Doriemus PLC - Audited Final Results for Year Ending 31 December 2016

10 May 2017

DORIEMUS PLC
(“Doriemus” or the “Company”)
 

Audited Final Results for Year Ending 31 December 2016

Chairman’s Statement incorporating the Strategic Report

2016 and the early part of 2017 (post reporting period) has seen significant advances towards oil production from both our Brockham and Horse Hill oil assets in the UK’s onshore Weald Basin near London’s Gatwick Airport and as we move towards drilling the second production well at the Lidsey Oil Field this year.

Overview:

The Company owns three valuable oil and gas assets in the new UK onshore oil province centred around the new Kimmeridge oil discoveries in the Weald Basin south of London. We firmly believe that all of these assets hold a very real chance of being significant UK onshore oil producing areas over the coming year with Doriemus set to benefit significantly with the commencement of positive cash flow from at least Brockham and Lidsey. We also believe that the new oil production from the Weald Basin may well prove to be of significant strategic importance to the UK in the years to come, especially considering the recent declines seen in the UK’s North Sea offshore oil production and as the country moves to separate from the European Union, making indigenous oil production more important.

Brockham Oil Field:
(Doriemus holds a direct 10% interest in Brockham, operated by Angus Energy Plc, the “Operator”)

The 8.9km² Brockham Oil Field (“Brockham”), in the Weald Basin, is held under UK Licence PL235 (Production Licence).

On 3 March 2017 (post year end), it was announced that the Brockham X4Z well, designed to evaluate the Portland, Corallian and Kimmeridge formations at Brockham (including an evaluation of the Kimmeridge reservoir that had been demonstrated by the Horse Hill discovery only 8km to the South), was drilled to a total depth of 1,391m.

The Brockham X4Z well was intended to establish whether the reservoir reported at the adjacent Horse Hill discovery extended further north into the Brockham Licence.

The preliminary results from Brockham X4Z well confirmed very similar thickness of reservoir and properties to those reported at Horse Hill. The gross thickness of Kimmeridge in Brockham X4Z was found to be some 385m thick. The two limestone intervals (each around 30m) tested in Horse Hill are also seen in the Brockham well and the reservoir properties appear to be very similar to Horse Hill, based on electrical logging evidence.

The Operator used Weatherford’s Ultra Wave Acoustic borehole imaging tool for first time in Europe. This tool made it possible to directly see fractures in the borehole. The Ultra Wave information confirmed not only evidence of natural fractures in the two main limestones intervals previously tested at Horse Hill, but also confirmed abundant natural fractures were evident in sections of the interbedded shales and limestones between and below the two main limestones. Around 200m of the reservoir showed this potential.

Geochemical analysis on the drilling samples showed total organic content through the Kimmeridge section of between 2-12%, exceeding Horse Hill in places. Furthermore, evidence showed that the highest organic content corresponds to the limestones and, in particular, the intervals in between the limestones which have natural fracturing. Whilst organic content is not the same as oil content, it is indicative of those sections where oil content will be the highest. This supports the potential for some 200m of reservoir of interest. Initial Tmax and Hydrogen Index readings also corresponded with Horse Hill’s data.

Therefore, based on the evidence so far, the Operator has confidence that the well will be similar to Horse Hill and perhaps, given that the reservoir is potentially much thicker in zones not previously tested, the final flow results could be even better.

In addition, oil shows were observed in the Portland and Corallian formations whilst drilling the Brockham X4Z well. Currently, the Brockham number 2 well is a temporarily suspended producer from the Portland reservoir and the Operator is confident of additional oil production from the Portland reservoir from the Brockham X4Z well in due course. The good indications of both gas and oil in the Corallian formation, below the Kimmeridge, is still being evaluated.

After a major surface refit of the site infrastructure to accommodate extra oil production, steps are now in hand to install new production facilities for the well and to prepare for the production as soon as the necessary OGA approvals are in place. The Operator is targeting completion for production in spring/summer 2017.

Lidsey Oil Field:
(Doriemus holds a direct 20% interest in the onshore Lidsey Oil Field. Operated by Angus Energy Plc, (the “Operator”)

The 5.3km² Lidsey Oil Field (“Lidsey”), is located in the southern portion of the UK’s onshore Weald Basin, and is held under UK Licence PL 241 (Production Licence).

On 2 May 2017 (post year end) the Operator announced that following the West Sussex County Council approval, it had also received permission from the UK Environment Agency to drill the Lidsey-X2 horizontal production well at the Lidsey production oil field, license PL 241. The Group will now seek the required approvals from the Health and Safety Executive ("HSE") and Oil and Gas Authority ("OGA").

