More annual reports from 3D Oil Limited:
2023 Report2012
AnnuAl
RepoRt
contents
Managing director’s report
Chairman’s letter
Review of operations
Directors’ report
Financial reports
Statement of comprehensive income
Statement of financial position
2
4
6
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
12
Directors’ declaration
24
25
26
Shareholder information
Corporate governance statement
Corporate directory
27
28
29
48
52
54
61
3D Oil Limited
ABN 40 105 597 279
Annual Report – 30 June 2012
HigHligHts
3D oil successfully fARms out Vic/p57
to tHe mAlAysiAn compAny, Hibiscus
petRoleum beRHAD, AnD in tHe pRocess
secuRes A$27 million to unDeRpin
tHe commencement of tHe West
seAHoRse DeVelopment.
3D oil AnD Hibiscus petRoleum AligneD
to fAst tRAck tHe DeVelopment of West
seAHoRse WitH plAnning of fiRst oil
pRoDuction by miD 2014.
3D oil boARD stRengtHeneD WitH tHe
Appointment of DR ken peReiRA, mAnAging
DiRectoR of Hibiscus, WHo HAs A long
AnD successful cAReeR in tHe oil AnD
gAs inDustRy.
1
mAnAging
DiRectoR’s
RepoRt
2
In my letter last year I outlined
our continuing strategy to deliver
shareholder value by transitioning
3D Oil into an oil and gas producer in
the Bass Strait.
During 2012, 3D Oil progressed
numerous opportunities to achieve
this goal. I was pleased to announce in
August 2012 that we secured a $29m
farm-out and share placement with
Hibiscus Petroleum.
This achieves an excellent strategic
alliance between 3D Oil and Hibiscus
Petroleum. Both companies are strongly
aligned in bringing the West Seahorse
Field into production at the earliest
possible date, while providing the best
economic outcome for the development.
The A$27 million farm-out to
Hibiscus Petroleum will underpin the
commencement of the development
of West Seahorse. In fact, work has
already commenced with engineering
studies and discussions with the
regulators and stakeholders. It is
expected we will have a clear vision for
the development by December 2012
with the application for a Production
Licence being submitted shortly
thereafter. We have already submitted
an application for a Location, the
precursor to a Production Licence,
over West Seahorse. It is certainly
very exciting to finally see such rapid
progression of the development.
Both 3D Oil and Hibiscus have
commenced discussion with financiers
and have received favourable
responses to the development and the
joint venture. At this early stage I am
optimistic we can finance a significant
proportion of the development
through debt and minimise the
equity component. That is the goal
of both companies. An attraction to
financiers is the high performance of
the Gippsland fields with a short debt
payback period. Initial flow rates of the
West Seahorse oil field are envisaged
to be well in excess of 10,000 barrels of
oil per day.
Hibiscus was not only drawn to VIC/
P57 by the anticipation of early oil
production from West Seahorse, but
also the considerable prospectivity.
The combination of the two provides
both short-term and long-term growth
potential. In the short-term both
companies are planning to drill the Sea
Lion Prospect. In my opinion this is one
of the best offshore oil prospects in
Australia. A discovery at Sea Lion would
have the potential to substantially
improve the overall project economics,
on the basis of a tie-in to the West
Seahorse development. We will also
undertake a full review of the Gurnard
Formation over the West Seahorse
Field which has an estimated 12 mmbbl
OIP (2C). It is also envisaged that other
prospects, such as the potentially large
Felix Prospect, will be drilled.
Finally I would like to welcome
Dr Ken Pereira to the board of 3D Oil.
Not only does Ken have a long and
successful career in the oil industry,
but we also share a common vision
for 3D Oil. This vision is for us to
become an oil producer in the
immediate future. This will ultimately
underpin a broader vision to seek
new opportunities to take advantage
of our strengths in order to identify
and exploit niche positions.
On behalf of the company, I thank the
Board and the 3D Oil team for their
hard work and commitment over the
years which has now culminated in
this fantastic result. I would also like
to thank all our shareholders for their
support and encouragement.
I am confident that with the strength of
our team we will deliver a great result.
I am the most optimistic about 3D Oil’s
future that I have ever been.
Noel Newell
Managing Director
3
cHAiRmAn’s
letteR
4
The outlook for 2013 is very exciting,
with the focus being to determine the
development concept and obtaining
a production permit for the West
Seahorse field. The management team
has already made good progress,
having engaged Worley Parsons to
develop the project specifications.
On behalf of all shareholders and
the Board, I would like to thank Noel
Newell and his team for their hard work
and the fantastic outcome. I am also
grateful for the work carried out by
Lion Capital in facilitating the Hibiscus
transaction, and helping us secure a
high quality joint venture partner.
Lastly, my thanks to all our shareholders
for keeping the faith and to my fellow
board members for their contributions
this year. I believe that 3D Oil has turned
the corner and I look forward to the new
year with great anticipation.
Campbell Horsfall
Chairman
one for the true believers
Dear shareholders,
2012 has been a pivotal year for 3D Oil.
In my letter to shareholders last year I
wrote about the commercial reasons
behind the decision to farm-out an
interest in VIC/P57. Over the past 12
months we have worked hard to secure
a $29m farm-out and capital raising to
Hibiscus Petroleum Berhad (‘Hibiscus’).
This is a great outcome, and ensures 3D
Oil is on track to commercialise VIC/P57
in the near future.
Following a thorough process, we
announced in August 2012 that we
had selected Hibiscus to be our joint
venture partner in developing VIC/
P57. The high degree of interest in
the permit and the commercial terms
negotiated with Hibiscus clearly
highlights the value embedded in the
assets. We look forward to working
with Hibiscus, who are well regarded
and have a highly experienced team
with proven experience in bringing
exploration projects to production.
Hibiscus’ investment in 3D Oil further
consolidates the strong relationship
between the two companies.
On behalf of the Board and
management, I would like to warmly
welcome Dr Kenneth Pereira to the
Board. Ken joins 3D Oil having over
22 years of experience in the oil and
gas industry, with leading global
organisations including Schlumberger,
SapuraCrest Petroleum Berhad and
Interlink Petroleum Ltd. His experience
and support will be highly invaluable to
3D Oil’s future development.
As a result of the share placement
to Hibiscus, 3D Oil has increased
its cash balance by $2.0m. We are
comfortable with our current cash
position, and anticipate that the farm-
in and placement funds of $29m will
materially progress the development
of the West Seahorse field before
further funding is required. This strong
funding position is favourable given the
prevailing financial market conditions.
5
ReVieW of
opeRAtions
Figure 1. Location of VIC/P57 and
the relinquished T/41P
6
3D Oil Limited is the operator and 100%
equity holder of the VIC/P57 permit in
the offshore Gippsland Basin, Victoria.
