DORIEMUS PLC
Annual Report and Financial Statements
Year Ended 31 December 2019
Company Registered Number 03877125 (England and Wales)
ARBN 619 213 437
Doriemus PLC
Annual Report and financial statements
for the year ended 31 December 2019
CONTENTS
COMPANY INFORMATION ................................................................................................................................................... 1
CHAIRMAN’S STATEMENT INCORPORATING THE STRATEGIC REPORT .................................................................................. 2
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2019 ................................................................................ 8
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DORIEMUS PLC .......................................................................... 11
FINANCIAL STATEMENTS ................................................................................................................................................... 14
Consolidated Statement of Comprehensive Income for the year ended 31 December 2019 ....................................... 14
Consolidated Statement of Changes in Equity for the year ended 31 December 2019 ................................................. 15
Company Statement of Changes in Equity for the year ended 31 December 2019 ....................................................... 16
Consolidated Statement of Financial Position at 31 December 2019 ............................................................................ 17
Company Statement of Financial Position at 31 December 2019 .................................................................................. 18
Consolidated Statement of Cash Flows for the year ended 31 December 2019 ............................................................ 19
Company Statement of Cash Flows for the year ended 31 December 2019 .................................................................. 20
Notes forming part of the financial statements for the year ended 31 December 2019 ............................................... 21
ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES ..................................................................................... 41
OIL AND GAS EXPLORATION ENTITY - RESOURCES REPORT AS AT 31 DECEMBER 2018 ........................................................ 53
COMPANY INFORMATION
DIRECTORS:
DORIEMUS PLC
Keith Coughlan – Non Executive Chairman
Greg Lee – Executive Director
Donald Strang – Non Executive Director
JOINT COMPANY SECRETARIES:
Donald Strang & Jessamyn Lyons
UK REGISTERED AND PRINCIPAL OFFICE:
AUSTRALIAN REGISTERED OFFICE
Suite 3B
Princes House
38 Jermyn Street
London
SW1Y 6DN
Suite 12, Level 1,
11 Ventnor Avenue,
West Perth, WA
6005, Australia
REGISTERED NUMBER:
03877125 (England & Wales)
AUDITORS:
SOLICITORS:
SHARE REGISTRY:
Chapman Davis LLP
2 Chapel Court
London
SE1 1HH
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Computershare Investor Services Pty Limited
11/172 St Georges Terrace
Perth WA
6000 Australia
1
DORIEMUS PLC
(“Doriemus” or the “Company”)
CHAIRMAN’S STATEMENT INCORPORATING THE STRATEGIC REPORT
The Company is pleased to present this Annual Report, together with the financial statements and annual corporate governance
statement, on the Company (referred to hereafter as ‘Doriemus') consisting of Doriemus Plc (referred to hereafter as the
'company' or 'parent entity') and the entities it controlled at the end of, or during, the full year ended 31 December 2019.
2019 saw the Company divest some of its interest in Horse Hill and its Lidsey Oilfield interests to provide balance sheet strength
to assist with the funding of the acquisition of any new assets that the Board believes will enhance shareholder value.
The Company provides the following overview of activities in 2019 and post the reporting period:
Horse Hill Oil Discovery, UK:
The Company currently owns a 4% interest in a special purpose company, HHDL, 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 (having only recently disposed of 6% of its 10% interest as detailed further below). The PEDL137
licence covers 99.29 km2 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 km2 and lies immediately adjacent and to the east of PEDL137.
On the 17th January 2019, the Company announced that:
•
•
Sustained production was being maintained from the HH-1 extended well test (“EWT”) programme, achieving a gross
aggregate total of over 25,000 barrels (“bbl”) to date with over 21,000 bbl produced from the Kimmeridge Limestone
(“KL”) oil pool.
Planning and environmental permit applications for permanent oil production via a 7-well development facility
submitted. It is anticipated that all necessary permits should be in place by the UK Autumn 2019 (i.e. October / November
2019), enabling a transition from EWT production into permanent production during the UK Winter (i.e. December 2019
/ January 2020).
On the 25th January 2019, the Company announced that:
•
•
•
The Operator of HH-1 advised production from Horse Hill throughout the year will continue with the EWT of HH-1.and by
the drilling and production testing of two horizontal wells.
Planning consent and environmental permits are in place.
Further horizontal production wells and a water reinjection wells are planned to be drilled in early 2020 after the grant
of regulatory approvals for permanent oil production.
On the 15th February 2019, the Company announced that:
• Doriemus has signed a binding Heads of Terms to sell 60% of its 10% interest in HHDL to UK Oil and Gas Plc ("UKOG") for
a consideration 129,629,630 new ordinary shares in UKOG to Doriemus, worth approximately $3.5 million at UKOG’s
closing price in London on 14 February 2019 at 1.5 pence per share at an exchange rate of GBP:AUD of 1.81.
• Doriemus will still retain a 4% interest in HHDL, post completion of the transaction and UKOG will then hold a 77.9%
direct interest in HHDL and a majority 50.635% interest in the Horse Hill oil field and licences.
On the 19th February 2019, the Company announced that:
•
The Operator of HH-1 discovery well HHDL has advised production from Horse Hill has resumed from the Portland with
dry oil flow (i.e. oil with zero water content), at a stable daily rate of between 208 to 218 barrels per day (“bopd”).
On the 22nd February 2019, the Company announced that: it had completed the transaction to sell 60% of its 10% interest in Horse
Hill.
On the 18th of March 2019 the company announced that aggregate test production from the Portland reservoir at the Horse Hill
oil field in the Weald Basin of the UK now exceeds 10,000 barrels (“bbl”).
On the 12th April 2019, the Company announced that:
•
The aggregate test production from the Horse Hill-1 discovery well had exceeded 40,000 bbl of oil from the Portland and
Kimmeridge reservoirs at the Horse Hill oil field. With oil production from the Portland reservoir delivering an aggregate
total volume exceeding 15,000 barrels ("bbl") to date.
2
On the 20th of May 2019, the company announced that aggregate test production from the Portland reservoir at the Horse Hill oil
field in the Weald Basin of the UK now exceeds 20,500 barrels (“bbl”). The operator had finalised drilling contracts for the drilling
of Horse Hill 2 well.
On the 12th June 2019, the Company announced that as of the 7th June 2019:
•
The total aggregate Portland and Kimmeridge test oil production from the Horse Hill oil field, reached a significant
landmark of 50,000 bbl of light, sweet, dry oil. with an aggregate total of 25,777 bbl to date from the Portland.
On the 2nd of August 2019, the Company announced that it had been informed by HHDL that, total aggregate Portland and
Kimmeridge test oil production from the Horse Hill oil field, exceeded 60,186 bbl of light, sweet, oil.
On the 12th of September 2019, the Company announced that:
•
The UK’s Surrey County Council's ("SCC") Planning and Regulatory Committee granted full planning consent for long-term
oil production at the Horse Hill oil field. The important planning consent gives permission to produce oil over a period of
25 years. All existing and future wells will be drilled from within the existing 20 x 15 metre concrete pad. No further
drilling sites beyond Horse Hill are required.
On the 13th of September 2019, the Company announced that:
•
•
Total aggregate Portland and Kimmeridge test production now stands at a landmark 66,127 bbls of light, sweet, dry oil.
bbl.
Final site works to accommodate the arrival of the rig to drill the new HH-2/2z. Portland horizontal well commenced at
1200 hrs, Friday 30th August and were now complete with the rig scheduled to arrive later in September to commence
drilling the HH-2 well.
On the 25th of September 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• Operations had commenced onsite in preparation for the drilling of HH 2/2Z.
On the 1st of October 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• Drilling operations for the new HH-2/2z Portland Sandstone well commenced on Sunday morning, 29 September.
•
Following a planned extensive HH-2z production flow-testing campaign, both the HH-2z Portland Sandstone well and the
HH-1 Kimmeridge Limestone well are expected to be put into long term production by the end of 2019.
On the 9th of October 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• HH-2/2Z 12 ¼” hole has been drilled to a current total depth of 615.4 m (1019 ft) from the Rotary Table (RT) and the 9
•
5/8” casing has been successfully run, set and cemented to surface.
The next stage was to drill the 8 ½”hole to coring point where 3 x 18.3 m (60 ft) cores are expected to be drilled through
the oil bearing Portland reservoir.
On the 14th of October 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• Coring operations had commenced and the operator had decided to take an additional 18.3 m core from the original plan
making it 4 x 18.3 m. This was due to some third party petrophysical interpretation that the operator had acquired that
interpreted a potentially deeper oil water contact in the field. This interpretation has now been received by Doriemus
but until final analysis of cores and logs have been performed the findings of the third-party interpretation cannot be
confirmed.
On the 16th of October 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• Coring operations have been successfully completed on the Horse Hill 2 (“HH 2”) Portland pilot well. Preliminary onsite
visual analysis of the 4 sections of the total cored interval of 73.6 m (241.45 foot) have clearly visually indicated the
Portland Reservoirs prime and most productive section. It is expected that this reservoir depth will be where the
horizontal section of the well will target, subject to final analysis and reports.
The well has now reached its planned depth of ± 707 m (2320 ft) from the rotary table (RT) and is now being
prepared/conditioned to run electric logs.
•
On the 23rd of October 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
•
Following the successful drill logging and coring of the Horse Hill-2 ("HH-2") Portland pilot well, the HH-2z horizontal
drilling operations are now underway.
3
On the 5th November 2019, the Company updated the market on the drilling of HH 2/2Z announcing that:
• Drilling of the horizontal section has been completed to a total depth of 704m (2311 ft) from the rotary table (RT). The
horizontal section of the well has been drilled to approximately 260m (850 feet) laterally south east of the top hole
location of Horse Hill 2 (“HH-2”).
The drilling rig was damaged and was awaiting repairs.
The open hole section was conditioned to stabilise the wellbore till drilling could recommence.
•
•
On the 13th of November 2019, the Company updated the market on the drilling of HH 2/2Z announcing that
• Drilling of the horizontal section has now been successfully completed to approximately a total of 762 meters (2,500 ft).
• A comprehensive electric logging programme was completed in the horizontal section.
On the 28th of November 2019, the Company announced that:
•
The Horse Hill-2z ("HH-2z") Portland horizontal well drilling has been completed and temporarily suspended in
preparation for the extended well test (“EWT”).
• HH-2z was being prepared for the planned “EWT” campaign once the rig and associated equipment has been demobilised.
On the 24th of December 2019, the Company announced that:
•
The EWT has commenced on the Horse Hill-2z ("HH-2z") Portland horizontal well.
On the 20th February 2020, the Company announced that the operator has commenced well intervention activities in an attempt
to identify and isolate the unexpected water production from the horizontal section of HH-2Z in the Portland Sandstone formation.
Isle of Wight, UK:
Doriemus has a 5% participating interest in a 200km2 onshore Isle of Wight Petroleum Exploration and Development Licence (PEDL
331) - Arreton Oil Discovery. The Operator is UK Oil & Gas Investments Plc.
Doriemus has a 5% participating interest in a 200km2 onshore Isle of Wight Petroleum Exploration and Development License
(“PEDL 331”)
On the 23rd August 2019, the Company announced that it had been informed by the operator of PEDL 331 UK Oil & Gas plc (“UKOG”
or the “Operator”) that the UK Oil and Gas Authority (“OGA”) has granted a two-year extension to the expiry of the initial terms
of the PEDL331 License. The initial terms are now not due to expire until at least the 20th of July 2023. The Company understands
that the extension should allow for sufficient time for the Operator’s previously reported multiple well appraisal and exploration
drilling campaign to be conducted and completed fully within the extended time frame.
The Company has historically considered this asset to be a non-core asset but given the plans for drilling and development as set
out below, the Company may consider this to be a more core asset. The Isle of Wight PEDL331 Arreton license contains a discovery
well Arreton plus several geologically similar prospects Arreton South and North prospects. Drilling of the Arreton-3/3z appraisal
well with an expected extended flow test (EWT) is now scheduled to commence in the United Kingdom Autumn of 2020, subject
to the grant of necessary regulatory consents. The Arreton South and North prospects are believed to contain Portland formation
oil with further upside believed to be contained in both prospects within the underlying Inferior Oolite sequence.
The Operator’s subsurface team have advised that they have also recently identified a further large undrilled anticlinal structure,
the Arreton East Prospect, another lookalike to the Arreton discovery and lying further to the east along the same geological trend.
Initial mapping shows this feature to be many times larger than both the Arreton oil discovery and Arreton South prospect
combined. Further work and potential recoverable resources will be reported in due course.
Following completion of Arreton-3/3z, the Operator has advised that it currently plans to proceed directly to drill Arreton South,
and if regulatory permissions are in place, to proceed directly to drill Arreton East in the United Kingdom Winter of 2020/21. The
proposed United Kingdom Autumn/Winter drilling is designed deliberately to avoid the island’s tourist season.
Investment in Greenland Gas & Oil Plc (1.33% interest in GGO):
The Company has a small shareholding in the English registered company Greenland Gas and Oil Plc (“GGO”), which is an early
stage oil and gas exploration company focused on acquiring oil and gas exploration assets in Greenland. The Company considers
this to be a passive investment.
4
Brockham Oil Field, UK:
Doriemus holds a direct 10% interest Brockham, operated by a subsidiary of Angus Energy Plc (the “Operator”). The 8.9 km2
Brockham oil field (“Brockham”), in the Weald Basin, is held under UK Production License 235 (PL 235).
On the 5th February 2019, the Company announced that the Operator had started on site to complete the flow testing of the
Brockham X4Z well.
On the 1st July 2019, Doriemus announced that it had received notification via a public announcement from the Operator regarding
the testing of Brockham X4Z well as detailed below:
• Works on the BR-X4Z were completed and after the operators inhouse analysis of the results, it is their opinion that the
stimulation techniques and application of the technique employed by the Operator had not succeeded on the
Kimmeridge formation in the well.
• Whilst the Operator evaluates options for the site, including addressing the Portland reservoir and using the older BR-X1
well for water disposal, the Operator announced that it has entered into preliminary discussions with a third party
regarding the proposed sale of the Operator’s 65% interest in the Brockham license.
As a result of this recent development and noting the announcement of the intention of the Operator to dispose of its own interest,
Doriemus will also be reviewing all of its options in connection with its interest in the Brockham asset and the work programme.
The Company will provide a further update upon any material developments occurring.
Lidsey Oil Field, UK:
On the 27th February 2019, the Company announced that it had signed a binding Term Sheet to sell its 20% interest in the Lidsey
Oil Field, on the south coast of the UK to Angus Energy for a consideration 8,324,024 new ordinary shares in Angus Energy to
Doriemus, worth approximately A$0.6 million at Angus Energy’s closing price in London on 26 February 2019 at 3.9 pence per
share at an exchange rate of GBP:AUD of 1.84.
