3D Oil Limited
ABN 40 105 597 279
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Corporate Directory
Board of Directors
Campbell Horsfall (Non-Executive Director and Chairman)
Noel Newell (Executive Managing Director)
Melanie Leydin (Executive Director)
Company Secretary
Melanie J Leydin
Place of Business
Level 5
164 Flinders Lane
Melbourne Victoria 3000
Telephone: 03 9650 9866
Web: www.3doil.com.au
Auditor
William Buck
Chartered Accountants
215 Spring Street
Melbourne Victoria 3000
Share Registry
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford Victoria 3067
Telephone: 03 9415 5000
Stock Exchange Listing
Home Exchange is Melbourne
ASX Code Fully Paid Shares: TDO
ASX Code Partly Paid Shares: TDOCA
Legal Advisors
Baker & McKenzie
Level 39, Rialto 525 Collins Street
Melbourne Victoria 3000
The cover image was provided to 3D Oil Limited by the Energy Geosience Group, GeoScience Victoria.
The assets depicted on pages 1, 2, 3 and 11 are not assets of the company, nor do they represent the
actual drilling rig to be used on the permits of the Company.
3D Oil Limited Annual Report 2007
3D Oil Limited Annual Report 2007
Contents
Heading
i
2
4
10
12
17
18
Corporate Directory
Letter from the Managing Director
Review of Operations
Corporate Governance Statement
Directors’ Report
Independence Declaration
Independent Audit Report
20
Director’s Declaration
21
22
23
24
25
39
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Additional Shareholder information
1
1
Year in brief
3D Oil successfully listed on the Australian Stock
Exchange on May 22, 2007
Two drilling slots for 2008 were secured with the
Seadrill jack-up drilling unit “West Triton” to drill the
West Seahorse-3 appraisal/development well and
an exploration well in Vic/P57
Commencement of feasibility studies for the West
Seahorse development and well planning the West
Seahorse-3 appraisal/development well
Continuing evaluation of the West Seahorse Field
provides encouragement for the commerciality of
the fi eld
A Heads of Agreement was signed with fi ve other
companies to secure a 2D seismic vessel to acquire
2D seismic in the Bass Strait region and enable 3D
Oil to acquire seismic in T41-P
22
2
Heading
Noel Newell
Managing Director
3D Oil took an
aggressive stance to
secure a drilling rig, as
a founding member of
the Bass Strait drilling
consortium, prior to
the company listing
on the ASX.
Letter from the
Managing Director
Dear Shareholders
It is with great pleasure that I am able to
write my fi rst annual report for 3D Oil as an
ASX listed company.
The company has quietly worked behind the
scenes building and evaluating our portfolio to
the point where we now have a most exciting
year ahead of us. It is in this year that the
company will start to realise the value this solid
foundation work has provided.
Most exciting will be the commencement
of the appraisal and development of the West
Seahorse oil fi eld and exploration within
Vic/P57. The company is using the working
capital raised from the IPO in May, 2007 and
the approaching December 2007 call, to fund
the drilling and planning associated with the
West Seahorse fi eld and Sea Lion prospect,
commencement of the feasibility studies
associated with the West Seahorse
development and the acquisition of seismic
in our Tasmanian T41-P permit.
As our activities grow so does our organisation
with an expansion of our skill base to explore,
appraise and develop our assets with world
class practitioners in their disciplines.
While the continuing high oil price has provided
record profi ts for producers it also has created
a challenging environment for explorers and
developers. One negative effect has been the
increase in demand for and cost of drill rigs,
associated materials and seismic acquisition
vessels. While this may subside in the medium
term, primarily resulting from newly built rigs
coming into the market to meet this new
demand, virtually all upstream companies are
experiencing delays and increased costs in
their work programs. 3D Oil is not immune
from cost increases, but we are rigorously
managing our budgets to minimise any impact.
3D Oil took an aggressive stance to secure a
drilling rig, as a founding member of the Bass
Strait drilling consortium, prior to the company
listing on the ASX. The new build jack-up, West
Triton, was secured earlier in the year. The rig,
currently under construction in Singapore, is
close to completion and is scheduled to arrive
in Victorian waters in early 2008.
The formation of 3D Oil was largely motivated
by a combination of favourable technical and
commercial considerations existing in the
Bass Strait at that time. A further component
to the timing and strategy was a perceived
competitive advantage in knowledge of this
region allowing us to be ahead of the pack.
3D Oil Limited Annual Report 2007
3
I believe that in both the Gippsland and
Bass basins we have demonstrated perfect
implementation of this strategy. The Vic/P57
and T41-P permits were acquired immediately
prior to the ‘pack’ arriving and secured with
modest work commitments relative to
more recent programs. Furthermore, the
Vic/P57 permit contained an existing oil
fi eld overlooked by the industry.
This strategy has allowed 3D Oil to be in very
strong position relative to most of the new
entrants and even many long term players. We
currently have a potentially commercial oil fi eld,
an array of quality prospects delineated by
3D seismic within the prolifi c Gippsland basin
and a promising lead inventory in the rapidly
emerging Bass basin and all at 100%.
The acquisition of the West Seahorse oilfi eld
was no accident; early production at low entry
price, was always a key part of our strategy.
The high oil price environment and the need
for many producers to secure reserves
replacement has resulted in an increasing level
of transactions for oil assets. Recent examples
include Anzon’s Basker Manta project, Nexus’
Crux project and Wandoo’s interests in the Cliff
Head, BassGas and Wandoo projects. The high
prices paid puts our ground fl oor acquisition of
an oil fi eld in a highly favourable context.
With the drilling of West Seahorse fi eld in the
New Year, we are confi dent we will increase our
reserves base. 3D Oil’s continuing evaluation
of the fi eld has been extremely encouraging
to date.
With the confi rmation of the reserves base and
ultimately the demonstration of a very positive
NPV for the fi eld, we will be able to explore a
number of funding options for the development.
This will allow us to minimise the potential for
share dilution, building value for our existing
shareholders.
The West Seahorse-3 well is expected to be
suspended as a future producer to allow rapid
and cost effective development of the fi eld
following the planning, approvals and fi nancing
stage. 3D Oil is currently exploring the options
for the most effi cient and speedy method
to bring this oil to market. These include the
stand alone development, highlighted in our
prospectus and we are currently undertaking
a high level review of the onshore in relation
to the placement of pipelines and processing
plant. At the same time we will continue to
actively explore other development options.
Most exciting will be the
commencement of the
appraisal and development
of the West Seahorse
oil fi eld and exploration
within Vic/P57.
While 3D Oil is developing its ability as an
operator, the commercialisation of West
Seahorse is comparatively uncomplicated as
an offshore development and I believe it is
not unreasonable to expect fi rst oil production
by 2010.
Exploration will remain the company’s primary
mechanism for organic growth and value
creation.
Vic/P57 is 750 km2 in area with almost 70%
coverage of 3D seismic. Further, it is relative
unexplored with only four wells drilled in total
and none located with 3D seismic. At the time
of listing, the company illustrated a number
of the prospects and leads. Since then the
company has undertaken further detailed
evaluation of the seismic to both fi rm and add
to this inventory.
3D Oil sees the future potential of Vic/P57 as
outstanding with this increasing portfolio of
quality prospects. These have the potential to
be commercialised quickly as add-ons to the
West Seahorse development.
Our current evaluation indicates the Sea Lion
prospect to be the most favourable exploration
candidate for this coming drilling campaign.
It has very strong analogies with existing
discoveries such as West Seahorse and
Seahorse while being located between the
former and shore. As a discovery it could be
added to the West Seahorse discovery for
a relatively minor increase in capital
expenditure. For this reason even a small
discovery could be commercialised.
Our decision to bid on T41-P, at a time when
the industry was largely ambivalent in relation
to the Bass basin, has recently been vindicated
with a high level of bids and farm-in activity.
Earlier this year a Tap Oil Ltd led consortium
acquired a contiguous permit with a two well
and 3D seismic bid while Beach Petroleum has
farmed into two neighbouring permits with a
full carry on a well in each.
This increase in activity in the basin is based
on a rapidly changing industry perception
of its prospectivity underlined by the
commercialisation of the Yolla oil and gas fi eld
in recent years.
In the coming months we will undertake a
2D seismic survey within T41-P to further
delineate and, hopefully, extend our current
lead inventory. The permit is both large and
relatively unexplored; however leads such
as Dalrymple provide signifi cant comfort to
prospectivity of this region.
One of my key objectives in the short term is
to strive to minimize the issue of new equity
and to provide existing shareholders with
maximum leverage through the coming
exploration program. To this end the company
has commenced discussions with several
lending institutions to explore funding options
for the development of West Seahorse.
Following a modest beginning I believe the
next year will see 3D Oil rapidly emerge into
mid-cap oil developer. The year will bring to
fruition the solid behind scenes work carried
out over the last few years and I am confi dent
this will translate into a signifi cant increase
to shareholder value. I look forward to your
support through this most exciting year.
Yours sincerely
Noel Newell
Managing Director
4
3D Oil Limited Annual Report 2007
Review of Operations
During the year, 3D Oil has concentrated its
efforts on the following activities in its two
exploration permits:
Vic/P57
– West Seahorse technical review
– West Seahorse development and planning
– Exploration review
T41-P
– Technical review
Vic/P57 Wells and fi elds
Vic/P57, Gippsland Basin Offshore
Victoria
West Seahorse Technical Review
The discovery of oil in the West Seahorse
structure in 1981 by Hudbay Oil Australia
Limited followed the oil discovery in the
neighbouring Seahorse Field by Esso in
1978. The well intersected 3 separate oil
accumulations with a potential fourth untested.
