Annual Report
For the year ended 30 June 2022
1
Competent Persons Statement
Technical Statement – Hydrocarbon Reserves
The independently verified ‘Armour Energy Hydrocarbon Reserves, 30 June
2022’ report details a high degree of confidence in the commercial
producibility of Permian and Triassic aged reservoirs previously discovered and
produced in operated granted petroleum licenses 511 and 227 using, recent
Armour drilled and hydraulically stimulated wells, 2D-3D seismic, historic and
modern well data, reservoir pressure data, electric logs and rock properties
from chip and core samples, gas composition analysis, hydraulic stimulation
results, analysis of historical well production, decline curve analysis, offset field
production data and prior production data from wells before the Kincora Gas
Plant was shut-in by the previous operator, Origin Energy. The reported
Reserves are used in connection with estimates of commercially recoverable
quantities of petroleum only and in the most specific category that reflects an
objective degree of uncertainty in the estimated quantities of recoverable
petroleum. The petroleum reserves are reported net of fuel and net to Armour
to the APA Group metered sales connection to the Roma to Brisbane Pipeline
(Run 2) at Wallumbilla and the report discloses the portion of petroleum
Reserves that will be consumed as fuel in production and lease plant
operations. Armour will be using calibrated metering and gas chromatographs
at the Kincora Gas Plant as a reference point for the purpose of measuring
and assessing the estimated petroleum Reserves from the produced gas.
The economic assumptions used to calculate the estimates of petroleum
Reserves are commercially sensitive to the Armour operated Kincora Project.
The methodology used to determine the economic assumptions are based
upon strategic objectives that include, but not limited to, new drills, hydraulic
stimulation, workovers, recompletes and surface facility modifications to ramp
up to and maintain a commercial production profile for 15 years. The
sanctioned development model includes a starting and ending monthly
schedule of working/net interest capital expenditure to develop and maintain
the petroleum Reserves, operational expenditure to develop and produce the
petroleum Reserves, fixed petroleum Reserve prices under-contract and
escalated petroleum Reserve futures based upon Wallumbilla Hub prices,
tax/royalty sensitivities, revenue from gross and net petroleum production
yields and cash flow from petroleum production yields and summation of
discounted cash flows.
The petroleum Reserves are located on granted petroleum licences with
approved environmental authorities and financial assurances. Armour has a
social licence to operate and relevant surface access agreements are in-
place. Armour is the owner and operator of the Kincora Project and PPL3 sales
gas pipeline which connects the Kincora Gas Plant to the Wallumbilla gas hub
via the connection agreement with APA. Armour holds granted Petroleum
Licenses over the reported estimates of petroleum Reserves, associated
gathering and field compressors. The basis for confirming the commercial
producibility and booking of the estimated petroleum Reserves is supported
by actual historic production and sales and/or formation tests. The analytical
procedures used to estimate the petroleum reserves were decline-curve
analysis to 50 thousand cubic-feet-day, historic production data and relevant
subsurface data including, formation tests, 2D-3D seismic surveys, well logs and
core analysis that indicate significant extractable petroleum.
The proposed extraction method of the estimated petroleum Reserves will be
through approved conventional drilling and, where applicable, hydraulic
stimulation techniques to accelerate production, commingle the productive
zones and extract volumes from tight gas zones. Wellbores will be cased and
cemented with a -pressure wellhead completion. Petroleum will be recovered
through 2-3/8” production tubing and gathered to field compression sites for
delivery to the Kincora Gas Plant.
Wellbores will be designed to protect aquifers and deviated drilling may be
used to lessen the overall impact to surface owners, environmental receptors,
strategic cropping and to consolidate surface infrastructure. Processing at the
Kincora Gas Plant will be required to separate the extracted hydrocarbons
into dry gas, liquid petroleum gas, oil, and condensate and to remove any
impurities prior to sales.
Technical Statement – Oil & Gas Reserves
Armour Energy engaged the services Mr Teof Rodriguez, Director of TR&A, to
provide independent expert review of reports on the operated Oil & Gas
Reserves associated within the Company’s Surat Basin acreage position. Mr.
Rodriguez completed and documented his review at 30 June 2022.
Consents
The reserves information in this ASX release is based on, and fairly represents,
data and supporting documentation prepared by, or under the supervision,
of Mr Teof Rodrigues. Mr Rodrigues’ primary discipline is Reservoir Engineering
and during his 40‐year period in the Industry has had the opportunity to work
in multidisciplined teams to appreciate the importance of understanding the
process involved in moving the hydrocarbons from the reservoir to the
reference sales point. As the Chief Reservoir Engineer for 6 years he had the
Corporate Reserves Team reporting to him. In addition, he had the
responsibility of endorsing all the Major Projects and the key Reserves and
Resource estimates of the Company. He is a Director of TR&A and an
experienced petroleum Reserves and resources estimator with 40 years
relevant experience. He has adhered to the ASX Listing Rules Guidance Note
32. His qualifications and experience meet the requirements to act as a
Competent Person to report petroleum reserves under PRMS (2018). The
Resources information in this ASX announcement was issued with the prior
written consent of Mr Rodrigues in the form and context in which it appears.
The reserves review was carried out in accordance with the SPE Reserves
Auditing Standards and the SPE‐PRMS guidelines under the supervision of Mr.
Michael Laurent, Chief Operating Officer, Armour Energy Limited. Mr Laurent’s
qualifications include being a professionally registered engineer in both
Australia and Canada, has over 20 years of diverse oil and gas industry
experience and has successfully held various senior managerial and GM
positions. His career spans a number of sectors and includes expertise in
reservoir, drilling, facilities, production and operations with particular emphasis
on resource and business development. Experience is underpinned with strong
strategic, commercial and technical acumen in both conventional and
unconventional reservoirs. Prior to joining Armour Energy, Michael successfully
leadership
held a variety of domestic and
appointments. Most recently he worked for Santos where he was responsible
for managing Cooper Basins oil and gas appraisal/development wells and
field optimisation
inception through to approval and
implementation. Mr Laurent has sufficient experience that is relevant to
Armour’s reserves and resources to qualify as a Reserves and Resources
Evaluator as defined in the ASX Listing Rules. Mr Laurent has consented to the
inclusion in this report of the matters based on his information in the form and
context in which it appears.
initiatives from
international
technical
SPE-PRMS
Society of Petroleum Engineer’s Petroleum Resource Management System ‐
Petroleum resources are the estimated quantities of hydrocarbons naturally
occurring on or within the Earth’s crust. Resource assessments estimate total
quantities in known and yet‐to‐be discovered accumulations, resources
evaluations are focused on those quantities that can potentially be recovered
and marketed by commercial projects. A petroleum resources management
system provides a consistent approach to estimating petroleum quantities,
evaluating development projects, and presenting
results within a
comprehensive classification framework. PRMS provides guidelines for the
evaluation and reporting of petroleum reserves and resources (June 2018).
