Doriemus Regulatory News (DOR)

17 December 2014 Doriemus plc ("Doriemus" or the "Company") Horse Hill-1 Oil Discovery Update Upgrade on Portland Discovered Oil in Place Volumes and Conventional Upper Jurassic Limestone Oil Play, Weald Basin UK Doriemus Plc (AIM: DOR) today announces that, as a result of the analysis andintegration of subsurface data from the Horse Hill-1 ("HH-1") discovery well,in which it holds a net attributable interest of 6.5%, the calculated estimatesof the discovered most likely gross oil initially in place ("OIIP") within theoverall Upper Portland sandstone conventional reservoir in the HH-1 andCollendean Farm-1 ("CF-1") structure have increased by over 250% from the 3.1million barrels ("mmbbls") reported on 24 October 2014, to a current mostlikely OIIP of 8.2 mmbbls. Similarly, calculated estimates of low case (P90)discovered OIIP has increased by nearly 400% to 5.7 mmbbls and high case (P10)OIIP volumes show a 250% increase to 12.1 mmbbls. In addition, the results of electric log analysis in the HH-1, CF-1 and otherregional wells to the south of PEDL 137 ("Licence"), combined with ongoinggeochemical analysis of HH-1 samples, indicate that the key elements of aconventional Upper Jurassic Limestone oil play have been demonstrated to extendinto the southern part of the Licence. The HH-1 well demonstrates the presenceof limestone porosity adjacent to, both overlying and underlying, thermallymature super-saturated world-class oil source rocks within a 1,496-foot grossinterval of the Upper Jurassic Kimmeridgian Clay ("KC") Formation between 2,224feet and 3,720 feet TVDss. Samples from the KC show total organic carbon("TOC") of up to 9.4%, generative potentials of between 45-103 kg ofhydrocarbons per tonne and with measured vitrinite reflectance ("Ro") exceeding0.81% at the base of the formation. Further conventional oil potential within the Middle Jurassic Kellaways Bedssandstones in HH-1 is currently under investigation. Work is underway to obtain the necessary permissions to conduct a productionflow test from the HH-1 Upper Portland conventional oil pool in 2015. The current OIIP estimates are set out in Table 1 below. The full results of the HH-1 well are complex by their nature. The operator'spost-well evaluation has therefore taken longer than expected and is stillcontinuing, as described below. Portland Sandstone Discovery Integration of the Vertical Seismic Profile ("VSP") data from the HH-1 well hasenabled a revised interpretation of available 2D seismic data to be made overthe geological structure containing the HH-1 discovery. The current seismicinterpretation is strongly indicative that the Upper Portland oil pool,discovered by HH-1, is most likely part of a larger geological structurecontaining the CF-1 well to the north drilled by Esso in 1964. New electric log analysis of the CF-1 well demonstrates that a near identicalUpper Portland reservoir section to that seen in HH-1 exists with a gross97-foot oil saturated "missed oil pay" section and average porosities of 16%.The Company reported on 24 October 2014 that HH-1 contained a gross oilsaturated Upper Portland section of 102 feet with 16% average porosity. Oilsaturations exist to the base of the Upper Portland sand reservoir in both HH-1and CF-1, indicating that the oil water contact lies deeper within thestructure. The Company currently interprets that the proven lowest oil at 1,900feet TVDss found in the HH-1 well now demonstrates that a most likely 140 feethydrocarbon column has been discovered, 38 feet greater than the 102-foot oilcolumn previously reported. The mapped spill point (and possible oil watercontact) of the combined HH-1 and CF-1 Upper Portland oil pool demonstratesthat a possible 240-foot maximum hydrocarbon column could exist within astructural closure of approximately 3,400 acres (14 square kilometres). The Operator's analyses of the Brockham-1 well logs demonstrate that the oilproducing Upper Portland reservoir thickness and overall quality in the nearbyBrockham field are very similar to HH-1 and CF-1 and provide a direct producingreservoir analogue. However, the Operator's calculated most likely (P50) OIIPof 8.2 mmbbl for the HH-1 and CF-1 discovery is significantly larger than theBrockham field's most likely (P50) Upper Portland OIIP of 3.62 mmbbl, certifiedby