Desire Petroleum says that, at the Annual General Meeting of the Company held this week, all resolutions were passed.

Desire is very encouraged by the two wells of the current North Falkland Basin campaign drilled to date, with Liz (Desire operated) resulting in the discovery of gas and gas condensate and Sea Lion (Rockhopper operated) resulting in an oil discovery. Both of these wells have yielded much new information leading to a much greater understanding of the hydrocarbon potential of the North Falkland Basin. A great deal of work is now underway analysing all these new data to identify the prime targets for drilling later in the campaign. These wells represent a milestone in the North Falkland Basin exploration proving that hydrocarbons (oil and gas) have been generated and trapped.

The Sea Lion discovery is very exciting, discovering oil in a good quality sandstone reservoir. This has significantly de-risked oil exploration, particularly on the eastern flank of the basin where Desire has a strong acreage position. Desire has identified a number of potential sandstone fans of the same play type as Sea Lion including the Rachel, Ninky and Anna prospects. The Competent Persons Report produced for Desire by Senergy (UK) Limited in October last year shows gross mean unrisked prospective recoverable resources of 318 MMbo and 122 MMbo for the Rachel and Ninky prospects respectively. It is now Desire's intention to drill the Rachel prospect as its next well, subject to all the necessary approvals, when the rig returns to Desire later in the year. Extensive studies are now being carried out on the 3D seismic data, mapping the distribution of potential sandstone fans on the eastern flank, and further drilling in this area is likely early in the campaign.

The Liz well, which was drilled on the western flank of the basin discovered gas in two zones and analysis of the samples has confirmed the lower zone as dry gas (high methane and low liquid content) and the upper zone as gas condensate with a condensate/gas ratio of 95 barrels/MMscf and condensate of 49.5 API. Work is now concentrating on mapping the size of these accumulations and obtaining a better understanding of the reservoir quality. Given the complexity of this work, which involves seismic re-processing and modelling, it will take a number of months to complete. The results of the oil indications in the Liz and Beth fans are also being followed up to determine if better quality sandstone reservoir may be present updip. Only when all this work is finished will it be possible to decide on how best to proceed with the evaluation of this area.

Tags: Desire Petroleum plc