Desire Says New Falkland Drilling Unlikely Until Oil Recovers
London, Nov. 23 (Bloomberg) -- Desire Petroleum Plc said it
was likely to suspend drilling off the coast of Argentina until
crude oil prices recovered from their lowest level in more than a
decade, sending its stock to a record low.
Desire's comments came after Royal Dutch/Shell Group on
Friday said its latest exploration well near the Falkland
Islands, Fitzroy-1, was not economically viable. That well, the
last of series of six that drilled in the region by a number of
companies, was plugged and abandoned.
The amount of oil in the Falklands is unknown, though
estimates have ranged from 400 million barrels to a few billion
barrels, which could meet world demand for a month. The statement
from Desire, which has no operations outside the Falklands, is
the latest sign that oil prices down 40 percent in the past year
are forcing companies to halt drilling.
''The present, historically low, level of oil prices is
inhibiting the willingness of many companies to carry out
exploration,'' the company said in a statement. ''It is,
therefore, likely that there will be a lull in further drilling
in the North Falkland Basin until such a time as oil prices
recover.''
Desire Petroleum shares slid 0.5 pence to 22 in London, the
lowest closing price since they were listed in April.
Desire's partners in the area include Sodra Petroleum AB,
Lasmo Plc and Gulf Canada Resources Ltd.
Oil prices have slumped on waning Asian demand, prompting
some oil companies to postpone developing more risky and less
lucrative oil fields. Brent crude in London last week fell to
$11.15 a barrel, the contract's lowest level since it began
trading more than ten years ago. Prices today were recently at
$11.42 a barrel.
Desire, which is examining seismic information obtained from
the area, said further drilling is justified. Still, the company
said if the Borgny Dolphin drilling rig, which has drilled the
six exploration wells, leaves the region, as is likely, it will
be ''some time'' before another rig is available.
If that happens, Desire said it will consider seeking
exploration opportunities outside the Falklands. |
