Setback for Desire as oil well fails to deliver

Falkland Islands-focused Desire Petroleum saw its shares tank nearly 70 per cent at one stage after it said its Ninky Well in the North Falkland Basin would be shut down and abandoned. Stephen Phipps, Desire chairman, said after shutting down the well, the AIM-listed company would be left with around £22m which was insufficient to drill further wells and further financing would be sought.

Desire has been exploring the Falklands since 1998 and has so far failed to find any significant reserves of oil or gas. This latest disappointment follows failure to find oil at its Rachel North and Jacinta Prospect wells at the end of last year.

Desire shares have fallen around 90 per cent since the beginning of December.

Earlier this year, rival oil firm Rockhopper raised hopes after it discovered an estimated 242 million barrels in recoverable reserves at its Sea Lion well in the Falklands.

Desire and Rockhopper are conducting a joint seismic survey of the basin near the Sea Lion well, which they expect to complete later in the year and hope will identify new prospects.

Mr Phipps said: “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.”

The company said it discovered traces of oil but the quality was poor.