More annual reports from 3D Oil Limited:
2023 Report3D Oil Limited
Annual Report 2011
Contents
1 Corporate Directory
2 Managing Director’s Report
4 Chairman’s Letter
6 Review of Operations
14 Directors’ and Remuneration Report
24 Independence Declaration
25 Financial Report
26 Statement of Comprehensive Income
27 Statement of Financial Position
28 Statement of Changes in Equity
29 Statement of Cash Flows
30 Notes to the Financial Statements
47 Directors’ Declaration
48 Independent Audit Report
51 Corporate Governance Statement
57 Shareholder Information
Highlights
A highlight of the past year in VIC/P57 has been the West Seahorse
Reserves and Resources Statement received from Gaffney, Cline &
Associates in early 2011. This independent review of the field resulted in
a best estimate of Contingent Resource (2C) of 9.2 MMbbl recoverable.
An evaluation of the Gurnard Formation, which occurs at the top of
the Latrobe Group, concluded that within the West Seahorse Field it
contains a significant oil in-place volume (Most Likely 9.1 MMbbls). It has
previously not been regarded as a potential target however, a closer
examination suggests that it commonly contains hydrocarbon shows
within the VIC/P57 region and provides a further exploration target.
The Dalrymple 3D seismic survey was conducted early in 2011 in T/41P
with no delays. The survey was acquired in just less than five days,
and completed without any HSE incidents and under budget. The
interpretation of this new seismic data, will enable the leads within the
Dalrymple survey area to be upgraded to prospects, the best of which
will then be considered for exploration drilling.
Corporate Directory
Directors
Campbell Horsfall
(Non-Executive Director and
Chairman)
Noel Newell
(Managing Director)
Melanie J Leydin
(Non-Executive Director)
Philippa Kelly
(Non-Executive Director)
Keith Edwards
(Non-Executive Director)
Company secretary
Melanie J Leydin
Registered office
Level 5
164 Flinders Lane
Melbourne
Victoria 3000
Telephone (03) 9650 9866
Principal place of business
Level 5
164 Flinders Lane
Melbourne
Victoria 3000
Share register
Computershare Investor
Services Pty Limited
452 Johnson Street
Abbotsford
Victoria 3067
Telephone (03) 9415 5000
Auditor
Grant Thornton Audit Pty Ltd
Chartered Accountants
215 Spring Street
Melbourne
Victoria 3000
Solicitors
Baker & McKenzie
Level 19
181 William Street
Melbourne
Victoria 3000
Stock exchange listing
3D Oil Limited shares are listed on
the Australian Securities Exchange
(ASX code: TDO)
Website address
www.3doil.com.au
1
3D image of the West Seahorse complex
3D seismic image along the
Rosedale Fault System
“
It is my firm belief that in these times we stick to our
knitting – in other words, we continue with our stated strategy.
From the outset it has been our objective to become an oil and
gas producer, initially focussed, on what we know best; Bass
Strait. This is within reach.”
3D image of the West Seahorse complex
Seismic amplitude image in the West Seahorse region
2
Managing Director’s Report
Seismic amplitude image illustrating fluvial
system near top of Latrobe Group
We live in dangerous times. This may
be a cliché and we may have experienced
economic crises before – but in our
lifetimes we have not seen a time
when governments of some of the
major economies of the world are part
of the problem. Business entities of all
persuasions and size face challenges,
not just of growth, but of survival.
These challenges arguably appear
most calamitous at the helm of a small
public company. The fact that we don’t
yet have cash flow adds to the burden.
However, we are not alone in this
situation at 3D Oil. I speak regularly to
many of my compatriots at small resource
companies and realise we all face the
same challenges.
The question is: how to react to this
situation? We sense we must do
something, or at least be perceived to
be doing something. Some may take a
cautious approach, and effectively shut
down their businesses and wait until the
climate changes. Others may scramble
about believing that activity equals
productivity. Some may even change their
business model in an attempt to find a
path through the financial road blocks.
You can try harder, be more resourceful,
more creative, or even try to be smarter.
But that assumes we weren’t already
doing these things, and that the business
climate is not all-pervasive. With hindsight
many can see how we may have improved
our performance – but we are in the here
and now.
We completed the Dalrymple 3D
seismic survey, under budget, in our
Bass Basin permit, T/41P. We will now
undertake detailed prospect mapping
which, combined with our regional
prospectivity analysis, should provide a
strong position to attract a partner in
the forthcoming year.
It is my firm belief that in these times we
stick to our knitting – in other words, we
continue with our stated strategy.
From the outset it has been our objective
to become an oil and gas producer,
initially focussed, on what we know best;
Bass Strait. This is within reach.
We must remember 3D Oil is in an
enviable position, owning 100% of a
9.2 MMbbl (2C) oil field in the Gippsland
Basin together with arguably the two
best oil prospects in Australia: Sea Lion
and Felix.
While we continued our search for
a strategic partner during this difficult
year, we reviewed and improved our
development plans for West Seahorse.
The certification from Gaffney, Cline &
Associates of West Seahorse was a very
positive step. We continued to de-risk
our prospects with rigorous evaluation,
while 3D seismic reprocessing
nears completion.
We have undertaken reviews of
opportunities in Bass Strait and have
made application to acquire further
permits that best fit our strategy. This is
the right time to attempt to increase our
acreage position in our niche area.
I believe 3D Oil has taken the correct
approach during this difficult time, and
is poised to achieve our stated aim of
becoming a significant producer and
experience healthy growth when the
economic conditions begin to improve.
I remain 100% committed to delivering
value to our shareholders, first and
foremost, above all else.
Noel Newell
Managing Director
3
Above and below:
3D seismic images of the West Seahorse
complex illustrating the main reservoirs
4
Chairman’s Letter
3D seismic image from the recently acquired
Darymple 3D seismic survey in the Bass Basin,
offshore Tasmania
2011: A Year of Positioning
In the current economic climate a
company such as 3D Oil faces significant
challenges from factors beyond its
control. These include the highly volatile
equity and currency markets and a
crisis of confidence generally. In these
circumstances, it is our job to make sure
that the company survives the onslaught
so that, when things do improve, it is well
positioned to take advantage of what, on
any analysis, is an impressive asset base.
In this regard, there were some pleasing
aspects about 3D Oil‘s performance
during the year ended 30 June 2011
and I remain cautiously optimistic about
its prospects heading into the new
financial year. It was encouraging to see
the upgrade in West Seahorse reserves by
the global petroleum consulting firm
Gaffney, Cline and Associates and have an
internationally recognised expert verify
the extent of the petroleum accumulation
in VIC/P57.
The upgrade has come at an important
time for 3D Oil and has two benefits. The
first is that it increases the net present
value of the forecast for the West
Seahorse Development project, which in
turn makes the project more attractive to
financiers and has potential to increase
cash flow. Secondly, we have seen
continued interest expressed by
oil companies who want to farm in into
the permit and a standard condition of
most farm out arrangements has now
been met.
It is important to outline the commercial
reason behind the decision to farm out
an interest in the permit. This strategy,
which is commonplace in the oil industry,
will enable 3D Oil to carry out future
drilling operations. At the same time it will
provide access to expertise and overseas
capital to ensure the company achieves
its objectives. The process has proved
to be much longer than anticipated,
primarily for the reasons outlined above.
However, the board remain positive
about the likelihood of a transaction
taking place.
As mentioned in the Operations report,
3D Oil has also secured its major asset,
the VIC/P57 Exploration Permit, for a
further five years and has also adopted
a pro-active approach to acquiring new
acreage with a view to diversifying its
portfolio. In this regard it was good to
see the acquisition of seismic data for
the T/41P Exploration Permit achieved
in an efficient and cost effective manner.
There have been significant oil and gas
discoveries recently in the Bass Basin so
the company has positioned itself well by
exploring in this area.
During the past two years the company
has been successful in developing a team
of seasoned oil industry professionals
who, together with a talented and
committed board, are determined to
overcome the challenges it faces and
manage its assets very hard to add
value for shareholders. I thank them for
their contribution during the year as I
do shareholders for their support of this
emerging oil company during this
difficult time.
Campbell Horsfall
Chairman
5
Review of Operations
In the past year 3D Oil Limited has been
active in both of its 100%-owned permits
(Figure 1) Gippsland Basin VIC/P57 and
Bass Basin T/41P, as well as conducting
assessments of several other potential
new opportunities.
After a postponement due to vessel
unavailability in early 2010, the 264
square kilometre Dalrymple three
dimensional seismic survey was
conducted early in 2011 in the south-
west of T/41P. With no delays due to
weather or equipment problems, the
survey was acquired in just less than
five days, and was completed without
any HSE incidents. The seismic data
was then dispatched for processing,
which was completed on schedule and
received by 3D Oil Limited in late August
2011. Interpretation of this data has
commenced, in conjunction with other
studies, with the aim of upgrading at least
some of the existing prospects and leads
to a status that could justify their ultimate
evaluation via exploration drilling.
In VIC/P57, the reprocessing of the
existing 3D seismic data in and adjacent
to the permitthat commenced in the
latter part of 2010 has continued through
2011. Although originally anticipated
to be completed around the middle of
the year, the final reprocessed data will
be received later in 2011. This delay
has resulted from some of the required
improvements to the data proving to be
more challenging to achieve than initially
expected. However, given the importance
of ensuring that the reprocessed data is
as good as state-of-the-art techniques
can make it, especially with regard to
imaging at deeper levels, the extra time
has been warranted.
The company also undertook an
evaluation of the Gurnard Formation
at the top of the Latrobe Group within
the West Seahorse area and currently
estimates the formation contains a
significant oil in-place volume over the
greater West Seahorse structure.
A highlight of the past year in VIC/P57
has been the West Seahorse Reserves
and Resources Statement received from
Gaffney, Cline & Associates in early 2011.
This independent review of the field
resulted in a significant increase in the
estimated size of the oil accumulation.
6
VIC/P57
T/41P
Figure 1. 3D Oil Limited current permits
Vic/P57 original and renewed areas
VIC/P57
Scooter
Salsa
Kangafish Lucifer
Dexter
Sea Lion
Sea Monkey
West
Seahorse
Hippo
Wardie
Golden Beach
Seahorse
Barracouta
Figure 2. Exploration permit VIC/P57, showing
prospects and leads and the approximate area over
which 3D seismic data is being reprocessed. (Note;
dashed outline shows area of original permit which
has been relinquished).
