3D OIL LIMITED
ABN 40 105 597 279
Annual Financial Report
for the Financial Year Ended 30 June 2008
1
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE DIRECTORY
CONTENTS
Page
Corporate Directory.........................................................................2
Letter from Managing Director.........................................................3
Review of Operations......................................................................5
Schedule of Petroleum Permits.....................................................10
Directors' Report ...........................................................................11
Independence Statement ..............................................................21
Director’s Declaration....................................................................22
Independent Audit Reports ...........................................................23
Income Statement.........................................................................25
Balance Sheet ..............................................................................26
Statement of Changes in Equity....................................................27
Cash Flow Statement ...................................................................28
Notes to the Financial Statements ................................................29
Additional Shareholder information ..............................................53
Corporate Governance Statement ................................................55
Board of Directors
Peter Willcox (Non-Executive Director and Chairman)
Noel Newell (Executive Managing Director)
Campbell Horsfall (Non-Executive Director)
Company Secretary
Melanie J Leydin
Place of Business
Level 5
164 Flinders Lane
MELBOURNE VIC 3000
Ph: 03 9650 9866
Web: www.3doil.com.au
Auditor
Grant Thornton
Chartered Accountants
215 Spring Street
MELBOURNE VIC 3000
Share Registry
Computershare Investor Services Pty Ltd
452 Johnson Street
ABBOTTSFORD VIC 3067
Telephone: (03) 9415 5000
Stock Exchange Listing
Home Exchange is Melbourne
ASX Code Fully Paid Shares: TDO
2
3D OIL LIMITED
ABN 40 105 597 279
LETTER FROM THE MANAGING DIRECTOR
Dear Shareholders
As our first full year as a publicly listed company draws to a close with the backdrop of the most
turbulent financial environment of our times 3D Oil has taken a significant step in laying the
foundations for the growth of the company.
I firstly want to iterate clearly the current position of 3D Oil;
• The company owns 100% of an oil field, West Seahorse, offshore Victoria
• The field has a suspended well for future production
• While the field is marginal it has significant attributes which I believe make it commercial
• 3D Oil has a good cash position for at least the next two years
• We have a portfolio of 23 quality leads and prospects in our two permits
• We have a small but highly experienced and dedicated team of professionals committed to
3D Oil’s future
Since the commencement of 3D Oil my overwhelming priority has been to secure early production to
underpin the stability and growth of the company. As a young company arriving in the market at a time
of record oil prices this is a task that cannot be under estimated. Access to petroleum provinces is as
competitive as it has ever been historically and when accessed, drilling costs are at near record
levels. This fierce competition has translated into quite expensive transactions in our sector in recent
times to secure reserves.
West Seahorse, a field acquired in a bid round and therefore at a low entry cost, provides 3D Oil with
the opportunity to secure a cash flow. Whilst our drilling campaign did not increase our reserve base
the field still remains economically viable. 3D Oil has made it a priority in the short term to find the
most suitable development option for the field. It is pertinent to remember that the neighbouring
Seahorse field, of similar size and geology, has been on production since 1991.
Prior to drilling 3D Oil undertook a pre FEED (Front End Engineering and Design) study with
WorleyParsons to primarily evaluate the cost of a stand alone development with an onshore
processing plant and to be immediately ready post drilling to go straight into development mode.
Although we continue to explore this option I now believe an alternative development model may
provide higher returns and we are aggressively exploring a number of these models prior to making
our final decision. Our prime considerations are balanced between economic optimisation and time to
first oil. I am very confident we will proceed to a development of this field in the short term.
Beyond West Seahorse exploration will continue to remain the company’s primary mechanism for
organic growth and value creation. In future we intend to share exploration risk, particularly drilling,
within strategic partnerships.
3D Oil interprets the potential of the Vic/P57 permit as outstanding. The 750 km2 block still remains
largely unexplored, with only 4 exploration wells, despite being literally flanked by numerous oil and
gas fields. Sea Lion and Felix are very exciting prospects as potentially the last remaining undrilled
top Latrobe closures along the highly prospective Rosedale Fault on which nearly all related
structures contain oil and gas. Independent experts, RPS Energy, detailed evaluation of Sea Lion
provided a best estimate unrisked Prospective Resource of 20.7 MMstb. The adjacent Salsa Prospect
provides a direct follow up to Sea Lion while being considerably larger.
Recent further detailed mapping of the 3D seismic in Vic/P57 has revealed a trend of deeper level
leads which are on trend and look-a-like to the Longtom gas field. The Dexter, Kangafish and Lucifer
leads combined could contain a considerable resource and we are currently undertaking detailed
geological evaluation with the intention of raising them to prospect status.
A first pass interpretation of the recently acquired 2200 km of seismic in T41/P, offshore Tasmania,
has been completed to reveal a series of new and exciting leads while confirming the previously
identified leads. There also appear amplitude anomalies indicative of the presence of hydrocarbons;
first pass studies (AVO analysis) has confirmed the validity of these.
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3D OIL LIMITED
ABN 40 105 597 279
T41/P is a large block (2700 km2), virtually unexplored with only one well despite being only about 50
kilometres from the producing Yolla gas and condensate field. While the Bass Basin has been
traditionally viewed as a gas province there is an emerging belief in the industry that it is in fact quite
“oily”. This is evidenced by the 28 MMbbl (2P) oil and condensate reserves in Yolla accompanying the
330 petajoules of gas.
Two exploration wells will be drilled in the Bass Basin by Beach Petroleum in the fourth quarter with
the West Triton jack up drilling rig. While both wells are close to T41/P they are also are in a similar
geological setting and testing “top Eastern View” closures as we have currently mapped. Following, a
further three wells are also likely to be drilled by Origin in the basin. This increase in activity is based
on the growing industry perception of the prospectivity of the Bass Basin. We are in a very good
position in T41/P with 100% equity and no work commitments over the next year.
Over the coming year my only objective will be to maximise value to shareholders and strive to
minimise the issue of new equity. While the company has no immediate obligations in either permit we
don’t intend to sit still. We are aggressively seeking a suitable development option for West Seahorse
and a leveraged position in both permits through the introduction of appropriate joint venture partners.
We will also actively explore new venture opportunities where we can leverage off a competitive
advantage; primarily knowledge.
Noel Newell
Managing Director
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3D OIL LIMITED
ABN 40 105 597 279
Review of Operations
2008 has been a busy year for 3D Oil Limited, with the company undertaking its first major operations.
These consisted of drilling the Wardie-1 and West Seahorse-3 wells in VIC/P57, Gippsland Basin, and
the acquisition of 2200 km of 2D seismic data in T/41P, Bass Basin. Both operations were completed
in under the scheduled time and under budget.
VIC/P57, GIPPSLAND BASIN OFFSHORE VICTORIA
Background
The Gippsland Basin, offshore Victoria, is historically Australia’s most prolific oil and gas province,
with initial reserves estimated at 4 billion barrels of oil and 11.5 trillion cubic feet of gas. Twenty one
oil and gas fields are on production with most of the hydrocarbons reservoired within clastic
sandstones of the Late Cretaceous to Tertiary Latrobe Group.
Vic/P57 is located in the NW of the Gippsland Basin and is flanked to the south by a number of oil and
gas fields including the giant Barracouta and Snapper fields. The West Seahorse oil discovery lies
within the permit and was drilled in 1981 by Hudbay Oil Australia. The field contains oil at three levels
within the upper Latrobe Group and the uppermost zone was production tested at 1800 BOPD
through a half inch choke. An appraisal well, West Seahorse-2 (1982), drilled into the flank of the field
encountered only a small oil accumulation at the top of the Latrobe Group. The Seahorse field, in the
neighbouring VIC/L8 License block, has strong similarities to West Seahorse and has been on
production since 1991. A recent workover of the Seahorse-1 well (2005) arrested the field’s decline,
returning production to 4000 bopd.
Early exploration in the basin was conducted on 2D seismic data. The latest phase of exploration has
been carried out using 3D seismic, improving both the imaging and the depth conversion.
Approximately 70% of VIC/P57 is covered with the Northern Margin 3D seismic survey acquired by
Esso/BHPB in 2002. Analysis of the data indicated that West Seahorse-2 had been drilled into a low-
lying saddle area. The area to the SE of the well was interpreted to be updip and had the potential to
contain a significant volume of oil.
Drilling Review
Over the preceding 12 months the primary focus of 3D Oil Limited has been the preparation and
drilling of two wells in Bass Strait, West Seahorse-3 and Wardie-1, using the new build jack-up drilling
unit the West Triton. This was the first major operation performed by the company since listing in May
2007.
Leading up to drilling in late April to June 2008, the company undertook an extensive evaluation of the
West Seahorse Field complex including detailed mapping and depth conversion analysis. This work
revealed a new prospect, Wardie, within the greater West Seahorse complex. As a result 3D Oil
Limited chose to drill an exploration well on the Wardie prospect ahead of an earlier planned
exploration well on the Sea Lion prospect, located 7 km west-north-west of West Seahorse. Both were
interpreted as similar in size.
The substitution of Wardie-1 for Sea Lion-1 provided the opportunity to drill the West Seahorse and
Wardie structures as deviated wells from the same location, thereby saving significant rig time with
only one rig move. There were also economic benefits in the event of a discovery at Wardie in a
neighbouring location to the West Seahorse Field.
The West Seahorse-3 well was designed to be both an appraisal and development well on the West
Seahorse Field. The well was targeting the N1, N2.6 and P1 reservoir units encountered in West
Seahorse-1 but from a location interpreted to be updip of the discovery well. An additional level, the
N2.3, which had encouraging oil indications in West Seahorse-1, provided an additional appraisal
objective. The well was to be suspended as a future producer.
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3D OIL LIMITED
ABN 40 105 597 279
The first well, West Seahorse-3 was spudded in late April 2008 and drilled to a measured depth of
1810 metres (1646.5 metres sub-sea). The well encountered the N1 oil reservoir on prognosis and
established that the oil column extended below the lowest known oil in West Seahorse-1 while also
providing a more reliable and modern data set. Excellent reservoir quality was encountered over this
zone and the well has been suspended to enable re-entry and completion as a future oil producer.