On the 14th March 2019, the Company announced that all the required sale and purchase agreements to sell its interest in the
Lidsey Oil Field in the UK to Angus Energy had been executed and the deal will close when the UK Government’s Oil & Gas Authority
approves the transfer of the interest from Doriemus to Angus Energy.
On the 23rd April 2019, the Company announced that the transaction to sell its Lidsey onshore field interest to Angus Energy had
completed. The Company no longer has an interest in the Lidsey asset.
Western Australian Onshore Block L15:
On the 31st December 2018, Doriemus announced that it had signed a binding letter of intent with Rey Resources Limited (ASX:
REY) to earn 50% (plus operatorship) over the 163 km2 WA onshore block L15, which contains the fully permitted West Kora oil
field. L15 is located only 20km east of Derby in Western Australia.
On the 5th March 2019, Doriemus confirmed it had executed a Farmout Agreement with Rey Resources Ltd (REY) to farmin to L15.
The key points of this agreement are as follows:
•
The Farmout Agreement confirms the terms on which the Doriemus group will, subject to fulfilling certain earning
obligations, be assigned a 50% interest in L15 Block as well as be appointed the operator of the field pursuant to an
agreed form Joint Operating Agreement which forms part of the Farmout Agreement and will become operational in
conjunction with the assignment of the 50% interest.
• REY currently owns 100% of L15 and Doriemus can secure a 50% interest and operatorship in L15 by funding a $1 million
field development plan over the following year on the L15 permit which would be aimed to bring West Kora back in to
production.
• Once earning obligations are complete Doriemus will be assigned the 50% interest in L15 from REY, at which point the
parties have agreed the JOA (which comprises part of the Farmout Agreement) will become operational.
• Doriemus are preparing all permits and other safety management documentation required by the Western Australian
Government with the aim of recommencing oil production from Kora West.
Doriemus announced on the 6th February 2020 that it had filed a Notice of Withdrawal from the farm-out agreement for L15 with
Rey Resources. The relevant farmout agreement is now deemed terminated and Doriemus has not earned any interest in the L15
asset.
5
Western Australian Onshore Block EP 487:
The EP 487 Block is 5,058 km2 in size and is located onshore Western Australia, approximately 30km ESE of Derby. Doriemus has
the contractual right to be assigned a 50% interest and operatorship upon the completion of certain conditions precedent as
previously announced.
On the 31st December 2018, Doriemus announced it had signed a binding letter of intent with Rey Resources Limited (ASX: REY)
to obtain a 50% interest (plus operatorship) over the 5,058 km2 WA onshore petroleum exploration permit block EP 487. EP 487
is located only 30km ESE of Derby (Western Australia), and close to existing infrastructure.
On the 28th March 2019, Doriemus confirmed it had executed a Farmout Agreement with Rey Resources Ltd (REY) to farmin to EP
487. Key points of this agreement are as follows:
•
The Farmout Agreement confirms the terms on which the Doriemus group will, subject to fulfilling certain earning
obligations, be assigned a 50% interest in the 5,058 km2 WA onshore block EP 487 as well as be appointed the operator
of the permit pursuant to an agreed form Joint Operating Agreement which forms part of the Farmout Agreement and
will become operational in conjunction with the assignment of the 50% interest.
• Doriemus was required to provide evidence to REY by 30 June 2019 that it had or would have the required funding in
place to drill an exploration well on EP 487 to a depth as agreed by the parties. Doriemus had then to drill a well to the
agreed depth within 12 months to be assigned the interest). REY currently own 100% of EP487.
On the 1st July 2019, the Company announced that it had agreed with Rey Resources Limited to extend the date on which Doriemus
must provide proof of funding to drill an exploration well to an agreed depth on the EP487 License from the 30th June 2019 to the
31st July 2019 in accordance with the terms of the relevant farmout agreement.
On the 5th August 2019, the Company announced that it had received a notice of termination of the relevant EP 487 Farmout
Agreement from Rey Resources Limited (ASX: REY). The EP487 Farmout Agreement was terminated by Rey Resources Limited as
result of Doriemus not satisfying the relevant condition precedent to have sufficient funding in place by the 31st July 2019 in order
to undertake the drilling of an exploration well (Butler prospect) proposed as part of the relevant farm in obligations on EP487.
The termination ceases the right of Doriemus to earn an interest in EP487 and brings the EP487 Farmout Agreement to an end.
Potential Acquisition of Coera Limited from Oilex Limited:
The Company announced on the 30th January 2020 that a binding conditional Heads of Agreement has been executed between
Doriemus and ASX Listed Oilex Limited (“Oilex”) for the proposed acquisition by Doriemus of Coera Limited (“Coera”) which holds
(or holds the rights to acquire) a portfolio of oil and gas assets within the proven onshore South Australian Cooper-Eromanga Basin
(“Proposed Acquisition”). The Proposed Acquisition was subject to a number of conditions precedent including in particular a
minimum capital raising of $3.5m and obtaining various shareholders approvals.
The Company then announced on the 21st February 2020 that it had completed a $4.5m bookbuild from various professional and
sophisticated investors (“Bookbuild”) in connection with the Proposed Acquisition. However, unfortunately, the Company was
required to announce on the 24th March 2020 that certain investors had failed to settle their committed funds under the Bookbuild
by the specified date of the 20th March 2020. This meant that the raising of a minimum of $3.5m million in funds that was required
to satisfy the capital raising condition precedent for the Proposed Acquisition had not been achieved.
In light of the above, and in these unprecedented times of market and global uncertainty, the Board took the view that it is in the
best interests of the Company, its shareholders and other stakeholders to not proceed with the capital raising element of the
Proposed Acquisition (which included the Bookbuild) at this time.
In addition to withdrawing the Bookbuild, the Company also resolved to withdraw a priority and shortfall offer, as well as a bonus
option issue, both offers were to be made in connection with the Bookbuild. Having resolved to withdraw the various offers, the
Company applied to ASIC to withdraw the prospectuses under the priority and shortfall offer as well as the bonus option issue.
Accordingly, no securities will be issued by Doriemus at this time in connection with the Proposed Acquisition (including as
consideration to Oilex Limited, or under the Bookbuild, or the priority and shortfall offer, or the bonus option issue, or the director
options, or any securities to Hartleys Limited or the performance rights).
Doriemus is currently working with Oilex Limited in respect of seeking to agree and extended the timetable for completion of the
Proposed Acquisition, potentially with a revised structure and varied commercial terms.
6
Corporate:
Results for the period:
Retained loss for the year to 31st December 2019 amounted to £1,571,000 (2018: £1,745,000 loss) which included a write off of
capitalized exploration costs of £788,000 (2018: £998,000); an impairment charge of £179,000 (2018: £160,000); and
administrative costs of £639,000 (2018: £ 656,000).
Total revenue for the period was £10,000 (2018: £43,000) and £105,000 (2018: £90,000) related to Oil Field expenses.
Director Changes:
On the 19th June 2019, the Company announced that Mr Keith Coughlan had been appointed as Non-Executive Chairman and that
Mr David Lenigas had resigned as Executive Chairman.
On the 17th July 2019, the Company announced the resignation of Mr Hamish Harris and that Donald Strang had moved from the
position of Executive Director to Non-Executive Director.
Outlook:
2019 has seen the ongoing Horse Hill extended well testing and development plans continue to show its potential, with two
production / appraisal wells planned shortly for Horse Hill discovery nearby London Gatwick Airport. Other onshore UK activities
at Isle of Wight will continue.
2019 also saw the Company set focus on the sourcing and appraisal of further investments in line with the Company’s growth
strategy. The board looked 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. To reflect the future plans of the
Company, the board was rationalised and there has been a significant reduction in all costs, in line with the current structure.
Early 2020 has seen the Company continue to evaluate the potential acquisition of Coera from Oilex. Although the capital raising
component of the Proposed Acquisitions will not be proceeding at this stage, the Board remain favorable to maintaining
discussions with Oilex with a view to agreeing revised transaction timetable and terms.
Covid-19
Doriemus continues to monitor the situation very closely, with a primary focus on the health, wellbeing and safety of all its
employees.
To date there has been no impact to the Group and Company, or any of its projects, if this changes Doriemus will of course provide
an update accordingly.
The Board, as always, remain open to consideration of other opportunities that may arise to create shareholder value.
In the meantime, Doriemus is still in strong position with its existing portfolio of assets in the United Kingdom and cash reserves
of approximately $1.4M.
The directors would like to take this opportunity to thank our shareholders, staff and consultants for their continued support.
Keith Coughlan
Chairman
27th March 2020
7
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2019
DORIEMUS PLC
The Directors present their report together with the audited financial statements of the Group for the year ended 31 December
2019.
Principal activities and business review and future developments
The principal activity of the Group is to invest in and / or acquire companies and / or projects with clear growth potential, focusing
on businesses that are available at attractive valuations and hold opportunities to unlock imbedded value, mainly focusing in the
mining, and oil & gas sectors.
A review of the business and future developments is given in the Chairman's statement incorporating the strategic report, on
pages 2-7.
Key Performance Indicators
Due to the current status of the Group, the Board has not identified any performance indicators as key.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group involve the ability to secure funding in order to finance the acquisition and
exploitation of mining and, oil and gas assets and their fluctuating commodity prices.
In addition, the amount and quality of the Group’s oil and gas resources and the related costs of extraction and production
represent a significant risk to the Group.
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments are financial investments, trade receivables, trade payables and cash at bank. The
main purpose of these financial instruments is to fund the Group's operations.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be
undertaken. The main risk arising from the Group’s financial instruments is liquidity risk. The Board reviews and agrees policies
for managing this risk and this is summarised below.
Liquidity Risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of equity and its cash
resources. Further details of this are provided in the principal accounting policies, headed 'going concern'.
Going Concern
The Directors note the losses that the Group has made for the year ended 31 December 2019. The Directors have prepared cash
flow forecasts for the period ending 31 March 2021 which take account of the current cost and operational structure of the Group.
The cost structure of the Group comprises a high proportion of discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the Group to operate within its available funding.
These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been
prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the Group remains a going concern. At 31 December 2019, the Group had
cash and cash equivalents of £909,000 and no borrowings. The Group has minimal contractual expenditure commitments and the
Board considers the present funds sufficient to maintain the working capital of the Group for a period of at least 12 months from
the date of signing the Annual Report and Financial Statements. For these reasons the Directors adopt the going concern basis in
the preparation of the Financial Statements.
Results, dividends
The statement of comprehensive income shows the result for the year of £1,571,000 (loss) (2018: £1,745,000 loss). No dividends
were paid in the current or prior years, and no dividends are proposed.
8
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2019 (CONTINUED)
DORIEMUS PLC
Events after the end of the reporting period
Events after the end of the reporting period have been fully detailed in Note 19 to the financial statements.
Directors’ Remuneration and interests
The Group remunerates the Directors at a level commensurate with the size of the Group and the experience of its Directors. The
Remuneration Committee has reviewed the Directors’ remuneration and believes it upholds the objectives of the Group with
regard to this issue. Details of the Directors’ emoluments and payments made for professional services rendered are set out in
Note 3 to the Financial Statements.
All the directors below served during throughout the period unless otherwise stated:
Keith Coughlan - appointed on 19th June 2019
David Lenigas - resigned on 19th June 2019
Donald Strang
Gregory Lee
Hamish Harris - resigned on 17th July 2019
Each of the directors hold fully vested options over ordinary shares, Donald Strang, and David Lenigas each hold 3million, and
Gregory Lee, and Hamish Harris hold 1.5million options (total options held by directors is 9,000,000), all of which are exercisable
at 0.197p each up until 28th September 2022.
Substantial Shareholdings
The substantial shareholdings in the Company have been fully disclosed in the additional ASX additional disclosures at the end of
the report.
Policy on Payment of Creditors
It is the Group's policy to agree appropriate terms and conditions for its transactions with suppliers by means ranging from
standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms and conditions,
provided that the supplier meets those terms and conditions. The Group does not have a standard or code dealing specifically
with the payment of suppliers.
Trade payables at the year end all relate to sundry administrative overheads and disclosure of the number of days’ purchases
represented by year end payables is therefore not meaningful.
Statement of Directors' responsibilities
The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
prepared the Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing these
financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure
that the financial statements comply with the Companies Act 2006.
9
DORIEMUS PLC
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2019 (CONTINUED)
Website publication
The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Disclosure of information to Auditors
Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
•
•
so far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware; and
the directors have taken all the steps that ought to have been taken as directors in order to be aware of any information
needed by the Group's auditors in connection with preparing their report and to establish that the Group's auditors are aware
of that information.
Independent Auditors
The auditors, Chapman Davis LLP, have indicated their willingness to continue in office and a resolution concerning their re-
appointment will be proposed at the Annual General Meeting.
By order of the Board
Don Strang
Director
27th March 2020
10
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DORIEMUS PLC
DORIEMUS PLC
OPINION
We have audited the financial statements of Doriemus Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 December 2019 which comprise the consolidated statement of comprehensive income, the consolidated and company
statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company
statements of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the company financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2019 and of the Group’s losses for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate;
or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s or the Parent Company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified by our audit. Our audit procedures in relation to these matters
were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these
matters individually and we express no such opinion.
We have determined the matters described below to be the key audit matters to be communicated in our report.
11
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DORIEMUS PLC (continued)
DORIEMUS PLC
CARRYING VALUE OIL & GAS PROPERTIES’
The Group has oil & gas properties’ disclosed within non-current assets (‘O&G assets’) totalling £50,000 as at 31st December 2019,
which are tested annually for impairment.
Management and the Board are required to ensure that only costs which meet the IFRS criteria of an asset and accord with the
Company’s accounting policy are capitalised within the O&G asset. In addition, in accordance with the requirements of IFRS 6
‘Exploration for and Evaluation of Mineral Resources’ (‘IFRS 6’) Management and the Board are required to assess whether there
is any indication whether there are any indicators of impairment of the O&G assets.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and evaluating management's assessment of whether any impairment
indicators in accordance with IFRS 6 have been identified across the Company’s exploration assets/projects, the indicators being:
• Expiring, or imminently expiring, licence and/or exploration rights;
• A lack of budgeted or planned exploration and evaluation spend on the licence areas; and
• Discontinuation of, or a plan to discontinue, exploration activities in the licence areas.
• Sufficient data exists to suggest carrying value of oil & gas exploration and evaluation assets is unlikely be recovered in full
through successful development or sale.
