Production Licence update

Desire Petroleum plc

("Desire" or "the Company")

Production Licence update

Desire Petroleum plc (AIM:DES) the exploration company focusing on the North Falkland Basin, announces certain changes to its Production Licences following approval received from the Executive Council of the Falkland Island Government.

Licences PL003, PL004 and PL005

·; Production Licences PL003, PL004 and PL005 (the "Licence Group") will be grouped together with collective requirements for all three licences. These licences contain the Sea Lion extension and all other discoveries

·; The existing work commitments under Phase 2 of the licence period have been confirmed as satisfied

·; The Phase 2 licence period has been extended to 1 May 2016 with a one well work commitment during this period

·; No relinquishment is required while this licence group remains in Phase 2. Normal relinquishment provisions will apply should the Licence Group move into Phase 3

·; Acreage rentals will remain at current levels of $60/km2 for the duration of Phase 2.

Licences PL006 and PL007

·; Production Licences PL006 and PL007, in the southern portion of Desire's acreage, will be relinquished in their entirety at the end of their respective Phase 2 periods -, 25 November 2012 and 29 October 2012 respectively.. A mature source rock is unproven in this area, and the only significant prospectivity in the licence areas was tested by the 25/5-1 well which encountered only gas shows.

Commenting on the update, Stephen Phipps, Chairman of Desire, said:

"We are extremely pleased with the changes to our licences, and thank the Falkland Island Government for their understanding in agreeing our revised licence terms. Desire now has over three years in which to further explore its highly prospective key licence areas in the northern part of this basin."