The N2.6 and P1 reservoir units, which contained oil in West Seahorse-1, were intersected deep to
prognosis and consequently below the oil water contacts (“OWC”). It is interpreted that a small
localised fault was encountered below the N1 at this location and has resulted in the deeper section
thickening in this area.
Latest mapping indicates this has not had a major impact on the size of the field at these levels.
Samples were taken of the N1 oil and cores were collected from all the reservoir units. These will be
used to assist in the field development planning. It should be noted that both the N1 and N2.6
reservoirs are produced from the neighbouring Seahorse Field from a subsea completion tied back to
the Barracouta Platform.
The Wardie-1 exploration well was spudded in early May 2008, following the suspension of West
Seahorse-3, and drilled to a measured depth of 1766 metres (1580.5 metres sub-sea). The well had a
similar design to West Seahorse-3 with identical reservoir targets.
The Wardie-1 well intersected the Latrobe Group slightly deep to prognosis as a result of strong
velocity gradient variations in the shallow section of this region. The presence of oil was confirmed by
sampling over an 11 metre interval within a series of thin sands interbedded with coal and shale at the
top of the Latrobe Group and stratigraphically higher than the N1 oil reservoir in the West Seahorse-1
and 3 wells. The quality of the reservoir of this zone at Wardie-1 was interpreted as too poor to justify
suspension of the well as a future producer. The well was plugged however the conductor will be cut
at a later date.
In conjunction with the drilling operation and in accordance with the Submerged Lands Act, 3D Oil
Limited submitted and received approval from the Joint Authority for the following;
•
•
•
•
•
Environment Plan
West Triton Safety Case Revision (including Emergency Response Plan, Oil Spill
Contingency Plan) for West Seahorse/Wardie Drilling & Well Testing Addendum
Well Operations Management Plan (West Seahorse-3/Wardie-1)
Application to Drill (West Seahorse-3/Wardie-1)
Approval to Abandon/Suspend
West Seahorse Field
Following on from the drilling of West Seahorse-3, 3D Oil Limited, in conjunction with independent
expert consultants, has undertaken an extensive evaluation of the West Seahorse Field utilising the
newly acquired data from the drilling. This information has been incorporated with the existing 3D
seismic data to generate a new volumetric evaluation of the hydrocarbons in the West Seahorse
Field.
The work carried out to date includes:
•
•
•
•
•
•
Detailed reservoir analysis
Detailed mapping of all hydrocarbon bearing horizons
High density depth conversion
Reservoir fluid analysis
Reservoir simulation
Production forecasting and reserve assessment
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3D OIL LIMITED
ABN 40 105 597 279
3D Oil Limited has paid particular attention to depth conversion of the West Seahorse Field both pre
and post drilling. This area is prone to significant velocity anomalies and it provides a significant risk to
field appraisal and development. New velocity data has been used to improve the field mapping at all
reservoir levels to enable a comprehensive evaluation of reserves and contingent resources. The
West Seahorse field contains three separate oil zones: the N1 (Top Latrobe), the N2.6 and the P1
(both intra Latrobe) formations. Reservoir analysis has confirmed the excellent quality of the reservoir
units. All consist of thick, stacked fluvial channel sandstones and are expected to provide the high
flow rates, supplemented by strong water drive, typical of the Gippsland Basin Latrobe Group
reservoirs.
The “in-house” reserve assessment of the West Seahorse field has been completed in conjunction
with independent consultants and follows SPE/WPC/AAPG guidelines. These guidelines require that
Proved Reserves are those quantities of petroleum which, by analysis of geological and engineering
data, can be estimated with reasonable certainty to be commercially recoverable from a given date.
3D Oil Limited intends to commission an independent reserves certification of the West Seahorse field
to provide independent verification of the reserves and the company’s methodology.
Reserves and Contingent Resources for the West Seahorse Field in Vic/P57
Reserves
N1 and N2.6
Contingent Resource
P1 and NE Fault Block
1P
MMstb
3.12
2P
MMstb
4.63
3P
MMstb
6.04
Low Estimate (P90)
MMstb
1.98
Best Estimate (P50)
MMstb
3.23
High Estimate (P10)
MMstb
5.41
Total Reserves plus Contingent Resource
5.1
7.86
11.45
The West Seahorse-3 well has been suspended as a future producer and can be sidetracked to a
more optimal production location.
Exploration Review
VIC/P57 is a large permit located in the NW of the offshore Gippsland basin. It contains the West
Seahorse oil field and is surrounded by discoveries including Seahorse, Wirrah, Barracouta, Snapper,
Golden Beach, Mulloway/Whiptail, Whiting, Emperor and Sweetlips. Four recent wells have
intersected hydrocarbons in areas adjacent to VIC/P57: Longtom-2 and 3, Grayling-1 and West
Moonfish-1. All were located from mapping on 3D seismic survey. The non-commercial but historically
important Lakes Entrance oil field is located immediately onshore from the northeast corner of the
permit.
Despite the proximity to numerous hydrocarbon discoveries, the permit is lightly drilled, containing
only four exploration wells. Extensive mapping, incorporating the Northern Margin 3D seismic data,
has confirmed the prospectivity of the permit and a portfolio of high quality prospects has been
compiled, which will provide drilling candidates for future campaigns. Three of these prospects are
described below:
Sea Lion
Sea Lion is located to the west of the West Seahorse oil field on an extension of the oil fairway. It is a
simple inversion anticline against the Rosedale Fault with closure mapped at multiple levels below the
Top Latrobe Group. This play type has had a very high historical success rate in the Gippsland Basin
and there is oil at three reservoir levels in the nearby West Seahorse oil field. The P50 recoverable
volume is about 20 MB. The Salsa lead, to the NE, is another inversion anticline at the Top Latrobe
level and provides attractive follow-up potential. The Scooter lead, on a migration spill chain out of
the Emperor and Sweetlips discoveries, is another Top Latrobe closure.
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3D OIL LIMITED
ABN 40 105 597 279
Felix
Felix is located between the Moonfish oil field and the Wirrah discovery. Closure is mapped at
multiple levels from the Intra-Latrobe into the Golden Beach Group. Both the adjacent discoveries
have multiple levels of trapped hydrocarbons. The recoverable volume range is about 15-80 MB
depending on the number of successful levels. Oil and gas were encountered at five main levels at
Moonfish. Felix requires a little more work, mainly to do with optimising the drilling location, to
advance it to “drillable” stage.
Dexter
Dexter is a low-side fault-dependant trap at the level of the Golden Beach Group. A possible direct
hydrocarbon indicator (DHI) is interpreted over the crestal area. The trapping potential along the major
basin-bounding faults of the Gippsland Basin has only recently been recognized and this trapping
style was successful at the Kipper oil and gas field and at the Longtom gas field. More work around
Dexter has identified immediate follow-up potential in the look-alike Lucifer and Kangafish leads along
trend.
T41/P, BASS BASIN OFFSHORE TASMANIA
Technical Review
T41-P is a very large permit in the eastern Bass Basin. The Bass Basin has long been recognized to
contain excellent quality source rocks and has had a high strike rate for intersecting hydrocarbons but
commercial success has proven to be more difficult. This changed in 2006 with the opening of the
Bass Gas project centred on the Yolla oil and gas discovery. The oil industry has acted swiftly in
recognizing the potential in the basin and all remaining acreage has been permitted. Exploration
activity has surged and over the next three years there are 13 wells scheduled to be drilled. Two of
these wells will be drilled in the neighbouring permits during the third and fourth quarters of 2008. 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.
3D Oil Limited’s permit T41-P has been lightly explored with only one well, Chat-1, drilled in 1986. The
well was located on a broad 2D seismic grid and tested a reactivated fault block. A residual oil
column is interpreted in the well, suggesting that the trap was originally hydrocarbon-bearing but
subsequently leaked. Importantly, this indicates that the permit has had access to hydrocarbon
charge.
Existing seismic coverage within T41-P was sparse consisting of data from six surveys ranging in
vintage from 1975 to 1990. Four moderate-sized leads (40 – 140 MB recoverable) were identified
from the broad 2D grid but more seismic was required to mature these to prospect status.
Seismic Acquisition
3D Oil Limited joined a consortium of local operating companies to contract a 2D seismic vessel to
acquire seismic data. The contract was awarded to CGG-Veritas and the 2D seismic vessel, the
Pacific Titan was mobilized to Australia to acquire the data.
The seismic survey was designed to target the SW half of the permit where leads had been identified
and where technical studies suggested there was the best access to hydrocarbons. The 3D Oil
Limited seismic survey was successfully acquired in late April to early May 2008. Acquisition
conditions were good and no weather down-time was experienced.
The seismic data has been processed and interpretation is underway. Preliminary mapping indicates
that there is considerably more structuring than previously thought. The existing leads have been
confirmed and our evaluation indicates a significant increase in the number of leads.
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3D OIL LIMITED
ABN 40 105 597 279
Historically, discoveries in the Bass Basin have been either at the Top Eastern View level or in the
lower Eastern View. The preliminary mapping suggests that many of the new and existing leads have
the potential for stacked objectives, with significant volume upside. Significantly, there is extensive
follow-up potential in the event of a discovery.
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3D OIL LIMITED
ABN 40 105 597 279
SCHEDULE OF PETROLEUM EXPLORATION PERMITS AS AT 30 JUNE 2008
Project Name
Locality
Tenement
Gippsland Basin Victoria
Exploration Permit VIC/P57
Bass Basin
Tasmania
Exploration Permit T41P
Equity
100%
100%
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3D OIL LIMITED
ABN 40 105 597 279
DIRECTORS’ REPORT
The Directors of 3D Oil Limited submit herewith the annual financial report of the Company for the financial year
ended 30 June 2008. 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 office during the financial year and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Name
Mr Peter Willcox
Qualifications
Experience
Particulars
Non-Executive Director and Chairman (Appointed 5 November 2007)
MA
Peter Willcox has a long history in the global oil and gas industry. Mr Willcox was chief
executive officer of BHP Petroleum from 1986 to 1994 and vice president of Amoco Production
Co ltd, along with holding various other roles in London, Houston, Egypt, Iran and Chicago
between 1973 and 1986. Between 1966 and 1973 Mr Willcox occupied positions in London,
Qatar and Abu Dhabi for Iraq Petroleum Company Ltd (a consortium of BP, Shell, Exxon, Mobil,
and Total).