In addition, we reviewed management’s assessment of the carrying value and the impairment / exploration expensed during the
year of £788,000 and the basis thereof.
We also reviewed the Operator’s AIM & the Company’s ASX announcements and Board meeting minutes for the year and
subsequent to year end for exploration activity to identify any indicators of impairment.
We also assessed the disclosures included in the financial statements.
MATERILIATY
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements identified. Based on professional judgement, we determined overall
materiality for the financial statements as a whole to be £100,000, based on an average of 2.0% percentage consideration of the
Group’s total assets and 10% consideration of an adjusted loss of the Group for the year.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DORIEMUS PLC (continued)
DORIEMUS PLC
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) or ISA IAASB will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Rowan Palmer
(Senior Statutory Auditor)
For and on behalf of Chapman Davis LLP, Statutory Auditor
London
Chapman Davis LLP is a limited liability partnership registered in England and Wales (with registered number OC306037).
Date: 27th March 2020
13
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2019
DORIEMUS PLC
Revenue
Cost of sales
Gross (loss)
Administrative expenses
Exploration costs written-off
Impairment charges
Depletion charge
(Loss) from operations
Loan Interest received
Realised gain on financial investments
Unrealised (loss) / gain on financial investments
(Loss) before income tax
Income tax expense
(Loss) attributable to the owners of the company
and total comprehensive income for the year
Other comprehensive income
Exchange differences on translation of foreign operations
Other comprehensive income for the year net of taxation
Total comprehensive income for the period attributable to equity
holders of the company
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
2
2019
£’000
10
(105)
(95)
(641)
(788)
(179)
(5)
2018
£’000
43
(90)
(47)
(656)
(998)
(160)
(3)
4
(1,708)
(1,864)
48
121
(32)
95
12
12
(1,571)
(1,745)
5
-
-
(1,571)
(1,745)
(1)
(1)
-
-
(1,572)
(1,745)
6
6
(2.71p)
(2.71p)
(3.42p)
(3.42p)
The notes form an integral part of these financial statements.
14
Consolidated Statement of Changes in Equity
for the year ended 31 December 2019
DORIEMUS PLC
Share
capital
Share
premium
Share
based
payment
reserve
Foreign
exchange
reserve
£’000
£’000
£’000
£’000
At 31 December 2017
202
7,734
1,717
Issue of Share capital
Share issue costs
Share options lapsed
Transactions with owners
(Loss) for the year
Total comprehensive loss for the year
30
-
-
30
-
-
252
-
-
252
-
-
-
-
(34)
(34)
-
-
At 31 December 2018
232
7,986
1,683
(Loss) for the year
Currency translation differences
Total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
At 31 December 2019
232
7,986
1,683
-
-
-
-
-
-
-
-
-
(1)
(1)
(1)
Retained
earnings /
Accumulat
ed losses
£’000
Total
£’000
(4,725)
4,928
-
-
34
34
282
-
-
282
(1,745)
(1,745)
(1,745)
(1,745)
(6,436)
3,465
(1,571)
-
(1,571)
(1,571)
(1)
(1,572)
(8,007)
1,893
The notes form an integral part of these financial statements.
15
Company Statement of Changes in Equity
for the year ended 31 December 2019
DORIEMUS PLC
Share capital
Share
premium
Share based
payment
reserve
£’000
202
30
-
-
30
-
-
£’000
7,734
252
-
-
252
-
-
£’000
1,717
-
-
(34)
(34)
-
-
Retained
earnings /
Accumulated
losses
£’000
(4,725)
-
-
34
34
Total
£’000
4,928
282
-
-
282
(1,745)
(1,745)
(1,745)
(1,745)
At 31 December 2017
Issue of Share capital
Share issue costs
Share options lapsed
Transactions with owners
(Loss) for the year
Total comprehensive loss for the year
At 31 December 2018
232
7,986
1,683
(6,436)
3,465
(Loss) for the year
Total comprehensive loss for the year
-
-
-
-
-
-
(1,357)
(1,357)
(1,357)
(1,357)
At 31 December 2019
232
7,986
1,683
(7,793)
2,108
The notes form an integral part of these financial statements.
16
Consolidated Statement of Financial Position
at 31 December 2019
DORIEMUS PLC
Assets
Non-current assets
Intangible assets
Oil & gas properties
Financial investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity attributable to owners
of the parent
Share capital
Share premium account
Share based payment reserve
Foreign exchange reserve
Retained earnings
Total equity
Note
7
8
9
11
13
14
2019
£’000
224
50
423
697
903
909
1,812
2,509
(616)
(616)
(616)
1,893
232
7,986
1,683
(1)
(8,007)
1,893
2018
£’000
296
1,274
941
2,511
1,340
209
1,549
4,060
(595)
(595)
(595)
3,465
232
7,986
1,683
-
(6,436)
3,465
The financial statements were approved by the Board of Directors and authorised for issue on 27th March 2020.
Keith Coughlan
Director
Company registered number 03877125
Donald Strang
Director
The notes form an integral part of these financial statements.
17
Company Statement of Financial Position
at 31 December 2019
DORIEMUS PLC
Assets
Non-current assets
Intangible assets
Oil & gas properties
Financial investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity attributable to owners
of the parent
Share capital
Share premium account
Share based payment reserve
Retained earnings
Total equity
Note
7
8
9
11
13
14
2019
£’000
224
50
423
697
1,131
891
2,022
2,719
(611)
(611)
(611)
2,108
232
7,986
1,683
(7,793)
2,108
2018
£’000
296
1,274
941
2,511
1,340
209
1,549
4,060
(595)
(595)
(595)
3,465
232
7,986
1,683
(6,436)
3,465
The financial statements were approved by the Board of Directors and authorised for issue on 27th March 2020.
Keith Coughlan
Director
Company registered number 03877125
Donald Strang
Director
The notes form an integral part of these financial statements.
18
Consolidated Statement of Cash Flows
for the year ended 31 December 2019
DORIEMUS PLC
Cash flows from operating activities
(Loss) from operations
Adjustments for:
Impairment charge
Exploration costs written-off
Depletion charge
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash (outflow) from operating activities
Cash flows from investing activities
Payments for intangible assets/OGP’s
Loans advanced to related parties
Receipts on sale of AFS investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from Issuance of ordinary share capital
Share issue costs
Net cash generated in financing activities
Net increase/(decrease) in cash and cash equivalents
Foreign exchange differences on translation
Cash, cash equivalents and bank overdrafts at beginning of year
Cash and cash equivalents at the end of year
Cash and cash equivalents comprise:
Bank & cash available on demand
2019
£’000
2018
£’000
(1,708)
(1,864)
179
788
5
(151)
21
(866)
(42)
(151)
1,760
1,567
-
-
-
701
(1)
209
909
909
160
998
3
27
158
(518)
(229)
(519)
95
(653)
282
-
282
(889)
-
1,098
209
209
The notes form an integral part of these financial statements.
19
Company Statement of Cash Flows
for the year ended 31 December 2019
DORIEMUS PLC
Cash flows from operating activities
(Loss) from operations
Adjustments for:
Impairment charge
Exploration costs written-off
Depletion charge
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash (outflow) from operating activities
Cash flows from investing activities
Payments for intangible assets/OGP’s
Loans advanced to related parties
Receipts on sale of AFS investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from Issuance of ordinary share capital
Share issue costs
Net cash generated in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash, cash equivalents and bank overdrafts at beginning of year
Cash and cash equivalents at the end of year
Cash and cash equivalents comprise:
Bank & cash available on demand
2019
£’000
2018
£’000
(1,494)
(1,864)
179
788
5
(150)
16
(656)
(42)
(380)
1,760
1,338
-
-
-
682
209
891
891
160
998
3
27
158
(518)
(229)
(519)
95
(653)
282
-
282
(889)
1,098
209
209
The notes form an integral part of these financial statements.
20
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019
1
Accounting policies
Background information
Doriemus plc is incorporated and domiciled in the jurisdiction of England and Wales. The address of Doriemus plc’s registered
office is Suite 3B, 38 Jermyn Street, London, SW1Y 6DN which is also the Company’s principal place of business. Doriemus plc’s
shares in the form of CHESS Depositary Interests are listed on the Australian Securities Exchange (“ASX”).
These Financial Statements (the "Financial Statements") have been prepared and approved by the Directors on 27th March 2020
and signed on their behalf by Donald Strang and Keith Coughlan.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied to the company through all the years presented, unless otherwise stated. These financial statements have
been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and EU
adopted IFRICs (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union
("adopted IFRSs"), and in accordance with those parts of the Companies Act 2006 applicable to those companies preparing their
accounts under IFRS. The financial statements have been prepared under the historical cost convention and presented in pound
thousands (£’000).
Going Concern
The Directors noted the losses that the Group has made for the Year Ended 31 December 2019. The Directors have prepared cash
flow forecasts for the period ending 31 March 2021 which take account of the current cost and operational structure of the Group.
The cost structure of the Group comprises a high proportion of discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the Group to operate within its available funding.
These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been
prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the Group remains a going concern. At 31 December 2019, the Group had
cash and cash equivalents of £909,000 and no borrowings. The Group has minimal contractual expenditure commitments and
the Board considers the present funds sufficient to maintain the working capital of the Group for a period of at least 12 months
from the date of signing the Annual Report and Financial Statements. For these reasons the Directors adopt the going concern
basis in the preparation of the Financial Statements.
New standards, amendments and interpretations adopted by the Company
No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current
year by/to the Group, as standards, amendments and interpretations which are effective for the financial year beginning on 1
January 2019 are not material to the group.
21
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
New standards, amendments and interpretations not yet adopted
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been
applied in these financial statements, were in issue but not yet effective for the year presented:
- IFRS 17 Insurance Contracts (effective date 1 January 2021).
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on
the Group.
Revenue
Revenue is generated from one main source of income currently. In the current year, revenue is being generated from the Group’s
Farm-in interests, on an accrued monthly basis, along with the associated costs.
Revenue from the production of oil, in which the Group has an interest with other producers, is recognised based on the Group’s
working interest and the terms of the relevant production sharing contracts. Differences between oil lifted and sold and the
Group’s share of production are not significant.
Expenses
Expenses are recognised in the period when obligations are incurred and matched against when the related revenue is recognised.
Financial assets
The Group classifies its financial assets into categories as set out below, depending on the purpose for which the asset was
acquired.
Cash and cash equivalents
Includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the statement
of financial position.
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other
types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable
to their acquisition or issue, and are subsequently carried at cost, less provision for impairment, if appropriate.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the group will be unable to collect all of the amounts due under the
terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the
statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value
of the asset is written off against the associated provision.
The group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial
position, and also include amounts due from invested entities.
22
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
Financial liabilities
The Group classifies its financial liabilities into one of the following categories, depending on the purpose for which the liability
was acquired:
-
-
-
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried
at amortised cost using the effective interest method
Bank and other borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue
of the instrument.
Income received in advance is recorded as deferred income on the balance sheet.
Share capital
Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a
financial liability. The Company’s ordinary and deferred shares are classified as equity instruments.
Reserves
Share capital is the amount subscribed for ordinary shares at nominal value.
Retained earnings / accumulated losses represent cumulative gains and losses of the company attributable to equity shareholders.
Share based payment reserve represents the value of equity benefits provided to employees and directors as part of their
remuneration and provided to consultants and advisors hired by the Group from time to time as part of the consideration paid.
Intangible assets – Exploration of mineral resources
Acquired intangible assets, which consist of mining rights, are valued at cost less accumulated amortisation.
The Group applies the full cost method of accounting for exploration and evaluation costs, having regard to the requirements of
IFRS 6 'Exploration for and Evaluation of Mineral Resources'. All costs associated with mining development and investment are
capitalised on a project by project basis pending determination of the feasibility of the project. Such expenditure comprises
appropriate technical and administrative expenses but not general overheads.
Such exploration and evaluation costs are capitalised provided that the company's rights to tenure are current and one of the
following conditions is met:
(i) such costs are expected to be recouped through successful development and exploitation of the area of interest or
alternatively by its sale; or
(ii) the activities have not reached a stage which permits a reasonable assessment of whether or not economically recoverable
resources exist; or
(iii) active and significant operations in relation to the area are continuing.
When an area of interest is abandoned, or the directors decide that it is not commercial, any exploration and evaluation costs
previously capitalised in respect of that area are written off to profit or loss.
Amortisation does not take place until production commences in these areas. Once production commences, amortisation is
calculated on the unit of production method, over the remaining life of the mine. Impairment assessments are carried out
regularly by the directors. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount may exceed its recoverable amount. Such indicators include the point at which a determination is made
as to whether or not commercial reserves exist.
The asset's residual value and useful lives are reviewed and adjusted if appropriate, at each reporting date. An assets' carrying
value is written down immediately to its recoverable value if the assets carrying amount is greater than its listed recoverable
amount.
23
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
Oil and gas properties and other property, plant and equipment
(i) Initial recognition
Oil and gas properties and other property, plant and equipment are stated at cost, less accumulated depreciation and accumulated
impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset
into operation, the initial estimate of the decommissioning obligation and, for qualifying assets (where relevant), borrowing costs.
The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire
the asset. The capitalised value of a finance lease is also included within property, plant and equipment.
When a development project moves into the production stage, the capitalisation of certain construction/development costs
ceases, and costs are either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation
relating to oil and gas property asset additions, improvements or new developments.
(ii) Depreciation/amortisation
Oil and gas properties are depreciated/amortised on a unit-of-production basis over the total proved developed and undeveloped
reserves of the field concerned, except in the case of assets whose useful life is shorter than the lifetime of the field, in which case
the straight-line method is applied. Rights and concessions are depleted on the unit-of-production basis over the total proved
developed and undeveloped reserves of the relevant area.
The unit-of-production rate calculation for the depreciation/amortisation of field development costs takes into account
expenditures incurred to date, together with sanctioned future development expenditure. An item of property, plant and
equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and other comprehensive
income when the asset is derecognised.
The asset’s residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period and
adjusted prospectively, if appropriate.
(ii) Major maintenance, inspection and repairs
Expenditure on major maintenance refits, inspections or repairs comprises the cost of replacement assets or parts of assets,
inspection costs and overhaul costs. Where an asset, or part of an asset that was separately depreciated and is now written off is
replaced and it is probable that future economic benefits associated with the item will flow to the Group, the expenditure is
capitalised. Where part of the asset replaced was not separately considered as a component and therefore not depreciated
separately, the replacement value is used to estimate the carrying amount of the replaced asset(s) and is immediately written off.
