By J. Brock (FINN)

Recently, Sodra Petroleum, a wholly owned subsidiary of Talisman Energy Inc., has carried out an extensive seismic survey in Tranche "F" in the North Falkland Basin. As a result, they came to the conclusion that prospects for hydrocarbons were more interesting in Tranches "C" and "D" and have called for more data from the areas. According to the Chairman’s report to shareholders, Desire Petroleum’s Colin Phipps has said that it is hoped to make a decision about exploratory drilling in Tranches "C" and "D" early in the New Year.

"Should the decision be positive, it is probable that Sodra’s participation in Tranches "C" and "D" would be effected via a farm-in or a utilisation of all three tranches "C," "D" and "F."

Mr. Phipps speculates that at this stage, it is also possible that Argos Evergreen’s Tranche "A" could be included , thus forming a single consortium to take exploration in the North Falkland Basin forward. As Desire has the largest interest in the North Falkland Basin, Mr. Phipps says that it is probable that Desire will become the operator of the next phase of exploration.

Prudence is encouraged as it is anticipated that any consortium would have to raise considerable amounts of cash to progress this next stage of exploration. Further to this, the group has asked its directors and companies that they represent, to subscribe to placings in the Company’s shares at an agreed level related to the fees that they have received during the past 12 months. Mr. Phipps reports that the Directors have agreed to the proposal.

In his conclusion, Mr. Phipps states that regardless of the remote location of the area, a licence for exploration in the South-West Tranches has been awarded to the Anglo-Australian group, Falklands Hydrocarbon Consortium. "Although the basin is unconnected to the North Falkland Basin, the expansion of exploration activity in Falkland waters is to be welcomed as an indication of renewed interest by the industry," concludes Mr. Phipps.