He has previously been Chairman of AMP Ltd, Mayne Group Ltd, Mayne Pharma Ltd and
CSIRO. Mr Willcox gained a physics degree at Cambridge University in the UK and completed
the Senior Executive Programme at the Stanford School of Business.
Directorships in listed entities
Telstra Ltd
AMP Ltd (resigned 6 September 2005)
Mayne Group Ltd (resigned 18 November 2005)
Mayne Pharma Ltd (resigned 5 February 2007)
Relevant interests in shares and
options
25,000 ordinary fully paid shares
4,000,000 options expiring 31 January 2011, exercisable at $0.50.
Mr Noel Newell
Executive Director
Qualifications
Experience
B App Sc (App Geol)
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 Petrofina. 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
Mr Campbell Horsfall
Non-Executive Director
Qualifications
Experience
B.Com., LL.B (Melb)
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 prolific
hydrocarbon regions of the Sacramento and San Joaquin basins.
Directorships in listed entities
Orchard Petroleum Limited (resigned 30 June 2007)
Relevant interests in shares and
options
Nil ordinary fully paid shares
500,000 options expiring 31 January 2011, exercisable at $0.50.
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3D OIL LIMITED
ABN 40 105 597 279
DIRECTORS’ REPORT (CONT’D)
Name
Mr Ian Gorman
Particulars
Non-Executive Chairman (resigned 21 September 2007)
Experience
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
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 field and basin experience with
exposure to projects in over 20 countries.
International and BHP Billiton
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
Griffin. He has direct Bass Strait experience from previous roles in BHP including the discovery
of Moonfish, appraisal of Blackback and in-field development of Kingfish/West Kingfish and the
smaller oil fields.
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 field development and CBM development.
Ms Melanie J Leydin
Executive Director (appointed 21 September 2007 resigned 22 November 2007)
Company Secretary
Qualifications
B.Bus CA
Ms Leydin is a Chartered Accountant and principal in a chartered accounting firm 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.
PRINCIPAL ACTIVITIES
The principal activities of the Company are the production and development of upstream oil and gas.
OPERATION RESULTS
The entity’s net loss for the year after applicable income tax was $19,471,448 (2007: $1,471,727).
REVIEW OF OPERATIONS
Refer to the Review of Operations preceding this Directors’ Report.
FINANCIAL POSITION
The net assets of the entity have increased to $31,725,661 as at 30 June 2008. 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 $11,805,829 compared
with working capital of $26,469,670 in 2007.
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.
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3D OIL LIMITED
ABN 40 105 597 279
DIRECTORS’ REPORT (CONT’D)
CHANGES IN STATE OF AFFAIRS
During the financial year the company:
• The company received $16,500,000 (before costs) via the final payment on party paid shares of $0.15
per share on 110,000,000 shares that were issued as partly paid in the company’s Initial Public Offering
in 2007.
• The company raised $7,020,000 (before costs) through the issue of 13,500,000 shares.
FUTURE DEVELOPMENTS
Disclosure of further information regarding likely developments in the operations of the entity in future financial
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 financial year, that has significantly affected, or may significantly affect, the operations of the entity,
the results of those operations, or the state of affairs of the entity in future financial years.
DIVIDENDS
No dividend has been declared or paid during the financial year and the Directors do not recommend the
payment of any dividend in respect of the current or preceding financial years.
ENVIRONMENTAL REGULATIONS
The economic entity holds participating interests in a number of oil and gas areas. The various authorities
granting such tenements require the licence holder to comply with the terms of the grant of the licence and all
directions given to it under those terms of the licence. There have been no known breaches of the tenement
conditions, and no such breaches have been notified by any government agencies during the year ended 30
June 2008.
SHARE OPTIONS
Share options granted to Directors and executives or their nominees during and since the end of the financial
year:
Directors
Mr P. Willcox
Mr D. Vuckovic
Number of Options
granted
Exercise Price of
Options
$
Expiry Date of
Options
4,000,000
400,000
$0.50
$0.75
31/01/2011
31/03/2013
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
Unlisted Options
Unlisted Options
Unlisted Options
Number of Shares
under option
11,100,000
7,125,000
400,000
Exercise Price of
options
$0.50
$0.60
$0.75
Expiry Date of
options
31 January 2011
31 January 2011
31 March 2013
During the year and up to the date of this report 4,400,000 options were issued, and 1,000,000 options lapsed.
At 30 June 2008, 18,625,000 options were on issue. Refer to the notes to the financial statements for details of
options granted.
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3D OIL LIMITED
ABN 40 105 597 279
DIRECTORS’ REPORT (CONT’D)
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.
DIRECTORS’ MEETINGS
The following table sets out the number of Directors’ meetings held during the financial year and the
number of meetings attended by each Director. During the financial year, 11 Board meetings were
held, 1 audit committee meeting and 1 remuneration committee meeting.
DIRECTORS
Mr P. Willcox (1)
Mr N Newell
Mr C Horsfall
Ms M Leydin (3)
Mr I Gorman (2)
BOARD OF DIRECTORS
HELD
7
11
11
2
2
ATTENDED
7
11
11
2
2
AUDIT COMMITTEE
COMMITTEE
REMUNERATION
COMMITTEE
HELD
1
-
1
-
-
ATTENDED
1
-
1
-
-
HELD
1
-
1
-
-
ATTENDED
1
-
1
-
-
(1) Appointed 5 November 2007
(2) Resigned 21 September 2007
(3) Appointed 21 September 2007, Resigned 22 November 2007
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial 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 officers of the company
and of any related body corporate against a liability incurred as such a director, secretary or executive
officer 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 financial year, except to the extent permitted by
law, indemnified or agreed to indemnify an officer or auditor of the company or of any related body
corporate against a liability incurred as such an officer or auditor.
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services, during the year by the auditor (or
by another person or firm on the auditor’s behalf) is compatible with the general standards of
independence for auditors imposed by the Corporations Act 2001.
There were no non-audit services provided by the company’s auditors during the year to 30 June
2008.
AUDITOR’S INDEPENDENCE DECLARATION
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 21.
14
3D OIL LIMITED
ABN 40 105 597 279
REMUNERATION REPORT (AUDITED)
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.
Remuneration Philosophy
The remuneration of the Company has been designed to align Director and executive objectives with
shareholder and business objectives by providing both a fixed and variable remuneration component
and offering long-term incentives based on key performance areas. The Board believes the
remuneration policy, to be appropriate and effective in its ability to attract and retain the best
Executives and Directors to run and manage the Company, as well as create goal congruence
between Directors, Executives and shareholders.
Executive Director Remuneration
In determining the level and make-up of executive remuneration, the Board negotiates a remuneration
to reflect the market salary for a position and individual of comparable responsibility and experience.
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 fixed remuneration and a long term incentive portion as appropriate.
All Executives are eligible to receive a base salary (which is based on factors such as experience and
comparable industry information) or consulting fee. The Board reviews the Managing Directors
remuneration package, and the Managing Director reviews the senior Executives’ remuneration
packages, annually by reference to the Company’s performance, executive performance and
comparable information within the industry.
The performance of Executives is measured against criteria agreed annually with each executive and
is based predominantly on the overall success of the Company in achieving its broader corporate
goals. Bonuses and incentives are linked to predetermined performance criteria. The Board may,
however, exercise its discretion in relation to approving incentives, bonuses, and options, and can
require changes to the Managing Director’s recommendations. This policy is designed to attract the
highest caliber of Executives and reward them for performance that results in long-term growth in
shareholder wealth.
All remuneration paid to Directors and Executives is valued at the cost to the Company and
expensed. Options are valued using the Black-Scholes methodology.
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 subject to shareholder approval in accordance
with the ASX Listing Rules.
15
3D OIL LIMITED
ABN 40 105 597 279
REMUNERATION REPORT (AUDITED) (CONT’D)
Performance Based Remuneration
Remuneration packages do not include performance-based components. An individual member of
staff’s performance assessment is done by reference to their contribution to the Company’s overall
achievements. The intention of this program is to facilitate goal congruence between Executives with
that of the business and shareholders. Generally, the executive’s remuneration is tied to the
Company’s successful achievement of certain key milestones as they relate to its operating activities.
Further information has not been disclosed as it is commercially confidential.
Relationship between the remuneration policy and company performance
The tables below set out summary information about the Company’s earnings and movements in
shareholder wealth for the year since listing December 2006:
30 June 2008
30 June 2007
30 June 2006
30 June 2005
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
1,740,306
(17,283,270)
(17,283,270)
228,396
(1,471,727)
(1,471,727)
3,833
(79,221)
(79,221)
47
(111,644)
(111,644)
Share price at listing date/start of year
Share price at end of year
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
$0.50**
$0.26
(8.80)cps
(8.80)cps
N/A
N/A
(1.67)cps
(1.67)cps
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
*3D Oil Limited adopted the Australian equivalents to International Financial Reporting Standards with effect from 1 July 2004,
which resulted in various changes in accounting policies from that date.
**3D Oil Limited listed on the Australian Stock Exchange in November 2007.
The remuneration of the Directors and executives are not linked to the performance, share price or
earnings of the consolidated entity.
Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the entity and the company is set
out below.
