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

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

FOGL shares are down but DES up........A correction is on its way

http://oilbarrel.com/news/desire-petroleum-jumps-as-it-nets-61-million-paper-backed-bid-from-falklands-oil-gas-as-enlarged-group-tees-up-five-well-campaign-for-2014-2015


October 03, 2013

Desire Petroleum Jumps As It Nets £61 Million Paper-Backed Bid From Falklands Oil & Gas As Enlarged Group Tees Up Five-Well Campaign For 2014-2015



News of a four-way deal between operators in the Falkland Islands will be seen as long overdue by some investors. For a province that has yielded only one commercial discovery, there's a surprising number of small caps struggling to make headway with their frontier exploration portfolios where the remote location in the Southern Atlantic makes for hefty drilling costs.


Thursday saw AIM-quoted Falklands Oil & Gas (FOGL) announced an all-paper acquisition of fellow AIM company Desire Petroleum, which had faced a significant funding gap to advance its acreage in the North Falkland Basin. The deal values Desire at £61 million, which represents a 45 per cent premium to Wednesday's share price. FOGL CEO Tim Bushell said the combination was a “compelling opportunity”. For under-pressure Desire, which has faltered after a run of poor drilling results and the poorly managed release of the results from the Rachel North well in 2010, which proved to be water-bearing, the tie-up with cash-rich FOGL can only be good news.

FOGL has also agreed farm-out terms for the Desire-operated licences PL004a and PL004c to Premier Oil and Rockhopper, who are jointly developing the only commercial oilfield in these remote waters. Premier and Rockhopper will carry the newly merged company through two exploration wells, one on each licence, in return for a 52.5 per cent interest in PL004a and 35 per cent of PL004c (under a previous agreement, the two will split the equity on a 40/60 basis in favour of Premier). Those wells will test the Isobel/Elaine prospect in PL004a, which is reckoned to host Pmean gross oil-in-place of over one billion barrels, and the Jayne East prospect, with 289 million barrels in PL004c. FOGL will be left with 40 per cent of each licence and will operate until both wells have been drilled.

Rockhopper chief executive Sam Moody said the new acreage, adjacent to Sea Lion, was “highly prospective” and said this week's deal-making would increase the likelihood of rig-sharing for a drilling campaign in late 2014 or early 2015. Shares in Rockhopper ticked up four per cent on the news.

From a FOGL point of view, the deal provides diversification from its high risk wildcatting in the frontier waters to the south and east of the island, giving it a seat in the North Falkland Basin, where drilling conditions are more benign, drilling costs are lower and there's a proven oilfield to reduce risks. It also changes the perception that the FOGL portfolio is a gaseous play (something FOGL disputes) as the North Falkland Basin is proven to be oil-charged. And it also adds some critical mass to the portfolio: through the farm-out the company now has a package of five wells, which again helps spread risk and should help when negotiating with rig companies.

Those wells will comprise two in the South Falkland Basin, partnered with Noble Energy and Edison International, and three wells in the North Falkland Basin, Isobel/Elaine, Jayne East and Zebedee. This programme will be fully funded from existing cash – and at the end of June FOGL's and Desire's combined cash balances tallied US$170 million - and farm-out carries.

Yet some investors were critical, feeling the terms were too dilutive. FOGL's share price may be under pressure after the dusters of last year but it had wisely conserved cash, ending June with US$161 million. In the current market, cash is king: is buying cash-strapped Desire and a portfolio that has yet to impress the wisest use of this resource? The market didn't seem to think so and the shares slid six per cent in early trading to 26.75 pence.

RNS Falkland Islands government approve takeover by FOGL........ goodbye DES.

Time to say good bye.......thank you all for input over the years...good luck all holding in Falklands.

Marky


NOTICE

06/12/2013 7:00am

NOTICE OF CANCELLATION OF ADMISSION TO TRADING ON AIM

DESIRE PETROLEUM PLC



At the request of the company trading on AIM for the under-mentioned securities has been cancelled from 06/12/2013 7:00am.

ORDINARY SHARES OF 1P EACH, FULLY PAID

(0268949)(GB0002689494)

If you have any queries or require further information, please contact the company's nominated adviser on 020 7418 8900.

did you still hold des marky or all on rockhopper?

I sold out way back, hope to be back in FOGL at some point ready for the drill in late 2014.