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 iii excellent post from eagerbeaver04

Desire Petroleum Plc, AGM Notes 8th June 2010

Apologies in advance for any errors/omissions/duplications.

Attendance was lower than I expected albeit there was approx 100 seated with a few people standing at the back and the sides.

Introductions were made, and the meeting began. Resolutions 1-6 were duly passed without incident save for the cup juggling/smashing Norseman.

On to the more interesting part of the AGM Ian Duncan (ID) was delighted that thus far, 2 wells have been drilled resulting in 1 gas discovery and 1 oil discovery. ID was at pains to remind investors that exploration in the NFB is at a very early stage and the aim is to start to understand the basin.
ID stated that there are currently 5 plays being worked up on the East Margin.
The basin is 4500km2 and is a failed rift which has already demonstrated prolific resources, oil, dry gas and condensate.
The source rock has been found to be more mature than previously thought. Sea Lion (SL) has proven good quality reservoir at shallow rocks however Liz has shown that the deeper reservoir rocks on the Western flank in the drilled location are not very good sands.
ID went on to say that the East flank sand entry points are good for our Rachel and Anna prospects and there is a high possibility that there will be many more prospects of the same play type to come.
ID described that there are currently gaps in the 3d seismic on the Eastern Margin which the company, in conjunction with RKH, intend to fill by shooting new 3d over the winter.
ID described the many ongoing studies with the new information from the NNFB but regarding the SNFB source and reservoir were still the principle risks.

Liz well results. Well defined fans in the West margin with better than expected shallow sands above the source rock (20%-30% porosity). Base sand below the source is poor. The 20m shale seal was surprisingly good in that it held back significant pressure. It was when drilling through this seal that we encountered the gas kick and lost time. The gas condensate encountered was from a 17m net pay with an API of 49. Lower down in the well was over pressure. Its thought that the rock is volcanic albeit not definite. We encountered no water contact. Overall more work required. We found a good column of dry gas and ID did remind us that it is indeed possible to get good reservoir in volcanics and referred projects in Argentina. 2 probably 3 hydrocarbon systems have been identified and are in play. ID confirmed that Liz was chosen because it was the only prospect which got them into the pre-rift which they wanted an early look at. Reprocessing of the seismic data is ongoing.

Sea Lion Very exciting. DES have a shared data policy with RKH. We now know that the top of the oil window is much shallower than previously thought and the clay stone acts as a seal between play types.

Rachel Has many fans and as such optimal location will be a difficult choice. Rachel will be our next well and the option to side track this well is being persued.

Ninky This prospect is more basinal and as such probably has less reservoir quality. It is likely to have structural closure and will be an early well.

Anna Not originally a top 10 prospect however with SL that has now changed. We are currently looking at fans to target.

Alpha I missed these comments

Ann Looking at a new and more optimal position to drill.

General ID was clear that due to SL success the CoS for Rachel and Ninky were greatly increased, although no figres were given. It was confirmed that at $50 oil a 55m find was commercial. ID confirmed that we get the rig back in the 3rd quarter and our first targets were to follow the SL play type.

Questions were then invited.

Q1. When would seismic be shot?
A1. Nov10-Feb11

Q2. Are additional site surveys reqd?
A2. Not if covered by 3d.

Q3. Rig program?
A3. Toroa / Ernest / Well test SL / Rachel early Sept 10 however expect delays.

Q4. What does the SL well result mean to DES?
A4. Better than expected shallow sands this is positive for Jacinta and Alpha but the focus is on an oil strike (not gas).

Q5. Will there be more rigs?
A5. Not yet as there is no requirement. If an extra rig was required it would be considered.

Q6. What prospect is next for DES?
A6. Drill Rachel early September Then Ninky.

Q7. How many prospects does DES have?
A7. Lots more than the10 high grade prospects but will not be drawn to a number.

Q8. What is the minimum size required for a commercial gas find?
A8. We think maybe 3-3.5tcf but oil is our target and that is what we are pursuing.

Q9. What was the API of the Liz oil?
A9. There was no oil sample recovered from Liz.

Q10. What was the problem with the Liz reservoir?
A10. Cementation is an issue in the deeper reservoirs. Its early days and as such there is much to learn about the basin.

