DES.L Regulatory News (DES)

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 2012.

Highlights:

·; Competent Person's Report ('CPR') on the 14/15-4a well results give net to Desire contingent resources of 85 MMstb oil and 178 bcf gas

·; Rockhopper Exploration's CPR indicates that Desire has an estimated 4% of the Sea Lion discovery

·; CPR update on the Elaine and Isobel prospects with estimated best case un-risked prospective recoverable oil resources net to Desire of 312 MMstb, with a geological chance of success of 30%.

·; A CPR covering the full prospect inventory will be available in Q4 2012

·; Licence extensions on Tranches C, D and F, subject to Executive Council approval

·; Loss for the period of $2.0 million decreased from $39.3 million (1H 2011 restated)

·; The Group's cash resources at the period end amounted to $12.7 million

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

"Recent developments have highlighted the exciting potential of the North Falkland Basin and it is Desire's intention to seek a high quality farm in partner to help us capitalise on this potential, with our share in recent discoveries, material positions in well defined prospects and the exploration potential across our remaining acreage."

Chairman's Statement

Dear Shareholder,

The recent acquisition in July of this year of 60% of Rockhopper Exploration's interest and the operatorship of the Sea Lion discovery by Premier Oil is a major step forward towards producing hydrocarbons in the North Falkland Basin. Premier Oil has committed to the development of the field and expects production to reach up to 70,000 barrels of oil per day. Rockhopper's Competent Person's Report (CPR) undertaken by Gaffney Cline Associates earlier this year indicates that Desire has an estimated 4% of the Sea Lion discovery on our acreage. In addition the Sea Lion development will create an infrastructure from which the development of our satellite discoveries, Casper, Casper South and Beverley, are likely to benefit.

Desire commissioned Senergy GB Limited (Senergy) to produce an independent updated CPR post the results of the highly successful 14/15-4a well drilled in December 2011, in which Desire has a 40% interest. The CPR evaluates the Sea Lion Extension, Casper, Casper South and Beverley prospects all of which were found to be hydrocarbon bearing with a gross reservoir column of 89 metres and a total net pay of 57 metres. Senergy's best estimate of net contingent oil resources assigned to Desire is 85 MMstb and best estimate of net contingent gas resources assigned to Desire is 178 bcf.

The full interpretation of our 2010/2011 merged 3D seismic data is ongoing. However, we were able to fast track the interpretation of two exciting prospects, Elaine and Isobel, both of which are in licence PL004a where Desire has a 92.5% interest. The Elaine and Isobel fans are developed in the southeast of the basin within the basal part of the F sequence and are similar to the Sea Lion fans further north. Senergy have included these prospects in a further CPR update and have estimated best case un-risked prospective recoverable oil resources net to Desire of 312 MMstb, volumes which are comparable to the size of the Sea Lion discovery, with a geological chance of success of 30%.

A CPR covering the full prospect inventory derived from the total merged 3D data will be available in Q4 2012 and we believe that this will continue to enhance our prospect inventory.

It is anticipated that, subject to Executive Council approval in the Falkland Islands, our key northern licences, PL003 (Tranche C), PL004 (Tranche D) and PL005 (Tranche F), will be granted extensions under the existing phase 2 work programme. These extensions are an important element in our ability to attract a farm-out partner and further licence details will be forthcoming once final Executive Council approval is confirmed. Our southern licences, PL006 (Tranche I) and PL007 (Tranche L) are currently under review and our studies to date post the evaluation of the Dawn/Jacinta well and the Rockhopper Exploration Ernest well results suggest that this is an area of lower prospectivity and hence higher risk. As a consequence we are likely to relinquish a substantial part, if not all, of these licences. PL034, containing the Alpha prospect in which we had a 20% interest, has already been relinquished by the operator Denholm Ltd.

Anna Neve has decided to step down as a non-executive director, effective 17 September 2012, and the Board is grateful for her valuable contribution over the period of her directorship but I am pleased to say she will remain as the Desire Company Secretary.

