Desire shares plummet as Falkland Islands drilling brings disappointing results

Shares in Desire Petroleum lost almost half their value today after the company told of disappointing drilling results at a new oil well.

Desire said the first well had brought disappointing results but added that “oil may be present in thin intervals but that reservoir quality is poor”.

Desire, as well as several other explorers, have been optimistic about discovering large quantities of oil in the North Falklands basin.

However, the company said the evidence of gas it discovered at 3,400 metres has to be analysed.

The company said once the results have been analysed, it will know whether or not the well needs to be “drilled deeper, suspended for testing or plugged and abandoned”.

The offshore drilling has triggered renewed diplomatic tension between the UK and Argentina, bringing to the surface bad memories of the war over the islands in 1982.

Desire is expected to announce further results from the well later this week. Today’s disappointing news also sent the value of other oil shares down.