Q11. Have we had any interest from major oil companies?
A11. No interest whatsoever yet but nor would we expect any its too early.

Q12. What size of oil fields are DES looking for?
A.12 Any size, Fields come in clusters they are never stand alone.

Q13. Explain what fairway means?
A13. It means a playtype for example the eastern flank fans.

Q14. How does the BP issue impact DES operations?
A.14 Not relevant because DES is not deep-sea.

Q15. What possible news flow can we expect before September?
A15. Depends on Liz, however that would be at least another 2 months away. Possibly more prospects.

Q16. Will DES be producing any more well plans?
A16. No, the deeper prospects are over pressure and the shallower fans are normal pressure.

Q17. How many wells can we drill with our current budget?
A17. We can drill 4 on our own account plus 2 wells paid for by our partners.

Q18. What is needed for a play type to be successful?
Q18. Reservoir/Source/Seal/Trap

Q19. This was a question on RKH which I missed?
A19.

Q20. This questioned the Danny Fortson episode.
A20. DES will stick to RNS at spud and completion of well. This was challenged vehemently by the questioner who suggested that as changes became apparent they should be notifying the market. SP was adamant that there will always be only 2 RNS per well whilst drilling because all data is required before release. SP went on to confirm that the company had not been approached by the FSA and that the matter was closed.

Q21. The allegation was made that the company did not go far enough and its response to the Sunday Times article on the Monday morning was inadequate?
A21. The company did not have enough information to hand at that time to make an announcement to the market.

Q22. This was a question on share price manipulation at RKH re the heavy oil. Share price dropped like a stone then rebounded when company issued statement.
A22. No comment not DES.

Q23. This was a question from me regarding clarification on best case number of wells we could drill.
A23. (refer A17)

Q24. How long will it take to drill Rachel?
A24. 25 days.

Q25. Do we need to raise money for the proposed 3d survey?
A25. This will probably be result dependant.

Q26. RKH have detailed build-ups as to how raised capital will be spent. Why have DES never provided such build-ups?
A26. By not assigning sums of money for specific tasks we remain flexible to act on information as it comes in.

Q27. What was the cost to DES of the Liz well?
A27. There was a real reluctance to answer with a number only offering lame excuses such as depends on total number of wells etc. Reluctantly they said perhaps 15m-20m. (Not sure whether or $. My feeling was sterling)

Q28. Is it possible that a deal with RKH could happen?
A28. No. No benefit for either party.

Q29. What effect were the Argentineans having?
A29. None. Operations have been planed independent of all South American countries.

Q30. What part are Arcadia playing?
A30. They are down to drill Alpha and Ann. They will contribute to the OG cost after drilling.

Q31. Is it possible that Arcadia will not drill?
A31. Yes but we think this unlikely. Ultimately we will present Arcadia with a drilling budget with approximate costs and they have to agree it.

Q32. How will future fundraising be funded?
A32. <5% Institutions for speed and convenience. >5% shareholders will be involved.

Q33. What about production?
A33. Any production would be years away. BL stated that fast tracked production would be a minimum of 3-5 years away at best.

Q34. How many options does DES have on the Ocean Guardian?
A34. There are a total of 6 fixed firm price options over and above the 4 contract wells. Any wells thereafter would be by mutual agreement and be subject to financial agreement.

Q35. What would the share price be on a find?
A35. Not prepared to comment, it would be guesswork.

Q36. This was a question regarding the deeper part of Liz.
A36. The deeper source is very likely to be gas. This could be ok.

Q37. If a find is made is a production license required?
A37. Yes, good question, a production license will be required.

Q38. Is it possible that both Alpha and Jacinta can work?
A38. Yes. Alpha is likely to be gas and Jacinta to be oil.

Q39. Are we still going to drill Ann?
A39. Yes but we may have to look at a more optimum location to drill in light of the Liz results.

Q40. The company only has 1 directly employed geologist, is this sufficient?
A40. We have 5 geologists working up DES data at Senergy. 4 are working up the Eastern flank and 1 is still working on the lower priority Liz prospect. We are actively looking for another board level geologist.

Q41. What is the revised CoS figures for Rachel in light of Sea Lion?
A41. No revised figures have or will be done albeit SL does significantly reduce the risk on the Eastern flank.

