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

yet more news today:

The current exploration programme, closely watched not only by British investors but also by Argentina which claims sovereignty over the islands, has recently suffered a few knocks, however. [ID:nN22219606]

Rockhopper cast doubt over estimates of its oil reserves at Sea Lion citing a lack of geological data, while Desire said its Rachel well was dry but it would drill a sidetrack well from the original hole having identified a more prospective zone nearby. [ID:nLDE69E099] [ID:nLDE69C0FV]

Drilling of the sidetrack was completed on Wednesday, said Desire, adding that geological tests are underway to find out whether oil was found or not. The test results should be known in the next few days said analysts.

BUY

Some analysts are bullish on the upside still to come from Rockhopper and Desire given the size of Rockhopper's discovery and the geological potential of the Northern Falklands basin, on which both are focused.

Evolution Securities analyst David Farrell said that Sea Lion (Berlin: LOC.BE - news) could be a world-class oil field and that Rockhopper's current share price is underpinned by the value of the discovery, meaning the exploration portfolio comes for "free."

Rockhopper raised 206 million pounds ($325.1 million) in a placing in mid-October, easing analyst concerns over funding, to finance the drilling of appraisal wells and undertake further studies to help better understand its discovery. [ID:nLDE69H1ZY]

"The optimum time for Rockhopper to exit the Sea Lion project in terms of maximising shareholder value would be at the final investment decision point and this appears to be exactly where it is heading," Farrell said, referring to details it gave at the time of the placing.

Of the seven analysts covering Rockhopper on Thomson Reuters (TRI.TO - news) StarMine, all have a "strong buy" or a "buy" rating. Four analysts cover Desire on StarMine, with two of them on "buy" or "strong buy" and two on "hold".

"Desire's portfolio of prospects is extensive and does offer potentially huge upside," said Seymour Pierce analyst Alan Sinclair on Oct. 15 after the company said its Rachel well was dry. [ID:nLDE69E099]

CAUTIOUS

Other analysts, while not banging the table with "sell" ratings, are wary given that so far the drilling campaign has only yielded one commercial discovery and one that has been the subject of an implicit reserves downgrade due to lack of data.

"Sea Lion could end up being bigger, but it could also end up being smaller than the market was anticipating," said Mirabaud Securities analyst Richard Savage, who has a "hold" recommendation on the stock.

"Great discovery but let's see what the reservoir's like over the whole of the structure; drill the appraisal wells before anyone gets excited."

Oriel Securities analyst Richard Rose moved Desire to "hold" from "buy" after the disappointment of the initial Rachel well and based on a comparison with Rockhopper.

"I wouldn't say it [the sidetrack well] is completely make or break but...it looks to us like the best prospect they have in their inventory so if this doesn't work it will be a bit of a blow to the company," he said.

The risk that Sea Lion is a lone discovery, while unlikely, could not be ruled out, added Savage, meaning that due to the remoteness of the islands and objections from Argentina it could be difficult and very costly for Rockhopper to build the infrastructure needed to commercialise the oil. (Editing by David Cowell)

($1=.6336 Pound)

Looks like they will keep everybody sweating until monday morning....not in...just too risky....but will keep my RKH shares....

rf -i think you did the right thing switching to rkh - i dont mind the risk here for today only - rumour mill working o/t - see another increase this afternoon then i am out again - had a good year and only in modest now - but sufficient to make some g'ss if it goes well at a price i should at least break even end of day imo barring a shat rns! lol

This is like playing casino red or black....

While logging they would of know within the first 6 hours if the had hit oil or not, and I would of thought they would want the news out before the weekend as I think it is crew change over today as well.

I am wondering if the very strong winds could be affecting the logging apart from that we should hear today.

agreed marky - wonder if some lunch time buying b4 the rns?

One thing for sure they are keeping this one quiet with no leaks as nobody has a clue.

Imagine if it is a billion barrel find.....and not in....

Might be worth renting a midget submarine with a periscope about a quarter of a mile away from the rig....

rf - i have done that & am in it right now - have taken camcorder & will send the pics back if I can find my way through this black stuff coming from the sea bed- LOL LOL LOL

You're in the wrong hemisphere...that's the gulf of mexico you are in !...you need to travel a lot further south.

and being cold waters, it will be very murky indeed

Rachel has come in as a duster they have side tracked into another fan system .so even if this fan holds oil the actual size could be very small and un economical to produce.just to put a different slant on things.

rf - lol -me i dropped me compass - no wonder!!

cynic - i'm ok - got me marks & sparks thermals on!!

lol

And the sp is holding up... bizarre....no way do I wish to be in DES at the moment....

but surely marky, they won't have penetrated this other system yet?
sounds as though DES could be grasping at straws - and seemingly the market with it, but then i do have a vested interest in a disaster

.

probably because of rumours like the one below - from iii apparently:

'Message below posted from theblue. Make of it what you will!

the lads are just awaiting the news, knowbody knows, thats the truth, DES have oil, its just a matter of how much, and if its commercial or not, i expect an RNS today / monday confirming HC's, just will they confirm commercial oil, or will they say HS's encountered, both imho opinion will move the stock north, but if they say HC's non commercail its trouble for us.'

cynic i think you mean DESIRaster! lol

11:59:55 des buy of 195,000?!

lol