RPS Energy at end 2013. Work is ongoing to submit an application to the Department of Energy andClimate Change ("DECC"), the Environment Agency and Surrey County Council forpermission to carry out a flow test on the Upper Portland Sandstone in HH-1.The planned flow test will likely include a pressure transient test to examinethe reservoir connectivity within the overall geological structure. Subject to this HH-1 flow test, a future submission is planned to DECC of aField Development Plan for the HH-1 and CF-1 discovery. The presence of twowells containing oil saturations down to base reservoir within the same mappedstructural closure, and with similar reservoir quality to the Brockham oilfield but larger OIIP, significantly increases the Company's confidence thatthe Upper Portland discovery can be developed as a commercial oil field. Table 1: Estimated gross in place discovered Upper Portland Sandstone oilvolumes HH-1 and CF-1 Low (P90) Medium (P50) High (P10)Structure Discovered OIIP,mmbbls 5.7 8.2 12.1 Increase from 24.10.14 +380% +260% +250% Doriemus has a net attributable interest of 6.5% in the discovery. It should be noted that the OIIP numbers in Table 1, above, represent themanagement's current viewpoint. For the avoidance of doubt OIIP numbers shouldnot be construed as resource or reserve estimates as a significant proportionwill not be recovered during any future production regime. Volumes have been estimated by the Operator using methodologies and standardspublished by the Society of Petroleum Engineers. Conventional Upper Jurassic Limestone Oil Potential The HH-1 well penetrated an unexpectedly thick 1,496-foot gross interval of theUpper Jurassic Kimmeridge Clay ("KC") Formation between 2,224 feet and 3,720feet TVDss. The sequence contains predominantly organically rich high gamma-rayhot shale, inter-bedded with two regionally correlatable limestone units.Preliminary examination of cuttings indicates the limestones are coccolithicargillaceous micrites. The mud log showed elevated gas readings above the upperlimestone (KC Micrite 1) and weak oil shows were reported within the limestone.The KC Micrite 1 encountered at 2,510.4 feet TVDss has a gross thickness of 113feet and electric log analysis indicates the development of 37 feet of netporosity greater than 5%. A continuous oil saturated zone of approximately 20feet below 2,550 feet TVDss is calculated. Average total porosity within thehydrocarbon zone is calculated at 6.4% and is dominated by secondary porosity. The gamma-ray log through the KC Micrite 1 shows a near identical pattern andformation thickness to the equivalent micrite found in the Balcombe-1 well,drilled by Conoco in 1986 approximately 15 kilometres to the south. TheOperator's analysis also demonstrates that the top of the oil saturated porouszone in HH-1 occurs at an identical stratigraphic and gamma-ray point to thetop of the proven tested oil pay zone in Balcombe-1. Total porosities of 8% arecalculated within the Balcombe pay section and are thus similar to HH-1. The lower limestone (KC Micrite 2) has a gross thickness of 83 feet and shows28.6 feet of net porosity development with an average porosity of 7%. No showsor elevated gas readings were reported, although minor thin oil saturated zonesare calculated from logs. The Company reported on 5 November 2014 that multiple oil shows and elevatedgas readings were encountered within the KC Formation and that preliminarygeochemical analysis showed oil source rock potential to likely be higher thanexpected. Subsequent analysis of a further eight KC shale samples, from 2,715to 3,345 feet TVDss encasing the KC micrites, show TOCs of 4.64 to 9.4% andgenerative potentials of between 45 and 103 kg hydrocarbon/tonne of rock.Corresponding calculated hydrogen indices (HI) are extremely high, ranging from759-1098, indicating a very oil-prone source rock. These initial sample resultsgives management confidence that the KC within the south of PEDL 137 has thepotential to be a world-class source rock of equivalence to the provenconventional oil source rocks of the KC within the Viking Graben and CentralGraben of the North Sea. Thermal maturation data obtained from well cuttings samples shows that thepre-Oligocene and Jurassic section of the HH-1 well has achieved greater thanexpected maximum