Under PRMS
“Reserves” are those quantities of petroleum which are anticipated to be
commercially recovered from known accumulations from a given date
forward. All reserve estimates involve some degree of uncertainty. The
uncertainty depends chiefly on the amount of reliable geologic and
engineering data available at the time of the estimate and the interpretation
of these data. The relative degree of uncertainty may be conveyed by
placing reserves into one of two principal classifications, either proved or
unproved. Unproved reserves are less certain to be recovered than proved
reserves and may be further sub‐classified as probable and possible reserves
to denote progressively increasing uncertainty in their recoverability.
“Contingent Resources” are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations, but the
applied project(s) are not yet considered mature enough for commercial
development due to one or more contingencies. Contingent Resources may
include, for example, projects for which there are currently no viable markets,
is dependent on technology under
or where commercial
development, or where evaluation of the accumulation is insufficient to clearly
assess commerciality. Contingent Resources are further categorised in
accordance with the level of certainty associated with the estimates and may
be sub‐classified based on project maturity and/or characterised by their
economic status.
recovery
2
Contents Page
Our Business ................................................................................................................................................................... 5
Chairman’s Report .......................................................................................................................................................... 6
Operating and Financial Review ..................................................................................................................................... 7
Sustainability Report ..................................................................................................................................................... 22
Managing Risk ............................................................................................................................................................... 30
Board of Directors ......................................................................................................................................................... 33
Leadership Team .......................................................................................................................................................... 34
Former Directors ........................................................................................................................................................... 35
Directors’ Report ........................................................................................................................................................... 36
Remuneration Report (audited) ..................................................................................................................................... 41
Auditor’s Independence Declaration ............................................................................................................................. 52
Financial Statements ..................................................................................................................................................... 54
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................. 55
Consolidated Statement of Financial Position ............................................................................................................... 56
Consolidated Statement of Cashflows .......................................................................................................................... 57
Consolidated Statement of Changes in Equity .............................................................................................................. 58
Notes to the Financial Statements ................................................................................................................................ 59
Directors’ Declaration .................................................................................................................................................. 101
Independent Auditor’s Report...................................................................................................................................... 102
Shareholder information .............................................................................................................................................. 106
Corporate Directory ..................................................................................................................................................... 110
3
Primed for growth &
focused on delivery
4
Our Business
Our Purpose
To create a financially strong, healthy, and sustainable
business that delivers value to shareholders.
Our Vision
To become one of Eastern Australia’s prominent Oil & Gas
explorers and producers and participate in energy transition.
Our Values
We work as one team with a common
purpose.
We act with integrity in everything we do.
We show respect to our team, stakeholders
and the environment.
We have an owners mindset.
We are committed and look for innovative
solutions.
5
Chairman’s Report
Dear Shareholders,
As Executive Chairman of Armour Energy I am acutely aware that the year to 30 June 2022 has brought its fair
share of frustration and disappointment to our hopes and aspirations for the Company as reflected in a
distressed share price performance. However, I am very pleased to report that progress is now being made to
move the business forward. Whilst a range of challenges were experienced during the last financial year, I
remain confident in the Company’s future prospects with the continued support of DGR Global Ltd.
A number of positive achievements were delivered over the 2022 financial year, these include that the
Company continued to focus on reducing debt with the Senior Secure Debt being reduced by $8,800,000 or
26% and the Tribeca Facility reduced by $386,173 or 7%, that preparations were progressed for the drilling of the
Enterprise North 1 well in the Otway Basin and that the Warroon #1 well was successfully fracture stimulated.
Notwithstanding some of the operational and work program challenges faced by the Company during the
year, the company is focused on demonstrating value to shareholders in its core operating areas, the Surat,
Victoria and Cooper Basins, whilst extracting value from its Northern Basin assets.
To assist with funding for future exploration programs and to help accelerate the repayment of the Amour debt
position, the Company is continuing to actively progress further asset transactions. In May 2022 Armour agreed
binding terms with PZE Limited for an emissions reduction partnership and a divestment of working interests in
the Waldegrave JV and Snake Creek East JV. The proposed demerger and separate ASX listing of Armour’s
Northern Basin Oil & Gas Business into McArthur Oil & Gas has not progressed as swiftly as initially anticipated.
Further revisions to the proposed demerger structure are being considered to ensure that acceptable
commercial and taxation outcomes would be achieved following further recent feedback from the Australian
Taxation Office that income tax demerger relief is unlikely to be available in relation to the proposed McArthur
demerger and IPO transaction.
Over the next 12 months, Armour will continue to focus on:
The drilling of the Enterprise North 1 well in the Otway Basin.
•
• Executing the seriatim of planned Surat “in-well-bore” opportunities and partner with industry partners to
•
increase gas production.
Securing a Surat gas sales contract which will ensure that the realised gas price is significantly higher
than the current contract price.
• Completing the proposed demerger and IPO of the Northern Basin Business into McArthur Oil & Gas or
divestment of the assets.
• Reducing the operating costs across the business, managing cashflow and improving profitability.
• Reducing the Company’s debt burden restructuring the balance sheet.
• Progressing exploration activity in the newly acquired Cooper-Eromanga Basins acreage as well as the
existing Surat Basin acreage with a view of high-grading the leads and prospects portfolio.
The market for gas on the East Coast continues to be strong. Spot gas prices at Wallumbilla have exceeded
expectations over the last months, Armour remains confident that prices will continue to provide a strong market
demand and prices for our products. Armour believes it’s substantial asset base is poised for near-and long-term
growth. The company’s strong acreage positions in the Cooper Basin in South Australia, the Otway Basin in
Victoria, the McArthur Basin in the Northern Territory and its production assets in the Surat Basin in Queensland
provide it with strategic diversity. Maturing these assets will help support the demands of the East Coast
Australian Gas markets.
