Desire in farm-out agreement with Rockhopper

12th Oct 2011 09:23

Desire Petroleum, the exploration company wholly focused on the North Falkland Basin, has agreed the terms of a farm-out agreement. The contract, which is subject to the approval of the Falkland Islands Government, is with Rockhopper Exploration in relation to the northern section of its Tranche D (PL004) licence.According to the farm out agreement, the farmed-out area has been divided into two sections, while Desire retains 92.5% of the remainder of Tranche D. Rockhopper will pay 100% of the committed well in Area 1 to earn a 52.5% interest, the firm said. With their existing 7.5% interest, this will bring their equity to 60% with Desire at 40%. Rockhopper will assume operatorship of this area. Rockhopper will increase its equity to 25% in Area 2, with Desire retaining 75% equity and the operatorship.The farm-out agreement is conditional upon Rockhopper raising additional capital through an equity placing.Desire chairman Stephen Phipps said: "We are very pleased that this agreement to farm-out part of Tranche D to Rockhopper will enable another well to be drilled on our acreage in this current drilling campaign, at no further cost to Desire. Under the terms Desire still retains a significant interest in the prospectivity of Tranche D. "In addition, the recently evaluated fast track 3D seismic data shot earlier this year has brought some exciting new prospects into play and underpins our core belief in the prospectivity within our acreage. A CPR containing a detailed evaluation of the new data and prospects is being finalised and will be available shortly."Desire's share price rose 17.39% to 20.25p by 09:41.NR