Vic/p57, gippslAnD bAsin
offsHoRe VictoRiA
background
Exploration permit VIC/P57 is located
in the north-west of the offshore
Gippsland Basin, between 6 and 26
km offshore, with water depths less
than 50 metres. VIC/P57 has been
renewed for a second five-year term
which commenced on 10 August 2011.
After the required 50% relinquishment,
the renewed VIC/P57 now comprises
approximately 483 square kilometres.
The minimum work requirements for
the renewed permit include the drilling
of one exploration well before August
2014 and another before August
2016. The permit has retained all of
the previously identified prospects
and leads plus the West Seahorse
oil field which was discovered in
1981 and for which the development
planning and approvals process
is now underway. 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.
On 3 November 2011, 3D Oil announced
it had entered into a non-binding
term sheet with Canadian oil and gas
company, Oracle Energy Corporation
(‘OEC’) for OEC to farm-in to the VIC/
P57 permit. This transaction was
conditional upon the parties signing
definitive documentation by 17
February 2012 and, in early 2012, OEC
notified 3D Oil that it would be unable
to meet these conditions. While 3D
Oil and OEC continued discussions
on a non-exclusive basis, 3D Oil then
recommenced discussions with other
parties. This process led to a formal
agreement being negotiated with
Hibiscus Petroleum.
Figure 2. Exploration permit VIC/P57,
showing prospects and leads and the
approximate area of the 3D seismic
data reprocessing.
The past year has seen significant
changes for 3D Oil’s permit areas
and strategic direction. On 15 August
2012 the Company announced that it
had entered into a farm-in agreement
with Hibiscus Petroleum Berhad,
through its wholly owned subsidiaries
(‘Hibiscus Petroleum’). This farmin will
provide funding for the progress of the
development of the West Seahorse
oil field and potentially facilitate the
drilling of an exploration well at Sea
Lion prospect, both in permit VIC/P57
in the offshore Gippsland Basin. This
key event has opened a new chapter in
the company’s operations as we move
to the development and production
phase of this project.
With the fast-tracking of the
development of the West Seahorse
Field now underway, the company is
working toward first oil production in
mid-2014.
At the completion of the farm-in
agreement, which is expected in
December 2012 following approval
of Hibiscus shareholders, a new
joint venture will be established and
Hibiscus Petroleum will acquire a
participating interest of 50.1% in VIC/
P57 and assume operatorship over
the permit. Hibiscus Petroleum will
contribute up to a total of A$27m into
the joint account to be used to initiate
the development program for West
Seahorse field, which involves the
drilling of up to two appraisal wells.
While the company will push ahead
with operations in VIC/P57, it will not
be proceeding with exploration in the
T/41P permit in the offshore Bass
Basin of Tasmania. On 13 July 2012 the
company announced that the T/41P
permit would not be renewed following
completion of the initial six-year term
of the permit.
3D Oil plans to re-focus its exploration
effort and will also continue to assess
new opportunities for growth, both
now in the context of development
operations and imminent oil production
from VIC/P57.
7
Hibiscus fARm-in AnD
West seAHoRse DeVelopment
On 15 August 2012 the company
announced that it had entered into a
conditional farm-in agreement with
Hibiscus Petroleum. Under the farm-in
agreement, Hibiscus Petroleum will
acquire a 50.1% interest in petroleum
exploration permit VIC/P57 up front,
and will invest up to A$27m in tranches
to fund joint operations on the permit.
Funds will be used to initiate the
development program for West
Seahorse field, which involves the
drilling of up to two appraisal wells.
Upon production, Hibiscus Petroleum
will preferentially receive 74.9% of
Petroleum produced from the permit
until the sale revenue equals the
amount funded by Hibiscus Petroleum.
Thereafter, each party will receive cash
flows equivalent to their participating
interest in the producing asset.
The development concept being
progressed by the joint venture is for
West Seahorse field to be produced
from up to two wells via a Mobile
Offshore Production Unit (MOPU).
The MOPU will fully process the
Reservoir fluid producing a stabilised
crude oil which will be transported
to shore via a pipeline to an onshore
storage and road tanker terminal.
The oil will then be transported to a
Victorian refinery. An option to tie-in
to an existing third party pipeline
which runs to both Victorian refineries
is also being considered.
Figure 3. A development option for
West Seahorse under consideration
8
A project team has been established
in Melbourne with Hibiscus Petroleum,
3D Oil, engineering firm WorleyParsons
and other specialists to carry out
concept and Front-end Engineering
and Design (FEED) studies. These
studies are required for all government
approvals and bank finance to allow a
Final Investment Decision (FID) by third
quarter of 2013. This would allow a first
oil date of third quarter 2014.
The engineering studies currently
being progressed include:
— MOPU tender package based on a
4-5 year lease
— Offshore oil pipeline design and
installation
— Coastal shore crossing using a
Horizontal Directional Drilling (HDD)
method
— Onshore pipeline design utilising
existing pipeline easements
— Oil storage and tanker loading facility
Discussions with debt providers to
provide funding options for the West
Seahorse development are ongoing.
To date favourable responses have
been received.
Upon FID approval the major project
steps leading to first oil will include (in
the MOPU option):
— Awarding the MOPU lease contract.
This will authorise the MOPU owner to
convert and transport the MOPU to the
West Seahorse location.
— Awarding the Operation and
Maintenance contract for the MOPU
and onshore facilities.
— Award the offshore and onshore
pipelines, and onshore storage and
tanker loading procurement and
installation contracts
— Award the drilling contracts.
Figure 4. A MOPU with a jack-up
drilling rig (for illustration only)
In light of the Hibiscus Petroleum farm-
in agreement and as a first necessary
step in the approvals process, 3D Oil
has submitted an application for the
declaration of a location over the West
Seahorse oilfield. A declaration of
location provides the mechanism for
the transition of a proven hydrocarbon
accumulation within an exploration
permit to a production licence. In
practical terms it formally excises the
proven hydrocarbon accumulation
from the exploration acreage as a
necessary precursor to applying for a
production licence. 3D Oil is also well
advanced in preparing a production
licence application.
Significant exploration potential
notwithstanding, the West
Seahorse oil field is the principal
asset contained within VIC/P57 and
the Hibiscus Petroleum farm-in is
a major step towards bringing this
field in to production.
9
Seismic mapping at these levels in
the VIC/P57 area had been difficult
primarily due to the data being
contaminated with shallow water
multiples and inter-bed multiples
from the upper Latrobe Group coals.
The newly reprocessed data enabled
clearer imaging of the subsurface,
especially in the lower Latrobe Group
and therefore more robust prospect
mapping with greater confidence
in mapping and depth conversion.
In conjunction with ongoing
geological studies, 3D Oil undertook
a comprehensive evaluation which
resulted in revised structural mapping
and amplitude analysis of the middle
and deeper levels of the Sea Lion and
Felix prospects.
