Desire begins trading in £23m share placing

MIDLANDS based oil and gas exploration company Desire Petroleum began trading in a near £23m share placing today.

The Malvern company has issued 16,294,600 new shares at 140p each, raising £22.8m. The funding will allow exploration work to continue in the North Falkland Basin (NFB).

Approval for the new shares to be traded on the Alternative Investment Market (AIM) has been granted and following admission, the total number of Desire shares in issue is 342,185,172.  There are no shares held in treasury.  
 
The new shares have been placed by Seymour Pierce with a range of new and existing institutional and other investors.

• For the latest Desire share price click here

Desire, which has also announced the spudding of the Rachel 14/15-1 exploration well, intends using the funds to acquire and process further 3D seismic activity over the Desire acreage on the east flank of the NFB in Tranches D and F.  

The Rachel prospect is located in Tranche D and has an estimated target depth of 2,850 metres.  Drilling operations are expected to take approximately 35 days and a further announcement on progress will be made once drilling is completed.
 
Following the Sea Lion oil discovery by Rockhopper Exploration, Desire has concentrated on identifying prospects in the same play type as Sea Lion and has outlined a fan sandstone play fairway in the eastern flank.

These fan sandstones can only be fully identified on 3D data and currently Desire has 3D coverage over only half of this fairway on its acreage. Desire said it believed it was essential it acquired and processed new 3D seismic data as quickly as possible in order to fully understand the potential of this play.

Tenders for a 3D seismic survey have been received and Desire now intends to award a contract for the acquisition and processing of the survey in the near future. 

In addition, discussions are under way with other NFB oil operators regarding a joint seismic programme that could go some way to mitigate the significant cost of the mobilisation/demobilisation of a seismic vessel to Falkland waters.  

The board of Desire currently expects that the seismic programme will begin in December 2010.

Rockhopper has announced it has plugged and abandoned the Sea Lion 1 well, the first oil discovery and contingent oil resource in the NFB.

It has released the Ocean Guardian drilling rig.

Rockhopper said it was continuing to evaluate information acquired during Sea Lion drilling and testing in order to plan the next phase in proving the reserves discovered.

It is also participating in a number of wells on licences PL003 and PL004, operated by Desire, where it has a 7.5% working interest.