3D Oil Limited Annual Report 2012

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FY2012 Annual Report · 3D Oil Limited

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2012
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

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Directors’ declaration

Shareholder information

Corporate governance statement

Corporate directory

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.

mAnAging
DiRectoR’s
RepoRt

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

cHAiRmAn’s
letteR

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.

ReVieW of
opeRAtions

Figure 1. Location of VIC/P57 and
the relinquished T/41P

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.

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

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.

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

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

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

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.

DiRectoRs’
RepoRt

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.

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

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.

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

–

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.

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.

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

c
service agreements

ms m leydin
non-executive Director

mr k edwards
non-executive Director

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.

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.

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.

finAnciAl
RepoRts

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

140,072

336,290

(464,739)

(159,663)

(84,318)

(66,749)

(1,118,592)

(833,850)

(94,466)

(91,436)

(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)

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)

Cents

(0.49)

The above statement of comprehensive
income should be read in conjunction
with the accompanying notes

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

Note

2012

2011

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

361,100

217,250

44,166

64,954

405,266

282,204

538,308

545,218

538,308

545,218

943,574

827,422

22,166,500 29,094,716

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)

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)

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

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

(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

1,684,892

3,857,995

The above statement of cash flows
should be read in conjunction with
the accompanying notes

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.

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.

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.

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

(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.

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.

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)

–

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

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

11,864

(7,165)

18,914

3,274

(8,548)

13,640

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)

54,018

30,488

(31,770)

54,018

30,488

(31,770)

Balance at 30 June 2012

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

3,895,248

(151,426)

25,921,401

601,835

(5,954,106)

Balance at 30 June 2012

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.

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.

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

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.

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

47,107

(1,885,650)

185,283

48,587

185,283

48,587

(155,225)

Balance at 30 June 2012

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

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

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.

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

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

143

(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

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)

–

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).

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

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

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)

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

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)

Cents

(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

$0.40

$0.18

400,000

125,000

64,000

265,000

150,000

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

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

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

(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

$0.75

$0.25

$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

$0.75

$0.25

$0.40

$0.18

83.00%

80.00%

99.67%

0.00%

5.93%

3.56%

6.09%

4.97%

5.16%

4.36%

$0.59

$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

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

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

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

Bond Street Custodians Limited

H Louey Pang & Co Pty Ltd

Pand Jr Pty Ltd

Fugro Multi Client Services Pty Ltd

Bill Hopper

DMG & Partners Securities Pte Ltd

J K Demaria Pty Ltd

Nefco Nominees Pty Ltd

Andrew Paterson

Pengold Pty Ltd

Noel Mainwaring

Mr Giovanni Monteleone + Mrs Frances Monteleone

Vin Naidu + Wendy Naidu

GKI Resort Pty Limited

Vobe Resources Pty Ltd

Mr Russel Barwick

Eilie Sunshine Pty Ltd

Phillip Securities Pte Ltd

Mr Joseph Hannah

Number held

36,661,450

23,508,362

11,700,000

6,865,201

6,475,000

4,373,943

3,583,532

3,369,821

3,237,500

3,050,000

3,000,000

2,837,500

2,615,000

2,550,000

2,500,000

2,176,396

1,993,200

% of total
shares issued

17.75

11.38

5.66

3.32

3.13

2.12

1.73

1.63

1.57

1.48

1.45

1.37

1.27

1.23

1.21

1.05

0.96

132,709,405

64.22

unquoted equity securities

There are no unquoted equity
securities.

substantial holders

Substantial holders in the company
are set out below:

Noel Newell

Bond Street Custodians Limited

H Louey Pang & Co Pty Ltd

Voting rights

The voting rights attached to ordinary
shares are set out below:

ordinary shares

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.

There are no other classes of equity
securities.

Ordinary shares

Number held

36,661,450

23,508,362

11,700,000

% of total
shares issued

17.75

11.38

5.66

coRpoRAte
goVeRnAnce
stAtement

The Board of Directors (‘the Board’)
of 3D Oil Limited (the ‘company’)
is responsible for the corporate
governance of the consolidated entity.
The Board guides and monitors the
business and affairs of the company
on behalf of the shareholders by whom
they are elected and to whom they are
accountable.

The table below summarises
the company’s compliance with
the ASX Corporate Governance
Council’s Revised Principles and
Recommendations.

Principles and Recommendations

Compliance

Comply

Principle 1 – Lay solid foundations for management and oversight

1.1

Establish the functions reserved
to the Board and those delegated
to manage and disclose those
functions.