Flinders
Sweetlips
West Moonfish
Felix
Moon
fish
Wirrah
Snapper
Whiting
km
0 5 10
Gas Field
Oil Field
Prospects and leads
Latrobe Group
Golden Beach or
Emperor Group
Seismic
Reprocessing
Vic/P57 original and renewed areas
Figure 3. Gippsland Basin stratigraphy. Seismic reprocessing is being
conducted to improve imaging of the Golden Beach and Emperor
Subgroups in the lower Latrobe Group.
The company continued its pursuit of a
strategic joint venture partner for both its
exploration and development programs.
Discussions and negotiations are
continuing with several overseas parties.
The company has actively reviewed
a number of opportunities to deliver
growth using the stated key criteria in the
prospectus as a template.
VIC/P57, Gippsland Basin,
Offshore Victoria
Background
Located in the north-west of the offshore
Gippsland Basin, the VIC/P57 exploration
permit has been held 100% by 3D Oil
Limited since it was awarded in April,
2004. Although only lightly explored
previously, the permit contains the West
Seahorse oil field, which was discovered
in 1981. In 2008 3D Oil Limited drilled
the West Seahorse-3 appraisal well and
the nearby Wardie-1 exploration well.
Subsequent to that drilling, various
development options for West Seahorse
have been investigated and exploration
of other oil and gas opportunities within
the permit has continued.
In August 2011 the VIC/P57 permit was
renewed for another five years. After
the required relinquishment of some of
the original acreage, the renewed permit
(Figure 2) comprises about 483 square
kilometres and, most importantly, retains
all of the previously identified prospects
and leads.
Exploration
During the past year the dominant
exploration activity conducted in VIC/P57
has been the extensive reprocessing of
the 2001-2 Northern Fields 3D seismic
data. Encompassing over 500 square
kilometres across VIC/P57 and adjacent
oil and gas discoveries the reprocessing
project has primarily been focused on
improving the seismic imaging of the
deeper Latrobe Group, comprising the
Golden Beach and Emperor Subgroups
(Figure 3). State-of-the-art techniques
have been applied to the original data
to minimise noise and multiples, with
the goal of attaining the best possible
data set for mapping the subsurface
structures and assessing their petroleum
prospectivity.
7
e
s
n
o
p
s
e
R
Figure 4. Whole oil gas chromatogram from the Gurnard Formation in the
Wardie-1 exploration well.
Retention time
Review of Operations
Continued
Due to the geological complexity of
some parts of the shallower section,
achieving significant improvements
in the image quality at depth has
proved to be very challenging, which
necessitated more iterations of some
of the processing steps than originally
anticipated. Although this has not added
substantially to the cost, it has delayed
the completion of the reprocessing by
a few months. However, the extra time
and effort taken to optimize the quality
of the final data will clearly be beneficial
in the interpretation phase, allowing
the best possible mapping of the target
horizons at all levels, especially in the
Golden Beach and Emperor Subgroups.
While these older, deeper sediments have
been found to contain hydrocarbons in
several structures along the central and
eastern areas of the northern margin of
the Gippsland Basin, the distribution of
hydrocarbons in this section in wells in
the VIC/P57 area is difficult to predict due
to the previous inability to map seismic
data with confidence.
When the final reprocessed seismic
data is received, re-mapping at multiple
levels across the full data set will be
undertaken to both further refine the
structural features already identified and
to complement these with structures
that could not be confidently mapped
previously. In particular, the company is
excited by the deep potential in the Felix
and Sea Lion prospects, and the expected
ability to upgrade the Lucifer and Dexter
leads to the status of prospects.
Other work conducted during the past
year included an evaluation of the
Gurnard Formation. This formation,
which occurs at the top of the Latrobe
Group, is an open marine unit comprising
thinly interbedded claystone, siltstone
and sandstone laminae in the VIC/P57
area. Due to its previously inferred lack
of adequate reservoir quality in this area
of the basin, it has not been regarded
as a potential target. However, a closer
examination of the limited data from
intervals of this unit penetrated in
VIC/P57 wells suggests that the silts
and sands within it commonly contain
hydrocarbon shows. The best example
of this was the retrieval of approximately
600 cc of oil via wire line testing in the
8
West Seahorse Field Contingent Resources (MMBbl)
Reservoir
Gross 100% Field
Main Reservoirs
N1u/N1/N2.6
Secondary Reservoir
Gurnard
Total West Seahorse
Field
1C
4.2
0.0
4.2
2C
7.4
1.8
9.2
3C
10.6
3.9
14.5
Table 1. West Seahorse field contingent resources reported by GCA independent review.
Figure 5. Three-dimensional perspective image of the main reservoirs in West Seahorse
field (arrow pointing north).
N
Wardie-1 exploration well (Figure 4).
At present the company estimates the
Gurnard Formation contains a significant
oil in-place volume (Most Likely 9.1
MMbbls) over the greater West Seahorse
structure, but validation of this, and
evaluation of its producibility can only be
achieved with specific measurements and
tests in future drilling.
West Seahorse Development
In late 2010 and early 2011 an
independent review of West Seahorse
field and the development concept
proposed by 3D Oil was conducted by
Gaffney, Cline & Associates (GCA). This
comprised an audit of 3D Oil’s technical
work, as well as GCA performing its
own technical and commercial analyses
appropriate to test the feasibility of the
project. As shown in Table 1, the resulting
West Seahorse Reserves and Resources
Statement reported low (1C), best (2C)
and high (3C) estimates of contingent
resources for the main reservoirs of
the upper Latrobe Group (Figure 5) and
the currently less well-defined Gurnard
Formation reservoir. GCA have reported
that “a reclassification of some volumes to
the Reserves category may be possible”
when a Production Licence is granted.
9
Review of Operations
Continued
3D Oil considers GCA’s low case estimate
(4.2 MMbbls) to be a very important
validation of the low-side estimate
because even this low-side recoverable
volume estimate is economic with
the proposed development scenario –
providing confidence in the commercial
viability of the West Seahorse project.
Financing the West Seahorse
development remains the company’s
primary challenge and it has focused
on finding a twofold solution; securing
a strategic joint venture partner
and securing debt financing. In the
case of the latter, the company has
conducted discussions with a number
of debt providers. These discussions
have involved a detailed review of the
development economics and risks, to
which favourable responses have been
received. Undoubtedly, the 20 year
production history of the neighbouring
analogous Seahorse Field supports the
viability of West Seahorse.
The development plan for the field, a
subsea tie back to shore of the suspended
West Seahorse-3 well (Figure 7) has
remained largely unchanged during past
12 months; though some minor changes
have been incorporated. The 14 kilometre
offshore line will consist of two pipelines,
an 8 inch multi-phase and a 2 inch gas
lift, as well as a control umbilical line.
The shore crossing will be horizontal
directionally drilled with onshore lines
utilising existing hydrocarbon pipeline
easements. The crude will be stabilised
at a small new-build plant and either
exported by road tanker or existing
third-party oil pipeline.
10
Reserves Category
1C
2C
3C
TDO – Review 2009
Reserves (MMstb)
4.1
5.3
6.8
GCA Certification 2010
Contingent Resource
(MMstb)
4.2
9.2
14.5
14.5 MMstb
+113%
9.2 MMbbl
+74%
5.3MMbbl
6.8MMbbl
4.2MMbbl
4.1MMbbl
)
b
t
s
M
M
(
e
m
u
o
V
l
15
12
9
6
3
0
1C
2C
3C
GCA upgrade 2010
3D Oil Review 2009
Figure 6. Comparison of West Seahorse field producible volumes estimates
TDO 2009 and GCA 2011.
10km
1 9 k m O n s h ore Pip e
N Oil a n d 6 5 D
2 0 0 D
N G aslift lin e
N
HPU & Control at Landfall
West Seahorse
Sub-sea
well head
1
4
k
m u
m
1
4
k
2
0
m O
0
D
ff
N p
r
s
h
o
r
o
d
u
bilic
al
e Pip
c
tio
n: 6
e
5
D
Proposed New Oil Processing
Plant near Dutson Downs
Figure 7. Proposed development concept for West Seahorse field.
N g
a
s lift
Figure 8. Location map for exploration permit T/41P.
T/41P, Bass Basin, Offshore
Tasmania
Background
Situated in the eastern Bass Basin
(Figure 8) exploration permit T/41P
covers an area of approximately 2,700
square kilometres and has been held
100% by 3D Oil Limited since it was
awarded in June 2005. As with all of the
eastern Bass Basin, the area comprising
T/41P had only been lightly explored,
with various vintages of sparse, relatively
old two dimensional (2D) seismic data and
only one exploration well. Drilled in 1986,
Chat-1 tested a reactivated fault block
and encountered a residual oil column
which indicates the T/41P permit area
has had access to hydrocarbon charge
in the past.reactivated fault block and
encountered a residual oil column which
indicates the T/41P permit area has had
access to hydrocarbon charge in the past.
In 2008, 3D Oil acquired 2200 line
kilometres of 2D seismic in T/41P, largely
focused on the south-western half of the
permit, where previous work suggested
the best access to hydrocarbons occurs.
Interpretation of this data culminated
in multiple leads, with the potential to
contain over 800 MMbbl of recoverable oil
equivalent (un-risked).
To follow up the most prospective of
these leads, 3D Oil then planned to
conduct a threedimensional (3D) seismic
survey in early 2010, but this had to be
deferred when the acquisition vessel
became unavailable within the require
timeframe. A 12-month suspension and
extension to the work program conditions
and permit term for Year 5 were granted
by the Joint Authority in March 2010.
11
Review of Operations
Continued
Exploration
The primary exploration activity in T/41P
in the past year has been the successful
acquisition and processing of the 3D
seismic survey that had been cancelled
the previous year. After months of
planning, tendering, contracting and
gaining government approvals, the 264
square kilometre Dalrymple 3D seismic
survey was conducted over five days in
late January and early February 2011 with
no delays or HSE incidents – ahead of
schedule and under budget. The survey
was acquired using the PGS 12-streamer
vessel MV Ramform Sterling (Figures 9
and 10).
