Desire slumps after abandoning well

18th Apr 2011 13:09

Falklands oil explorer Desire Petroleum crashed to a 52-week low after plugging and abandoning the 14/15-3 well on the Ninky prospect in the North Falkland basin.Oil shows were encountered while drilling but not enough to justify continued drilling. Analysis of the drilling results suggests that the company would have been better off drilling a bit further to the east."There are indications from seismic of further sands along strike on the Ninky structural high, which were not penetrated in this well. These opportunities will be evaluated with the new 3D seismic as part of Desire's prospect inventory update," the company said.The company's three-dimensional (3D) seismic operations are still active, with around 1,485 square kilometres covered by the operations to date. Desire expects a further 195 square kilometres to be acquired before the programme is complete. The joint survey (with Rockhopper Exploration) is expected to be completed during May."On completion of the Ninky well Desire will have funds of circa $37m which, while more than adequate for our share of rig and vessel demobilisation, completion of our 3D seismic acquisition, processing and interpretation plus general working capital needs, is insufficient to drill further wells," admitted Stephen Phipps, chairman of Desire. "Given our continuing confidence that oil will be discovered on Desire's acreage, further wells will need to be drilled and, therefore, once the results of the Ninky well and the 3D seismic have been analysed, we will review all financing options available with the intention of rejoining the drilling campaign later in the year if possible," he added.Matrix Group's Charlie Sharp said the Ninky well disappointment is only likely to have a small effect on Desire's partner, Rockhopper, as it only has a 7.5% stake in the well."Although the well result has only a very small impact on Rockhopper (about -5p) there could be some sentiment disappointment reflecting the fact that a second field has not yet been found in the North Falklands Basin," Sharp suggests.---jh