Desire hit by latest Falklands oil setback

The discovery nearly halved the oil company's share price. Photo / Peter Meecham

Desire Petroleum, the British oil and gas explorer, dealt investors another blow this week by revealing that it has so far failed to find any hydrocarbons in a further drilling hiccup in the Falklands.

The update on the Jacinta Prospect well in the North Falkland Basin comes after Desire said an "oil discovery" at the Rachel North well, unveiled last month, had turned out to be water.

After that episode, Desire plugged and abandoned the Rachel North well to focus on the Jacinta Prospect. But having drilled to a depth of 1.3km with no success, Desire said yesterday that the Jacinta well, in which it has a 100 per cent interest, would now have to be drilled to the planned total depth of about 1.67km.

Yesterday's admission sent Desire's shares sliding 18p (36c), or almost 30 per cent.

Following the update on Rachel on December 6, when Desire said the hydrocarbons found there were residual, and the mobile fluid was water, Stephen Phipps, the company's chairman, commented: "It is extremely disappointing that the wireline logs and fluids sampling have dashed all the earlier promise of this being Desire's first oil discovery in the North Falkland Basin."

That statement nearly halved the oil company's share price, knocking 66p off it on the small-cap AIM market.

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