burial depths. Measured vitrinite reflectance ("Ro") betweenthe top and base of the KC ranges from 0.62-0.81%, demonstrating that the KClies within the early to peak oil generation window. The Lower Liassic shaleand limestone sequence shows a measured Ro of up to 0.98%, indicating the latepeak oil to early wet-gas condensate generation window. The 2014 Weald Shale Report by the British Geological Survey models the top ofthe oil window within the Weald Basin to represent a burial depth of 7,000 to8,000 feet (i.e. an Ro of 0.5-0.6%). Consequently, the top of the oil window,interpreted to be at circa 2,300 feet TVDss in the HH-1 well, indicates thewell was likely to have been uplifted by approximately 4,500 to 5,500 feetduring the post-Oligocene inversion period. The southern part of PEDL 137during KC deposition would thus have been in a more basin-centred location thanat present day and could lie within a high TOC KC basinal sweet-spot. The Operator has concluded that the most likely source of oil saturations foundwithin the KC Micrite 1 is thus from the adjacent underlying and overlying hotshale of the KC in direct proximity to the HH-1 well. The Operator concludes that the presence of thermally mature KC source rocks,together with porosity within the KC Micrites and log derived micrite oilsaturations, strongly indicate that an Upper Jurassic limestone conventionalplay exists within the southern area of PEDL 137. Further detailed integrated geochemical and petrophysical studies are ongoingto help establish possible OIIP volumes in the KC Micrite 1. The Operator isalso currently evaluating the feasibility of a short flow test in the KCMicrite 1 after the planned Upper Portland flow test. Conventional Middle Jurassic Kellaways Beds Oil Potential Re-examination of the HH-1 mud log shows that gas levels increase significantly60 feet above the Kellaways Sandstone, continue throughout the 47-foot grosssand interval and immediately drop off within the underlying Great Oolitelimestone. No observed oil shows were recorded within the Kellaways Sandstone.Geochemical analyses of samples from the Oxford Clay demonstrate that thesection directly above the Kellaways Beds is thermally mature for oilgeneration (Ro of greater than 0.81%) and contains potential generative oilsource rocks with TOCs of 1.9 to 2.9%. Electric logs are now being evaluated inmore detail, to determine whether potential oil saturations lie within theKellaways Sandstone. Doriemus' interest in Horse Hill The Horse Hill-1 well is located within onshore exploration license PEDL 137,on the northern side of the Weald Basin near Gatwick Airport. Doriemus owns a10% direct interest in Horse Hill Developments Ltd ("HHDL") HHDL is a specialpurpose company that owns a 65% participating interest and operatorship oflicence PEDL 137 and the adjacent licence PEDL 246 in the UK Weald Basin. Theparticipants in the Horse Hill-1 well are HHDL with a 65% working interest andMagellan Petroleum Corporation with a 35% interest. Dorimeus' net attributableinterest in PEDL 137 and 246 is therefore 6.5%. Doriemus' Interest in Brockham Doriemus holds a 10% interest in Brockham oil field (PL 235). Qualified Person's Statement The information contained in this announcement has been reviewed and approvedby Stephen Sanderson, Exploration and Technical Adviser to Doriemus, who hasover 33 years of relevant experience in the oil industry. Mr Sanderson is aFellow of the Geological Society of London and is an active member of theAmerican Association of Petroleum Geologists. Glossary: 2D seismic seismic data collected using the two-dimensional common depth point method argillaceous a rock containing a significant proportion of clay minerals coccolithic containing coccoliths which are the skeletal remains of calcareous algae/plankton as found ubiquitously in the Chalk of NW Europe discovery a discovery is a petroleum accumulation for which one or several exploratory wells have established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons electric logs tools used within the wellbore to measure the rock and fluid properties of surrounding rock formations gamma-ray log an electric log which measures natural background radioactivity emitted mainly by potassium, uranium and thorium isotopes used as a sedimentary lithology discriminator