In conclusion, I would like to express my gratitude to the Company’s shareholders and external stakeholders for
their continued support and patience during this period. We are very focused and determined, on transforming
Armour Energy into a prominent oil and gas exploration and production company, with a commitment to
delivering for our shareholders.
Yours sincerely
Nicholas Mather
Chairman
6
Operating and Financial Review
7
Executive Summary
Armour Energy Limited (Armour or the Company) and its controlled entities (the Group) is a Brisbane based ASX
listed company focused on the exploration, development and production of gas and associated liquids
resources. The Company’s work programs aim to increase liquid rich gas production and revenues while
focussing on becoming one of Eastern Australia’s prominent onshore Oil and Gas explorers and producers.
Figure 1 – Summary of Armour’s assets and locations
Key Points
▪ Armour continued to reduce its debt under the Secured Amortising Notes by $8.8 million.
▪ Armour established an equity-based settlement mechanism to reduce its debt under the Tribeca
Facility.
▪ Armour agreed binding terms with PZE Limited for an emissions reduction partnership and a
divestment of working interests in the Waldegrave JV and Snake Creek East JV.
▪ Warroon#1 re-stimulation work program, 100% funded by partners, was delivered thereby reducing
unit production costs.
▪ Myall Creek #2 workover, 100% funded by partners, was delivered.
▪ Corporate initiatives progressed to provide funding and to realise value from Armour’s project
portfolio.
▪ CEO Christian Lange appointment progressed during the financial year.
▪ As part of the annual impairment review, $1.0 million was recognised as an impairment across oil and
gas assets, and exploration and evaluation assets.
8
Strategy
To support Armour’s growth strategy, it has continued to focus on the below priorities for the 2022 calendar
year:
Focus Outcome
1
2
3
4
5
6
7
8
Unlocking value for shareholders
Materially reduce debt and renegotiate terms
Extract value through commercialisation of under-utilised, operationally ready assets
Reduce the operating cost base across the business and improve profitability
Generate positive free cash flow to cover all operating and corporate costs and capital for
new investment
Build the Surat and Cooper exploration pipeline
High grading of portfolio – Consolidate, unitise and rationalise across the portfolio
Demonstrate tangible improvement in HSE performance and culture across the business
Focussing on these priorities will enable Armour to unlock value for shareholders.
Operating Review
Surat Basin Assets
Kincora Gas Project Overview
The Company delivers gas to the Eastern Australian market from its Kincora Gas Project. Kincora achieved 96%
operational time for the fourth full year of operation (FY2021: 95%) and an average production of approximately
4.9 TJ/day (FY2021: 6.2 TJ/day) of sales gas plus associated liquids.
Average Production per day*
FY2022
FY2021
Change
Gas (TJ)
LPG (T)
Oil/Condensate (BBL)
4.9
7.8
102.7
6.2
10.2
121.7
(20%)
(24%)
(16%)
Table 1 – Kincora average production
* Volumes normalised to exclude shutdowns in respective years that reduced production from the Kincora Gas Plant
Kincora also produced an average of approximately 103 barrels (FY2021: 122 barrels) of oil and condensate per
day, and approximately 8 tonnes (FY2021: 10 tonnes) per day of Liquid Petroleum Gas (LPG). Oil and
condensate are sold ex-Kincora and transported to local Queensland refineries. LPG is sold at the Kincora Gas
Plant and on-sold mostly in Queensland, New South Wales, and South Australia, providing energy for transport,
heating, and agricultural enterprises.
Armour, like many other companies, continued to be affected by COVID-19 during the financial year. The
Company continued to manage its cost base while maintaining operations in these challenging times.
9
Kincora Gas Reserves Update
Armour performed a review of its oil and gas reserves position. The work was conducted by Armour Energy’s
qualified technical team of Geoscientists and Engineers and completed in accordance with the definition
and guidelines of the 2018 Petroleum Resources Management System (PRMS, 2018) approved by the
SPE/AAPG/WPC/SPEE. The workflow was independently reviewed and certified by Teof Rodrigues from Teof
Rodrigues & Associates for financial year 2022 (30 June 2022). See Table 2.
The data from previous Work Programs and other technical workflows continues to support the reserves
position. Armour remains encouraged by potential found in a significant new pay zone across existing well
stock. Identifying these bypassed pay zones were only possible due to the advancements in logging
technology allowing for the identification of mineralogically complex sandstones with hydrocarbon saturation
suitable for hydraulic stimulation.
Highlights from the 30 June 2022 Certified Reserves Report:
▪ 2P oil reserves numbers lowered primarily from produced FY2022 volumes.
▪ 2P gas reserves numbers lowered only from produced FY 2022 volumes.
▪ Material long term potential continues to be demonstrated across the wider Kincora Project.
▪ Reserves independently verified.
Kincora Gas Project
Gas (Bscf)
Sales Gas (PJ)
LPG (k Tonnes)
Condensate (k Bbl)
Oil (k Bbl)
Notes to Table 2
1P
35
39.8
82
396
204
2P
128
145.8
301.1
1449
1200
3P
286
325.2
671.5
3232
2610
Table 2 – Combined Armour Energy Reserves
▪
▪
▪
▪
▪
▪
▪
Petroleum reserves are classified according to SPE-PRMS.
Petroleum reserves are stated on risked net basis with historical production removed
Petroleum reserves have no deduction applied for gas used to run the process plant estimated at 5 to 10%
Petroleum reserves can be sold on behalf of any minority interest holder
BSCF = billion cubic feet, PJ = petajoules, bbls = barrels, gas conversion 1.137 PJ/BCF
1P = Total Proved; 2P = Total Proved + Probable; 3P = Total Proved + Probable + Possible.
LPG Yield 2,065 tonnes/petajoules, Condensate Yield 9,938 barrels/petajoules
Figures 2 and 3 – Gas and oil reserve comparison charts
10
Armour remains encouraged by the potential of new pay zones across existing well stock and is looking to
exploit them in the upcoming work program. Identifying these bypassed pay zones were only possible due to
the advancements in logging technology allowing for the identification of mineralogically complex
sandstones with hydrocarbon saturation suitable for hydraulic stimulation.
Figure 4 – Kincora Plant
Kincora Production Enhancement Activities
Armour remains focussed on Surat Basin production enhancement work streams. Targeted increased gas
production both from in well bore production enhancement programs (including the near-term in-well-bore
program outlined below) and proposed new production wells is expected to reduce unit production costs
materially. Armour is also investigating opportunities for production facility sharing and rationalisation in its
Surat operating area to further reduce production costs.