Figure 5. Latest mapping over the
Sea Lion Prospect, N2.6 horizon RMS
depth conversion
West seAHoRse Volumes
Vic/p57 exploRAtion AnD
pRospects AnD leADs
In November 2011 the reprocessing
of over 500 sq km of Northern Fields
3D seismic survey data in and around
VIC/P57 was completed. This project
applied state-of-the-art techniques
in an effort to improve seismic image
quality generally, but particularly in the
deeper Golden Beach and Emperor
Subgroup horizons. The gas play
potential of these levels has been
confirmed by recent nearby discoveries
at the Longtom and Grayling gas fields
and the SE Longtom-1 and SE Remora-1
wells, as well as the Judith and Kipper
gas fields further east.
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
and the currently less welldefined
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.
West Seahorse Field Contingent
Resources (MMBbl)
Gross 100% Field
Reservoir
1C
2C
3C
Main Reservoirs
N1u/N1/N2.6
4.2
7.4
10.6
Secondary Reservoir
Gurnard
0.0 1.8
3.9
Total West
Seahorse Field
4.2 9.2 14.5
Table 1. West Seahorse field
recoverable oil contingent resources
reported by GCA independent
10
The more robust mapping was followed
by detailed updates of the risking
and potential range of hydrocarbon
volumes for the Sea Lion and Felix
prospects in anticipation of potential
drilling next year. The evaluation
incorporates both deterministic and
probabilistic methods of estimation.
The Sea Lion prospect is targeted for
drilling on a best endeavours basis
under the Hibiscus Petroleum farm-in.
The Sea Lion prospect has also
recently been the subject of an
independent resource assessment as
part of the Hibiscus Petroleum farm-in
process. This assessment reviewed
3D Oil’s seismic interpretation
and mapping and then calculated
probabilistic volumetrics using West
Seahorse analogues for reservoir
parameters. The three main target
reservoirs at Sea Lion are the Gurnard,
N1 and N2.6 levels, with recognised
upside potential in the N2.2, N2.3 and
P1 levels. The combined probabilistic
sum for the three main levels was
11.0 mmbbl of oil P50 (most likely)
prospective resource. The probability
of success was assessed at 37% for
the Gurnard and 42% for each of the N1
and N2.6 levels.
In the event of a discovery at Sea Lion
the neighbouring Salsa Lead, to the
north-east, provides an exciting follow
up. As with West Seahorse and Sea
Lion it is another inversion anticline
associated with the Rosedale Fault
system and is anticipated to have
multiple targets. Although potentially
a large structure, Salsa is located on
the edge of the 3D seismic data set
and would require further seismic
acquisition to firm as a prospect.
Figure 6. Preliminary mapping of the
Felix Prospect, F.longus horizon TWT
Figure 7. Composite seismic line
through Salsa Lead
11
t/41p, bAss bAsin
offsHoRe tAsmAniA
On 13 July 2012, 3D Oil announced that
it had decided not to renew exploration
permit T/41P in the Bass Basin following
the completion of its initial six-year
term. Located in the in the eastern
half of the offshore Bass Basin, T/41P
covered approximately 2,700 square
kilometres. The permit had been held
100% by 3D Oil Limited since mid-2005.
During this first term of the permit the
company recorded a 2D seismic survey
in 2008 and the 264 sq km Dalrymple
3D seismic survey in early 2011, as well
as conducting an extensive suite of
geoscience studies. Prospect mapping
and evaluation based on the Dalrymple
survey was completed in May 2012.
Despite this technical programme
and investment over the permit term
by 3D Oil, with only one well drilled
in 1986, the permit area remains
sparsely explored.
Unfortunately however, renewal of
the permit required the drilling of an
exploration well in the next three years
of the permit. Based on its evaluation
of all the data and on the resulting suite
of mapped prospects, the company
could not justify the high technical and
commercial risk inherent committing to
an exploration well in the renewal term.
The relinquishment of T/41P is consistent
with 3D Oil’s strategy to focus on more
advanced economic opportunities.
12
DiRectoRs’
RepoRt
13
Completion of both the Subscription
Agreement and Farm-in Agreement will
be subject to a number of conditions
precedent, including Foreign
Investment Review Board (‘FIRB’) and
Hibiscus shareholder approval. The
shares subscribed for by Hibiscus will
be issued once the conditions have
been met.
No other matter or circumstance
has arisen since 30 June 2012 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 2012.
The directors present their report,
together with the financial statements,
on the company for the year ended 30
June 2012.
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
Dr Kenneth Pereira
(appointed 4 September 2012)
Mr Keith Edwards
(resigned 23 March 2012)
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.
The company does not have franking
credits available for subsequent
financial years.
Review of operations
The loss for the company after
providing for income tax amounted
to $6,976,803 (30 June 2011:
$1,003,568).
Refer to the detailed Review
of Operations preceding this
Directors’ Report.
financial position
The net assets of the Company
have decreased by $6,928,216 to
$22,166,500 as at 30 June 2012 (2011:
$29,094,716) due to the write down
of capitalised exploration expenditure
associated with the relinquishment of
the T/41P permit.
The Company’s working capital, being
current assets less current liabilities,
was $2,069,302 compared with
working capital of $3,645,601 in 2011.
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
continue 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
On 15 August 2012, the Company
entered into a conditional Farm-
in Agreement and Subscription
Agreement with Hibiscus Petroleum
Berhad, through its wholly owned
subsidiary (‘Hibiscus’). Under the
Farm-in Agreement, Hibiscus will
acquire a 50.1% interest in petroleum
exploration permit VIC/P57 up front
and will invest up to $27m in tranches
to fund joint operations on the permit.
On 4 September 2012, as per the
Subscription Agreement, Hibiscus
subscribed for new shares in the
Company equal to 14.99% of the
Company’s share capital (before
the new shares are issued) as part
of a cornerstone investment. The
consideration (including costs of the
transaction) of $2.04 million was based
on the 30 day Volume Weighted Average
Price of the Company’s shares prior to
the date the agreement was announced.
14
information on directors
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
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
interests in shares
38,000 ordinary fully paid shares
interests in options
None
mr noel newell
executive Director and
managing Director
Qualifications
B App Sc (App Geol)
experience and expertise
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 was 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
interests in shares
38,105,150 ordinary fully paid shares.
interests in options
None
ms melanie leydin
non-executive Director and
company secretary
Qualifications
B.Bus CA
experience and expertise
Melanie 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.