1.2

1.3

Disclose the process for evaluating
the performance of senior
executives.

Provide the information indicated in
Guide to reporting on Principle 1.

The Board is responsible for the overall corporate
governance of the company.

Complies.

The Board has adopted a Board charter that formalises
its roles and responsibilities and defines the matters
that are reserved for the Board and specific matters
that are delegated to management.

The Board has adopted a Delegations of Authority that
sets limits of authority for senior executives.

On appointment of a director, the company issues
a letter of appointment setting out the terms and
conditions of appointment to the Board.

The Board meets annually to review the performance
of executives. The senior executives’ performance is
assessed against performance of the Company as a
whole.

A Board charter has been disclosed on the company’s
website and is summarised in this Corporate
Governance Statement.

A performance evaluation process is included in
the Board Charter, which has been disclosed on
the company’s website and is summarised in this
Corporate Governance Statement.

Complies.

The Board conducted a performance evaluation for
senior executives at June 2012 in accordance with the
process above.

Complies.

Principles and Recommendations

Compliance

Comply

Principle 2 – Structure the Board to add value

2.1

A majority of the Board should be
independent directors.

The majority of the Board’s directors are independent
directors of the company.

Mr Campbell Horsfall is an independent Non-Executive
Director and Chairman.

Ms Melanie Leydin is a Non-Executive Director.

Ms Philippa Kelly is an independent Non-Executive
Director.

Dr Kenneth Pereira is a Non-Executive Director.

Mr Noel Newell is an Executive Director.

Does not comply. Whilst
the Board recognises
that it is desirable for
the majority of the
Board to be Independent
Directors, the Board
believes that the current
Board is reflective of the
structure of the business
at the present time. The
Board will review the
appointment of further
Independent Directors
should the Company’s
size, growth and
structure warrant this.

2.2

2.3

2.4

The chair should be an independent
director.

Mr Campbell Horsfall is the Chairman and is an
independent Non-Executive Director.

The roles of chair and chief executive
officer should not be exercised by
the same individual.

Mr Campbell Horsfall is the Chairman and Mr Noel
Newell the Executive Director.

Complies.

The Board should establish a
nomination committee.

The company has established a Nomination and
Remuneration Committee.

Complies.

2.5

Disclose the process for evaluating
the performance of the Board, its
committees and individual directors.

The Board has undertaken a review of the mix of skills
and experience on the Board in light of the company’s
principal activities and direction, and has considered
diversity in succession planning. The Board considers
the current mix of skills and experience of members of
the Board and its senior management is sufficient to
meet the requirements of the company.

The Board supports the nomination and reelection of
the directors at the company’s forthcoming Annual
General Meeting.

The company conducts the process for evaluating
the performance of the Board, its committees and
individual directors as outlined in the Board Charter
which is available on the company’s website.

The Board’s induction program provides incoming
directors with information that will enable them to
carry out their duties in the best interests of the
company. This includes supporting ongoing education
of directors for the benefit of the company.

Complies.

Comply

Complies.

Principles and Recommendations

Compliance

2.6

Provide the information indicated in
the Guide to reporting on Principle 2.

This information has been disclosed (where applicable)
in the directors’ report attached to this Corporate
Governance Statement.

Mr Campbell Horsfall and Ms Philippa Kelly are
independent directors of the company. A director
is considered independent when he substantially
satisfies the test for independence as set out in the
ASX Corporate Governance Recommendations.

Members of the Board are able to take independent
professional advice at the expense of the company.

Mr Campbell Horsfall, Non-Executive Chairman, was
appointed to the Board in January 2009.

Mr Noel Newell, Executive Director and Chief Executive
Officer, was appointed to the Board at incorporation of
the Company.

Ms Philippa Kelly, Non-Executive Director, was
appointed to the Board in January 2010.

Ms Melanie Leydin, Non-Executive Director, was
appointed to the Board in January 2009.

Dr Kenneth Pereira, Non-Executive Director, was
appointed to the Board in September 2012.

Board and its senior management is sufficient to meet
the requirements of the company.

In accordance with the information suggested in Guide
to Reporting on Principle 2, the company has disclosed
full details of its directors in the director’s report
attached to this Corporate Governance Statement.
Other disclosure material on the Structure of the Board
has been made available on the company’s website.

Principle 3 – Promote ethical and responsible decision making

3.1

3.2

Establish a code of conduct and
disclose the code or a summary of
the code.

The Board has adopted a code of conduct. The code
establishes a clear set of values that emphasise a
culture encompassing strong corporate governance,
sound business practices and good ethical conduct.