The uppermost zone, within the top of Latrobe
Group, fl owed 1800 bopd through a half inch
choke. The oil is mildly biodegraded, paraffi nic
with a low gas oil ratio. The follow-up well,
West Seahorse-2, only recovered a small
quantity of oil from an RFT in the uppermost
sand in the Latrobe Group but provided an
indication of controls of reservoir continuity.
Prior to the acquisition of the Northern Margin
3D seismic Prior to the acquisition of the
Northern Margin 3D seismic survey the West
Seahorse fi eld was defi ned by a broad grid
of 2D seismic dating from the seventies and
eighties. The data constrained the feature
poorly and suggested that it was appreciably
smaller than the Seahorse fi eld. The Northern
Margin 3D seismic has provided much
improved imaging of the fi eld as well as high
density velocity data for depth conversion. The
current interpretation of the West Seahorse
fi eld shows it to be substantially larger than
interpreted by previous operators. Furthermore
the West Seahorse-2 well appears to be
located on the edge of the fi eld, suggesting
that larger hydrocarbon intersections might
be encountered higher on the structure. The
neighbouring Seahorse fi eld has produced oil
since 1990/1991 through a subsea completion
connected to the Barracouta platform. A
recent workover of the Seahorse-1 well (2005)
resulted in the well’s return to production at
4000 bopd following a period of declining oil
production.
The oil is a light (48° API) paraffi nic crude
which has undergone mild biodegradation
resulting in a low gas to oil ratio. Two deeper
oil zones were confi rmed by pressure testing
of the well while a fourth zone is indicated by
electric logs. Reserve estimates for the West
Seahorse fi eld, of which approximately 85%
is within VIC/P57, currently range from 2.9
MMstb (P1) to 9.2 MMstb (P3). In addition the
Contingent Resource estimate for the fi eld is
4.5 MMstb (best estimate).
The current interpretation
of the West Seahorse
fi eld shows it to be
substantially larger than
interpreted by previous
operators.
3D Oil Limited Annual Report 2007
5
3D image of the West Seahorse Field
3D Oil will continue
to actively explore
other development
options most notably
the potential to tie in to
existing facilities.
Over the last 12 months, a technical review of
the fi eld has been conducted, including detailed
analysis of the well data and mapping of the
3D seismic data. Particular attention has been
paid to depth conversion, as this area is prone
to signifi cant velocity anomalies in the shallow
carbonate sediments. These studies are
close to completion and will be the subject of
pending press releases. The results to date are
encouraging and the technical team considers
that they have made signifi cant improvements in
their understanding of the West Seahorse fi eld.
West Seahorse Development and Planning
3D Oil has commenced initial engineering
studies for the West Seahorse fi eld
development. As per the prospectus, the fi eld
is planned to be developed on a stand alone
basis with a wellhead platform, pipeline to
shore and an onshore processing plant.
3D Oil has awarded a contract for the Onshore
Planning Criteria which includes:
• Identifi cation of all government permit and
regulatory requirements. This includes
Federal and State and Local requirements.
• Identifi cation of potential onshore plant
sites, onshore pipeline routes and pipeline
shore crossings.
Ultimately our objective
is to deliver fi rst oil
with the shortest lead
time and least capital
expenditure.
3D Oil is currently planning the award of an
engineering study for pipeline installation and
shore crossing engineering. This will review the
offshore engineering requirements for the
pipeline design. This will include a review of
both bottom towed and barge installed
pipelines for the West Seahorse development.
In conjunction with the planned drilling
program, the number of wells to be drilled
for West Seahorse, both for the forthcoming
drilling program and possible future
requirements, is being assessed. This includes
the method of suspending the planned
appraisal well and how to re-complete the
well once the wellhead platform is installed. A
review of installing the wellhead platform with
a jack up drill rig is also being considered.
6
3D Oil Limited Annual Report 2007
Review of Operations continued
The work has confi rmed
the prospectivity of the
permit and a portfolio of
high quality prospects is
being compiled, which
will provide drilling
candidates for future
campaigns.
Project Operations
The Company has signed a Drilling Services
Agreement with Australian Drilling Associates
(ADA), a drilling service provider and paid a
deposit secured two drilling slots with the
Seadrill jack-up “West Triton”. The West Triton
is a new build jackup drilling unit, which is
due to arrive in the Gippsland basin in the
fi rst quarter 2008 to drill several wells for a
number of operators in the vicinity.
Site surveys for the West Seahorse-3 and
Sea Lion-1 locations have been carried out
to ensure that the sea bed conditions are
suitable for drilling and that there is no shallow
gas. Planning for the wells is at an advanced
stage.
The West Triton Jack-up drilling rig
under construction in Singapore
E
Exploration Review
VIC/P57 is a large permit of approximately
750 km2 in extent located in the NW of the
offshore Gippsland basin. It contains the West
Seahorse oil fi eld, located approximately
2 kilometres to the west of the producing
Seahorse fi eld. West Seahorse-1, drilled in
1981, fl owed 1800 bopd, constrained by a half
inch choke.
VIC/P57 is fl anked to the south by several oil
and gas fi elds including the giant Barracouta
and Snapper gas fi elds. These are located on a
large regional anticline, which is interpreted to
shield the VIC/P57 region from signifi cant gas
charge. Consequently it is unlikely that any oil
accumulations in VIC/P57 will have been
displaced by gas. Other oil and gas fi elds
fl anking the permit include Golden Beach,
Mulloway/Whiptail, Seahorse, Wirrah,
Whiting, Emperor and Sweetlips. Four recent
wells have intersected hydrocarbons in areas
adjacent to VIC/P57: Longtom-2 and 3,
Grayling-1 and West Moonfi sh-1. All were
located from mapping of Esso’s Northern
Margin 3D seismic survey. The non-commercial
but historically important Lakes Entrance oil
fi eld is located immediately onshore from the
northeast corner of the permit.
The permit is lightly drilled, containing only
four exploration wells with only one drilled in
the previous 25 years. Approximately 70% of
VIC/P57 has been surveyed by the recently
acquired Esso Northern Margin 3D seismic
while the remainder is covered by reprocessed
2D seismic. To date, no wells have been
located in the permit using 3D seismic.
Over the last 12 months, the entire permit
has been mapped, incorporating the Northern
Margin 3D seismic data. The purpose of
the study has been to identify prospective
features to evaluate and incorporate in the
prospect inventory. The work has confi rmed
the prospectivity of the permit and a portfolio
of high quality prospects is being compiled,
which will provide drilling candidates for future
campaigns. Two of these prospects
are described below;
Sea Lion Prospect
Sea Lion is a northwest-southeast inversion
anticline 7 km west-north-west from the West
Seahorse fi eld. It is located adjacent to, and on
the basin-ward side of the Rosedale-Seahorse
fault. There is also a northern component to
the prospect, North Sea Lion, formed from a
splay from the Rosedale fault. The exploration
potential in the Sea Lion prospect provides
best estimate unrisked Prospective Resources
of 20.7 MMstb.
Felix Prospect
The Felix prospect is an inversion structure
on the basinward side of the Seahorse fault and
on trend with the Moonfi sh and Wirrah fi elds.
Closure is mapped over three reservoir levels
and increases with depth. The neighbouring
Moonfi sh Field intersected 5 hydrocarbon zones;
three of them oil, and is currently on production
through the Snapper facilities. Felix requires a
little more work to advance it to “drillable” stage.
3D Oil Limited Annual Report 2007
7
Structural elements with
prospects and leads
E-W Seismic line extending
from West Seahorse to the Sea
Lion Prospect
E-W Seismic line extending
from Moonfi sh to the Felix
Prospect
8
3D Oil Limited Annual Report 2007
Review of Operations continued
T41/P, Bass Basin Offshore Tasmania
Technical Review
T41-P covers approximately 2805 km2 in the
eastern Bass basin in water depths generally
less than 90m. The permit has been lightly
explored with only one well, Chat-1, drilled
in 1986. The Chat-1 well, located on a broad
seismic grid, tested a reactivated horst
which demonstrates fault breach along strike.
A residual oil column is interpreted in the
well, suggesting that the trap was originally
hydrocarbon-bearing but subsequently leaked.
Seismic coverage within T41-P is sparse and
consists of data from 6 surveys ranging in
vintage from 1975 to 1990. 1,500km of this
data has been reprocessed and was used for
mapping prior to the award of the permit to
the company.
Since the T41/P permit was awarded in 2005,
activity in the Bass basin has increased and the
basin is now fully permitted. The industry’s
focus on the basin vindicates 3D Oil’s decision
to acquire the permit ahead of its competitors
and provides us with valuable acreage at a
time when competition for quality exploration
opportunities is increasing. Over the next three
years, 13 wells have been scheduled in the
Bass basin and 3D Oil will be closely monitoring
the drilling results as we mature our prospects
towards drillable status.
Bass Basin structural elements with
T41/P location
The industry’s focus
on the basin vindicates
3D Oil’s decision to
acquire the permit
ahead of its competitors
and provides us with
valuable acreage at a
time when competition
for quality exploration
opportunities is
increasing.