Q42. When will Arcadia drill?
A42 Now the SL play type is successful we need to target that first. When RKH drill Ernest it will tell us more about the SNFB.

Q43. What is DES end game?
A43. Prove as much oil as possible then sell out, but things can change.

Q44. Is it possible that 2 rigs can drill at the same time?
A44. Yes, its not a problem to the FIG.

Q45. What effect will FOGL have if successful?
Q45. No effect successful or otherwise, its a different basin.

Q46. What slot have RKH been given for the SL appraisal?
A46. No slot has yet been allocated.

Q47. Liz at first was bad news but now its much better?
A47. No change, the reservoir quality is poor.

Q48. Will wellheads be refurbished?
A48. No.


Points of interest from one to one discussions with directors after the meeting.

1. SP confirmed that the FIG require a $12m deposit as a contingency against any well that is drilled. This means that regardless of results DES will be returning home following the drilling program with $12m in cash.
2. Dawn/Jacinta prospects very likely to be drilled prior to drilling Alpha.
3. ID confirmed that when comparing DES prospects on the Eastern flank with the Sea Lion discovery that there was a 90% similarity.
4. Diamond Drilling are looking for work for the OG April/May 2011 hopefully in Brazilian waters. DES are not currently in a position to open negotiations for an extended OG stay but hope that if required the OG will still be available. Other rigs are now becoming available on the open market.
5. SP suggested that the market would play games throughout the campaign. He said he would not be surprised to have a repeat of the RKH situation on every well drilled.
6. SP agreed with me when questioned on dilution. I suggested to him that any further dilution at current levels or below would kill investor confidence and dilute most shareholders out of sight. It was agreed we must find commercial oil before any further monies are raised.
7. ID confirmed that it is possible that the whole of the East flank could potentially be one prospect and that the infill 3d will reveal more prospects.

My thoughts.

i. I was less than impressed at the lack of transparency regarding anything of a financial nature. I cannot see any positive connotations here whatsoever.
ii. I am quite sure we will find oil on the Eastern flank in one or both of our next wells.

It was particularly nice this year to meet up with many other posters after the AGM (you know who you are). Lets hope next year when we meet we have found commercial oil.

kind regards

eb

and i thought that the above told us bugger all, but then that is to be expected and actually not unreasonable

Noticed yesterday it was being crept-up in a similar vein to TAN the last few days almost as if we aren't meant to notice.

http://www.prweek.com/uk/news/1014657/Falkland-Islands-hold-talks-agencies-UK-companies-increase-oil-exploration/

Falkland Islands to hold talks with agencies as UK companies increase oil exploration

http://en.mercopress.com/2010/07/09/fifth-company-argos-plans-to-drill-for-oil-off-the-falkland-islands-says-ft

Friday, July 9th 2010 - 03:57 UTC

Fifth company, Argos plans to drill for oil off the Falkland Islands says FT

A fifth UK company plans to drill for oil off the Falkland Islands after it raises 70m in a London stock market listing, reports the Financial Times. Argos Resources, which holds licences next to the landmark 250m-barrel Falklands oil discovery made by peer Rockhopper Exploration in May, hopes to achieve a 200m value on AIM.

People close to the company said Argos began pre-marketing the share offering to investors this week with broker Evolution.

The news comes after three UK oil explorers Rockhopper, Desire Petroleum and Falkland Oil & Gas Ltd raised almost 150m to fund a drilling campaign off the Falklands that was condemned by the Argentine government as a violation of its sovereignty.

Rockhoppers value surged 650% in May after its Sea Lion prospect, which lies just east of Argos Resources PL001 license, made the Falklands first large oil discovery.

According to the FT Argos, formed in 1995, is led by John Hogan, who worked on Lasmos attempts to find Falklands oil in 1997. Ian Thomson is the companys chairman and founder.

Proceeds from the Argos IPO will be used to shoot 3D seismic data and to fund exploration. It is not clear whether Argos will attempt to use the Ocean Guardian drilling rig being used by oil explorers on the Islands, or if it plans to use another rig at a later date.

Since exploration around the Islands began this year, Argentina has sought to make it difficult for companies to move in equipment and supplies by requiring special shipping permits to cross Argentine waters to the Islands.

