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

I wouldnt say that Cynic,

Plenty of ifs and buts in that last RNS, remember that the RNS was only given in response to the article in the FT.


Hundreds of Falkland Islanders heavily invested in Desire Petroleum (DES) are keeping faith, despite poor initial news from its first well in the region.


Desire investors suffered a horrendous day, as the shares slumped on news of results from Liz, its first well drilled in the North Falklands Basin, have shown quantities of oil which may be small or of poor quality.


Islanders still vividly remember the disappointments of the late 1990s when six wells were drilled in the same area north of the Islands and showed the presence of hydrocarbons in the rich source rock. But rising costs and the plunging value of oil meant further work was deemed commercially non-viable and drilling operations ceased.


Inevitably, this disappointment meant Islanders were cautious in their approach to the latest drilling round but the arrival of the semi-submersible Ocean Guardian last month created an undeniable sense among the community that the Islands were at the brink of a new adventure.


Today's announcement from Desire has dampened excitement, but it hasn't killed off the dream for this tiny community.


Liz is understood to be Desire Petroleum's prime prospect, and local investors - the number of whom has grown from scores to hundreds in the months leading up to the start of the drilling - have had their fingers crossed good news would be forthcoming this week.


One Stanley resident, a former teacher who bought into the first issue of Desire shares around 12 years ago, said he had enjoyed being along for the ride, whatever the news.


"One of the attractions was that the shares were being offered to Falkland Islanders with staggered payments, and these easy terms became even easier when there was a second flotation," he said.


"As part of the adjustment, we never had to pay the second instalment and, if I remember rightly, were even issued with more shares. Although I have bought some more shares in the company since, I once calculated that this first purchase cost me in the end something in the region of 13p a share."


This was even after a day in which the Desire price closed at just above 50p after which saw it lose up to 60% of its value.


He echoed the sense of adventure Islanders were feeling: "There was something exciting about getting in on the ground floor of something which might constitute the next big boom for the Falklands economy and, maybe my own. Although I have kept track of the share price over the years, I have always seen this rather modest investment as a 'punt' with discovery and a buy-out as the ultimate prize, but nothing much lost if it all turns pear shaped."


Living on tiny Sea Lion Island, hotelier and Desire shareholder Jenny Luxton had a similar attitude and was happy to "sit tight and hope for the best".


She said: "I invested money I could afford to lose, so I'm not really risking anything. Having said that, it would be wonderful if oil is found."


Like small communities everywhere in the world, rumour and gossip are national pastimes in the Falklands and as the announcement from Desire loomed, speculation was rife. In the past two weeks there had been talk of oil flooding the offshore platform and counter-rumours of nothing but water being found; every movement of the oil supply ships to and from Stanley's small port was - and still is - closely scrutinised for any clue they may give to whether a significant find had been made.


This interest in the success of the Liz prospect is understandable.


However, Phyl Rendell, the Falkland Islands government's (FIG) director of mineral resources, said that with at least seven wells to be drilled in the present programme not everything was riding on the outcome of the first well.


She said: "It would of course be very encouraging and rewarding for Desire Petroleum, considering how committed they have been to advancing offshore exploration here, to have positive hydrocarbon indicators in their first well.


"If there is not a very positive report following analysis of the samples taken from the well, which can take months to fully interpret, it will still help Desire and the FIG to understand what is present and where to drill next.


"We all are aware that many wells were drilled in the North Sea before commercial oil was found and we are only on the seventh well to be drilled in the North Falkland Basin at present."


In recent years, a drastic reduction in income from the Illex squid fishery - the mainstay of the economy - has led Islanders to hope that oil could provide the financial stability the Falklands need to flourish.
Stanley businessman Tom Blake said oil was needed in order to maintain a positive outlook for the future.


"The Falklands government is currently facing financial pressures which are not just solely due to the worldwide economic downturn and unless a new source of revenue is gained we are likely to see reductions in public services and/or increases in taxes which will make the Falklands a less attractive place to live."


In a quirk of fate, this year's Illex season has reportedly seen healthy catches and income of around 7 million from the sale of licence fees to ships from the Far East.


