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

Cheers for that skinny. I use Digitallook as a backup site and looks like MAM are going to have to sort out a few price glitches today, so will have to multi-task for a while!

These are notes taken fron Desire AGM in June,i have now re topped up on Desire today as i hope they are bought out or the oil which they hold in Sea Lion will be bought out.

With a market cap of only 73 mill the offer made by a partner knowing what was made to RKH we should see this SP double depending on deal.

"DES are not party to any discussions with third parties - and neither do they expect to be at this stage. Stephen Phipps did agree that Anadarko, with their DoD connections would make an excellent partner but added that they had no inside track, apart from reading about the famous visits by the company jet to the FI). The assumption is that RKH's chosen partner will conclude negotiations with RKH and only then will they open discussions with DES and other interested parties in the 'Unit'. "

DES are price takers and are not in a decent negotiating position. I wouldn't expect miracles (eg oil to water) even though they have form in that regard.

based on the enthusiasm that greeted RKH's deal yesterday, i think mark's b/o estimate is wildly over-optimistic

Guess we will have to wait and see,my average price now is 21p,also my biggest holding, then RKH then FOGL.

Not holding BOR

there's a CPR out today which is clearly trying to make DES sound much more alluring than it is ...... hahaha!

StockMarketWire.com
North Falkland Basin-focused Desire Petroleum is delighted that a recently-completed competent person's report indicates its prospect inventory continues to strengthen.

The report on the Elaine and Isobel prospects - prepared by Senergy (GB) - covers the interpretation results from the 2010-2011 merged 3D seismic data.

A CPR covering the full prospect inventory from the merged 3D seismic data will be available in the fourth quarter.

The Elaine and Isobel prospects are located wholly within the PL004a licence in which Desire has a 92.5% interest.

Desire says the highlights include:

* Best case un-risked prospective recoverable oil resources net to Desire are estimated to be 312 MMstb

* The Elaine and Isobel fans are developed in the southeast of the basin within the basal part of the F sequence and are similar to the Sea Lion fans further north

* The seismic expression indicates a thick, sand-prone interval inter-bedded with mature oil source rock and combined structural/stratigraphic traps mapped on the downthrown side of the basin-bounding fault system

* The volumetric assessment of the total Elaine and Isobel prospect area indicates gross prospective resources which are comparable with the size of the Sea Lion field and with a geological chance of success of 30%

Desire chairman Stephen Phipps said: " We are delighted that our prospect inventory continues to strengthen and that some of the best remaining potential in the North Falkland Basin is within licence PL004 in which Desire has a strong equity position.

"The Elaine and Isobel prospects are very attractive drilling targets, particularly as the basin moves into a new phase of activity.

"The planned development of the Sea Lion discovery demonstrates the commerciality of major discoveries in the basin and we are optimistic that the Elaine and Isobel prospects can deliver significant value for our investors.

"As our prospect inventory matures, we will be seeking industry partners to participate in further exploration of our licences and the quality of prospects like Elaine and Isobel provides a strong platform for success."

That's what Desire always say over the past 10 years, but no significant oil has been found. RKH has a much better track record.

bet you couldn't turn oil into water!

But Desire can a few years ago. Hahaha.

StockMarketWire.com
Explorer Desire Petroleum, which is focused on the North Falkland Basin, said its for the half-year to end-June period decreased from $39.3m (restated) in the previous period to just $2m, due to a fall in exploration and evaluation expenses.

The 2011 exploration and evaluation expense of $39.7m (restated) largely consisted of unsuccessful Ninky well costs and 3D seismic expenditure incurred during that period. These costs have reduced to $0.7m in 2012 following the completion of drilling and seismic activities.

Net Administrative expenses for the period increased from $532,000 to $831,000. This was entirely due to a reduction in the allocation to joint venture licences, with gross administrative expenses in line with the previous period.

The exchange movement for the period showed a small gain of $66,000 compared with a gain of $821,000 in the previous period, and arises primarily on the Group's Sterling cash balances, which were held both directly by Desire, and as restricted cash within escrow accounts. The period end exchange rate of $1.568/£ was little changed from the rate at the start of the period ($1.554/£). Investment revenues of $20,000 in the year were lower than 2011 levels due to a reducing cash balance during the period.

