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

From Jac on iii who i respect as a poster.

Spoke to Ben Romney 10 mins ago and asked him about the recent mini price rise and whether it was significant with regards to next week and a rig etc etc.
He said we will be given a full overview with regards to the rig situation but obviously could not go into specifics now but that retail investors would have a full picture of what was happenning(whatever that means!)
I asked him talks were still ongoing and he said that they were but that we would be fully enlightened on wednesday to what the position is and what is going to happen!
Good luck everyone!

news will be a relief tomorrow afternoon for many old timers....including you dit...wherever you are.

Preliminary Results

http://moneyam.uk-wire.com/cgi-bin/articles/200904220700119388Q.html

MoneyAM
"North Falkland Basin-focused oil explorer Desire Petroleum posts a pre-tax loss of $1.8m after a "frustrating year".

Results for the year to the end of December show the loss increasing from $0.6m in 2007 with the firm having cash in hand of around $40m.

Chairman Stephen Phipps said 2008 was an excellent year of progress, building the prospect inventory and attracting a substantial new partner.

But he added: "Frustratingly, we were unable to hire a rig to drill on behalf of us and our partners in the North Falkland Basin.

"Notwithstanding the general unavailability of rigs due to the high utilisation rates and the resulting very high day rates, we were also hampered by the rig owner's demands for long term contract times (typically two to three years), and their reluctance to commit to a rig programme in the remote location that is the North Falkland Basin." "

Desire Petroleum (DES), the oil and gas company focused on the Falkland Islands, said it made a loss of 1.77 million dollars for the year to 31st December 2008 on the back of a 44.6% fall in revenues to 1.14 million dollars for the period. Shares in the company fell 0.5p to 35.25p on the news. The company which agreed a farm-in partnership with Arcadia Petroleum earlier this year said its results were impacted by problems it faced in hiring rigs for its projects in the North Falklands basin. The firm said it has 15 prospects in inventory and 40 million dollars in cash to take advantage of opportunities on the site. Desire Chairman Stephen Phipps said: The biggest challenge facing Desire over the next months is to secure a suitable rig at a suitable price from as close to the North Falkland Basin as possible. The deepening global economic recession is having a noticeable impact on the drilling rig market.Despite the oil price fall the fundamentals of Desire's projects remain unchanged and with our very attractive prospects the economics of any discovery should be exciting. Commenting on the news, Broker Seymour Pierce said: Four top prospects have been selected for drilling first and these have a combined gross reserve potential of a massive 3.3 billion barrels in oil equivalent terms. With the rig market continuing to soften we feel it is increasingly likely that a rig will be secured on acceptable terms and that is when the excitement begins. However, now is the time to buy the shares.

Desire still hunts for rig

http://www.investorschronicle.co.uk/Companies/ByEvent/Results/default/article/20090428/e4caafa2-3011-11de-b6eb-00144f2af8e8/Desire-still-hunts-for-rig.jsp

Created: 28 April 2009 Written by: Martin Li

Having identified four top exploration prospects in the South Falklands Basin, Desire Petroleum chairman Stephen Phipps is disappointed that the company still hasn't been able to secure a drilling rig.

The biggest challenge remains persuading a rig owner to float a platform down to the Falklands at a commercially viable rate, as the remoteness of the Falklands makes it time-consuming and, therefore, expensive to get a platform there. Mr Phipps believes Africa to be the best source and is in discussions with several owners - he remains optimistic as rig demand and rates are falling, while sharing a platform with a fellow Falklands explorer would spread the 'mob/demob' costs. In fact, the sales of interests to Arcadia Petroleum and fellow Falklands explorer Rockhopper Exploration will allow Desire to drill two wells at no cost, while existing cash should be enough to cover the costs of the other two initial wells.

Mr Phipps doesn't think the technical challenges of drilling in the South Falklands are insurmountable, either - water depths are 200 to 400m, against a maximum drill depth of 2,600m, and the climate isn't extreme. However, it might be a different matter if Desire were to make a discovery. A gas find would require pipelines or liquefaction, and could be a major technical challenge, although after several frustrating years this would, at least, be a good problem to have.

