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://energy.pressandjournal.co.uk/Article.aspx/1572986?UserKey=


Falklands explorers led by Desire
AGR-managed North Sea veteran Ocean Guardian is the cornerstone of the second-ever oil&gas campaign offshore this UK possession
By Jeremy Cresswell

Published: 01/02/2010


Within just days, the semi-submersible, Ocean Guardian, should arrive under tow off the Falkland Islands following an epic journey that started in the Cromarty Firth and which, except for a brief pause at Falmouth to shelter and allow the anchor-handler, Maersk Traveller, to repair a towing cable, was relatively routine.

The rig is being managed out of Aberdeen by AGR and is to drill four firm wells in the North Falklands Basin, with an option to drill six more, according to Desire Petroleum, which can be broadly regarded as the powerhouse behind getting a rig into Falklands waters.

The Austral summer campaign is going ahead in the face of opposition from Argentina and Chile, which are contesting possession of waters currently controlled by the UK.

Moreover, Argentina has been sabre-rattling in recent weeks. In December, its government passed a law claiming to own the islands and several other British territories in the South Atlantic.

However, the aggressor has been put firmly in its place by the UK political machine. Moreover, the Falklands are bristling with more firepower than at any time past, including a squadron of Tornado aircraft.

In a written statement, junior Foreign Office minister Chris Bryant said the UK had no doubt about its sovereignty over the Falklands, South Georgia, South Sandwich Islands and the surrounding seas, as well as the British Antarctic Territory.

The Foreign Office delivered a note verbale to the Argentine charge daffaires in London outlining the UKs rejection.

Mr Bryant said: The UK firmly rejects the enactment and promulgation, on December 9, 2009, of Argentine Law 26.552, and thus the additional paragraph in Article 1 of Argentine Law 23.775, insofar as it purports to include within a province of Argentina areas which comprise the Falkland Islands, South Georgia and the South Sandwich Islands, and the British Antarctic Territory.

However, under a United Nations plan to divide up Antarctic region resources, Argentina wants all waters around the Falklands, South Georgia, South Sandwich Islands and any other British possessions that may lie within the 1.7million sq km claimed.

Chile has filed a claim that largely mirrors the Argentina submission. By comparison, the UK is laying claim to a more modest 1million sq km.

The deadline for Antarctic Shelf claim submissions to the UN was May 13, 2009, with no firm date given for determinations. However, Gavin Farquhar, who runs the Falklands office of law firm McGrigors, told Energy that the claim and counter-claims amount to a stalemate, something the UN might be loath to try getting embroiled in.

Ocean Guardian is on hire to Desire Petroleum, a London-listed junior that participated in the short-lived first campaign, which took place as oil prices were sliding towards a sub-$10 basement in the late-1990s upstream downturn.

While Desire is the lead player, it cannot foot the bill on its own. Rockhopper Exploration, another London-listed junior, will share the costs of at least one well, but wants to drill more most likely two.

The first well to be drilled by Desire is likely to be the Liz prospect, where the prize could be up to 660million barrels oil equivalent. At least that was the state of play on January 11 when the company made a presentation to analysts.

According to that presentation, Rockhopper will likely drill the second well on a prospect known as Sea Lion. It is interesting that Rockhoppers first choice is not Johnson, the name given to a well drilled by Shell in the first campaign which encountered what is now regarded as a gas accumulation with multi-trillion cu ft potential.

The subsequent drilling order depends on Australias BHP/Falklands Oil & Gas, which may also participate, and the results of the first two wells.

However, Desire has stressed that the programme is designed for flexibility, operational efficiency and the need to thoroughly evaluate the basin.

If early results are promising, Ocean Guardian could spend the best part of a year in Falklands waters.

H2 2009 saw speculation that both Desire and Rockhopper would need to raise additional funds, plus Rockhopper had been hoping to conclude farm-in negotiations for one of its prospects.

The Financial Times said Desire was looking to raise about $80million (50million) by selling new shares at 75p each, while Rockhopper was planning to raise a similar amount at a price yet to be determined.

In Desires case, on December 9, the company announced an open offer to raise gross proceeds of up to 20.3million (about 19.9million, net of expenses) through the issue of up to 28,971,544 new ordinary shares at an issue price of 70p.

That offer closed on January and was heavily oversubscribed.

As for Rockhopper, its chairman, Pierre Jungels, said in September that the companys board was pursuing a number of financing options, including the raising of new capital and/or farm-outs. He said it was confident that the group would be able to raise funds when required in order to fund development of its assets and to continue in operation.

In the event, it made a 50million share placing in November.

