can't beat a bit of curve ball negating to make the news release a bigger splashdown than the normal. still predicting before christmas would be great news

watcher

Hi all

Well unfortunatly DES went down today. Look on the bright side so did most of the main indices. This means that DES isn't out of favour it's just the market wasn't putting money in. Trading in DES was low. Total buy's 371.122. Total sell 748.122. Total unknown 32.482. Total trades of 1.153 million. On the 11/11/04 the trades total was 18 million. This came on the back of Desires good news anouncment. So to me it looks like its mainly the small share holders going into panic. It was the 100,000 share buy at the end that saved DES from closing at 0.49p. So lets look forward to next week. Who knows, maybe we might have some good news to fuel this rocket.

Any thoughts anyone?

Good Luck All

Eddie

I will continue to hold at an average of 40p until the next news when they should spurt to 60p again...next week we can expect further news so no problems .

Mitzy

Don't see Des going near 0.40p, only bad news could take it to 0.40p. It's good news were waiting for, so up is the direction of DES!

Anyone else with thoughts?

Good Luck All

Eddie

I would recommend fellow investors having a look at the DES BB there. Some very good information, debate and thoughts being posted.
For what its worth I thought I would copy my comments I posted on iii BB earlier today:
I hope you will forgive me if this information has previously been posted. As we begin the wait for further news from Desire, (and top-up as we go!) I decided to do a little general research. Perhaps new investors may find this background information useful. With FOGL recently floating, Desires recent annoucement and then the advertisement in the Shares magazine this week for a prospectus on Falklands Gold & Minerals, this backwater is rapidly coming to the fore!

I had a look at http://www.bgs.ac.uk/programmes/landres/csm/pmg_f alk2.htm which gives a overview of the licences and previous drilling and charts etc. An important point is also made about the potential environmental impact of oil extraction. I wont post the whole article but a couple of points struck me reading through it:
1) 6 wells drilled in North Falkland Basin - 5 with shows, one with oil recovered to surface.
2) Significant levels of gas were also recorded in some wells.
3) These source rocks are of world-class quality.
4) Up to 60 billion barrels of oil may have been generated in the basin. This figure is based on the source rock pyrolysis data obtained from the wells, and assumes a 400 m thick mature interval at the base of the source succession, extending over an area of 40 km by 40 km. However, even when the calculations are based on much more conservative figures for the thickness and extent of the mature source and the richness and generative potential of the kerogens, significant amounts of expulsion are also calculated. For example, a 200 m thick mature zone, over an area of 35 km by 12 km, may have expelled over 11.5 billion barrels of oil, even at oil yields of 8 kg HC/tonne, which are towards the low end of those observed by rock-eval pyrolysis for this basin.
Also looked at http://www.falklands-oil.com where the following succint points are made (I suppose you would expect them to say some of this!):
The Falkland Islands are:
1. A British Overseas Territory;
2. Self-governing;
3. An easy place to do business.
Petroleum summary:
1. This is a petroleum province in its infancy;
2. There are several under-explored and undrilled basins;
3. We have a world-class source rock;
4. Several working petroleum systems have been proven;
5. Only 6 wells all in very small area all tested same play;
6. Live oil has been recovered to surface;
7. There are numerous undrilled targets > 200 MM bbls;
8. We have top quartile fiscal terms;
9. New licences and farm-ins are available;
10. We promote easy data access;
11. There are benign drilling conditions.
Onshore Minerals summary:
1. Exploration is underway for gold and diamonds;
2. Promising indicators have been found in stream and sediment samples;
3. Progress is being made towards exploitation.

Despite all that detractors may say, I dont think anyone would dispute the facts that the oil potential off the Falklands is huge, world demand is currently insatiable and the price of oil high. Whether Desire Petroleum is worth 30m or 100m, someone is going to get that oil and Desire currently holds some of the licences. Thats what makes DES a Must Have for long-term investors and next year will be very interesting. I wonder what the Islanders make of all this? Life is going to change very significantly for them in the not too distant future.
Perhaps its time to invest in a Buy-to-Let property in Port Stanley as well!?