Melanie has 20 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
Celamin Holdings NL
former directorships
(in the last 3 years)
None
special responsibilities
Chairman of Audit Committee and
Member of Remuneration and
Nomination Committee
interests in shares
150,000 ordinary fully paid shares
interests in options
None
15
ms philippa kelly
non-executive Director
Qualifications
LLB, FFin, GAICD
experience and expertise
Philippa Kelly 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 where she was
involved in equity raisings, corporate
structuring and acquisitions and
mergers for a broad range of resource
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 is Chair
of its Finance & Business Affairs
Committee and is 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 Chair
of Remuneration and Nomination
Committee
interests in shares
145,000 ordinary fully paid shares
interests in options
None
Dr kenneth pereira
(appointed 4 september 2012)
non-executive Director
mr keith edwards
(resigned 23 march 2012)
non-executive Director
Qualifications
BSc (Hons) Engineering, MBA, DBA.
experience and expertise
Kenneth Pereira has 22 years’
experience in the oil and gas industry
(both services and exploration and
production). He has worked for
Schlumberger (9 years as a Field
Engineer in North Africa and Europe)
and SapuraCrest Petroleum Berhad
(from founding of the company as
Sapura Energy in 1997 until 2008)
as Chief Operating Officer. In 2009,
he became Managing Director of
Interlink Petroleum Ltd, an oil and gas
exploration & production company
listed on the Mumbai Stock Exchange
(2009 to 2011).
other current directorships
Hibiscus Petroleum Berhad
former directorships
(in the last 3 years)
None
special responsibilities
None
interests in shares
None
interests in options
None
experience and expertise
Keith Edwards has extensive oil and
gas experience. He has had almost
30 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 oil majors BHP Billiton and Shell
International and also 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
None
interests in shares
N/A
interests in options
N/A
‘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.
16
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 2012, and the
number of meetings attended by each
director were:
Held: represents the number of
meetings held during the time the
director held office or was a member of
the relevant committee.
Mr C Horsfall
Mr N Newell
Ms M Leydin
Ms P Kelly
Mr K Edwards
Full Board
Audit and
Risk Committee
Remuneration
and Nomination
Committee
Attended Held
Attended Held
Attended Held
15
15
14
15
9
15
15
15
15
11
2
–
2
2
1
2
–
2
2
1
1
–
1
1
–
1
–
1
1
–
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
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
— acceptability to shareholders
rewards
— 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.
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.
17
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
executives of the company are set out
in the following tables.
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.
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 is assessed 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.
Voting and comments made at
the company’s 28 november 2011
Annual general meeting (‘Agm’)
The company received 94.30% of ‘for’
votes in relation to its remuneration
report for the year ended 30 June
2011. The company did not receive any
specific feedback at the AGM regarding
its remuneration practices.
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 three
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.
18
2012
Name
Non-Executive Directors:
Mr C Horsfall
Ms M Leydin *
Ms P Kelly
Mr K Edwards **
Executive Directors:
Mr N Newell
Other Key Management
Personnel:
Mr K Lanigan***
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
Bonus
Non-
monetary
Super-
annuation
Long service
leave
Equity-
settled
$
59,663
117,000
41,284
30,132
321,101
291,924
861,104
$
–
–
–
–
–
–
–
$
–
–
–
–
$
5,345
–
3,716
2,712
$
–
–
–
–
$
–
–
–
–
Total
$
65,008
117,000
45,000
32,844
–
28,899
7,223
–
357,223
–
–
26,273
6,594
66,945
13,817
–
–
324,791
941,866
* This includes fees paid to Leydin Freyer Corporate Pty Ltd in respect of Directors
fees, Company Secretarial and Accounting services.
** Resigned on 23 March 2012.
*** Mr K. Lanigan left the Company’s employment on 14 September 2012.
2011
Name
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
Bonus
Non-
monetary
Super-
annuation
Equity-
settled
Non-Executive Directors:
Mr C Horsfall
Ms M Leydin *
Ms P Kelly
Executive Directors:
Mr N Newell
Other Key Management Personnel:
Mr K Lanigan
$
100,000
105,896
43,602
321,101
270,300
840,899
$
–
–
–
–
–
–
$
–
–
–
$
9,000
–
3,924
$
–
–
–
$
–
–
–
Total
$
109,000
105,896
47,526
–
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
19
c
service agreements
ms m leydin
non-executive Director
mr k edwards
non-executive Director
Agreement commenced:
Agreement commenced:
1 July 2011
Details:
Lapsed following resignation on
23 March 2012.
mr k lanigan
exploration manager
term of agreement:
7 December 2009
Details:
Lapsed following resignation on
14 September 2012.
Key management personnel have no
entitlement to termination payments in
the event of removal for misconduct.
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 2012.
options
There were no options issued to
directors and other key management
personnel as part of compensation
that were outstanding as at 30 June
2012.
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 2012.
23 January 2009
Details:
(i) Ms Leydin may resign from her
position and thus terminate this
contract by giving 6 months written
notice.
(ii) The Company may terminate
this employment agreement by
providing 6 months written notice.
(iii) 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.
(iv) 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:
(i) Ms Kelly may resign from her
position and thus terminate this
contract by giving 6 months written
notice.
(ii) The Company may terminate
this employment agreement by
providing 6 months written notice.
(iii) 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.
(iv) On termination of the agreement,
Ms Kelly will be entitled to be paid
those outstanding amounts owing
to her up until the Termination date.
Remuneration and other terms of
employment for key management
personnel are formalised in service
agreements. Details of these
agreements are as follows:
mr noel newell
executive Director
Agreement commenced:
1 November 2006
Details:
(i) Mr Newell may resign from his
position and thus terminate this
contract by giving 6 months written
notice.
(ii) The Company may terminate
this employment agreement by
providing 6 months written notice.
(iii) The Company may terminate
the contract at any time without
notice if serious misconduct has
occurred. Where termination
with cause occurs, Mr Newell is
only entitled to that portion of
remuneration which is fixed, and
only up to the date of termination.
(iv) 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:
(i) Mr Horsfall may resign from his
position and thus terminate this
contract by giving 6 months
written notice.
(ii) The Company may terminate
this employment agreement by
providing 6 months written notice.
(iii) 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.
(iv) On termination of the agreement,
Mr Horsfall will be entitled to
be paid those outstanding
amounts owing to him up until the
Termination date.
20
e
Additional information
The earnings of the company for
the five years to 30 June 2012 are
summarised below:
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
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
2008
2009
$
$
2010
$
2011
$
2012
$
1,740,306
587,992
414,898
336,290
140,072
(19,741,448)
(940,340)
(857,435)
(1,003,568)
(7,672,697)
(19,741,448)
(940,340)
(857,435)
(1,003,568)
(6,976,803)
2008
0.50
0.26
2009
0.26
0.11
2010
0.11
0.20
2011
0.20
0.14
2012
0.14
0.07
Basic earnings per share (cents per share)
(10.05)
(0.46)
(0.42)
(0.49)
(3.38)
this concludes the remuneration report, which has been audited.
shares under option
Unissued ordinary shares of the
company under option at the date of
this report are as follows:
Grant date
Expiry date
Exercise price
27 August 2009
30 June 2014
2 June 2010
30 November 2014
7 October 2011
7 October 2015
$0.25
$0.40
$0.18
Number under
option
64,000
465,000
554,700
1,083,700
No person entitled to exercise the
options had or has any right by virtue
of the option to participate in any share
issue of the company or of any other
body corporate.
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 2012.
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.