The tax charge of $447,000 and the finance costs of $48,000 for the period represent estimated provisions for the settlement of corporation tax liabilities arising in respect of investment revenues in prior years.

The group capitalised $0.7m of exploration and evaluation expenditure ("E&E") in the period. The only E&E assets carried forward at the balance sheet date are those in respect of the farm in area PL004b, where the Group holds contingent hydrocarbon reserves. All other E&E costs have been expensed in the Income Statement, in accordance with the Group's successful efforts accounting policy.

Gross provisions at the period end have reduced from $25.7 million to $nil, following the demobilisation of the drilling rig and equipment at the conclusion of the drilling campaign.

The Group's cash resources at the period end amounted to $12.7 million, plus an additional $1.8 million held as restricted cash in escrow accounts with AGR to meet liabilities within creditors.

Due to the Group's available cash resources at the period end, the Directors have a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future.

Stephen Phipps, Chairman, said: "Recent developments have highlighted the exciting potential of the North Falkland Basin and it is Desire's intention to seek a high quality farm in partner to help us capitalise on this potential, with our share in recent discoveries, material positions in well defined prospects and the exploration potential across our remaining acreage."

Highlights:

Competent Person’s Report (‘CPR’) on the 14/15-4a well results give net to Desire contingent resources of 85 MMstb oil and 178 bcf gas

Rockhopper Exploration’s CPR indicates that Desire has an estimated 4% of the Sea Lion discovery

CPR update on the Elaine and Isobel prospects with estimated best case un-risked prospective recoverable oil resources net to Desire of 312 MMstb, with a geological chance of success of 30%.

A CPR covering the full prospect inventory will be available in Q4 2012

Licence extensions on Tranches C, D and F, subject to Executive Council approval

Loss for the period of $2.0 million decreased from $39.3 million (1H 2011 restated)
The Group’s cash resources at the period end amounted to $12.7 million

basically DES is all but bankrupt as far as i can see

http://www.guardian.co.uk/uk/2013/mar/12/Falkland-islands-referendum-votes-yes

Falkland Islands referendum: overwhelming yes to staying British Only three vote no in unsurprising landslide, which Argentina dismisses as irrelevant in deciding ownership of territory

http://www.desireplc.co.uk/images/uploaded/8766251_8766251.pdf

AGM Presentation

Taken from iii

As per last year, my notes of the meeting and discussions with Board:

ID: Prem/ RKH deal was a good one. This is not the North Sea. However, still expects a premium to RKH barrel price, intimating $6 per barrel? (my take).

Would not be drawn on farm-in discussions. Share price is cyclical and likely to rebound upon rig return.

FDP can only be delivered with all three parties' agreement. FIG would be reluctant to intervene. They could adjudicate, but this is very unlikely, and almost certainly will not be necessary.

KB: RKH appraisal of Sealion satelites will satisfy DES licence extension requirements.

Isobel stack is best prospect within NFB.

RL: Farm-in - most companies require circa 3/4 months to assess information.

Late 2014 is a reasonable timeframe to get a rig down to Falklands. Next six months will see a number of announcements, with Des farm-in, next step of Sealion development approval (I took this to mean FEED options?), and rig announcement. This time next year, any rig for late 2014 would require setting up. Therefore, expect announcement of contract within next six months.

Des cannot take a rig alone - requires circa $100m mobilisation, even before drilling. Leasing Co would want at least a year's contract. Ocean Guardian left as Diamond wanted 2 yr contract extension.

Des could take slots in southern rigs if absolutely necessary, at higher day rates, as this may offset high mobilisation costs of going alone.

relationship with RKH is excellent. Also with Prem. Had a good relationship with Prem even before RKH farm-out. Fully expect RKH to send a rig down for appraisal/ exploration before production drilling, and this would need down time between drills - therefore an opportunity for Des/ ARG.

SP: Not giving anything away as to farm-in, although probably be complete in July/ August. Outside of farm-in, market has obvious very little interest in small oil i.e. as to why share price is so depressed, but this wasn't said in relation to farm-in. RKH is very good value at present given reserves.

RKH are literally snowed under with work, therefore not surprised no unitisation discussion as taken place to date. This ought to be commenced in July/ August. This is good timing for Des, co-inciding with farm-in.