The Warroon #1 well was successfully fracture stimulated in January 2022. Since then, the well has been
steadily recovering frac fluids via the gathering network. The well has now recovered the equivalent total
volume of the injected stimulation fluids and gas rates have increased each month since the activity was
executed, achieving a high of close to 600 MSCF/D. Currently rates have stabilised around 550 MSCF/D with
condensate production at 14 BBLS/D. An intermitter unit is being employed to cycle the well up to 4 times per
day to promote liquids recovery. And while this is a positive result, the well is currently being assessed for further
optimisation opportunities to improve production. This may include a coil tubing conveyed velocity string or
a plunger lift system.
Myall Creek #2 continues to flow gas to sales via the Myall Creek compressor station. The Tinowon C has
previously been confirmed as a potentially suitable fracture stimulation target. Additional reservoir and
petrophysical work is progressing, with data collected, to consider the viability of other intervals for stimulation,
namely the Back Alley, Bandana and Basal Rewan formations. Both a single and multi-stage facture
stimulation project are under consideration. The intent is to complete the technical analysis shortly and, if the
further fracture stimulation(s) are considered viable, undertake a stimulation program in late Q3-2022/early
Q4 pending equipment availability. With the support of our funding partner, Armour will continue to be 100%
free carried through the next phase of activity.
Armour has developed a seriatim of “in-well-bore” opportunities planned to be executed over the second
half of 2022 in its Queensland Surat assets. The programme is designed to target a range of initiatives to arrest
premature decline, restore production and access bypassed pay zones. The programme includes the
installation of automated intermitter units, connection of an existing stranded well bore, installation of well
head oil pumping facilities, and recompletions including a well clean out, sucker rod pump install and
recompletions targeting behind pipe bypassed pay.
The culmination of this work programme is targeting a combined (initial production rate) uplift of 1.5 MMSCF/D
and 10 BBLS/D of crude oil. Works are scheduled to commence from July 2022.
11
Figure 5 – Carbean #01 Logging
Figure 6 – Armour Surat Basin Assets
12
Figure 7 – Myall Creek #3 Linear Rod Pump
Surat Basin Exploration
During the reporting period Armour continued to focus on developing a multi-year exploration programme
based on building a deep portfolio of exploration leads and drill-ready prospects.
The exploration strategy is underpinned by extracting further value in existing areas with existing 3D coverage
including Myall Creek Gas Field area as well as progressively acquiring new 3D seismic across priority areas
defined by comprehensive remapping of legacy 2D seismic data across the Surat PL’s. New 3D seismic data
will provide a superior understanding of the structural and stratigraphic complexities of the target areas,
compared to the existing legacy 2D seismic, by utilising world class nodal technology, thereby unlocking the
significant remaining prospectivity of the areas and providing numerous low-risk, highly economic drill ready
prospects targeting both gas and oil. Proximity to Armour’s infrastructure will provide rapid monetisation of
discovered hydrocarbons.
Throughout the Reporting Period Armour progressed planning activities for 3D seismic acquisition in 2022 to
de-risk drilling opportunities in the PL22, PL53, PL89, PL227, PL511 and ATP-2032P asset areas . The planning
included an initial feasibility study followed by detailed design work, stakeholder engagement and work
tendering. These plans have been accelerated following a farm-in arrangement with Gas2Grid (refer
Commercial Section). The total 3D seismic area to be acquired will be approximately 400 km2, larger than
any 3D Seismic survey ever completed in the Surat Basin and represents the first seismic acquisition in the
project area in 25 years.
Geophysical attribute analysis of the Myall Creek 3D seismic identified an anomaly north east of the Myall
Creek field which has been one of the most prolific fields within Armour’s Surat acreage. Armour was
sufficiently encouraged to proceed with testing feasibility of detailed inversion processing of the Myall Creek
3D seismic dataset, with the key objective to delineate reservoir facies distribution within the Tinowon
Formation across the area. Results of the feasibility work are currently being analysed with a view to
proceeding to production inversion processing of the full 3D seismic volume in Q1 2022 calendar year.
Interpretation of the inversion dataset is anticipated to lead to identifying further drilling opportunities across
the Myall Creek area for potential drilling in Q3/Q4 2022 calendar year.
In addition, advanced wireline logging and petrophysical re-evaluation of the Myall Creek and Riverside gas
fields indicates significant bypassed pay in the Permian and Triassic reservoirs within existing wellbores in these
fields. Structurally high locations within the greater Riverside field identified on 3D seismic also provide
attractive appraisal/development opportunities. Technical workflows have been maturing
these
opportunities, with follow-up drill and fracture stimulation operations planned for 2022.
13
Victoria Assets
Preparations are progressing for the drilling of the Enterprise North 1 well in the Otway Basin following the lifting
of the drilling moratorium in Victoria.
The Enterprise North prospect is in Victorian tenement, PEP 169 (Armour 51% interest and operator) and is on
trend with the Enterprise 1 discovery (Beach Energy) and Minerva gas field (Cooper Energy).
New transition seismic interpretation has identified the Enterprise North prospect as an analogue of the
Enterprise Gas field recently discovered by Beach Energy in the adjacent tenement to PEP169. The Enterprise
1 discovery well flowed on test at 61 million scfd and 2P gas reserves of 161PJ have been assessed (Beach
Energy Ltd - ASX release 15 February 2021).
The Enterprise North 1 prospect is well located relative to gas pipeline, processing and storage infrastructure
with two nearby gas processing plants with current excess capacity providing a potential near-term
processing option to expedite commercialisation of a discovery.
Northern Basin Business
McArthur Basin
Armour holds a commanding position in the McArthur Basin.
Figure 8 – Location Map of granted Permits and Application Blocks that form the Northern Basin Business
The Northern Basin Business consists of:
▪ Conventional targets – Significant Resources, Proven Plays, Existing Discoveries & Multi-Target Portfolio.
Armour’s interests in the McArthur Basin contains extensive acreage holdings covering multiple
conventional gas and liquids rich prospects and plays.
Armour has reported conventional gas discoveries in Cow Lagoon-1, Glyde-1, Glyde-ST1 and oil
discoveries at Lamont Pass-3. The Glyde-1 discovery well flowed 3.3 MMscfd of sales-quality gas from the
Coxco Hydrothermal Dolomite of the McArthur Formation in Armour’s 100% owned and operated EP 171.
