MercoPress. South Atlantic News Agency

Desire has raised sufficient funds to ensure Falklands’ oil drilling campaign

The company admits having 40 million USD and plans to collect another £ 62 million in share-placing.

Desire Petroleum, the oil and gas exploration company focused on the North Basin of the Falkland Islands announced Wednesday it has conditionally placed 60 million new ordinary shares of 1p each at an issue price of 70p per share, thereby raising £42 million (68 million US dollars) before expenses.

These shares, which have been placed predominantly with new institutional investors by Seymour Pierce Limited, will represent approximately 20.7% of Desire’s Enlarged Share Capital, according to a release from the company.

In addition Desire is intending to invite qualifying shareholders to participate in an open offer which it is anticipated will raise up to approximately a further £20 million at the same issue price, 70p.

On 10 September 2009, Desire announced that it had exchanged a letter of intent with Diamond Offshore Drilling (UK) Ltd for the drilling unit the “Ocean Guardian” to undertake a four well minimum drilling campaign in the North Falkland Basin. Desire also announced that it had secured options to drill up to a further four wells for itself or its partners.

Subsequently, on 2 October 2009, Desire announced that the formal drilling contract for the Ocean Guardian had been signed and disclosed that the contract is for a four well, minimum eighty day campaign, for which the Ocean Guardian could earn maximum total revenue of 19.6 million USD with mobilisation and demobilisation fees estimated to be 16 million USD. In addition Desire announced that it had increased the number of option wells from four to six.

With approximately 40 million USD of current funds, Desire already has sufficient funds to drill two wells in the planned drilling campaign. This, together with the planned drilling of two further wells by Desire’s partners, Arcadia Petroleum Limited and Rockhopper Exploration, results in the four well drilling commitment being met.

Desire also announced that fourteen different play types have been identified in the North Falkland Basin of which only three have been drilled to date. Prudent exploration dictates that “as many of these play types as possible should be drilled to help unlock the potential of the Basin”.

This planned approach to the exploration campaign has, in Desire Directors’ opinion, been endorsed by the analysis of the prospective resources of the Company prepared by Senergy Limited.

Senergy has evaluated Desire's top ten prospects, namely Liz, Ann, Alpha, Dawn, Jacinta, Beth, Ninky, Rachel, Helen and Pam, and the key conclusions are as follows: the mean, net to Desire, un-risked, prospective recoverable resources in those ten prospects is over 3 billion barrels and the mean, gross, un-risked prospective recoverable resources in those ten prospects is over 4.6 billion barrels.