Overall:

I get the impression all directors are very excited about the prospects. Presentation was corporate, but in private much more up-beat. They want a crack at Isobel.

marky so they are saying this is dead money till May 2016?

Hal there hoping to be drilling late 2014 or early 2015 so no to your question

I am hoping to buy in at some point also buy RKH as both look cheap also FOGL with all that money they are sitting on.

Lots of BUTS.......Funding .....Farm-in......I don't think getting a rig will be a problem not with PMO and RKH wanting it as well.

Lots going on down there at moment.

from Chav

Locally the infrastructure requirements for the next drilling phase is being pushed as fast as possible. They are going to have additional berthing capacity, adjacent to the Oil yards, seperate from FIPASS for the supply boats to use.... The Byron Oil yard capacity is being increased considerable.... The new port in Port William is under way in that they have had a small jackup rig on the site over the last couple of months drilling cores to help with the final design....FIDC have folks away to Brazil to talk airlinks

I wonder if this means gas NO 8?

http://en.mercopress.com/2013/07/27/falklands-set-rules-for-oil-and-gas-development-to-the-benefit-of-islanders-current-and-future-generations

Falklands set rules for oil and gas development, to the benefit of Islanders current and future generations

Falkland Islands has set out the eight basic guidelines of its hydrocarbons development policy which are centred on robust regulation, supply chain support and long-term benefits for Islanders because the statement underlines its resources belong to the people of the Islands.

At its meeting of 24th July 2013, Executive Council agreed an overarching set of policy principles for hydrocarbons developments in the Islands. The policy statements capture the core principles that will govern the development of an oil and gas industry in the Islands and how the benefits of the industry will be managed.

“Hydrocarbons in Falklands’ waters belong to the people of the Falkland Islands and their exploitation must be to the benefit of the people of the Falkland Islands, both those of today and future generations”, points out the statement released by the Executive Council.


The document provides a strong message to the hydrocarbons industry as to what is expected of them, and provides a clear statement of intent to the local community with regards to how revenues will be managed. The eight policies are as follows:

1. Hydrocarbons in Falkland Islands waters belong to the people of the Falkland Islands and their exploitation must be to the benefit of the people of the Falkland Islands, both those of today and future generations.

2. The Falkland Islands Government will maintain constant supervision and control over all hydrocarbon activities within the Falkland Islands Designated Area.

3. Petroleum discoveries must be efficiently managed and exploited to maximise economic recovery and to ensure the development of a long-term industry presence that will benefit the Islands for decades to come.


4. Development of the hydrocarbons industry must ensure the protection and conservation of the Falkland Island’s environment and biodiversity.

5. Development of the hydrocarbons industry must take into consideration existing commercial activity and promote the development of local business capacity.


6. The exploitation of finite natural resources will be used to develop lasting benefits to society across the whole of the Falkland Islands.


7. Transparency and accountability must be present throughout the hydrocarbon development process from all parties involved.


8. The Falkland Islands will only consider onshore hydrocarbon facilities if they are considered to be in the best interests of the Falkland Islands, and can be proven to satisfy all of the above policy goals.

lols

RNS
RNS Number : 6250P
Desire Petroleum PLC
03 October 2013



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

3 OCTOBER 2013

RECOMMENDED COMBINATION

of

Falkland Oil & Gas Limited ("FOGL")

with

Desire Petroleum plc ("Desire")

(to be implemented by way of a Scheme of Arrangement

under Part 26 of the Companies Act)



and



FARM-OUT HEADS OF AGREEMENT AGREED

with

Premier Oil Exploration and Production Limited ("Premier") and Rockhopper Exploration (Oil) Limited ("Rockhopper")

in respect of

certain North Falkland Basin licences





Summary

· The boards of FOGL and Desire are pleased to announce that they have reached agreement on the terms of a recommended combination of FOGL with Desire (the "Combination"), pursuant to which FOGL will acquire the entire issued and to be issued share capital of Desire in exchange for FOGL Consideration Shares. The Combination is to be effected by way of a Scheme of Arrangement of Desire under Part 26 of the Companies Act.

· The boards of FOGL and Desire believe that the Combination will diversify the activities of the two companies, resulting in a balanced portfolio with enhanced long-term prospects, a strong balance sheet and improved financing options.

