DREAMS of vast oil reserves off the Falkland Islands have been dented for a Mathon-based company after initial drilling yielded poor results.

Shares in Desire Petroleum, listed on the Alternative Investment Market, plummeted 50 per cent on one day after the firm announced the small amounts of oil it had found were of poor quality.

The results signify a major set-back for the company as it had hoped to capitalise on a predicted 60-billion barrels of oil underneath the British Overseas Territory - an amount that would rival North Sea reserves.

Drilling began in February amid an international row between the UK and Argentina, which still claims sovereignty over the South Atlantic islands.

This culminated on February 16, when Argentina attempted to blockade access to the Falklands by taking control of all shipping from its coast to the islands.

However Desire began drilling in the North Falklands Basin from the Ocean Guardian platform on February 22.

There still remains the possibility that significant reserves of oil will be found at deeper depths and in five further wells around the islands.

In a statement to shareholders, the company said: “The primary Liz target was encountered at around 2,550 metres with indications of hydrocarbons while drilling. Subsequent logging operations have shown that oil may be present in thin intervals but that reservoir quality is poor. Wireline sampling is still to be carried out. Deeper gas shows have also been encountered while drilling, particularly below 3,400 metres and these have still to be evaluated by wireline logging and sampling.

“Until the logging is complete and the results analysed it will not be possible to determine the significance of the hydrocarbons encountered and whether the well will need to be drilled deeper, suspended for testing or plugged and abandoned.”