Desire Could Return To The Falklands. Desire Will Be Back....in 12 to 18 Months
A Report For Calling The Falklands By D. Palmer (DP) 31/08/99
Falkland Islands News Network, September 2
As expected, Desire Petroleum is merging with the Irish gas and oil exploration
company, Gaelic Resources which recently announced a gas find off Portugal.
But that doesn't mean that the merged company will abandon its search for
Falklands oil. According to Desire's Chairman, Dr. Colin Phipps (CP), he
expects to return to the Islands but not immediately.
CP I don't expect drilling to recommence in the Falklands, even while the oil price
has come back for perhaps another 12 to 18 months. First of all, I think that the
industry as a whole has got to feel more confident that these higher oil prices will
last. Secondly. I don't think we can afford to bring another drilling rig all the way
down from the UK as we did before. That really means that drilling in the South
Atlantic, particularly offshore Brazil, has got to get going so that there are some
rigs around that we can use. I don't see that happening for the next 12 to 18
months. But, I can't see us drilling in that period. Now, the reverse really is true
for Gaelic. Gaelic have a gas discovery in Portugal which looks very interesting
indeed. And, that is about to be appraised, hopefully before the end of this year,
when the next well will be drilled. Gaelic's problem is that they are short of cash
and, of course, Desire has sufficient cash and no discovery as well so, from both
points of view, it looks a sensible match.
DP But, it doesn't mean that the enlarged company can concentrate on the gas
interests at Gaelic at the expense future exploration in the Falklands, then?
CP No. Far from it. I mean, what we are hoping is that if the gas interests prove
to be very successful and that will indeed lend impetus to the company's search in
the Falklands by enabling us, for instance, to raise extra cash and move forward
on our own without necessarily even having to farm out. Although, we now have
such large interests in the Falklands that I suspect we would seek to farm out
anyway in this period.
DP And this is a good deal for Desire shareholders, isn't it?
CP Well, it certainly gives Desire Shareholders some immediate interest and the
possibility of some immediate up-rise. I think that was important for Desire
because although the Falklands remain for us a very, very exciting prospect, a
wait of 12 to 18 months with relatively little happening is a sure-fire dampened,
I'm afraid, as far as interest in the City is concerned.
DP And, it really is a merger? It's not a take-over of Desire by another name?
CP No. It is a merger. As it happens, the Company will keep the new name,
Desire and the new board will largely comprise Desire Directors and, of course, a
lot of the Gaelic Shareholders are themselves, Desire Shareholders. The two
companies, in terms of shareholders have been related. I am on the board of both
companies, for instance. Phipps and Company have a substantial shareholding in
Gaelic as well as in Desire.
DP So, does that mean the Shareholders in Desire will be better off at the end of
the day?
CP There will be no difference at all in terms of the value of their shareholding.
That won't change. But hopefully, I am told, the prospects in Portugal will do well
and that should reflect in the share price of Desire.
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