Processing of this survey with state-
of-the-art techniques commenced in
mid-February and was completed on
schedule in August 2011. Figure 11
shows a preliminary image of one of the
key surfaces juxtaposed against two
orthogonal seismic lines from the new
3D seismic data.
12
Figure 9. MV Ramform Sterling just prior to starting the Dalrymple 3D seismic survey.
m
k
2
3
1
.
Figure 10. Schematic of hydrophone streamer array on the MV Ramform Sterling.
5.5km
3D Oil has also been updating its
geological studies over a large part of
the Bass Basin during the year. The
completion of this work, coupled with the
interpretation of the new seismic data,
will enable the leads within the Dalrymple
survey area (Figure 12) to be upgraded to
prospects, the best of which will then
be considered for evaluation by
exploration drilling.
With regard to drilling, the original T/41P
permit work programme required that a
decision on whether or not to commit to
drill an exploration well be made prior to
the middle of 2011. At the end of March
2011, in recognition of the fact that the
newly-acquired seismic data would not
be available to assist with this decision
until much later in the year, the Joint
Authority granted a variation to the work
programme removing the requirement
for an exploration well to be drilled
before mid-2012.
Figure 12. Previously mapped leads in the
south-west of T/41P, and the outline of
the Dalrymple 3D seismic survey.
13
Figure 11. Preliminary three-dimensional perspective image of one of the prospective
horizons interpreted in the Dalrymple 3D seismic data (looking north).
Tolpuddle
Pembroke
Chat-1
Delamere
Tamar
Strathlyn
Glengarry
Dalrymple
Humbug
Directors’ Report
The directors present their report,
together with the financial statements,
on the company for the year ended 30
June 2011.
Review of operations
The loss for the company after providing
for income tax amounted to $1,003,568
(30 June 2010: $857,435).
Directors
The following persons were directors
of the company during the whole of the
financial year and up to the date of this
report, unless otherwise stated:
Mr Campbell Horsfall
Mr Noel Newell
Ms Melanie Leydin
Ms Philippa Kelly
Mr Keith Edwards
(appointed 30 June 2011)
Principal activities
During the financial year the principal
continuing activities of the company
consisted of exploration and development
of upstream oil and gas assets
Dividends
There were no dividends paid or declared
during the current or previous financial year.
Refer to the detailed Review of Operations
preceding this Directors’ Report.
Financial Position
The net assets of the Company have
decreased by $956,461 to $29,094,716 as
at 30 June 2011 (2010: $30,051,177) due
to normal operating costs.
The Company’s working capital, being
current assets less current liabilities, was
$3,645,601 compared with working capital
of $8,348,495 in 2010. The working
capital decrease is due to the exploration
expenditure and working capital paid
during the year.
Based on the above the Directors believe
the Company is in a stable position to
expand and grow its current operations.
Significant changes in
the state of affairs
There were no significant changes in the
state of affairs of the company during the
financial year.
Matters subsequent to the
end of the financial year
No matter or circumstance has arisen
since 30 June 2011 that has significantly
affected, or may significantly affect the
company’s operations, the results of those
operations, or the company’s state of
affairs in future financial years.
Likely developments and expected
results of operations
Information on likely developments in
the operations of the company and the
expected results of operations have not
been included in this report because the
directors believe it would be likely to result
in unreasonable prejudice to the company.
Environmental regulation
The Company 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 2011.
Name
Particulars
Mr Campbell Horsfall
Non–Executive Director and Chairman
Qualifications
B.Comm., LL.B (Melb)
Experience and expertise
Campbell Horsfall is a lawyer 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 was General Counsel of Vicpower Trading.( formerly the
State Electricity Commission of Victoria) Campbell holds Degrees in Law and Commerce
from the University of Melbourne and a Diploma from the Securities Institute and
practices as a barrister in Melbourne.
Campbell has commercial expertise in fund raisings, mergers and acquisitions as well as
the day to day running of a an ASX listed public company. He has been a director of two
other public companies and was a non-executive director of Orchard Petroleum Limited.
Orchard Petroleum is an oil and gas exploration company based in California USA.
Other current directorships
None
Former directorships (in the last 3 years)
None
Special responsibilities
Member of Audit Committee and Remuneration and Nomination Committee
Relevant interests in shares
Relevent interests in options
38,000 ordinary fully paid shares
None
14
Name
Mr Noel Newell
Qualifications
Experience and expertise
Particulars
Executive Director
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 Company 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.
Other current directorships
None
Former directorships (in the last 3 years)
None
Special responsibilities
None
Relevant interests in shares
Relevent interests in options
37,805,150 ordinary fully paid shares
None
Ms Melanie Leydin
Non–executive Director and Company Secretary
Qualifications
Experience
B.Bus CA
Ms Leydin is a Chartered Accountant and is a Registered Company Auditor. She Graduated
from Swinburne University in 1997, became a Chartered Accountant in 1999 and since
February 2000 has been the principal of chartered accounting firm, Leydin Freyer.
In the course of her practice she audits listed and unlisted public companies involved in
the resources industry. Her practice also involves outsourced company secretarial and
accounting services to public companies in the resources sector. This involves preparation
of statutory financial statements, annual reports, half year reports, stock exchange
announcements and quarterly ASX reporting and other statutory requirements.
Ms Leydin has 19 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.
Other current directorships
None
Former directorships (in the last 3 years)
Jervois Mining Limited (resigned 29 December 2008)
Special responsibilities
Chairman of Audit Committee and Member of Remuneration & Nomination Committee
Relevant interests in shares
Relevent interests in options
150,000 ordinary fully paid shares
None
15
Directors’ Report
Continued
Name
Particulars
Ms Philippa Kelly
Non–Executive Director
Qualifications
Experience
LLB, FFin, GAICD
Philippa has over 25 years experience in the corporate sector, with a background in
law and investment banking. She is Chief Operating Officer of the Juilliard Group of
Companies, a private property group. Philippa was previously an investment banker
with Goldman Sachs JBWere, involved in equity raisings, corporate structuring and
acquisitions and mergers for a broad range of resources companies. She has a
longstanding exposure and involvement with public boards, with a strong governance
and risk management focus.
Philippa is also a member of Deakin University Council and its Finance & Business Affairs,
and Campus Planning Committees and Treasurer of the Australian Drug Foundation.
Other current directorships
None
Former directorships (in the last 3 years)
None
Special responsibilities
Member of Audit Committee and Chairperson of Remuneration and
Nomination Committee
Relevant interests in shares
Relevent interests in options
145,000 ordinary fully paid shares
None
Mr Keith Edwards
Non–Executive Director (appointed 30 June 2011)
Experience
Mr Edwards, who is Melbourne based, has extensive oil and gas experience. He has
had over 28 years in the petroleum industry in company management, business
development (both upstream and downstream) and project financing in addition to his
foundation technical areas of petroleum engineering, oil and gas field development,
engineering, operations, gas marketing, and project evaluation. He has worked with
both oil majors (BHP Billiton and Shell International) and also a mid cap, Nexus Energy.
His most recent position was as Nexus’s General Manager of Business Development
and Corporate Planning.
Other current directorships
None
Former directorships (in the last 3 years)
None
Special responsibilities
Member of Audit Committee and Remuneration and Nomination Committee
Relevant interests in shares
Relevent interests in options
240,000 ordinary fully paid shares
None
16
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships in all
other types of entities, unless otherwise stated.
‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships in all other types of entities, unless otherwise stated.
Meetings of directors
The number of meetings of the company’s Board of Directors and of each board committee held during the year ended
30 June 2011, and the number of meetings attended by each director were:
Full Board
Audit and Risk Committee
Remuneration and
Nomination Committee
Directors
Attended
Held
Attended
Held
Attended
Held
Mr C Horsfall
Mr N Newell
Ms M Leydin
Ms P Kelly
Mr K Edwards
10
10
10
10
–
10
10
10
10
–
2
–
2
2
–
2
–
2
2
–
1
–
1
1
–
1
–
1
1
–
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
17
Directors’ Report
Remuneration Report (Audited)
The remuneration report, which has
been audited, outlines the director and
executive remuneration arrangements
for the company, in accordance with the
requirements of the Corporations Act 2001
and its Regulations.
The remuneration report is set out under
the following main headings:
A Principles used to determine the nature
and amount of remuneration
B Details of remuneration
C Service agreements
D Share–based compensation
E Additional information
A Principles used to determine
the nature and amount of
remuneration
The objective of the company’s executive
reward framework is to ensure reward
for performance is competitive and
appropriate for the results delivered. The
framework aligns executive reward with
the achievement of strategic objectives
and the creation of value for shareholders,
and conforms with the market best
practice for delivery of reward. The Board
of Directors (‘the Board’) ensures that
executive reward satisfies the following
key criteria for good reward governance
practices:
• competitiveness and reasonableness
• acceptability to shareholders
• alignment of executive compensation
• transparency
The Nomination and Remuneration
Committee is responsible for determining
and reviewing remuneration arrangements
for its directors and executives. The
performance of the consolidated entity
and company depends on the quality
of its directors and executives. The
remuneration philosophy is to attract,
motivate and retain high performance and
high quality personnel.
The Nomination and Remuneration
Committee has structured an executive
remuneration framework that is market
competitive and complementary to the
reward strategy of the company.
Alignment to shareholders’ interests:
• focuses on sustained growth in
shareholder wealth, consisting of
dividends and growth in share price,
and delivering constant or increasing
return on assets as well as focusing the
executive on key non–financial drivers
of value
• attracts and retains high calibre
executives
Alignment to program participants’
interests:
• rewards capability and experience
• reflects competitive reward for
contribution to growth in shareholder
wealth
• provides a clear structure for
earning rewards
In accordance with best practice
corporate governance, the structure of
non–executive directors and executive
remunerations are separate.
Non–executive directors remuneration
Fees and payments to non–executive
directors reflect the demands which are
made on, and the responsibilities of, the
directors. Non–executive directors’ fees
and payments are reviewed annually
by the Nomination and Remuneration
Committee. The chairman’s fees are
determined independently to the fees
of other non–executive directors based
on comparative roles in the external
market. The chairman is not present at
any discussions relating to determination
of his own remuneration. Non–executive
directors do not receive share options or
other incentives.