From Morani who lives in the Falklands

The following is a personal account of the Desire Petroleum meeting in the Chamber of Commerce FI, Tuesday 5th May. Same caveat applies as before regards unintentional inaccuracies for which I apologise. It was a smaller meeting. Other than locals, including LC, there were a few other oil boffins but no Councillors. Mr Stephen Phipps, and the Chief Executive, Dr Ian Duncan who are attending a week of Falkland Offshore Operators meetings, did the presentation. Really Ian did the presentation with just a few words from Stephen here and there.
The presentation overall, clarified where Desire has got to and what the prospects are (which should help further discussion to this BB). They have farmed out 3 of their 15 prospects to Arcadia. A major gas presence has also been identified as well as oil. They have 4 top prospect sites which are known as Ann, Liz, Dawn and Alpha. Desire currently have $40M in cash but any profit and loss depends entirely on the exchange rate. Their licences are in hand until 2012/13 and they have also bought and own the casing and well heads for 4 wells which they have back in UK. There are about 11,000 Desire shareholders of which approx 200 are in the Falklands. The north Falklands basin is known as a rift basin and rifts are known to be very prolific elsewhere. The 1998 drilling identified a very good type of source rock. They feel they need to drill a minimum of 4 wells to have a decent shot at it and they kept saying there was also significant potential for gas too. They don't expect to have to drill more than 450 m depth and that is quite shallow compared to other places. They would expect to take about 12 days to drill the Alpha well which has the largest gas potential and is in the south. They have Tranches C & D in the north Falklands basin. I then missed a bit but 80% of something (either one of the prospective drillings or the drillings overall) would go to Arcadia and 20% to Desire. Dawn is expected to be the other gas well and that is 100% Desire. 30% of Alpha would go to Desire and 70% to Arcadia. Drilling at 2 of these wells would be at no cost to Desire at all. In 1998, Ann showed good oil prospects as 14/9-1 then. Liz could be expected to yield 600M barrels and I have got that one down as 92.5% and Ann as 57.5% but I am not sure why now-,must have missed another bit, apologies. Think they are hoping for a total of something like 3B barrels.
The big problem is still getting a rig and they are not as readily available as one might expect. They would cost $400,000 per day and as we are so remote, a lot of the cost would be taken up in getting it here and away again - mob and demob as they call it. To get one from the north sea would take 75 days one way, 18 days from Brazil and 35 days from South Africa. That seems the most likely at the moment as they have talked endlessly to Brazil but get no nearer to any agreement. We need the oil prices to stay down to make the availability of a rig more likely and more negotiable although they are starting to get offers. They did say they want to get on with drilling as soon as possible before they become old men (and us too) but until they can get an affordable rig, we all seem to be in limbo!
Q What would happen if the licences expire in 2012/13 and there has been no drilling by then?
A - Be nice to Phyl Rendell.
Q Is there a possibility of them changing their priorities if they hit something exciting when drilling starts?
A There will be flexibility if it is needed. Stephen Phipps said if they strike something exciting, they would hope to move on quickly.
Q What of the Argentine claim to the seabed?
A It was not unexpected and the Foreign Office will probably(!) counter claim but it all may take up to 10 years.
Q Do the oil prices reflect the rig prices?
A Keep hoping for low prices as it does reflect.
Q Minimum cost of a rig.
A $420,000 per day but with costs more like $700,000 per day.
Stephen Phipps said rig companies are starting to phone and negotiate. He added that the market will always go down eventually.
Q Would it be better for Desire to find oil or better for it to be found by someone else?
A Desire is not waiting for farm in partners and not expecting anyone else to turn up. They will go ahead as soon as possible.
Q What do you mean by not expecting anyone else to turn up.
A - Not expecting BP or anyone else to appear. Will go ahead alone as soon as possible. They can drill 4 wells on their own.
Stephen Phipps commented on having to wait for 12 years now and just wanting to get on with it before we all get any older. Hope that helps.

http://www.sartma.com/art_6479.html

A shareholders meeting on behalf of Desire Petroleum was held at the Chamber of Commerce on Tuesday, 05 May 2009. Stephen Phipps welcomed shareholders to the meeting and Ian Duncan presented the 2008 report.