Falklands Oil & Gas has followed a similar strategy, going to the market in November with a successful placing designed to raise 50million.

The company said the net proceeds of the fundraising would be used to fully fund FOGLs share of the costs of a drilling programme which could start during H1 this year and incorporate a deepwater programme of one committed well and other possible discretionary wells, which the BHP/FOGL JV expects to commence late this year.

So what is the prize that has kept the fires of anticipation blazing at Desire and Rockhopper especially, but not forgetting FOGL?

The fuel has surely been British Geological Surveys unswerving view that the Falklands Shelf possesses some of the most prolific source rocks to be found anywhere in the world, coupled with the tantalising results of the first drilling campaign and subsequent seismic and CSEM (controlled source electromagnetic) surveys.

The BGS estimate is that 11-60billion barrels of oil could have been expelled from the Lower Cretaceous lacustrine source present in the North Falklands Basin, which is described as a relatively narrow and elongated (50km by 250km) half graben basin with a thick and good-quality syn-rift lacustrine shale source rock sequence.

Parallels have been drawn with the Lake Albert Basin in Uganda. It is smaller about 40km wide by about 125km long and has, over the past three years, delivered a prolific stream of oil finds for Tullow and Heritage.

In the first Falklands campaign, six wells were drilled; hydrocarbons were encountered, and yet all the consortia pulled out. A lack of thorough planning, an oil price heading for less than $10 a barrel and perhaps insufficient conviction put an early end to dreams of a South Atlantic bonanza.

It was a serious blow to Desire, whose share price at that time rocketed towards the 10 mark only to slump to a few pennies within months. However, the company and its dream survived and, late-January, its stock was trading around 110p in anticipation of big finds being made over the coming weeks, and perhaps months.

The results of the six wells drilled in the first campaign were:

14/5-1A Shell, 4,525m total depth. Result oil shows, plus gas.

14/10-1 Shell, 3,005m, live oil of 27 Deg API.

14/9-1 Amerada Hess, 2,590m, oil stains.

14/9-2 Amerada, 2,345m, oil stains.

14/13-1 Lasmo, 1,475m, dry hole.

14/24-1 Lundin, 2,914m, oil stains.

All this acreage was eventually relinquished by the various consortia and later picked up by Desire and Rockhopper.

The other key licence holders are Falklands Oil & Gas, and via a farm-in with FOGL Australian natural-resources conglomerate BHP Billiton holds an interest in 14 licences.

The second campaign is based on extensive research of well data from this first sortie, coupled with the seismic and CSEM surveys referred to earlier.

Rockhopper hired Australian consultants RPS to carry out a detailed assessment of all available data, while Desire hired UK group Senergy to conduct parallel analysis.

There is close correlation between the outputs of RPS and Senergy, although the latter is more detailed, including drawing comparisons with other basins such as the Albertine Basin in Uganda which Tullow and Heritage are successfully exploring.

However, differences between these competent persons reports (CPRs) mostly lie in nuances rather than fundamentals.

In a way, the most intriguing prospect in the Rockhopper portfolio is the 14/5-1a (Johnson) natural gas discovery made originally by Shell but only minimally acknowledged as such 10 years ago.

According to RPS, well 14/5-1 encountered significant gas shows and kicks within the deeper drilled sections (3,500-4,525m). It offers multi-trillion cu ft potential.

Johnson is described as a very large gas-bearing structure, possibly 250sq km in area.

Log analysis from the former Shell well report indicates that, within the deeper sand units, over 165m of gas pay was present.

Independent log analysis performed by Rockhopper indicates that 5-130m of gas pay was intersected by the well.

Senergy says: All the studies appear to tell a similar story of a thick gross interval (500m-plus) that is mature in its lower part below 2,400m to 2,650m and at peak oil phase below 2,800m to 3,000m.

In addition, well 14/5-1 encountered increasing gas (up to 32%) with gas breaking out of the drilling mud below about 4,000m. The gross source sequence in this well is over 500m thick.

Senergy suggests that the evidence from just this one well could point to the possibly widespread presence of a deeper (early Jurassic?) mixed gas and oil-prone source in the basin.

Senergy says, too, that of the previous wells drilled in the basin, at least 14/9-1 and 14/10-1 drilled valid closures, and that under-charging and/or lack of migration was probably responsible for the absence of hydrocarbons.

For Rockhopper, Sea Lion and Ernest are the companys primary oil targets. Both have direct hydrocarbon indicators Sea Lion in the form of AVO anomaly, Ernest in the form of a positive CSEM anomaly and are clearly defined on seismic. Key Desire targets with mid-estimate reserves estimates include Jacinta (1.1billion barrels oil equivalent), Liz (660million boe), Pam (430million boe) and Beth (297million boe).