generative potential the amount of hydrocarbons that can be generated from a(S2) unit volume of source rock established via the S2 peak from rock-eval pyrolysis, normally expressed in milligrammes of hydrocarbon per gramme of rock (or kilogramme per tonne) hot shale a shale rock displaying average initial TOCs normally exceeding 2% and represented by a high gamma ray electric log reading hydrogen index (HI) the amount of hydrogen relative to the amount of organic carbon in a sample, normally expressed in milligrammes of hydrogen per gramme of TOC. The higher the amount of hydrogen the more oil prone the source rock when subjected to time temperature and pressure; an initial HI over 450 normally indicates an oil prone source rock kerogen the fraction of organic material in a sedimentary rocks that is insoluble in the usual organic solvents being composed of a variety of organic materials, including algae, pollen, wood, vitrinite, and amorphous material. Over time and subjected temperature and pressure kerogen converts to hydrocarbons micrite a sedimentary rock formed of very fine grained calcareous particles ranging in diameter from 0.06 to 2 mm, often referred to as lime mudstone mmbbls millions of barrels oil down to the deepest level where oil saturation is measured at the base of a porous reservoir where it directly overlies rock of very low porosity and permeability where no reliable oil water contact can be established oil initially in the quantity of oil or petroleum that is estimated toplace exist originally in naturally occurring accumulations before any extraction or production oil saturation the amount of the pore space within a reservoir containing oil oil water contact a bounding surface in a reservoir above which predominantly oil occurs and below which predominantly water occurs. P10 a 10% probability that a stated volume will be equalled or exceeded P50 a 50% probability that a stated volume will be equalled or exceeded P90 a 90% probability that a stated volume will be equalled or exceeded play a set of known or postulated oil and or gas accumulations sharing similar geologic, geographic, and temporal properties, such as source rock, migration pathways, timing, trapping mechanism, and hydrocarbon type porosity the percentage of void space in a rock formation, where the void may contain, for example, water or petroleum reservoir a subsurface rock formation containing an individual natural accumulation of moveable petroleum that is confined by impermeable rock/formations source rock a rock rich in organic matter which, if subjected to sufficient heat and pressure over geological time, will generate oil or gas. Typical source rocks, usually shale or limestone, contain above an initial 1% organic matter by weight spill point the structurally lowest point in a hydrocarbon trap that can retain hydrocarbons, normally coincides with a hydrocarbon water contact sweet spot the area within a shale source rock unit showing highest TOC and generative potential normally associated with basin centred deposition thermally mature a term applied to source rocks which have received sufficient temperature and pressure over geological time to generate hydrocarbons TOC total organic carbon - the weight percent amount of organic carbon within the rock which is a commonly used measure of hydrocarbon source rock richness TVDss true vertical depth below a subsea datum vitrinite a measure of the percentage of incident light reflectedreflectance (Ro) from the surface of vitrinite particles in a sedimentary rock. It is referred to as % Ro and is a measure of the thermal maturity of a rock. Top of the oil window is dependent on source rock type, but is widely recognized to be at an Ro equivalent of between 0.5-0.7% VSP vertical seismic profile, recording of seismic waves directly at the borehole to enable seismic two way travel time reflectors to be accurately correlated with formation depths encountered by the well Enquiries: Doriemus plc +44 (0) 20 7440 0640Donald Strang/Hamish Harris Cairn Financial Advisers LLP +44 (0) 20 7148 7900Nominated Adviser and BrokerJames Caithie/Jo Turner/Carolyn Sansom Public Relations +44 (0) 20 7929 5599Square 1 Consulting LtdDavid Bick/Mark Longson A copy of this announcement is available from the Company's website atwww.doriemus.co.uk -ENDS-