British explorers struggle to strike oil in Falklands

That announcement stoked takeover speculation about the company, which hopes to start producing oil in 2016.

Analysts have said that a “farm-out,” where a partner is delegated extraction duties, is the most likely outcome.

Desire Petroleum

Desire endured a dire end to 2010 when it reported that two promising wells were dry. There was a run on the company’s shares after it was forced to backtrack on the “highly encouraging” results of initial drilling that turned out to be the opposite.

It has farmed out a well to Rockhopper, close to the Sea Lion prospect, which has led to a discovery of oil and gas. Despite that success, it is not drilling at present.

Argos Resources

Another company that has struggled to find oil, but remains optimistic after recently completing a 3D survey of its prospect near Sea Lion, a patch of territory that covers more than 1,100km2 in the north Falklands basin.

According to one estimate, there could be up to 2.1 billion barrels of oil in its prospects, but, as yet, they have proved elusive.

Borders & Southern Petroleum

The company has two exploratory wells in the south Falkland basin. The promising prospects are called Darwin and Stebbing.

The firm was founded by Harry Dobson, a mining entrepreneur who once held a 6.7 percent stake in Manchester United Football Club and made ￡30 million (US$47.65 million) from his investment.

Falkland Oil and Gas

Falkland Oil and Gas, has the most production licences in the region. Its sites to the south and east of the Falkland Islands have significant potential, with the Loligo prospect holding an estimated 4.7 billion barrels.

However, the company must wait until Borders & Southern finishes with its exploratory rig before it can start work. Sharing a rig makes sense, according to industry sources, because exploration is such a costly business. This is particularly true when there is a chance that the wells could come up empty — a fate that cost Desire’s shareholders millions of pounds. It can cost US$1 million a day to run an exploratory well in deep water.