16
3D OIL LIMITED
ABN 40 105 597 279
REMUNERATION REPORT (AUDITED) (CONT’D)
Details of Remuneration for Year Ended 30 June 2008
The remuneration for each Director and each of the two executive officers of the entity receiving the
highest remuneration during the year was as follows:
Short –term
employment
benefits
Salary, Fees
and
Commissions
$
78,645
280,000
44,411
16,042
230,000
70,730
719,828
Post-
employment
Superannuation
Contribution
$
7,078
25,200
-
919
20,700
-
53,897
Equity
Shares
Received as
Compensation
$
Options
Received as
Compensation
$
Total
$
-
-
-
-
-
-
-
709,600
-
-
-
795,323
305,200
44,411
16,961
-
-
709,600
250,700
70,730
1,483,325
Directors
Mr. P Willcox
Mr N Newell
Mr C Horsfall
Mr I Gorman
Executives
Mr J Keall
Ms M Leydin
Shares Issued as Part of Remuneration for the Year Ended 30 June 2008
There were no shares issued as part of remuneration during the year ended 30 June 2008.
Options Issued as Part of Remuneration for the Year Ended 30 June 2008
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
Number of
Options Vested
Value of
Options
Granted at
grant date
$
Total
Remuneration
Represented by
Options
%
Exercise
Price of
Options
$
Expiry Date of
Options
4,000,000
-
-
4,000,000
4,000,000
500,000
709,600
-
-
89.22
$0.50
-
-
31/01/2011
-
-
-
-
Directors
Mr. P Willcox
Mr. N. Newell
Mr. C Horsfall
Executives
Mr D. Vuckovic
400,000
100,000
119,080
67.44
$0.75
31/03/2013
17
3D OIL LIMITED
ABN 40 105 597 279
REMUNERATION REPORT (AUDITED) (CONT’D)
Details of Remuneration for Year Ended 30 June 2007
The remuneration for each Director and each of the five executive officers of the entity receiving the
highest remuneration during the year was as follows:
Short –term
employment
benefits
Salary, Fees
and
Commissions
$
29,167
248,234
10,000
64,389
64,977
416,767
Post-employment
Equity
Superannuation
Contribution
$
Shares
Received as
Compensation
$
Options
Received as
Compensation
$
Total
$
2,625
14,700
900
5,795
-
24,020
-
-
-
-
-
-
173,100
692,400
86,550
234,600
-
204,892
955,334
97,450
304,784
64,977
1,186,650
1,627,437
2007
Directors
Mr I Gorman
Mr N Newell
Mr C Horsfall
Executives
Mr J Keall
Ms M Leydin
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.
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
%
1,000,000
173,100
4,000,000
692,400
500,000
86,550
84.49
72.47
84.76
Exercise
Price of
Options
First
Exercise
Date
Expiry Date of
Options
$
0.50
0.50
0.50
6/12/07
31/1/2011
6/12/07
31/1/2011
6/12/07
31/1/2011
1,500,000
234,600
76.97
0.50
6/12/07
31/1/2011
-
-
-
-
-
-
2007
Directors
Mr I Gorman
Mr N Newell
Mr C Horsfall
Executives
Mr J Keall
Ms M Leydin
18
3D OIL LIMITED
ABN 40 105 597 279
REMUNERATION REPORT (AUDITED) (CONT’D)
Employment contracts
The Managing Director, N Newell, is employed under contract. The employment contract commenced
on 1 November 2006 and has no fixed 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 fixed, 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 fixed 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 fixed, 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.
The Non-Executive Chairman, Mr P Willcox, is employed under contract. The current employment
contract commenced on 5 November 2007 and has no fixed term. Under the terms of the present
contract:
• Mr Willcox 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 Willcox is only entitled to that portion of
remuneration which is fixed, and only up to the date of termination.
• On termination of the agreement, Mr Willcox will be entitled to be paid those outstanding
amounts owing to him up until the Termination Date.
The Non-Executive Director, Mr C Horsfall, is employed under contract. The current employment
contract commenced on 15 November 2006 and has no fixed term. Under the terms of the present
contract:
• Mr Horsfall 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 Horsfall is only entitled to that portion of
remuneration which is fixed, and only up to the date of termination.
• On termination of the agreement, Mr Horsfall will be entitled to be paid those outstanding
amounts owing to him up until the Termination Date.
19
3D OIL LIMITED
ABN 40 105 597 279
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
Noel Newell
Managing Director
MELBOURNE, 29 September 2008
20
Grant Thornton
ABN 13 871 256 387
Level 2
215 Spring Street
Melbourne
Victoria 3000
GPO Box 4984WW
Melbourne
Victoria
3001
T +61 3 8663 6000
F +61 3 8663 6333
E info@grantthorntonvic.com.au
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF 3D OIL LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of 3D Oil Limited for the year ended 30 June 2008, I declare that, to
the best of my knowledge and belief, there have been:
a No contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
b No contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON
Chartered Accountants
Brad Taylor
Partner
Melbourne, 29 September 2008
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia
Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards legislation*
*other than for acts or omissions of financial services licensees 11
3D OIL LIMITED
ABN 40 105 597 279
DIRECTORS 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 financial 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 financial 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
Noel Newell
Managing Director
MELBOURNE, 29 September 2008
22
Grant Thornton
ABN 13 871 256 387
Level 2
215 Spring Street
Melbourne
Victoria 3000
GPO Box 4984WW
Melbourne
Victoria
3001
T +61 3 8663 6000
F +61 3 8663 6333
E info@grantthorntonvic.com.au
W www.grantthornton.com.au
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 sheet as at 30 June 2008, and the income statement, statement of changes
in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies, other explanatory notes and the directors’ declaration of the company.
Directors’ Responsibility for the Financial 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 controls 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.
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.
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 judgement,
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
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia
Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards legislation*
23
*other than for acts or omissions of financial services licensees
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Electronic Presentation of Audited Financial Report
This auditor’s report relates to the financial report of 3D Oil Limited for the year ended 30 June
2008 included on 3D Oil Limited’s web site. The company’s directors are responsible for the
integrity of the 3D Oil Limited web site. We have not been engaged to report on the integrity of
the 3D Oil Limited’s web site. The auditor’s report refers only to the statements named above.
It does not provide an opinion on any other information which may have been hyperlinked
to/from these statements. If users of this report are concerned with the inherent risks arising
from electronic data communications they are advised to refer to the hard copy of the audited
financial report to confirm the information included in the audited financial report presented on
this web site
Independence
In conducting our audit, we complied with applicable independence requirements of the
Corporations Act 2001.
Auditor’s Opinion
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 the company’s financial position as at 30 June 2008 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; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 19 of the directors’ report
for the year ended 30 June 2008. The directors of the company are responsible for the
preparation and presentation of the Remuneration Report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of 3D Oil Limited for the year ended 30 June 2008,
complies with section 300A of the Corporations Act 2001.
GRANT THORNTON
Chartered Accountants
Brad Taylor
Partner
Melbourne, 29 September 2008
24
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
3D OIL LIMITED
ABN 40 105 597 279
Note
2
3
4
Revenue
Corporate expenses
Administrative expenses
Occupancy expenses
Employment expenses
Share based payments
Depreciation and amortization
Unrealised loss on foreign currency
translation
Exploration costs written off
Loss before income tax expense
Income tax expense
Loss for the year
Loss per share
Basic loss per share
Diluted loss per share
2008
$
2007
$
1,740,306
228,396
(234,334)
(105,429)
(79,393)
(582,768)
(724,485)
(34,894)
(2,458,179)
(17,262,273)
(93,306)
(84,020)
-
(292,166)
(1,205,150)
(25,481)
-
-
(19,741,448)
(1,471,727)
-
-
(19,741,448)
(1,471,727)
Cents per
Share
Cents per
Share *
(10.05)
(10.05)
(1.67)
(1.67)
This statement is to be read in conjunction with the notes to the financial statements.
25
BALANCE SHEET
AS AT 30 JUNE 2008
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
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated losses
Total Equity
3D OIL LIMITED
ABN 40 105 597 279
Note
20(a)
7
8
9
10
11
12
13
13
14
15
2008
$
2007
$
15,228,679
3,488,313
4,231,208
26,458,238
362,986
3,000
22,948,200
26,824,224
39,381
42,405
19,838,046
19,919,832
46,588
11,556
1,888,072
1,946,216
42,868,032
28,770,440
10,599,308
32,573
10,631,881
339,147
15,407
354,554
510,490
510,490
-
-
11,142,371
354,554
31,725,661
28,415,886
50,620,867
2,610,135
(21,505,341)
28,294,129
2,058,750
(1,936,993)
31,725,661
28,415,886
This statement is to be read in conjunction with the notes to the financial statements.
26
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
3D OIL LIMITED
ABN 40 105 597 279
Equity as at 1 July 2006
Loss for the period (A)
Issue of Options
Issued Capital
Accumulated
Losses
Note 14
Option
Reserves
Note 15
Total
449,986
(465,266)
-
(15,280)
-
-
(1,471,727)
-
-
2,058,750
Issue of Shares
30,615,000
Costs of Capital Raising
(2,770,857)
-
-
-
-
Equity as at 30 June 2007
28,294,129
(1,936,993)
2,058,750
28,415,886
(1,471,727)
2,058,750
30,615,000
(2,770,857)
Equity as at 1 July 2007
Loss for the period (A)
Issue of Options
Options Lapsed during the
period
28,294,129
(1,936,993)
2,058,750
(19,741,448)
-
-
724,485
28,415,886
(19,741,448)
724,485
173,100
(173,100)
-
-
-
-
Issue of Shares
23,514,473
Costs of Capital Raising
(1,187,735)
-
-
-
-
23,514,473
(1,187,735)
Equity as at 30 June 2008
50,620,867
(21,505,341)
2,610,135
31,725,661
(A) Loss for the period equals total recognised income and expense for the period.
This statement is to be read in conjunction with the notes to the financial statements.
