The Falklands: Desire Petroleum, Chairman's statement
Desire Petroleum Interim results for the six months to 30 June 1998
22nd October 1998
Since April this year there have been four wells drilled in
the North Falklands Basin, in two of which Desire has
participated. The drilling rig "Borgny Dolphin" is currently
drilling a fifth well on behalf of the Amerada Hess
Consortium. These wells have been drilled on Tranches A and
F and were the first wells ever to be drilled in the Basin.
As is usual in such circumstances, they produced a mixture
of surprises, encouragement and disappointment, but they
have added greatly to our geological knowledge of the Basin
although there is still much to learn and understand.
In order for there to be economic oil accumulations in the
Falklands, it is necessary to have a combination of good oil
source rocks, good reservoirs, good sealing horizons above
the reservoirs and structures large enough to contain
accumulations of oil which will be commercial to exploit in
the South Atlantic. The first four wells have demonstrated
that all these conditions have been satisfied in the North
Falklands Basin, in particular the presence of significant
source rocks, but, to date, they have not been found
together in a sufficient combination to yield an economic
oil discovery. It is the continuing task of all the
geologists involved to analyse the increasing amount of data
in order to identify the migration pattern of the oil and
therefore the most likely locations where such a combination
may be present. Although the odds against doing this have
been reduced by the findings of the initial wells, it may be
some time before success is achieved.
Perhaps the most serious impediment to rapid progress is the
world-wide slowdown in exploration drilling which has
followed the major fall in oil prices this year. Exploration
budgets have been cut back sharply and this is likely to
have an effect on continued exploration in the North
Falklands Basin while low oil prices prevail. Should this be
the case, your Board is considering what steps it should
take either for Desire to drill by itself or with other
groupings. Whether or not this can be done will depend upon
a fall in drilling costs which frequently occurs in times of
low exploration activity.
During August and September of this year, the Company
completed the acquisition of 2412 kilometres of seismic data
on Tranches I and L, more than meeting our licence
commitments, and these data are now being processed and
analysed. In addition, Desire took a 12.5% interest in
Tranche F, operated by Sodra, in which well 14/24-1 was
recently completed. This interest in Tranche F gives the
Company an interest in five Tranches: C (operated by Lasmo -
25%: D (operated by Lasmo - 25%): F (operated by Sodra -
12.5%): I (operated by Desire - 100%): and L (operated by
Desire - 100%). These Tranches all lie to the south in the
North Falklands Basin in an area where, your Board believes,
the best reservoir development is likely to occur.
The major corporate event of the year was the company's
admittance to AIM and the raising of à15 million to finance
its exploration activities. This was a major achievement and
reflects credit on my colleagues on the Board and our
Adviser and Broker. Following the AIM flotation the
Company's shareholder base has expanded to nearly 6,000.
The money raised has, so far, enabled Desire to participate
in two wells and acquire more than the commitment seismic.
When all the costs of these activities have been met the
Company will have approximately US $11 million for further
drilling.
It is disappointing not to have been able to report a
commercial discovery but, it must be stressed, it invariably
takes the drilling of several wells before the nature of a
virgin basin is even partially understood. The conditions
for a successful exploration programme are now known to be
present in the North Falklands Basin: only continued
drilling will determine whether or not economic oil
accumulations are present. If they are, your Company is now
very well-placed to benefit from their discovery.
Dr. Colin B. Phipps, Chairman
22 October 1998
Enquiries to:
Dr. Colin Phipps 01648 892 242
John Martin 01953 717 210
Simon Rothschild / Judith Parry
Millham Communications 0171 256 5756 |