Complies.

Companies should establish a
policy concerning diversity and
disclose the policy or a summary
of that policy. The policy should
include requirements for the Board
to establish measurable objectives
for achieving gender diversity and
for the Board to assess annually
both the objectives and progress in
achieving them.

The code is available on the company’s website.

The Board has undertaken a review of the mix of skills
and experience on the Board in light of the company’s
principal activities and direction.

Complies.

The Board has prepared a Diversity Policy that
considers the benefits of diversity, ways to promote
a culture of diversity, factors to be taken into account
in the selection process of candidates for Board
and senior management positions in the company,
education programs to develop skills and experience
in preparation for Board and senior management
positions, processes to include review and
appointment of directors, and identify key measurable
diversity performance objectives for the Board, CEO
and senior management.

Principles and Recommendations

Compliance

The company will report in each annual report the
measurable objectives for achieving gender diversity
set by the Board.

Comply

Complies.

3.3

3.4

Companies should disclose in
each annual report the measurable
objectives for achieving gender
diversity set by the board in
accordance with the diversity policy
and progress towards achieving
them.

Companies should disclose in
each annual report the proportion
of women employees in the whole
organisation, women in senior
executive positions and women on
the board.

The company will report, where appropriate, the
proportion of women employees and their positions
held within the company.

Complies.

The current composition of the board is 5 Directors of
which 2 are female.

The proportion of females in the company is 33% being
3 out of a total of 9 employees.

3.5

Provide the information indicated in
Guide to reporting on Principle 3.

This information is available on the Company’s website. Complies.

Principle 4 – Safeguard integrity in financial reporting

4.1

4.2

4.3

4.4

The Board should establish an audit
committee.

The audit committee should be
structured so that it consists of only
nonexecutive directors, a majority
of independent directors, is chaired
by an independent chair who is not
chair of the Board and have at least
3 members.

The audit committee should have a
formal charter.

Provide the information indicated in
Guide to reporting on Principle 4.

The Board has established an audit and risk committee
which operates under an audit and risk committee
charter to focus on issues relevant to the integrity of
the company’s financial reporting.

Complies.

Members of the audit and risk committee are Ms
Melanie Leydin (Chair), Ms Philippa Kelly and Mr
Campbell Horsfall. Ms Melanie Leydin is a Non-
Executive Director and is not chair of the Board. The
committee consists of three non-executive directors.

Complies.

The Board has adopted an audit and risk charter.

Complies.

This charter is available on the company’s website.

In accordance with the information suggested in Guide
to Reporting on Principle 2, this has been disclosed
in the directors’ report attached to this Corporate
Governance Statement and is summarised in this
Corporate Governance Statement.

The members of the audit and risk committee are
appointed by the Board and recommendations from
the committee are presented to the Board for further
discussion and resolution.

The audit and risk committee held two meetings during
the period to the date of the directors’ report and will
meet at least twice per annum.

The audit and risk charter, and information on
procedures for the selection and appointment of the
external auditor, and for the rotation of external audit
engagement partners (which is determined by the audit
committee), is available on the company’s website.

Principles and Recommendations

Compliance

Principle 5 – Make timely and balanced disclosure

5.1

Establish written policies designed to
ensure compliance with ASX Listing
Rules disclosure requirements and
to ensure accountability at a senior
executive level for that compliance
and disclose those policies or a
summary of those policies.

The company has adopted a continuous disclosure
policy, to ensure that it complies with the continuous
disclosure regime under the ASX Listing Rules and the
Corporations Act 2001.

This policy is available on the company’s website.

Comply

Complies.

5.2

Provide the information indicated in
the Guide to reporting on Principle 5.

The company’s continuous disclosure policy is
available on the company’s website.

Complies.

Principle 6 – Respect the rights of shareholders

6.1

Design a communications policy for
promoting effective communication
with shareholders and encouraging
their participation at general
meetings and disclose that policy or
a summary of that policy.

The company has adopted a shareholder
communications policy. The company uses its
website (www.3doil.com.au), annual report, market
announcements, media disclosures and webcasting
to communicate with its shareholders, as well as
encourages participation at general meetings.

Complies.

6.2

Provide the information indicated in
the Guide to reporting on Principle 6.

The company’s shareholder communications policy is
available on the company’s website.

Complies.

This policy is available on the company’s website.

Principle 7 – Recognise and manage risk

7.1

7.2

Establish policies for the oversight
and management of material
business risks and disclose a
summary of these policies.