The Lidsey Oil Field has planning consent for the development and operation of a three wellhead and beam pump oil production facility plus ancillary works at its Lidsey Oil Field. As permitted by the site planning consent, the first well has already been drilled at the site (Lidsey-X1) and the tophole/cellar is completed and installed to enable a second well to be drilled (Lidsey-X2). This second well has not yet been drilled and is planned to be drilled to a depth of approximately 1,000 metres and will target the upper crest of the Great Oolite reservoir that has been producing oil from the Lidsey-X1 well which was first discovered in 1987, and until now has been temporarily suspended back in February 2016 to allow for site works. Lidsey-X2 will also assess the Kimmeridge formation which is located above the Great Oolite reservoir.

Investment in Horse Hill Developments Limited (“HHDL”):
(Doriemus holds a 10% interest in HHDL. Operated by HHDL)

The Company currently owns a 10% interest in a special purpose company, Horse Hill Developments Limited, which is the operator and 65% interest holder in two Petroleum Exploration and Development Licences (“PEDL”) PEDL137 and PEDL246 in the northern Weald Basin between Gatwick Airport and London.

The PEDL137 licence covers 99.29 square kilometres (24,525 acres) to the north of Gatwick Airport in Surrey and contains the Horse Hill-1 (“HH-1”) discovery well. PEDL246 covers an area of 43.58 square kilometres (10,769 acres) and lies immediately adjacent and to the east of PEDL137.

The HH-1 well is located approximately 7.5 kilometres southeast of Doriemus’s producing Brockham Oil Field.

In August 2015, Schlumberger independently verified Huston based Nutech’s previous Horse Hill OIP estimates contained in PEDL137 and PEDL246. Schlumberger estimated a Mean Oil in Place (“OIP”) of 10,993 billion barrels of oil (“mmbbl”), with Kimmeridge OIP of 8,262 mmbbl. Schlumberger’s Mean OIP estimates are therefore 19% higher in total than Nutech’s P50 OIP estimate over the two Horse Hill licences and they were 58% higher in the Kimmeridge.

After receiving permits from the Environment Agency and the Oil and Gas Authority for the flow testing of the Horse Hill-1 discovery well, flow testing operations commenced in February 2016 and were completed in March 2016. Flow testing far exceeded all expectations resulting in an aggregate stable oil rate of 1,688 barrels (“bbl”) per day of very high quality oil, from the Lower Kimmeridge, Upper Kimmeridge and Upper Portland reservoirs. The produced oil contained no water and no clear indication of any reservoir pressure depletion was observed during the original flow testing.

Based on analysis of published reports from all significant UK onshore discovery wells, the 1,688 bbl per day flow rate is likely to be the highest aggregate stable rate recorded from any onshore UK discovery well.

The way forward on Horse Hill will now involve seeking regulatory permissions to conduct extended production tests from all 3 zones at the site, followed by a horizontal sidetrack in the Kimmeridge and a possible new Portland development well.

(Note: All of the reviews and reports mentioned above state that the OIP volumes estimated should not be construed as recoverable resources or reserves.)

Investment in Greenland Gas & Oil Plc
(2.82% interest in GGO)

The Company currently owns 2.82% equity shareholding in Greenland Gas & Oil Plc (“GGO”), a UK based oil and gas exploration company focused solely on Greenland, which in June 2015 was granted oil exploration and exploitation licences over 4,200km² located onshore in south-eastern Greenland in a region known as the Jameson Land Basin.

Public Trading Platform for the Company’s shares:

On 15 March 2016, the Company's ordinary shares commenced trading on the ISDX Growth Market (Now called NEX Exchange) under the ticker DOR and ceased trading on the London AIM market.

The Company’s Board had determined that due to the possible delisting of trading of its shares on the London AIM market, and to keep the Company’s shares trading on a regulated platform and given the size and stage of development of the Company, that the London ISDX Growth Market provides shareholders with the most appropriate listing platform on which to promote the Company's growth strategy.

The Reason for the Move from AIM to ISDX:

Going back a number of years, the Company had previously announced on 12 September 2014 that the disposal of TEP Exchange ("TEP") had been completed. This concluded the transition of the Company from the historical TEP Exchange Group Plc, whose primary business was unsuccessful in the licensing and on-line advertising of TEP's proprietary electronic platform, to a company with a new focus of investing in conventional oil and gas production and exploration activities in Europe.

This disposal constituted a change of business for the purpose of Rule 15 of the AIM Rules for Companies and therefore the Company was, with effect from 12 September 2014, re-classified as an investing company.

As an investing company it was required to make an acquisition or acquisitions which constituted a reverse takeover under the AIM Rules or otherwise implement its investing policy within the next 12 months.

