Desire upbeat over Falklands oil prospects

MALVERN-registered oil and gas exploration company Desire Petroleum said today it remained upbeat about its drilling prospects in the North Falkland Basin.

The company saw shares plummet by more than 60% last month when it appeared that its latest drilling operation off the Falkland Islands would not produce oil in commercial quantities.

In its preliminary results statement today, chairman Stephen Phipps- announcing a full year loss of $3.77m – said the period had been an eventful one, culminating in a gas discovery on the Liz 14/19-1 well, the drilling of which was completed earlier this month.

He said further analysis of the Liz 14/19-1 well operations was taking place and shareholders would be updated in due course.

 “It has been an exciting year for Desire and the company has made much progress in the period,” said Mr Phipps.

“Further detailed analysis on the Liz well is currently being carried out and we look forward to updating shareholders on the results when the analysis is completed within the next couple of months.  

“We remain upbeat about the resource potential within the North Falkland Basin and look forward to recommencing drilling later this year.”  

Desire (DES), which began its drilling in February after towing the rig on a 70-day journey from the North Sea to the Falklands, said despite the fall in share price it still had cash in hand of $88m.

The large reserve is due to a successful share placing and open offer last year which raised around £60m.

Desire said it had successfully kept costs down by subcontracting the Liz rig to Rockhopper Exploration and BHP Billiton.

The company said in its statement its exploration work was expected to resume in the third quarter of this year.

It said a report had shown there was the net potential to recover more than three billion barrels from the region, such was the level of reserves in ten prospects sprinkled around the islands.

“The results of this report have further endorsed our view of the prospectivity of the North Falkland Basin,” said Mr Phipps.

Drilling by the company of the first well in the region in over a decade ignited protests from Argentina, which claims the British territory, but Britain rejected the complaint.