Mr Duncan said that Desires licence would run out in 2013but if hydrocarbons were discovered it could last longer. Desire plans to drill 4 exploratory wells but will only pay towards two of them. Desire have already purchased well heads and other necessary equipment but have $40 Million to spend on exploration. Arcadia will pay for 100% of the Ann prospect and 85% of the Liz prospect as well as 100% of the Alpha prospect. Desire will pay for 100% of the Dawn respect and 15% of the Liz prospect.



Prospects to be drilled will be through or close to mature, world-class source rock.



It is hoped that a semi-submersible rig can be found to do exploratory drilling. Ian Duncan has pointed out that the longer a rig has to travel, the more expensive it will be. However, getting one from Brazil is not likely due to prioritising and tightness of the market. Perhaps one can be found in South Africa.



Mr Duncan went on to say that challenges include remoteness, willingness of contractors and support.



Stephen Phipps concluded that the Falklands are a major oil province but that we should hope for low oil prices so that the rig market wont tighten up again. He concluded that while the Companies are down here drilling, they might as well stay as it was not cost-effective and would take a lot of time should only one exploratory well be drilled and abandoned.

Marymar,

Many thanks for your 'very' informative post. I hold in FKL, so have an interest in all those companies connected to the Falkland exploration area. Although moving very slowly (like watching paint dry), all these companies appear to be moving forward. My bet is that when one of these companies get a rig on site (especially if drill results come quickly and positively) this will assist the other companies. If oil is found in sufficient quantities, this will draw other rigs to the area. If no oil or/and insignificant quantities are found, this could mean a cheaper deal for the others as the rig would already be on site (as Mr Phipps stated)..
All it needs is that one important result. As soon as a rig is secured, the sp of most, even those who have not secured, will start moving upward.
If/once oil does starts to flow well who knows.
Once again thanks for your post.

Regards Greek.

http://en.mercopress.com/2009/05/08/oil-companies-delegation-visits-falklands-in-anticipation-of-drilling

Friday, May 8th 2009 - 6:20 pm UTC

Oil companies delegation visits Falklands in anticipation of drilling


Representatives of oil companies intending to drill in North and South basins around the Falkland Islands say they are, as confident as they can be in an exploration setting, that they will be successful in their endeavour to recover oil in commercial quantities.


Sam Moody of Rockhopper Exploration; Stephen Phipps of Desire Petroleum and John Hogan Argos Resources in Stanley



Eleven representatives from Desire Petroleum, Argos Resources, Rockhopper Exploration, BHP Billiton and Borders and Southern Petroleum spent between five and seven days in the Falklands this week.

Asked if they were anticipating any particular problems, Dr John Hogan, Chief Executive Argos Resources, said, Drilling here is easy for us we can benefit from the history and drilling is fast.

A 3.000 m dry hole can be drilled in about 20 days. Drilling rates are high, there are no unusual near-bottom currents, no known gas hazards and rock is not dense.

The companies are also not expecting problems from the harsh South Atlantic weather as drilling has been shown to be almost unaffected by weather and currents.

The delegation was complimentary about Falklands officialdom, Mr Stephen Phipps of Desire Petroleum said, Everyone has been very co-operative, there is a can do attitude here.

The companies are actively seeking a drilling rig and intend to share it between them a semi submersible was used during the last drilling round and it is likely that a similar rig will be used in the North Falkland basin.

With oil prices currently coming down the companies see this as helpful in terms of reducing the cost of rigs.

The oil companies representatives spent their time in the Falklands talking to Government officials, H E the Governor of the Falklands and members of the Islands business community. They also attended a public meeting on the subject of the Environmental Impact Assessment.

Mr Sam Moody, Managing Director Rockhopper Exploration, commented, We had a very positive reaction at the public meeting. Everyone seemed very pleased with the amount of in depth planning we have undertaken.