ASX listing rules requires that the
aggregate non–executive directors
remuneration shall be determined
periodically by a general meeting. The
most recent determination was at the
Annual General Meeting held on 14
December 2006, where the shareholders
approved an aggregate remuneration of
$200,000.
Executive remuneration
The company aims to reward executives
with a level and mix of remuneration
based on their position and responsibility,
which are both fixed.
The executive remuneration and reward
framework has four components:
• base pay and non–monetary benefits
• share–based payments
• other remuneration such as
superannuation and long service leave
The combination of these comprises the
executive’s total remuneration.
Fixed remuneration, consisting of base
salary, superannuation and non–monetary
benefits, are reviewed annually by the
Nomination and Remuneration Committee,
based on individual and business unit
performance, the overall performance
of the company and comparable market
remunerations.
Executives can receive their fixed
remuneration in the form of cash or other
fringe benefits (for example motor vehicle
benefits) where it does not create any
additional costs to the company and adds
additional value to the executive.
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 Director’s
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 or Binomial
methodology.
18
The long–term incentives (‘LTI’) includes
long service leave and share–based
payments. Shares are awarded to
executives over a period of four years
based on long–term incentive measures.
These include increase in shareholders
value relative to the entire market and the
increase compared to the consolidated
entity’s direct competitors.
Consolidated entity performance
and link to 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.
B Details of remuneration
Amounts of remuneration
Details of the remuneration of the
directors, other key management
personnel (defined as those who have the
authority and responsibility for planning,
directing and controlling the major
activities of the company) and specified
executives of the company are set out in
the following tables.
2011
Short –term benefits
Post–
employment
benefits
Long–term
benefits
Share–based
payments
Cash salary
and fees
$
Non–Executive
Directors
Mr C Horsfall
100,000
Ms M Leydin*
105,896
Ms P Kelly
Executive
Directors
43,602
Mr N Newell
321,101
Other Key
Management
Personnel
Mr K Lanigan
270,300
840,899
Bonus
$
–
–
–
–
–
–
–
–
–
–
–
–
Non–
monetary
$
Superannuation
Contribution
$
Long Service
Leave
$
Equity-settled
Total
$
–
–
–
$
109,000
105,896
47,526
9,000
–
3,924
–
–
–
28,696
6,137
–
355,934
24,287
4,343
65,907
10,480
–
298,930
– 917,286
* This includes fees paid to Leydin Freyer Corporate Pty Ltd in respect of Directors fees, Company Secretarial and Accounting services
** Mr Keith Edward was appointed on 30 June 2011 and accordingly no Directors fees were paid in the 2011 financial year.
19
Directors’ Report
Remuneration Report (Audited)
Continued
2010
Short –term benefits
Post–
employment
benefits
Long–term
benefits
Share–based
payments
Cash salary
and fees
$
Non–Executive
Directors
Mr C Horsfall
100,000
Ms P Kelly *
21,798
Ms M Leydin **
108,948
Executive
Directors
Mr N Newell
294,000
Other Key
Management
Personnel
Mr J Keall ***
Mr K Lanigan
100,625
150,743
776,114
* Appointed 5 January 2010.
Bonus
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Non–
monetary
$
Superannuation
Contribution
$
Long Service
Leave
$
Equity -settled
Total
$
–
–
–
$
109,000
23,760
108,948
–
320,460
9,000
1,962
–
26,460
–
–
–
–
9,056
13,308
12,795
–
–
122,476
1,222
165,273
59,786
12,795
1,222 849,917
** This includes fees paid to Leydin Freyer Corporate Pty Ltd in respect of Directors fees, Company Secretarial and Accounting services
*** Resigned 27 December 2009
20
C Service agreements
Remuneration and other terms of
employment for key management
personnel are formalised in service
agreements. Details of these
agreements are as follows:
Mr N Newell
Managing Director
Agreement commenced:
1 November 2006
Details:
• 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 wihtout 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 amount owing to him
up until the Termination date.
Mr C Horsfall
Chairman
Agreement commenced:
23 January 2009
Details:
• Mr Horsfall 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 midconduct 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 termiantion.
• On termination of the agreement,
Mr Horsfall will be entitled to be paid
those outstanding amounts owing to
him up until the Termination date.
Ms M Leydin
Non–Executive Director
Agreement commenced:
23 January 2009
Mr K Edwards
Non–Executive Director
Agreement commenced:
1 July 2011
Details:
• Ms Leydin may resign from her 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,
Ms Leydin is only entitled to that portion
of remuneration which is fixed, and only
up the the date of termination.
• On termination of the agreement,
Ms Leydin will be entitled to be paid
those outstanding amounts owing to
her up until the Termination date.
Ms P Kelly
Non–Executive Director
Agreement commenced:
5 January 2010
Details:
• Ms Kelly may resign from her 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 occured.
Where termination with cause occurs,
Ms Kelly is only entitled to that portion of
remuneration which is fixed, and only up
to the date of termination.
• On termination of the agreement,
Ms Kelly will be entitled to be paid those
outstanding amounts owing to her up
until the Termination date.
Details:
• Mr Edwards may resign from his position
and thus terminate this contract by
giving 3 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 occured.
Where termination with cause occurs,
Mr Edwards 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 Edwards will be entitled to be paid
those outstanding amounts owing to
him up until the Termination date.
Mr K Lanigan
Exploration Manager
Term of agreement:
7 December 2009
Details:
• Mr Lanigan may resign from his position
and thus terminate this contract by
giving 3 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 occured.
Where termination with cause occurs,
Mr Lanigan 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 Lanigan will be entitled to be paid
those outstanding amounts owing to
him up until the Termination date
Key management personnel have no
entitlement to termination payments in
the event of removal for misconduct.
21
Directors’ Report
Remuneration Report (Audited)
Continued
D Share–based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended
30 June 2011.
Options
There were no options issued to directors and other key management personnel as part of compensation that were outstanding as
at 30 June 2011.
There were no options granted to or exercised by directors and other key management personnel as part of compensation during the
year ended 30 June 2011.
E Additional information
The earnings of the company for the five years to 30 June 2011 are summarised below:
2007
$
2008
$
2009
$
2010
$
2011
$
Revenue
228,396
1,740,306
587,992
414,898
336,290
Net profit/(loss) before tax
(1,471,727)
(19,741,448)
(940,340)
(857,435)
(1,003,568)
Net profit/(loss) after tax
(1,471,727)
(19,741,448)
(940,340)
(857,435)
(1,003,568)
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at start of year *
Share price at end of year
Basic earnings per share
(cents per share)
Diluted earnings per share
(cents per share)
2007
2008
–
–
0.50
0.26
(1.67)
(10.05)
2009
0.26
0.11
(0.46)
2010
0.11
0.20
(0.42)
2011
0.20
0.14
(0.49)
(1.67)
(10.05)
(0.46)
(0.42)
(0.49)
*3D Oil Limited listed on the Australian Stock Exchange in November 2007.
This concludes the remuneration report, which has been audited.
22
Shares under option
Unissued ordinary shares of the company under option at the date of this report are as follows:
Excercise Price
Number Under Option
Grant Date
31 M arch 2008
27 August 2009
2 June 2010
31 January 2011
Expiry date
31 March 2013
31 January 2014
30 November 2014
31 January 2015
Shares issued on the exercise
of options
There were no shares of the company
issued on the exercise of options during
the year ended 30 June 2011.
Indemnity and insurance of officers
The company has indemnified the directors
of the company for costs incurred, in their
capacity as a director, for which they may
be held personally liable, except where
there is a lack of good faith.
During the financial year, the company
paid a premium in respect of a contract
to insure the directors of the company
against a liability to the extent permitted
by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the
nature of liability and the amount of
the premium.
Indemnity and insurance of auditor
The company has not otherwise, during
or since the financial year, indemnified
or agreed to indemnify the auditor of the
company or any related entity against a
liability incurred by the auditor.
During the financial year, the company has
not paid a premium in respect of a contract
to insure the auditor of the company or any
related entity.
Proceedings on behalf of the company
No person has applied to the Court under
section 237 of the Corporations Act
2001 for leave to bring proceedings on
behalf of the company, or to 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 part of those proceedings.
$0.75
$0.25
$0.40
$0.40
400,000
189,000
615,000
200,000
1,404,000
Non–audit services
There were no non–audit services provided
during the financial year by the auditor.
Officers of the company who are
former audit partners of Grant
Thornton Audit Pty Ltd
There are no officers of the company
who are former audit partners of Grant
Thornton Audit Pty Ltd.
Auditor’s independence declaration
A copy of the auditor’s independence
declaration as required under section 307C
of the Corporations Act 2001 is set out on
the following page.
Auditor
Grant Thornton Audit Pty Ltd continues in
office in accordance with section 327 of the
Corporations Act 2001.
This report is made in accordance with a
resolution of directors, pursuant to section
298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Noel Newell
Managing Director
29 September 2011,
Melbourne.
23
Independence Declaration
Grant Thornton Audit Pty Ltd
ACN 130 913 594
Level 2
215 Spring Street
Melbourne
Victoria 3000
GPO Box 4984
Melbourne
Victoria
3001
T +61 3 8663 6000
F +61 3 8663 6333
E info.vic@au.gt.com
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 2011, I declare that, to
the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Simon Trivett
Director - Audit & Assurance
Melbourne, 29 September 2011
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
24
Financial Report
For the Year Ended 30 June 2011
Contents
Financial Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members of 3D Oil Limited
Page
26
27
28
29
30
47
48
General information
The financial report covers 3D Oil Limited as an individual entity. The financial report is presented in Australian dollars,
which is 3D Oil Limited’s functional and presentation currency.
The financial report consists of the financial statements, notes to the financial statements and the directors’ declaration.
3D Oil Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is: Level 5, 164 Flinders Lane, Melbourne Victoria 3000
A description of the nature of the company’s operations and its principal activities are included in the directors’ report,
which is not part of the financial report.
The financial report was authorised for issue, in accordance with a resolution of directors, on 29 September 2011.
The directors have the power to amend and reissue the financial report.