Glyde-1 has been confirmed as a conventional gas discovery and Contingent Resources of up to 53 BCF
3C have been booked (see tables below). Based on these initial exploration successes, the Company
has filed applications for Retention Licenses covering the Greater Glyde Gas Discovery as the first step
towards progressing the Glyde Gas Discovery to commercial development.
14
▪ Unconventional targets – Multi-TCF Resource & Multiple Shale Plays – Barney Creek, Wollogorang &
McDermott.
In addition to the proven conventional hydrocarbon systems established through the 5-well exploration
drilling programme, the Company’s position in the McArthur Basin also contains a potential World-class
unconventional shale gas petroleum system with multiple target shales in the Barney Creek and
Wollogorang and McDermott Shales of the Tawallah Group.
The Barney Creek Formation is considered to be one of the most prospective unconventional Shale Gas
plays in the southern McArthur Basin. The Barney Creek Formation is regionally extensive and thick
(commonly over 150m) with significant TOC concentration and an oil-prone organic matter type. The
Barney Creek Formation is oil mature at the surface and has been established to be wet-gas mature from
350m to 2400m and dry-gas mature where it is over 2400m deep. The Shale Gas play has a finely
interbedded nature with high dolomitic and silt components providing favourable conditions for large
volumes of gas to be held in pore spaces. It is expected that these rocks are likely to be well suited to
large scale fracture stimulation.
Armour’s initial exploration success in the McArthur Basin has also established the Wollogorang and
McDermott Shales of the Tawallah Formation as newly identified prospective shale source rock
unconventional resource exploration targets. Through work commissioned by the Company, the CSIRO
has confirmed the oil and gas generative potential in both the Wollogorang and McDermott Shales of
the Tawallah Formation.
Resource Update
During the 2021, Armour commissioned Netherland, Sewell & Associates, Inc. (NSAI) to update the
independent resource estimate for Armour’s McArthur Basin assets, which form a significant part of the
Northern Basin Business.
The estimate was undertaken using the 2018 updated Petroleum Resources Management System and
confirms a Prospective Resource Best Estimate of approximately 33 TCF from the Conventional and
Unconventional structures in the McArthur Basin. The resource update has also confirmed 53 BCF (3C)
Conventional Contingent Gas Resource associated with Glyde-ST1 and the retention licence application
area.
Unrisked Gross (100%)
Contingent Sales Gas
Resource (BCF)
Unrisked Gross (100%)
Prospective Conventional
Sales Gas Resource (BCF)
Unrisked Gross (100%) Prospective
Unconventional Sales Gas
Resource (BCF)
Estimate
Estimate
Low
(1C)
-
Best
(2C)
6
High
(3C)
53
Low
(1C)
191
Best
(2C)
4,624
High
(3C)
54,813
Low
(1C)
5,203
Total
Estimate
Best
(2C)
High
(3C)
28,126
126,303
Unrisked Gross (100%)
Contingent Gas Resource (BCF)
Low
estimate
(1C)
Best
estimate
(2C)
High
estimate
(3C)
Mean
Total (EP 171)
-
6
53
7
Tables 3 and 4 – Updated resource estimate from Netherland, Sewell & Associates, Inc.
15
Northern Territory Exploration
Between late June and late July Armour completed the acquisition of a 20,000 km2 airborne geophysical
survey, which was the largest airborne survey of its type to be undertaken in the Northern Territory. The survey
was aimed at detecting anomalies in areas of upward fluid flow of migrating hydrocarbons above fluid
pathways and/or hydrocarbon accumulations. The survey was designed to provide information over existing
prospects and leads, and a regional context upon which to plan future follow up exploration work
The survey covered all or substantial portions of six (6) exploration permits (EPs 171, 174, 176, 190, 191 and 192)
These permits cover the highly prospective Batten Fault Zone and several oil and gas play fairways, including
the proven Coxco Dolomite Play (Glyde gas discovery), which encompass 193 conventional prospects and
leads within McArthur and Tawallah Group reservoirs identified by previous exploration work. See Figure 9 for
the map of the survey area.
Figure 9 – Map and cross section over the area covered by the Airborne Geophysical Survey
Armour engaged geophysical technology company, Pinemont Technologies Australia Pty Ltd (Pinemont) to
undertake the airborne geophysical survey using their patented passive airborne survey technology (AEM-
PTP). The technology underpinning the AEM-PTP system measures a geophysical response associated with
variability in elements of the earth’s electromagnetic field interacting with REDOX cells. REDOX cells can form
in association with the upward flow of petroliferous and metalliferous fluids as well as, micro-seepage from
hydrocarbon accumulations.
The survey was conducted out of the Town of Borroloola and was completed ahead of schedule and within
budget. Importantly, the survey was both non-invasive and had a very low environmental impact, and all
landholders within the coverage area had been notified of the airborne programme. The data acquired
during the survey is high quality and is being incorporated into the regional evaluation of the area.
16
Cooper Basin Assets
Figure 10 – Pre-dawn preparations Boroloola Airport
Cooper Basin Overview
Armour holds 30 licences in the South Australian portion of the Cooper Basin. This makes Armour the 3rd largest
net acreage holder in is area. Many of the licences contain legacy 3D seismic data coverage.
Armour currently holds 100% interest in all licences. Petroleum Exploration Licence (“PEL”) 112 and PEL 144
cover 1,086 km2 and 1,166 km2 respectively and newly awarded PEL 677 covers 545 km2. 27 Petroleum
Retention Licences (“PRL’s”) cover a total 2,445 km2. In these PRLs Senex Energy (now a part of K-A Energy 1
Pty Ltd, the subsidiary nominated by POSCO INTERNATIONAL corporation in a recent scheme of arrangement)
retains a 20% back in right at cost, subject to certain conditions, following the drilling of a well.
Cooper Basin Exploration
During the year the Company undertook technical desk studies utilising the company’s knowledge of the
both the Cooper basin and the Surat Basin which have many geological similarities. 3D seismic Quantitative
Interpretation work was carried out along with the application of Artificial Intelligence evaluation of the 3D
data. This work incorporated a variety of data sets as well as Armour’s basin experience.