The existing investments in HHDL, Lidsey and Brockham made by the Company prior to the disposal of TEP and the adoption of the new investing policy pursuant to AIM Rule 15 did not count towards the consideration as to whether the Company had implemented its investing policy pursuant to AIM Rule 8.

The Company attempted to otherwise implement its investing policy by investing the majority of its available cash in suitable investments.

The investment committee conducted due diligence on several further investment opportunities in the oil and gas sector in Europe with potential for growth in relation to implementing its investing strategy. However these minority investments were not deemed sufficient for the Company to be considered to have implemented its investing policy pursuant to AIM Rule 8. It was considered, under the circumstances, that the investment in GGO and potential reverse takeover of GGO represented the best opportunity for the Company to implement its investing strategy.

On 11 September 2015, the Company announced that it had acquired an initial 2.82% equity shareholding in Greenland Gas & Oil Plc (“GGO”), a UK based oil and gas exploration company focused solely on Greenland, and had entered into an option agreement (the “Option”) to acquire a further 60.56% of the existing share capital of GGO which expired on 31 March 2016.  Exercise of the Option in full would have constituted a reverse takeover under AIM Rule 14 and the Company therefore requested that dealings in its Shares be suspended from trading on AIM with immediate effect.  However, as a reverse takeover was not completed the Company's Shares were cancelled from AIM pursuant to AIM Rule 41 on 14 March 2016.  The Company had elected not to exercise the Option following further due diligence and due to the current low oil price environment.

On 15 March 2016, the Company was admitted to trading on the ISDX Growth Market in order to take advantage of that market’s profile, broad investor base, liquidity and access to institutional investors. The Directors believe that the Admission will (i) provide liquidity for current and future investors in the Company; and (ii) provide the Company with the flexibility to implement its Investing Policy going forward in order to create greater Shareholder returns.

New Public Trading Platforms:

The Company is cognizant of the limited level of trading activity of its shares on the NEX Exchange, and in order to address this the Company is working with its advisors to seek a potential listing on the LSE Standard List and also considering dual listing the Company’s shares on a senior recognised stock exchange outside of the UK. The paperwork required to apply for a move to the LSE Standard List is both complex and complicated due primarily to the requirements of the UKLA listing rules obtain full Competent Persons Reports on all of the Company’s oil assets and work in this regard remains ongoing.

Board Changes:

On 27 June 2016, Mr David Lenigas was appointed as the new Executive Chairman of the Company with Grant Roberts assuming the position of Non-Executive Director. David Lenigas has extensive first hand corporate and operational experience with all of Doriemus’s oil assets, having previously served as Executive Chairman of UK Oil & Gas Investments Plc.

Results for the period:

Loss for the year to 31 December 2016 amounted to £1,032,000 (2015: £310,000 loss) which included £380,000 loss (2015: £nil) on the full equity swap settlement, a share based payment charge of £207,000 (2015: £nil) and approximately £215,000 (2015: £nil) of professional fees in relation to the Company’s AIM de-listing and listing on the NEX Exchange Growth market. £55,000 (2015: £99,000) related to Oil Field expenses and the remaining £176,000 (2015: £ 268,000) related to regulatory costs and other corporate overheads.

Total revenue for the period was £1,000 (2015: £57,000).

Outlook:

Oil Production on its way!

2017 and beyond should prove to be an exciting period ahead for the Company and its shareholders as Doriemus moves towards being a serious contributor to new UK onshore oil production and being an active player in opening up the ultimate potential of the Weald Basin. The past few years has seen a significant amount of shareholders funds spent on drilling and evaluating new oil wells in the Weald Basin and it is now time to see oil production lifted from the reservoirs discovered in the Kimmeridge near Gatwick Airport.

We will hopefully see our Brockham Oil Field producing substantial amounts of oil from very wide pay intervals in the Kimmeridge formation and will work closely with our partners on the possibility of drilling a number of new production side-tracks and new production wells once the Brockham X4Z well comes in to full production over the spring/summer of 2017.

We will continue to seek out further investments in line with the Company’s investing strategy and will also work closely with HHDL and Angus Energy on potentially increasing our oil production and reserves from the existing operating fields. Also as per our investment strategy, the board will also look opportunistically at investing in or acquiring, an appropriate percentage holding, possibly including management, of a company or companies and businesses in the global oil and gas sector.

The directors would like to take this opportunity to thank our shareholders, staff and consultants for their continued support.

David Lenigas
Executive Chairman
9 May 2017

The directors of the Company accept responsibility for the contents of this announcement.