25
Statement of Comprehensive Income
For the year ended 30 June 2011
Revenue
Other income
Expenses
Corporate expenses
Administrative expenses
Employment expenses
Occupancy expenses
Depreciation and amortisation expense
Exploration costs written off
Loss on sale of assets
Gain/(loss) on foreign currency translation
Share based payments
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year
attributable to the owners of 3D Oil Limited
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
attributable to the owners of 3D Oil Limited
Basic earnings per share
Diluted earnings per share
Note
2011
$
2010
$
4
336,290
414,898
(51,650)
11,479
(159,663)
(218,930)
(66,749)
(71,557)
(833,850)
(641,904)
(91,436)
(26,746)
(151,426)
–
(87,169)
(27,971)
(31,938)
(939)
88,769
(139,653)
(47,107)
(63,751)
(1,003,568)
(857,435)
–
–
(1,003,568)
(857,435)
–
–
(1,003,568)
(857,435)
Cents
(0.49)
(0.49)
Cents
(0.42)
(0.42)
5
6
26
26
The above statement of comprehensive income should be read in conjunction with the accompanying notes
26
Statement of Financial Position
For the year ended 30 June 2011
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non–current assets
Property, plant and equipment
Intangibles
Exploration and evaluation
Total non–current assets
Total Assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non–current liabilities
Provisions
Total non–current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
2011
$
2010
$
7
8
9
10
11
12
3,857,995
8,378,658
34,962
114,386
34,848
56,802
3,927,805
8,549,846
18,914
54,018
14,215
38,230
25,921,401
22,177,579
25,994,333
22,230,024
29,922,138
30,779,870
13
14
217,250
147,874
64,954
53,477
282,204
201,351
15
545,218
527,342
545,218
527,342
827,422
728,693
29,094,716
30,051,177
16
17
50,620,867
50,620,867
185,283
2,023,826
(21,711,434)
(22,593,516)
29,094,716
30,051,177
The above statement of financial position should be read in conjunction with the accompanying notes
27
Statement of Changes in Equity
For the year ended 30 June 2011
Contributed
equity
$
Reserves
$
Retained
profits
$
Total
equity
$
Balance at 1 July 2009
50,620,867
1,960,075
(21,736,081)
30,844,861
Other comprehensive income for the year, net of tax
Loss after income tax expense for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share–based payments
–
–
–
–
–
–
–
–
–
(857,435)
(857,435)
(857,435)
(857,435)
63,751
–
63,751
Balance at 30 June 2010
50,620,867
2,023,826
(22,593,516)
30,051,177
Balance at 1 July 2010
50,620,867
2,023,826
(22,593,516)
30,051,177
Other comprehensive income for the year, net of tax
Loss after income tax expense for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share–based payments
Expiry of Options
–
–
–
–
–
–
–
–
–
–
(1,003,568)
(1,003,568)
(1,003,568)
(1,003,568)
47,107
–
47,107
(1,885,650)
1,885,650
–
Balance at 30 June 2011
50,620,867
185,283
(21,711,434)
29,094,716
The above statement of changes in equity should be read in conjunction with the accompanying notes
28
Statement of Cash Flows
For the year ended 30 June 2011
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Note
2011
$
2010
$
13,012
13,666
Payments to suppliers and employees (inclusive of GST)
(1,065,022)
(1,857,752)
Interest received
415,999
383,627
Net cash used in operating activities
25
(636,011)
(1,460,459)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for exploration and evaluation
Proceeds from sale of property, plant and equipment
Proceeds from foreign exchange investment
Proceeds from deposits refunded for exploration and development
(11,864)
(5,178)
(35,370)
(25,100)
(3,874,531)
(703,409)
–
200
37,113
(128,175)
–
2,231,556
Net cash from/(used in) investing activities
(3,884,652)
1,369,894
Cash flows from financing activities
Net cash from financing activities
Net decrease in cash and cash equivalents
–
–
(4,520,663)
(90,565)
Cash and cash equivalents at the beginning of the financial year
8,378,658
8,469,223
Cash and cash equivalents at the end of the financial year
7
3,857,995
8,378,658
The above statement of cash flows should be read in conjunction with the accompanying notes
29
Notes to the Financial Statements
For the year ended 30 June 2011
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of
available–for–sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain
classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Going Concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and
realisation of assets and settlement of liabilities in the ordinary course of business. At 30 June 2011 the Company has cash and cash
equivalents of $3.8 million and a net decrease of cash during the financial year of $4.5 million. This cash decrease was predominately due
to the spend on exploration expenditure on VICP/57 and T41/P as detailed in the Review of Financial Position in the Director’s Report.
The Company also has exploration commitments as detailed in Note 23 of $37.7 million over the next 6 years. In order for the Company to
meet these commitments the Company will need to secure funding by means of a capital raising, debt financing, sale of assets, farm out
or a combination of these. The Directors continue to monitor the ongoing funding requirements of the Company. The Directors are of the
opinion that the financial report has been appropriately prepared on a going concern basis.
Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the
internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to
operating segments and assessing their performance.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax
rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax
losses and under and over provision in prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
30
Note 1. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to
be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable
profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax
liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable
entity or different taxable entity’s which intend to settle simultaneously.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short–term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
Trade and other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight–line basis to write off the net cost of each item of property, plant and equipment (excluding land)
over their expected useful lives as follows:
Plant and equipment: 3–7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve
relating to the item disposed of is transferred directly to retained profits.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of
the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost
less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets
are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful
lives of finite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Software
Significant costs associated with software are deferred and amortised on a straight–line basis over the period of their expected benefit,
being their finite life of 5 years.
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.
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.
31
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 1. Significant accounting policies (continued)
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.
Impairment of non–financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non–financial assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value–in–use. The value–in–use is the present value of the
estimated future cash flows relating to the asset using a pre–tax discount rate specific to the asset or cash–generating unit to which the
asset belongs. Assets that do not have independent cash flows are grouped together to form a cash–generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are
unpaid. Due to their short–term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are
usually paid within 30 days of recognition.
Provisions
Provisions are recognised when the company has a present (legal or constructive) obligation as a result of a past event, it is probable
the company 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 the reporting date, taking
into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted
using a current pre–tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a
finance cost.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non–monetary benefits, and annual leave expected to be settled within 12 months of the
reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in current and non–current liabilities, depending on the unconditional right to defer
settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
Share–based payments
Equity–settled and cash–settled share–based compensation benefits are provided to employees.
Equity–settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering
of services. Cash–settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by
reference to the share price.
The cost of equity–settled transactions are measured at fair value on grant date. Fair value is independently determined using either the
Binomial or Black–Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option, together with non–vesting conditions that do not determine whether the company receives the services
that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity–settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of
awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
32
The cost of cash–settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or
Black–Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative
charge to profit or loss until settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion
of the vesting period.
• from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash–settled transactions is the cash paid to settle the liability
Equity–settled awards by the parent to employees of subsidiaries are recognised in the parent’s individual financial statements as an
increase in investment in the subsidiary with a corresponding credit to equity and not as a charge to profit or loss. The investment in
subsidiary is reduced by any contribution by the subsidiary.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity–settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional
expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share–based
compensation benefit as at the date of modification.
If the non–vesting condition is within the control of the company or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the company or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity–settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if
they were a modification.
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of 3D Oil Limited, 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 elements in ordinary shares issued during the financial 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
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Foreign Currency translation
Both the functional and presentation currency of 3D Oil Limited is Australian dollars (A$).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the
reporting date.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not
been early adopted by the company for the annual reporting period ended 30 June 2011. The company has not yet assessed the impact
of these new or amended Accounting Standards and Interpretations.
33
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Estimation of useful lives of assets
The company determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and
equipment and definite life intangible assets. The useful lives could change significantly as a result of technical innovations or some
other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or
technically obsolete or non–strategic assets that have been abandoned or sold will be written off or written down.
Long service leave provision
As discussed in note 1, the liability for long service leave is recognised and measured at the present value of the estimated future cash
flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition
rates and pay increases through promotion and inflation have been taken into account.
Note 3. Operating segments
The Company has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 requires operating segments to be
identified on the basis of internal reports about the components of the Company that are regularly reviewed by the chief decision maker
in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (AASB 114 Segment
Reporting) required an entity to identify two sets of segments (business and geographical), using a risk and returns approach, with the
entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of
such segments.
Upon the adoption of AASB 8, there has been no change to the reportable segments. The Company has therefore not changed any
reporting for the previous corresponding period. 3D Oil Limited operates in the development of oil and gas within Australia. The
Company’s activities are therefore classified as one business segment.
Note 4. Revenue
Other revenue
Interest
Rent
Revenue
2011
$
323,180
13,110
336,290
2010
$
401,232
13,666
414,898
34
Note 5. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation
Software
Total depreciation and amortisation
Post employment benefit plans – Superannuation contributions
Equity settled share based payments
Employment entitlements
Foreign Currency
Realised gain/loss on foreign currency translation
Unrealised gain on foreign currency translation
2011
$
2010
$
(6,549)
(12,085)
(20,197)
(26,746)
(102,371)
(47,107)
(29,353)
(178,831)
88,769
(51,650)
37,119
(15,886)
(27,971)
(80,335)
(63,751)
(27,607)
(171,693)
(139,653)
11,479
(128,174)
Operating lease payments
Office lease
(86,843)
(83,260)
Note 6. Income tax expense
2011
$
2010
$
Numerical reconciliation of income tax expense to prima facie tax payable
Loss before income tax expense
(1,003,568)
(857,435)
Tax at the Australian tax rate of 30%
(301,070)
(257,231)
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
– Share–based payments
– Other Permanent Differences
Capitalised deductible exploration expenditure
Realised foreign exchange gain
Deductible share issue costs
Other timing differences
Unrealised foreign exchange loss
Income tax losses not taken up as benefit
Income tax expense
14,132
1,377
19,125
1,203
(285,561)
(236,903)
(1,120,371)
–
(186,299)
44,953
15,495
1,531,783
–
(338,445)
(3,444)
(186,299)
(44,228)
–
809,319
–
35
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 6. Income tax expense (continued)
Petroleum Resource Rent tax
PRRT applies to all petroleum projects in offshore areas under the Petroleum Act, other than some specific production licences. PRRT is
assessed on a project basis or production licence area and is levied on the taxable profits of a petroleum project at a rate of 40%. Certain
specified undeducted expenditures are eligible for compounding. The expenditures can be compounded annually at set rates, and the
compounded amount can be deducted against assessable receipts in future years.
