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Gold/Mining/Energy : Sodra Petroleum -- Ignore unavailable to you. Want to Upgrade?

To: Greywolf who wrote (124)	9/14/2000 7:56:23 PM
From: Greywolf	Respond to of 133

HIGH OIL PRICES BRING A RAY OF HOPE TO DESIRE’S INVESTORS, The article centers on Desire yet the farmin thought´s are interesting even for Sodra... By J. Brock (FINN) Much has been said and printed about the present fuel crisis in Europe and in the United Kingdom in particular. Given the fact that on mainland Europe the cost of fuel can be a third less, and in the United States fuel costs around £1.50 a gallon, it is no wonder that HMG are shed any blame by saying that the high cost of fuel in Britain down to high oil prices. The present cost of fuel from the depots in Britain is .18p per litre. It could go up. And, many in Britain are wondering how HMG justifies charging .62p on top of that for tax. In June OPEC authorised a production increase of 700,000 barrels a day. This had a minimal to no effect of the price per litre in the UK. On Sunday OPEC put an extra 800,000 barrels on top of that but to no avail. Given the crisis, motorists are wondering why OPEC won’t release any more oil so that the price of petrel at the pump would drop. In many cases, it is reasonable to think that the high percentage of tax in the UK is linked to increases in crude prices. On the other hand, the Arab Minister of OPEC has stated that it is HMG that is responsible for the crisis, in that the tax is excessive, and that blame should not be placed on OPEC for regulating production. It is fortunate that the crisis in the UK does not have far reaching effects in the Falklands. UK taxes are not passed on to consumers here in the Falklands. However, we do have a budding oil industry here and the high cost of the resource means that, yet again, oil companies are interested in contributing some hard cash to exploration budgets. Where better to go for current information on how the high price of oil can work to our advantage than Dr. Colin Phipps of Desire Petroleum. He very kindly answered questions about what effect the oil price had on exploration in the North Falkland Basin. FINN: When crude prices hit their low at just under $10.00 a barrel the norm for oil companies was to cut the exploration budgets. Seeing that the cut-off point to make Falklands exploration viable, what is the reasoning behind not putting that money back in the budgets and getting on with exploration for hydrocarbons in the North Falkland Basin? Dr. Phipps: The oil companies are beginning to review their exploration budgets and, because most of them have had a very good year following the price rises, there is now some money available for exploration. However, it has to be appreciated that oil companies suffer just as much as OPEC from low oil prices and they are not keen to see them fall. Accordingly, even though finding new oil at current prices would be extremely profitable, it might also depress the price if too much new oil were found. The companies have been bitten so many times by sharp falls, due to over production, that it is unlikely that they will increase exploration rapidly. That said, if the oil price can be maintained somewhere between $22-$28, which is OPEC’s declared preference, then any oil found in the Falklands would certainly be attractive. Under this scenario we are hopeful that the Industry will now start to look at the Falklands again. FINN: What is the state of play for Desire Petroleum and its tranches in the North Falkland Basin and does the price of crude have any effect on when exploration will begin? Dr. Phipps: Desire has just completed a very detailed Farmout Brochure and is beginning the process of meeting various oil companies in order to see if we can farmout our North Falklands acreage. Initial reaction has shown that companies are reviewing their exploration budgets and are prepared to re-look at the Falklands. It will be some time before we know whether or not we have been successful in attracting a farminee and only then will we be able to say when exploration will restart. Of course, Desire is hopeful that this will take place sooner rather than later but there is a lot of competition from many parts of the world for exploration dollars. My own view is that the Falklands does look competitive. FINN: Are you still working with Gaelic on the gas exploration off Portugal? Dr. Phipps: Gaelic is now part of Desire, following our merger, and we are continuing to explore for gas in Portugal. FINN: Did you have success in that exploration that would make your presence in the North Falkland Basin any sooner? Dr. Phipps: We have been successful in finding low-pressure gas and are now considering the best ways to exploit it. It is primarily a technical problem rather than a reserve problem. It will not affect anything that we do in the Falklands. FINN: Will Gaelic be your partner in North Falkland Basin exploration? Dr. Phipps: As Gaelic is part of Desire the question of their being a partner does not arise. FINN: When is your next trip to the Falklands? Dr. Phipps: It is likely that my next trip to the Falklands will take place with a company or companies interested in farming-in. This could be any time during the next six months. However, even if it is not with a potential farminee, I do usually arrange to visit the Islands early in the New Year. Hopefully the crisis in Britain won’t be getting worse and that a solution can be found that will make both HMG and protestors happy. In the Falklands, the high price of the resource means that our hydrocarbons industry may heat up once the oil companies review their exploration budgets. Investors in Desire Petroleum plc will be happy with this news and breathe a big sigh of relief that something will finally happen in the area north of the Falklands. It is a stock well worth keeping.