· FOGL has also signed heads of agreement ("Heads of Agreement") with Premier and Rockhopper with respect to a farm-out of licences PL004a and PL004c (the "Licences") (the "Farm-Out"). Premier and Rockhopper will farm-in to the Licences and, in exchange, will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences. Completion of the Farm-Out is subject to, inter alia, the Scheme becoming effective, any required approvals from the Falkland Islands Government and completion of definitive documents in respect of the Farm-Out.

· The Combination and the Farm-Out together will enable the execution of an enhanced drilling programme of five wells in the next drilling campaign, including:

o two wells in the South Falkland Basin, partnered with Noble Energy and Edison International; and

o three wells in the North Falkland Basin, one of which will target the Zebedee prospect.

· The next drilling campaign is expected to be fully funded from existing cash, the Farm-Out and other previously completed farm-out agreements.

Overview of the Combination

· Under the terms of the Combination, Scheme Shareholders will be entitled to receive 0.6233 FOGL Consideration Shares for each Desire Share.

· Following the Combination becoming effective, FOGL Shareholders will own 60 per cent. of the Combined Group's issued share capital, with Desire Shareholders owning the remaining 40 per cent.

· The Combined Group will be a balanced, focussed E&P company with exposure to all known major hydrocarbon plays in the Falklands.

· As at 30 June 2013, the aggregate cash balances of FOGL and Desire were approximately US$170 million.

· Based on the price of a FOGL Share of 28.50 pence, being the Closing Price of a FOGL Share on 2 October 2013, the Combination values the entire issued share capital of Desire at approximately £61 million, and each Desire Share at 17.76 pence.

· Thisrepresents a premium of approximately 45 per cent. over the Closing Price of 12.25 pence per Desire Share on 2 October 2013, being the last practicable date prior to this announcement.

· Following implementation of the Combination, the management team of the Combined Group will comprise Tim Bushell as Chief Executive Officer and Colin More as Exploration Director. Richard Liddell, Non-Executive Chairman of FOGL, will continue as Non-Executive Chairman of the Combined Group. In addition to Mr. Liddell, the Board of the Combined Group will comprise Timothy Jones (Non-Executive Director of FOGL), David Hudd (Non-Executive Director of FOGL), Tim Bushell and Colin More, as well as Stephen Phipps (Desire's current Chairman), Ian Duncan (Desire's current Chief Executive Officer) and Robert Lyons (a current Non-Executive Director of Desire) who will all join the Board of the Combined Group as Non-Executive Directors.

· Stephen Phipps, who controls 10.7 per cent. of the issued share capital of Desire, has entered into a conditional lock-in agreement with FOGL for a period of six months following completion of the Combination in respect of the FOGL Consideration Shares issued to him (and those persons associated with him) on completion of the Combination.

· The Desire Directors, who have been so advised by Peel Hunt LLP, consider the terms of the Combination to be fair and reasonable. In providing its advice, Peel Hunt LLP has taken into account the commercial assessments of the Desire Directors.

· Accordingly, the Desire Directors unanimously recommend Desire Shareholders vote in favour of the Scheme and the resolutions at the Court Meeting and the Desire General Meeting (or in the event that the Combination is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as the Desire Directors have irrevocably undertaken to do (or procure that those persons connected with them so do) in respect of their entire beneficial holdings in Desire, amounting to, in aggregate, 37,405,557 Desire Shares, representing approximately 10.9 per cent. of the issued ordinary share capital of Desire. These undertakings include an undertaking from the Chairman of Desire, Stephen Phipps, who controls 10.7 per cent. of the issued ordinary share capital of Desire. The irrevocable undertakings remain binding in all circumstances, including in the event of a higher offer, unless the Scheme lapses or is withdrawn and/or the Panel does not require FOGL to proceed with the Scheme.

· The Combination is conditional on, inter alia, certain approvals by Desire Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy. In addition, special resolutions approving the Scheme and the related Capital Reduction must be passed by Desire Shareholders representing at least 75 per cent. of the votes cast at the Desire General Meeting.

· The Combination is also conditional on the FOGL Shareholders approving, by way of ordinary resolution, the issue of the FOGL Consideration Shares at the FOGL General Meeting.