Within the Bass basin, hydrocarbon
occurrence appears to be linked to proximity to
depositional troughs. Two previously
unrecognised troughs trending northwest to
southeast, have been identifi ed within T41-P
and it is likely that at least one of these
provided the initial charge into the Chat
structure. Four leads have been identifi ed from
the broad 2D grid but more seismic is required
to mature these to prospect status. Some of
these leads demonstrate little or no late
structural reactivation; interpreted as a key
component to successful Bass basin
exploration.
During the last 12 months, the seismic data
has been mapped and nearby wells have been
reviewed. The results of the work have been
encouraging, confi rming the high probability
of there being an effective petroleum system
operating in the permit. Detailed analysis
of Chat-1 has identifi ed up to 500m of
hydrocarbon shows, which is interpreted to
indicate that the Chat structure contained
hydrocarbons in the past but has subsequently
leaked. The Chat structure is located at the
intersection of two major structural trends
and has undergone a complex deformational
history, resulting in breaching of the trap.
The new leads consist of relatively simple
structures and are considered to have higher
structural and sealing integrity.
3D Oil Limited Annual Report 2007
Lead locations and the grid of
reprocessed seismic data
9
The leads are moderate in size (40 – 140 MB
recoverable) but are defi ned on only regional
seismic data. More data is required to properly
map the leads and mature them as drilling
candidates. 3D Oil has joined a consortium of
local operating companies, which is attempting
to contract a 2D seismic vessel to acquire
seismic data. At the time of writing, the
consortium is close to awarding the contract.
The recent work has confi rmed the Dalrymple
lead as 3D Oil’s highest rated feature.
Dalrymple is tilted fault block trap identifi ed
on three seismic lines. Seismic amplitude
dimming is present on the southernmost line,
consistent with the presence of hydrocarbons
in sandstone reservoir. More seismic data will
be acquired over Dalrymple to improve the
structural defi nition and confi rm the interpreted
direct hydrocarbon indicator (DHI).
Seismic line over Dalrymple, illustrating
the amplitude dimming.
Seismic amplitude
dimming is present
on the southernmost
line, consistent
with the presence
of hydrocarbons in
sandstone reservoir.
10
3D Oil Limited Annual Report 2007
Corporate Governance Statement
The Board of Directors are responsible for
the Corporate Governance practices of the
Company. The Board guides and monitors the
business and affairs of 3D Oil Limited on behalf
of the shareholders by whom they are elected
and to whom they are accountable.
While the company aims to comply with the
ASX Best Practice Recommendations, its
small size and the composition of its Board of
Directors make it inappropriate or impractical
to comply with all the recommendations.
The company currently complies with the
ASX Best Practice Recommendations except
for the following:
• The Board has not specifi cally established a
remuneration committee.
This function is undertaken by the Board as a
whole with compensation arrangements for
Directors and senior executives determined
by the Board on recommendations of
the Chairman and the Directors.
For further information on corporate
governance policies adopted by 3D Oil Limited,
refer to our website www.3doil.com.au.
The Board of Directors
The Board carries out its responsibilities
according to the following mandate:
• The Chairman of the Board should be an
independent Director;
• The Directors should possess a broad range
of skills, qualifi cations and experience; and
• All available information in connection with
items to be discussed at a meeting of the
Board shall be provided to each Director
prior to that meeting.
The primary responsibilities of the Board
include:
• The approval of the annual and half-year
fi nancial statements;
• The establishment of the long term goals of
the Company and strategic plans to achieve
those goals;
• The review and adoption of annual budgets
for the fi nancial performance of the
Company and monitoring the results on a
monthly basis;
• Ensuring that the Company has implemented
adequate systems of internal controls
together with appropriate monitoring of
compliance activities;
• Reviewing Board structure and performance
from time to time and making decisions on
new appointments; and
• The issue of any shares, options, equity
instruments or other securities in the
Company or its subsidiaries.
On the day on which the Directors’ report
is made out the Board consisted of two
Non-Executive Directors. Details of the
Directors are set out in the Directors’ Report.
Risk Management
The board is responsible for the Company’s
systems of internal controls. The Board
constantly monitors the operational and
fi nancial aspects of the Company’s activities
and the Board considers the recommendations
and advice of external auditors and other
external advisers on the operational and
fi nancial risks that face the Company. The
Board ensures that recommendations made
by the external auditors and other external
advisors are investigated and, where
considered necessary, appropriate action is
taken to ensure that the Company has an
appropriate internal control environment in
place to manage the key risks identifi ed.
Code of Conduct
As part of the Board’s commitment to the
higher standard of conduct, the Company
adopts a code of conduct to guide executives
and management in carrying out their duties
and responsibilities in compliance with all
applicable laws and regulations. The code of
conduct covers such matters as:
• Responsibilities to Shareholders;
• Compliance with laws and regulations;
• Relations with customers, suppliers,
competitors and trade practices;
• Ethical responsibilities;
• Employment practices:
– equal opportunity and unlawful
harassment
– safety of the workplace
• Responsibilities to the environment and the
community, and;
• Corporate assets and information:
– Company funds and property
– corporate records and accounting
– confi dential and proprietary information
In addition, the Board investigates ways of
enhancing existing risk management strategies.
– insider trading
– legal disputes
In accordance with the Company’s constitution
and the Corporations Act 2001, Directors
disclose to the Board any material contract in
which they may have interest. In compliance
with Section 195 of the Corporations Act 2001
any Director with a material personal interest
in a matter being considered by the Board
will not be present when the matter is being
considered and will not vote on the matter.
Reappointment of Directors
The Company’s Constitution provides that at
every Annual General Meeting, one-third of
Directors, and Directors appointed since the
most recent Annual General Meeting, shall
retire from offi ce and, being eligible, may stand
for re-election. All vacant directorships may be
fi lled at the meeting.
Board Committees
Given the nature of the Company’s current
operations and the size of the Board, there is
no remuneration or nomination committee.
The functions of these types of committees
are performed by the Board of Directors as
a whole.
Audit and Risk Management Committee
The current members of the committee are:
• C Horsfall
• I Gorman
The committee is responsible for risk
management and oversight of the Company’s
fi nancial reporting policies and other
operational risk areas.
Furthermore, the committee monitors
the internal controls and the integrity of
the Company’s fi nancial statements in
compliance with the regulatory requirements.
The committee is also responsible for the
appointment, evaluation and oversight of
the external auditor, ensuring that the
independence of the external assurance
function is maintained.
3D Oil Limited Annual Report 2007
11
11
Shareholders
Shareholders play an integral part in corporate
governance. To give effect to this, the Board
ensures that Shareholders are kept fully
informed through:
– the Annual Report which is distributed to
all Shareholders;
– disclosures made to the Australian Stock
Exchange; and
– notices and explanatory memoranda of
extraordinary and general meetings.
Shareholders may raise matters of concern
at General Meetings and have the ultimate
control in corporate governance as they vote
for the members of the Board, the Company’s
governing body.
Independent Professional Advice
With the prior approval of the Chairman, each
Director has the right to seek independent legal
and other professional advice at the Company’s
expense concerning any aspect of the
Company’s operations or undertakings in order
to fulfi l their duties and responsibilities
as Directors.
Review of Corporate Governance
The Company’s corporate governance
practices, Board and committee operations
are subject to annual review and revision as
required, and to performance assessment
collectively and individually, under the direction
of the Chairman.
12
Directors’ Report
3D Oil Limited Annual Report 2007
The Directors of 3D Oil Limited submit herewith
the annual fi nancial report of the Company
for the fi nancial year ended 30 June 2007.
In order to comply with the provisions of the
Corporations Act 2001, the Directors report
as follows:
Directors
The names and details of the Company’s
Directors in offi ce during the fi nancial year
and until the date of this report are as follows.
Directors were in offi ce for this entire period
unless otherwise stated.
Name
Particulars
Mr Campbell Horsfall
Non-Executive Director
Experience
Campbell Horsfall is a solicitor with extensive experience in the petroleum
industry and has held positions as Company Solicitor for BP Australia Ltd, BHP
Petroleum, Japan Australia LNG (MIMI) Pty Ltd and has, until recently, been
General Counsel of Vicpower. Campbell holds Degress in Law and Commerce
from the University of Melbourne and a Diploma from the Securities Institute and
practices as a lawyer in Melbourne.
He has been a director of two public companies and has been a non-executive
director of Orchard Petroleum Limited since May 2002. Orchard Petroleum is listed
on the ASX and focuses exclusively on oil and gas exploration and development
in California’s prolifi c hydrocarbon regions of the Sacramento and
San Joaquin basins.
Directorships in listed entities
Orchard Petroleum Limited
Relevant interests in shares and options Nil ordinary fully paid shares
500,000 options expiring 31 January 2011, exercisable at $0.50.
Mr Noel Newell
Experience
Executive Director
Noel Newell holds a Bachelor of Applied Science and has over 25 years
experience in the oil and gas industry, with 20 years of this time with
BHP Billiton and Petrofi na. With these companies, he has been technically
involved in exploration of areas around the globe, particularly South East Asia,
and all major Australian offshore basins. Prior to leaving BHP Billiton in 2002,
Noel was Principal Geologist, working within the Southern Margin Group and
primarily responsible for exploration within the Gippsland Basin. Noel has a
number of technical publications and has co-authored Best Paper and runner
up Best Paper at the Australian Petroleum Production & Exploration Association
conference and Best Paper at the Western Australian Basins Symposium.
Noel is the founder of 3D Oil. Immediately prior to starting 3D Oil, Noel was a
technical advisor to Nexus Energy Limited and directly involved in their move
to explore in the offshore of the Gippsland Basin.
