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

Wise man - you can always put it against the wonderful profit elsewhere! RKH peut t'etre?

exactly so .... i have a modest holding in RKH already, and if DES starts to reverse, i am also short FOGL

you'll recoup that little loss - had a good day bmr - still undecided des at this sp - bmr worth a look next week again imo along with rrr which the mms appear to be loading up - lots happening by 30th nov

des - rach 2 - if they get the nod could be a turning point - watching closely - need a dip pls!?

Interesting, poster on AFN thinks the new coordinates for the next drill (Rachel-2) are :

Latitude 49 25 44.01 S
Longitude 59 04 16.28 W

And says rig should be at Rachel-2 location Monday, if that is the case should be an RNS coming Monday morning to confirm Rachel-2 is going ahead.

From AFN :

durby - 7 Nov'10 - 09:37 - 34951 of 34951

New Position - 2.9Km North West

If co-ordinates given by Granny is correct, OG is moving appx 2.9km North West from current position. See picture below (Point 1 is the new location):

http://i51.tinypic.com/2599ulk.jpg

Co-ordinates:
New location (Point 1):
Latitude 49 25 44.01 S
Longitude 59 04 16.28 W

Old location as per NOTAM (Point 2):
Latitude 49 26 58 S
Longitude 59 02 46 W

So we are heading further west - which is good news!

mini kerrchinnngg monday perhaps!?

Shorters are havimg a bad start.

Goldman Sachs releases today, DES is a buy as well as RKH and many others.


BUYS

Rockhopper started with buy rating at Goldman Sachs
Nautical Petroleum initiated with buy rating at Goldman Sachs
Northern Petroleum started with buy rating at Goldman Sachs
Nighthawk Energy started with buy rating at Goldman Sachs
BowLeven initiated with buy rating at Goldman Sachs
Desire Petroleum initiated with buy rating at Goldman Sachs
Borders & Southern initiated with buy rating at Goldman Sachs
Falkland Oil & Gas initiated with buy rating at Goldman Sachs

------------

NEUTRALS

Tullow Oil downgraded to neutral from buy at Goldman Sachs
Sterling Energy initiated with neutral rating at Goldman Sachs
Valiant Petroleum initiated with neutral rating at Goldman Sachs
Max Petroleum initiated with neutral rating at Goldman Sachs
EnQuest initiated with neutral rating at Goldman Sachs
Tower Resources initiated with neutral rating at Goldman Sachs
Dominon Petroleum started with neutral rating at Goldman Sachs
Cove Energy started with neutral rating at Goldman Sachs
Faroe Petroleum initiated with neutral rating at Goldman Sachs
Melrose Resources initiated with neutral rating at Goldman Sachs

------------

SELLS

Gulf Keystone Petroleum started with sell rating at Goldman Sachs
Encore Oil started with sell rating at Goldman Sachs

HOW many more times is he going to post that crap......

Well am back in!!!!!!

GS comments on DES


Source of opportunity

We initiate coverage of Desire with a Buy recommendation and a 12-month price target of 197p, believing that the companys sizable de-risked exploration acreage in the North Falklands provides it with a structural exploration advantage.

We believe that Rockhoppers Sea Lion discovery has helped to de-risk Desires substantial acreage in the north eastern part of the North Falklands basin, and, in view of this, regard our assumed likelihood of success of 20% for prospects in this acreage as conservative. Desires acreage in this part of the basin amounts to over 1000 sq km giving it substantial running room to drill a significant number of potentially transformational wells over the next few years. As Desire does not have what we would regard as an immediately commercial discovery (with the Liz discovery finding gas), it does not possess the same level of core value to support its share price as its neighbour in the basin, Rockhopper, making the stock more levered to the exploration potential in the area in our view. In the event of 100% success at the prospects that we include for Desire our valuation would increase by over 6x. Conversely, if Sea Lion has raised expectations too high and no further discoveries are made in the basin, the downside in the stock would be close to 100%. We believe that
the market tends not to be aggressive enough in valuing new basins after the initial discovery, and while we appreciate the risks involved, we are willing to give Desire value for exploration drilling out to 2013 in the area.
As a result we see substantial upside to our target price and add the stock to our Buy List. We also include Desire in our Play Openers screen.

Catalyst

We expect the key catalysts to be exploration and appraisal drilling in the companys acreage in the north east of the basin. We believe that Sea Lion has partially de-risked the area, meaning that Desire has a large and potentially material pipeline of exploration prospects to drill. Success at a Rachel follow-up or one of the other upcoming wells in Desires drilling programme are the obvious near-term catalysts.

