Desire Petroleum narrows annual losses

Desire Petroleum narrowed its losses in 2012 as the oil and gas company slashed costs of production.

The North Falkland focused company saw the loss for the year decreased from $42.5m to $3.8m, mainly due to a drop in exploration and evaluation expenses from $41.7m to $1.8m.

During the period, the group won licence extensions with the Falkland Islands and completed a two-year drilling campaign in the North Falkland basin.

A total of 16 exploration and appraisal wells were drilled which have proved up a hydrocarbon system with a commercial oil discovery at the Sea Lion field where the company has now turned its focus.

The firm's cash resources were reduced to zero following settlement of all outstanding demobilisation liabilities.

"Desire has been active in proving up the exciting hydrocarbon potential in our acreage, firstly, in the Sea Lion area, and secondly over our other acreage which we believe has the best remaining exploration potential in the North Falkland Basin," said Chairman Stephen Phipps.

"On the strength of this extensive prospect inventory, the board took the decision to commence a farm-out process in order to attract further investment into our licences.

"With the next drilling campaign expected to commence in late 2014, a successful farm-out would not only ensure that part of this campaign will be focused on Desire's licences, but also provide an attractive method of funding our ongoing exploration activities."

Shares fell 2.26% to 16.25p at 13:24 Monday.

RD