The Company estimates that it has incurred expenditure for VIC/P57 resulting in a total carried forward undeducted expenditure
against income, derived in future years of $63,551,000 (2010: $52,298,000) as at 30 June 2011. At 1 July 2011 this estimated amount is
$76,411,000 (2010: $62,603,000) as compounding occurs annually on 1 July.
In order for the Company to utilise undeducted expenditures for PRRT purposes from prior years, it will be required to substantiate
eligible expenditure in relation to the permit since the date of its grant. Any amount that the Company is not able to substantiate cannot
be utilised against assessable receipts in future years. Interests in the undeducted expenditure can be transferred between projects by
the Company or to other entities on acquisition of interests in the project.
The Company has not recognised a deferred tax asset with respect to the carried forward undeducted expenditure.
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary
differences attributable to:
– Tax Losses
– Temporary Differences
Total deferred tax assets not recognised
2011
$
2010
$
14,801,545
(7,138,504)
7,663,041
13,269,790
(6,824,593)
6,445,197
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the
statement of financial position as the recovery of this benefit is uncertain.
Note 7. Current assets – cash and cash equivalents
Cash at bank
Cash on deposit
Note 8. Current assets – trade and other receivables
Interest receivable
GST receivable
2011
$
357,431
3,500,564
3,857,995
2011
$
3,673
31,289
34,962
2010
$
2,169,962
6,208,696
8,378,658
2010
$
96,492
17,894
114,386
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. Due to the short term nature of
these receivables, their carrying value is assumed to approximate their fair value .
36
Note 9. Current assets – other
Prepayments
Deposits paid for exploration expenditure
2011
$
34,848
–
34,848
Note 10. Non–current assets – property, plant and equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Reconciliations
Reconciliations of the written down values at the beginning and
end of the current and previous financial year are set out below:
Balance at 1 July 2009
Additions
Disposals
Depreciation expense
Balance at 30 June 2010
Additions
Depreciation expense
Balance at 30 June 2011
2011
$
79,420
(60,506)
18,914
Plant & Equipment
$
22,261
5,178
(1,139)
(12,085)
14,215
11,864
(7,165)
18,914
2010
$
36,089
20,713
56,802
2010
$
67,556
(53,341)
14,215
Total
$
22,261
5,178
(1,139)
(12,085)
14,215
11,864
(7,165)
18,914
37
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 11. Non–current assets – intangibles
Software – at cost
Less: Accumulated amortisation
Reconciliations
Reconciliations of the written down values at the beginning and end
of the current and previous financial year are set out below:
Balance at 1 July 2009
Additions
Amortisation expense
Balance at 30 June 2010
Additions
Amortisation expense
Balance at 30 June 2011
2011
$
121,030
(67,012)
54,018
Software
$
29,016
25,100
(15,886)
38,230
35,370
(19,582)
54,018
2010
$
85,660
(47,430)
38,230
Total
$
29,016
25,100
(15,886)
38,230
35,370
(19,582)
54,018
Note 12. Non–current assets – exploration and evaluation
2011
$
2010
$
Exploration and evaluation expenditure
25,921,401
22,177,579
Reconciliations
Reconciliations of the written down values at the beginning and end of
the current and previous financial year are set out below:
Balance at 1 July 2009
Expenditure during the year
Write off of assets
Balance at 30 June 2010
Additions
Write off of assets
Exploration & Development
Expenditure
$
21,506,108
703,409
(31,938)
22,177,579
3,895,248
(151,426)
Total
$
21,506,108
703,409
(31,938)
22,177,579
3,895,248
(151,426)
Balance at 30 June 2011
25,921,401
25,921,401
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.
38
Note 13. Current liabilities – trade and other payables
Trade payables
Amounts payable to: Key Management Personnel
Sundry payables and accrued expenses
2011
$
157,308
–
59,942
217,250
2010
$
75,403
9,496
62,975
147,874
Refer to note 19 for detailed information on financial instruments.
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. Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
Note 14. Current liabilities – provisions
Employee benefits
Note 15. Non–current liabilities – provisions
Employee benefits
Provision for well abandonment
2011
$
64,954
2011
$
45,218
500,000
545,218
2010
$
53,477
2010
$
27,342
500,000
527,342
The provision for well abandonment represents the present value of director’s best estimate for the costs to abandon
the Wardie–1 Well. This abondonment is exepcted to take place within the next 5 years.
Note 16. Equity – contributed
Ordinary shares – fully paid
206,506,000
206,560,000
50,620,867
50,620,867
2011
Shares
2010
Shares
2011
$
2010
$
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Capital risk management
The company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns
for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debt.
The company would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the
current parent entity’s share price at the time of the investment. The company is not actively pursuing additional investments in the short
term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The company is subject to certain financing arrangements covenants and meeting these are given priority in all capital risk management
decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2010 Annual Report.
Options
For futher information in relaion to unissued ordinary shares of 3D Oil Limited under option, refer to the Directors’ report and Note 27.
39
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 17. Equity – reserves
Options reserve
Balance at 1 July 2009
Share based payments
Balance at 30 June 2010
Share based payments
Expiry of options
Balance at 30 June 2011
2011
$
2010
$
185,283
2,023,826
Share based Payment
$
1,960,075
63,751
2,023,826
47,107
(1,885,650)
Total
$
1,960,075
63,751
2,023,826
47,107
(1,885,650)
185,283
185,283
The option reserve records items recognised as expenses on valuation of employee share options.
During the current year the following options were issued:
– 200,000 options to a consultant valued at $0.08 per option.
Details of the option valuation are included in Note 27.
Note 18. Equity – dividends
There were no dividends paid or declared during the current or previous financial year.
Note 19. Financial instruments
Financial risk management objectives
The company’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk),
credit risk and liquidity risk. The company’s overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the company. The company uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and
other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by the Board. The polcies employed to mitigate risk include identification and analysis of the risk
exposure of the company and appropriate procedures, controls and risk limits. The Board identifies risk and evaluates the effectiveness
of its responses.
Market risk
Foreign currency risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the Company’s functional currency. The Company 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 payables may be held
in United States Dollars (USD).
Price risk
Commodity price risk – Although the entity is not in production, the primary risk to the entity is the movement in the price of Tapis oil, as
measured in Australian dollars per barrel. The entity has a certified oil resource of 9.2 million barrels. The carrying value of the entity’s
capitalised project costs and the economic viability of future developments are subject to the risk of movements in the Tapis oil price per
barrel, and the effect that such movements may have on the economics of developing the resource and the resulting financial returns to
be derived in future years.
Interest rate risk
The company’s only exposure to interest rate risk is in relation to deposits held. Deposits are held with reputable banking
financial institutions.
40
Note 19. Financial instruments (continued)
As at the reporting date, the company had the following variable rate borrowings and interest rate swap contracts outstanding:
Cash on hand
Cash on deposit
Net exposure to cash flow interest rate risk
2011
Weighted average
interest rate
%
4.75
4.75
Balance
$
357,431
3,500,564
3,857,995
2010
Weighted average
interest rate
%
3.66
3.66
Balance
$
2,169,962
6,208,696
8,378,658
An increase/decrease in interest rates of 30% or 1.43 percentage points would have a favourable/adverse affect on profit before tax
of $55,170 per annum. The percentage change is based on the expected volatility of interest rates using market data and analysis
forecasts.
Credit risk
Credit risk is managed on a company basis. Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the company. The company has minimal exposure to credit risk as its only receivables relate to security
deposits, interest receivable, and GST refunds due.
Liquidity risk
Vigilant liquidity risk management requires the company to maintain sufficient liquid assets (mainly cash and cash equivalents) and
available borrowing facilities to be able to pay debts as and when they become due and payable.
The company manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring
actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
The company’s working capital, being current assets less current liabilties was $3,645,601 at 30 June 2011. During the period the
company had negative net cash flows of $4,520,663. Based on this the directors are satisfied that the company will have sufficient funds
to pay its debts as and when they fall due.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables
and trade payables are assumed to approximate their fair values due to their short–term nature. The fair value of financial liabilities is
estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial
instruments.
41
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 20. Key management personnel disclosures
Directors
The following persons were directors of 3D Oil Limited during the financial year:
Mr Campbell Horsfall (Chairman and Non–Executive Director)
Mr Noel Newell (Managing Director)
Ms Melanie Leydin (Non–Executive Director, Company Secretary, and Chief Financial Officer)
Ms Philippa Kelly (Non–Executive Director)
Mr Keith Edwards (Non–Executive Director)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the company is set out below:
Short–term employee benefits
Post–employment benefits
Long–term benefits
Termination benefits
Share–based payments
2011
$
840,899
65,907
10,480
–
–
917,286
2010
$
776,114
59,786
–
12,795
1,222
849,917
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management personnel
of the company, including their personally related parties, is set out below:
2011
Ordinary shares
Mr C Horsfall
Mr N Newell
Ms M Leydin
Ms P Kelly
Mr K Edwards*
Balance at
the start of
the year
Received
as part of
renumeration
Additions
Disposals/
other
38,000
37,700,150
150,000
145,000
–
38,033,150
–
–
–
–
–
–
–
105,000
–
–
240,000
345,000
–
–
–
–
–
–
*Mr K Edwards was appointed as a Non–Executive Director on 30 June 2011.
2010
Ordinary shares
Mr C Horsfall
Mr N Newell
Ms M Leydin
Ms P Kelly *
Balance at
the start of
the year
Received
as part of
renumeration
Additions
Disposals/
other
–
37,461,450
150,000
–
37,611,450
–
–
–
–
–
38,000
238,700
–
145,000
421,700
–
–
–
–
–
*Ms P Kelly was appointed as a Non–Executive Director on 5 January 2010.
