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

It would be good if Desire got major institutional support to fund the drilling along with a placing & offer for the long suffering share holders like myself. Maybe this is one of the options Desire are discussing at present, along with the farm-in option ?


Who knows, we certainly aren't privy but it would be good for DES to do a fund raising and go it alone, IMHO.

The directors have a lot of faith in the work they have done. They are old and very experienced hands.
A free carry on a drill test program would inevitably lead to a massive dilution of their interest. They are probably testing the water as to Institutional interest in financing their own program and/or part financing a program to be undertaken by a major. If you really believe in what you've got, that would be the logical course.
Des shareholders can be comforted by the fact that the Directors have that self belief and don't intend to sell out cheaply. In their case, they would still be very wealthy if they did. Good on them for sticking to their guns.

Iturama I agree totally. A placing is clearly dilutive and might be interpreted as a failure to agree terms on a farm-in but as the price didn't fall on the rumour and only drifted a couple of pence after the RNS I think the discussions of a placing is more likely a reflection on the confidence of the directors that this is a winner and the deals on the table from the majors are not enticing enough. A few weeks ago I thought an attempt by Desire to raise it's own funds would cause the price to half, it clearly hasn't-why not-there must be some good data in that 3D. Given that the most pessimistic forecast I've seen on future oil prices (Browns) is a return to $30 I hope a major will now turn around and offer a juicy % to Desire. If Phipps is reading this then please don't be stubborn and hold out for 50%, we small shareholders will still be pleased with you if you settle for 49%.

Yes, this could all turn around quite quickly.

Hi all

Just thought I would put this cover story on again, to remind us of what we are speculating about. The way I see it 4.00 would be a lovely value for DES. But this is if DES holds ony 10%. So most investors who have bought in at the low end of the chart might think, that 10% will give them a good return. However if you have bought when DES was at 3.00- 4.00, but didn't get out it's not as attractive. The managment has made a statement that it intends to hold onto 50%. I doubt the large oil companies would offer this straight away. So DES has to have another option, ie raise the capital for a rig. So which ever way we look at it, the managment appear to be trying for the best solution for all investors. I personaly think the first offer won't be the best offer.




Desire Petroleum (AIM: DES) 33p
Desire is the ultimate blue sky story and
serious newsflow is due within two months.
Desire holds 100% of four tranches in the North
Falklands Basin and 12.5% of a fifth. Detailed
3D seismic surveys were completed in May
and the first results are expected in late
August. 3D seismics have grown steadily more
accurate over the years but they still have
trouble telling between sandstone containing
oil and sandstone filled with water. Even so,
Desire has already made cheerful hints and
this suggests the news should be good
enough to entice companies to sign
exploration partnerships.
Six holes were drilled in 1998 near the
Falklands. Four found serious signs of oil but
not enough to be commercial. The oil price
then collapsed and interest dwindled. Desire
points to structures in its tranches which
might hold 2.4 billion barrels of recoverable
oil. Even if Desire holds only 10% after bringing
in partners, this would translate into
valuation of 400p per share or zero if nothing
is found. At 33p the company is valued at 38
million. Expect the price to rise in the coming
weeks as excitement builds. Westmount
Energy (AIM: WTE) holds 3.4% of Desire and
Greenwich Resources (GRWA) has 4.2%.

Any thoughts ?


Good Luck All

Eddie

New Player in Falklands Oil Scene
December 10, 2004
by FINN/SARTMA







New Player on Falklands oil scene as Crude Oil and Gas Limited awarded licences


Crude Oil and Gas Limited has announced that the Falkland Islands Government has awarded it

two exploration/production licences in the North Falkland Basin, covering an area of 4,140 square

kilometres.



The licences, PL023 and PL024, are located in the North Falkland Basin, 50 kilometres to the

north of the Islands. The company plans to conduct an extensive work programme over the area

in the next few years with a focus on developing the regions exploration potential.



Crude Oil and Gas is a UK-based oil and gas exploration and production company, and includes

amongst its directors Richard Visick. Mr Visick already has significant business and other

interests in the Falkland Islands, and he and his family are regular visitors to the Islands. He next

plans to visit in January 2005.