27
3D OIL LIMITED
ABN 40 105 597 279
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
Cash Flows From Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
Note
20(c)
PARENT ENTITY
2008
$
2007
$
17,730
1,741,149
(1,213,509)
990
56,548
(301,208)
Net cash used in operating activities
545,370
(243,670)
Cash Flows From Investing Activities
Payments for exploration and development
expenditure
Deposits paid for exploration and development
expenditure
Payment for foreign exchange investment
Payment for plant and equipment
Payment for intangibles (software)
(27,360,265)
(1,888,072)
(4,224,687)
(2,458,179)
(14,850)
(43,686)
-
(47,339)
(11,556)
Net cash (used in)/provided by investing activities
(34,101,667)
(1,946,967)
Cash Flows From Financing Activities
Proceeds from issue of equity securities
Proceeds from final payments on partly paid
shares
Payment for share issue costs
7,020,000
16,500,000
30,535,000
-
(1,193,262)
(1,917,257)
Net cash flows from financing activities
22,326,738
28,617,743
Net Increase (Decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of the
financial year
Cash and cash equivalents at the end of the
financial year
(11,229,559)
26,427,106
26,458,238
31,132
20(a)
15,228,679
26,458,238
This statement is to be read in conjunction with the notes to the financial statements.
28
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008
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.
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance
with
the Corporations Act 2001, Australian Accounting Standards, Australian Accounting
Interpretations, other authorative pronouncements on the Australian Accounting Standards Board
and the Corporations Act 2001.
The financial report complies with all Australian Accounting Standards and International Financial
Reporting Standards (“IFRS”).
The financial statements were authorised for issue by the Directors on 29 September 2008.
Basis of preparation
The financial report has been prepared on the basis of historical cost except for the revaluation of
certain non-current assets and financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets received. All amounts are presented in Australian
dollars, unless otherwise noted.
Adoption of new and revised Accounting Standards
In the current year, the Group 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 Group has also adopted the following
standards as listed below which impacted on the Group’s financial statements with respect to
disclosure.
• AASB 101 ‘Presentation of Financial Statements (revised October 2006)
• AASB 7 ‘Financial Instruments: Disclosures’
• AASB 2007-4 ‘Amendments to Australian Accounting Standards arising from ED 151 and
Other Amendments’
• AASB 2007-7 ‘Amendments to Australian Accounting Standards [AASB 1, AASB 2, AASB
4, AASB 5, AASB 107 & AASB 128] and Erratum: Proportionate Consolidation [AASB 101,
AASB 107, AASB 121, AASB 127, Interpretation 113]
Significant accounting policies
The following significant accounting policies have been adopted in the preparation and presentation
of the year financial report:
(a)
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amount of cash, which are
subject to an insignificant risk of changes in value and have a maturity of three months or
less at date of acquisition.
29
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
(b)
Financial instruments issued by the company
Issued Capital
Ordinary shares are classified as equity. For further information see Note 14.
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.
(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
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 flows are included in the cash flow statement
on a gross basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
ii.
(d)
Impairment of assets
At each reporting date or more frequently if events or changes in circumstances indicate a
possible impairment, 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 flows that are largely 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 flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset, excluding goodwill, (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
profit 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 profit 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.
30
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
(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 profit 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).
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 financial 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 sufficient 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 profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from goodwill.
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 financial statements and the corresponding tax base of those
items.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income statement,
except when it relates to items credited or debited directly to equity, in which case the
deferred tax is also recognised directly in equity, or where it arises from the initial accounting
for a business combination, in which case it is taken into account in the determination of
goodwill or excess.
(f)
Petroleum and Exploration Development Expenditure
Petroleum and exploration development expenditure incurred is accumulated in respect of
each identifiable area of interest. These costs are only carried forward in relation to each
area of interest to the extent the following conditions are satisfied:
(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 significant
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 profit 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.
31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
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)
Financial Assets
Financial assets can be classified into the following specified categories: financial assets ‘at
fair value through profit or loss’, ‘held-to-maturity investments’, ‘available-for-sale’ financial
assets and ‘loans and receivables’. The classification depends on the nature and purpose of
the financial assets and is determined at the time of initial recognition. The Company holds
no financial assets ‘at fair value through profit or loss’, ‘held-to-maturity investments’ or
‘available-for-sale’ financial assets.
Investments
Investments are recognised and derecognised on trade date where the purchase or sale of
an investment is under a contract whose terms require delivery of the investment within the
time frame established by the market concerned, and are initially measured at fair value, net
of transaction costs except for those financial assets classified as at fair value through profit
or loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the
company financial statements as the fair value cannot be reliably determined.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments
that are not quoted in an active market are classified as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method less
impairment.
Effective Interest Rate Method
The effective interest rate method is a method of calculating the amortised cost of a financial
asset and of allocating interest income over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where a appropriate, a shorter period.
Income is recognised on an effective interest rate method for debt instruments other than
those financial assets at ‘fair value through profit and loss.’
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for
indicators of impairment at each balance sheet date. Financial assets are impaired where
there is objective evidence that as a result of one or more events that occurred after the
initial recognition of the financial assets the estimated future cash flows of the investment
have been impacted. For financial assets carried at amortised cost, the amount of the
impairment is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
32
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables where the carrying amount is
reduced through the use of an allowance account.
When a trade receivable is uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent the carrying amount of the investment at
the date the impairment is reversed does not exceed what the amortised cost would have
been had the impairment not been recognised.
(h)
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 financial statements in respect of the other equity-settled share-based payments.
(i)
Employment Benefits
A liability is recognised for benefits 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 benefits 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 benefits which are not expected to be settled
within 12 months are measured as the present value of the estimated future cash outflows
to be made by the entity in respect of services provided by employees up to reporting date.
Consideration is given to expected future wage and salary rates, expected employee
departures and expected periods of service. Expected future payments are discounted using
government bond rates, that match, as closely as possible the terms and maturity of
expected future cash outflows.
(i)
Plant and Equipment
Each class of 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.
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
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 flows that will be received fro the asset’s
employment and subsequent disposal. The expected net cash flows 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 benefits associated with
the item will flow 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 financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed 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
Plant and equipment
Depreciation
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 recognised 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 recognised 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 cashflows estimated to
settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised 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 financial asset to that asset’s net carrying
amount.
34
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
(l) Standards and Interpretations issued not yet effective
At the date of authorisation of the financial report, the Standards and Interpretations listed below
were in issue but not yet effective.
Initial application of the following Standard will not affect any of the amounts recognised in the
financial report, but will change the disclosures presently made in relation to the Group and the
company’s financial report:
• AASB 101 ‘Presentation of Financial
Effective for annual reporting periods
beginning on or after 1 January 2009
Statements’ (revised September 2007),
AASB 2007-8 ‘Amendments to Australian
Accounting Standards arising from AASB
101’
• AASB 8 ‘Operating Segments’, AASB 2007-
3 ‘Amendments to Australian Accounting
Standards arising from AASB 8’
Effective for annual reporting periods
beginning on or after 1 January 2009
Initial application of the following Standards and Interpretations is not expected to have any
material impact on the financial report of the Group and the company:
Effective for annual reporting periods
beginning on or after 1 January 2009
AASB 3 (business combinations
occurring after the beginning of
annual reporting periods beginning 1
July 2009) AASB 127 and AASB
2008-3 (1 July 2009)
Effective for annual reporting periods
beginning on or after 1 January 2009
Effective for annual reporting periods
beginning on or after 1 January 2009
Effective for annual reporting periods
beginning on or after 1 July 2009
Effective for annual reporting periods
beginning on or after 1 January 2009
• AASB 123 ‘Borrowing Costs’ (revised),
AASB 2007-6 ‘Amendments to Australian
Accounting Standards arising from AASB
123’
• AASB 3 ‘Business Combinations’ (2008),
AASB 127 ‘Consolidated and Separate
Financial Statements’ and AASB 2008-3
‘Amendments to Australian Accounting
Standards arising from AASB 3 and AASB
127’
• AASB 2008-1 ‘Amendments to Australian
Accounting Standard – Share-based
payments: Vesting Conditions and
Cancellations’
• AASB 2008-5 ‘Amendments to Australian
Accounting Standards arising from the
Annual Improvements Process’
• AASB 2008-6 ‘Further Amendments to
Australian Accounting Standards arising
from the Annual Improvements Process’
• AASB 2008-7 ‘Amendments to Australian
Accounting Standards – Cost of an
Investment in a Subsidiary, Jointly
Controlled Entity or Associate’
35
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
(m)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the
entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus shares issued
during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account the after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all dilutive potential ordinary shares
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.
36
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
2. REVENUE
Revenue from continuing operations
consisted of the following items
Other Income
Rent received
Interest revenue
Total Revenue
3.
LOSS FOR THE YEAR
(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 benefit plans –
Superannuation Contribution
Share based payments:
- Equity settled share based payments
Charges to provisions:
- Employee entitlements
2008
$
2007
$
17,730
1,722,576
1,740,306
900
227,496
228,396
1,740,306
228,396
(22,057)
(12,837)
(7,309)
(18,172)
(34,894)
(25,481)
(68,844)
(24,176)
(724,485)
(1,205,150)
(27,656)
(15,407)
Unrealised foreign currency translation
(2,458,179)
-
Operating lease payments
- Office lease
(76,996)
(43,960)
37
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
4.
INCOME TAX EXPENSE
(a) The Components of Tax Expense comprise:
Current Tax
Deferred Tax
2008
$
2007
$
-
-
-
-
-
-
(b) The prima facie tax from loss for the year before income
tax is reconciled to the income tax expense as follows:
Loss for the year
(19,741,449)
(1,471,727)
Income tax benefit calculated at 30%
Add:
Tax Effect of:
- Share Based Payments
Add/(Less) Temporary Differences:
- Capitalised Deductible Exploration Expenditure
- Unrealised Foreign Exchange Losses
- Deductible Share issue costs
- Other Timing Differences
Tax benefit for the year
Income Tax losses carried forward not taken up as
benefit
Tax Expense
Deferred tax assets not brought to account as assets:
- Tax Losses
- Temporary Differences
(5,922,435)
(441,518)
217,345
(5,705,090)
361,545
(79,973)
(5,234,992)
737,453
(186,299)
9,698
(566,422)
-
(115,035)
48,058
(10,379,230)
(713,372)
10,379,230
713,372
-
-
11,287,892
(5,341,180)
5,946,712
886,593
(91,863)
794,730
The taxation benefits 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 sufficient to enable the benefit
from the deductions for the losses to be realised.