42
Balance at
the end of
the year
38,000
37,805,150
150,000
145,000
240,000
38,378,150
Balance at
the end of
the year
38,000
37,700,150
150,000
145,000
38,033,150
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other members of key
management personnel of the company, including their personally related parties, is set out below:
Balance at
the start of
the year
500,000
4,000,000
265,000
4,765,000
Balance at
the start of
the year
500,000
4,000,000
1,500,000
–
6,000,000
2011
Options over ordinary shares
Mr C Horsfall*
Mr N Newell*
Mr K Lanigan
*These options expired on 31 January 2011.
2010
Options over ordinary shares
Mr C Horsfall
Mr N Newell
Mr J Keall **
Mr K Lanigan ***
* Appointed 5 January 2010
** Resigned 27 November 2009
*** Appointed 7 December 2009
Granted
Exercised
Expired
Forfeited/
other
Balance at
the end of
the year
–
–
–
–
–
–
–
–
(500,000)
(4,000,000)
(265,000)
(4,765,000)
–
–
–
–
Granted
Exercised
Expired
Forfeited/
other
Balance at
the end of
the year
–
–
–
265,000
265,000
–
–
–
–
–
–
–
500,000
4,000,000
(1,500,000)
–
–
265,000
(1,500,000)
4,765,000
Note 21. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd,
the auditor of the company, and its related practices:
Audit services – Grant Thornton Audit Pty Ltd
Audit or review of the financial report
33,500
33,000
2011
$
2010
$
Note 22. Contingent liabilities
There were no contingent liabilities in existence at 30 June 2011.
43
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 23. Commitments for expenditure
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Exploration Licenses – Commitments for Expenditure
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2011
$
90,316
46,044
136,360
2010
$
86,743
136,360
223,103
700,000
37,000,000
37,700,000
4,500,000
15,000,000
19,500,000
In order to maintain current rights of tenure to exploration tenements, the Company is required to outlay rentals and to meet the
minimum expenditure requirements of the Mineral Resources Authority. Minimum expenditure commitments may be subject to
renegotiation and with approval may otherwise be avoided by sale, farm out or relinquishment. These obligations are not provided in the
accounts and are payable.
In August 2011 renewal of VIC/P57 was granted which includes minimum guaranteed work requirements for the first 3 years which also
includes an exploration well in Year 3. The secondary work plan is on a year by year basis and also includes one exploration well in Year 5.
The T41/P conditions were varied in March 2011 to a $409,000 commitment for the 2012 year.
Note 24. Events occurring after the reporting date
No matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect the company’s
operations, the results of those operations, or the company’s state of affairs in future financial years.
Note 25. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(1,003,568)
(857,435)
2011
$
2010
$
Adjustments for:
Depreciation and amortisation
Share–based payments
Exploration costs written off
Realised (gain)/loss on foreign currency translation
Unrealised gain on foreign currency translation
Loss on sale of plant and equipment
Annual and long service leave provisions
Change in operating assets and liabilities:
Decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
26,746
47,107
151,426
(37,113)
–
–
29,353
79,421
1,241
69,376
27,971
63,751
31,936
139,653
(11,479)
939
27,607
131,378
(2,912)
(1,011,868)
Net cash used in operating activities
(636,011)
(1,460,459)
44
Note 26. per share
Loss after income tax attributable to the owners of 3D Oil Limited
(1,003,568)
Number
2011
$
2010
$
(857,435)
Number
Weighted average number of ordinary shares used in
calculating basic earnings per share
Weighted average number of ordinary shares used in
calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
206,560,000
206,560,000
206,560,000
206,560,000
Cents
(0.49)
(0.49)
Cents
(0.42)
(0.42)
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 Company has generated a loss for the financial year.
Note 27. Share–based payments
Set out below are summaries of options movements during the financial year:
2011
Granted date
Expiry date
14/12/2006
31/01/2011
14/12/2006
31/01/2011
14/12/2006
31/01/2011
14/12/2006
31/01/2011
31/03/2008
31/03/2013
27/08/2009
30/06/2014
27/08/2009
30/06/2014
02/06/2010
30/11/2014
02/06/2010
30/11/2014
02/06/2010
30/11/2014
24/01/2011
31/01/2015
2010
Granted date
Expiry date
14/12/2006
31/01/2011
14/12/2006
31/01/2011
14/12/2006
31/01/2011
14/12/2006
31/01/2011
31/03/2008
31/03/2013
27/08/2009
30/06/2014
27/08/2009
30/06/2014
Exercise
price
$0.60
$0.50
$0.50
$0.50
$0.75
$0.25
$0.25
$0.40
$0.40
$0.40
$0.40
Exercise
price
$0.60
$0.50
$0.50
$0.50
$0.75
$0.25
$0.25
Balance at
the start of
the year
4,000,000
5,500,000
100,000
1,500,000
400,000
125,000
64,000
–
–
–
–
11,689,000
Balance at
the start of
the year
4,000,000
5,500,000
100,000
1,500,000
400,000
125,000
64,000
11,689,000
Granted
Exercised
–
–
–
–
–
–
–
265,000
150,000
200,000
200,000
815,000
–
–
–
–
–
–
–
–
–
–
–
–
Expired/
forfeited/
other
(4,000,000)
(5,500,000)
(100,000)
(1,500,000)
–
–
–
–
–
–
–
Balance at
the end of
the year
–
–
–
–
400,000
125,000
64,000
265,000
150,000
200,000
200,000
(11,100,000)
1,404,000
Granted
Exercised
Expired/
forfeited/
other
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at
the end of
the year
4,000,000
5,500,000
100,000
1,500,000
400,000
125,000
64,000
–
–
–
–
–
–
–
–
11,689,000
45
Notes to the Financial Statements
For the year ended 30 June 2011
Continued
Note 27. Share–based payments (continued)
For the options on issue during the previous and current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
14/12/2006
31/01/2011*
14/12/2006
31/01/2011*
14/12/2006
31/01/2011*
14/12/2006
31/01/2011*
31/03/2008
31/03/2013
27/08/2009
30/06/2014
27/08/2009
30/06/2014
02/06/2010
30/11/2014
02/06/2010
30/11/2014
02/06/2010
30/11/2014
24/01/2011
31/01/2015
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk–free
interest rate
Fair value
at grant date
$0.60
$0.50
$0.50
$0.50
$0.75
$0.25
$0.25
$0.40
$0.40
$0.40
$0.40
83.00%
83.00%
83.00%
83.00%
83.00%
80.00%
80.00%
80.00%
80.00%
80.00%
80.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
5.93%
5.93%
5.93%
3.56%
6.09%
4.97%
4.97%
4.97%
4.97%
5.16%
5.16%
$0.213
$0.173
$0.185
$0.156
$0.030
$0.049
$0.440
$0.083
$0.076
$0.083
$0.931
$0.59
$0.19
$0.19
$0.19
$0.19
$0.19
$0.25
* 3D Oil Limited on the Australian Stock Exchange in November 2007.
46
Directors’ Declaration
In the directors’ opinion:
• the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting
• Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements
• the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
• the attached financial statements and notes thereto give a true and fair view of the company’s financial position as at 30 June 2011
and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the directors
Noel Newell
Managing Director
29 September 2011,
Melbourne
47
Independent Audit Report
Grant Thornton Audit Pty Ltd
ACN 130 913 594
et
vel 2
Le
215 Spring Stre
Melbourne
Victoria 3000
GPO Box 4984
Melbourne
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T +61 3 8663 6000
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E info.vic@au.gt.com
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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 “Entity”), which
comprises the statement of financial position as at 30 June 2011, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year ended on that date, a summary of significant accounting policies, other explanatory
notes to the financial report and the directors’ declaration of the company .
Directors responsibility for the financial report
The Directors of the Entity are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards 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 are 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. The
Directors also state, in the notes to the financial report, 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 which require us to
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
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
48
2
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 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 opinion.
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 2011 included on 3D Oil Limited’s web site. The Entity’s Directors are responsible for
the integrity of 3D Oil Limited’s web site. We have not been engaged to report on the
integrity of 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 have complied with the 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
ii
giving a true and fair view of the Entity’s financial position as at 30 June 2011
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
49
Independent Audit Report
Continued
3
Report on the remuneration report
We have audited the remuneration report included in pages 18 to 25 of the directors’ report
for the year ended 30 June 2011. The Directors of the Entity 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 on the remuneration report
In our opinion, the remuneration report of 3D Oil Limited for the year ended 30 June 2011,
complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Simon Trivett
Director - Audit & Assurance
Melbourne, 29 September 2011
50
Corporate Governance Statement
The Board of Directors (‘the Board’) of 3D Oil Limited (the ‘company’) is responsible for the corporate
governance of the consolidated entity. The Board guides and monitors the business and affairs of the
company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The table below summarises the company’s compliance with the ASX Corporate Governance Council’s
Revised Principles and Recommendations.
Principles and Recommendations
Compliance
Comply
Principle 1 – Lay solid foundations for management and oversight
1.1
Establish the functions reserved
to the Board and those delegated
to manage and disclose those
functions.
The Board is responsible for the overall corporate governance of
the company.
Complies.
The Board has adopted a Board charter that formalises its roles
and responsibilities and defines the matters that are reserved
for the Board and specific matters that are delegated to
management.
The Board has adopted a Delegations of Authority that sets limits
of authority for senior executives.
On appointment of a director, the company issues a letter
of appointment setting out the terms and conditions of
appointment to the Board.
1.2
1.3
Disclose the process for
evaluating the performance of
senior executives.
The Board meets annually to review the performance of
executives. The senior executives’ performance is assessed
against performance of the Company as a whole.
Complies.
Provide the information indicated
in Guide to reporting on Principle 1.
A Board charter has been disclosed on the company’s website and
is summarised in this Corporate Governance Statement.
Complies.
A performance evaluation process is included in the Board
Charter, which has been disclosed on the company’s website and
is summarised in this Corporate Governance Statement.
The Board will conduct a performance evaluation for senior
executives at June 2012 in accordance with the process above.
Complies.
Complies.
Principle 2 – Structure the Board to add value
2.1
A majority of the Board should be
independent directors.
The majority of the Board’s directors are independent directors of
the company.
Complies.