Inspection costs associated with major maintenance programmes are capitalised and amortised over the period to the next
inspection. All other day-to-day repairs and maintenance costs are expensed as incurred.
24
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
Provision for rehabilitation / Decommissioning Liability
The Group recognises a decommissioning liability where it has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of
obligation can be made.
The obligation generally arises when the asset is installed, or the ground/environment is disturbed at the field location. When the
liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the
related oil and gas assets to the extent that it was incurred by the development/construction of the field. Any decommissioning
obligations that arise through the production of inventory are expensed when the inventory item is recognised in cost of goods
sold.
Changes in the estimated timing or cost of decommissioning are dealt with prospectively by recording an adjustment to the
provision and a corresponding adjustment to oil and gas assets.
Any reduction in the decommissioning liability and, therefore, any deduction from the asset to which it relates, may not exceed
the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of profit or
loss and other comprehensive income.
If the change in estimate results in an increase in the decommissioning liability and, therefore, an addition to the carrying value
of the asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment.
If, for mature fields, the estimate for the revised value of oil and gas assets net of decommissioning provisions exceeds the
recoverable value, that portion of the increase is charged directly to expense. Over time, the discounted liability is increased for
the change in present value based on the discount rate that reflects current market assessments and the risks specific to the
liability. The periodic unwinding of the discount is recognised in the statement of profit or loss and other comprehensive income
as a finance cost. The Group recognises neither the deferred tax asset in respect of the temporary difference on the
decommissioning liability nor the corresponding deferred tax liability in respect of the temporary difference on a decommissioning
asset.
Significant accounting judgements, estimates and assumptions
The preparation of the group’s financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continuously
evaluated and are based on management’s experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In particular, the group has identified the following areas where significant judgements, estimates and assumptions are required.
Further information on each of these areas and how they impact the various accounting policies are described below and also in
the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
Judgements
(i)
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial statements:
(a) Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Group, including legal,
contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future
events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the
exercise of significant judgement and the use of estimates regarding the outcome of future events.
25
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
(ii) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are
described below. The Group based its assumptions and estimates on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or
circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
(a) Hydrocarbon reserve and resource estimates
Hydrocarbon reserves are estimates of the amount of hydrocarbons that can be economically and legally extracted from the
Group’s oil and gas properties. The Company estimates its commercial reserves and resources based on information compiled by
appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the
hydrocarbon body and suitable production techniques and recovery rates. Commercial reserves are determined using estimates
of oil and gas in place, recovery factors and future commodity prices, the latter having an impact on the total amount of
recoverable reserves and the proportion of the gross reserves which are attributable to the host government under the terms of
the Production-Sharing Agreements. Future development costs are estimated using assumptions as to the number of wells
required to produce the commercial reserves, the cost of such wells and associated production facilities, and other capital costs.
The current long-term Brent oil price assumption used in the estimation of commercial reserves is US$75/bbl. The carrying amount
of oil and gas development and production assets at 31 December 2017 is shown in Note 8.
The Group estimates and reports hydrocarbon reserves in line with the principles contained in the SPE Petroleum Resources
Management Reporting System (PRMS) framework. As the economic assumptions used may change and as additional geological
information is obtained during the operation of a field, estimates of recoverable reserves may change. Such changes may impact
the Company’s reported financial position and results, which include:
•
The carrying value of exploration and evaluation assets; oil and gas properties; property, plant and equipment; and
goodwill may be affected due to changes in estimated future cash flows
•
• Depreciation and amortisation charges in the statement of profit or loss and other comprehensive income may change
where such charges are determined using the Units of Production (UOP) method, or where the useful life of the related
assets change
Provisions for decommissioning may require revision — where changes to the reserve estimates affect expectations about
when such activities will occur and the associated cost of these activities
The recognition and carrying value of deferred tax assets may change due to changes in the judgements regarding the
existence of such assets and in estimates of the likely recovery of such assets
•
(b) Exploration and evaluation expenditures
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement to determine
whether future economic benefits are likely, from future either exploitation or sale, or whether activities have not reached a stage
which permits a reasonable assessment of the existence of reserves. The determination of reserves and resources is itself an
estimation process that involves varying degrees of uncertainty depending on how the resources are classified. These estimates
directly impact when the Group defers exploration and evaluation expenditure. The deferral policy requires management to make
certain estimates and assumptions about future events and circumstances, in particular, whether an economically viable
extraction operation can be established. Any such estimates and assumptions may change as new information becomes available.
If, after expenditure is capitalised, information becomes available suggesting that the recovery of the expenditure is unlikely, the
relevant capitalised amount is written off in the statement of profit or loss and other comprehensive income in the period when
the new information becomes available.
26
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
(c) Units of production (UOP) depreciation of oil and gas assets
Oil and gas properties are depreciated using the UOP method over total proved developed and undeveloped hydrocarbon
reserves. This results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining production
from the field.
The life of each item, which is assessed at least annually, has regard to both its physical life limitations and present assessments
of economically recoverable reserves of the field at which the asset is located. These calculations require the use of estimates
and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The calculation of
the UOP rate of depreciation/amortisation will be impacted to the extent that actual production in the future is different from
current forecast production based on total proved reserves, or future capital expenditure estimates change. Changes to the
proved reserves could arise due to changes in the factors or assumptions used in estimating reserves, including:
The effect on proved reserves of differences between actual commodity prices and commodity price assumptions
•
• Unforeseen operational issues
(d) Recoverability of oil and gas assets
The Group assesses each asset or cash generating unit (CGU) (excluding goodwill, which is assessed annually regardless of
indicators) each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment
exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs of
disposal (FVLCD) and value in use (VIU). The assessments require the use of estimates and assumptions such as long-term oil
prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital
requirements, decommissioning costs, exploration potential, reserves (see (a) Hydrocarbon reserves and resource estimates
above) and operating performance (which includes production and sales volumes). These estimates and assumptions are subject
to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may
impact the recoverable amount of assets and/or CGUs.
(e) Decommissioning costs
Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s facilities and
properties. The Group assesses its decommissioning provision at each reporting date. The ultimate decommissioning costs are
uncertain and cost estimates can vary in response to many factors, including changes to relevant legal requirements, the
emergence of new restoration techniques or experience at other production sites. The expected timing, extent and amount of
expenditure may also change — for example, in response to changes in reserves or changes in laws and regulations or their
interpretation.
Therefore, significant estimates and assumptions are made in determining the provision for decommissioning.
As a result, there could be significant adjustments to the provisions established which would affect future financial results.
External valuers may be used to assist with the assessment of future decommissioning costs. The involvement of external valuers
is determined on a case by case basis, taking into account factors such as the expected gross cost or timing of abandonment, and
is approved by the Company’s Audit Committee. Selection criteria include market knowledge, reputation, independence and
whether professional standards are maintained. The provision at reporting date represents management’s best estimate of the
present value of the future decommissioning costs required
27
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
1
Accounting policies (continued)
(f) Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. From time to time, the
fair values of non-financial assets and liabilities are required to be determined, e.g., when the entity acquires a business, or where
an entity measures the recoverable amount of an asset or cash-generating unit (CGU) at FVLCD.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. From time
to time external valuers are used to assess FVLCD of the Company’s non-financial assets. Involvement of external valuers is
decided upon by the valuation committee after discussion with and approval by the Company’s Audit Committee. Selection
criteria include market knowledge, reputation, independence and whether professional standards are maintained. Valuers are
normally rotated every three years. The valuation committee decides, after discussions with the Group’s external valuers, which
valuation techniques and inputs to use for each case.
Changes in estimates and assumptions about these inputs could affect the reported fair value.
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised
in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on disallowed
expenses, expect where the timing of the reversal of the temporary difference is controlled by the company and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
28
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
2
Revenue and segmental reporting
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board.
The Group’s current revenue is all generated in the United Kingdom from oil & gas production in accordance with its farm-in
agreements, within the United Kingdom. However with this segment in its infancy, and with the only major related transactions
being the carrying value of the oil & gas properties assets as described in Note 8, no further segmental analysis is deemed useful
to disclose currently. The revenue from this segmental was £10,000 (2018: £43,000)
Subject to further acquisitions, the Group’s expects to further review its segmental information during the forthcoming financial
year and update accordingly.
3
Staff and director costs
Staff costs, including directors, consist of:
Fees and remuneration for management services
Employers NI
Pension costs
Group
2019
£’000
269
4
-
273
2018
£’000
414
11
1
426
The Group has no employees other than the directors. No pension contributions were made in respect of the directors (2018:
£nil). The key management personnel of the group are the board of directors and their remuneration is disclosed below;
2019
K Coughlan****
D Strang
G Lee
D Lenigas*
H Harris **
2018
D Lenigas
D Strang
G Lee
H Harris
G Whiddon ***
Fees and
salaries
£’000
16
73
85
53
26
253
Fees and
salaries
£’000
119
119
114
28
18
398
Group
Share based
payments
£’000
-
-
-
-
-
-
Share based
payments
£’000
-
-
-
-
-
-
Total
£’000
16
73
85
53
26
253
Total
£’000
119
119
114
28
18
398
* Resigned 19 June 2019
** Resigned 17 July 2019
*** Resigned 30 July 2018
**** Appointed 19 June 2019
Directors’ fees totalling £24,000 have been accrued and remain unpaid as at 31 December 2019 (2018: £298,000).
29
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
4
Group loss from operations
Loss from operations is stated after charging:
Fees payable to the Group’s auditor for the audit of:
Parent company and consolidated financial statements
Fees payable to the Group’s auditor for other services
- Taxation services
Foreign currency exchange losses
Depletion & impairment charge
5
Taxation - Group
Current tax expense:
UK corporation tax and income tax of overseas operations on profits for the period
Total income tax expense
The reasons for the difference between the actual tax charge for the period and the
standard rate of corporation tax in the UK applied to profits for the year are as
follows:
Loss for the period
Standard rate of corporation tax in the UK
Loss on ordinary activities multiplied by the standard rate of corporation tax
Expenses not deductible for tax purposes
Future income tax benefit not brought to account
Current tax charge for period
2019
£’000
2018
£’000
14
-
9
5
2019
£’000
-
-
(1,571)
19%
(298)
-
298
-
10
-
35
3
2018
£’000
-
-
(1,745)
19%
(332)
-
332
-
No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which
they can be recovered.
6
Loss per share - Group
The calculation of the basic loss per share is calculated by dividing the consolidated loss attributable to the equity holders of the
Group by the weighted average number of ordinary shares in issue during the year.
Basic earnings per share (pence)
Diluted earnings per share (pence)
2019
(2.71)
(2.71)
2018
(3.42)
(3.42)
(Loss) attributable to equity shareholders
(£1,571,000)
(£1,745,000)
Weighted average number of shares - basic
Weighted average number of shares - diluted
Number
Number
57,983,125
72,433,125
50,984,872
65,434,872
The diluted number of shares includes 14.45 million share options (2018: 14.45 million share options) as described in Note 14.
However the impact of the share options are considered to be anti-dilutive.
30
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
7
Intangible assets
Cost
At 31 December 2017
Additions
At 31 December 2018
Additions
At 31 December 2019
Amortisation and impairment
At 31 December 2017
Impairment
At 31 December 2018
Impairment
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Group
Licences &
Exploration
costs
£’000
280
16
296
7
303
-
-
-
(79)
(79)
224
296
Company
Licences &
Exploration
costs
£’000
280
16
296
7
303
-
-
-
(79)
(79)
224
296
Total
£’000
280
16
296
-
303
-
-
-
(79)
(79)
224
296
On 10 August 2016 the Company entered into an agreement to acquire a 5% beneficial interest in the onshore Isle of Wight oil &
gas licence “PEDL 331”, in the United Kingdom. Consideration paid for the total 5% interest totalled £200,000. During 2018 and
2019 the Company incurred direct exploration costs in relation to PEDL331.
Impairment Review
At 31 December 2019, the directors have carried out an impairment review and have considered that an impairment write-down
of £79,000 is required in relation to its capitalised directly incurred exploration costs in relation to Greenland Gas & Oil Ltd and its
licences thereon (2018: £nil). The directors are of the opinion that the carrying value is stated at fair value.
31
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
8
Oil & gas properties
Cost
At 31 December 2017
Additions
Exploration costs written-off
Impairment charge
At 31 December 2018
Additions
Disposal
Exploration costs written-off
Impairment charge
At 31 December 2019
Depletion
At 31 December 2017
Depletion charge
At 31 December 2018
Depletion charge
Disposal
Exploration costs written-off
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Group
Oil & Gas
Properties
£’000
2,232
213
(998)
(160)
1,287
35
(470)
(802)
-
50
10
3
13
5
(4)
(14)
-
50
1,274
Company
Oil & Gas
Properties
£’000
2,232
213
(998)
(160)
1,287
35
(470)
(802)
-
50
10
3
13
5
(4)
(14)
-
50
1,274
Total
£’000
2,232
213
(998)
(160)
1,287
35
(470)
(802)
-
50
10
3
13
5
(4)
(14)
-
50
1,274
Impairment review
The Oil & Gas properties comprised the 20% participating interest in the Lidsey oil field, in the United Kingdom and the 10%
participating interest in the Brockham oil field, also in the United Kingdom. During the year ended 31 December 2019, the
Company sold its 10% participating interest in the Lidsey oil field for £468,000, resulting in a small gain of £3,000 during the year.
The Company had previously written down this interest during the previous year.
The Directors have carried out an impairment review as at 31 December 2019 and determined that an impairment charge in
relation to the Brockham Oil Field is required as a result of the operator’s termination of well tests and their intention to dispose
of their own interest. As a result the Group’s interest has been written down to £50,000, to which the Board of Directors will also
consider their options in regards to a possible sale of their interest.
32
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
9
Financial Investments
Group & Company
Investment in Listed & unlisted securities
Valuation at 1 January
Additions at cost
Disposal proceeds
Impairment
Net gain on disposals & market value movements
Valuation at 31 December
The financial investments split is as below:
Non-current assets – unlisted – at cost
Non-current assets – listed – at market value
2019
£’000
941
2,567
(3,861)
(100)
876
423
390
33
423
2018
£’000
1,012
-
(95)
-
24
941
850
91
941
Financial investments comprise investments in listed and unlisted which if listed are traded on stock markets throughout the
world, and are held by the Group as a mix of strategic and short term investments.
