You are here:
Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.
26p - Oil & Gas - About once a year, the British tabloid press decides that Argentina wants a rematch over the Falklands. Cue much red, white and blue in the middle pages, and 25-year-old pictures of Royal Marines heading for Port Stanley with Union Flags flying.
Advertising
As with so many things, though, what's really behind it all is oil. But in the case of the Falklands it's only the hope of oil. The potential of the north and south Falklands basins is undeniable, and much money has been spent on seismic surveys by many companies, including Desire. Results have been promising, and it may be that there is oil in those basins, deep under the ocean.
So, even though the oil isn't likely to come into production soon, Desire's shares periodically get pumped up on the back of the Falklands assets because the potential valuations look huge. However, at the moment, the shares are on the way back down. That's because, for several years, Desire has been trying to get hold of a drill rig to find out just exactly what its licences hold. And it's had no luck. The money the company raised to that end back in 2005 sits idle on the balance sheet, earning just about enough interest to cover administrative costs.
The irony is that high oil prices aren't doing Desire any favours at all. All the speculative money that has flowed into the small oil sector over the past couple of years is being spent in a frenzy of exploration, and all the available exploration kit is booked up for the foreseeable future. The idea of sending a drill rig all the way down to the Falklands doesn't make sense for a rig operator who can turn a huge profit in home waters. So there will be no rig going to the Falklands until the oil price falls, or until rig operators build enough capacity. And that could take years. Sell.
| Ord price: 26p | Market value: £ 57m |
|---|---|
| Touch: 24.5-26.5p | 12-month High: 49p Low: 23p |
| Dividend yield: nil | PE ratio: 28 |
| Net asset value: 14p* | Net cash: £25m |
| Year to | Turnover | Pre-tax | earnings | dividend per |
|---|---|---|---|---|
| 31 Dec | (£m) | profit (£m) | per share(p) | share (p) |
| 2003 | - | -0.53 | -0.47 | nil |
| 2004 | - | -0.65 | -0.41 | nil |
| 2005 | - | 2.07 | 0.90 | nil |
| % change | - | - | - | - |
Free access to financial data, charts, portfolio tools and more - registration is quick, secure and free!
Profit from IC share tips; discover the benefits of IC Advantage and sign up for a free trial.
© The Financial Times Limited 2010. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
v6.2.11.1 running on ftbwebw-sun-02-z1