The last drilling round was in 1998. Five of the six wells drilled had oil and/or gas shows: one recovered live oil to surface and another encountered significant gas.

According to the Falkland Islands Government Department of Mineral Resources, Post-mortem analyses suggest that only one play type was drilled. It was on the worst possible migration route, above a regional seal. There is a proven, world-class source rock, plus other petroleum systems. There are numerous untested play concepts, targets and reservoir levels. Exploration in the basin is in its infancy.

http://www.guardian.co.uk/world/2009/may/11/uk-falklands-argentina-un

UK stakes claim to huge area of South Atlantic seabedUN submission heralds battle with Argentina over mineral rights

Owen Bowcott guardian.co.uk, Monday 11 May 2009 18.11 BST Article

historyA vast tract of the South Atlantic seabed rich in oil and minerals was formally claimed by the United Kingdom today in defiance of Argentinian opposition.

The submission to the United Nations commission on the limits of the continental shelf has been issued two weeks after the government in Buenos Aires lodged its application to extend control over an almost identical area of underwater territory.

The British claim is contained in a 63-page document that will be posted on the UN's website. It defines the precise limits of the extended continental shelf area around the Falkland Islands, South Georgia and the South Sandwich Islands.

The islands are all British overseas territories, although ownership is disputed by Argentina. The Foreign Office minister Lord Malloch-Brown said: "Successful completion of this process will confirm the boundaries of the UK's jurisdiction over its continental shelf, thus ensuring our sovereign rights to manage the shelf for future generations."

The UK document deals concisely with the Argentinian counter-claim, stating: "The UK has no doubt about its sovereignty over the Falkland Islands, South Georgia and the South Sandwich Islands and the surrounding maritime area."

The submission is one of several last-minute claims for millions of square kilometres of the ocean floor that have arrived at the UN's New York office before an international deadline 13 May for demarcating possession of extended continental shelves.

In the past two weeks, Ghana, Pakistan, Norway, South Africa, Iceland, Denmark, France, Vietnam, Nigeria, Sri Lanka, Kenya and others have delivered boxes of documents to the UN in the hope of securing valuable oil, gas and mineral resources around the world.

The hefty files of detailed paperwork one Australian submission ran to 80 volumes are the culmination of years of underwater exploration by each state, plotting submarine contours that mark the outer edges of the continental shelf.

The complex rules of the UN convention on the law of the sea allow states to extend their control and exploitation of the seabed beyond the traditional 200 nautical mile limit and up to 350 nautical miles offshore.The precise extent of each claim frequently involves establishing the foot of an underwater continental slope, thousands of feet down in the chilly, dark oceans and then measuring 60 miles outward.

Some claims, usually the legacies of unresolved international conflicts, are mutually exclusive, generating fresh diplomatic unease along the fissure lines of ancient boundary disputes.

As well as the overlapping claims for the Falklands, South Georgia and the South Sandwich Islands in the South Atlantic, a dispute has emerged between France and Canada over claims to be presented for the seabed surrounding St Pierre and Miquelon, a small archipelago off the coast of Newfoundland. The French have also raised hackles by claiming the seabed near their Pacific island territories.

The 13 May deadline applies only to those states that were signatories of the original treaty 10 years ago. Other states, which signed later, have more time left to submit their claims.

The US has still not ratified the UN convention, but the prospect of neighbouring countries such as Canada and Russia carving up the seabed for exploration is rapidly shifting opinion in Washington.

Greenpeace and other marine environmental groups have derided the process as a series of colonial land grabs. Britain has submitted several major claims, all in the Atlantic. They are around Ascension Island, in the waters near the Falkland Islands, South Georgia and the South Sandwich Islands and in the Hatton-Rockall Basin to the west of Scotland.

The UK has signalled its interest in the continental shelf that slopes away from the British Antarctic Territory. All territorial claims at the south pole are, however, formally frozen by the Antarctic Treaty, to which the UK is a signatory.