In addition to his work with Crude Oil and Gas, Mr Visick is looking to pursue other business

opportunities in the region, and remains a committed investor in the Islands.



Mr Visick commented: I am delighted that the Falklands Government has awarded Crude Oil and

Gas Limited these licences. We are very excited about the companys prospects, and my own

long-term involvement with the Islands through existing business interests means that I am

particularly pleased to be able to further my commitment to the region. The Islands are a great

place to work and relax and the people are both welcoming and supportive, and I look forward to

developing our relationships here even further over the next few years.

Ends.



For further information, please contact:

Patrick d'Ancona/Peter Reilly, Aquila Financial 00 44 20 7849 3326/3319

www.aquila-financial.com

Hi all

Thanks for that markymar.

Looking at the chart, it looks like the resistance has now changed to support. 0.55p was the resistance, now we should take it as the new support. The market has been testing the support by trading down to 0.55p. As we can see it has closed at 0.575p, So it looks positive. The trend should continue up. Des is also trading above the 10 day moving average, which has also just moved through the 20 day moving average. These should prove to be good short term indicators. Long term indicators are still up.

Good Luck All

Any Thoughts ?
Eddie

Good post Eddie and good to see those charts i topped up to day at 56.9 and bought 20,001 shares and i feel that was a bargin at that price.

Anyone who who reads this thread at the start they were 10p and now have made good profits now is the time to hold your nerve as we shall jump again in share price soon.ps oily is your email correct on this thread.

Regards Markymar

Hi markymar.

Looks like you'll buzzing all the way to the bank.

Good Luck

Eddie

Some thoughts on some of the possibilities Des may be considering. If anyone has better ideas, please air them.
I assume Des wishes to keep 50% of the rights and will insist on a minimum 6 month drilling campaign in order to give the prospect areas justice. That is for logistical reasons as well as to avoid a Petroceltic one hole situation.
Scenario 1.
JV with a major that has its own rig available sometime in 2005. Des has a free carry for 20%, pays its own way for 30% of the rig operating cost.
Rig cost= 26 * $0.75M = $20M. Des share = $6M or (say) 3.2M. Des raises (say) 4.0M by way of placing. Cost & risk moderate. Only 11-12M shares placed at +/-45p? to cover cap requirement + placing costs. Peanuts in the overall scheme of things.
Scenario 2.
Similar to the above but JV is with a less well known company that does not have a rig. Rig has to be contracted at current market rate.
Rig cost = 26 * $1.5M = $40M. Des share = $12M or (say) 6.4M. Des raises 7.2M by way of placing. Cost & risk more elevated. 22 - 23M shares placed at 0.38p?. Again no major dilution.
Scenario 3.
Des decides to go it alone and take the exploration to the next level.
Rig cost =$40M or 21M. Cost & risk most elevated. +/- 80M shares placed at 0.30p? Currently 189M shares outstanding, so still no major dilution given the possible prize.

While we may hear the reality as early as January, it is unlikely there will be a drillship or drill platform on site before the 2nd half of 2005.

I think we will know these answers to your question in the near future as Desire have there backs up against the wall at moment thanks to the Guardian.



Among the smaller companies, Desire Petroleum advanced 3.5p to 62.5p, excited by talk that the company has appointed Seymour Pierce to work on a possible fundraising. If Desire goes ahead with an equity placing, traders reckon it will use the proceeds to help develop its North Falkland Basin project. Dealers had thought it would outsource development of the site to a large oil company. Indeed, a farm-out partner is likely to be announced next year. However, the fact that Desire is contemplating raising money suggests it is confident the field will be a success and wants a piece of the action.

And desires reply was


RNS Number:4393G
Desire Petroleum PLC
15 December 2004


Desire Petroleum plc

("Desire" or "the Company")

Press Comment

The Board of Desire notes the recent rise in the Company's share price and press
comment that the Company may enter into a farm-out agreement and that it is
considering conducting a fundraising.

The Board can confirm that it is considering all the alternatives available to
Desire to commence an exploration drilling programme in the North Falklands
Basin and, as previously announced, Desire is in discussion with a number of
companies which may wish to participate in such a programme.