Directorships in listed entities
Nil
Relevant interests in shares and options 36,661,450 ordinary fully paid shares
4,000,000 options expiring 31 January 2011, exercisable at $0.50
Ms Melanie J Leydin
Experience
Executive Director (appointed 21 September 2007)
and Company Secretary
Ms Leydin is a Chartered Accountant and principal in a chartered accounting fi rm
specialising in audit and company secretarial services. Ms Leydin has 15 years
experience in the accounting profession and is a director and company secretary
for a number of oil and gas, junior mining and exploration entities listed on the
Australian Stock Exchange.
Directorships in listed entities
Jervois Mining Limited
Relevant interests in shares and options Nil ordinary fully paid shares
Nil options expiring 31 January 2011, exercisable at $0.50.
3D Oil Limited Annual Report 2007
13
Mr Ian Gorman
Experience
Non-Executive Chairman (resigned 21 September 2007)
Ian Gorman as a B/A and M/A (Hons) in Physics from Oxford University, as well
as a Post Graduate Diploma in Management from Deakin University. Ian has
25 years of international oil and gas experience within Shell International and
BHP Billiton in conventional and unconventional oil and gas development. He
has proven leadership in development planning, project start-up and production
operations, together with strategic focus and business planning processes.
He has extensive Australian and international fi eld and basin experience with
exposure to projects in over 20 countries.
He was formerly Global Technical Leader of the coal bed methane business in
BHP Billiton. Prior to this role, he was Manager Petroleum Engineering Australia/
Asia (BHP Billiton) and London. He was responsible for offshore Australian
developments including Jabiru, Challis and Griffi n. He has direct Bass Strait
experience from previous roles in BHP including the discovery of Moonfi sh,
appraisal of Blackback and in-fi eld development of Kingfi sh/West Kingfi sh and the
smaller oil fi elds.
Ian is also currently an executive director of Molopo Australia Limited and, until
recently, was SPE Global Technical Director, Production and Operations. He has
led SPE workshops in marginal fi eld development and CBM development.
Directorships in listed entities
Molopo Australia Limited
Relevant interests in shares and options Nil Shares
1,000,000 Options expiring 31 January 2011 exercisable at $0.50
Dividends
No dividend has been declared or paid during
the fi nancial year and the Directors do not
recommend the payment of any dividend in
respect of the current or preceding fi nancial
years.
Environmental Regulations
The economic entity holds participating
interests in a number of mining and exploration
tenements. The various authorities granting
such tenements require the tenement holder
to comply with the terms of the grant of the
tenement and all directions given to it under
those terms of the tenement. There have
been no known breaches of the tenement
conditions, and no such breaches have been
notifi ed by any government agencies during
the year ended 30 June 2007.
Principal Activities
The principal activities of the Company are the
production and development of upstream oil
and gas.
Changes in State of Affairs
During the fi nancial year the company:
• converted from a private company to a
public company;
Operation Results
The entity’s net loss for the year after
applicable income tax was $1,471,727
(2006: $79,221).
Review of Operations
Refer to the Review of Operations preceding
this Directors’ Report.
Financial Position
The net assets of the entity have increased to
$28,415,886 as at 30 June 2007. The major
movements were due to capital raisings during
the year and expenditure on exploration and
development in oil and gas.
The entity’s working capital, being current
assets less current liabilities was $26,469,670
compared with negative working capital of
$40,010 in 2006.
As a result of the above together with the
events occurring after balance date the
Directors believe the Company is in a strong
and stable position to expand and grow its
current operations.
• raised $27,500,000 through the issue of
110,000,000 shares partly paid to $0.25;
and
• issued further shares and options to seed
capital investors as detailed in Note 14
Future Developments
Disclosure of further information regarding likely
developments in the operations of the entity in
future fi nancial years and the expected results
of those operations is likely
to result in unreasonable prejudice to the entity.
Accordingly, this information has not been
disclosed in this report.
Events Subsequent to Balance Date
There has not been any matter or
circumstance, other than that referred to
in Note 24, that has arisen since the end
of the fi nancial year, that has signifi cantly
affected, or may signifi cantly affect, the
operations of the entity, the results of
those operations, or the state of affairs
of the entity in future fi nancial years.
14
3D Oil Limited Annual Report 2007
Directors’ Report continued
Share Options
Share options granted to Directors and executives or their nominees during and since the end of the fi nancial year:
Number of Options
granted
Exercise Price of
Options $
Expiry Date of
Options
Directors
Mr I Gorman
Mr N Newell
Mr C Horsfall
Mr J Keall
1,000,000
4,000,000
500,000
1,500,000
$0.50
$0.50
$0.50
$0.50
31/01/2011
31/01/2011
31/01/2011
31/01/2011
Share options on issue at year end or exercised during the year:
Details of unissued ordinary shares of the Company under option at the date of this report are as follows:
Item
Number of Shares
under option
Exercise Price of
options
Unlisted Options
Unlisted Options
7,100,000
7,125,000
$0.50
$0.60
Expiry Date of
Options
31 January 2011
31 January 2011
During the year and up to the date of this report 14,225,000 options were issued, and no options were exercised. At 30
June 2007, 14,225,000 options were on issue. Refer to the notes to the fi nancial statements for details of options granted.
subject to shareholder approval in accordance
with the ASX Listing Rules.
The amount of aggregate remuneration sought
to be approved by Shareholders and the
manner in which it is apportioned amongst
Directors is reviewed annually. The Board
considers the amount of Director fees being
paid by comparable companies with similar
responsibilities and the experience of the
Non-Executive Directors when undertaking the
annual review process.
The Company determines the maximum
amount for remuneration, including thresholds
for share-based remuneration, for Directors
by resolution. Further details regarding
components of Director and executive
remuneration are provided in the notes to
the fi nancial statements.
Proceedings on Behalf of
the Company
No person has applied for leave of the Court
under Section 327 of the Corporations Act
2001 to bring proceedings on behalf of the
Company or intervene in any proceedings
to which the Company is a party for the
purpose of taking responsibility on behalf
of the Company for all or any part of those
proceedings.
The Company was not a party to any
proceedings during the year.
Remuneration Report
This report outlines the remuneration
arrangements in place for Directors
and executives of 3D Oil Limited (the
“Company”).
The Board policy for determining the nature
and amount of remuneration of Directors and
executives is agreed by the Board of Directors
as a whole. The Board obtains professional
advice where necessary to ensure that the
Company attracts and retains talented and
motivated Directors and employees who can
enhance Company performance through their
contributions and leadership.
Executive Director Remuneration
In determining the level and make-up of
executive remuneration, the Board negotiates
a remuneration to refl ect the market salary
for a position and individual of comparable
responsibility and experience. Due to the
limited size of the Company and of its
operations and fi nancial affairs, the use of
a separate remuneration committee is not
considered appropriate. Remuneration is
regularly compared with the external market
by participation in industry salary surveys
and during recruitment activities generally.
If required, the Board may engage an external
consultant to provide independent advice in the
form of a written report detailing market levels
of remuneration for comparable executive roles.
Remuneration consists of a fi xed remuneration
and a long term incentive portion as
appropriate.
Non-Executive Director Remuneration
Non-Executive Directors’ fees are paid
within an aggregate limit which is approved
by the shareholders from time to time. The
limit of Non-Executive Director fees was
set at a maximum of $250,000. Retirement
payments, if any, are agreed to be determined
in accordance with the rules set out in the
Corporations Act 2001 at the time of the
Directors retirement or termination.
Non-Executive Directors’ remuneration
may include an incentive portion consisting
of bonuses and/or options, as considered
appropriate by the Board, which may be
3D Oil Limited Annual Report 2007
15
Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the entity and the company is set out below:
Short-term employment benefi ts
Post employment benefi ts
Other long-term benefi ts
Termination benefi ts
Share based payments
2007
$
416,767
24,020
–
–
1,186,650
1,627,437
2006
$
–
–
–
–
–
–
The compensation of each member of the key management personnel of the entity is set out below.
Details of Remuneration for Year Ended 30 June 2007
The remuneration for each Director and each of the fi ve executive offi cers of the entity receiving the highest remuneration
during the year was as follows:
Short –term Post-employment
Equity
employment benefi ts
Salary, Fees
and Commissions
$
Superannuation Shares Received Options Received
as Compensation
$
Contribution as Compensation
$
$
Directors
Mr I Gorman
Mr N Newell
Mr C Horsfall
Mr J Keall
Ms M Leydin
29,167
248,234
10,000
64,389
64,977
416,767
2,625
14,700
900
5,795
–
24,020
–
–
–
–
–
–
Total
$
204,892
955,334
97,450
304,784
64,977
173,100
692,400
86,550
234,600
–
1,186,650
1,627,437
Options Issued as Part of Remuneration for the Year Ended 30 June 2007
Options have been issued to Directors and executives as part of their remuneration. The options are not issued based on
performance criteria, but are issued to increase goal congruence between Directors and executives and shareholders.