The focus of the exploration efforts has been on areas with existing 3D seismic coverage aimed at
demonstrating the extension of the Western Flank Oil Fairway in South Australia across the Company’s portfolio
of acreage. The work aims to identify stratigraphic and subtle trends and traps which are known to produce
oil on the successful oil rich Western Flank of the Cooper Basin. Advanced planning has been undertaken for
the acquisition of an AEM-PTP passive electromagnetic survey to locate geophysical responses related to the
upward flow of migrating proliferous and/or metalliferous fluids along with micro-seepage from hydrocarbon
accumulations. This is a risk reduction exercise and a low-cost way to rapidly cover large areas in a
reconnaissance survey.
17
Figure 11 – Location map of the Cooper Eromanga assets
Uganda Assets
Uganda Oil Project Overview
The Ugandan Oil Project is located at the southern end of Lake Albert within the Albertine Graben which has
recorded discoveries of 6.5 billion barrels of oil. The Company was awarded the Kanywataba exploration
licence in September 2017 with DGR Global, a major shareholder in Armour, holding a beneficial interest of
83.18% and the Company 16.82%. In 2019, the exploration licence was renewed for a further two-year term
and further renewed as a condition of the force majeure until 28 May 2023.
Uganda Exploration
The Company has identified multiple developed (untested) on-trend structural traps (3-way and 4-way dip
closures) and multiple untested stratigraphic traps. NSAI have independently estimated a Mean Unrisked
recoverable prospective resource estimate of 219 mmbls. This prospective resource estimate will be updated
following the 2D seismic program and surface geochemistry study in 2022.
Over 160 line kilometre of new 2D seismic has been acquired and processed to improve prospect definition
pre 2023 drilling.
Armour Energy Uganda is planning for its first exploration well which is proposed to be the deepest well ever
drilled in the Albertine Graben at approximately 4000m vertical depth.
18
Figure 12 – Location map of the Uganda assets
Corporate Activities
Capital Raising
A capital raising on 27 September 2021 comprised the following components:
• $5.7 million of New Shares with attaching AJQOA $0.05 options expiring on 29 February 2024.
• $2.4 million of Conditional Placement with attaching AJQOA $0.05 options expiring on 29 February
2024 that were subject to shareholder approval, which was granted on 25 November 2021 with the
options issued on 23 December 2021.
Secured Amortising Notes Facility
In 2019 Armour raised $55 million of funds through the issues of secured and amortising notes (Notes). The
Notes have a repayment schedule through until 29 March 2024. In April 2022 Armour received approval from
Noteholders for amendments to the Conditions of the Secured Amortising Notes. The approved amendments
include:
In short, the approved amendments include the following:
1. Waiver of any breach of certain Financial Undertakings including the Debt Service Cover Ratio
and the Leverage Ratio that may have arisen prior to the date on which the Circulating Resolution
is passed;
2. Amendments to Financial Undertakings, including the Debt Service Cover Ratio and the Leverage
Ratio Armour must maintain;
3. Amendments to increase a certain limit on incurring Financial Indebtedness;
4. Consent from Noteholders to extend the due date for the environmental bonding finance facility.
Executive Leadership Team
Christian Lange was appointed to CEO and commenced his role on 25 July 2022. Mr Lange is a highly
experienced executive within both the Australian and International resources industries, having spent over 30
years in executive and operational roles globally. Christian was an executive at leading global oil and gas
field services provider, Schlumberger where he spent 18 years in executive and operational management in
19
Australia/NZ, the Middle East, the United Kingdom, Venezuela and the USA. Christian was also previously the
Managing Director and CEO of ASX listed Neptune Marine Services, a company that he developed from a
single technology start up, to a company employing over 700 people and operating in major offshore
provinces. Recently, Christian was the Founder and Managing Director of Griffin Energy Solutions, a specialist
well engineering and project management company. Christian holds an MBA from the Curtin Graduate
School of Business and is a member of the Society for Petroleum Engineers (SPE).
Mr Geoff Walker was appointed as Chief Financial Officer and joint Company Secretary of the Company. Mr
Walker is a chartered accountant and member of the Australian Institute of Company Directors. He has 30
plus years of financial and commercial experience including previous Chief Financial Officer roles with ASX
listed Eagers Automotive Limited, Range International Limited and Kina Petroleum Limited. Mr Walker brings
extensive experience formulating and executing strategic initiatives while managing change and growth. Mr
Walker is also currently CFO and Company Secretary for DGR Global Ltd, Armour’s largest shareholder and
through this role he has a good working knowledge of Armour’s business and strategic objectives
Financial Review
Results for the financial year
2022
2021
Change
Sales Revenue
Average Realised Sales Price
EBITDA (Non-IFRS measure)
Exploration Expenditure
Non-Cash Impairment
Statutory NPAT
Operating Cashflow
Development Spend
Cash Balance
Debt (excl. transaction costs)
Earnings Per Share - Basic
Earnings Per Share - Diluted
$'000
$AUD
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
c.p.s
c.p.s
17,985
6.40
(2,210)
(2,742)
(1,004)
(11,006)
(2,888)
(2,271)
3,255
(35,717)
(0.6)
(0.6)
17,502
5.90
(3,621)
(5,217)
(12,353)
(11,592)
(7,062)
(11,123)
2,358
(39,110)
(1.0)
(1.0)
483
0.50
1,326
2,475
10,589
1,800
5,219
10,286
898
2,157
0.4
0.3
Sales Revenue
Table 5 – Summary of financial results
Year-on-year sales were 3% higher due to higher average prices received during the year.
Development Expenditure
Change
%
3%
8%
(37%)
47%
91%
16%
74%
92%
38%
6%
40%
43%
Armour’s Development Expenditure of $0.8 million primarily represents the 2021/22 Work Program (2020/21:
$11.1m) in the Surat Basin.
Non-cash impairment
As part of Armour’s annual impairment review, there was a total of $1.0 million (2020/21: $12.4m) identified to
be written-off. The impairment relates to various oil & gas assets including the relinquished ATP1107 and certain
costs historically capitalised to the Northern Basin assets.
Debt
In 2022 Armour continued to reduce its total debt. The Secured Amortised Notes reduced by $8.8 million, to
$24.9 million. With an original face value of $55 million, Armour has now reduced the Notes by over 50% and
is scheduled to make the final principal repayment in March 2024.
Repayment of the Tribeca Facility held by the Company was also progressed by establishing an equity-based
settlement mechanism.
McArthur NT Pty Ltd, a subsidiary of Armour, issued Redeemable Exchangeable Notes to the value of $5.9m
during the year at an issue price of $1 and a coupon rate of 15%.