For further information please contact:

Doriemus Plc:
www.doriemus.com
David Lenigas (Executive Chairman)                                                                  [phone]
Hamish Harris (Non-Executive Director)

Peterhouse Corporate Finance Limited                                     [phone]
Guy Miller
Fungai Ndore

Square 1 Consulting (Public Relations)                                                              [phone]
David Bick

Statement of Comprehensive Income
for the year ended 31 December 2016

		2016	2015
		£’000	£’000
Revenue		1	57
Cost of sales		(54)	(99)
Gross (loss)/profit		(53)	(42)
Administrative expenses		(442)	(251)
Share based payment charge		(207)	-
Depletion & impairment charge		(1)	(4)
(Loss) from operations		(703)	(297)
Finance expense		-	(13)
(Loss) on equity swap settlements		(380)	-
Unrealised gain on AFS investments		51	-
(Loss) before income tax		(1,032)	(310)
Income tax expense			-
(Loss) attributable to the owners of the company
and total comprehensive income for the year		(1,032)	(310)
Other comprehensive income
Fair value adjustment of equity swap		-	(34)
Transfer to income statement on equity swap settlement		314	-
Other comprehensive income for the year net of taxation		314	(34)
Total comprehensive income for the period attributable to equity
holders of the company		(718)	(344)
Earnings per share
Basic earnings per share		(0.01)p	(0.004)p
Diluted earnings per share		(0.01)p	(0.004)p

Statement of Changes in Equity
for the year ended 31 December 2016

	Share capital	Share premium	Share based payment reserve	Hedging reserve	Retained earnings / Accumulated losses	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 31 December 2014	57	2,940	236	(280)	(1,032)	1,921
Issue of Share capital	20	1,180	-	-	-	1,200
Share issue costs	-	(82)	-	-	-	(82)
Transactions with owners	20	1,098	-	-	-	1,118
(Loss) for the year	-	-	-	-	(310)	(310)
Unrealised (loss) on equity swap	-	-	-	(34)	-	(34)
Total comprehensive loss for the year	-	-	-	(34)	(310)	(344)
At 31 December 2015	77	4,038	236	(314)	(1,342)	2,695
Issue of Share capital	48	1,278	-	-	-	1,326
Share issue costs	-	(95)	-	-	-	(95)
Share based payment charge	-	-	207	-	-	207
Share options cancelled	-	-	(202)	-	202	-
Transactions with owners	48	1,183	5	-	202	1,438
(Loss) for the year	-	-	-	-	(1,032)	(1,032)
Transfer to income statement	-	-	-	314	-	314
Total comprehensive loss for the year	-	-	-	314	(1,032)	(718)
At 31 December 2016	125	5,221	241	-	(2,172)	3,415

Statement of Financial Position
at 31 December 2016

		2016	2016	2015	2015
		£’000	£’000	£’000	£’000
Assets
Non-current assets
Intangible assets			250		-
Oil & gas properties			1,101		1,047
Available for sale investments			1,058		850
			2,409		1,897
Current assets
Trade and other receivables		730		437
Cash and cash equivalents		537		719
Total current assets			1,267		1,156
Total assets			3,676		3,053
Liabilities
Current liabilities
Trade and other payables		(261)		(244)
Derivative financial instruments		-		(114)
Total current liabilities			(261)		(358)
Total liabilities			(261)		(358)
Net assets			3,415		2,695
Equity attributable to owners
of the parent
Share capital			125		77
Share premium account			5,221		4,038
Share based payment reserve			241		236
Hedging reserve			-		(314)
Retained earnings			(2,172)		(1,342)
Total equity			3,415		2,695

The financial statements were approved by the Board of Directors and authorised for issue on 9 May 2017.

David Lenigas                                                                                        Donald Strang
Director                                                                                                  Director

Statement of Cash Flows
for the year ended 31 December 2016

			2016		2015
			£’000		£’000
Cash flows from operating activities
(Loss) from operations			(703)		(297)
Adjustments for:
Depletion & impairment charge			1		4
Share based payment charge			207		-
(Increase)/decrease in trade and other receivables			(4)		150
Increase/(decrease) in trade and other payables			17		(12)
Net cash (outflow) from operating activities			(482)		(155)
Cash flows from investing activities
Payments for intangible assets/OGP’s			(106)		-
Loans advanced to related parties			(289)		(179)
Payments for AFS investments			(157)		(250)
Net cash used in investing activities			(552)		(429)
Cash flows from financing activities
Proceeds from Issuance of ordinary share capital			947		1,200
Share issue costs			(95)		(82)
Finance expense paid			-		(13)
Net cash generated in financing activities			852		1,105
Net (decrease)/increase in cash and cash equivalents			(182)		521
Cash, cash equivalents and bank overdrafts
at beginning of year			719		198
Cash and cash equivalents at the end of year			537		719
Cash and cash equivalents comprise:
Bank & cash available on demand			537		719

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