· The FOGL Directors believe that the Combination is in the best interests of FOGL and FOGL Shareholders as a whole and accordingly intend to unanimously recommend that FOGL Shareholders approve the resolutions to be proposed at the FOGL General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings totalling 720,185 FOGL Shares, representing approximately 0.23 per cent. of the FOGL Shares.

· FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting from the FOGL Directors in respect of their entire beneficial holdings in FOGL, amounting to, in aggregate, 720,185 FOGL Shares, representing approximately 0.23 per cent. of the issued ordinary share capital of FOGL. FOGL has also received an irrevocable undertaking to vote in favour of the resolutions to be proposed at the FOGL General Meeting from Erebus Limited (a subsidiary of Falkland Islands Holdings plc of which David Hudd, one of the FOGL Directors, is also a director), in respect of its holding of 12,825,000 FOGL Shares, representing approximately 4.01 per cent. of the issued ordinary share capital of FOGL. Accordingly, FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting in respect of a total of 13,545,185 FOGL Shares, representing approximately 4.23 per cent. of the issued ordinary share capital of FOGL.

· The Scheme is also subject to the Conditions set out in Appendix I to this announcement, including any required approvals from the Falkland Islands Government.

· The Combination is not conditional upon completion of the Farm-Out.

· It is expected that the Scheme Document, containing further information about the Combination and notices of the Court Meeting and Desire General Meeting together with the Forms of Proxy, will be posted as soon as reasonably practicable and that the Combination and the resolutions required to implement the Scheme will be put to Desire Shareholders at the Court Meeting and the Desire General Meeting in November 2013, with the FOGL General Meeting being held around the same time. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions (as set out in Appendix I), the Scheme is expected to become effective by 31 December 2013.

Overview of the Farm-Out

· FOGL has signed Heads of Agreement with Premier and Rockhopper with respect to the Farm-Out of the Licences in which Desire currently holds working interests of 92.5 per cent. and 75 per cent. respectively. Completion of the Farm-Out is conditional on,inter alia, the Scheme becoming effective, receipt of any approvals required from the Falkland Islands Government and entry into and completion of definitive documentation in respect of the Farm-Out.

· Following implementation of the Combination, any required approvals being received from the Falkland Islands Government and the completion of definitive documentation in respect of the Farm-Out, Premier and Rockhopper will farm in to the Licences and as a result of this, the Combined Group's working interests in PL004a and PL004c will both be reduced to 40 per cent.

· In exchange for aggregate working interests of 52.5 per cent. in PL004a and 35 per cent. in PL004c, Premier and Rockhopper will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences. It is anticipated that these two wells will be included in the next drilling campaign. The Heads of Agreement provide that the Combined Group will retain operatorship of the Licences until the second carried exploration well is plugged and abandoned.

Commenting on the Combination, Tim Bushell, Chief Executive of FOGL, said:

"This combination is a compelling opportunity to consolidate the portfolios of FOGL and Desire, diversifying the risk profile for both companies' shareholders and enabling the combined group to move forward with an active, long-term programme for growth in the Falkland Islands. Specifically, this transaction provides FOGL with access to Desire's interests in the North Falkland Basin (including the Sea Lion area) which we believe are highly complementary to our existing exploration portfolio in the South.

The farm-out to Premier and Rockhopper, which will reduce the combined group's working interests in PL004a and PL004c to 40 per cent., is a prudent piece of portfolio management and allows us to participate in a more extensive exploration programme due to the drilling carry we have agreed, while retaining control through operatorship until both wells have been drilled.

FOGL is in a strong financial position and these transactions will enhance the company's opportunity set and offer new and exciting potential opportunities to deploy capital and create value for both companies' shareholders."

Commenting on the Combination, Stephen Phipps, Chairman of Desire, said:

"We have for a number of months been seeking additional investment into our North Falkland Basin licences and are pleased that this process has concluded with the combination with FOGL. Not only do Desire shareholders retain material interests in Desire's highly prospective exploration acreage, but we also benefit from the farm-out with Premier and Rockhopper, exposure to FOGL's upcoming programme in the South Falkland Basin, a strong balance sheet and expert partners. We are entering an extremely exciting period in the Falklands with shareholders in the combined group now having fully funded, material exposure to five wells across three basins, testing three different play types."



Enquiries:



FOGL



Tim Bushell, Chief Executive Officer


+44 (0)20 7563 1260