Number of
Options granted
Value
of Options
Granted at
grant date
$
Total
Remuneration
Represented
by Options
%
Directors
Mr I Gorman
Mr N Newell
Mr C Horsfall
Mr J Keall
Ms M Leydin
1,000,000
4,000,000
500,000
1,500,000
–
0.1731
0.1731
0.1731
0.1564
–
84.49
72.47
84.76
76.97
–
Exercise
Price of
Options
First Exercise Expiry Date
of Options
Date
$
0.50
0.50
0.50
0.50
–
6/12/07
31/1/2011
6/12/07
31/1/2011
6/12/07
31/1/2011
6/12/07
31/1/2011
–
–
The value of options issued to I Gorman, N Newell and C Horsfall was calculated at 17.31 cents per option, based on the
following assumptions:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate: 5.93%
$0.40
$0.50
83%
2.9 years
16
3D Oil Limited Annual Report 2007
Non-Audit Services
The Directors are satisfi ed that the provision
of non-audit services, during the year by
the auditor (or by another person or fi rm on
the auditor’s behalf) is compatible with the
general standards of independence for auditors
imposed by the Corporations Act 2001.
The non-audit services provided by the
Company’s auditor during the year to June
2007 are as follows:
Independent Accountants Report $5,014.
Independence Statement
A copy of the auditor’s independence
declaration under s.307C of the Corporation
Act 2001 in relation to the audit of the full year
is included on page 17.
Signed in accordance with a resolution of the
Directors made pursuant to s.298(2) of the
Corporations Act 2001.
On behalf of the Directors
Campbell Horsfall
Chairman
MELBOURNE, 28 September 2007
Directors’ Report continued
The value of options issued to J Keall was
calculated at 15.64 cents per options, based
on the following assumptions:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate: 6.415%
$0.40
$0.50
70%
3.56 years
Shares Issued as Part of Remuneration for
the Year Ended 30 June 2007
There were no shares issued as part of
remuneration during the year ended
30 June 2007.
Details of Remuneration for Year Ended
30 June 2006
There was no Directors or Key Management
Personnel remuneration paid during the 2006
fi nancial year.
Options Issued as Part of Remuneration for
the Year Ended 30 June 2006
There were no options issued as part of
remuneration during the year ended
30 June 2006.
Shares Issued as Part of Remuneration for
the Year Ended 30 June 2006
There were no shares issued as part of
remuneration during the year ended
30 June 2006.
Employment contracts
The Managing Director, N Newell, is employed
under contract. The employment contract
commenced on 1 November 2006 and has
no fi xed term. Under the terms of the present
contract:
• Mr Newell may resign from his position
and thus terminate this contract by giving 6
months written notice.
• The Company may terminate this
employment agreement by providing 6
months written notice.
• The Company may terminate the
contract at any time without notice if
serious misconduct has occurred. Where
termination with cause occurs, Mr Newell is
only entitled to that portion of remuneration
which is fi xed, and only up to the date of
termination.
• On termination of the agreement, Mr
Newell will be entitled to be paid those
outstanding amounts owing to him up until
the Termination Date.
The Exploration and Development Manager,
Mr J Keall, is employed under contract. The
current employment contract commenced on
16 April 2007 and has no fi xed term. Under the
terms of the present contract:
• Mr Keall may resign from his position and
thus terminate this contract by giving 4
months written notice.
• The Company may terminate this
employment agreement by providing 5
months written notice.
• The Company may terminate the
contract at any time without notice if
serious misconduct has occurred. Where
termination with cause occurs, Mr Keall is
only entitled to that portion of remuneration
which is fi xed, and only up to the date of
termination.
• On termination of the agreement, Mr Keall
will be entitled to be paid those outstanding
amounts owing to him up until the
Termination Date.
Directors’ Meetings
The following table sets out the number of
Directors’ meetings held during the fi nancial
year and the number of meetings attended
by each Director. During the fi nancial year,
11 Board meetings were held. There is
no separate remuneration or nomination
committee.
Directors
Board of Directors
Held
Attended
Mr I Gorman
Mr N Newell
Mr C Horsfall
11
11
11
11
11
11
Indemnifi cation of Offi cers
and Auditors
During the fi nancial year, the company paid a
premium in respect of a contract insuring the
directors of the company (as named above),
the company secretary and all executive
offi cers of the company and of any related body
corporate against a liability incurred as such a
director, secretary or executive offi cer to the
extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure
of the nature of the liability and the amount of
the premium.
The company has not otherwise, during or
since the fi nancial year, except to the extent
permitted by law, indemnifi ed or agreed to
indemnify an offi cer or auditor of the company
or of any related body corporate against a
liability incurred as such an offi cer or auditor.
3D Oil Limited Annual Report 2007
17
Independence Declaration
Auditor’s Independence Declaration
Under Section 307C of the Corporations Act 2001
To the Directors of 3D Oil Limited:
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2007 there
have been:
(cid:132) no contraventions of the auditor independence requirements as set out in the Corporations Act
2001; and
(cid:132) no contraventions of any applicable code of professional conduct in relation to the audit.
____________________
William Buck
Chartered Accountants
____________________
Brad Taylor
Partner
Dated this 28th day of September 2007.
Melbourne, Australia.
C:\DOCUME~1\KATRIN~1.TUR\LOCALS~1\Temp\notes6030C8\Independence declaration.doc
Template v 1.0 released May 2007
18
3D Oil Limited Annual Report 2007
Independent Audit Report
INDEPENDENT AUDITOR’S REPORT
To the members of 3D Oil Limited
Report on the Financial Report
We have audited the accompanying financial report of 3D Oil Limited (the Company), which
comprises the balance sheets as at 30 June 2007, and the income statements, statements of
changes in equity and cash flow statements for the year ended on that date, a summary of
significant accounting policies and other explanatory notes and the directors’ declaration of the
company.
As permitted by the Corporations Regulations 2001, the Company has disclosed information about
the remuneration of directors and executives (“remuneration disclosures”), as required by
Australian Accounting Standard AASB 124 Related Party Disclosures, under the heading
Remuneration Report on pages 22-24 of the Directors’ report and not in the financial report. We
have audited the remuneration disclosures on pages 22-24 of the Directors’ report.
Directors’ Responsibility for the Financial Report and the AASB 124 Remuneration
Disclosures Contained in the Directors’ Report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal control relevant to the preparation and fair presentation of the
financial report that is free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances.
In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation
of Financial Statements, that compliance with the Australian equivalents to International Financial
Reporting Standards ensures that the financial report, comprising the financial statements and
notes, complies with International Financial Reporting Standards.
The directors of the Company are responsible for the remuneration disclosures contained in the
Directors’ report.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards
require that we comply with relevant ethical requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement. Our responsibility is also to express an opinion on the remuneration
disclosures contained in the Directors’ report based on our audit.
3D Oil Limited Annual Report 2007
19
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report and the
remuneration disclosures contained in the Directors’ report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
has been provided to the directors on the same date as this auditor’s report.
Auditor’s Opinion on the financial report
In our opinion:
a)
the financial report of 3D Oil Limited is in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of company’s financial position as at 30 June 2007 and of their
performance for the year ended on that date; and
ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
b)
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1.
Auditor’s Opinion on the AASB 124 remuneration disclosures contained in the directors’
report
In our opinion, the remuneration disclosures on pages 22-24 of the Directors’ report comply with
Australian Accounting Standard AASB 124 Related Party Disclosures.
____________________
William Buck
Chartered Accountants
____________________
Brad Taylor
Partner
Dated this 28th day of September 2007.
Melbourne, Australia.
Page 2
20
3D Oil Limited Annual Report 2007
Director’s Declaration
The Directors declare that:
a) in the Directors’ opinion, there are
reasonable grounds to believe that the
Company will be able to pay its debts as
and when they become due and payable;
b) in the Directors’ opinion, the Remuneration
Report, the attached fi nancial statements
and notes thereto are in accordance with the
Corporations Act 2001, including compliance
with accounting standards and giving a true
and fair view of the fi nancial position and
performance of the entity; and
c) the Directors have been given the
declarations required by s.295A of the
Corporations Act 2001.
Signed in accordance with a resolution of the
Directors made pursuant to s.295(5) of the
Corporations Act 2001.
On behalf of the Directors
Campbell Horsfall
Chairman
MELBOURNE, 28 September 2007
21
3D Oil Limited Annual Report 2007
Income Statement
for the Year Ended 30 June 2007
Revenue
Corporate expenses
Administrative expenses
Employment expenses
Share based payments
Depreciation and amortisation
Exploration costs written off
Loss before income tax expense
Income tax expense
Profi t/(loss) attributable to members of
the parent entity
Earnings/(Loss) per share
Basic earnings per share
Diluted earnings per share
* Calculated on a post-split basis.
Note
2
3
4
2007
$
228,396
(93,306)
(84,020)
(292,166)
(1,205,150)
(25,481)
–
(1,471,727)
–
(1,471,727)
2006
$
3,833
–
(47,333)
–
–
(35,721)
(79,221)
–
(79,221)
Cents per Share
Cents per Share*
(1.67)
(1.67)
(0.01)
(0.01)
This statement is to be read in conjunction with the following notes.
3D Oil Limited Annual Report 2007
22
Balance Sheet
as at 30 June 2007
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangibles
Other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
(Accumulated losses)
Total Equity
Note
20(a)
7
8
9
10
11
12
13
14
15
2007
$
26,458,238
362,986
3,000
26,824,224
46,588
11,556
1,888,072
1,946,216
28,770,440
339,147
15,407
354,554
354,554
2006
$
31,132
2,112
–
33,244
24,730
–
–
24,730
57,974
73,254
–
73,254
73,254
28,415,886
(15,280)
28,294,129
2,058,750
(1,936,993)
449,986
–
(465,266)
28,415,886
(15,280)
This statement is to be read in conjunction with the following notes.