So while a reprieve may be on the horizon for the Falklands treasury this year, hopes remain pinned on oil for long term security.


But it won't be plain sailing even if oil is found: fresh tension arrived with the Ocean Guardian in the form of new political pressure from Argentina, including direct threats to penalise companies operating in the Falklands, and this tension is bound to get worse with any major find.


However, according to Phyl Rendell this had not deterred the operators whose work was "going to plan" and the British government had also made "the right noises".


She added: "Companies have been very reassured by the statements made by Prime Minister Gordon Brown, foreign secretary David Miliband and the minister for the overseas territories, Chris Bryant, and others that the licences awarded to them by the FIG to drill in Falkland waters have international legal status and that HMG supports the efforts of both FIG and the companies to explore for hydrocarbons."

greekman I have been negative about DES for the last 2 weeks it was due a fall.

no one likes a "told you so" so i wont.
sad day for many.
regards
jkd

marky - i know you have a lot of dosh invested in DES and RKH, so i very much hope that the next instalment makes (much) more cheery reading ..... however, it cannot be denied that this first indication is not encouraging, albeit that there are 6/8/10 further wells already scheduled for this north basin ..... as i have written before, DES assuredly picked what it thought to be the best prospect for its first attempt ...... time will tell

I get the feeling that it's mostly gas.....perhaps a lot of it, but where are the commercial amounts....it's like trying to find a needle in a haystack....Rockhopper have a find and it was gas....

i just re read my own posts.
i often do such, it helps me to see where i go wrong, which i often do. go wrong that is.
dont mean i now think this is going up ,or think otherwise. i am neutral from here,
regards
jkd

Yes disappointing Cynic, guess I can put them rockets away for a little longer and I look forward to the next RNS, they are still testing and a possible sidetrack may be carried out or drill a bit deeperthere is some thing of interest to them at moment or at over $400,000 they would of lifted the anchors and off over to Rockhopper.

There does seem to be Gas there but how much and oil has been found but not enough. At least there seismic modelling has been correct. Still a lot of pluses just a shame to see the share price as low and there must have been a lot of people who went long on Desire and got burnt very badly today and I hope no more posters rub there noses in there losses today.

Were all here to make money at the end of the daynot to gloat as someones misfortune!

From the FT.com       
MARKET REPORT - SMALL CAP

Desire Petroleum dropped 49.5 per cent to 50p after disappointing test results from its first well in the north Falklands basin.

That news also hit the other Falkland explorers. Rockhopper, which is looking for oil in the same basin, fell 15.9 per cent to 45p while Borders & Southern, which is exploring to the south of the islands, lost 5.9 per cent to 55p.

But some analysts remained positive on Desire. On balance, while the market may have been looking for seagull-scorching test results, it should be borne in mind that this is the first of a potential six-well programme by Desire, said Seymour Pierce.

It is encouraging that initial indications suggest that potentially all the ingredients reservoir, trap and hydrocarbons are present in the general area.

Tight stop losses will have cost people money...that's the problem...stop loss at 85p....opens up at 60 or so and sold at 46...no time to react...luckily mine were a lot lower and will stay put for the long run...come on DES !.

Unfortunately Greek, BBs are far from immune to stupid comments (aka Mitzy) I guess they forget to engage brain before posting. Just be thankful AM has few such muppets, unlike the Zoo which is rife with misinformation, malicious rumour, downright lies and people who should probably be locked up.

I'm pretty much with Cynic on this one, anyone trying to make this sound better than it is, is looking through rose-tinted specs. It's a duster and I am sure will be P&A (now if that's a stupid comment, I'm happy for it to come back and haunt me!). In the meantime I'll see what happens over the next few days but will probably take the loss and move on.

ptholden as oily said a breath of fresh air.......I had certain info second hand came my way i do not rule out Beth till i see RNS...contact postive on findings...am at loss tonight.........with all info....

Ouch Mitzy you've been verbally given a red card.. get the set and you can join him in the zoo..

Have a read, good write up on it :

http://www.fool.co.uk/news/investing/investing-strategy/2010/03/29/oil-investing-the-first-falklands-flop.aspx

.