Mr Campbell Horsfall is an independent Non-Executive Director
and Chairman.
Mr Keith Edwards is an independent Non-Executive Director.
Ms Melanie Leydin is Non-Executive Director.
Ms Philippa Kelly is an independent Non-Executive Director.
Mr Noel Newell is an Executive Director.
2.2
2.3
The chair should be an
independent director.
Mr Campbell Horsfall is the Chairman and is an independent
Non-Executive Director.
The roles of chair and chief
executive officer should not be
exercised by the same individual.
Mr Campbell Horsfall is the Chairman and Mr Noel Newell the
Executive Director.
Complies.
Complies.
51
Corporate Governance Statement
Continued
Principles and Recommendations
Compliance
2.4
The Board should establish a
nomination committee.
The company has established a Nomination and
Remuneration Committee.
Comply
Complies
The Board has undertaken a review of the mix of skills
and experience on the Board in light of the company’s principal
activities and direction, and has considered diversity in
succession planning. The Board considers the current mix
of skills and experience of members of the Board and its
senior management is sufficient to meet the requirements
of the company.
The Board supports the nomination and re-election of the
directors at the company’s forthcoming Annual General Meeting.
2.5
Disclose the process for
evaluating the performance of
the Board, its committees and
individual directors.
The company conducts the process for evaluating the
performance of the Board, its committees and individual directors
as outlined in the Board Charter which is available on the
company’s website.
Complies.
Complies.
Complies
The Board’s induction program provides incoming directors with
information that will enable them to carry out their duties in the
best interests of the company. This includes supporting ongoing
education of directors for the benefit of the company.
2.6
Provide the information indicated
in the Guide to reporting on
Principle 2.
This information has been disclosed (where applicable) in
the directors’ report attached to this Corporate Governance
Statement.
Mr Campbell Horsfall, Mr Keith Edwards and Ms Philippa Kelly are
independent directors of the company. A director is considered
independent when he substantially satisfies the test for
independence as set out in the ASX Corporate Governance
Recommendations.
Members of the Board are able to take independent professional
advice at the expense of the company.
Mr Campbell Horsfall, Non-Executive Chairman, was appointed to
the Board in January 2009.
Mr Noel Newell, Executive Director and Chief Executive Officer,
was appointed to the Board at incorporation of the Company.
Mr Keith Edwards, Non-Executive Director, was appointed to the
Board in June 2011.
Ms Philippa Kelly, Non-Executive Director, was appointed to the
Board in Janua ry 2010.
Ms Melanie Leydin, Non-Executive Director, was appointed to the
Board in January 2009.
The Board has undertaken a review of the mix of skills and
experience on the Board in light of the company’s principal
activities and direction, and has considered diversity in succession
planning. The Board considers the current mix of skills and
experience of members of the Board and its senior management is
sufficient to meet the requirements of the company.
In accordance with the information suggested in Guide to
Reporting on Principle 2, the company has disclosed full details
of its directors in the director’s report attached to this Corporate
Governance Statement. Other disclosure material on the
Structure of the Board has been made available on the
company’s website.
52
Principles and Recommendations
Compliance
Principle 3 – Promote ethical and responsible decision making
3.1
Establish a code of conduct and
disclose the code or a summary
of the code.
The Board has adopted a code of conduct. The code establishes
a clear set of values that emphasise a culture encompassing
strong corporate governance, sound business practices and good
ethical conduct.
Comply
Complies.
The code is available on the company’s website.
The Board has undertaken a review of the mix of skills and
experience on the Board in light of the company’s principal
activities and direction.
The Board will prepare a Diversity Policy that considers the
benefits of diversity, ways to promote a culture of d iversity,
factors to be taken into account in the selection process of
candidates for Board and senior management positions in the
company, education programs to develop skills and experience
in preparation for Board and senior management positions,
processes to include review and appointment of directors, and
identify key measurable diversity performance objectives for the
Board, CEO and senior management.
3.2
Companies should establish a
policy concerning diversity and
disclose the policy or a summary
of that policy. The policy should
include requirements for the
Board to establish measurable
objectives for achieving gender
diversity and for the Board
to assess annually both the
objectives and progress in
achieving them.
3.3
Provide the information indicated
in Guide to reporting on Principle 3.
On completion and acceptance of a Diversity Policy, the company
will report in each annual report the measurable objectives for
achieving gender diversity set by the Board.
Does not comply
however the Board
has committed
the company to
review and prepare
a Diversity Policy
that considers all
aspects of diversity
in accordance
with corporate
governance
guidelines.
Does not comply
however the Board
has committed
the company to
review and prepare
a Diversity Policy
that considers all
aspects of diversity
in accordance
with corporate
governance
guidelines.
The company will include in the directors’ report the proportion of
women employees and their positions held within the company.
Does not comply.
Principle 4 – Safeguard integrity in financial reporting
4.1
The Board should establish an
audit committee.
4.2
The audit committee should be
structured so that it consists of
only non-executive directors,
a majority of independent
directors, is chaired by an
independent chair who is not
chair of the Board and have at
least 3 members.
4.3
The audit committee should have
a formal charter.
The Board has established an audit and risk committee
which operates under an audit and risk committee charter
to focus on issues relevant to the integrity of the company’s
financial reporting.
Members of the audit and risk committee are Ms Melanie Leydin
(Chair), Ms Philippa Kelly, Mr Keith Edwards and Mr Campbell
Horsfall. Ms Melanie Leydin is a Non-Executive Director and is
not chair of the Board. The committee consists of four non-
executive directors.
Complies.
Complies
The Board has adopted an audit and risk charter.
Complies.
This charter is available on the company’s website.
53
Corporate Governance Statement
Continued
Principles and Recommendations
Compliance
4.4
Provide the information
indicated in Guide to reporting
on Principle 4.
In accordance with the information suggested in Guide to
Reporting on Principle 2, this has been disclosed in the directors’
report attached to this Corporate Governance Statement and is
summarised in this Corporate Governance Statement.
Comply
Complies.
The members of the audit and risk committee are appointed
by the Board and recommendations from the committee are
presented to the Board for further discussion and resolution.
The audit and risk committee held two meetings during the
period to the date of the directors’ report and will meet at least
twice per annum.
The audit and risk charter, and information on procedures for
the selection and appointment of the external auditor, and for
the rotation of external audit engagement partners (which
is determined by the audit committee), is available on the
company’s website.
Principle 5 – Make timely and balanced disclosure
5.1
Establish written policies
designed to ensure compliance
with ASX Listing Rules
disclosure requirements and
to ensure accountability at a
senior executive level for that
compliance and disclose
those policies or a summary of
those policies.
5.2
Provide the information indicated
in the Guide to reporting on
Principle 5.
The company has adopted a continuous disclosure policy, to
ensure that it complies with the continuous disclosure regime
under the ASX Listing Rules and the Corporations Act 2001.
Complies.
This policy is available on the company’s website.
The company’s continuous disclosure policy is available on the
company’s website.
Complies.
Principle 6 – Respect the rights of shareholders
6.1 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.
6.2
Provide the information indicated
in the Guide to reporting on
Principle 6.
Principle 7 – Recognise and manage risk
The company has adopted a shareholder communications
policy. The company uses its website (www.3doil.com.au),
annual report, market announcements, media disclosures and
webcasting to communicate with its shareholders, as well as
encourages participation at general meetings.
This policy is available on the company’s website.
Complies.
The company’s shareholder communications policy is available
on the company’s website.
Complies.
7.1
Establish policies for the
oversight and management
of material business risks and
disclose a summary of these
policies.
The company has adopted a risk management statement
within the audit and risk committee charter. The audit and risk
committee is responsible for managing risk; however, ultimate
responsibility for risk oversight and risk management rests with
the Board.
Complies.
The audit and risk charter is available on the company’s website
and is summarised in this Corporate Governance Statement.
54
Principles and Recommendations
Compliance
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 internal control.
The Board has received a statement from the chief executive
officer and chief financial officer that the declaration provided
in accordance with section 295A of the Corporations Act 2001
is founded on a sound system of risk management and internal
control and that the system is operating efficiently and effectively
in all material respects in relation to the financial reporting risks.
7.2
7.3
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 and chief
financial officer that the
declaration provided in
accordance with section 295A of
the Corporations Act is founded
on a sound system of risk
management and internal control
and that the system is operating
efficiently and effectively in all
material respects in relation to
the financial reporting risks.
Comply
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.
Complies.
7.4
Provide the information
indicated in Guide to reporting
on Principle 7.
The Board has adopted an audit and risk charter which includes
a statement of the company’s risk policies.
Complies.
This charter is available on the company’s website and is
summarised in this Corporate Governance Statement.
The company has identified key risks within the business and
has received a statement of assurance from the chief executive
officer and chief financial officer.
55
Corporate Governance Statement
Continued
Principles and Recommendations
Compliance
Comply
Principle 8 – Remunerate fairly and responsibly
8.1
The Board should establish a
remuneration committee.
The Board has established a Nomination and Remuneration
Committee and has adopted a remuneration charter.
Complies.
The remuneration committee:
• consists of a majority of independent directors Mr Campbell
Horsfall, Mr Keith Edwards, Ms Melanie Leydin and
Ms Philippa Kelly;
• is chaired by Ms Philippa Kelly an independent director; and
• has four members.
8.2
Clearly distinguish the structure
of non-executive directors’
remuneration from that of
executive directors and senior
executives.
The company complies with the guidelines for
executive remuneration packages and non-executive
director remuneration.
No senior executive is involved directly in deciding their
own remuneration.
Complies.
8.3
Provide the information indicated
in the Guide to reporting on
Principle 8.
The Board has adopted a Nomination and Remuneration
Committee charter.
Complies.
The company does not have any schemes for retirement benefits
other than superannuation for non-executive directors.
3D Oil Limited’s corporate governance practices were in place for the financial year ended 30 June 2011 and to the date of signing the
directors’ report.
Various corporate governance practices are discussed within this statement. For further information on corporate governance policies
adopted by 3D Oil Limited, refer to our website: www.3doil.com.au
56
Shareholder Information
The shareholder information set out below was applicable as at 31 August 2011.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Number of holders
of ordinary shares
32
166
164
456
163
981
125
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Noel Newell
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