3D Oil Limited Annual Report 2007
Statement of Changes in Equity
for the Year Ended 30 June 2007
23
Issued Capital
Note 14
Equity as at 1 July 2005
449,986
Loss for the period (A)
Issue of Options
Issue of Shares
Costs of Capital Raising
–
–
–
–
Retained
Earnings
(386,045)
(79,221)
–
–
–
Equity as at 30 June 2006
449,986
(465,266)
Equity as at 1 July 2006
Loss for the period (A)
Issue of Options
Issue of Shares
Costs of Capital Raising
449,986
–
–
30,615,000
(2,770,857)
(465,266)
(1,471,727)
–
–
–
Option Reserves
Note 15
–
–
–
–
–
–
–
–
2,058,750
–
–
Equity as at 30 June 2007
28,294,129
(1,936,993)
2,058,750
(A) Loss for the period equals total recognised income and expense for the period.
This statement is to be read in conjunction with the following notes.
Total
63,941
(79,221)
–
–
–
(15,280)
(15,280)
(1,471,727)
2,058,750
30,615,000
(2,770,857)
28,415,886
24
Cash Flow Statement
for the Year Ended 30 June 2007
3D Oil Limited Annual Report 2007
Note
2007
$
2006
$
Cash Flows From Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
990
56,548
(301,208)
Net cash used in operating activities
20(c)
(243,670)
3,807
26
(30,499)
(26,666)
–
(11,365)
–
(11,365)
–
–
–
(1,888,072)
(47,339)
(11,556)
(1,946,967)
30,535,000
(1,917,257)
28,617,743
26,427,106
(38,031)
31,132
20(a)
26,458,238
69,163
31,132
Cash Flows From Investing Activities
Payments for exploration and development expenditure
Payment for plant and equipment
Payment for intangibles (software)
Net cash (used in)/provided by investing activities
Cash Flows From Financing Activities
Proceeds from issue of equity securities
Payment for share issue costs
Net cash fl ows from fi nancing activities
Net Increase (Decrease) in cash and
cash equivalents
Cash and cash equivalents at beginning of
the fi nancial year
Cash and cash equivalents at the end of
the fi nancial year
This statement is to be read in conjunction with the following notes.
3D Oil Limited Annual Report 2007
25
Notes to the Financial Statements
Notes to and Forming Part of the Financial Statements
1. Summary Of Accounting Policies
Corporate Information
3D Oil Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian
Stock Exchange.
Adoption of new and revised Accounting Standards
In the current year, the entity has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period.
The adoption of these new and revised Standards and Interpretations has not resulted in changes to the entitiy’s accounting
policies.
At the date of authorisation of the fi nancial report, the following Standards and Interpretations
were in issue but not yet effective:
• AASB 7 ‘Financial Instruments: Disclosures and
consequential amendments to other accounting
standards resulting from its issue.
• AASB 8 ‘Operating Segments
beginning on or after 1 January 2009.
• AASB 101 ‘Presentation of Financial
Statements’ – revised standard
• AASB 2007-4 ‘Amendments to Australian
Accounting Standards arising from ED151
and other standards
Effective for annual reporting periods
beginning on or after 1 January 2007.
Effective for annual reporting periods
Effective for annual reporting periods
beginning on or after 1 January 2007.
Effective for annual reporting periods
beginning on or after 1 July 2007.
• Interpretation 10 ‘Interim Financial Reporting
and Impairment’.
Effective for annual reporting periods
beginning on or after 1 November 2006.
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material fi nancial
impact on the fi nancial statements of the Company. The circumstances addressed by Interpretation 10, which prohibits the
reversal of certain impairment losses, do not affect either the Company’s previously reported results and accordingly, there will
be no impact to these fi nancial statements on adoption of the Interpretation.
The application of AASB 101 (revised), AASB 7 and AASB 2005-10 will not affect any of the amounts recognised in the
fi nancial statements, but will change the disclosures presently made in relation to the Company’s fi nancial instruments and the
objectives, policies and processes for managing capital.
These Standards and Interpretations will be fi rst applied in the fi nancial report of the entity that relates to the annual reporting
period beginning after the effective date of each pronouncement, which will be the Company’s annual reporting period beginning
on 1 July 2007.
Statement of compliance
The fi nancial report is a general purpose fi nancial report which has been prepared in accordance with the Corporations Act 2001,
Accounting Standards and Urgent Issues Group Interpretations, and complies with other requirements of the law. Accounting
Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS
ensures that the fi nancial statements and notes of the entity comply with International Financial Reporting Standards (‘IFRS’).
The parent entity fi nancial statements and notes also comply with IFRS except for the disclosure requirements in IAS 32
‘Financial Instruments: Disclosure and Presentation’ as the Australian equivalent Accounting Standard, AASB 132 ‘Financial
Instruments: Disclosure and Presentation’ does not require such disclosures to be presented by the parent entity where its
separate fi nancial statements are presented together with the fi nancial statements of the entity. AASB 132 would not have any
impact on the fi nancial report of 3D Oil Limited should the entity have been required to disclose this information.
The fi nancial statements were authorised for issue by the Directors on 28 September 2007.
Basis of preparation
The fi nancial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given
in exchange for assets.
In the application of A-IFRS management is required to make judgments, estimates and assumptions about carrying values of
assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which
form the basis of making the judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
26
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
Judgments made by management in the application of A-IFRS that have signifi cant effects on the fi nancial statements and
estimates with a signifi cant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to
the fi nancial statements.
Accounting policies are selected and applied in a manner which ensures that the resulting fi nancial information satisfi es
the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events
is reported.
The accounting policies set out below have been applied in preparing the fi nancial statements for the year ended
30 June 2007.
Signifi cant accounting policies
The following signifi cant accounting policies have been adopted in the preparation and presentation of the year fi nancial report:
(a) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
(b) Financial instruments issued by the company
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of
the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with
the issue of those equity instruments and which would not have been incurred had those instruments not been issued.
Interest and dividends
Interest and dividends are classifi ed as expenses or as distributions of profi t consistent with the balance sheet classifi cation
of the related debt or equity instruments or component parts of compound instruments.
(c) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
Cash fl ows are included in the cash fl ow statement on a gross basis. The GST component of cash fl ows arising from
investing and fi nancing activities which is recoverable from, or payable to, the taxation authority is classifi ed as
operating cash fl ows.
(d) Impairment of assets
At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does
not generate cash fl ows that are independent from other assets, the entity estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specifi c to the asset for which the estimates of future cash fl ows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profi t
or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment loss is recognised in profi t or loss immediately, unless the relevant asset is
carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.
(e) Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profi t or
tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting
date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
3D Oil Limited Annual Report 2007
27
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the fi nancial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to
the extent that it is probable that suffi cient taxable amounts will be available against which deductible temporary differences
or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor accounting profi t. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches,
associates and joint ventures except where the entity is able to control the reversal of the temporary differences and it is
probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with these investments and interests are only recognised to the extent that it is probable
that there will be suffi cient taxable profi ts against which to utilise the benefi ts of the temporary differences and they are
expected to reverse in the foreseeable future.
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the fi nancial statements and the
corresponding tax base of those items.
(f) Petroleum and Exploration Development Expenditure
Petroleum and exploration development expenditure incurred is accumulated in respect of each identifi able area of interest.
These costs are only carried forward in relation to each area of interest to the extent the following conditions are satisfi ed:
(a) the rights to tenure of the area of interest are current; and
(b) at least one of the following conditions is also met:
(i) the exploration and evaluation expenditures are expected to be recouped through successful development and
exploitation of the area of interest, or alternatively, by its sale; and
(ii) Exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and signifi cant
operations in, or in relation to, the area of interest are continuing.
Accumulated costs in relation to an abandoned area are written off in full against profi t in the year in which the decision to
abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area
according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward cost
in relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in
the cost of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have
been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration,
there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation.
Accordingly the costs have been determined on the basis that the restoration will be completed within one year of
abandoning the site.
(g) Share-Based Payments
Equity-settled share-based payments with employees and other providing similar services are measured at the fair value
of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions,
and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been
determined can be found in the Remuneration Report.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of shares that will eventually vest.
The above policy is applied to all equity-settled share-based payments that were granted after 7 November 2002 that vested
after 1 January 2005. No amount has been recognised in the fi nancial statements in respect of the other equity-settled
share-based payments.
28
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
(h) Employment Benefi ts
A liability is recognised for benefi ts accruing to employees in respect of wages and salaries, annual leave and long service
leave, when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefi ts expected to be settled within 12 months, are measured at their normal
values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefi ts which are not expected to be settled within 12 months are measured
as the present value of the estimated future cash outfl ows to be made by the Group in respect of services provided by
employees up to reporting date.
(i) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash fl ows that will be
received fro the asset’s employment and subsequent disposal. The expected net cash fl ows have been discounted to their
present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when
it is probable that future economic benefi ts associated with the item will fl ow to the group and the cost of the item can
be measured reliably. All other repairs and maintenance are charged to the income statement during the fi nancial period in
which they are incurred.
Depreciation
The depreciable amount of all fi xed assets including building and capitalized lease assets, but excluding freehold land, is
depreciated on a straight-line basis over their useful lives to the economic entity commencing from the time the asset is
held for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation
Plant and equipment
40%
The assets’ residual vales and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
that its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to
that asset are transferred to retained earnings.