As for FOGL/BHP, their targets lie in the South Falklands Basin, which has never been drilled and therefore source, reservoir presence and quality and integrity of the proposed trapping mechanisms (majority of prospects are stratigraphic) are all key risks.

The priority target is said to be Toroa. It is located some 140km (90 miles) south of Port Stanley and is a large prospect identified in the Cretaceous Springhill play, with recoverable hydrocarbons estimated in the range 380million to 2.9billion barrels of oil. The planned drilling location is in about 600m (1,968ft) of water.

One way and another, this is set to become one of the most closely watched exploration campaigns of 2010, and the most politically significant and sensitive ever for the South Atlantic.



Read more: http://energy.pressandjournal.co.uk/Article.aspx/1572986?UserKey=#ixzz0eGiqTfuJ

http://www.fdcap.com/media/120040/falkland%20report.pdf

"Desire Petroleum Plc (AIM:DES) the oil and gas exploration company, wholly focused on the North Falkland Basin, is pleased to announce that two drilling slots using the Ocean Guardian Drilling rig ("Ocean Guardian") have been formally assigned to Rockhopper Exploration Plc ("Rockhopper") for the upcoming exploration programme in the Falklands.

The Ocean Guardian is expected to be in position mid February 2010 to spud the first well of the campaign on the Liz prospect, which is located in Desire's Tranche C acreage.

Following the Liz well the Ocean Guardian will then be allocated to Rockhopper to drill their Sea Lion and Ernest prospects. Advanced discussions are ongoing with BHP Billiton ("BHP") which may lead to BHP taking an early drilling slot, and so it is likely that Desire's second well will be the 4th or 5th well in the sequence of this drilling programme.

The order of later Desire wells will depend upon the results of the Liz, Sea Lion and Ernest wells."

Good to have a drill update and to see Liz will be the 1st well to be drilled and then it moves on to RKH and FOGL acreage. What this does is gives Desire more time to evaluate Liz and RKH acreage and will help them to know the best prospects to drill next.

All good news and Desire leading from the front and we should see a strong push up in the share price in the next 14 days.

BOR as i thought no EIA and not a mentioned in drill up date no rig no partner it a big sell as its totally over priced.

http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=10076559

Falkland Islands set for more success in 2010

In just over a decade, the Falkland Islands - with its rich oil reserves - has transformed itself into a hotbed for London's leading oil explorers.


In 1998, the British-ruled territory was considered to have poor hydrocarbon reserves, and the North Falkland Basin had just six wells under its belt, all of which were plugged and abandoned.


Fast forward to 2010 and an estimated 327 million has been ploughed into offshore projects as British-based companies clamour to get their hands on the territory believed to hold up to 60 billion barrels of oil.


While oil prices were just $10 a barrel in the late 1990s, today it has a price tag of almost $75 a barrel and the stakes are a lot higher.


The region, split into the North and Southern Basins, has attracted the attentions of Desire Petroleum (DES), Rockhopper Exploration (RKH), Falkland Oil and Gas (FOGL), Borders and Southern Petroleum (BOR) and, most recently, mining heavyweight BHP Billiton (BLT).


Rockhopper Exploration and Desire Petroleum have become the two principal operators of the North Falkland Basin, while its fellow oil producers concentrate on tackling the South Basin.


David Hart of WestHouse Securites, says that while the Northern Basin lacks the expanse of the South and East Falkland Basins, he believes "reserves in the hundreds of millions of barrels of oil can be reasonably expected."


Rockhopper Exploration, first admitted to AIM in 2005, was attracted to the acreage as it was deemed relatively low risk in exploration terms, with both proven oil and gas.


After raising a hefty 50 million in October 2009, Rockhopper - which owns a 100% interest in Licences PL023, PL024, PL032 and PL033 and has farmed-in to Licences PLO3 and PLO4 - is now bracing itself for the "most exciting period" since its inception.


It has teamed up with partner Desire to embark on a drilling programme starting this month, after securing the Ocean Guardian rig from Diamond Offshore Drilling.


While the terms of the contract are for a four well, eighty-day campaign, operator Desire retains the option to drill a further six wells for itself or its partner.


Since announcing the securing of the rig, Desire's share price has climbed steadily, rising as much as 27% in the last month. Rockhopper enjoyed similar success, rising over 18% throughout January.


Hart of WestHouse Securities, adds: "Clearly, 2010 is a big year for the North Falkland Basin explorers and we expect a steady diet of drilling news beginning in February. Having studied prior drilling data and numerous technical studies of the region over the years, we believe the two companies are now ideally placed to pursue a successful drilling programme assuming the geology works.