20
Financial performance and cash flows
Revenue from contracts with customers
Cost of goods sold
Gross profit/(loss)
Net (loss)/gain on sale of assets
Other income and expenses
Finance income
Finance expenses
Impairments
Income tax benefit
Consolidated
30-Jun-22
$'000
17,985
(16,641)
1,344
(35)
(6,288)
9
(5,206)
(1,004)
174
30-Jun-21
$'000
17,502
(22,151)
(4,649)
15,857
(4,201)
70
(6,316)
(12,353)
-
Loss after income tax expense
(11,006)
(11,592)
Table 6 – Financial Performance
Earnings before interest, tax, depreciation, and amortisation (EBITDA) – Non-IFRS measure
Loss before income tax and net finance expenses
Add/(Less):
Interest Received
Depreciation and Amortisation
Non-cash impairment
(Loss)/gain on disposal of PPE
Consolidated
30-Jun-22
$'000
(5,863)
(9)
2,623
1,004
35
30-Jun-21
$'000
(5,278)
(70)
5,231
12,353
(15,857)
EBITDA (non- IFRS measure)
(2,210)
(3,621)
Table 7 – EBITDA
The upside in EBITDA reflects Armour’s commitment to unlocking value for shareholders by selling its non-core
assets and focussing on its primary operations.
Cash flow
Net cash at the beginning of the year
Net cash (used in) operating activities
Net cash (used in)/from investing activities
Net cash from financing activities
Consolidated
30-Jun-22
$’000
2,358
(2,888)
(3,595)
7,380
30-Jun-21c
$’000
3,246
(7,062)
4,773
1,401
Net cash at the end of the year
3,255
2,358
Table 8 – Summary of cashflows
In the year ended 30 June 2022, total net cash inflow was $897,000 million. The net cash outflow from operating
activities was $2,888,000 million with $20,528,000 million of revenue positively contributing from operations.
21
.
Sustainability Report
22
Acknowledgement
Armour acknowledges the Traditional Owners of the land in which we operate. The Turrbal and Jagera people
in Brisbane, the Mandandanji people where our Surat operations are, the Yandruwandha/Yawarrawarrka and
Dieri people in the Cooper Basin and the Wannyi people and Gangalidda & Garawa people in Northern
Queensland as well as a number of Traditional Owners Groups under the Northern Land Council in the Northern
Territory.
Performance in 2022
713
Days Since
Last Safety
Incident
0
TFIFR
0
Recordable
Environmental
Incidents
1,131
Days since last
reportable
environmental
incident
Armour continues to align itself successfully with the government guidance in regard to the ongoing
management of Covid –19. We have special regard to the remote and small communities where we operate
and will continue to put our employees, contractors and the communities first.
Health and Safety
The safety of our employees, contractors, and the communities where we operate continues to be Armour
priority. We are constantly investing and enabling improvement in HSE and pride ourselves on our considered
and practical approach.
For the 2022 financial year, Armour reported zero recordable incidents and has achieved well in excess of
1,000 days recordable incident free with the company TRIFR at 0. A Our ‘Beyond 0’ HSE action plan has
focused on driving safety behaviours to ensure Armour workers operate with a low risk tolerance and that
safety performance demonstrate that Armour is a credible safety organisation
Industry Collaboration
Armour as a member of the Safer Together industry working group committed to creating the leadership and
collaboration needed to build a strong and consistent safety culture. As part of the community we share
industry lessons learnt and improve quickly by implementing learnings.
23
Environment
Armours operations are subject to environmental regulation under federal and state legislation. For the year
ended 30 June 2022, Armour Energy reported outstanding environmental performance with zero recordable
environmental incidents reported with 1,131 days reportable incident free.
The Kincora Gas Project is an established oil and gas field that is spread across numerous PLs in the Surat
region of Queensland. Armour took over the project in 2016 and is committed to the practical
decommissioning and remediation of nonoperational assets. The Riverslea Pond Soil & Water Assessment was
completed and represents part of the first phase of the Kincora decommissioning and rehabilitation plan. The
study has identified practical options for the remediation of the site with Armour now focusing on further
studies in 2022.
As a responsible Operator, Armour continues to deliver work programs with minimum impact to the
environment. Minimum disturbance controls such as use of existing access tracks, use of existing leases and
rapid reinstatement ensures that disturbance is avoided or temporary and reduces future rehabilitation.
Armour is aware of the risk that poor weed hygiene practices pose to farmers in our operating areas. Armour
ensures the highest level of weed hygiene control and adopts suitable practices in consultation with
landholders. All contractors that visit any Armour site are required to adopt the same practices. Armour has
trained all staff that conduct work on landholders properties in vehicle weed hygiene.
Climate Change Disclosure
Climate change is one of the most significant challenges facing the world today and as a member of the
energy industry, Armour recognises the important role it has to play. The world is transitioning to a low-carbon
future, and climate change is an important political, social, environmental, and commercial issue. The
Company recognises the increasing level of investor and regulatory expectation that the particular risks faced
by the Company – and its stance generally on climate change issues – will be addressed in its Annual Report.
Armour is well positioned to contribute to a lower-carbon future through the production and supply of natural
gas. Natural gas is widely recognised for its part in reducing global emissions. This stems from the fact that
emissions from the combustion of natural gas per unit of energy produced are approximately 40% lower than
coal. Furthermore, natural gas can significantly improve air quality in urban centres due to its comparative
negligible particulate and Sulphur Oxide emissions, together with low Nitrogen Oxide emissions.
Natural gas is also an advantageous fuel for baseload and supplemental power generation supporting the
increasing renewables sector, as gas-fired generation can be triggered from zero to full production in minutes
and is 40% less carbon-intensive than coal-fired generation.
Whilst gas is a complimentary, transitional fuel supporting intermittent renewable energy generation, it is also
important to note that natural gas is also used as a feedstock for many other applications including heating
in foundry’s and furnaces, plastics and petrochemicals, fertilisers and food manufacturing for which there are
limited other viable alternatives.
Armour can confirm that for the period 2021- 2022, it met the corporate group thresholds prescribed by the
National Greenhouse Gas Reporting (NGER) Act with reporting to be completed in October 2022.
The vast majority of the Company’s gas-related infrastructure components (gas plant, gas pipelines, well-
heads, compressors, and associated field equipment) are essentially “legacy assets” acquired from Origin
Energy as part of the overall acquisition of the Kincora Gas Project near Roma in Queensland, which was
completed in 2016. Based on the operation and maintenance of these assets during its period of ownership,
Armour has established the following initiatives to reduce emissions and environmental impact:
▪ Reduction of “fugitive emissions” via leak management and preventative maintenance programs.