(j) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cashfl ows estimated to settle the present obligation, its carrying amount is the present value of those cashfl ows.
When some or all of the economic benefi ts required to settle a provision are expected to be recovered from a third party,
the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
(k) Revenue
Revenue is measured at the fair value of the consideration received or receivable.
Interest Revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial
asset to that asset’s net carrying amount.
3D Oil Limited Annual Report 2007
29
Critical Accounting Judgments and Key Sources of Estimation Uncertainty
In the application of the Company’s accounting policies, which are described in note 1, management is required to make
judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affect both current and future periods.
2. Revenue
Revenue from continuing operations consisted of the following items
Revenue from the Sale of Goods
Revenue from the Rendering of services
Other Income
Rent received
Interest revenue
Total Revenue
3. Profi t/(Loss) from Operations
(a) Loss before income tax has been arrived at after
crediting/ (charging) the following gains and losses from
continuing operations
Depreciation and amortisation of non-current assets:
– Plant and equipment
– Software
Post employment benefi t plans – Contribution
Share based payments:
– Equity settled share based payments
Charges to provisions:
– Employee entitlements
Operating lease payments
– Offi ce lease
2007
$
–
–
–
900
227,496
228,396
228,396
7,309
18,172
25,481
24,176
1,205,150
15,407
43,960
2006
$
–
–
–
–
3,833
3,833
3,833
8,693
–
8,693
–
–
–
–
30
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
4. Income Tax Expense
(a) The Components of Tax Expense comprise:
Current Tax
Deferred Tax
(b) The prima facie tax from ordinary activities before income
tax is reconciled to the income tax expense as follows:
2007
$
–
–
–
2006
$
–
–
–
Profi t/(Loss) from Ordinary Activities
Income tax expense/(benefi t) calculated at 30%
(1,471,727)
(441,518)
(79,221)
(23,766)
Add:
Tax Effect of:
– Share Based Payments
Add/(Less) Temporary Differences:
– Capitalised Deductible Exploration Expenditure
– Deductible Share issue costs
– Other Timing Differences
Tax benefi t for the year
Income Tax losses carried forward not taken up as benefi t
Tax Expense
Deferred tax assets not brought to account as assets:
– Tax Losses
– Temporary Differences
361,545
(566,422)
(115,035)
48,058
(713,372)
713,372
–
886,593
(91,863)
794,730
–
–
–
–
(23,766)
23,766
–
273,097
–
273,097
The taxation benefi ts of tax losses and temporary differences not brought to account will only be obtained if:
i) the entity derives future assessable income of a nature and of an amount suffi cient to enable the benefi t from the deductions for the losses
to be realized.
ii) The entity continues to comply with the conditions for deductibility imposed by law, and
iii) No change in tax legislation adversely affects the entity in realizing the benefi ts from deducting the losses.
3D Oil Limited Annual Report 2007
31
5. Key Management Personnel
The key management personnel of 3D Oil Limited during the year were:
Mr I Gorman
Mr N Newell
Mr C Horsfall
Mr J Keall
Ms M Leydin
(Non–Executive Chairman)
(Managing Director)
(Non–Executive Director)
(Exploration and Development Manager)
(Company Secretary and Chief Financial Offi cer)
(a) Key Management Personnel Compensation
Details of key management personnel compensation are in the Remuneration Report within the Directors Report.
(b) Option holdings by Key Management Personnel or their nominees
Balance
1.7.2006
Granted
as Compensation
Net Change Other Balance 30.6.2007
Mr I Gorman (1)
Mr N Newell
Mr C Horsfall (2)
Mr J Keall
Ms M Leydin
–
–
–
–
–
–
1,000,000
4,000,000
500,000
1,500,000
–
7,000,000
–
–
–
–
–
–
(1) Appointed as Director on 25 September 2006
(2) Appointed as a Director on 20 November 2006
(c) Shareholdings by Key Management Personnel or their nominees
Balance
1.7.2006
Received as
Compensation
Options
Exercised
Net Change
Other
Mr I Gorman (1)
Mr N Newell
Mr C Horsfall (2)
Mr J Keall
Ms M Leydin
–
36,661,450
–
–
–
36,661,450
(1) Appointed as Director on 25 September 2006
(2) Appointed as a Director on 20 November 2006
–
–
–
–
–
–
6. Auditors Remuneration
Auditor of the Parent Entity – William Buck
Auditing or reviewing the fi nancial report
Independent Accountants report
7. Trade and Other Receivables
Current
Goods and services tax recoverable
Interest receivable
Other receivables
–
–
–
–
–
–
–
–
–
–
–
–
2007
$
23,731
5,014
28,745
192,069
170,848
69
362,986
1,000,000
4,000,000
500,000
1,500,000
–
7,000,000
Balance
30.6.2007
–
36,661,450
–
–
–
36,661,450
2006
$
–
–
–
2,112
–
–
2,112
32
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
8. Other Current Assets
Prepayments
9. Plant & Equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Movement in carrying value of plant and equipment
Opening carrying value
Additions
Transfer to intangibles
Depreciation expense
Closing carrying value
10. Intangibles
Software – at cost
Less accumulated amortisation
Movement in carrying value of intangibles
Opening carrying value
Additions
Transfer from plant & equipment
Amortisation expense
Write off of intangibles (i)
Closing carrying value
2007
$
3,000
51,455
(4,867)
46,588
24,730
47,359
(18,192)
(7,309)
46,588
11,556
–
11,556
–
11,556
18,192
(18,192)
–
11,556
(i) Software purchased in 2004 with a cost of $22,052 and a written down value of Nil was written off during the fi nancial year.
11. Other Non–Current Assets
Exploration and development expenditure
Movement in Exploration and development expenditure
Opening carrying value
Expenditure during the year
Written off expenditure
Impairment losses
Closing carrying value
1,888,072
–
1,888,072
–
–
1,888,072
2006
$
–
37,532
(12,802)
24,730
22,058
11,365
–
(8,693)
24,730
–
–
–
–
–
–
–
–
–
–
–
35,721
(35,721)
–
–
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest.
Capitalised cost of $1,888,072 has been included in cash fl ows from investing activities in the cash fl ow statement.
3D Oil Limited Annual Report 2007
33
12. Trade and Other Payables
Current
Trade payables (i)
Amounts payable to:
– Key management personnel
– Key management personnel related entities
Sundry payables and accrued expenses
2007
$
100,602
18,500
183,828
36,217
339,147
2006
$
73,254
–
–
–
73,254
(i) The average credit period on purchases is 30 days. No interest is charged on the trade payables.
The entity has fi nancial risk management policies in place to ensure that all payables are paid within the credit timeframe.
13. Provisions
Provision for employee entitlements
15,407
–
14. Issued Capital
83,060,000 fully paid ordinary shares (2006: 266,550 (pre–split))
110,000,000 partly paid shares (2006: Nil)
3,564,986
24,729,143
28,294,129
449,986
–
449,986
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Changes to the corporations’ law
abolished the authorised capital and par value concept in relation to the Share Capital from 1 July 1998. Therefore, the
Company does not have a limited amount of authorised capital and issued shares do not have a par value.
No. of Shares
$
(a) Fully paid ordinary shares
Balance at 1 July 2005
Share Issues
Balance at 30 June 2006
Balance at 1 July 2006
Issue of shares (pre–split)
Share split on 1:259 basis
Issue of shares (post–split)
Balance at 30 June 2007
(b) Partly paid ordinary shares (i)
Balance at 1 July 2006
Issue of shares in Initial Public Offering
Less: Costs of Capital Raising
Balance at 30 June 2007
266,550
–
266,550
266,550
23,450
75,110,000
7,950,000
83,060,000
–
110,000,000
110,000,000
449,986
–
449,986
449,986
469,000
–
2,646,000
3,564,986
–
27,500,000
(2,770,857)
24,729,143
(i) Shares are partly paid $0.40 paid to $0.25. The remaining $0.15 is due and payable by 16 December 2007.
34
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
(c) Terms and Conditions of Issued Capital
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held.
At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
(d) Options
Balance at beginning of the fi nancial year
Granted during the fi nancial year
Exercised during the fi nancial year
Lapsed during the fi nancial year
Balance at end of the fi nancial year
2007
No.
–
14,225,000
–
–
14,225,000
2006
No.
–
–
–
–
–
7,100,000 options entitles the holder to subscribe for one ordinary share in 3D Oil Limited upon the payment of $0.50.
7,125,000 options entitles the holder to subscribe for one ordinary share in 3D Oil Limited upon thepayment of $0.60.
All the options will lapse at 5.00pm (AEST) on 31 January 2011 and are exercisable from 16 December 2006. The options
are transferable. The options carry neither rights to dividends nor voting rights.
Directors Options
Options granted to Directors or their nominees are disclosed in the Remuneration Report.
15. Reserves
Option Reserve
The option reserve records items recognised as expenses on valuation of employee share options.
During the year the following options were granted for Directors, executives and promoters:
• 5,500,000 options to Directors valued at $0.1731 per option.
• 100,000 options to Executives valued at $0.185 per option.
• 1,500,000 options to Executives valued at $0.1564 per option.
• 4,000,000 options to Promoters valued at $0.2134 per option.
Details of the Director option valuation are included in the Remuneration Report.
16. Dividends
2007
$
2006
$
There have been no dividends paid or proposed in the 2006 or 2007 fi nancial years.
