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://online.wsj.com/article/SB10001424052748703699204575016672711190144.html?mod=googlenews_wsj

Back to the Falklands
Rising oil prices lure prospectors to area once deemed too expensive

By CAROLINE HENSHAW
LONDONTwelve years after the last prospectors left the Falkland Islands, British oil-exploration companies are returning, lured by rising oil prices and advances in deep-water drilling technology.

But exploration and production around the remote wind-swept islandsbest known as the location of a brief, bloody war 28 years agohave been handicapped by a harsh climate and dicey politics.

Analysts say that as much as 60 billion barrels of high-grade oil could be found in the 200-square-mile economic zone surrounding the islands. If estimates prove correct, this could make the Falklands one of the world's largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels.

Next month, Desire Petroleum PLC and Rockhopper Exploration PLC will begin exploring a region of the North Basin, 22 miles from the islands, where they have shared and separate prospects.

They are drilling in the same area where a consortium of large oil companies, including Royal Dutch Shell PLC, led the first wave of drilling in 1998. Only six wells were drilled in an area half the size of Texas. Although oil was found, prices around $10 a barrel made the prospects commercially unviable and further development was abandoned.

But improved technology and higher prices are prompting oil companies to return, and the appetite for investment risk in London is growing. The four companies that are leading the campaign, all listed on the Alternative Investment Market, raised a total 327 million ($527 million) in share placements in a single month. Desire's shares have nearly doubled during the past three months.

"Exploration and risk are back in vogue," says Howard Obee, chief executive of Borders & Southern Petroleum PLC, which has prospects to the south. Borders & Southern raised 113 million in rights placements, more than its market capitalization.

Geologists believe the uncharted waters of the south could hold the largest finds.

Tim Bushell, chief executive of Falklands Oil & Gas Ltd., holds four prospects in the south in partnership with BHP Billiton. He compares the geology with that found near off Argentina's coast, where six billion barrels have been found. Other plays show characteristics similar to exploration hot spots in West Africa and Brazil, he says.

If a company finds oil, it could be viable as long as oil fetches $25 a barrel, less than a third of current market prices, Mr. Bushell says. Crude oil closed Friday at $74.54 on the New York Mercantile Exchange.

The Falklands government only takes a 26% share of oil earnings in addition to a 9% royalty on each barrel of oil sold, making it one of the most favorable areas in the world for exploration.

Still, the hurdles to exploration are vast. The South Basin reaches depths approaching 10,000 feet. Temperatures in the basin, one of the southernmost prospects in the world, average a low around 36 degrees Fahrenheit in winter, and the average rainfall can be as high as 2.4 inches a day. While this environment is similar to the established oil fields of the North Sea, the costs of operating a rig run to around $1 million a day, meaning losses are high if drilling stops during storms.

Political tensions surrounding drilling are also high. After the 1982 Falklands War, the islands remained a U.K. overseas territory. But Argentina has done its best to isolate the Falklands and pressured neighboring countries, such as Chile, to do the same.

Tensions in the region have been growing in recent weeks, after Argentina's Congress passed a law on Dec. 9 identifying the Falklands, as well as part of the Antarctic shelf, as belonging to Argentina. Britain says it "firmly rejects" the claim, but Argentina continues to agitate in diplomatic forums to have its sovereignty recognized.

The political complications make it difficult to know who would be willing to purchase or operate any finds in the Falklands, says Malcolm Graham-Wood, an analyst with Westhouse Securities. None of the majors with operations in Argentina, including Spain's Repsol YPF SA, the U.K.'s BP PLC and Brazil's Petroleo Brasileiro SA, which are drilling in the nearby Cuenca Malvinas, have ventured into the islands.

"If this was a huge success in somewhere like Uganda, you would have all the usual suspects lined up to take over," Mr. Graham-Wood says. "You can rule out quite a lot of potential bidders just because of the dispute with Argentina."

But despite the politics, the Falklands will remain the next frontier in oil exploration. "Geology doesn't stop at political borders," says Mr. Obee, of Borders & Southern. "There are complications. But if it were that easy, everyone would be in exploration."

OG UPDATE

The OG is anchoring 23 miles off Vitoria this morning. The Maersk Traveller will head for the dock to load the required fuel and water for the final leg. ETA over "Liz" is expected to be the 13th Feb

There has been a significant drop in the Falklands Oil shares today...What has happened???

Significant drop in most shares over the last few days, profit taking, oil down to $74 p/b, Falkland oil exploration companies thought to be overvalued & possibly slight nervousness concerning Argentine interest.

Agree with Harrycat. There have been multiple news items re the Argentinians getting out of their tree again.

If the Argies sink the rig on the way to the Falklands : I will go down there myself to sort them out !.

It would be better for the Argies to capture the crews on the rig and enslave them to dig for oil.

More likely that would like to participate in the drilling and setting up maintenance facilities along with refineries on the mainland.

One minor detail; I thought Argentina was broke? (I seem to remember they had the biggest ever Sovereign wealth fund default). In which case they are not likely to upfront the enormous costs of drilling in a joint venture.
Either, best to let someone else do the hard, expensive work & then occupy the sites, claiming sovereignty, or think very hard as to how the U.K are going to export the oil, if found. South America is the easiest land mass through which to route this crude.
Rf, you might be needed yet to go & defend our honour!!! Suggest you brush up on your language & military skills, pdq!!! ;o)

that would likely lead to yet another mfu

DES is getting weaker by the day...aargh.

Good support at 90p! Don't tell me you got caught up in the hype, hlyeo?

hate to say "i told you so"......

If the sp breaks the 105 support the next one is 90p

Bpoole explain how it hit a 1 low yesterday and then bounced up to finish the day at 109p... i think that sinks your 90p theory!!!!! Yarn..............

If you look at the sells today it a lot of smaller sells either people panicking as the share price retreats or a lot of people taking profit after getting there certificates yesterday and selling and making a quick profit.

They will be drilling on Valentines Day and the share price will significantly higher than it is today!!!

"People getting their certificates"...........? I don't think so!

I got mine Yesterday and also i few freinds got theres.

I think the majority of people who are active investors, trade on-line & therefore do not receive certificates.

Phew! It stabilise end of day...but for how long???

Better day!!!! not long now till drilling