An announcement will be made in due course if and when the Company decides to
conduct a fundraising and/or an agreement is concluded with another company.

For further information contact:

Dr Colin B. Phipps (01684 892242)

Mr Stephen Phipps (020 7409 2138)



This information is provided by RNS
The company news service from the London Stock Exchange

I think that say's it all its rather sooner than later we will hear news

Looks like a lot of intrest in the Falkands

can u give an explanation MM please
HM

The Falklands is the island in the middle and these are the blocks which have been awarded to the likes of Desire which is to the north of the map marked Green.

The other blocks are Global, Crude oil ect ect


http://www.falklands-oil.com

Click on link and this site will tell you what you need to know i was just trying to point out that poor old Desire are not all by them selves any more and 2005 will be the buzz word for the Falklands as there is so much going on at the moment.

Regards markymar

December 2004 - New Licences in North Falkland Basin issued to Crude Oil and Gas Ltd

Crude Oil and Gas Ltd, a new UK exploration start-up company, has been awarded 2 licences covering 16 blocks in Quadrants 25 and 26 of the North Falkland Basin. These blocks (see A3 map available from the Downloads page) surround Desire Petroleum's blocks in the southernmost part of the North Falkland Basin. They are located in relatively shallow water (all less than 200 metres), and represent an opportunity to explore a part of the North Falkland Basin with a distinctly different structural style and stratigraphic infill to that observed further north in the area drilled during 1998.

Crude Oil and Gas Ltd plan a 2D seismic survey over their new licences within the first year of operation.

December 2004 - New Licences in North Falkland Basin issued to Crude Oil and Gas Ltd

Crude Oil and Gas Ltd, a new UK exploration start-up company, has been awarded 2 licences covering 16 blocks in Quadrants 25 and 26 of the North Falkland Basin. These blocks (see A3 map available from the Downloads page) surround Desire Petroleum's blocks in the southernmost part of the North Falkland Basin. They are located in relatively shallow water (all less than 200 metres), and represent an opportunity to explore a part of the North Falkland Basin with a distinctly different structural style and stratigraphic infill to that observed further north in the area drilled during 1998.

Crude Oil and Gas Ltd plan a 2D seismic survey over their new licences within the first year of operation.

http://www.bgs.ac.uk/falklands-oil/download/download_files/A3MapDEC2004v2.jpg

If you wish to know something about the Falklands in general, visit www.falklandislands.com

Q Who owns the Islands?
A They are a British Overseas Territory, and have autonomy for all aspects of life except defence and foreign affairs.

Q What are the water depths offshore?
A They range from <200m to about 550m in the North Falkland Basin, and up to 3,000m or so in the Southern Basins.

Q Was the 1982 war about oil?
A Emphatically, No. The UK Government was responding to its policy view that the Islanders should have the right to self-determination; the Islanders overwhelmingly wish to remain British.

Q Shouldnt the area be written off because the 6 wells in 1998 failed?
A Its a common misconception that they failed. Five of the six wells had oil and/or gas shows, one recovered live oil to surface, one encountered significant gas. 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.

Q What do you mean, exploration in the basin is in its infancy?
A Only six wells have been drilled, all in a very tight grouping, all aimed at the same play, and all drilled back to back from a single rig. Thats 6 wells in an area more than half the size of Texas! Theres a lot to play for yet.

Q Isnt the weather too harsh for oil exploration?
A No, not at all. Seismic surveying can be conducted for most of the year. Particularly in the North Falkland Basin, which is where we have the only experience, drilling is simple and straightforward, and almost unaffected by weather and currents.

Q What are the drilling conditions like?
A Quick and easy. A 3,000m dry hole can be drilled in about 20 days. Drilling rates are high, there are no unusual near-bottom currents and no known gas hazards.

Q I hear the 1998 wells were expensive. Why, and could wells be drilled cheaper?
A The 1998 wells were expensive because a rig was towed from the North Sea at very high day rates. There is no requirement to use a North Sea rig here. We have analysed the safety management systems of rigs available more locally, and they all appear fit to work here. The fast drilling rates achievable in the area mean that wells should be relatively inexpensive.
http://www.falklands-oil.com/