The Board should require
management to design and
implement the risk management and
internal control system to manage
the company’s material business
risks and report to it on whether
those risks are being managed
effectively. The Board should
disclose that management has
reported to it as to the effectiveness
of the company’s management of its
material business risks.

The company has adopted a risk management
statement within the audit and risk committee charter.
The audit and risk committee is responsible for
managing risk; however, ultimate responsibility for risk
oversight and risk management rests with the Board.

The audit and risk charter is available on the company’s
website and is summarised in this Corporate
Governance Statement.

The Board believes the risk management and internal
control systems designed and implemented by the
Directors and the Financial Officer are adequate given
the size and nature of the Company’s activities. The
Board informally reviews and requests management
internal control.

Complies.

Management has not
formally reported to
the Board as to the
effectiveness of the
Company’s management
of its material business
risks. Given the nature
and size of the Company
and the Board’s ultimate
responsibility to manage
the risks of the Company
this is not considered
critical. The Company
intends to develop the
risk reporting framework
into a detailed policy as
its operations continue
to grow.

Principles and Recommendations

Compliance

7.3

The Board should disclose whether
it has received assurance from the
chief executive officer and chief
financial officer that the declaration
provided in accordance with section
295A of the Corporations Act is
founded on a sound system of risk
management and internal control
and that the system is operating
efficiently and effectively in all
material respects in relation to the
financial reporting risks.

The Board has received a statement from the chief
executive officer and chief financial officer that the
declaration provided in accordance with section 295A
of the Corporations Act 2001 is founded on a sound
system of risk management and internal control and
that the system is operating efficiently and effectively
in all material respects in relation to the financial
reporting risks.

Comply

Complies.

7.4

Provide the information indicated in
Guide to reporting on Principle 7.

The Board has adopted an audit and risk charter which
includes a statement of the company’s risk policies.

Complies.

This charter is available on the company’s website
and is summarised in this Corporate Governance
Statement.

The company has identified key risks within the
business and has received a statement of assurance
from the chief executive officer and chief financial
officer.

Principle 8 – Remunerate fairly and responsibly

8.1

The Board should establish a
remuneration committee.

Complies.

The Board has established a Nomination and
Remuneration Committee and has adopted a
remuneration charter.

The remuneration committee:

— consists of a majority of independent directors

Mr Campbell Horsfall, Ms Melanie Leydin and Ms
Philippa Kelly;

—is chaired by Ms Philippa Kelly, an independent

director; and

—has three members.

8.2

Clearly distinguish the structure
of non-executive directors’
remuneration from that of executive
directors and senior executives.

The company complies with the guidelines for
executive remuneration packages and nonexecutive
director remuneration.

Complies.

No senior executive is involved directly in deciding their
own remuneration.

8.3

Provide the information indicated in
the Guide to reporting on Principle 8.

The Board has adopted a Nomination and
Remuneration Committee charter.

Complies.

The company does not have any schemes for
retirement benefits other than superannuation for non-
executive directors.

3D Oil Limited’s corporate governance practices were in place for the financial year
ended 30 June 2012 and to the date of signing the directors’ report.

Various corporate governance practices are discussed within this statement. For
further information on corporate governance policies adopted by 3D Oil Limited, refer
to our website: www.3doil.com.au

coRpoRAte
DiRectoRy

Directors

share register

Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford Victoria 3067
Telephone: (03) 9415 5000

Auditor

Grant Thornton Audit Pty Ltd
Chartered Accountants
215 Spring Street
Melbourne Victoria 3000

solicitors

Baker & McKenzie
Level 19
181 William Street
Melbourne
Victoria 3000

stock exchange listing

3D Oil Limited shares are listed on
the Australian Securities Exchange
(ASX code: TDO)

Website address

3doil.com.au

Campbell Horsfall
(Non-Executive Chairman)

Noel Newell
(Managing Director)

Melanie J Leydin
(Non-Executive Director)

Philippa Kelly
(Non-Executive Director)

Dr Kenneth Pereira
(Non-Executive Director)

company secretary

Melanie J Leydin

Registered office

Level 5, 164 Flinders Lane
Melbourne, VIC 3000
Telephone: (03) 9650 9866

principal place of business

Level 5, 164 Flinders Lane
Melbourne, VIC 3000

Advisors

Lion Capital Advisory Pty Ltd
Level 6
350 Collins Street
Melbourne
Victoria 3000

3D Oil Limited
ABN 40 105 597 279
Annual Report – 30 June 2012