Interim Results

Desire Petroleum plc

("Desire" or "the Company")

Interim Results

Desire Petroleum plc (AIM:DES) the exploration company focusing on the North Falkland Basin, today announces its Interim Results for the six months ended 30 June 2011.

Highlights:

·; 3D seismic programme completed in Tranches C, D, F and adjacent open areas. Initial interpreted data from our priority areas are encouraging.

·; An updated Competent Persons Report over our priority areas to be published in Q4 2011

·; Appointment of Graeme Thomson to Board as an Independent Non-Executive Director and Chairman of the Audit Committee

·; Rockhopper Exploration announced in August that in their high case up to approximately 10% of the Sea Lion field may extend into PL004 (Tranche D) in which Desire has a 92.5% interest

Commenting on the results, Stephen Phipps, Chairman of Desire, 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."

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Chairman's Statement

When I last wrote to you on the publication of our Annual Report earlier in April of this year, Desire were in the midst of drilling the Ninky well, the sixth and last well in our recently completed drilling campaign. While the results were disappointing, the information provided by this well, other wells in the area, plus the recently acquired 3D seismic data on our acreage, is providing a strong basis for further prospect generation.

The ongoing appraisal drilling campaign on the Sea Lion discovery operated by Rockhopper Exploration has been very successful and we are particularly encouraged by their recent statement that, in their high case, up to approximately 10% of the field may extend into PL004 (Tranche D) in which Desire has a 92.5% interest. This area was previously highlighted by our mapping of the Shona lead from the preliminary fast track data acquired from our 3D seismic survey completed in May 2011.

Processed data from our priority areas are currently being interpreted and initial indications are encouraging that the previously identified Shona and Beverly leads can be matured and that further prospects will emerge in the area to the north of our Rachel wells, where previously there was no 3D seismic coverage.

It is our intention to publish an update to our Competent Persons Report sometime early in the fourth quarter of 2011. This will provide an independent assessment of our new high graded prospects in our priority areas which we consider could be near-term drilling targets. A fully interpreted update of our prospect inventory, incorporating the full extent of the 3D seismic survey over our acreage, will be prepared during the first half of 2012

As announced in July 2011, I am pleased to report that Graeme Thomson has joined our Board as an Independent Non-Executive Director and Chairman of the Audit Committee. He has significant experience of both the oil and gas industry and in the capital markets arena and we look forward to his input.

Your Board remains optimistic that oil will be discovered on Desire's acreage and as such it is our intention to rejoin the current drilling campaign when possible. As flagged in my last statement, whilst Desire has sufficient funds for our share of rig and equipment demobilisation plus general working capital needs, our cash balance is insufficient to drill further wells. With this in mind your Board is continually reviewing all available financing options. 

Yours sincerely,

Stephen L. Phipps

Chairman

Financial Report

The profit for the six months ended 30 June 2011 was $333,000, compared with a loss for the corresponding period of $6,398,000, and occurs principally from foreign exchange gains.

Net administrative expenses of $532,000 were in line with the previous half-year, helped by continuing recharges to joint venture licences on operated drilling and 3D seismic activity.

The exchange gain for the period of $821,000 (2010 - loss of $5,954,000) arises primarily on Sterling cash balances held to meet exploration costs incurred in that currency, and follows a strengthening of the pound against the dollar between the previous year-end ($1.566/£) and the date of this report ($1.605/£). During the period, Sterling cash balances were held both directly by Desire, and as restricted cash within escrow accounts held jointly with Diamond Offshore Drilling for rig demobilisation, and with AGR for equipment demobilisation.

Investment revenues of $68,000 are lower than in the corresponding period ($110,000) due to lower average cash balances held.

The Group's intangible assets at the period end stood at $175 million. The Group follows the full-cost method of accounting as permitted by International Financial Reporting Standard 6 ('IFRS6') "Exploration for and Evaluation of Mineral Resources".

The Group does not believe that an impairment of this carrying value is required under IFRS6.

Total cash balances, inclusive of amounts held as restricted cash, have reduced from $100.6 million at the start of the period, to $34.4 million at the balance sheet date, as a result of expenditures on the Dawn and Ninky wells, both completed during the period, and on the Group's 3D seismic acquisition programme which concluded in May.

As at the Balance Sheet date, the Group holds sufficient resources to meet all of its current drilling rig and equipment demobilisation commitments, and other ongoing expenses.

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Material/non cash transactions

As restricted cash is excluded from cash and cash equivalents, then payments for oil expenditure costs from restricted cash are treated as non-cash transactions.

In addition to the purchase of tangible and intangible assets stated above, there were $49,624,000 paid from restricted cash.

Consolidated Cash Flow Statement

Notes to the Interim Financial Statements for the six months ended 30 June 2011

1 Basis of preparation and accounting policies

The results for the six months to 30 June 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and International Accounting Standards Board.

The financial information does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. Full accounts of the Company for the year ended 31 December 2010, on which the Auditors gave an unqualified report, have been delivered to the Registrar of Companies.

2 Segmental information

The Group considers itself to have a single purpose, the exploration and exploitation of its licenses in the North Falkland Basin, and therefore concludes that it has only one business segment and only one geographic segment.

3 Earnings/(loss) per share

The calculation of basic earnings per share is based upon the earnings/(loss) for the period and the weighted-average number of shares of 342,285,172 (2010 - 322,696,245) in issue during the period.

The diluted earnings per share is based upon the profit for the period and the number of shares in issue as follows:

There are 12,440,000 of anti-dilutive share options and Share Appreciation Rights in issue that could potentially dilute the basic earnings per share in the future.

When the Group reports a loss for the period then, in accordance with International Accounting Standard 33, the share options are not considered dilutive.

4 Tax

Current tax comprises a provision for tax on the interest receivable less any allowable expenses, and any adjustment for over or under provision in prior periods.

5 Copies of report

Copies of this interim statement can be viewed on the Company's website and will be available to the public at the Registered Office, Mathon Court, Mathon, Malvern, Worcestershire WR13 5NZ.

Independent Review Report to Desire Petroleum Plc

Introduction

We have reviewed the accompanying balance sheet of Desire Petroleum Plc as of 30 June 2011 and the related statements of income, changes in equity and cash flows for the six month period then ended and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements

2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the entity as at 30 June 2011, and of its financial performance and its cash flows for the six month period then ended in accordance with International Financial Reporting Standards as applicable in the United Kingdom.

UHY Hacker Young Manchester LLP

Chartered Accountants

Manchester

September 2011