Valuation

Our 12 month SOTP-based price target is calculated using a US$85/bl oil price. We include value for Desires exploration programme with a three-year time horizon, with catalysts falling after 12 months being given a 50%
discount. We assume an equity raise of US$200 mn to fund further drilling in the Falklands in our valuation. We assume a 12% discount rate higher than the normal 10% we use for OECD countries to reflect the higher political risk that we assume in the Falklands.

Risks

Risks to our view and price target include worse than expected drilling success in the companys acreage, a deterioration of political relations between the UK/Falklands and Argentina that impacts exploration activities, or the waxiness of the oil increasing costs to a higher level than we expect.

R-2, according to this one estimate of the new location, looks to be in a pretty prime place.

R-EIS were the original mentioned ones prior to drilling, R-1 is the original well thats just been P&A and of course Rachel-2 is the estimate of where the next one is going.



.

According to the grapevine spud could be from Tuesday afternoon, so an RNS by Wednesday it seems (could be earlier).

Pro they were hoping to move the OG later tonight and it should take a couple of hour to get her to here new spud sight weather permitting,winds not to bad but blowing in right direction.

So RNS soon

Marlon iii

Normally in oil exploration you have a pretty good idea about the size, depth, lateral extent, age and OIP target on a drill.

What you normally have very little idea of is whether oil will be present or not.

Rachel 3 is the complete opposite of this.

It is almost certain that the reservoir encountered with the Rachel sidetrack will be re-encountered, and oil will be present.

However, we have only small clues as to what we are drilling.

It isn't the Barremian 0 top-fan as shown on the prospects map. We are pretty sure, that this will be dry.

So at the new well location, how big are Rachels sisters?

Is one of them Kath, Elaine, Sealion, Sealion lower, Ruth, another, another2.

Which of these are realistic targets and not ruled out by maturity depths and eastern faults?

There is scant data to really help us on deciphering whether we are pursuing a 30mmbs target or 500mmbs+ target. Although we are confident that everything below barremian 3 will be oil bearing!

What an insane position for an investor to be in!!!!

The scant data tells me that Rachel 3 could still be Pyrex...theres lots of high amplitude west of the heavily faulted zone that has not yet been penetrated, but I'm bemused to say the least.

Just sit tight and enjoy the ride. --------------------------------------------------------------------------------

Well, its off and running time with Rachel North.


Desire Petroleum PLC
Rachel North
RNS Number : 8228V
Desire Petroleum PLC
09 November 2010

Rachel North

Desire Petroleum plc (AIM:DES) the oil and gas company wholly focused on the North Falkland Basin, wishes to announce that both regulatory and partner approvals have been granted for Desire to drill the 14/15-2 Rachel North well.

The 14/15-1 well has been plugged and abandoned and the rig is currently waiting on weather to move to the Rachel North location.

The Rachel North well will be drilled vertically with an estimated total depth of 3,050 metres. The bottom hole location will be 1.7 kilometres from the Rachel sidetrack 14/15-1Z bottom hole location. Drilling operations are expected to last around 35 days.

It is intended that this well will evaluate the sands with oil shows encountered in the Rachel sidetrack as well as a number of possible additional sands not seen in the sidetrack.

Desire wishes to thank both the regulatory authorities and its partner Rockhopper Exploration plc for their speedy approvals to move to the new Rachel North location.

A further announcement will be made once the well has been spudded.

sh one t or bust - lol

gl everybody.

Just back up from mine with very light clogs on clip clop clip..

Rachel 3 is about 30 km from Sea Lion,am quiet sure DES hit oil its just a matter of how much and whats in those stacked fans.

This is the bit I like.
'The bottom hole location will be 1.7 kilometers from the Rachel sidetrack 14/15-1Z bottom hole location'.
They must be fairly sure that the initial Rachel drills had indicated that the chances of a commercial find were high. If you were not confident and thought that those initial shows indicated a poor low volume find or even a duster, you would move as far away from that well as possible.
Looking very good, still a big risk, but the percentage of risk factor must be far lower than pre Rachel, when the sp was higher than its current level.

Well, blow me away but I have just purchased a long position in DES.

Why, well, there is a top seal, a side seal and this side of the side seal they know there is oil. They are also going to target some of the lower fans as well.

All in all, I do not think they can miss oil this time, and so, I now have a long position. Goldman Sachs remaining positive also assisted in the needed confidence to take a long in DES.... ;)