DES Desire Petroleum

    RNS Number : 3149B
  Desire Petroleum PLC
  14 August 2008
   

 For immediate release.  14 August 2008



    Desire Petroleum plc

    ("Desire" or "the Company")

    Farm-out Agreement and Grant of New Acreage

    Desire signs agreement with Arcadia Petroleum Limited

    New licence awarded over major new prospect

    Exciting new gas play identified

    Desire Petroleum plc is pleased to announce that further to the Announcement of 25 February 2008, regarding the acceptance, by Desire,
of the terms of a conditional farm-in offer, the approval of the Falkland Islands Government has now been received and that a formal
farm-out agreement has been entered into with Arcadia Petroleum Ltd. ("Arcadia").

    The Falkland Islands Government has also granted Desire and Arcadia new acreage adjacent to Desire's existing acreage in Tranche I, in
the North Falkland Basin.

    Arcadia is a U.K., private, integrated, upstream and downstream, international, energy business which is a member of a significant group
of related companies involved in the oil industry. Arcadia is in the process of building a world-wide portfolio of high-quality, de-risked,
exploration and production assets in frontier and semi-frontier areas.

    The terms of the farm-out arrangements are as follows:

    Tranche C

    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 covering the Ann
and Orca South prospects.

     Rockhopper Exploration plc, as part of a larger transaction, is responsible for paying the remaining 15% of the Ann well costs to earn
a 7.5% interest in Tranches C and D.  Accordingly, the net result to Desire will be a 57.5% interest in the Ann prospect for which the
Desire mid-estimate of potential recoverable reserves is 202 million barrels of oil. Following AVO studies in 2007 Desire now estimates the
chance of success on this prospect at 50%, which is the chance of the prospect containing hydrocarbons.

    Tranche I

    Arcadia will drill and test a major new prospect named Alpha, paying 100% of the costs to earn 50% in Block 25/10 and part of Block
25/15. This prospect also extends into the newly awarded Blocks 25/8, 25/9 and 25/14b where Arcadia has an 80% interest and Desire 20%.
Based on the current mapping, Desire estimates that it has an approximately 30% interest in the total Alpha prospect.

    Alpha is a large, well-defined, structural closure, covering an area of over 300 square kilometres. 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 mid-estimate for the potential recoverable reserves for Alpha is 7.8 trillion cubic feet (Tcf) with 15 Tcf in the upside case.
These volumes are considered more than adequate for a commercial gas development in the event of a discovery. This prospect represents an
exciting new major exploration play in the North Falkland Basin.

    Arcadia will also pay the mobilisation and demobilisation costs associated with the two wells.

    In addition to the two wells to be drilled by Arcadia, Desire has undertaken to drill two wells for its own account including the
mobilisation and demobilisation costs associated with these two wells. Desire will remain as operator on all the acreage Arcadia has joined
them in. 

    Mr Stephen Phipps (Chairman of Desire) commented:

    "The Board of Desire very much welcomes the opportunity to work with Arcadia, whose exploration philosophy fits extremely well with our
own. We look forward to a long and successful partnership with Arcadia.

    The majority of the prospects in the Desire inventory are still held 100% by Desire and with the funds currently available and at
current rig rates we are able to drill two of these for our own account. 

    With our new partner on board we are now in a far stronger position to pursue actively all available rig opportunities for drilling our
prospects.

    We are excited about the new exploration gas play and the large potential of the Alpha prospect." 

    For further information please contact:

 Desire Petroleum plc
 Stephen Phipps, Chairman                   020 7436 0423
 Dr Ian Duncan, Chief Executive Officer     01684 568 993

 Seymour Pierce Limited                     020 7107 8000
 Jonathan Wright
 Richard Redmayne

 Buchanan Communications                    020 7466 5000
 Ben Willey
 Ben Romney


    This announcement will be posted on the Desire website www.desireplc.co.uk with a map showing the new acreage position.

This information is provided by RNS
The company news service from the London Stock Exchange
 
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