Britain, France, Spain and Ireland have also lodged a shared submission for a 31,000 square mile tract of the ocean floor on the edge of the Bay of Biscay.

http://www.falklandnews.com/public/story.cfm?get=5374&source=3

OIL OPERATORS COMPLETE THEIR FALKLANDS VISIT
May 13, 2009
by By J. Brock (FINN)

OIL OPERATORS COMPLETE THEIR FALKLANDS VISIT
By J. Brock (FINN)


Representatives from several oil exploration companies have spent a week in the Falklands presenting their Environmental Impact Assessment Reports as well as updating shareholders on progress towards exploratory drilling. On Thursday they had a brief meeting with the press to update them on what happened during the week.


They met with Officers from most of the Government Departments and a majority of the Councillors. They have been extremely helpful and proactive, said Desire Representative, Stephen Phipps.


Desire had a shareholders meeting open to approximately 200 local shareholders. Rockhopper Exploration presented their Environmental Impact Assessment Report on Monday night to a public gathering at the Chamber of Commerce and Desire Petroleum updated shareholders. A representative from ARGOS, Mr John Hogan, also visited the Falklands and met with people with relevant interest in the hydrocarbons industry.


People were pleased and impressed with the amount of in-depth analysis that goes into the environmental process, said Sam Moody, Managing Director of Rockhopper Exploration. The Assessment is part of the process for drilling, he continued.


A main issue discussed was rig security in that an entity needed to be identified to be responsible for that security. Stephen Phipps said that logistics also played a part in that the Falklands are a long way away and flights and accommodation needed to be arranged as well as facilities at FIPASS. It is routine but the distance makes logistics more difficult. John Hogan of ARGOS said that these arrangements were part of the routine and were not issues. Operators need to be clear about what Government and other agencies will do to support the exploratory drilling effort.


The more meetings like this we have, the easier it makes it, said Mr Hogan, We dont want to wait until the very last minute at the risk of finding theres a gap in the coverage and the more things we can identify we can do prior to the round the better.


In the North the Companies are hoping to work together and jointly they are actively seeking a drill rig. They are not quite sure when they will get one but things look more hopeful than they have done for a long time. Once acquired, the companies exploring in the North Falkland Basin would take it in turns. This includes the logistics around the rig flights, supplies, etc. This is what happened during the 1997/98 drilling round.


Argos hasnt presented any updated information because they havent decided yet. They expect to complete their mapping before the end of this year and then will have a view on the quality of the prospects through commercial thresholds and will act on any opportunities they see.


Mr Hogan explained that each company had its own exploration programme and interpretation programme so the time-scales will be different in completing all needed to begin exploratory drilling.


Desire Petroleum plan to drill 4 wells and Rockhopper Petroleum have a commitment to drill 2 wells but could opt for two more and could drill up to five wells the maximum.


The economic down-turn wont hurt Desire as they dont produce any oil. When they secured a partnership with Arcadia, they decided not to look for any other partners. However, it is unknown whether people have been put off by the economic woes that have plagues the world economy.


Actually, it could be helping because with the oil price coming down, exploration spending is coming down and therefore rigs will be cheaper, seismic vessels are becoming cheaper, so for those of us at the sharp end, who are explorers only, our cost base has come down, said Mr Hogan.


Logistics plans for the exploratory drilling round have not been finalised as no one knows what kind of rig will be coming down and how many wells are to be drilled. Companies need to know what kit will be appropriate and when it is needed. The representatives said they can be equally comforted with South America or Africa as a continental touch point.


Small exploration companies expect, that if good quantities of oil are found, it would surprise the representatives if smaller companies arent gobbled up by bigger companies. They are not geared up to be production companies at the moment. In saying that, there is confidence that huge amounts of commercially viable hydrocarbons can be found in the North Falkland Basin.


Representatives would not be spending enormous amounts of money if they were not confident about commercially viable hydrocarbons reserves.

Markymar,

As you know I am in FKL so although only connected to desire re FKL I don't always have the time to read this thread. When I do it is good to read the posts on here that are usually well argued.

Away from my PC for a couple of weeks, a time period where anything can happen to a Company/Share.

Cheers to all contributors.

Significant moves up after the AGM.