10
Investment in Subsidiaries
Company
Country of Registration
Proportion held
Nature of business
Direct
Doriemus Energy Pty Ltd
Indirect
Via Doriemus Energy Pty Ltd
Doriemus EP487 Operations Pty Ltd
Doriemus EP487 Pty Ltd
Doriemus L15 Operations Pty Ltd
Doriemus L15 Pty Ltd
Australia
100%
Oil and Gas Services Company
Australia
Australia
Australia
Australia
100%
100%
100%
100%
Dissolved on 26 November 2019
Dissolved on 26 November 2019
Dormant company
Dormant company
Doriemus L15 Operations Pty Ltd is in the process of being dissolved. The Parent company acquired all of the subsidiaries on
their incorporation for nominal share holdings of A$10.
11
Trade and other receivables
Trade receivables
Loan to related party (See Note 17)
Other receivables
Prepayments and accrued income
Group
Company
2019
£’000
-
709
191
3
903
2018
£’000
-
1,297
15
28
1,340
2019
£’000
-
938
190
3
1,131
2018
£’000
-
1,297
15
28
1,340
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
33
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
12
Cash and cash equivalents
Analysis by currency;
Sterling
Australian Dollar
13
Trade and other payables
Trade payables
Other payables
Accrued liabilities and deferred income
Group
Company
2019
£’000
867
42
909
2018
£’000
200
9
209
2019
£’000
867
24
891
Group
Company
2019
£’000
410
29
177
616
2018
£’000
135
103
357
595
2019
£’000
410
29
172
611
2018
£’000
200
9
209
2018
£’000
135
103
357
595
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
14
Share capital
Ordinary shares of 0.4p each
Allotted, called up and fully paid
At 31 December 2017
3 December 2018 – Placing for cash at 0.0372p(A$0.065) per CHESS Depositary Interests
5 December 2018 – Placing for cash at 0.0375p(A$0.065) per CHESS Depositary Interests
At 31 December 2018
No issue of shares during the period
At 31 December 2019
Dividends Paid
During the years ended 31 December 2019 and 31 December 2018, the Group paid no dividends.
Capital Management
The Group’s capital comprises the ordinary shares 0.4p (2018: 0.4p) each, as shown above.
Ordinary
Shares
Number
50,420,109
4,750,000
2,813,016
57,983,125
-
57,983,125
Nominal
Value
£’000
202
19
11
232
-
232
The Group’s objectives when maintaining capital are:
•
•
to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders
and benefits for other stakeholders, and
to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
Share Options
The Group has as at 31 December 2019, 14,450,000 (2018: 14,450,000) share options issued through its share schemes. During
the year nil share options were issued. (2018: nil) The share options on issue have exercise prices of 13.2p up to 20p per share,
which are exercisable on various dates up to 29 September 2022. The Group cancelled none of the existing options on issue (2018:
nil). During the year no options lapsed (2018: 50,000).
Warrants in issue
As at 31 December 2019, nil warrants remained outstanding (2018: nil). No warrants were issued during the year (2018: nil).
34
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
15
Share based payments
Share options held by directors, employees and third parties are as follows:
Grant date
Expiry date
Exercise price
11 May 2017
24 May 2017
29 September 2017
29 September 2017
30 June 2021
30 June 2021
28 September 2021
28 September 2022
Total options in issue
£
0.20
0.132
0.1917
0.1917
Outstanding as at
31 December 2019
Number
75,000
1,250,000
2,000,000
11,125,000
14,450,000
A modified Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair
value is expensed to the income statement on a straight-line basis over the vesting period, which is determined annually. The
model assesses a number of factors in calculating the fair value. These include the market price on the date of grant, the exercise
price of the share options, the expected share price volatility of the Parent Company’s share price, the expected life of the
options, the risk-free rate of interest and the expected level of dividends in future periods.
For those options granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were calculated using the Black-
Scholes model. The inputs into the model were as follows:
Risk free rate
Share price volatility
Expected life
Share price at date of
grant
29 September 2017
29 September 2017
0.5%
0.5%
44.2%
44.2%
5 years
4 years
£0.265
£0.265
Expected volatility was determined by calculating the historical volatility of the Parent Company's share price for 12 months prior
to the date of grant. The expected life used in the model is the term of the options.
16 Material Non-Cash Transactions
During the year the significant non-cash transactions were as follows:
•
•
•
•
•
£787,000 effective loss on the novation of the loan due from Horse Hill Developments Ltd transferred to the purchaser
on the sale of the Group’s 6% shareholding in Horse Hill Developments Ltd. However the group made a gain on the sale
of the shareholding of £1,740,000 resulting in an overall net gain on the transaction of £953,000.
In connection with the above disposal of shareholding in Horse Hill Developments Ltd, the Group received non-cash
proceeds of shares in UK Oil & Gas Plc, valued at £2,100,000.
£467,000 of shares in Angus Energy plc received as proceeds for the sale of the Group’s 20% interest in Lidsey Oil Field.
£100,000 impairment of the Group’s investment in Greenland Oil & Gas Ltd, expensed through the income statement.
£788,000 net exploration costs in relation to the Group’s 10% interest in the Brockham oil field, expensed through the
income statement.
35
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
17
Related party transactions
The Group had the following amounts outstanding from its investee companies (Note 11) at 31 December:
Doriemus Energy Pty Ltd
Horse Hill Development Ltd (“Horse Hill”)
Loan Interest receivable (“Horse Hill”)
Group
Company
2019
£’000
-
632
77
709
2018
£’000
-
1,202
95
1.297
2019
£’000
229
632
77
938
2018
£’000
-
1,202
95
1.297
The above loans outstanding are included within trade and other receivables, Note 11. The loan to Horse Hill has been made in
accordance with the terms of the investment agreement whereby it accrues interest daily at the Bank of England base rate +10%,
and is repayable out of future cashflows. On disposal of 6% of the Group’s interest in Horse hill, the company also novated 60%
of the outstanding loan balance and interest to the purchaser for no cost, incurring an effective loss on the loan of £787,000
taken through the income statement (see also Note 16).
Remuneration of Key Management Personnel
The remuneration of the directors, and other key management personnel of the Group, is set out below in aggregate for each
of the categories specified for Related Party Disclosures
Group
Company
2019
£’000
253
-
253
2018
£’000
398
-
398
2019
£’000
193
-
193
2018
£’000
398
-
398
Short-term employee benefits
Share-based payments
18
Financial instruments
Financial risk management
The Board of Directors sets the treasury policies and objectives of the Group, which includes controls over the procedures used
to manage financial market risks.
It is, and has been throughput the period under review, the Group’s policy that no major trading in financial instruments shall be
undertaken. The main risks arising from the Group’s financial instruments are:
▪
▪
▪
▪ market risk.
▪
interest rate risk;
liquidity risk;
credit risk.
Commodity price risk
Interest rate risk
The Group borrows only in sterling at both fixed and floating rates of interest. At the year end, the Group had nil borrowings.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts
and funding from shareholders.
36
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
18
Financial instruments (continued)
Credit risk
The Group has no significant concentration of credit risk.
Market risk
The Group’s current exposure to market risk is fundamentally linked to its interest in its listed financial investments, and the
market price fluctuations thereof.
The Board agrees and reviews policies and financial instruments for risk management. The primary objectives of the treasury
function are to provide competitively priced funding for the activities of the Group and to identify and manage financial risk.
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market commodity prices on the mix of oil and gas products through
its farm-in arrangements.
Commodity price sensitivity
The table below summarises the impact on profit before tax for changes in commodity prices. The analysis is based on the
assumption that the crude oil price moves 10% resulting in a change of US$6.44/bbl (2018: US$7.13/bbl), with all other variables
held constant. Reasonably possible movements in commodity prices were determined based on a review of the last two years’
historical prices and economic forecasters’ expectations.
Increase/decrease in crude oil prices
Increase US$6.44/bbl (2018: US$7.13)
Decrease US$6.44/bbl (2018: US$7.13)
Principal financial instruments
Effect on profit before tax
for the year ended
31 December 2019
Increase/(Decrease)
Effect on profit before tax
for the year ended
31 December 2018
Increase/(Decrease)
£’000
1
(1)
£’000
4
(4)
The principal financial instruments used by the Group from which financial instrument risk arises, are as follows:
Financial assets
Trade receivables
Other receivables
Other loans
Cash and cash equivalents
Total financial assets classified as loans and receivables
Group
Company
2019
£’000
-
190
709
909
1,808
2018
£’000
-
15
1,297
209
1,521
2019
£’000
-
190
938
891
2,019
2018
£’000
-
15
1,297
209
1,521
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above.
At 31 December 2019 and 2018 the carrying amounts of financial assets approximate to their fair values.
37
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
18
Financial instruments (continued)
Financial liabilities
Group
Company
Trade payables - current
Other payables
Accrued liabilities
Total financial liabilities measured at amortised cost
2019
£’000
410
29
177
616
2018
£’000
135
103
357
595
2019
£’000
410
29
172
611
2018
£’000
135
103
357
595
To the extent trade and other payables are not carried at fair value in the statement of financial position, book value approximates
to fair value at 31 December 2019 and 2018.
All financial assets and liabilities are due in less than 1 year.
The Group is exposed through its operations to one or more of the following financial risks:
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
Short term liquidity risk is managed by preparing forecasts together with obtaining and reviewing the adequacy of banking
facilities. There is currently no long-term liquidity risk.
Market operational and pricing risks
The Group operates in the United Kingdom and Australia. The Group’s only revenue is derived from income from its farm-in
agreements within the United Kingdom. The level of income is entirely dependent on the production and operation of the oil
fields by its existing operator and the subsequent exposure to the movement in oil price in the market.
Credit risk
The credit qualities of financial assets that are neither past nor impaired are considered to be good, as they are primarily trade
receivables and cash held with the Group’s Banks. There are no financial assets which are past due or impaired.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating “AA” are accepted.
Cash flow interest rate risk
The Group has minimal risk towards interest rate changes, other than those effects on interest being received on cash held in the
Group’s bank accounts.
Currency risk
The group is currently not materially directly exposed to currency risk as its assets, liabilities, revenue and expenditure are
denominated in Sterling, and the Group remained a predominantly United Kingdom based Group during the year ended 31
December 2019.
38
DORIEMUS PLC
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
19
Events after the end of the reporting period
Potential Acquisition of Coera Limited from Oilex Limited:
The Company announced on the 30th January 2020 that a binding conditional Heads of Agreement has been executed between
Doriemus and ASX Listed Oilex Limited (“Oilex”) for the proposed acquisition by Doriemus of Coera Limited (“Coera”) which holds
(or holds the rights to acquire) a portfolio of oil and gas assets within the proven onshore South Australian Cooper-Eromanga Basin
(“Proposed Acquisition”). The Proposed Acquisition was subject to a number of conditions precedent including in particular a
minimum capital raising of $3.5m and obtaining various shareholders approvals.
The Company then announced on the 21st February 2020 that it had completed a $4.5m bookbuild from various professional and
sophisticated investors (“Bookbuild”) in connection with the Proposed Acquisition. However, unfortunately, the Company was
required to announce on the 24th March 2020 that certain investors had failed to settle their committed funds under the Bookbuild
by the specified date of the 20th March 2020. This meant that the raising of a minimum of $3.5m million in funds that was required
to satisfy the capital raising condition precedent for the Proposed Acquisition had not been achieved.
In light of the above, and in these unprecedented times of market and global uncertainty, the Board took the view that it is in the
best interests of the Company, its shareholders and other stakeholders to not proceed with the capital raising element of the
Proposed Acquisition (which included the Bookbuild) at this time.
In addition to withdrawing the Bookbuild, the Company also resolved to withdraw a priority and shortfall offer, as well as a bonus
option issue, both offers were to be made in connection with the Bookbuild. Having resolved to withdraw the various offers, the
Company applied to ASIC to withdraw the prospectuses under the priority and shortfall offer as well as the bonus option issue.
Accordingly, no securities will be issued by Doriemus at this time in connection with the Proposed Acquisition (including as
consideration to Oilex Limited, or under the Bookbuild, or the priority and shortfall offer, or the bonus option issue, or the director
options, or any securities to Hartleys Limited or the performance rights).
Doriemus is currently working with Oilex Limited in respect of seeking to agree and extended the timetable for completion of the
Proposed Acquisition, potentially with a revised structure and varied commercial terms.
Western Australian Onshore Block L15:
Doriemus announced on the 6th February 2020 that it had filed a Notice of Withdrawal from the farm-out agreement for L15 with
Rey Resources. The relevant farmout agreement is now deemed terminated and Doriemus has not earned any interest in the L15
asset.
Horse Hill Oil Discovery, UK:
On the 20th February 2020, the Company announced that the operator has commenced well intervention activities in an attempt
to identify and isolate the unexpected water production from the horizontal section of HH-2Z in the Portland Sandstone formation.
On the 10th March 2020, the Company announced that the operator has confirmed that the intervention to shut off significant
formation water ingress into its Horse Hill-2z (“HH-2z”) horizontal production well has been successful.
39
Notes forming part of the financial statements
for the year ended 31 December 2019 (continued)
19
Events after the end of the reporting period (continued)
On the 16th March 2020, the Company announced the following;
•
•
•
•
The Oil and Gas Authority has approved the Horse Hill Field Development Plan and consented to the start of long-term
production (“Production”) from the field.
This key consent will enable net recoverable reserves to be allocated to all partners, a pre-requisite for any potential future
debt-based funding. It will also permit the operator to enter into long-term field operations contracts which can help reduce
operating costs below $19 per barrel, making the field profitable even at current low oil prices.
Portland oil pool “Production” will commence via Horse Hill-1 (“HH-1”), a well intervention program is planned to install a
dual completion that will allow simultaneous production from both the Kimmeridge and the Portland in late spring.
Production from HH-2z is planned to follow upon completion of the current extended well testing campaign.
On the 24th March 2020, the Company announced that the operator has filed a planning application with the Isle of Wight Council
for the appraisal drilling and flow testing of the Arreton oil discovery and following a one-week statutory notice period, the
application is expected to go “live” on the 27th March 2020.
20
Commitments and contingencies
The directors have confirmed that there were no contingent liabilities or capital commitments which should be disclosed at 31
December 2019. No provision has been made in the financial statements for any amounts in relation to any capital expenditure
requirements of the Group’s farm-in agreements, and such costs are expected to be fulfilled in the normal course of the operations
of the Group.
21
Ultimate controlling party
There is not considered to be an ultimate controlling party of the parent company.
22
Profit and loss account of the parent company
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the parent company has
not been separately presented in these accounts. The parent company loss for the year was £1,357,000 (2018: £1,745,000 loss).
40
ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES
DORIEMUS PLC
The following additional information is required by the Australian Securities Exchange in respect of listed public companies only.
1.
