No cash for drilling but future secure says Desire
MIDLAND-registered oil exploration firm Desire Petroleum has said that although it lacks sufficient funds to mount independent drilling operations, its cash balances are enough to sustain the business for the foreseeable future.
This is despite further losses at the Malvern-registered business. Latest results show the firm recorded a £26.6m ($42.5m) loss in 2011 (2010: restated loss of $113.9m (£71.1m)).
Cash resources at the end of the year amounted to $10.6m (£6.62m) plus an additional $24.5m (£15.3m) held as restricted cash in escrow accounts with Diamond Offshore Drilling and AGR to meet demobilisation liabilities relating to drilling operations.
The company has endured a tough 12 months. Last April its shares plunged 60% after it warned a lack of funds would hamper future drilling operations.
However, it was cheered in the final quarter of 2011 by the discovery of oil and gas in one of the wells drilled by its license partner in the North Falkland Basin, Rockhopper.
Stephen Phipps, Desire chairman, said: “I am delighted with the discovery of oil in the 14/15-4a farmout well, drilled and operated by Rockhopper Exploration, in which Desire have a 40% economic interest. This was the undoubted highlight of the year.”
He added that the Ninky well, which had been planned to be the sixth and final well in Desire’s 2011 drilling operations, had shown such positive results the company had been able to farm-out more areas to Rockhopper to be drilled at no cost to Desire.
“The demobilisation of the Ocean Guardian drilling rig and associated vessels and equipment in January of this year is likely to lead to at least 12 months without a rig present in the North Falkland Basin. In the meantime we believe that the North Falkland Basin will continue to develop positively,” added Mr Phipps.
“Although at this time we do not have sufficient funds to restart a drilling campaign on our own, our current cash balances, post demobilisation, of over $10m are more than sufficient for the foreseeable future.”
Eddie Wisniewski, Desire’s finance director, said the group’s available cash and restricted cash resources at the year end were sufficient to meet demobilisation commitments, and to continue in operations for the foreseeable future.
“The cash resources are not sufficient to drill further wells, and the board will continue to review all financing options such that the group is positioned to act when that opportunity arises,” he said.
