Desire upbeat on Falklands oil discovery

Oil explorer Desire Petroleum today said the findings of a report have confirmed the potential of its discoveries offshore the Falkland Islands.

The firm said a competent person’s report (CPR) by energy consultancy Senergy estimated the chance of commercial development at its Sea Lion complex to be 80 per cent, but just 25 per cent for the gas condensate discovery at its Liz complex.

Chairman Stephen Phipps said: “This CPR confirms our view that the Desire licences have excellent remaining exploration potential.”

Oil exploration by British companies in the area has sparked anger in Argentina, which claims sovereignty over the islands it calls the Malvinas. It has called the drilling there ‘illicit’ and threatened legal action.

Fellow explorer Rockhopper signed up Premier Oil earlier this year to help it fund the costs of developing its own discovery at Sea Lion.

Desire said it now had 41 oil prospects and four gas prospects, 12 of which had best case prospective resources of over 100 million barrels of stock tank oil. Phipps said the company’s priority was to attract further investment in its licences.

Sam Wahab, oil and gas analyst at Seymour Pierce, said: “Whilst we expect the share price to strengthen this morning on the back of the resource upgrade, Desire requires considerable funding to prove up these assets.

“Whilst the North Falkland basin has been validated to a certain extent by Premier’s farm in to the Sea Lion field this year, significant appraisal activity will be required to validate the region.”