Desire Petroleum Upgrades Its Falkland Oil Resources

LONDON -- Desire Petroleum (LSE: DES.L  ) has given its shareholders a rough ride over the past couple of years. But there was a little light relief this morning, after it announced the results of a Competent Person's Report (CPR) that covers two of its prospects in the North Falkland Basin.

The Elaine and Isobel prospects are located wholly within the PL004a license, in which Desire has a 92.5% interest. Other partners in the license include Rockhopper Exploration, with 3%, and Premier Oil with 4.5%.

Elaine and Isobel lie about 20 kilometers south of Rockhopper's Sea Lion discovery, the region's major discovery to date.

According to the CPR, the best estimate of Desire's share in these two prospects is 312 million barrels (in technical terms, the best case unrisked prospective recoverable oil resources net to Desire are estimated to be 312 MMstb). The geological chance of success is estimated at 30%.

Commenting on the CPR update, Stephen Phipps, chairman of Desire, said:

We are delighted that our prospect inventory continues to strengthen and that some of the best remaining potential in the North Falkland Basin is within licence PL004 in which Desire has a strong equity position. The Elaine and Isobel prospects are very attractive drilling targets, particularly as the basin moves into a new phase of activity. The planned development of the Sea Lion discovery demonstrates the commerciality of major discoveries in the basin and we are optimistic that the Elaine and Isobel prospects can deliver significant value for our investors. As our prospect inventory matures, we will be seeking industry partners to participate in further exploration of our licences and the quality of prospects like Elaine and Isobel provides a strong platform for success.

This CPR covers the interpretation results from the 2010/2011 merged 3-D seismic data over the Elaine and Isobel prospects. However, work is also under way on a CPR that covers all of Desire's properties, and this is expected to be released in the final quarter of 2012. Desire shares rose 2% to 23 pence on today's news, valuing the company at around 80 million pounds.

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