I made a comment 10 days ago saying I was negative about DES so I was not surprised it fell 50% yesterday and that it could fall another 50%.

20p is my target.

heeeeeee Mitzy do try to engage that brain before you type.

markymar I have just read Hallucigenas report and he is saying buy at 51p for a 70p target...previously he said 95p.. Iam afraid he is in denial after yesterdays 50% fall so there might be gas but he expected oil and there is no oil.

The Times were right.

Am I mising something here? Apart from a day trading opportunity, why buy DES at the moment, at this price? The RNS is not what investors were hoping for & those who did not sell are now having to wait for the next drill. But in the short term I also think that the sp will drift, even though there may be a bit of a boost when the various stages of RKH drilling program gets under way. I can see no reason to currently buy DES, but am open to suggestions.

.

I don't know the exact timescales but with several companies in the area taking turns in drilling, there are bound to be rumours and counter rumours over the next few months/years and the sp's are going to be flying in all directions until the dust settles which gives all traders a chance to buy and sell and hopefully make some dough.

mitzy can you point out to me in the RNS where it stated that no oil has been found and can you tell me the results of Beth?



http://www.oilbarrel.com/nc/news/display_news/article/shares-in-desire-petroleum-slump-as-first-falklands-exploration-well-finds-poor-quality-reservoir/771.html

March 30, 2010

Shares In Desire Petroleum Slump As First Falklands Exploration Well Finds Poor Quality Reservoir


After the highs, come the lows. Ever since last September, when Desire Petroleum indicated it had a rig in its sights, excitement has been mounting about the first exploration wells to be drilled in the remote waters off the Falkland Islands for more than a decade. Rumbles of discontent from Argentina only raised the public profile of this already long-anticipated drilling campaign, putting some real firepower behind the share prices of the exploration companies, among them Desire, Rockhopper and Falkland Oil & Gas.
Last month, Desire spudded its first well in the North Falkland Basin since 1998, when a previous much-hyped exploration effort came to naught following a series of disappointing well results and a slump in the oil price. This week, press speculation in the Sunday newspapers prompted the AIM company to issue an early update even though the well, targeting the Liz prospect, is still logging.

The well has reached a depth of 3,570 metres and encountered hydrocarbons in the primary target at around 2,550 metres. Reservoir quality is poor, however, and the well looks to be sub-commercial. There is still much more to learn, with wireline sampling still to be carried out and logging required of the deeper reservoirs where gas shows have been encountered below 3,400 metres.

Gas, of course, is not top of investors wish-list given the difficulties of commercializing the stuff out here in the southern Atlantic it would only be useful if found in the multiples of tcf so that investment in LNG could be justified. There is some consolation for investors that the well has encountered oil, providing further evidence as to the existence of a working petroleum system in the region (Shells test of the Fitzroy prospect in 1998 recovered live oil to surface).

It is still too early to read much more into this holding statement. Smarting investors in Desire must now wait until later this week when a full announcement will be made. By then logging operations will have been completed and the results analysed, enabling the company to decide whether to deepen the well, suspend it for testing or to P&A.

The lack of good reservoir is a disappointment but not unexpected in this type of environment, said analysts at Fox Davies Capital. This is not a good result but hopefully the logs will provide valuable data.

The market reaction to the news was unforgiving, with shares in Desire losing almost half their value to stand at 51 pence by mid-afternoon on Monday, while Rockhopper, which has a 7.5 per cent interest, also suffered, with its shares down 18 per cent at 44 pence per share. Shares in Borders & Southern and Falkland Oil & Gas also dropped, even those these companies operate in the South Falkland basin, a region with a very different geological and structural setting.

Investors should take heart, however, from the fact this is only the first in a possible six-well campaign. And unlike the 1998 campaign, which tackled only one play type in a relatively limited portion of the basin, the 2010 wells will target different play types and structures so one failure wont write off the other wells.

Seasoned investors will know that exploration is a numbers game and that every well drilled, even the dusters, help build up a valuable picture of the subsurface rocks that could help the next well strike it lucky. Even so, a good result from the next well, Rockhoppers 100 per cent-owned Sea Lion prospect on the western margin of the basin, would go some way to restoring some very shaken investor confidence.