Mitzy - Have you any reason to expect news next week? It would be nice but this would be earlier than "we" anticipated - just wondered if you have any indications of this.
Good weekend all!

Also i would like to put a post on this board from oil brat who posted this on iii tonight and think one of the best post i have read and agree with this post 100%

OIL BRATS POST


Whats this talk of a sliding oil price??? The current price is still a record compared to any other year, (possibly not if you adjust the 81 spike for inflation). Anyway you look at it is very high.

The majors will be taking five year plus views of a prospect not and intra week look. The oil price is over the profit margin for the Falklands and has been for the last few years. There are two types of drilling for the majors. Development drilling to harness the reserves they have already booked, ie increased daily field out put. The other type is exploration drilling to find new bookable reserves.

We have been using approximately 4 barrels of oil for every 1 barrel we find, (verses time), since the late 70s. Well guess what, that cant continue indefinitely, especially with the methods used to calculate reserves coming under question, (Shells recent debacle, five times no less!!). There has been very little drilling in the exploration sector in the last two to three years, but in the last six months we have seen that start to reverse. However the development drilling has been bonkers over the last nine months. Everyone is very busy and service companies are turning down work. This will have the short term effect of increasing production and lowering the oil price, but I dont see it crashing the oil price. In a couple of years when the production curve from the wells being drilled now has quartered we will be in the same boat but with less proven reserves.

One other point has world demand peaked, not a chance. It will be more next year and the year after. We are very close to the Hubbard Peak, (if you dont know what that is search for it on the net, if it doesnt scare you then you are either a billionaire or in your late nineties). Getting bookable reserves are a must for the majors, especially Shell.

Is Desire worth 100m market cap? No its not, its tangible assets are worth a ballpark figure of 15m, which is what Id expect someone to pay for the data they have and the earth model / interpretation, and youd have to throw a little on for the acreage. That is a liquidation price. If they have a find then they are worth several possibly even many billions. I know Ill get grief for that comment but it is roughly true. Find one, youll find more, in this scenario. Find one 400m bbls recoverable field and youll find a 3000m bbls plus recoverable province. Currently they are worth 10-15p but their potential is in the 40 quid mark may be more. So its a balance. I am 95+ % certain that there is oil down there, they found oil last time and the necessary traps and reservoirs they just didnt find them in conjunction, eventually they or someone else will. To me its geologically inconceivable that there are not oil fields down there, based on the data Ive seen from the 98 campaign. Its possible that there will not be a find on the next drilling campaign or the one after that, but they will find it eventually. If a rig was on location to start drilling tomorrow we would see the price at 150-200p, (again no pound sign on the damn yankee keyboard), as that will happen eventually they are worth somewhere between 15p and 40,000p. Currently we are at 50p with the near term hope that it will be 200p. Id think somewhere nearer 100p would be not unreasonable right now.

Hi all

Well thanks for that SALKELDJP. It makes some interesting reading, anything else on your news board you might want to share with us?

Good Luck All

Eddie

Hi All

Thanks MARKYMAR. Your input is appreciated! MARKYMAR are you sure you didn't hold down the zero key 15p to 40,000p seems quite a big jump? So more thinkers than I thought.

Good Luck All

Eddie

Nope i keep telling JP to add a 0 and he will very soon and am giving LG time as asked.

Thanks for the postings everyone. Very Interesting . Please keep news , info coming .
Good luck next week everyone
Berlingo

I am predicting an oil price of up to $80 a barrel by end 2005 and no slide in the short term out look..all bodes well for oil explorers and DES in particular.

Hi all

Just added a 0 to my portfolio. I feel much better! Thanks MARKYMAR it's good for me. Thanks for all your input. Seems like we think next week will be better.

Any more thoughts?

Good Luck All

Eddie