Shareholding as at 2 March 2020
(a) Distribution of Equity Shareholders
Shares (including CDIs)
Options (unlisted)
Category
holding)
(size
of
Number of
Shareholders
Number of
Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
185
201
71
165
56
678
76,082
494,246
545,159
5,670,848
51,196,790
57,983,125
Number of
option
holders
-
-
-
1
9
10
Number of
options
-
-
-
75,000
14,375,000
14,450,000
(b) Number of Shareholders with Less than a Marketable Parcel
85
(c) Voting Rights
The Company is incorporated under the legal jurisdiction of England and Wales. To enable companies such as the
Company to have their securities cleared and settled electronically through CHESS, Depositary Instruments called
CHESS Depositary Interests (CDIs) are issued. Each CDI represents one underlying ordinary share in the Company
(Share). The main difference between holding CDIs and Shares is that CDI holders hold the beneficial ownership in the
Shares instead of legal title. CHESS Depositary Nominees Pty Limited (CDN), a subsidiary of ASX, holds the legal title to
the underlying Shares.
Pursuant to the ASX Settlement Operating Rules, CDI holders receive all of the economic benefits of actual ownership
of the underlying Shares. CDIs are traded in a manner similar to shares of Australian companies listed on ASX.
CDIs will be held in uncertificated form and settled/transferred through CHESS. No share certificates will be issued to
CDI holders. Each CDI is entitled to one vote when a poll is called, otherwise each member present at a meeting or by
proxy has one vote on a show of hands.
If holders of CDls wish to attend and vote at the Company's general meetings, they will be able to do so. Under the
ASX Listing Rules and the ASX Settlement Operating Rules, the Company as an issuer of CDls must allow CDI holders to
attend any meeting of the holders of Shares unless relevant English law at the time of the meeting prevents CDI holders
from attending those meetings.
In order to vote at such meetings, CDI holders have the following options:
(a) instructing CDN, as the legal owner, to vote the Shares underlying their CDls in a particular manner. A voting
instruction form will be sent to CDI holders with the notice of meeting or proxy statement for the meeting and this
must be completed and returned to the Company's Share Registry prior to the meeting; or
41
(b) informing the Company that they wish to nominate themselves or another person to be appointed as CDN's proxy
with respect to their Shares underlying the CDls for the purposes of attending and voting at the general meeting;
or
(c) converting their CDls into a holding of Shares and voting these at the meeting (however, if thereafter the former
CDI holder wishes to sell their investment on ASX it would be necessary to convert the Shares back to CDls). In
order to vote in person, the conversion must be completed prior to the record date for the meeting. See above
for further information regarding the conversion process.
As holders of CDls will not appear on the Company's share register as the legal holders of the Shares, they will not be
entitled to vote at Shareholder meetings unless one of the above steps is undertaken.
As each CDI represents one Share, a CDI Holder will be entitled to one vote for every CDl they hold.
Proxy forms, CDI voting instruction forms and details of these alternatives will be included in each notice of meeting
sent to CDI holders by the Company.
These voting rights exist only under the ASX Settlement Operating Rules, rather than under the Companies Act 2006
(England and Wales). Since CDN is the legal holder of the applicable Shares and the holders of CDIs are not themselves
the legal holder of their applicable Shares, the holders of CDls do not have any directly enforceable rights under the
Company’s articles of association.
As holders of CDIs will not appear on our share register as the legal holders of shares of ordinary shares they will not
be entitled to vote at our shareholder meetings unless one of the above steps is undertaken.
(d) 20 Largest Shareholders as at 2 March 2020
Shareholder
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Portfolio Design Group
Ditch Enterprises Pty Ltd
Flue Holdings Pty Ltd
Mr Jay Evan Dale Hughes
Battle Mountain Pty Limited
BNP Paribas Nominees Pty Ltd
Primorus Investments Plc
Bruce Garlick Superannuation Pty Ltd
Torlok Pty Ltd
No.
1
2
3
4
5
6
7
8
9
10
11
12
13 Ocean View WA Pty Ltd
14
15
16
17
18
19 Mrs Hilary Somerville Statham
20 Mr Hamish Harris
Golden Triangle Capital Pty Ltd
Pershing Nominees Pty Ltd
Kobia Holdings Pty Ltd
Troca Enterprises Pty Ltd
Alexander Holdings (WA) Pty Ltd
CDIs
%
7,075,646 12.20
6,028,539 10.40
5.30
3,075,610
4.62
2,677,999
4.34
2,515,159
3.97
2,300,000
3.97
2,300,000
3.67
2,125,817
3.56
2,064,826
2.02
1,169,550
2.00
1,160,138
1.88
1,089,926
1.73
1,000,000
1.64
950,000
1.60
924,739
1.40
813,000
1.40
811,414
1.38
800,000
1.29
750,000
1.29
750,000
40,382,363 69.64
(e) Substantial Shareholders as at 2 March 2020
To the best of Doriemus’ knowledge, the names of all Substantial Holders and the number of equity securities in which
each Substantial Holder has a relevant interest (within the meaning of section 608 of the Corporations Act) is as follows:
No.
1
2
3
Shareholder
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
CDIs
%
7,075,646 14.93
6,028,539 12.72
6.49
3,075,610
16,179,795 34.14
42
2.
Name of Joint Company Secretaries
Donald Strang and Jessamyn Lyons
3.
Principal Registered Offices
Australia
Suite 12, Level 1
11 Ventnor Avenue
West Perth WA 6005
Telephone +61 (0) 6245 2050
United Kingdom
Suite 3B Princes House
38 Jermyn Street
London
SW1Y 6DN
Telephone +44 (0) 207 440 0642
4.
Registers of Securities
The Company operates a certificated principal register of Shares in the UK branch and an uncertificated issuer sponsored
sub-register of CDIs and an uncertificated CHESS sub-register of CDIs in Australia.
The Company’s uncertificated issuer sponsored sub-register of CDIs and uncertificated CHESS sub-register of CDIs is
maintained by Computershare as per the below. The branch register is the register of the legal title (and will reflect legal
ownership by CDN of the Shares underlying the CDIs with the Shares held by CDN recorded on the branch register of Shares
in Australia). The two uncertificated sub-registers of CDIs combined make up the register of beneficial title of the Shares
underlying the CDIs.
The Register of Securities is held at:
Australia
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
PERTH WA 6000
Telephone number: +61 (0) 9323 2000
United Kingdom
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol, BS99 6ZZ
United Kingdom
Telephone number: +44 (0) 370 703 6300
5.
Securities Exchange Listing
Quotation has been granted for all the CDIs of the Company on the Australian Securities Exchange Limited.
The Company is not listed on any other exchange.
43
6.
Unquoted Securities
Doriemus has 14,450,000 options on issue, which are exercisable over 14,450,000 ordinary shares as follows:
Grant date
Expiry date
11 May 2017
24 May 2017
29 September 2017
29 September 2017
30 June 2021
30 June 2021
28 September 2021
28 September 2022
Exercise
price
£
0.20
0.132
0.1917
0.1917
Total
Outstanding as at
31 December 2019
Number
75,000
1,250,000
2,000,000
11,125,000
14,450,000
No single person holds 20% or more of the equity securities in an unquoted class.
7.
Restricted Securities
There are no restricted securities on issue.
8.
Use of Funds
We have used the cash (and assets in a form readily convertible to cash) that we had at the time of admission to the ASX
in a manner that is generally consistent with our stated business objectives (as described in the Australian prospectus
lodged with the Australian Securities and Investments Commission with respect to our IPO) from the time of our admission
to the ASX through to December 31, 2019, in that Doriemus has mostly applied these funds to the work programmes in
connection with its UK assets (in accordance with its contractual arrangements with the operator of these assets) and as
otherwise required for general working capital
9.
On Market Buy-Back
There is no current on-market buy-back of our securities.
10.
Section 611 (7) Corporations Act
There are no issues of securities approved for the purposes of Item 7 of section 611 of the Corporations Act which have
not yet been completed.
11.
Place of Incorporation
Doriemus is incorporated in the jurisdiction of England and Wales with company number 03877125.
Doriemus is registered as a foreign company in Australia with registered number 619 213 437.
12.
Corporate Governance Statement
Doriemus PLC is committed to high standards of corporate governance. The Company is listed on the Australian Securities
Exchange (“ASX”) and advise that copy of our corporate governance section of the Company’s website www.
Doriemus.co.uk (together with the various Corporate Governance policies of the Company). This corporate governance
statement relates to the financial year ended 31 December 2019, and has been approved by the Board.
A Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by the
ASX Corporate Governance Council in its publication ‘Corporate Governance Principles and Recommendations (4th Edition)’
(Recommendations). The Recommendations are not mandatory, however, the Recommendations that will not be followed
have been identified and reasons have been provided for not following them.
As a company registered in England and Wales, the Company is not required to comply with the provisions of the
Governance Code or the Corporate Governance Code for Small and Mid-Size Quoted Companies 2013 published by the
Quoted Companies Alliance. However, the Board recognises the importance of sound corporate governance and intends
that the Company will comply with the provisions of the Governance Code, the QCA Guidelines and the ASX Corporate
Governance Principles and Recommendations insofar as they are appropriate given the Company’s size and stage of
development.
44
A summary of the key risks for the Company are set out below.
Communication with shareholders
The Board recognises it is accountable to shareholders for the performance and activities of the Company.
The 2020 Annual General Meeting of the Company will provide an opportunity for the Chairman to present to the
shareholders a report on current operations and developments and enable the shareholders to express their views about
the Company's business.
The Board
The Board of Doriemus PLC currently consists of two Non-Executive Directors and one Executive Director (Technical). The
composition of the Board ensures no one individual or group of persons dominates the decision making process.
The Board is responsible to the shareholders for setting the direction of the Company through the establishment of
strategic objectives and key policies. The Board meets on a regular basis and considers the strategic direction, approves
major capital expenditure, and any other matters having a material effect on the Company. Presentations are made to the
Board on the activities and both the Executive and Non-Executive Directors undertake visits to operations.
All Directors have access to management, including the Company Secretaries, and to such information as is needed to carry
out their duties and responsibilities fully and effectively.
The composition and tenure of the Board as of 31 December 2019, as well as each member’s independence status during
2019, was as follows:
Audit & Risk
Committee
Remuneration
& Nomination
Committee
x
x
x
Chair
Director
Director Position
Tenure1
Independence
Yes
No
No
No
No
Keith Coughlan2 Executive Chairman
Donald Strang
Finance
Executive
Director
Executive Technical
Director
Former
Chairman
Executive
0.5 years
6.5 years
2.3 years
3 years
Greg Lee
David Lenigas3
Hamish Harris4 Non-executive Director
5.5 years
NOTES:
1 – Calculated as of 31 December 2019.
2 – Mr Coughlan was appointed to the board on 19 June 2019.
2 – Mr Lenigas resigned from the board on 19 June 2019.
3 – Mr Harris resigned from the board on 16 July 2019.
13.
Takeover regulations
Doriemus plc is not subject to Chapters 6, 6A, 6B or 6C of the Corporations Act 2001 (Cth), or Corporations Act, dealing with the
acquisitions of shares (including substantial shareholdings and takeovers). Chapters 6, 6A, 6B and 6C of the Corporations Act
dealing with the acquisition of shares (including acquisitions and takeovers) does not apply to the Company given it is incorporated
in England and Wales. Instead the Company is subject to the application of the City Code on Takeovers and Mergers in the UK (the
“City Code”) and further detailed below.
Mandatory bid
The Company is subject to the application of the City Code. Under Rule 9 of the City Code, any person who acquires an interest in
shares which, taken together with shares in which he or persons acting in concert with him are interested, carry 30% or more of
the voting rights in the Company will normally be required to make a general offer to all the remaining shareholders to acquire
their shares. Similarly, when any person or persons acting in concert is interested in shares which in aggregate carry 30% of the
voting rights of the Company but which do not carry more than 50% of the voting rights in the Company, a general offer will
normally be required to be made if he or any person acting in concert with him acquires an interest in any other shares in the
Company. An offer under Rule 9 must be in cash, normally at the highest price paid within the preceding 12 months for any interest
in shares of the same class acquired in the Company by the person required to make the offer or any person acting in concert with
him
45
Squeeze-out
Under the Companies Act 2006 (England and Wales), if an offeror were to make an offer to acquire all of the shares in the Company
not already owned by it and were to acquire 90% of the shares to which such offer related it could then compulsorily acquire the
remaining 10%. The offeror would do so by sending a notice to outstanding members telling them that it will compulsorily acquire
their shares and then, six weeks later, it would deliver a transfer of the outstanding shares in its favour to the Company which
would execute the transfers on behalf of the relevant members, and pay the consideration to the Company which would hold the
consideration on trust for outstanding members. The consideration offered to the members whose shares are compulsorily
acquired under this procedure must, in general, be the same as the consideration that was available under the original offer unless
a member can show that the offer value is unfair.
Sell-out
The Companies Act 2006 (England and Wales) also gives minority members a right to be bought out in certain circumstances by
an offeror who has made a takeover offer. If a takeover offer related to all the shares in the Company and, at any time before the
end of the period within which the offer could be accepted, the offeror held or had agreed to acquire not less than 90% of the
shares, any holder of shares to which the offer related who had not accepted the offer could by a written communication to the
offeror require it to acquire those shares. The offeror would be required to give any member notice of his/her right to be bought
out within one month of that right arising. The offeror may impose a time limit on the rights of minority members to be bought
out, but that period cannot end less than three months after the end of the acceptance period or, if later, three months from the
date on which notice is served on members notifying them of their sell-out rights. If a member exercises his/her rights, the offerors
are entitled and bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.
14.
Key risks**
Our business faces many risks. We believe the risks described below are the material risks that we face. However, the risks
described below may not be the only risks that we face. Additional unknown risks or risks that we currently consider immaterial,
may also impair our business operations. If any of the events or circumstances described below actually occur, our business,
financial condition or results of operations could suffer, and the trading price of our Shares / CDIs could decline significantly. The
board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound.
There can be no guarantee that the Company will deliver on its business strategy, that the Company will generate any revenue.
Investors should note that past performance is not a reliable indicator of future performance. If any of the risks referred to in this
annual report were to occur, the results of operations, financial condition and prospects of the Company could be materially
adversely affected. If that were to be the case, the trading price of the options and the underlying CDIs and/or the level of dividends
or distributions (if any) received from the CDIs could decline significantly.
The risks referred to below are not to be taken as exhaustive. Where relevant, the risks below assume completion of the Offer has
occurred. The specific risks considered below and other risks and uncertainties not currently known to the Company, or that are
currently considered immaterial, may materially and adversely affect the Company’s business operations, its financial
performance and the value and market price of its shares and or underlying CDIs.