"Despite the raised awareness of the two groups' intentions, both are still substantially undervalued according to our valuations."


In the more daring south of the region operates Falkland Oil & Gas and Borders & Southern Petroleum.


The South Basin possesses a single rich source rock which spreads across the entire Southern Basins, from the Magallanes Basin in Argentina to the Maurice Ewing Bank some 800 kilometres east of the Islands. However, it poses a greater risk to explorers and shareholders alike due to the fact it has not yet been penetrated and remains in the very earliest stage of exploration.


Nevertheless, while Rockhopper and Desire have a lower risk profile, the rich resources of the Southern Basins mean Borders and Falkland Oil and & Gas could be faced with greater opportunities should their drilling activities come up trumps.


Fox Davies Capital believes said that there is a "fair chance of success in the 10 or so wells that will be drilled in 2010/11".


Falkland Oil & Gas is to embark on a drilling programme in the southeast of the region in April, along with partner and mining heavyweight BHP Billiton - which farmed in for 51% in 2009 - and has an option on the third drilling slot on the rig commissioned by Desire and Rockhopper.


Falkland Oil & Gas's shares have doubled during the course of 2009, leaving the company worth 228 million and shot up 21% in January alone.


Just as recently as November, Falkland Islands Holdings netted a handsome 3.1 million profit after offloading three million shares in Falkland Oil and Gas proving the company's growing worth.


Finally, Borders, which holds a 100% equity interest and operatorship of five production licences covering an area of 20,000 kilometres, is expected to start drilling towards the close of the year.


In January 2009, the company announced an initial review of its 3D seismic interpretations which, it said, highlighted three principal play fairways.


"Within these play fairways, multiple prospects were generated that, in common with analogous geological settings, could deliver in the success case multi-billion barrels of total recoverable reserves," Lionel Therond of Fox Davies Capital notes.


"We believe that the presence of companies such as BHP and Petrobras as farm-in partners respectively with Falkland Oil & Gas and across the Argentinean border in the Malvinas Basin to the West with Repsol, emphasise the attractiveness of the whole area," Therond added.


All four of the AIM-listed Falklands-focused groups have outperformed the AIM Oil&Gas Index over the last five years, as greater exploration opportunity helped to drive share prices higher. While they temporarily faulted in the second half of 2008 as the onslaught of the financial crisis took its toll, they were back on form by the start of 2009 and have gained 40-60% over the past three months.


With such success under their belts, 2010 could become a bumper year for the oil explorers.

Today's update is really not a surprise. We all know about this anyway.
That's why the sp moved up in the morning to 125p and dropped back again.

I think DES will move firmly upwards once the drillbit strikes oil. Now 117p.

the last bit is an obvious statement of the obvious ...... imo, sp will have a little surge between spudding and result as the lemmings get excited ..... the result will speak for itself

Huge sell at end of the day.

perhaps a forced sale or something a bit strange like an option being exercised as it was 1m @ 118.75 .... subsequently there was a buyer for 200k and overall buys/sells pretty much balanced

Big boys playing games...they buy 10 million...sell 1 million...

And I'm sure the Argentines will cause problems soon.

Argentina Summons U.K. Envoy Over Falklands Drilling

Feb. 2
Argentinas Foreign Ministry summoned the U.K. ambassador over plans by Falkland Oil & Gas Ltd. to start drilling a well near the islands in the Atlantic Ocean.

Argentina will issue its most energetic protest against the imminent start of drilling near the Falkland Islands archipelago, the ministry said in an e-mailed statement. The islands, known as the Islas Malvinas in Argentina, lie about 480 kilometers (298 miles) off the South American mainland and are claimed by Argentina as its territory.

Falkland Oil & Gas and partner BHP Billiton Ltd. expect to begin drilling in their Toroa offshore field in April, Chief Executive Officer Tim Bushell said in an interview last month.

Argentina, which fought a war with the U.K. over the Falklands in 1982, has repeatedly protested efforts to explore for energy deposits off the islands. In 2007, then President Nestor Kirchner voided a 1995 oil and gas exploration agreement with the U.K. that had been suspended for five years.

The Foreign Ministry reiterates its sovereign rights over the Malvinas Islands, South Georgia and the South Sandwich Islands and the sea surrounding them, which form a part of its national territory, the statement said.

A message left by Bloomberg News at the U.K.s Embassy in Buenos Aires wasnt immediately returned.

Argentine Claim

Argentina traces its ties to the Falklands to 1820 when Colonel David Jewett claimed possession in the name of the United Provinces of the Rio de la Plata. England assumed military control of the archipelago in 1833, evicting Argentine authorities the following year, Argentinas Foreign Ministry said on its Web site.