Legislators in Buenos Aires have also approved a bill to impose sanctions on any companies working in Argentina with links to the Falklands exploration program. The bill was passed unanimously in the Lower House, an illustration of the depth of feeling across parties and nationally, and is expected to be ratified by the Senate.

Britain says the Islanders have the right to self determination and to develop their own hydrocarbons industry.

are we going places now,when is the next action.

Answer is in post #4453.

Would be good to hear the results on Liz they have 5 blokes from Senergy working on all the data and they must be happy with some thing as they would not waste all this time and money.

What kind of gas?

How much gas?

How big is the gas field?

How much Hydrocarbons were in counted?

What does the data tell them especial combined with RKH data

Plenty to come from Desire on well results of Liz if its a commercial gas find its worth some thing.

Its also vey early days we are at the begining of another North sea been found but bigger.

looking forward to news that the rig is on its way and ready to do its stff

You ARE looking a long way forward!

maybe my eyesight is better than most........

maybe....

steady decline today (7%),is something brewing?

as far as i can see, DES is a bit peripheral insofar as it owns little of note itself, and rather hangs on the coattails of RKH ..... for sure if ernest came up trumps, DES would rocket as it has licences abutting to the south ..... however, if ernest draws a blank, as seems more likely, then DES is assuredly not the stock to be holding

indeed, there is a good argument for shorting it, as in the event ernest is a dud, then 40/50p could be immediate

to complete that, RKH could drop to 200/220, but more likely 240 given Sealion

FOGL is anyone's guess, but if 70/80 held then holders should think themselves lucky

"FIG Mineral Resources Department.

"Rockhopper Exploration spudded their Ernest well (26/06-1) in licence area PL024 on 23rd July and have announced that the well did not encounter any oil shows. The well has been safely plugged and abandoned This was another first; the first well to be drilled in the southern part of the North Falkland Basin and the data will be of huge benefit to the understanding of the geology in this area and will assist companies in deciding where to drill future wells.

The Ocean Guardian has moved to Rockhopper Explorations Sea Lion well, (14/10-B) that was drilled in April/May where hydrocarbons were encountered, resulting in the well being suspended for re-entry and testing. After testing, the well will be permanently plugged and abandoned. The current programme includes anchoring up, re-entering the well, drilling through cement cores and locating the hydrocarbon intervals, testing and plugging the well, is anticipated to last 25-35 days. Actual flaring of hydrocarbons is likely to last less than 48 hours. These are encouraging steps but there is no gua guarantee that the well will produce commercial hydrocarbons until more appraisal wells are drilled and further analysis is carried out over the following months and years to establish the economic viability of the field.

After the drill stem test on the Sea Lion prospect, the rig will be contracted by Desire Petroleum and their Rachel structure will be drilled which is located south of Sea Lion in licence PL004."

There was nothing fresh in the latest DES/RKH EIA's that have just been through FIG...merely extensions of the current ones till at least Feb 2011.

http://sartma.com/art_8016.html

Falklands : DIRECTOR OF MINERAL RESOURCES REPORT FOR FRIDAY, 27 AUGUST 2010:
Submitted by Falkland Islands News Network (Juanita Brock) 05.09.2010 (Current Article

StockMarketWire.com
North Falkland Basin-focused Desire Petroleum posts pre-tax losses of $6.4m for the six months to the end of June - up from $265,000 a year ago.

Operating losses were $6.5m compared with $350,000, in the corresponding period last year.

The firm had cash and cash equivalents of $68.7m compared with $40.6m a year ago.

Chairman Stephen Phipps said: "This drilling campaign in the North Falkland Basin has started very positively.

"Our first well Liz discovered gas in two zones and on the Sea Lion prospect drilled by Rockhopper Exploration, a potentially significant oil field has been discovered.

"The confirmation of oil in the NFB has clearly significantly de-risked the rest of the drilling campaign.

"With the 'Ocean Guardian' rig due to return to Desire within the month, we now enter an exciting period of drilling activity which may see us drilling up to four wells back to back."

Chances are that one of the four's going to produce the goods you'd think.....?

Off topic : massive hurricane heading west...I think its name is Igor.....could add to the bull run on oil.....to view amazing pictures from space live, log on to www.nhc.noaa.gov/, and then click satellite, and then their floaters or best of all is the atlantic wide view via flash or java.