The Company has taken delivery, in Aberdeen, of long lead time items, including the casing, tubulars and wellheads required for the planned 3 well drilling program in the Falkland Islands. This equipment, valued at around £2.75 million, represents a significant part of the down-hole materials required for the drilling operation. The equipment will be stored near Aberdeen until required for the drilling campaign. It should be noted that since the order was placed in early 2006 the cost of this equipment has risen significantly.
The Company continues to pursue a number of avenues in seeking to obtain a rig for drilling in the North Falkland Basin. In addition to continuing discussions with rig owners and potential farm-in partners, Desire is investigating the option of joining with the other operators in the Falklands to conduct a joint drilling campaign along the lines of the 1998 drilling campaign. The Directors believe that a multi-well joint campaign is likely to be of much greater interest to rig owners than a Desire stand-alone 3 well program.
Desire holds large equity positions in 5 tranches in the North Falkland Basin.
In 2004, Desire raised £4 million to finance a 3D seismic campaign over its acreage, followed by a further £25 million in 2005, to finance a multi well drilling campaign. The Company is presently seeking a rig for this program.
The North Falkland Basin is believed to hold in excess of 2 billion barrels of oil in place and has an established working hydrocarbon system. Seismic work completed in the basin has identified many delta and fan trapping plays, where hydrocarbons may be located.
Desire was formed in 1997 to participate in the drilling campaign in the Falkland Islands with several other companies in 1998. During the campaign, 6 wells were drilled, of which 5 wells encountered oil shows - and one well recovered live oil to the surface.
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