3D Oil Limited Annual Report 2007
35
17. Commitments For Expenditure
Operating Lease Commitments
Not longer that 1 year
Longer that 1 year and not longer that 5 years
Longer than 5 years
2007
$
75,240
112,860
–
188,100
2006
$
–
–
–
–
Exploration Licences – Commitments for Expenditure
In order to maintain current rights of tenure to exploration tenements, the
Company and economic entity is required to outlay rentals and to meet the
minimum expenditure requirements of the State Mines Departments. Minimum
expenditure commitments may be subject to renegotiation and with approval
may otherwise be avoided by sale, farm out or relinquishment. These
obligations are not provided in the accounts and are payable:
Not later than one year
Later than one year but not later than fi ve
Later than fi ve years
9,090,000
17,900,000
–
26,990,000
3,100,000
23,040,000
850,000
26,990,000
18. Segment information
The Company only operates in the development of oil and gas within Australia.
19. Related Party Disclosures
Key Management Personnel Compensation
Details of key management compensation are disclosed in the Remuneration Report.
Transactions with Key Management Personnel
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
During the year ended 30 June 2007 there were no related party transactions other than those detailed in the
Remuneration Report.
20. Notes to the Statement of Cash Flows
2007
$
2006
$
(a) Reconciliation of Cash and Cash Equivalents
For the purposes of the Cash Flow Statement, cash includes cash on
hand and in banks and investments in money market instruments, net of
outstanding bank overdrafts. Cash at the end of the fi nancial year as
shown in the statement of cash fl ows is reconciled to the related items
in the statement of fi nancial position as follows:
Cash and cash equivalents
26,458,238
31,132
(b) Financing Facilities
The company has no fi nancing facilities in place at 30 June 2007.
36
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
(c) Reconciliation of Net Profi t/(Loss) From Ordinary
Activities After Related Income Tax to Net Cash Flows
From Operating Activities
2007
$
2006
$
Profi t/(loss) after related income tax
(1,471,727)
(79,221)
Less: Non–cash activities:
Depreciation and amortisation of non–current assets
Share based payments expense
Annual leave provision
Changes in net assets and liabilities:
(Increase)/decrease in assets:
Current receivables
Other current assets
Increase/(decrease) in liabilities:
Current payables
Net cash (used in) operating activities
25,481
1,205,150
15,407
(362,986)
(888)
345,893
(243,670)
8,693
–
–
1,214
(764)
43,412
(26,666)
(d) Non–Cash Financing and Investing Activities
During the year the Company settled $80,000 in debts through the issue of 4,000 fully paid
ordinary shares (pre–split) at an issue price of $20.00.
21. Financial Instruments
(a) Signifi cant Accounting Policies
Details of the signifi cant accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which revenues and expenses are
recognised, in respect of each class of fi nancial asset, fi nancial liability and equity instrument
are disclosed in Note 1 to the fi nancial statements.
(b) Interest Rate Risk
The following table details the entity’s exposure to interest rate risk as at the 30 June 2007:
Fixed Interest Rate Maturity
2007
Average
Interest Rate
%
Variable
Interest Rate
$
Less than
1 Year
$
1 to 5 More than Non-Interest
Bearing
5 Years
Years
$
$
$
Total
$
Financial Assets
Cash
Trade and other
receivables
Other current assets
Financial Liabilities
Payables
5.4
26,458,238
–
–
26,458,238
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,458,238
362,986
362,986
3,000
3,000
365,986
26,824,224
339,147
339,147
339,147
339,147
3D Oil Limited Annual Report 2007
37
The following table details the entity’s exposure to interest rate risk as at the 30 June 2006:
2006
Average
Interest Rate
%
Variable
Interest Rate
$
Less than
1 Year
$
1 to 5 More than Non-Interest
Bearing
5 Years
Years
$
$
$
Fixed Interest Rate Maturity
4.8
Financial Assets
Cash
Other current assets
Financial Liabilities
Payables
31,132
–
31,132
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,112
2,112
73,254
73,254
Total
$
31,132
2,112
33,244
73,254
73,254
(c) Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in fi nancial loss to the entity.
The entity has adopted a policy of managing its exposure to credit risk by assessment of the creditworthiness of potential
customers and obtaining suffi cient collateral or other security where appropriate. The carrying amount of fi nancial assets
included in the accounts represents the exposure of the entity to credit risk.
(d) Fair Value
The carrying amount of fi nancial assets and fi nancial liabilities recorded in the fi nancial statements represents their respective
net fair values, determined in accordance with the accounting policies disclosed in note 1 to the fi nancial statements.
(f) Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who has built an appropriate liquidity risk
management framework for the management of the Company’s short, medium and long term funding and liquidity management
requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash fl ows and matching the maturity profi les of fi nancial assets
and liabilities.
22. Earnings Per Share
Basic earnings (loss) per share
Diluted earnings (loss) per share
(i) Calculated on a post–split basis.
The earnings and weighted average number of ordinary shares used in
the calculation of basic and diluted earnings per share are as follows
2007
Cents Per Share
(1.67)
(1.67)
2006
Cents Per Share
(0.01) (i)
(0.01) (i)
Earnings (i)
(1,471,727)
(79,221)
Weighted average number of ordinary shares (ii)
(i) Earnings are the same as profi t after tax in the income statement.
2007
No
88,273,743
2006
No
69,036,450(iii)
(ii) The following weighted average of potential ordinary shares are not dilutive and are therefore excluded from the weighted average number
of shares, used in the calculation of diluted earnings per share.
7,794,932
–
(iii) Calculated on a post–split basis.
38
3D Oil Limited Annual Report 2007
Notes to the Financial Statements continued
Diluted Earnings Per Share
The rights to options held by option holders have not been included in the weighted average number of ordinary shares
for the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 “Earnings per
Share”. The rights to options are non–dilutive as the exercise price was signifi cantly higher than the Company’s share
price as at 30 June 2007.
23. Contingent Liabilities
Estimates of the potential fi nancial effect of contingent liabilities that may become payable:
There has been a claim by a supplier to the Consortium , of which 3D Oil is a member, of a number of unpaid invoices and a
breach of contract. The Consortium believes that whilst there is some fi nancial obligation they disagree with the quantum of
the claim by the supplier. The maximum obligation by the consortium is approximately $1,300,000.
The exposure for 3D Oil Limited as part of the consortium is a maximum of $200,000.
24. Events After the Balance Sheet Date
There has not been any matter or circumstance that has arisen since the end of the fi nancial year, that has signifi cantly
affected, or may signifi cantly affect, the operations of the entity, the results of those operations, or the state of affairs of the
entity in future fi nancial years.
3D Oil Limited Annual Report 2007
39
Additional Shareholder Information
The shareholder information set out below was applicable as at 31 August 2007.
1. Distribution of Shareholders
(a) Analysis of number of shareholders (Partly paid and fully paid) by size of holding.
Category of holding
Holders
Number of Shares
% of Capital
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
4
44
106
352
131
637
586
153,350
938,573
15,145,532
176,621,959
193,060,000
0.01
0.01
0.64
7.85
91.49
100.00
(b) There are Nil shareholders with less than a marketable parcel of ordinary shares.
2. Twenty Largest Shareholders
The names of the twenty largest holders by account holding of ordinary shares (partly paid and fully paid) are listed below:
Shareholder
N Newell
HSBC Custody Nominees (Aust) Limited GSI ECSA
Bond Street Custodians Limited
UBS Nominees Pty Ltd
Fugro Multi Client Services Pty Ltd
Bill Hopper
HSBC Custody Nominees (Aust) Limited
Bond Street Custodians Limited
CS Third Nominees Pty Ltd
Bond Street Custodians Limited
Noel Mainwerring
Vin and Wendy Naidu
Andrew Paterson
Pengold Pty Ltd
ANZ Nominees Limited
HSBC Custody Nominees (Aust) Limited GSI EDA
National Nominees Limited
Elite Sunshine Pty Ltd
Bond Street Custodians Limited
Invia Custodian Pty Ltd
Holding
36,661,450
17,049,216
11,835,000
8,500,000
6,475,000
6,475,000
6,250,000
4,100,200
3,840,000
3,400,000
3,237,500
3,237,500
3,237,500
3,237,500
3,211,331
3,107,784
2,900,000
2,500,000
2,499,800
2,000,000
%
18.99
8.83
6.13
4.40
3.35
3.35
3.24
2.12
1.99
1.76
1.68
1.68
1.68
1.68
1.66
1.61
1.50
1.29
1.29
1.04
133,754,781
69.28
4. Restricted Securities
As at 31 August 2007, the company had the following securities subject to escrow arrangement:
Security
Fully paid ordinary shares
Unlisted options (1)
No
Escrow Expiry
83,060,000
14,225,000
21 May 2009
21 May 2009
(1) 7,125,000 options exercisable at $0.60 each up to 30 September 2009, 7,100,000 options exercisable at $0.50 each up to
30 September 2009.
40
3D Oil Limited Annual Report 2007
Shareholder Information continued
5. Substantial Shareholders
As at 31 August 2007 the substantial shareholders were as follows:
Name of Shareholder
Noel Newell
Macquarie Bank Limited
Commonwealth Bank of Australia
6. Voting Rights
At a general meeting of shareholders:
No of Shares
% of Issued Capital
36,661,450
20,100,000
15,343,808
18.99
10.41
7.95
(a) On a show of hands, each person who is a member or sole proxy has one vote.
(b) On a poll, each shareholder is entitled to one vote for each fully paid share.
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3D Oil Limited