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 benefits from deducting the
losses.
38
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
5.
KEY MANAGEMENT PERSONNEL
The key management personnel of 3D Oil Limited during the year were:
Mr P Willcox (Non-Executive Chairman) appointed the 5 November 2007
Mr I Gorman (Non-Executive Chairman) resigned 21 September 2007
Mr N Newell (Managing Director)
Mr C Horsfall (Non-Executive Director)
Mr J Keall
Mr D Vuckovic (Development Manager) appointed 5 March 2008
Ms M Leydin (Company Secretary and Chief Financial Officer)
(Exploration and Development Manager)
(a) Key Management Personnel Compensation
Details of key management personnel compensation are in the Remuneration Report within the
Directors Report.
(b) Aggregate Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the company is set out below:
Short-term employment benefits
Post employment benefits
Other long-term benefits
Termination benefits
Share based payments
2008
$
719,828
53,897
-
-
709,600
1,483,325
2007
$
416,767
24,020
-
-
1,186,650
1,627,437
Information regarding individual directors and executives compensation and some equity
instruments disclosures as permitted by Corporations Regulations 2M.3.03 and 2M.6.04 are
provided in the Remuneration Report section of the Directors report.
(c) Option holdings by Key Management Personnel or their nominees
Mr I Gorman (1)
Mr N Newell
Mr C Horsfall (2)
Mr J Keall
Ms M Leydin
Balance
1.7.2006
-
-
-
-
-
-
(1) Appointed as Director on 25 September 2006
(2) Appointed as a Director on 20 November 2006
Granted as
Compensation
1,000,000
4,000,000
500,000
1,500,000
-
7,000,000
Mr P Willcox (1)
Mr I Gorman (2)
Mr N Newell
Mr C Horsfall
Mr J Keall
Ms M Leydin
Mr D Vuckovic
Balance
1.7.2007
-
1,000,000
4,000,000
500,000
1,500,000
-
-
Granted as
Compensation
4,000,000
-
-
-
-
-
500,000
Net Change
Other
Balance
30.6.2007
-
-
-
-
-
-
1,000,000
4,000,000
500,000
1,500,000
-
7,000,000
Net Change
Other
Balance
30.6.2008
(1,000,000)
-
-
-
-
-
4,000,000
-
4,000,000
500,000
1,500,000
-
500,000
10,500,000
(1) Appointed as a Director on 5 November 2007
7,000,000
39
4,500,000
(1,000,000)
(2) Resigned as Director on 21 September 2007
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
(d) Shareholdings by Key Management Personnel or their nominees
Mr I Gorman (1)
Mr N Newell
Mr C Horsfall (2)
Mr J Keall
Ms M Leydin
Balance
1.7.2006
-
36,661,450
-
-
-
36,661,450
Received as
Compensation
-
-
-
-
-
Options
Exercised
-
-
-
-
-
-
-
Net Change
Other
-
-
-
-
-
-
Balance
30.6.2007
-
36,661,450
-
-
-
36,661,450
(1) Appointed as Director on 25 September 2006
(2) Appointed as a Director on 20 November 2006
Mr P Willcox (1)
Mr I Gorman (2)
Mr N Newell
Mr C Horsfall
Mr J Keall
Ms M Leydin
Balance
1.7.2007
-
-
36,661,450
-
-
-
Received as
Compensation
-
-
-
-
-
-
Options
Exercised
-
-
-
-
-
-
Net Change
Other
25,000
-
-
-
-
-
Balance
30.6.2008
25,000
-
36,661,450
-
-
-
(1) Appointed as a Director on 5 November 2007
(2) Resigned as Director on 21 September 2007
36,661,450
-
-
25,000
36,686,450
6.
AUDITORS REMUNERATION
Auditor of the Parent Entity –
Grant Thornton
Auditing or reviewing the financial report
Independent Accountants report
7.
TRADE AND OTHER RECEIVABLES
Current
Goods and services tax recoverable
Interest receivable
Other receivables
2008
$
2007
$
26,472
-
26,472
23,731
5,014
28,745
3,335,941
152,275
97
192,069
170,848
69
362,986
(a) The average credit period on trade and other receivables is 30 days. No interest is charged on the receivables.
The Company has financial risk management policies in place to ensure that all receivables are received within
the credit timeframe.
3,488,313
(b) Due to the short term nature of these receivables, their carrying value is assumed to be approximate their fair
value.
8. OTHER CURRENT ASSETS
Prepayments
Deposits paid for Exploration Expenditure
6,521
3,000
4,224,687
-
4,231,208
3,000
40
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
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
Closing carrying value
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
2008
$
2007
$
66,306
(29,925)
36,381
51,455
(4,867)
46,588
46,588
14,851
-
(25,058)
24,730
47,359
(18,192)
(7,309)
36,381
46,588
2008
$
2007
$
55,242
(12,837)
42,405
11,556
43,686
-
(12,837)
11,556
-
11,556
-
11,556
18,192
(18,192)
42,405
11,556
19,838,046
1,888,072
1,888,072
35,212,247
(17,262,273)
-
-
1,888,072
-
-
19,838,046
1,888,072
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 $31,584,952 has been included in cash flows from investing activities in the cash
flow statement and the remainder of the movement has been included in trade payables.
41
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
12. TRADE AND OTHER PAYABLES
Current
Trade payables
Amounts payable to:
- Key management personnel
- Key management personnel related entities
Sundry payables and accrued expenses
2008
$
2007
$
8,215,359
100,602
19,321
-
2,364,628
10,599,308
18,500
183,828
36,217
339,147
The average credit period on purchases is 30 days. No interest is charged on the trade payables. The entity has financial risk
management policies in place to ensure that all payables are paid within the credit timeframe.
13. PROVISIONS
Current
Provision for employee benefits
Non-current
Provision for employee benefits
Provision for Well Abandonment
Movement in Provision for Well Abandonment
Opening carrying value
Provisions for the period
Closing carrying value
32,573
32,573
15,407
15,407
10,490
500,000
510,490
-
500,000
500,000
-
-
-
-
-
-
The provision for well abandonment represents the present value of the director’s best estimate for the
costs to abandon the Wardie-1 Well. This abandonment is expected to take place within the next 5 years.
14.
ISSUED CAPITAL
206,560,000 fully paid ordinary shares
(2007: 83,060,000 (post-split))
110,000,000 partly paid shares
50,260,867
-
3,564,986
24,729,143
50,620,867
28,294,129
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.
42
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
(a) Fully paid ordinary shares
Balance at 1 July 2006
Issue of shares (pre-split)
Share split on 1:259 basis
Issue of shares (post-split)
2008
2007
No.
$
No.
$
83,060,000
-
3,564,986
-
266,550
23,450
449,986
469,000
-
-
-
-
75,110,000
7,950,000
-
2,646,000
Issue of shares upon final call of partly
paid shares
110,000,000 16,500,000
Transfer of party paid shares
- 24,729,143
Issue of shares
13,500,000
7,020,000
Less: Costs of capital raising
-
(1,193,262)
-
-
-
-
Balance at end of financial period
206,560,000 50,620,867
83,060,000
3,564,986
(b) Partly paid ordinary shares (i)
Balance at 1 July 2006
Issue of shares in Initial Public
Offering
Less: Costs of Capital Raising
Final call on partly paid shares and
transfer to fully paid ordinary shares
-
-
-
-
-
-
-
-
-
-
-
-
110,000,000
27,500,000
(2,770,857)
(110,000,000)
(24,729,143)
-
-
(i) Shares were $0.40 partly paid to $0.25. The remaining $0.15 was due and payable by 16 December 2007.
(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 financial year
Granted during the financial year
Exercised during the financial year
Lapsed during the financial year
Balance at end of the financial year
2008
No.
14,225,000
4,400,000
-
(1,000,000)
17,625,000
2007
No.
-
14,225,000
-
-
14,225,000
10,100,000 options entitle the holder to subscribe for one ordinary share in 3D Oil Limited upon the
payment of $0.50. These 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.
7,125,000 options entitle the holder to subscribe for one ordinary share in 3D Oil Limited upon the
payment of $0.60. These 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.
43
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
400,000 options entitle the holder to subscribe for one ordinary share in 3D Oil Limited upon the
payment of $0.75. These options will lapse at 5.00pm (AEST) on 31 March 2013 and are
exercisable from 31 March 2008. 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:
• 4,000,000 options to Non-executive directors valued at $0.1774 per option.
• 400,000 options to Executives valued at $0.2977 per option.
Details of the Directors’ option valuations are included in the Remuneration Report.
16.
DIVIDENDS
There have been no dividends paid or proposed in the 2007 or 2008 financial years.
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
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 Sate Mines Departments. Minimum
expenditure commitments may be subject to
renegotiations 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 on year but not later than five
Later than five years
2008
$
2007
$
79,815
40,690
-
120,505
75,240
112,860
-
188,100
850,000
-
9,090,000
17,900,000
-
850,000
26,990,000
The Minimum Guaranteed Dry Hole Work Programme commitments for Exploration Permit Vic/P57
have been fulfilled with the drilling of Wardie-1 and West Seahorse-3 wells. The Secondary Work
Programme commitments are on a year by year basis and the commitment to 20 June 2009 is
$250,000.
The conditions of Exploration Permit T/41P were amended on 17 June 2008 and are on a year by
year basis. The current year commitment to 19 June 2009 is $600,000.
44
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
18.
SEGMENT INFORMATION
The Company only operates one industry segment, the development of oil and gas and one geographical
segment, 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 2008 there were no related party transactions other than those
detailed in the Remuneration Report.
45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
2008
$
2007
$
20.
NOTES TO THE CASH FLOW STATEMENT
(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
financial year as shown in the cash flow
statement of cash flows is reconciled to
the related items in the balance sheet as
follows:
Cash and cash equivalents
15,228,679 26,458,238
(b) Financing Facilities
The company has no financing facilities in
place at 30 June 2008.
