Desire Petroleum Advances North Falkland Program
Desire Petroleum
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Sunday, September 14, 2008
The past six months has seen a major advance in Desire Petroleum's exploration plans for the North Falkland Basin. A farm-out agreement with Arcadia Petroleum Ltd. has been signed and a new exploration license, PL034, has been awarded to the Company (20%) and Arcadia (80%). This new license is the key to unlocking an exciting new gas play that the Company has identified, of which Alpha is the largest prospect. Under the terms of the farm-out agreement, Arcadia will drill and test two wells and pay the associated mobilization and demobilization costs whilst Desire has undertaken to drill two wells for its own account. Arcadia will drill and test the Ann prospect, paying 85% of the costs to earn a 35% interest in a sub-area of Tranche C. Under the terms of a previous farm-out agreement, Rockhopper Exploration plc will pay the remaining 15% of the Ann well costs to earn a 7.5% interest in Tranches C and D. This will leave Desire with a 57.5% interest in the Ann prospect for which the Desire unrisked, mid-estimate of potential recoverable reserves is 202 million barrels of oil.
In addition, Arcadia will drill and test the major new gas prospect named Alpha which is located partly on the existing Desire licenses, Tranches I and L, and partly on the newly awarded license, PL034. The Alpha prospect is a large well-defined, structural closure, covering an area of over 300 square kilometers. It is associated with a very strong AVO anomaly which, in addition to significantly de-risking the prospect, suggests that the reservoir is gas charged. Desire’s unrisked, mid-estimate for the potential recoverable reserves for Alpha is 7.8 trillion cubic feet (TCF) with 15 TCF in the upside case.
By drilling a well on the Alpha prospect Arcadia will earn a 50% interest in block 25/10 in Tranche I and a 50% interest in part of Block 25/15 in Tranche L. Based on the current mapping, Desire estimates that it has an interest of approximately 30% in the total Alpha prospect.
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