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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Oily1 who wrote (792)	10/23/1998 1:55:00 AM
From: Tomas	Respond to of 2742

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

To: Oily1 who wrote (792)	10/23/1998 7:54:00 AM
From: Tomas	Read Replies (1) \| Respond to of 2742

The Falklands: "The conditions for a significant oil find clearly exist" Slump may hit Isles oil hunt by Jeremy Cresswell Press & Journal, Aberdeen, October 23 DESIRE Petroleum says the four wells completed off the Falkland Islands to date indicated the conditions for a significant oil find clearly existed. But disappointments showed there was still much to learn about the geology of the region and that "it may be some time before success is achieved". Desire warned yesterday that the Falklands hunt could be hampered by the latest oil price crisis forcing a round of corporate belt tightening. "Perhaps the most serious impediment to rapid progress is the worldwide slowdown in exploration drilling ," said company chairman Colin Phipps. "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." Mr Phipps said Desire was looking at its options on this score, including whether it could drill by itself or with other groupings of oil companies. The company has a cash pile of $11million available, according to its 1998 first half year results statement posted yesterday. "Whether or not this can be done will depend on a fall in drilling costs, which frequently occurs in times of low exploration activity," said Mr Phipps. Amerada Hess is now drilling the fifth well in the current programme for the semi-submersible Borgny Dolphin. And Shell is expected to start the sixth in about two weeks. The company was sufficiently encouraged by the results of an earlier well -- Falklands well number three -- to have another try. Significant gas shows were achieved, with at least one source claiming that, had it been in the North Sea, Shell might have had a commercial find on its hands. However, this has never been confirmed. But the very fact that the company is back so soon has to be viewed as encouraging. pressandjournal.co.uk