21
non-audit services
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
28 September 2012
Melbourne
Details of the amounts paid or payable
to the auditor for non-audit services
provided during the financial year by
the auditor are outlined in note 22 to
the financial statements.
The directors are satisfied that the
provision of non-audit services during
the financial year, by the auditor (or by
another person or firm on the auditor’s
behalf), is compatible with the general
standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that
the services as disclosed in note 22
to the financial statements do not
compromise the external auditor’s
independence for the following
reasons:
— all non-audit services have been
reviewed and approved to ensure that
they do not impact the integrity and
objectivity of the auditor, and
— none of the services undermine the
general principles relating to auditor
independence as set out in APES
110 Code of Ethics for Professional
Accountants issued by the Accounting
Professional and Ethical Standards
Board, including reviewing or auditing
the auditor’s own work, acting in a
management or decision-making
capacity for the company, acting as
advocate for the company or jointly
sharing economic risks and rewards.
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.
22
23
finAnciAl
RepoRts
24
stAtement of
compReHensiVe income
For the year ended 30 June 2012
Revenue
Expenses
Corporate expenses
Administrative expenses
Employment expenses
Occupancy expenses
Depreciation and amortisation expense
Exploration costs written off
Unrealised exchange gains/loss
Realised exchange gains/loss
Share based payments
Loss before income tax benefit
Income tax benefit
Note
2012
$
2011
$
5
140,072
336,290
(464,739)
(159,663)
(84,318)
(66,749)
(1,118,592)
(833,850)
(94,466)
(91,436)
6
(40,318)
(26,746)
(5,954,106)
(151,426)
(6,747)
(51,650)
(896)
88,769
(48,587)
(47,107)
(7,672,697)
(1,003,568)
7
695,894
–
Loss after income tax benefit for the year attributable to the owners of 3D Oil Limited
(6,976,803)
(1,003,568)
Other comprehensive income for the year, net of tax
–
–
Total comprehensive income for the year attributable to the owners of 3D Oil Limited
(6,976,803)
(1,003,568)
Basic earnings per share
Diluted earnings per share
Cents
(3.38)
(3.38)
Cents
(0.49)
(0.49)
27
27
The above statement of comprehensive
income should be read in conjunction
with the accompanying notes
25
stAtement of
finAnciAl position
As at 30 June 2012
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
Issued capital
Reserves
Accumulated losses
Total equity
The above statement of financial
position should be read in conjunction
with the accompanying notes
26
Note
2012
$
2011
$
8
9
10
11
12
13
1,684,892
3,857,995
725,958
63,718
34,962
34,848
2,474,568
3,927,805
13,640
52,736
18,914
54,018
20,569,130
25,921,401
20,635,506 25,994,333
23,110,074 29,922,138
14
15
361,100
217,250
44,166
64,954
405,266
282,204
16
538,308
545,218
538,308
545,218
943,574
827,422
22,166,500 29,094,716
17
18
50,620,867 50,620,867
78,645
185,283
(28,533,012)
(21,711,434)
22,166,500 29,094,716
stAtement of
cHAnges in eQuity
For the year ended 30 June 2012
Contributed
equity
Reserves
Retained
profits
Total equity
$
$
$
$
Balance at 1 July 2010
50,620,867
2,023,826
(22,593,516)
30,051,177
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
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
Balance at 1 July 2011
50,620,867
185,283
(21,711,434)
29,094,716
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments
Expiry of Options
–
–
–
–
–
–
–
–
(6,976,803)
(6,976,803)
–
–
(6,976,803)
(6,976,803)
48,587
–
48,587
(155,225)
155,225
–
Balance at 30 June 2012
50,620,867
78,645
(28,533,012)
22,166,500
The above statement of changes in
equity should be read in conjunction
with the accompanying notes
27
stAtement of
cAsH floWs
For the year ended 30 June 2012
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Note
2012
$
2011
$
19,788
13,012
(1,670,764)
(1,065,022)
121,113
415,999
Net cash used in operating activities
26
(1,529,863)
(636,011)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for exploration and evaluation
Proceeds from foreign exchange investment
Net cash used in investing activities
Cash flows from financing activities
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(3,274)
(30,488)
(11,864)
(35,370)
(601,835)
(3,874,531)
(7,643)
37,113
(643,240)
(3,884,652)
–
–
(2,173,103)
(4,520,663)
3,857,995
8,378,658
Cash and cash equivalents at the end of the financial year
8
1,684,892
3,857,995
The above statement of cash flows
should be read in conjunction with
the accompanying notes
28
notes to tHe
finAnciAl stAtements
30 June 2012
note 1.
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, VIC 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 28 September 2012.
The directors have the power to amend
and reissue the financial report.
note 2.
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, as
appropriate for-profit oriented entities.
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 3.
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 2012 the Company has cash
and cash equivalents of $1.7 million
and a net decrease of cash during the
financial year of $2.2 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 24
of $37.0 million over the next 5 years.
On 15 August 2012, the Company
announced that it had entered into
a farm-in ageement with Hibiscus
Petroleum Berhad (‘Hibiscus’) in
relation to the VIC/P57 permit. Under
the agreement, Hibiscus will invest
funds of $27.0 million to acquire 50.1%
of the permit. It is anticipated that
the cost of the commitments will be
covered by the funding of $27.0 million
with the shortfall being covered using
alternative funding methods via the
joint arrangement vehicle.
In addition to the commitments
outlined above and in Note 24, the
Company may need to secure funding
by means of a capital raising, debt
financing, sale of assets, farm out
or a combination of these in order
to manage its own working capital
requirements. 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.
Research and development
tax incentives
Revenue relating to research and
development (R&D) tax incentive
refunds is recognised at the time
of lodgement of the R&D claim. The
claim is based on the company’s
interpretation as to the eligibility of its
specific R&D activities.
29
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
the adjustment recognised for 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.
Deferred tax assets are recognised for
deductible temporary differences and
unused tax losses only if it is probable
that future taxable amounts will be
available to utilise those temporary
differences and losses.
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.
30
intangible assets
Intangible assets 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.
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
are 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.
31
or loss for the period is the cumulative
amount calculated at each reporting
date less amounts already recognised
in previous periods.
new replacement award is substituted
for the cancelled award, the cancelled
and new award is treated as if they
were a modification.
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.
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
issued capital
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.
Dividends
Dividends are recognised when
declared during the financial year
and no longer at the discretion of the
company.
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,
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
32
(ii) AASB 9 Financial Instruments
Amendments to Australian
Accounting Standards (effective
from 1 January 2015)
(v) AASB 13 Fair Value Measurement
and Amendments to AASB 2011-8
Amendments to Australian
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.
In December 2009 the AASB
issued a revised AASB 9 Financial
Instruments. It is effective for
accounting periods on or after 1
January 2015. This amends the
requirements for classification and
measurement of financial assets.
On initial analysis this standard will
have no impact on the Company’s
financial statements.
foreign currency translation
(iii) AASB 11 Joint Arrangements
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
2012. The company’s assessment
of the impact of these new or
amended Accounting Standards and
Interpretations, most relevant to the
company, are set out below.
