MercoPress. South Atlantic News Agency

Desire confirms gas and oil “indications” in North Falkland Basin.

Desire Petroleum Plc which explores for oil and gas offshore the Falklands Islands confirmed this Tuesday in London “considerable indications of the presence of natural gas as well as oil” in the North Falkland Basin following the interpretation of both fast-track and final processed data from 3D seismic survey.

The company also reported that a number of parties are interested in farming into Tranches C & D given the "economic prospectivity" of the North Falkland Basin, where gas accumulations "would be economic given a field equivalent in size to a 300 million barrel oil field".

The official release from the Board of Desire Petroleum indicates that "the interpretation of both the fast-track and final-processed data from the 3D-seismic survey over Tranches C & D has been completed. In addition to the new 3D-data, the previously acquired 2D-data was incorporated in the interpretation where no 3D-data were available".

"The interpretation included analyses of various seismic attributes as well as a geological study. All of the processed data proved to be of excellent quality and the new interpretation largely confirms the new geological model proposed by the Company. In addition, other, new prospects have been identified associated, in particular, with well-defined alluvial deltas and fans.

"Within the area covered by the 3D-seismic a number of prospects have been identified. Of these, at least six are large enough to contain economic accumulations of oil in the range 100-1000 million barrels. These six are in addition to those prospects already delineated by the 2-D seismic outside the area covered by the 3D-survey.

"One of the features of the 3D-seismic has been the presence of Direct Hydrocarbon Indicators (DHIÃâ€Â¢s), in particular, there are considerable indications of the presence of natural gas as well as oil. Considerable volumes of gas were encountered by the first well drilled by Shell in Tranche B but the well was not tested because, at that time, the value of the gas was too low to be economically producible in an area as remote from markets as the North Falkland Basin. However, since that time, the price of gas (along with oil) has risen sharply and new technology, such as gas-to-liquid (GLT) in which diesel fuel is produced from natural gas, have been developed. As a consequence, the Board commissioned a scoping study on the economics of gas production which has shown that, at prices well below current levels, gas accumulations would be economic given a field equivalent in size to a 300 million barrel oil field. Several of the prospects identified to date match this requirement. It follows that natural gas can now be added to the economic prospectivity of the North Falkland Basin.

"A number of parties interested in farming into Tranches C & D are now examining the interpretation as well as conducting interpretations of their own. Hopefully, these will lead to Desire Petroleum concluding a successful farm-out leading on to exploration drilling of the most attractive prospects".

Following the announcement Desire shares surged 7.75 pence, or 28 percent, to 35.75 pence.