Any sniff of a rig?

Oh, Marky, on my advfn thread I've updated the grpahic above to now show RKH's discovery well.

Hi Kiwi,

Been away for a bit but will look over there at sum point and take a look, i hear the AGM went well!!!

Good news on this rigs soon i hope.....Bobs the man.

Capt.....keep those clogs clicking....

Price and moving averages

Price and moving averages has closed above its Short term moving average. Short term moving average is currently above mid-term; AND above long term moving averages. From the relationship between price and moving averages; we can see that: This stock is BULLISH in short-term; and BULLISH in mid-long term.

Bollinger Bands

Desire has closed below upper band by 4.8%. Bollinger Bands are 232.5% wider than normal. The large width of the bands suggest high volatility as compared to DES normal range. The bands have been in this wide range for 5 bars. This is a sign that the current trend might continue.

Next resistance level is at 55p which it has touched on a couple of times and fallen back from, if it passes the 55p in the near future then the next resitance is at 64p

http://www.investorschronicle.co.uk/MarketsAndSectors/Sectors/article/20090616/a5630054-5996-11de-bbc4-0015171400aa/Falklands-oil-dream-taking-flight.jsp

Falklands oil dream taking flight
Created:
16 June 2009
Written by:
Martin Li Investors Chronicle

The announcement by Rockhopper Exploration of the first Falklands hydrocarbon discovery has re-ignited interest in the South Atlantic - a little-explored frontier region that could hold more barrels of oil than the North Sea.

True, this isn't a 'new' discovery - it's a reinterpretation of a well drilled by Shell over ten years ago, and Rockhopper still faces significant challenges in commercialising this discovery. But that shouldn't distract from the fact that the four Aim-traded Falklands explorers - the others are Falkland Oil & Gas, Desire Petroleum and Borders & Southern - have made significant progress developing their projects over the past few months. First drilling now looks possible within a year, although a consortium of oil majors, including BP, might get the drillbit into action even sooner in adjacent international waters.

The Falklands area splits into two separate provinces, the North basin and South basin, each of which has very different characteristics. In the North basin, where Desire and Rockhopper are active (together with private company Arcadia), the water is relatively shallow at 100-600m, the targets are large (150-500m barrels of oil) and drilling conditions relatively benign - similar to those in the North Sea.
In the South basin, where Falkland Oil & Gas (FOGL) and Borders & Southern are active, the water is deeper at 500-1,200m, although still not ultra-deep by industry standards. The targets in the south are an order of magnitude larger than their northern counterparts (1,000-3,000m barrels of oil), but drilling conditions are more challenging - similar to those in the 'Atlantic margin' west of Shetlands.
Oil majors Shell, Amerada Hess and Lasmo drilled six wells in the North basin in 1998, of which five had oil shows and one also had gas shows. Although none of the wells confirmed a commercial discovery, they demonstrated that an active hydrocarbon system exists in the area. Furthermore, the majors confirmed the existence of the four fundamental requirements of any oil or gas discovery - source rock, trap, seal and reservoir - although these were not found together. The British Geological Survey adds further evidence to the highly oil-prone nature of the Falklands source rock, estimating that the North basin alone contains some 60bn barrels of oil. Although much of this will have seeped away over time, this still leaves sizeable reservoirs to be tapped.

The majors relinquished their licences in 1999 as the prevailing $10 (6) per barrel oil price left exploration of the Falklands uncommercial, due to the difficulty of developing any finds in such a remote location. Now, the licences are in the hands of smaller players.
No wells have yet been drilled in the South basin, although drilling to the west in the Malvinas basin and scientific drilling to the east have provided useful data on the potential of the region. Indeed, several oil and gas discoveries have been made in the Malvinas basin, although none has yet been developed. Further west, the Magellanes basin is one of the most prolific in South America, containing numerous fields in production, both onshore and offshore in Argentina and Chile.
Rockhopper's announcement was based on evaluation of three-dimensional seismic data, which allowed consultants RPS Energy to reclassify the newly-named Johnson structure as a gas discovery with mean contingent resources of 3.4 trillion cubic feet (tcf) of gas and a high estimate of 7.9tcf. 'Contingent' in this context indicates that the discovery is not yet considered commercial, hence Rockhopper's decision to delay production. There is no nearby market for gas and transporting it to the market by pipe or in liquid form requires considerable capital investment.
All four explorers have completed their reviews of seismic data and identified drill targets. FOGL has farmed out an operating interest to resources giant, BHP Billiton. Desire, meanwhile, has farmed out an interest to Arcadia, which will drill two wells, and Desire will drill an additional two wells on its own account.