(i) Interpretation 20 Stripping Costs in
the Production Phase of a Mine
Issued in November 2011
Interpretation 20 clarifies those
costs of removing mine waste
materials (overburden) to access
ore in a surface mine must be
capitalised as inventory under
AASB 102 Inventories. This will
have no impact on the Companies
financial statements because
the Company does not operate a
surface mine.
In August 2011 the Australian
Accounting Standards Board
issued AASB 11 to replace AASB131:
Interests in Joint Ventures (July
2004 as amended). AASB 11
requires joint arrangements
to be classified as either ‘joint
operations’ (whereby the parties
that have joint control of the
arrangement have rights to the
assets and obligations for the
liabilities) or ‘joint ventures’
(where the parties that have
joint control of the arrangement
have rights to the net assets
of the arrangement). Joint
ventures are required to adopt
the equity method of accounting
(proportionate consolidation is no
longer allowed). This standard will
have no impact on the Company’s
financial statements as at the 30th
of June 2012 as at that time the
Company is not a party to any joint
arrangement.
(iv) AASB 12 Disclosure of Interests in
Other Entities
In August 2011 the Australian
Accounting Standards Board
issued AASB 12. AASB 12 contains
the disclosure requirements
applicable to entities that hold
an interest in a subsidiary,
joint venture, joint operation or
associate. AASB 12 also introduces
the concept of a ‘structured entity’,
replacing the ‘special purpose
entity’ concept currently used in
Interpretation 112, and requires
specific disclosures in respect of
any investments in unconsolidated
structured entities. This standard
will only affect disclosures and
will have no other impact on the
Company’s financial statements.
Accounting Standards arising from
AASB 13 (effective 1 January 2013)
In September 2011 the Australian
Accounting Standards Board
issued AASB 13, it defines fair
value, sets out in a single Standard
a framework for measuring fair
value and requires disclosures
about fair value measurements.
On initial analysis this standard will
have no impact on the Company’s
financial statements.
None of the other standards,
amendments or interpretations
issued which are not yet effective
are expected to affect the financial
statements.
33
note 4.
opeRAting segments
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. 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 5.
ReVenue
2012
$
2011
$
Other revenue
Interest
Rent
120,284
323,180
19,788
13,110
Revenue
140,072 336,290
Recovery of deferred tax assets
Deferred tax assets are recognised for
deductible temporary differences only
if the company considers it is probable
that future taxable amounts will be
available to utilise those temporary
differences and losses.
long service leave provision
As discussed in note 2, 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.
provision for well abandonment
A provision has been made for the
present value of anticipated costs
of the remediation work that will be
required to comply with environmental
and legal obligations. The provision
is estimated based on currently
available facts, technology expected
to be available at the time of the clean
up, laws and regulations presently
or virtually certain to be enacted and
prior experience in remediation of
contaminated sites.
exploration and evaluation
At each reporting period the directors
review the carrying amount of each of
the tenements by assessing whether
any of the indicators of impairment
outlined in AASB 6 Exploration for and
Evaluation of Mineral Resources are in
existence.
note 3.
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.
share-based payment transactions
The company measures the cost
of equity-settled transactions with
employees by reference to the fair
value of the equity instruments at the
date at which they are granted. The fair
value is determined by using either the
Binomial or Black-Scholes model taking
into account the terms and conditions
upon which the instruments were
granted. The accounting estimates and
assumptions relating to equity-settled
share-based payments would have
no impact on the carrying amounts of
assets and liabilities within the next
annual reporting period but may impact
profit or loss and equity.
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 finite 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.
34
note 6.
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 loss on foreign currency translation
Operating lease payments
Office lease
note 7.
income tAx benefit
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Other Permanent Differences
R&D tax offset receivable at 30 June 2012
Income tax losses not taken up as benefit
2012
$
2011
$
(8,548)
(6,549)
(31,770)
(40,318)
(20,197)
(26,746)
(106,935)
(102,371)
(48,587)
(47,107)
27,698
(29,353)
(127,824)
(178,831)
(896)
(6,747)
(7,643)
88,769
(51,650)
37,119
(90,317)
(86,843)
2012
$
2011
$
(7,672,697)
(1,003,568)
(2,301,809)
(301,070)
(106,638)
1,319
14,132
1,377
(2,407,128)
(285,561)
(695,894)
–
2,407,128
285,561
Income tax benefit
(695,894)
–
35
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 if a
production licence was granted on VIC/
P57, it has incurred expenditure that
would result in total carried forward
undeducted expenditure of $72 million
to 30 June 2012 (2011: $71 million)
which is capable of being offset against
income derived in future years. At
1 July 2012 this estimated amount
is $88 million (2011: $86 million) as
compounding occurs annually on 1 July.
Expenditure incurred in relation to
production licence T/41P expired when
the licence was relinquished.
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
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.
The taxation benefits of tax losses and
temporary difference not brought to
account will only be obtained if:
(i) the company derives future
assessable income of a nature and
of an amount sufficient to enable
the benefit from the deductions for
the losses to be realised;
(ii) the company continues to comply
with the conditions for deductibility
imposed by law; and
(iii) no change in tax legislation
adversely affects the company
in realising the benefits from
deducting the losses.
note 8.
cuRRent Assets – cAsH AnD
cAsH eQuiVAlents
Cash at bank
Cash on deposit
note 9.
cuRRent Assets – tRADe AnD
otHeR ReceiVAbles
R&D tax concession receivable
Interest receivable
GST receivable
36
2012
$
2011
$
15,449,435
14,801,545
(6,926,166)
(7,138,504)
8,523,269
7,663,041
2012
$
2011
$
190,315
357,431
1,494,577
3,500,564
1,684,892
3,857,995
2012
$
695,895
2,844
27,219
2011
$
–
3,673
31,289
725,958
34,962
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 be
approximate to their fair value.
Subsequent to year end, the Company
has received the $696k R&D tax
concession receivable, however at
the date of the financial report the
Company is awaiting final approval by
AusIndustry.
note 10.
cuRRent Assets – otHeR
2012
$
2011
$
Prepayments
63,718
34,848
note 11.
