Falkland Islands oil explorer Desire Petroleum has moved back into the black after benefiting from gains on foreign exchange, but investors were more concerned about the rapidly diminishing cash pile.

Despite notching up a pre-tax profit of $0.3m in the six months to 30 June, versus a loss of $6.40m last year, the share price took a tumble, falling almost 15%.

The company enjoyed foreign exchange (forex) gains of $0.82m this time round, having booked $5.95m of forex losses in the first half of last year. The gains arose primarily on sterling cash balances held to meet exploration costs incurred in that currency, and follow a strengthening of the pound against the dollar.

Cash for the period was significantly reduced from $100.6m to $34.4m, as a result of expenditures on two of the wells which were both completed during the period.

Commenting on the disappointing outcome of the company's drilling results thus far, chairman Stephen Phipps said: "The information Desire has gained in the period from both our own wells, other wells drilled in the area, combined with the recently acquired 3D seismic data on our acreage, reaffirms our belief in the prospectivity of our acreage in the North Falklands Basin. We are therefore continuing to review all available financing options with an intention to rejoin the current drilling campaign when possible."

The company was keen to emphasise the "encouraging" results from its 3D seismic programme where a number of tranches have been completed and testing is under way.

The share price was down 14.12% to 18.25p at 08:35.

NR

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