13 January 2014
Doriemus Plc
("Doriemus" or the "Company")
Farm-in to Horse Hill Prospect in the UK Weald Basin
Doriemus Plc (AIM: DOR) is pleased to announce that it has signed a Binding
Term Sheet ("BTS") to acquire an initial 7.5% interest in Horse Hill
Development Ltd ("HHDL"), a special purpose company that holds the rights to a
65% participating interest and operatorship in the highly prospective UK
onshore Horse Hill Oil Field in the Weald Basin. Doriemus also has the right
under the BTS, at its sole discretion, to increase its ownership of HHDL to 15%
by 31 January 2014. The total consideration payable by Doriemus for the initial
7.5% is £450,000, mostly comprising monies to be used for drilling. The
consideration will be satisfied by a combination of existing cash balances and
funding facilities already in place. Details of the transaction are given
below.
Highlights:
* The target for the Horse Hill Prospect are stacked oil and gas targets in
the proposed 2,646 m (5,680 ft.) well.
* Upside potential of an estimated 671 million stock barrels ("MMSTB") oil in
place with an estimated total mean recoverable prospective resources of 87
MMSTB (Source: Magellan Petroleum (UK) Limited)
* Additional prospectivity of 456 Bcf gas in place (mean 164+ Bcf recoverable
prospective resource) in the proposed Triassic gas play (Source: Magellan
Petroleum (UK) Limited)
* The first well is expected to spud in Q2 2014.
Donald Strang, the Company's Chairman, commented:
"This Horse Hill Prospect is immediately adjacent and to the east of the
Company's producing Brockham Field and we look forward to participating in this
exciting conventional oil and gas play with tremendous potential upside
alongside other notable investors."
About Horse Hill Prospect:
The Horse Hill Petroleum Exploration and Development Licence No. 137 (PEDL 137)
is located in Surrey.
Magellan Petroleum (UK) Limited, a subsidiary of NASDAQ-listed Magellan
Petroleum Corporation ("Magellan"), currently owns 100% of the 99.29 km2
(24,525 acre)PEDL 137 ("Horse Hill") and has agreements with HHDL for HHDL to
earn a direct 65% participating interest and operatorship in the Licence, under
certain contractual conditions, by the drilling of the proposed 2,646 m (8,680
ft) Horse Hill-1 well by the end of August 2014.
The newly defined Horse Hill prospect covers an area of up to 16 km2 in the
south-west quadrant of PEDL 137. It is a tilted horst structure, similar to the
Palmers Wood oil field structure which lies approximately 20 km to the
north-east. The Collendean Farm-1 well was drilled by ESSO in 1964 on the
north-eastern edge of the Horse Hill structure and found good oil shows. Recent
seismic re-interpretation shows the Collendean Farm-1 well was drilled on the
wrong side of a significant fault.
The Horse Hill Prospect could contain up to an estimated 671 MMSTB oil in
place, the majority in the Lower Portland sandstone which alone has an
estimated upside oil in place potential of 284 MMSTB. The Collendean Farm-1
well confirms reservoir presence with porosity of 27% and a net: gross of 0.95,
with an expected oil recovery rate in the region of 30%. The reservoirs are
sealed by the Purbeck anhydrite and calcareous mudstones. Potential probably
also exists in the Corallian sands sealed by the overlying Kimmeridge Clay.
Estimated total mean recoverable prospective resources of oil for the Portland
sandstone, Corallian sandstone and Great Oolite limestone are 87 MMSTB.
Importantly, the Horse Hill Prospect is considered to have additional
prospectivity of 456 Bcf gas in place (Mean 164+ Bcf recoverable prospective
resource) in the proposed Triassic gas play.The Triassic sandstone is the
expected reservoir with an anticipated porosity of in the order of 18%, net:
gross of 0.58 and recovery factor of up to 70%. The stacked play potential of
this prospect is, therefore, considered substantial by the Board of Doriemus.
The Horse Hill Prospect OOIP and OGIP and prospective resources are summarised
in Table 1.
Table 1: Horse Hill Prospect estimated OOIP, OGIP and Prospective Resources.
Target Reservoir OOIP OOIP Prospective
Resources
Oil Upside Potential Mean (MMSTB)
(MMSTB) Mean (MMSTB )
Upper Portland 116 57 17
Sandstone
Lower Portland 284 147 44
Sandstone
Corallian Sandstone 67 33 10
Greater Oolite 204 104 16
Limestone
Total Oil 671 341 87
Target Reservoir OGIP OGIP Prospective
Resources
Gas Upside Potential Mean (Bcf)
(Bcf) Mean (Bcf)
Triassic Sandstone 456 234 164
Competent Person's Statement:
The information contained in this report has been prepared by Magellan
Petroleum (UK) Limited, and has been reviewed and signed off by Mr MervynCowie
BSc (Geology & Mineralogy), who has over 35 years' experience as a geologist.
Mr Cowie is a Fellow of the Australian Institute of Mining and Metallurgy and
is a competent person under Australian Stock Exchange Rules. The technical
disclosure in this report complies with the SPE-PRMS standard.
Transaction details:
The consideration due by Doriemusfor the initial 7.5% interest in HHDL shall be
paid as follows:
1. Doriemus will immediately pay HHDL £10,000 towards the cost of the Horse
Hill1 Well.
2. On completion of all necessary legal documentation within 30 days, Doriemus
will make a further payment of £50,000 to HHDL towards the cost of the
Well.
3. Doriemus shall bear a further total sum of £390,000 of cash calls for the
drilling of the Well to be drilled on the Horse Hill Licence.
4. Doriemus will have the exclusive right, at Doriemus's sole discretion, to
double its interest to a 15% participating interest in HHDL by advising
HHDL in writing of its intention to do so by 31 January 2014 and paying an
immediate further £50,000 to HHDL towards the cost of the Well on this
advice and guaranteeing to bear a further total sum of £400,000 of cash
calls for the drilling of the Well.
Glossary:
MMSTB - million stock barrels
Bcf - billion cubic feet
OOIP - Original Oil in Place
OGIP - Original Gas in Place
Prospective Resources - Prospective resources are estimated volumes associated
with undiscovered accumulations. These represent quantities of petroleum which
are estimated, as of a given date, to be potentially recoverable from oil and
gas deposits identified on the basis of indirect evidence but which have not
yet been drilled. This class represents a higher risk than contingent resources
since the risk of discovery is also added. For prospective resources to become
classified as contingent resources, hydrocarbons must be discovered, the
accumulations must be further evaluated and an estimate of quantities that
would be recoverable under appropriate development projects prepared.
-END-
Enquiries:
For further information please contact:
Doriemus plc +44 (0) 20 7440 0640
Donald Strang / Hamish Harris
Sanlam Securities UK Limited +44 (0) 20 7628 2200
Nominated Adviser and Broker
Virginia Bull / Simon Clements / Catherine Miles