(c) Reconciliation of Loss for the year
After Related Income Tax to Net Cash
Flows From Operating Activities
Loss after related income tax
Less: Non-cash activities:
Depreciation and amortisation of non-
current assets
Share based payments expense
Exploration costs written off
Provision for well abandonment
Unrealised loss on foreign currency
translation
Annual and long service leave provisions
Changes in net assets and liabilities:
(Increase)/decrease in assets:
Current receivables
Increase/(decrease) in liabilities:
Current payables
Net cash (used in) operating activities
46
(19,741,448)
(1,471,727)
34,894
724,485
17,262,273
500,000
25,481
1,205,150
(888)
-
2,458,179
27,656
15,407
(587,185)
(362,986)
(133,484)
345,893
545,370
(243,670)
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
21.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The entity’s principal financial instruments comprise cash and cash equivalents.
The main purpose of these financial instruments is to finance the entity’s operations. The company
has various other financial assets and liabilities such as receivables and trade payables, which
arise directly from its operations. It is, and has been throughout the entire period, the entity’s policy
that no trading in financial instruments shall be undertaken.
The main risks arising from the entity’s financial instruments are cash flow interest rate risk. Other
minor risks are summarized below. The Board reviews and agrees policies for managing each of
these risks.
(a) Cash flow interest risk
The entity’s exposure to the risks of changes in market interest rates relates primarily to the
entity’s short-term deposits with a floating interest rate. These financial assets with variable
rates expose the company to cash flow interest rate risk. All other financial assets and liabilities
in the form of receivables and payables are non-interest bearing. The company does not
engage in any hedging or derivative transactions to manage interest rate risk.
The following tables set out the carrying amount by maturity of entity’s exposure to interest rate
risk and the effective weighted average interest rate risk and the effective weighted average
interest rate for each class of these financial instruments. Also included is the effect on profit
and equity after tax if interest rates at that date had been 10 % higher or lower with all other
variables held constant as a sensitivity analysis.
The entity has not entered into any hedging activities to cover interest rate risk. In regard to its
interest rate risk, the company continuously analyses its exposure. Within this analysis
consideration is given to potential renewals of existing positions, alternative investments and
the mix of fixed and variable interest rates.
There has been no change in cash flow risk since the prior year.
47
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3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
21.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
A sensitivity of 10% has been selected as this is considered reasonable given the current level
of both short term and long term Australian dollar interest rates. A 10% sensitivity would move
short term interest rates at 30 June 2008 from 6.72% to 7.40% representing a 68 basis points
shift. This would represent two to three increases which is reasonably possible in the current
environment with the bias coming from the Reserve Bank of Australia and confirmed by market
expectations that interest rates in Australia are more likely to move up than down in the coming
period. This sensitivity is appropriate to be used for 2007.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash
balances is impacted resulting in a decrease or increase in overall income.
(b) Liquidity risk
The entity is exposed to liquidity risk by having to maintain sufficient cash reserves to
close out market positions in a timely manner and manages this risk by maintaining
sufficient cash reserves and through the continuous monitoring of budgeted and actual
cash flows. The entity aims at maintaining flexibility in funding by having plans in place to
source additional capital as required.
Financial Liabilities
The following tables the Company’s remaining contractual maturity for its non-derivative
financial liabilities.
Contracted maturities of payables as at balance date:
Payable:
- less than 6 months
- 6 to 12 months
- 1 to 5 years
- later than 5 years
Total
(c) Commodity Price Risk
2008
2007
8,255,693
2,343,614
-
-
339,147
-
-
-
10,599,307
339,147
The Company is exposed to commodity price risk. This risk arises from its activities
directed at exploration and development mineral commodities. If commodity prices fall,
the market for companies exploring for these commodities is affected. The Company
does not hedge its exposures.
(d) Foreign Exchange Risk
Foreign exchange risk arises when future commercial transactions and recognised assets and
liabilities are denominated in a currency that is not the entity’s functional currency. The
consolidated entity manages foreign currency risk by minimising the amounts of foreign
currency required and buying foreign currency only at the time it is required. Cash at bank,
prepayments and trade creditors are held in United States Dollars (USD).
49
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
21.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
Note
Amounts in foreign
currency
Interest Rate Risk Sensitivity 2008
+20%
+20%
2008
USD
2007
USD$
2008
$
2007
$
2008
$
2007
$
Financial Assets
Cash at bank
Other Current Assets
Total
Financial Liabilities
Trade and other
payables
Total
Net Financial assets
(liabilities)
7,106,488
3,280,810
10,387,298
1,465,198
1,465,198
8,922,100
1,350,814
631,622
1,982,436
(282,080)
1,700,356
-
-
-
-
-
-
-
-
(1,350,814)
(631,622)
(1,982,436)
-
282,080
(1,700,356)
A sensitivity of 20% has been selected as this is considered reasonable given the current level
of both short term and long term exchange rate movement for this currency and the above
analysis assumes all other variables remain constant.
(e) Net Fair Values
For financial assets and liabilities, the net fair value approximates their carrying value. No
financial assets and financial liabilities are readily traded on organized markets in standardized
form. The company has no financial assets where carrying amount exceeds net fair values at
balance date.
(f) Credit Risk
Credit risk arises from cash and cash equivalents and outstanding receivables. The cash
balances are held in financial institutions with high ratings and the receivables comprise accrued
income receivable, GST input tax credits refundable by the ATO, prepayments for drilling and
rental bonds. The entity has assessed that there is minimal risk that the cash and receivables
balances are impaired.
The consolidated entity’s receivables at balance date are detailed in Note 7
The maximum exposure to credit risk on financial assets of the economic entity which have
been recognised on the Balance Sheet is generally the carrying amount
(g) Capital Risk Management
When managing capital, management’s objectives is to ensure the entity continues as a going
concern as well as to maintain optimal returns to shareholders and benefits for other
stakeholders. Management also maintains a capital structure that ensures the lowest cost of
capital available to the entity.
In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends
paid to shareholders, return capital to shareholder, issue new shares, enter into joint ventures or
sell shares.
50
3D OIL LIMITED
ABN 40 105 597 279
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
21.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
The entity does not have a defined share buy-back plan.
No dividends were paid in 2007 and no dividends are expected to be paid in 2008.
There is no current intention to incur debt funding on behalf of the company as on-going
petroleum exploration expenditure will be funded via equity or joint ventures with other
companies.
The company is not subject to any externally imposed capital requirements.
Management reviews management accounts on a monthly basis and reviews actual expenditure
against budget on a quarterly basis.
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
Earnings (i)
2008
Cents
Per Share
2007
Cents
Per Share
(10.05)
(10.05)
(1.67)
(1.67)
(19,741,448)
(1,471,727)
2008
No
2007
No
Weighted average number of ordinary shares (ii)
196,388,767
88,273,743
(i) Earnings are the same as profit after tax in the income statement.
(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.
213,908,288
7,794,932
(iii) Calculated on a post-split basis.
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 significantly higher than the Company’s share price as at 30 June 2008.
51
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008(CONT’D)
3D OIL LIMITED
ABN 40 105 597 279
23.
SHARE BASED PAYMENTS
During the year the company issued 4,000,000 options to P Willcox, exercisable at $0.50 and expiring
30 January 2011. The options having been valued using the Black-Scholes methodology at $0.1774.
The following variables were used in this calculation:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate:
$0.47
$0.50
78.58%
4.25 years
6.73%
During the year the company issued 400,000 options to D Vuckovic, exercisable at $0.75 and
expiring 31 March 2013. The options having been valued using the Black-Scholes methodology at
$0.2977. The following variables were used in this calculation:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate:
$0.61
$0.75
71.71%
5 years
6.085%
During the previous year the company issued options to I Gorman, N Newell and C Horsfall,
exercisable at $0.50 and expiring 31 January 2011. These options having been valued using the
Black-Scholes methodology at $0.1731. The following variables were used in this calculation:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate:
$0.40
$0.50
83%
2.9 years
5.93%
During the previous year the company issued 1,500,000 options to J Keall, exercisable at $0.50 and
expiring 31 January 2011. These options having been valued using the Black-Scholes methodology
at $0.1564. The following variables were used in this calculation:
Share Price:
Exercise Price:
Volatility:
Time to Maturity:
Risk Free Interest Rate:
$0.40
$0.50
70%
3.56 years
6.415%
24.
EVENTS AFTER THE BALANCE SHEET DATE
There has not been any matter or circumstance that has arisen since the end of the financial year,
that has significantly affected, or may significantly affect, the operations of the entity, the results of
those operations, or the state of affairs of the entity in future financial years.
52
3D OIL LIMITED
ABN 40 105 597 279
ADDITIONAL SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 15 September 2008.
1.
Distribution of Shareholders
(a) Analysis of number of shareholders (Partly paid and fully paid) by size of holding.
Category of holding
Holders
1 – 500
501 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
7
24
160
182
437
154
964
Number of
Shares
383
22,291
517,169
1,601,643
16,489,206
187,929,308
206,560,000
% of Capital
0.00
0.01
0.25
0.78
7.99
90.97
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
HSBC Custody Nominees (Australia) Limited GSI ECSA
Bond Street Custodians Limited
UBS Nominees Pty Ltd
Bond Street Custodians Limited
Bond Street Custodians Limited
HSBC Custody Nominees (Australia) Limited GSI EDA
Bond Street Custodians Limited
National Nominees Limited
Bond Street Custodians Limited
J P Morgan Nominees Australia Limited
Ellie Sunshine Pty Ltd
Fortis Clearing Nominees P/L
UBS Wealth Management
J K Demaria Pty Ltd
Pand JR Pty Ltd
Mad Fish Management Pty Ltd
Brene No 132 Nominees Pty Ltd
Uob Kay Hian (Hong Kong) Limited
Mr J Bell
Presfan Pty Ltd
HOLDING
15,819,314
14,393,884
10,200,000
5,789,880
4,487,470
4,453,409
4,352,710
4,016,358
2,801,952
2,595,538
2,500,000
1,925,100
1,635,100
1,498,000
1,367,145
1,300,000
1,275,833
1,250,000
1,198,711
1,100,000
83,960,404
%
7.66%
6.97%
4.94%
2.80%
2.17%
2.16%
2.11%
1.94%
1.36%
1.26%
1.21%
0.93%
0.79%
0.73%
0.66%
0.63%
0.62%
0.61%
0.58%
0.53%
40.64%
53
3D OIL LIMITED
ABN 40 105 597 279
ADDITIONAL SHAREHOLDER INFORMATION
4.