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 2010
Additions
Depreciation expense
Balance at 30 June 2011
Additions
Depreciation expense
Balance at 30 June 2012
2012
$
2011
$
82,693
79,420
(69,053)
(60,506)
13,640
18,914
13,640
18,914
Plant &
Equipment
$
Total
$
14,215
14,215
11,864
11,864
(7,165)
(7,165)
18,914
18,914
3,274
3,274
(8,548)
(8,548)
13,640
13,640
37
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 2010
Additions
Amortisation expense
Balance at 30 June 2011
Additions
Amortisation expense
2012
$
151,518
(98,782)
52,736
2011
$
121,030
(67,012)
54,018
52,736
54,018
Software
$
38,230
35,370
Total
$
38,230
35,370
(19,582)
(19,582)
54,018
30,488
(31,770)
54,018
30,488
(31,770)
Balance at 30 June 2012
52,736
52,736
Exploration and evaluation expenditure
20,569,130
25,921,401
2012
$
2011
$
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 2010
Additions
Write off of assets
Balance at 30 June 2011
Expenditure during the year
Write off of assets
Exploration &
Development
Expenditure
$
Total
$
22,177,579
22,177,579
3,895,248
3,895,248
(151,426)
(151,426)
25,921,401
25,921,401
601,835
601,835
(5,954,106)
(5,954,106)
Balance at 30 June 2012
20,569,130
20,569,130
note 12.
non-cuRRent Assets –
intAngibles
note 13.
non-cuRRent Assets –
exploRAtion AnD eVAluAtion
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.
Out of the total of $5,954,106, the write
off of expenditure on permit T/41P
accounts for exploration assets in the
reporting period is $5,943,816. The
permit was relinquished at the end of
the reporting period.
38
note 14.
cuRRent liAbilities –
tRADe AnD otHeR pAyAbles
Trade
payables
Sundry
payables
and accrued
expenses
2012
$
2011
$
287,629
157,308
73,471
59,942
361,100
217,250
Refer to note 20 for further 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 15.
cuRRent liAbilities –
pRoVisions
2012
$
2011
$
Employee
benefits
44,166
64,954
note 16.
non-cuRRent liAbilities –
pRoVisions
Employee
benefits
Provision
for well
abandonment
2012
$
2011
$
38,308
45,218
500,000 500,000
538,308
545,218
provision for well abandonment
The provision for well abandonment
represents the present value of
director’s best estimate for the costs
to abandon the Wardie-1 Well. There
is no current estimate of when any
abandonment may take place in light of
the recently agreed farm-in arrangement
with Hibiscus Petroleum Berhad.
note 17.
eQuity – issueD cApitAl
2012
2011
ordinary shares
Ordinary
shares –
fully paid
$
$
50,620,867 50,620,867
Shares
Shares
206,560,000 206,560,000
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.
39
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
2011 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 28.
note 18.
eQuity – ReseRVes
Share-based payments reserve
78,645
2,038,070
Options reserve
–
(1,852,787)
2012
$
2011
$
Balance at 1 July 2010
Share based payments
Expiry of options
Balance at 30 June 2011
Share based payments
Expiry of options
78,645
185,283
Share based
Payment
$
Total
$
2,023,826
2,023,826
47,107
47,107
(1,885,650)
(1,885,650)
185,283
48,587
185,283
48,587
(155,225)
(155,225)
Balance at 30 June 2012
78,645
78,645
There were no dividends paid or
declared during the current or previous
financial year.
The company does not have franking
credits available for subsequent
financial years.
note 19.
eQuity – DiViDenDs
40
market risk
price risk
foreign currency risk
The company undertakes certain
transactions denominated in foreign
currency and are exposed to foreign
currency risk through foreign exchange
rate fluctuations.
Foreign exchange risk arises from
future commercial transactions and
recognised financial assets and
financial liabilities denominated in
a currency that is not the entity’s
functional currency. The risk is
measured using sensitivity analysis
and cash flow forecasting.
The company is not exposed to any
significant price risk.
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.
As at the reporting date, the company
had the following variable rate
borrowings and interest rate swap
contracts outstanding:
2012
Weighted
average interest
rate
%
4.35
4.35
2011
Weighted
average interest
rate
Balance
%
$
4.75
357,431
4.75
3,500,564
Balance
$
190,315
1,494,577
1,684,892
3,857,995
Cash on hand
Cash on deposit
Net exposure to
cash flow interest
rate risk
note 20.
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 derivative
financial instruments such as forward
foreign exchange contracts to hedge
certain risk exposures. Derivatives are
exclusively used for hedging purposes,
i.e. not as trading or other speculative
instruments. 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
senior finance executives (‘finance’)
under policies approved by the Board
of Directors (‘Board’). These policies
include identification and analysis of
the risk exposure of the company and
appropriate procedures, controls and
risk limits. Finance identifies, evaluates
and hedges financial risks within the
company’s operating units. Finance
reports to the Board on a monthly basis.
41
credit risk
liquidity risk
fair value of financial instruments
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 a strict code of credit,
including obtaining agency credit
information, confirming references and
setting appropriate credit limits. The
company obtains guarantees where
appropriate to mitigate credit risk. The
maximum exposure to credit risk at the
reporting date to recognised financial
assets is the carrying amount, net of
any provisions for impairment of those
assets, as disclosed in the statement
of financial position and notes to the
financial statements. The company
does not hold any collateral.
Vigilant liquidity risk management
requires the company to maintain
sufficient liquid assets (mainly cash
and cash equivalents) to be able to pay
debts as and when they become due
and payable.
The company manages liquidity risk by
maintaining adequate cash reserves
by continuously monitoring actual and
forecast cash flows and matching the
maturity profiles of financial assets
and liabilities.
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.
2012
Cash and cash
equivalents
The tables below illustrate the
impact on profit before tax based
upon expected volatility of interest
rates using market data and analysis
forecasts.
2011
Cash and cash
equivalents
Basis points increase
Basis points decrease
Basis
points
change
Effect
on profit
before tax
Effect on
equity
Basis
points
change
Effect
on profit
before tax
Effect on
equity
131
22,072
22,072
131 (22,072)
(22,072)
Basis points increase
Basis points decrease
Basis
points
change
Effect
on profit
before tax
Effect on
equity
Basis
points
change
Effect
on profit
before tax
Effect on
equity
143
55,170
55,170
143
(55,170)
(55,170)
note 21.
key mAnAgement peRsonnel
DisclosuRes
Directors
The following persons were directors of
3D Oil Limited during the financial year:
Mr Campbell Horsfall
Non-executive Chairman
Mr Noel Newell
Managing Director
Ms Melanie Leydin
Non-executive Director, Company
Secretary
Ms Philippa Kelly
Non-executive Director
Mr Keith Edwards
Non-executive Director –
resigned 23 March 2012
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
2012
$
2011
$
861,104 840,899
66,945
65,907
13,817
10,480
941,866
917,286
42
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:
2012
Balance at the start of
the year
Received as part of
remuneration
Additions
Disposals/
other
Balance at the end of
the year
Ordinary shares
Mr C Horsfall
Mr N Newell*
Ms M Leydin
Ms P Kelly
Mr K Edwards**
38,000
37,805,150
150,000
145,000
240,000
38,378,150
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(240,000)
38,000
37,805,150
150,000
145,000
–
(240,000)
38,138,150
* purchased 200,000 shares on-market at $0.07 per share on 16 August 2012 taking
holding to 38,105,150 shares.
