March 28, 2010
UK explorer Desire Petroleum has failed to find commercial quantities of crude oil in the South Atlantic ocean
THE first well drilled off the Falkland Islands in 12 years has struck oil — but not enough to be commercially viable.
Desire Petroleum, the UK explorer, is expected to announce the disappointing findings this week, according to industry sources. The news could defuse the political row that erupted between London and Buenos Aires after a handful of British oil exploration groups announced plans to drill wells in the territorial waters of the islands, which are 300 miles off the coast of Argentina.
President Cristina Kirchner claimed the campaign violated its national sovereignty. Hillary Clinton, US secretary of state, declined to side with Britain and suggested that the matter be referred to the UN.
Britain went to war in 1982 to reclaim the islands after Argentina invaded.
Desire is expected to say that the well drilled at its Liz prospect was “technically successful”, meaning it found oil, but that it is “non-commercial”, meaning that there was not enough oil to justify developing the field.
The company declined to comment. Sources close to the situation said it had not finished drilling, but the signs were not encouraging.
A source said: “It’s not a duster [a dry well], but it’s not commercially successful.” Desire has been working on the well for the past month.
Its disappointment is not the end of the Falklands oil story. Desire is one of four UK-listed firms that have raised £250m from investors in recent months to fund an exploration spree around the islands.
Rockhopper Exploration will drill its Sea Lion prospect next month. That will be followed by one well from Falkland Oil and Gas, before Rockhopper takes the rig back to drill another.
Falkland Oil and Gas has linked up with BHP Billiton, the Anglo-Australian group that is one of the world’s largest miners.
Borders & Southern, the other British firm, is further behind because its acreage in the deeper waters south of the islands requires a different type of rig — the other fields are in the north.
None of the companies has any other assets. If the holes are dry, investors will be left with nothing except whatever cash remains. Typically an offshore well can take a month to drill at a cost of up to $250,000 (£168,000) a day.
Desire’s news is likely to depress its share price, and those of its Falklands-focused rivals. The firm has stakes in several other blocks that are expected to be drilled in the next 18 months. Industry insiders still hope that at least one will lead to a big find.
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7078788.ece
I've been in touch with the Company.
ReplyDeleteThis report is based on malicious information given to the journalist -
not by Desire Petroleum.
They are still drilling and logging as we speak -
and there will be an announcement at 07.00 tomorrow to clarify the situation.
The Times Online on the other hand has now removed the comments section to this article, where clued up investors tried to question this article's conclusions.
Make of that what you will.
It mistakenly claims FOGL and BHP are based in the North Falkland Basin.
They are in the South.
They have completely misinterpreted the drilling plan and geology of this well.
The information is available on the Desire website.
In short - wait for tomorrow's RNS.
The Times article has been refuted by the Company representatives.