Having identified four top exploration prospects in the South Falklands Basin, Desire Petroleum chairman Stephen Phipps is disappointed that the company still hasn't been able to secure a drilling rig.
The biggest challenge remains persuading a rig owner to float a platform down to the Falklands at a commercially viable rate, as the remoteness of the Falklands makes it time-consuming and, therefore, expensive to get a platform there. Mr Phipps believes Africa to be the best source and is in discussions with several owners - he remains optimistic as rig demand and rates are falling, while sharing a platform with a fellow Falklands explorer would spread the 'mob/demob' costs. In fact, the sales of interests to Arcadia Petroleum and fellow Falklands explorer Rockhopper Exploration will allow Desire to drill two wells at no cost, while existing cash should be enough to cover the costs of the other two initial wells.
Mr Phipps doesn't think the technical challenges of drilling in the South Falklands are insurmountable, either - water depths are 200 to 400m, against a maximum drill depth of 2,600m, and the climate isn't extreme. However, it might be a different matter if Desire were to make a discovery. A gas find would require pipelines or liquefaction, and could be a major technical challenge, although after several frustrating years this would, at least, be a good problem to have.
DESIRE PETROLEUM (DES) | ||||
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ORD PRICE: | 33p | MARKET VALUE: | £76.0m | |
TOUCH: | 33-34p | 12-MONTH HIGH: | 107p | LOW: 23p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 27¢* | NET CASH: | $40.6m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2004 | nil | -0.65 | -0.41 | nil |
2005 | nil | 2.07 | 0.90 | nil |
2006 | nil | -2.48 | -1.27 | nil |
($m) | ($m) | (¢) | (p) | |
2007 | nil | -0.65 | -0.52 | nil |
2008 | nil | -1.77 | -0.61 | nil |
% change | - | - | - | - |
*Includes intangible assets of $16.7m, or 7¢ a share £1=$1.45 |