Restricted Securities
As at 15 September 2008, the company had the following securities subject to escrow arrangement:
Security
Fully paid ordinary shares
Unlisted options (1)
No
83,060,000
14,225,000
Escrow Expiry
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..
5.
Substantial Shareholders
As at 15 September 2008 the substantial shareholders were as follows:
Name of Shareholder
No of Shares
% of Issued Capital
HSBC Custody Nominees (Australia)
Limited GSI ECSA
Bond Street Custodians Limited
15,819,314
14,393,884
7.66%
6.97%
6.
Voting Rights
At a general meeting of shareholders:
(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.
54
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE GOVERNANCE STATEMENT
The directors of 3D Oil Limited believe firmly that benefits will flow from the maintenance of the highest
possible standards of corporate governance. A description of the company’s main corporate governance
practices is set out below. The Company has elected to early adopt the 2nd Edition of the “Corporate
Governance Principals and Recommendations of the ASX Corporate Governance Council” issued by the
ASX Corporate Governance Council in August 2007.
Principal
No
Best Practice
Recommendation
1.1
Establish the functions reserved
to the board and those delegated
to senior executives and disclose
those functions.
Disclose the process for
evaluating the performance of
senior executives.
1.2
1.3
Compliance
Reason for Non-compliance
The board has adopted a formal
charter setting out the
responsibilities of the Board. This
charter can be accessed at
www.3doil.com.au. Any functions
not reserved for the Board and not
expressly reserved for members by
the Corporations Act and ASX
Listing Rules are reserved for senior
executives.
The Board meets annually to review
the performance of executives. The
senior executives’ performance is
assessed against the performance
of the company as a whole.
Not applicable
Not applicable
Provide the information indicated
in the Guide to reporting on
Principal 1.
A performance evaluation has been
completed during the reporting
period in accordance with the
process detailed in 1.2 above.
Not applicable
2.1
A majority of the Board should
be independent of directors.
A definition of director independence
can be accessed at
www.3doil.com.au. Currently 3D Oil
Limited has two independent
directors and one non independent
directors.
Not applicable
2.2
2.3
2.4
The chair should be an
independent director.
The Chairman, Mr Peter Willcox, is
independent.
Not applicable
The roles of chair and chief
executive officer should not be
exercised by the same individual
The Chairman is Mr Peter Willcox
and the Managing Director is Mr
Noel Newell. .
Not applicable
The board should establish a
nomination committee.
The board does not have a
nomination committee.
It is not a company policy to
have a nomination committee,
given the size and scale of 3D
Oil Limited. The role of a
nomination committee is
carried out by the full Board.
The full board considers the
appointment of new directors,
on an informal basis. The
Board’s policy for the
appointment of new directors
to the Board can be accessed
at www.3doil.com.au.
55
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE GOVERNANCE STATEMENT
Principal
No
Best Practice
Recommendation
Compliance
Reason for Non-compliance
2.5
2.6
Disclose the process for
evaluating the performance of
the board, its committee and
individual directors.
Provide the information indicated
in the Guide to reporting on
Principle 2.
3.1
Establish a code of conduct and
disclose the code for a summary
of the code as to:
•
•
•
the practice necessary to
maintain confidence in the
Company’s integrity;
the practices necessary to
take into account their
legal obligations and the
reasonable expectations of
their stakeholders;
the responsibility and
accountability of individuals
for reporting and
investigating reports of
unethical practices.
Establish a policy concerning
trading in Company securities by
directors, senior executives and
employees, and disclose the
policy or a summary of that
policy.
Provide the information indicated
in the Guide to reporting on
Principle 3.
3.2
3.3
4.1
The performance evaluation of
board members occurs by way of an
informal review by the full board (in
the absence of the relevant Board
member)
The skills, experience and expertise
relevant to the position held by each
director is disclosed in the Directors’
Report which forms part of the
Annual Report.
The name of the Independent
Directors are disclosed above.
The directors are entitled to take
independent professional advice at
the expense of the company. The
period of office held by each director
is disclosed in the Directors’ Report
which forms part of this Annual
Report.
The Company has adopted a Board
Code of Conduct and a Company
Code of Conduct, both of which can
be accessed at www.3doil.com.au
Not applicable.
Not applicable
Not applicable
The Company has adopted a
Trading Policy which can be
accessed at www.3doil.com.au.
Not applicable.
The information has been disclosed
in the Annual Report.
Not applicable.
The board should establish an
audit committee.
The company has an established an
Audit Committee.
Not applicable.
56
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE GOVERNANCE STATEMENT
Principal
No
Best Practice
Recommendation
Compliance
Reason for Non-compliance
4.2
4.3
4.4
5.1
5.2
6.1
The audit committee should be
structured so that it: consists
only of non-executive directors;
• consists of a majority of
independent directors;
is chaired by an
independent chair, who is
not chair of the board;
• has at lease three members
•
The Audit Committee has two
members, consisting of the
independent directors, Peter Willcox,
and Campbell Horsfall .
The Audit Committee is chaired by
Campbell Horsfall.
Not applicable.
The audit committee should
have a formal charter.
The formal charter can be accessed
at www.3doil.com.au.
Not applicable.
Provide the information in the
Guide to reporting on Principle 4.
Establish written policies and
procedures designed to ensure
compliance with ASX Listing
Rule disclosure requirements
and to ensure accountability at a
senior executive level for that
compliance and disclose those
policies or a summary of those
policies.
Provide the information indicated
in the Guide to reporting on
Principle 5.
Design a communications policy
for promoting effective
communication with
shareholders and encouraging
their participation at general
meetings and disclose that policy
or a summary of that policy
Not applicable.
The names of the members of the
Audit Committee are disclosed
above. The qualifications of the
members of the Audit Committee are
disclosed in the Directors’ Report
which forms part of this Annual
Report. The audit committee will
meet twice in each year, before sign
off of the annual and half year
financial statements. The external
auditor, Grant Thornton, has a
rotation policy such that lead
partners are rotated every 5 years
and review partners are rotated
every 5 years.
The Company has adopted a
Disclosure Policy which can be
accessed at www.3doil.com.au
Not applicable.
The information has been disclosed
in the Annual Report.
Not applicable.
The Company has adopted a
Shareholder Communications Policy
which can be accessed at
www.3doil.com.au.
Not applicable.
6.2
Provide the information indicated
in the Guide to reporting on
Principle 6.
The information has been disclosed
in the Annual Report
Not applicable.
57
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE GOVERNANCE STATEMENT
Principal
No
Best Practice
Recommendation
Compliance
Reason for Non-compliance
The Company has adopted Risk
Management Policy which can be
accessed at www.3doil.com.au.This
policy outlines the material risks face
by the Company as identified by the
Board. Given the size and scale of
3D Oil Limited it does not have a
Risk sub-committee or Internal Audit
function.
The Board believes the risk
management and internal control
systems designed and implemented
by the Directors and the Financial
Officer are adequate given the size
and nature of the company’s
activities. The board informally
reviews and requests management
to report on risk management and
internal control.
The Board receives assurance from
Mr Noel Newell (Managing Director)
and the chief financial officer in the
form of a declaration, prior to
approving financial statement.
Not applicable.
Management has not formally
reported to the board as to the
effectiveness of the company’s
management of its material
business risks. Given the
nature and size of the
Company and the Board’s
ultimate responsibility to
manage the risks of the
Company this is not
considered critical. The
company intends to develop
the risk reporting framework
into a detailed policy as its
operations continue to grow.
Not applicable.
7.1
7.2
7.3
Establish policies for the
oversight and management of
material business risk and
disclose a summary of those
policies.
The board should require
management to design and
implement the risk management
and internal control system to
manage the Company’s material
business risks and report to it on
whether those risks are being
managed effectively. The board
should disclose that
management has reported to it
as to the effectiveness of the
Company’s management of its
material business risks.
The board should disclose
whether it has received
assurance from the chief
executive officer (or equivalent)
and the chief financial office (or
equivalent) that the declaration
provided in accordance with
section 295A is the Corporations
Act is founded on a sound
system of risk management and
internal control and that the
system is operating effectively in
all material respects in relation to
financial reporting risks.
7.4
Companies should provide the
information indicated in the
Guide to reporting on Principle 7.
The information has been disclosed
in the Annual Report.
Not applicable.
58
3D OIL LIMITED
ABN 40 105 597 279
CORPORATE GOVERNANCE STATEMENT
Principal
No
Best Practice
Recommendation
8.1
The board should establish a
remuneration committee.
8.2
Companies should clearly
distinguish the structure of non-
executive directors’
remuneration from that of
executive directors and senior
executives.
8.3
Companies should provide the
information indicated in the guide
to reporting on Principle 8.
Compliance
Reason for Non-compliance
The Board has an established
Remuneration Committee. The
Remuneration Committee has two
members, consisting of the
Independent directors, Campbell
Horsfall and Peter Willcox. There
was a single meeting of the
Remuneration Committee during the
reporting period which was attended
by all member of the Remuneration
Committee. The Remuneration
Committee is chaired by Campbell
Horsfall. The Remuneration
committee charter can be access at
www.3doil.com.au.
The structure of non-executive
directors’ remuneration is clearly
distinguished from that of executive
directors and senior executives, as
described in the Directors’ Report
which forms part of this Annual
Report.
The information has been disclosed
in the Annual Report.
Not applicable.
Not applicable.
Not applicable.
59