General risks
A summary of the major general risks is set out below.
(a)
(b)
Trading Price of Shares and CDIs -The Company’s operating results, economic and financial prospects and other
factors will affect the trading price of its shares and CDIs. In addition, factors that in the future may impact
specifically on the share prices of listed companies identified as being part of or involved in the oil and gas sector
may impact likewise on the price of the Company’s securities. In particular, the share / CDI prices for many
companies including Doriemus, have been and may in the future be highly volatile, which in many cases may
reflect a diverse range of non-company specific influences such as global hostilities and tensions relating to
certain unstable regions of the world, acts of terrorism and the general state of the global economy and trading
on the market. No assurances can be made that the Company’s market performance will not be adversely
affected by any such market fluctuations or factors.
Political conditions and government regulations - Although political conditions in the UK and Australia are
generally stable (See risk factor ‘Withdrawal of the UK from the European Union above), changes may occur in
their political, fiscal and legal systems, which might adversely affect the ownership or operation of the
Company’s interests including, inter alia, changes in exchange rates, exchange control regulations, expropriation
of oil and gas rights, changes in government and in legislative, fiscal and regulatory regimes. The Company’s
strategy has been formulated in the light of the current regulatory environment and likely future changes.
46
Although the Directors believe that the Company’s activities are currently carried out in accordance with all
applicable rules and regulations, no assurance can be given that new rules, laws and regulations will not be
enacted or that existing or future rules and regulations will not be applied in a manner which could serve to limit
or curtail exploration, production or development of the Company’s business or have an otherwise negative
impact on its activities. Amendments to existing rules, laws and regulations governing the Company’s operations
and activities, or increases in or more stringent enforcement, implementation or interpretation thereof, could
have a material adverse impact on the Company’s business, results of operations and financial condition and its
industry in general in terms of additional compliance costs.
Withdrawal of the UK from the European Union - A Following the British government’s decision to invoke Article
50 on 29 March 2017 (and consequent changes to the exit date) the UK left the European Union (EU) on 31
January 2020 (Brexit). At this stage, the nature of the future relationship between the UK and the remaining EU
countries following Brexit has yet to be agreed and negotiations with the EU on the terms of Brexit have
demonstrated the difficulties that exist in reaching such an agreement. Depending on the terms of the
negotiations, the UK could also lose access to the single EU market and to the global trade deals negotiated by
the EU on behalf of its members. Such a decline in trade could have a detrimental impact on economic growth
in the country. Furthermore, regardless of the form of any withdrawal agreement, there are likely to be changes
in the legal rights and obligations of commercial parties across all industries following Brexit, and British
regulatory requirements once outside the EU could be subject to significant change. The UK’s current main
trade partners are members of the EU single market and the effect of the UK’s exit may prove to be a barrier to
trade or determine that trade is less favourable for the UK which could lose the automatic benefit of access to
the EU single market and EU free trade agreements. Currency rates including Pounds Sterling (which is the
Company’s functional currency) and the euro were volatile prior to and immediately after the referendum and
may remain volatile during the exit negotiations which may increase the Company’s investment and portfolio
risk. Brexit may also make it more difficult for the Company to acquire or access funds for investment on
acceptable terms whilst the exit negotiations may create uncertainty and further risk which could affect the
Company’s investment strategy (including its exit from its UK investments). A material amount of UK law is based
on EU law including significant parts of the financial services legislation. Subject to the exit negotiations, the
Company may be required to adopt other measures which could increase its costs and adversely affect its
investment strategyreferendu
Commodity prices - Historically, commodity prices have fluctuated and are affected by numerous factors beyond
the Company’s control, including global demand and supply, weather conditions, the price and availability of
alternative fuels, actions taken by governments and international cartels, the cost of freight, international
economic trends, currency exchange fluctuations, expectations for inflation, speculative activity, consumption
patterns and global or regional political events. The aggregate effect of these factors is impossible to predict.
Fluctuations in commodity prices, over the long term, may adversely impact the returns from the Company’s
investments. International oil and gas prices have fluctuated widely in recent years and may continue to fluctuate
significantly in the future. Sustained downward movements in oil and gas prices could render less economic, or
wholly uneconomic, some or all of the exploration and the existing, and potential future, oil production related
activities to be undertaken in respect of those assets in which the Company has an interest. Any material decline
in oil and gas prices could result in a reduction of the Company’s net production revenue and overall value. The
economics of producing from some wells may change as a result of lower prices, which could result in a reduction
in the volumes produced from the Company’s assets. The operators and other owners of the assets in which the
Company holds interests might also elect not to produce from certain wells at lower prices. All of these factors
could result in a material decrease in the Company’s net production revenue causing a reduction in its acquisition
and development activities. A substantial material decline in prices from historical average prices could also
reduce the Company’s ability to borrow future funds.
Force majeure events - Events may occur within or outside the UK or Australia that could impact upon the global
and Australian economies, the operations of the Company and the price of the CDIs. These events include but
are not limited to acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour
strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events or occurrences
that can have an adverse effect on the demand for oil and gas products and the Company’s ability to conduct
business.
Greenhouse gas emissions - Many participants in the oil and gas sector are subject to current and planned
legislation in relation to the emission of carbon dioxide, methane, nitrous oxide and other so called “greenhouse
gases”. Failure by the operator of any investments of the Company to comply with existing legislation or any
future legislation could adversely affect the Company’s profitability. Future legislative initiatives designed to
reduce the consumption of hydrocarbons could also have an impact on the ability to market the oil and gas
47
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
produced from the Company’s investments and/or the prices which can be obtained from them. These factors
could have a material adverse effect on the Company’s business, results of operations, financial condition or
prospects.
Technological developments - the operators of the oil and gas licences in which the Company is a participant or
may acquire in the future or the Company itself may not be able to keep pace with technological developments
in the oil and gas industry. The oil industry is characterised by rapid and significant technological advancements
and introductions of new products and services using new technologies. As others use or develop new
technologies, the Company may be placed at a competitive disadvantage, and competitive pressures may force
the operators of the Company’s investments to implement those new technologies at substantial cost.
Material facts or circumstances not revealed in the due diligence process - Prior to making or proposing any
investment, the Company will undertake legal, financial and commercial due diligence on potential investments
to a level considered reasonable and appropriate by the Company on a case by case basis. However, these efforts
may not reveal all material facts or circumstances that would have a material adverse effect upon the value of
the investment. In undertaking due diligence, the Company will need to utilise its own resources and may be
required to rely upon third parties to conduct certain aspects of the due diligence process. Further, the Company
may not have the ability to review all documents relating to the proposed investee company and assets. Any due
diligence process involves subjective analysis and there can be no assurance that due diligence will reveal all
material issues related to a potential investment. Any failure to reveal all material facts or circumstances relating
to a potential investment may have a material adverse effect on the business, financial condition, results of
operations and prospects of the Company.
Currency and foreign exchange - The Company’s business may be carried out in the future in currencies other
than Pounds Sterling. Principal operations are expected to involve transactions in either Pounds Sterling or US
dollars. To the extent that there are fluctuations in exchange rates, this may have an impact on the figures
consolidated in the Company’s accounts, which could have a material impact on the Company’s financial position
or result of operations, as shown in the Company’s accounts going forward. The proceeds of the Offer will be
received in Australian dollars, while the Company’s functional currency is Pounds Sterling. As the Company is not
currently hedging against exchange rate fluctuations it will be at risk of any adverse movement in the Pounds
Sterling-Australian dollar exchange rate between the pricing of the Offer and the closing of the Offer.
Trading - The price at which the CDIs may trade and the price which investors may realise for their CDIs will be
influenced by a large number of factors, some specific to the Company and some which may affect quoted
companies generally. These factors could include the performance of the Company’s operations, large purchases
or sales of Shares or CDIs, liquidity (or absence of liquidity) in its Shares or CDIs, currency fluctuations, legislative
or regulatory changes (including changes in the tax regime in the jurisdiction in which the Company or its
investments operate), additions or departures of key personnel at the Company, adverse press, newspaper and
other media reports and general economic conditions. In addition, stock markets from time to time suffer
significant price and volume fluctuations that affect the market price for securities and which may be unrelated
to the Company’s performance. The value of the CDIs may therefore fluctuate and may not reflect their
underlying asset value.
Forward looking statements - This annual report contains forward-looking statements that involve risks and
uncertainties. The Company’s results could differ materially from those anticipated in the forward-looking
statements as a result of many factors, including the risks faced by the Company, which are described above and
elsewhere. Additional risks and uncertainties not currently known to the Directors may also have an adverse
effect on the Company’s business.
Force Majeure events – Force majeure events may occur within or outside the countries in which the Company
operates that could impact upon the operations of the Company and the price of the Shares CDIs. The events
include but are not limited to acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes,
labour strikes, civil wars, natural disasters, outbreaks of disease, pandemic or other natural or man-made events
or occurrences that can have an adverse effect on the demand for the Group’s services and its ability to conduct
business. The Company has only a limited ability to insure against some of these risks.
Specific Risks
(a)
Early stage development of the Assets - The assets in which the Company has an interest are at an early stage
of development. While the Brockham asset have historically produced oil they do not currently produce oil at
48
(b)
(c)
(d)
income generating levels and there can be no assurance that the drilling programmes , that are being sought to
be implemented in order to increase production, will be successful. In addition, the other oil and gas interests of
the Company detailed in this annual report are only at the exploration or appraisal stage and there can be no
assurance that they will eventually produce oil to income generating levels. If income generating levels of oil are
not produced from the Company’s assets, the Company’s revenue potential will be materially and adversely
impacted.
Licensing, planning permission and other consents - The development of the Company’s current and future
assets may be dependent on the receipt and maintenance of planning permissions from relevant local authorities
as well as other necessary consents such as environmental permits, leases and regulatory consents including, in
particular, the grant and maintenance of appropriate permissions from, amongst others, the OGA
(Authorisations). The Company is not the operator of any of the licences that it holds interests in. As a result,
obtaining the necessary consents and approvals will be largely dependent on the operators of the licences taking
the necessary actions to obtain such Authorisations. Obtaining such Authorisations may be costly exercises, and
they may not be granted, may be withdrawn, may be challenged by local authorities, third parties and activists,
or made subject to limitations. For example, during March 2017 it was alleged by a local authority that drilling
conducted by the operator of the Brockham oil field was unauthorised in that planning permission was not
obtained. Such allegation has since been refuted by the operator and no further action has been taken to date
by the local authority or any other party, but it is illustrative of the risks that can arise for the Company. Onshore
oil and gas operations in the UK have also recently been subject to extensive planning and environmental
approval procedures, the outcomes of which have often been uncertain. Unforeseen circumstances or
circumstances beyond the control of the Company may also lead to commitments given to licencing authorities
not being discharged on time. The failure by the operators of the licences to gain the necessary Authorisations
on a timely basis or gain them on terms or at a cost acceptable to the Company may limit the Company in its
ability to extract value from its assets and could have a material adverse effect on the Company’s business,
results of operations, financial position and prospects.
No guarantee of success of any drilling programmes and the costs involved may be greater, and the returns
lower, than estimated - The Company will not generate any material income from its asset base fields unless
there is a successful completion of drilling programmes. There is no guarantee that this drilling will be successful
(and the Company notes the issues at the Brockham oil field). These investments also have a limited operating
history upon which to base estimates of proven and probable oil reserves and future cash operating costs. For
early stage projects, estimates of proven and probable oil reserves and cash operating costs are, to a large extent,
based upon the interpretation of geological data and feasibility studies which derive estimates of cash operating
costs based upon anticipated recoveries, expected recovery rates, comparable facility and equipment operating
costs, anticipated climatic conditions and other factors. As a result, it is possible that actual cash operating costs
and economic returns may differ materially from those estimated which may adversely impact the Company’s
financial position, revenue potential and ability to invest in other investments.
Reliance on partners and operators- The Company only has minor interest in tis portfolio of assets and is
accordingly heavily reliant on its partners for the majority portion of the operating and development funding
required to exploit these oil fields. Various other participating parties are also responsible for the payment of
the costs to operate the oil fields. Any failure or delay in the provision of such funding by Angus Energy or the
payment of such costs by any of the other participating parties could cause a material delay in the exploitation
of these oil fields and as a result adversely affect the Company’s ability to implement its stated strategy and
consequentially its financial position and revenue potential. The Operators of these fields are also responsible
for adhering to the work programs in respect of those fields in the form approved by the OGA. A failure to adhere
to such work programs could result in the rescission of the permission by the OGA, which could result in the
Company losing its interest in these licences, which would adversely impact the Company and as a result
adversely affect the Company’s ability to implement its stated strategy and consequentially its financial position
and revenue potential.
49
(e)
Over-run of drilling programme and costs - It may not be possible for the operators of the Company’s assets ,
to adhere to agreed drilling schedules. This may impact the Company as a participant in the fields, and its future
plans. The final determination of whether to drill any scheduled or budgeted wells will depend on a number of
factors including:
(f)
(g)
(h)
(1)
(2)
(3)
(4)
(5)
results of the exploration efforts and the acquisition, review and analysis of seismic data, if any;
availability of sufficient capital resources for the drilling of the prospects;
approval of the prospects by other participants after additional data has been compiled;
economic and industry conditions at the time of drilling, including prevailing and anticipated processes
for oil and natural gas and the availability and prices of drilling rigs and crews; and
availability of leases, licence options, farm-outs, other rights to explore and permits on reasonable terms
for the prospects.
Although the relevant Operators, will at the time identify or budget for drilling prospects, it will require the
approval of all or a requisite majority of the participants in these licences. It may not be possible to drill those
prospects within the expected timeframe, or at all, and the drilling schedule, once agreed, may vary from its
expectations because of future uncertainties and rig availability and access to drilling locations. In addition, there
is a risk that no commercially productive oil or gas reservoirs will be discovered. If any of those circumstances
occur, they would adversely impact the Company’s revenue potential and financial position.
Exploration and development risks - Oil and gas exploration is a speculative investment and involves a high
degree of risk. There is no guarantee that exploration and development of the company’s asset portfolio, the or
any other oil and gas projects or interests that the Company has, or may acquire in the future, can be profitably
exploited. Oil and gas exploration, development and production activities are capital intensive and inherently
uncertain in their outcome. The Company’s projects may involve unprofitable efforts, either from dry wells or
from wells that are productive but do not produce sufficient net revenues to return a profit after development,
operating and other costs. Drilling, developing and operating projects involve a number of risks, many of which
are beyond the control of the Company, which may delay or adversely impact the exploration, development and
production activities that the Company has an interest in.