FAVOURITES...

Falkland Oil & Gas controls a large acreage in the South basin, covering diverse geological structures. The farming out of a controlling interest to BHP Billiton adds credibility to the acreage, and funding, although the undrilled South basin remains high risk ahead of anyone actually sinking a drillbit.

Desire Petroleum held cash of over $40m at 31 December 2008, as well as a deal with Arcadia that should carry Desire at no cost through two wells. What's more, some 50 per cent of Desire's acreage is at least partially proven by the 1998 drilling campaign.

...AND OUTSIDERS

Rockhopper has announced the first Falklands discovery, which significantly upgrades the prospectivity of its North basin acreage, although it will need to conclude a farm-out deal and/or raise funds before it can drill a well.

Borders & Southern has completed extensive three-dimensional seismic reviews of potentially very large fold structures, and identified prospects, but also needs to conclude a farm-out deal and/or raise funds before it can drill a well.
Current plans suggest the next round of Falklands exploration will see six wells drilled in each of the North and South basins, but rig availability remains the single biggest hurdle to exploration of the South Atlantic. With keen exploration activity offshore Brazil and Africa, and continuing in the North Sea, rig contractors able to command high rates for multi-year contracts have had little incentive to release a rig to the Falklands. A Falklands contract would most probably cover less than a year, even if explorers collaborated and shared a rig, which looks the only commercially viable option given the high costs of mobilising a rig to and from the Falklands.

Fortunately for the explorers, demand for rigs has fallen recently with the oil price. Although the oil price has risen again in recent weeks, costs have yet to follow, which creates a window of opportunity. For the first time since Rockhopper floated in 2005, managing director Sam Moody is confident of being able to secure a rig.
The modest depths of Rockhopper's North basin licences will require no more than a semi-submersible rig, which Mr Moody estimates has fallen in cost to around $280,000 per day from a high of $450,000 per day last year. Given the similarities of their North basin licences, any rig secured by Rockhopper could be shared with Desire, and vice versa.

The rig requirements of the South basin explorers are more exacting. The greater water depths will demand either a dynamically-positioned, high-specification semi-submersible rig or a drill ship, of which there are only estimated to be around 25 to 30 in the world.

Rig slots are becoming available from late 2009, particularly for rigs suitable for the less demanding North basin, which suggests drilling should be possible from 2010. The 1998 wells were drilled in the southern hemisphere winter, which suggests that drilling, at least in the North basin, is possible throughout the year.

The four Aim companies aren't the only ones interested in drilling near the Falklands. In international waters to the west of the licences they hold, a consortium led by Spanish firm Repsol - which also includes Petrobras and BP-controlled Pan American Energy - is assessing a potential drilling campaign in two blocks. Lying to the west of, and on trend with, Borders' licence area, any success that this heavyweight group enjoys, including just drilling a well, will provide a great boost to Borders' prospects.


WHAT DO WE THINK?
The four Aim explorers offer investors the chance to participate in high impact exploration of one of the world's most alluring frontier oil and gas regions. All four offer massive upside potential, although the chance of total failure is also significant. Logistics remain the principal challenge in such a remote location, although any success in either basin is likely to prove enormous. Oil and gas fields in large frontier basins tend to behave like herd animals: the explorers are likely either to find nothing or they will find a lot.

patvan on 3i seems cautiously optimistic tonight.

Kiwi.

I am quietly optimistic myself that we may get some rig news in the very near future, shouldnt be long now a good time to top up.
I see KO is using the name Truthseeker on iii and upsetting people.