Recent developments have highlighted the exciting potential of the North Falkland Basin and it is Desire's intention to seek a high quality farm in partner to help us capitalise on this potential, with our share in recent discoveries, material positions in well defined prospects and the exploration potential across our remaining acreage.

Yours sincerely,

Stephen L Phipps

Chairman

Financial Report

Change in accounting policy

In 2011 the Group changed its oil and gas accounting policy from a full cost policy (under which all exploration costs are capitalised irrespective of the success or failure of specific parts of the overall exploration activity) to a successful efforts policy (under which unsuccessful exploration costs are expensed to the income statement in the period in which it is determined that the exploration has failed to locate commercially recoverable hydrocarbons). The full accounting policy can be found in the 2011 Annual Report.

The change in accounting policy requires a restatement of prior period results. The impact of the change in policy on the half year results to 30 June 2011 can be found in note 2.

Income statement

The loss for the period decreased from $39.3 million (restated) in the previous period to $2.0 million in the current period. The reduced loss is mainly due to a decrease in exploration and evaluation expense.

The 2011 exploration and evaluation expense of $39.7 million (restated) largely consisted of unsuccessful Ninky well costs and 3D seismic expenditure incurred during that period. These costs have reduced to $0.7 million in 2012 following the completion of drilling and seismic activities.

Net Administrative expenses for the period increased from $532,000 to $831,000. This was entirely due to a reduction in the allocation to joint venture licences, with gross administrative expenses in line with the previous period.

The exchange movement for the period showed a small gain of $66,000 compared with a gain of $821,000 in the previous period, and arises primarily on the Group's Sterling cash balances, which were held both directly by Desire, and as restricted cash within escrow accounts. The period end exchange rate of $1.568/£ was little changed from the rate at the start of the period ($1.554/£). Investment revenues of $20,000 in the year were lower than 2011 levels due to a reducing cash balance during the period.

The tax charge of $447,000 and the finance costs of $48,000 for the period represent estimated provisions for the settlement of corporation tax liabilities arising in respect of investment revenues in prior years.

Balance Sheet

The Group capitalised $0.7 million of exploration and evaluation expenditure ("E&E") in the period. The only E&E assets carried forward at the balance sheet date are those in respect of the farm in area PL004b, where the Group holds contingent hydrocarbon reserves. All other E&E costs have been expensed in the Income Statement, in accordance with the Group's successful efforts accounting policy.

Gross provisions at the period end have reduced from $25.7 million to $nil, following the demobilisation of the drilling rig and equipment at the conclusion of the drilling campaign.

The Group's cash resources at the period end amounted to $12.7 million, plus an additional $1.8 million held as restricted cash in escrow accounts with AGR to meet liabilities within creditors.

Financial outlook

Due to the Group's available cash resources at the period end, the Directors have a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future.

Eddie Wisniewski

Finance Director

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 $21,810,000 (2011 - $49,624,000) paid from restricted cash.

Reconciliation of Operating Loss to Net Cash from Operating Activities

Notes to the Interim Financial Statements for the six months ended 30 June 2012

1 Basis of preparation and accounting policies

The results for the six months to 30 June 2012 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 Group for the year ended 31 December 2011, on which the Auditors gave an unqualified report, have been delivered to the Registrar of Companies.

2. Change in accounting policy

In 2011 the Group changed its oil and gas accounting policy from a full cost policy to a successful efforts policy.

The change in accounting policy requires a restatement of prior period results. The tables below show the impact of the change in accounting policy on the half year results to 30 June 2011.

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Balance Sheet

3 Segmental information

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

4 Loss per share

The calculation of basic loss per share is based upon the loss for the period and the weighted-average number of shares of 342,285,172 (2011 - 342,285,172) in issue during the period.

There are 12,215,701 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.

5 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.

6 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 2012 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 2012, 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 2012