Argentine military dictator Leopoldo Galtieri ordered the invasion of the Malvinas on April 2, 1982. Argentine troops were defeated by British forces on June 14, 1982. The two-month conflict took the lives of 255 British and 649 Argentine soldiers.

The British victory bolstered the government of then U.K. Prime Minister Margaret Thatcher, known as the The Iron Lady, and helped her win elections the following year.

This looks extremely threatening... they will do everything necessary to defend and preserve their rights to the oil.


Argentina protests Falklands oil exploration plans
Tue Feb 2, 2010


BUENOS AIRES, Feb 2 (Reuters) - Argentina protested to Britain on Tuesday over plans to begin offshore oil exploration in the disputed Falkland Islands, which the two countries went to war over in 1982.

Local media reported that British oil company Desire Petroleum is about to start exploration drilling off the coast of the remote South Atlantic archipelago. Geologists think the area around the islands could hold rich energy reserves.

"What they're doing is illegitimate. It's a violation of our sovereignty. We will do everything necessary to defend and preserve our rights," Foreign Minister Jorge Taiana told reporters after meeting a senior British Embassy official.

The islands, which are called the Islas Malvinas in Spanish, have been under British control since 1833.

Argentina's Foreign Ministry said in a statement it "strongly rejects the United Kingdom's intention to authorize energy exploration and production in part of Argentina's continental platform."

Nearly three decades after the brief Falklands war that killed almost 1,000 people, tensions over the islands continue to simmer. Indications that there could be large oil reserves around the Falklands have raised the stakes in the sovereignty dispute.

Thought price would be up to 140-150 now with imminent drilling???
People getting nervous or just profit taking?

It is because there is more news in the financial times today saying there is a possibility the Argentinian government would block the passage of Ocean Guardian once it reaches its waters.
This conflict may turn sour for DES and RKH.

And directors are sharing their own shares. Get out of DES now!


4 February 2010

Desire Petroleum plc
("Desire" or "the Company")

Directors' Shareholdings, Issue of Equity and TVR

The Company announces that on 2 February 2010, Phipps & Company Limited, a company in which Stephen Phipps, Chairman, and Anna Neve, a Non-executive Director, are interested, exercised 6,738,339 options over new ordinary shares in the Company at an exercise price of 32.46p per share.

These options were due to expire on 23 June 2010 and, taking into account the forthcoming drilling campaign in the North Falkland Basin, it was considered that exercising the options at this time was the only way to ensure that they could validly be exercised prior to the date of expiry.

Following the exercise Phipps & Company Limited sold 1,808,339 ordinary shares at an average price of 115.2p per share

In addition, on 2 February 2010, Ian Duncan, Chief Executive Officer, exercised 465,244 options over new ordinary shares at an exercise price of 35.21p per share. Following the exercise, Mr Duncan sold 200,444 ordinary shares at an average price of 115.3p per share.

Details of these transactions and their effect on the shareholdings of the relevant Directors are set out below:

Director
No. of options exercised
No. of shares sold
Post-transaction shareholding



Stephen Phipps
6,738,339
1,808,339
38,882,633* (11.9%)

Ian Duncan
465,244
200,444
700,169** (0.21%)

Anna Neve
6,738,339
1,808,339
38,662,633* (11.9%)

* These include an interest in 35,712,633 shares held by Phipps & Company Limited and 2,840,000 shares held by the Phipps & Company Retirement Benefit Scheme.

** This includes 107,143 shares held by Chase Energy Limited.

I meant they are SELLing their shares.

If you read it properly, they are exercising options. Directors in cos sell enough shares in order to take up their options i.e Buy shares at the option price (nice work if you can get it) so they haven't sold just swapped and in fact have more shares but at lower cost.

My feelings are that Argentina are angling for some sort of deal, and if so the more sabre rattling they make the more likely they will get one. It may in the end be best for all, as although they (Argentina) are in a mess both financially and politically, we also cannot afford another Falklands War, either on the basis of financial cost or/and loss of life.
Not saying the deal should involve sovereignty or be anything more than a financial percentage.

Not that the Argies deserve a deal, just that if push comes to shove both sides may find a deal attractive.

If any sort of trouble starts, such as even semi passive obstruction that can only be detrimental to both sides, with the Falkland Islanders stuck in the middle.

All IMHO of course

endorses the likelihood that huge oil fields exist, but war is highly unlikely - Falklands are internationally recognised as British Territory. A joint venture "deal" is more likely and DES would benefit massively from that, not least the logistical advantages