These delays and potential impacts could result in the activities being delayed or abandoned and substantial
losses could be incurred, all of which could adversely impact the Company. The oil industry historically has also
experienced periods of rapid cost increases. Increases in the cost of exploration, production and development
would affect the Company’s ability to invest in additional assets and also meet its funding obligations in respect
of the assets it has an interest in.
Litigation - From time to time the Company may be involved in litigation, for example, where a contractual
counterparty makes a claim for a loss due to a breach of contract by the Company. This litigation may include,
but is not limited to, contractual claims and employee claims. If a claim is pursued against the Company, the
litigation may adversely impact on the profits and financial performance of the Company. Any claim, whether
successful or not, may adversely impact the Company’s CDI price and/or financial performance.
Development - the Company’s ability to achieve any production, development, operating cost and capital
expenditure estimates in a timely manner cannot be assured. Possible future development of oil and gas
exploration at any of the Company’s projects is subject to a number of risk factors including, but not limited to,
unfavorable geological conditions, failing to receive the necessary approvals from all relevant authorities and
parties, unseasonal weather patterns, unanticipated technical and operational difficulties encountered in
extraction and production activities, mechanical failure of operating plant and equipment, unexpected shortages
or increases in the price of consumables, spare parts and plant and equipment, cost overruns, risk of access to
the required level of funding and contracting risk from any third parties providing essential services. In the event
that the Company commences production, its operations may be disrupted by a variety of risks and hazards
which are beyond its control, including environmental hazards, industrial accidents, technical failures, labour
disputes, unusual or unexpected rock formations, flooding and extended interruptions due to inclement or
hazardous weather conditions and fires, explosions and other accidents. Such occurrences could result in
damage to, or destruction of, production facilities, personal injury or death, environmental damage, delays in
drilling, increased production costs and other monetary losses and possible legal liability to the owner or
operator of a mine. The Company may become subject to liability for pollution or other hazards against which
it has not insured or cannot insure, including those in respect of past drilling activities in an area for which it was
not responsible.
50
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Potential disposal of the Company’s historic UK assets - in the normal course of business of the Company’s
operations, it may become involved in, named as a party to, or be the subject of, various legal proceedings,
including regulatory proceedings, tax proceedings and legal actions, relating to personal injuries, property
damage, property taxes, land rights, the environment and contractual disputes. The outcome of any future
litigation cannot be predicted with certainty. There can be no guarantee that the Company will be able to dispose
of these assets on favourable terms or at all. Should the Company be unable to dispose of these assets any
litigation or dispute in relation to these assets in the future may have a material adverse effect on the Company’s
assets, liabilities, business, financial condition and results of operations.
Oil and natural gas prices volatility - the Company’s prospects and the market price of its quoted securities be
influenced by the price obtained from time to time for oil, natural gas and petroleum products. Oil and gas prices
fluctuate and are affected by numerous factors beyond the control of the Company. These factors include
worldwide and regional supply and demand for oil and gas, forward selling by producers and production cost
levels, general world economic conditions and the outlook for interest rates, inflation and other economic factors
on both a regional and global basis. These factors may have a positive or negative effect on the Company's
exploration, project development and production plans and activities, together with the ability to fund those
plans and activities.
Funding risk - Although the Directors believe that, on completion of the Offer, the Company will have sufficient
working capital to carry out its short term objectives, there can be no assurance that each objective can be met
without further financing, or if further financing is necessary, that financing can be obtained on favourable terms
or at all. In addition, the Company may require capital in addition to the amount being sought in the Offer to
continue exploring and appraising its existing assets following the completion of the existing work program
budgets. As and when further funds are required, either for the existing assets or for acquisitions, the Company
will consider raising additional capital from both the issue of equity securities and/or debt finance if appropriate.
There is no assurance that the Company will be able to access and secure additional funding on reasonable terms
or at all.
Reliance on key personnel - The Company’s success depends in part on the Directors being able to identify
potential investment and/or acquisition opportunities, and to implement the Company’s business strategy. The
loss of the services of any of the Directors could materially and adversely affect the Company. In addition,
although the Company and the Directors will evaluate the risks inherent in a particular investment, they cannot
offer any assurance that a proper discovery, or a complete assessment of all significant risk factors associated
with the investment, can be made.
Resource estimation risk - There are inherent risks in the estimation of contingent resources including the
estimates included in this annual report. There is a risk that such estimations will not convert into reserves or
any actual production may significantly vary from such estimations, which may adversely impact the Company’s
revenue potential and financial position.
Rehabilitation cost risk - In relation to the Company’s historic and future planned exploration programs, issues
could arise with respect to abandonment costs, consequential clean-up costs, environmental concerns and other
liabilities. In most of these instances, the Company could become subject to liability if, for example, there is
environmental pollution or damage from the Company’s exploration activities and there are consequential clean-
up costs at a later point in time. While the Company has received no firm claims or advices, it remains possible
that such claims could arise and could materially adversely affect the financial position and performance of the
Company. Additionally, the Company estimates abandonment and rehabilitation costs based on current
understandings. There is no guarantee that actual costs will not be higher than are currently estimated.
Regulators may also, over time, impose higher standards for these activities which may increase the associated
costs. This may adversely affect the financial position and performance of the Company.
Potential acquisitions - As part of its business strategy, the Company may make acquisitions or significant
investments in which it believes there is scope to improve the underlying value of the Company and to further
its strategic goals. Any such transactions will be accompanied by risks commonly encountered in making such
acquisitions as well as risks such as access to additional capital. There are also inherent risks with acquisitions,
including that the acquired assets do not fulfil the acquisition criteria. Acquisitions may change the Company’s
future capital and operating expenditure requirements, and hence funding requirements. Acquisitions can give
rise to liabilities. It is possible that operational and financial underperformance of the acquired assets including
additional costs and/or liabilities may negatively impact on the financial performance of the Company and
potentially impact member returns.
51
(p)
(q)
Joint venture partners - Financial failure or default by any participant in a joint venture to which the Company
is a party may have a material adverse effect on the Company insofar as it may have to bear that share of the
joint venture costs which would otherwise have been borne by the relevant participant in the joint venture.
The Company will also be required in future to negotiate agreements with additional third parties. These
agreements may include but are not limited to contracts with service providers, product sales agreements, joint
venture agreements, agreements with landowners, access to third party facilities and permit terms with
regulators. If the outcomes of these negotiations are not favourable to the Company then the Company’s
financial performance may be adversely impacted.
Litigation - While the Company currently has no material outstanding litigation or dispute, there can be no
guarantee that the current or future actions of the Company or of the other parties which have interests in the
same assets as the Company will not result in litigation since there have been a number of cases where the rights
and privileges of natural resource companies have been the subject of litigation. The oil and gas industries, as
with all industries, may be subject to legal claims including personal injury claims, both with and without merit,
from time to time. The Directors cannot preclude that such litigation may be brought against the Company or its
assets in the future.
52
OIL AND GAS EXPLORATION ENTITY - RESOURCES REPORT AS AT 31 DECEMBER 2019
1.
DORIEMUS PLC’S UK BASED OIL AND GAS ASSETS AS AT 31 DECEMBER 2019:
DORIEMUS PLC
2.
SUMMARY OF LICENCES AS AT 31 DECEMBER 2019
Asset
Country
Brockham
PL 235
Horse Hill*
PEDL 137
Horse Hill*
PEDL 246
Isle of Wight
PEDL331
GGO
EL 2015/13
GGO
EL 2015/14
UK
UK
UK
UK
Greenland
Greenland
Doriemus
Interest
10% participating interest in PL
235
4%
in HHDL
(representing a 2.6% attributable
interest in PEDL137)
shareholding
Status
Operator
Licence Area
Producing
Angus
8.9km2
Exploration
HHDL
99.3km2
shareholding
4%
in HHDL
(representing a 2.6% attributable
interest in PEDL 246)
5% participating interest in PEDL
331
in GGO
2.82%
(representing a 2.64% interest in
EL 2015/13)
2.82%
in GGO
(representing a 2.64% interest in
EL 2015/14)
shareholding
shareholding
Exploration
HHDL
43.4km2
Exploration
UKOG
199.8km2
Exploration
GGO
2.572 km2
Exploration
GGO
2.923 km2
53
3.
RESERVES AS AT 31 DECEMBER 2019:
Oil Reserves (Developed)
('000 bbl)
Brockham Field PL 235 1
TOTALS
W.I.
10%
Gross
2P
82
82
1P
65
65
3P
92
92
Net to DOR
1P
2P
7
7
8
8
3P
9
9
Notes:
1 Refer to the Doriemus 30 August 2017 Prospectus (Xodus Technical Experts report).
NOTE (Reserves Table):
The reserves in these tables only refer to the reserves estimated by the Independent Technical Experts report(s) on the
conventional oil developments in the Portland Sandstones (Brockham) and the Horsehill Upper Portland. No consideration
has been given to the potential Reserves of the Kimmeridge and Corallian reservoirs in Brockham. Doriemus is of the view
that with the current planned analysis and testing of the wells drilled through the Kimmeridge and other prospective
formations there is the possibility of an upgrade of reserves and contingent resources which will be reported as required.
Xodus Group Ltd. (“Xodus”) reports are performed by a qualified petroleum reserves and resources evaluator (“QPRRE”) as
defined by the rules made by the Australian Securities Exchange (“ASX”).
Xodus provide certified an independent evaluation of the In Place Hydrocarbons and recoverable volumes expected in
accordance with Petroleum Resources Management System (“PRMS”) (2007 and 2011) prepared by the Oil and Gas Reserves
Committee of the Society of Petroleum Engineers (“SPE”) and reviewed and jointly sponsored by the World Petroleum
Council (“WPC”), the American Association of Petroleum Geologists (“AAPG”) and the Society of Petroleum Evaluation
Engineers (“SPEE”). The results of this work have been presented in accordance with the Listing Rules and Guidelines of the
ASX
4.
CONTINGENT RESOURCES AS AT 31 DECEMBER 2019:
Contingent Resources
(‘000 bbl)
Brockham Field PL 235 1
*Horse Hill Upper Portland PEDL 137 2
*Horse Hill Kimmeridge, Oxford, Lias 3
Isle of Wight Arreton Discovery 4
W.I.
10%
2.6%
2.6%
5 %
Gross
1C
89
592
TBC
2C
237
3C
283
1,498
3,629
TBC
TBC
9,900
15,700
24,100
Net to DOR
1C
9
15.4
TBC
500
2C
24
3C
28
38.96
94.36
TBC
790
TBC
1,200
Notes:
1 Refer to the Doriemus 30 August 2017 Prospectus (Xodus Technical Experts report).
2 Refer to UKOG website - Xodus Report Horse Hill Upper Portland Sandstone STOIIP and recoverable Volumes review PEDL 137
dated 6 February 2017.
3 Refer Schlumberger report 4th June 2015 (PEDL 137 & PEDL 246 Horse Hill Licenses), and UKOG and DOR release 26 August
2015.
4 Refer to the Xodus Arreton Discovery - PEDL 331, Onshore Isle of Wight Independent review 27 January 2016 (Technical
Experts report).
* The Company has disposed of 6% of its 10% interest in HHDL and currently only holds a 4% interest in HHDL. The Company
has accordingly reduced its contingent resources for these asset on a pro rata basis with no other adjustments made.
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NOTE (Resources Table):
The resources in these tables only refer to the reserves estimated by the Independent Technical Experts report(s) on the
conventional oil developments in the Portland Sandstones (Brockham) and the Horsehill Upper Portland. No consideration has
been given to the potential Reserves of the Kimmeridge and Corallian reservoirs in Brockham. Doriemus is of the view that
with the current planned analysis and testing of the wells drilled through the Kimmeridge and other prospective formations
there is the possibility of an upgrade of reserves and contingent resources which will be reported as required.
5.
RESERVES AND RESOURCES COMPARISON 31 DECEMBER 2018 vs 31 DECEMBER 2019
The resources as at 31 December 2019 remain the same as 31 December 2018, save for the fact that the Company has disposed
of 6% of its 10% interest in HHDL and currently only holds a 4% interest in HHDL. The Company has accordingly reduced its
contingent resources for these asset on a pro rata basis with no other adjustments made.
6.
DISCOVERED PETROLEUM IN PLACE AS AT 31 DECEMBER 2019:
Gross STOIIP (MMbbl)
Brockham Field (PL 235) 1
Low
1.7
Best
2.8
High
4.3
1 Refer to the Doriemus 30 August 2017 Prospectus (Xodus Technical Experts report).
Note: The Gross STOIIP in this table refer to the estimated by the Xodus Report on the STOIIP (discovered petroleum in
place) in the Portland Sandstones (Brockham).
** As detailed in the Chairman’s Statement in the Annual Report, Doriemus has since 31 December 2018 signed a
binding agreement to dispose of its interest in PL 241 and upon completion it will no longer hold an interest in this asset.
7.
CONTROLS AND AUDIT SYSTEMS
Doriemus does not presently hold operating interests in any of its assets and as a result does not have day to day control
over its assets. However, since obtaining the interests in its relevant assets the Company has worked, and will continue to
work, closely with the relevant operators of our assets as they review resources and reserves over time to ensure these are
updated and / or revised as appropriate.
As has been the case to date, any reserve estimates conducted in the future are likely to be performed by independent
technical expert groups such as McDaniel & Associates Consultants Ltd, RPS Group Plc, Ryder Scott Company, Xodus Group
in other internationally recognised experts in conjunction with both our fields operators experts and our Technical Director,
Mr Gregory Lee.
The Board will ensure the reserve/resources/oil in place reports presented will be in accordance with SPE Petroleum
Resources Management System (“PRMS”) in compliance with the Oil and Gas Reserves Committee of the Society of
Petroleum Engineers (“SPE”), World Petroleum Council (“WPC”), the American Association of Petroleum Geologists
(“AAPG”) and the Society of Petroleum Evaluation Engineers (“SPEE”) when appropriate.
8.
QUALIFIED PETROLEUM RESERVES AND RESOURCES EVALUATOR STATEMENT:
The Resources Statement in this Annual Report is based on, and fairly represents, information and supporting
documentation prepared by, or under the supervision of, a qualified petroleum reserves and resources evaluator. The
Reserves Statement as a whole has been approved by Mr Gregory Lee, who is the Technical Director of the Company. Mr
Lee has more than 30 years' diversified experience in the petroleum industry. Mr Lee is a chartered professional Engineer
(CPEng) and a member of the society of petroleum engineers (MSPE) and has been an independent consultant Petroleum
Engineer since 1992 and has sufficient experience in exploration for, appraisal and development, operations of oil and gas
resources.
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