High hopes for Falklands' oil prospects as rig arrives

Oil speculators talked up prospects in the Falkland Islands as a rig arrived to start drilling today at the British-controlled corner of the South Atlantic.

Shares in Desire Petroleum, which operates the rig Ocean Guardian, rose 9.3 per cent to 128.5p. It said drilling began today at 2.15pm.

Rockhopper Exploration soared 12 per cent to 77.75p and Falkland Oil & Gas was also up 8.3 per cent to 163p as both explorers are expected to use the rig. Even Borders & Southern Petroleum — which is not going to use Ocean Guardian, rose 3.4 per cent.

Peter Bassett, analyst at Hanson Westhouse, said: "Exploration stocks normally rise on activity."

Lionel Therond, analyst at Fox-Davies Capital, pointed out: "It's all speculative at this stage. They have to find something quite substantial to justify the value [of the shares]."

Argentina, which went to war with Britain in 1982 over the Falklands, has voiced anger over plans to exploit the islands' oil reserves.

Gordon Brown has said he is hopeful any row can be resolved but tensions are high, with Argentine hackers yesterday reportedly defacing a Falklands Islands newspaper website, Penguin News.

Hopes of a major energy find in the Falklands have fuelled a share price boom. Desire is up 376 per cent in the past 12 months, Rockhopper has jumped 470 per cent and Falkland Oil & Gas has climbed 138 per cent.

In a statement to the London Stock Exchange, Desure Petroleum said: "The well is being drilled to an estimated target depth of circa 3,500 metres (11,480 feet).

"Drilling operations are expected to take approximately 30 days and a further announcement will be made once drilling is completed."