** resigned on 23 March 2012
2011
Balance at the start of
the year
Received as part of
remuneration
Ordinary shares
Mr C Horsfall
Mr N Newell
Ms M Leydin
Ms P Kelly
Mr K Edwards*
38,000
37,700,150
150,000
145,000
–
38,033,150
–
–
–
–
–
–
Additions
–
105,000
–
–
240,000
345,000
Disposals/
other
Balance at the end of
the year
–
–
–
–
–
–
38,000
37,805,150
150,000
145,000
240,000
38,378,150
* Mr K Edwards was appointed as a Non-Executive Director on 30 June 2011.
option holding
2012
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:
options over ordinary shares
There were no options over ordinary
shares held by key management
personnel during the 2012 financial year.
2011
Options over ordinary shares
Mr C Horsfall*
Mr N Newell*
Mr K Lanigan
* These options expired on 31 January 2011.
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
500,000
4,000,000
265,000
4,765,000
–
–
–
–
–
–
–
–
(500,000)
(4,000,000)
(265,000)
(4,765,000)
–
–
–
–
43
note 22.
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:
2012
$
2011
$
Audit services – Grant Thornton Audit Pty Ltd
Audit or review of the financial statements
35,000
33,500
Other services – Grant Thornton Audit Pty Ltd
Taxation Services
134,966
–
169,966
33,500
note 23.
contingent liAbilities
There were no contingent liabilities in
existence at 30 June 2012.
note 24.
commitments
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. (Refer to Note 25 for details of
the Farm-in agreement recently entered
into with Hibiscus Petroleum. In the
event that the all required conditions
pursuant to the agreement are fulfilled,
the Company will be responsible for
49.9% of the exploration commitments
outlined above).
44
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
2012
$
2011
$
46,044
90,316
–
46,044
46,044
136,360
600,000
700,000
36,400,000 37,000,000
37,000,000 37,700,000
note 25.
eVents AfteR tHe
RepoRting peRioD
note 26.
ReconciliAtion of loss AfteR
income tAx to net cAsH useD
in opeRAting ActiVities
Completion of both the Subscription
Agreement and Farm-in Agreement will
be subject to a number of conditions
precedent, including Foreign
Investment Review Board (‘FIRB’) and
Hibiscus shareholder approval. The
shares subscribed for by Hibiscus will
be issued once the conditions have
been met.
No other matter or circumstance
has arisen since 30 June 2012 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.
On 15 August 2012, the Company
entered into a conditional Farm-
in Agreement and Subscription
Agreement with Hibiscus Petroleum
Berhad, through its wholly owned
subsidiary (‘Hibiscus’). Under the
Farm-in Agreement, Hibiscus will
acquire a 50.1% interest in petroleum
exploration permit VIC/P57 up front
and will invest up to $27m in tranches
to fund joint operations on the permit.
On 4 September 2012, as per the
Subscription Agreement, Hibiscus
subscribed for new shares in the
Company equal to 14.99% of the
Company’s share capital (before
the new shares are issued) as part
of a cornerstone investment. The
consideration (including costs of
the transaction) of $2.0 million was
based on the 30 day Volume Weighted
Average Price of the Company’s shares
prior to the date the agreement was
announced.
2012
$
2011
$
Loss after income tax benefit for the year
(6,976,803)
(1,003,568)
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Exploration costs written off
Annual and long service leave provisions
40,318
48,587
7,643
5,954,106
(27,698)
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(690,996)
Decrease/(increase) in prepayments
Increase in trade and other payables
(28,870)
143,850
26,746
47,107
(37,113)
151,426
29,353
79,421
1,241
69,376
Net cash used in operating activities
(1,529,863)
(636,011)
45
note 27.
eARnings peR sHARe
The rights to options held by option
holders have not been included in the
weighted average number of ordinary
shares for the purposes of calculating
diluted EPS as they do not meet the
requirements for inclusion in AASB
133 ‘Earnings per Share’. The rights
to options are non-dilutive as the
Company has generated a loss for the
financial year.
2012
$
2011
$
Loss after income tax attributable to the owners
of 3D Oil Limited
(6,976,803)
(1,003,568)
Weighted average number of ordinary shares
used in calculating basic earnings per share
206,560,000 206,560,000
Number
Number
Weighted average number of ordinary shares
used in calculating diluted earnings per share
206,560,000 206,560,000
Basic earnings per share
Diluted earnings per share
Cents
(3.38)
(3.38)
Cents
(0.49)
(0.49)
note 28.
sHARe-bAseD pAyments
Set out below are
summaries of options
granted under the plan:
2012
Grant date
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/ other
Balance at the
end of the year
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
07/10/2011
07/10/2015
$0.75
$0.25
$0.25
$0.40
$0.40
$0.40
$0.40
$0.18
400,000
125,000
64,000
265,000
150,000
200,000
200,000
–
–
–
–
–
–
–
–
697,177
1,404,000
697,177
–
–
–
–
–
–
–
–
–
(400,000)
(125,000)
–
–
–
–
64,000
265,000
(150,000)
–
–
200,000
(200,000)
–
(142,477)
554,700
(1,017,477)
1,083,700
46
2011
Grant date
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/ other
Balance at the
end of the year
14/12/2006
31/01/2011
$0.60
4,000,000
14/12/2006
31/01/2011
$0.50
5,500,000
–
–
–
–
–
–
–
100,000
1,500,000
400,000
125,000
64,000
–
–
–
–
265,000
150,000
200,000
200,000
11,689,000
815,000
–
–
–
–
–
–
–
–
–
–
–
–
(4,000,000)
(5,500,000)
(100,000)
(1,500,000)
–
–
–
–
–
–
–
–
–
–
–
400,000
125,000
64,000
265,000
150,000
200,000
200,000
(11,100,000)
1,404,000
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
$0.50
$0.50
$0.75
$0.25
$0.25
$0.40
$0.40
$0.40
$0.40
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
grant date Exercise price
Share price at
Expected
volatility Dividend yield
Risk-free
interest rate
Fair value at
grant 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
07/10/2011
07/10/2015
$0.60
$0.50
$0.50
$0.50
$0.75
$0.25
$0.25
$0.40
$0.40
$0.40
$0.40
$0.18
83.00%
83.00%
83.00%
83.00%
83.00%
80.00%
80.00%
80.00%
80.00%
80.00%
80.00%
99.67%
0.00%
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%
4.36%
$0.59
$0.19
$0.19
$0.19
$0.19
$0.19
$0.25
$0.14
* 3D Oil Limited listed on the Australian Stock Exchange in November 2007.
$0.213
$0.173
$0.185
$0.156
$0.030
$0.049
$0.440
$0.083
$0.076
$0.083
$0.931
$0.090
47
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
2 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 2012 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
28 September 2012
Melbourne
48
49
50
51
sHAReHolDeR infoRmAtion
30 June 2012
Distribution of equitable securities
The shareholder information set
out below was applicable as at 13
September 2012.
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
Equity security holders
Number of holders of ordinary shares
34
150
168
432
172
956
220
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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