▪ Optimisation of staff movements and logistics to reduce road traffic and distance travelled in our
operations and projects has led to a 50% reduction in the total kms travelled each month.
24
▪ Execution of the Kincora Stack Emission Monitoring Program to provide baseline air emission data for
assessment against EPP Air regulatory emission framework. Results show that emissions are below the EPP
Air Quality Objectives.
▪ New well site facility installations will include electrically driven instrumentation powered by local solar
panel arrays.
Furthermore, Armour minimises its impact on land and waterways in relation to development and exploration
activities by undertaking the following:
▪ Assessment of regional and local aquifers to characterise the geochemistry of formation water prior to
and during initial stages of exploration and development, including hydraulic stimulation, activities.
▪ Ongoing baseline monitoring of groundwater quality to detect any changes during and after the
cessation of exploration and development lifecycles.
▪ Assessment and survey of local ecological communities within and around our development, exploration
and production tenements, and the implementation of innovative approaches to negate and reduce
footprint and minimise vegetation clearing.
Staying educated on improved and innovative environmental technologies that could have the greatest
potential for reducing overall energy consumption during the exploration and development lifecycles.
▪
Armour has commenced studies on the potential use of depleted gas fields for carbon capture and storage
(CCS). CCS is a process which aims to safely capture carbon dioxide (CO2) and permanently store deep
underground in geological formations. CCS is seen as playing an important role in reducing carbon emissions
and transition to cleaner energy.
Notwithstanding the favourable landscape for the ongoing production and sale of natural gas as outlined
above, Armour anticipates that its activities may be subject to increasing regulation and costs associated
with climate change, and/or the management of carbon emissions. The Company is committed to
understanding and managing the current and emerging regulatory, reputational, and market-related risks of
climate change to its operations.
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to
improve and increase reporting of climate-related financial information. The TCFD has developed a set of
voluntary recommendations for companies to disclose information about how they oversee and manage
climate related risks and opportunities. Armour recognises the importance of transparency to our stakeholders
and the Board is considering the adoption of the TCFD Recommendations as a framework for guiding our
climate-related risk management and disclosures in future reporting periods.
Armour’s strategic approach is to minimise our emissions and to participate in the energy transition whilst
building a resilient business. The Company’s Executive Team and Audit and Risk Management Committee will
continue to review the potential impacts of climate change on the organisation and will be responsible for
delivering Armour’s climate change priorities.
The Company is also conscious that other social consensus-based issues connected with climate change
and environmental stewardship may impact its operations and cost structures into the future. These are
dynamic issues which will need to be monitored and considered in the context of the Company’s decisions
regarding the use of its capital, the nature and longevity of certain assets and operations, the safety and
security of its workforce, and the interests of its broader stakeholders and the communities in which it
operates. At this stage, there have been no direct impacts on Armour’s operations or assets connected to
these issues, other than the historic gas and hydraulic fracturing moratoriums imposed by the Victorian and
Northern Territory Governments.
No financial impacts have been recorded in the current period by Armour in relation to these initiatives as:
▪
▪
The Company’s project equity interests in the state of Victoria are currently carried at a nil value, having
been written down in an earlier period; and
The Government of the Northern Territory has now lifted its moratorium and granting the Company an
extension of time for it to complete its exploration activities, together with reductions in its financial
commitments related thereto.
25
The Board does not current consider the Company to be subject to a material financial impact as a
consequence of the various categories of climate change risk and as a result, no adjustments are included
in the financial statements. Future commodity prices are based on the Group’s estimate of future market
price with reference to various external forecasts. These price forecasts consider the potential impact of
climate change as one of the many factors that can affect long term price estimates.
Armour recognises the key physical and transitional risks from climate change that may impact the Company
into the future.
1. Physical risks include one off significant disruptions such as extreme weather events as well as more
graduate changes in the environment in which we operate. Armour’s operational activities are at risk
of severe interruption by extreme weather events such as bushfires or floods.
2. Transitional risks are risks associated with the global move towards a low carbon economy. The
Company could be at risk through reduced demand for oil and gas products, increased regulation
or higher stakeholder expectations impacting the Company’s reputation.
The impacts to the Company of the above risks could include reduced revenue, increased costs, higher cost
of capital or inability to access capital or insurance. The risks are covered in more detail in the Managing Risk
section of this report.
26
People
37
Direct
employees
20%
Female
workforce
50%
Site based employees
from the Region
As a small operation, people are at the core of our business. Armour directly employs 37 people with 20%
female. We have a diverse workforce with our team coming from a breath of backgrounds, from as close as
New Zealand and PNG to as far as the UK. Over a quarter of our workforce were originally from outside of
Australia.
Of our site-based team, approximately 50% are employed from within the Darling Downs and Western
Queensland region and 26% from the local area.
During 2021, with contribution and engagement from across the business, Armour has established new
corporate values. Our values set out the way in which Armour will operate, guide how we make decisions
and are important to setting the culture in our organisation.
Armour has introduced a new online learning system. Initially this system is focused on our core induction,
safety and compliance training. It will allow us to better deliver, track and reporting on the learning and
development of our employees.
27
Community
Armour operates in the Surat region of Queensland and strives to be an active and supportive member of the
community. A strong presence in the Surat community is a key focus and the opening of the Armour Surat
office in November 2020 demonstrates a commitment to the town of Surat. Having a local office sees
more local engagement and investment by the Armour team. Wherever possible, Armour buys goods and
services from businesses in local communities. We continue to foster positive relationships with other key
stakeholders such as landowners, governments and community groups.
Supporting Local Businesses
Armour aims to engage with local businesses and contractors that can support our operations. Strong
partnerships with local contractors are crucial to Armour’s operations in the Surat.
For our project activities, wherever possible we source local materials such as gravel and construction water
from our local landholders and local businesses. Flowers Earthmoving has been an ongoing supporter and
contractor to Armour. This family business provides earthmoving for both our well and pipeline project activities.
Roma-based Ricketts Mechanical Services and Gavco Instrumentation Services and Repairs provide contractor
services to Armour. These contractors provide specialist skills and work closely with the Armour operational team.
They use local people for their team.
Materials and parts supplies are also sourced from vendors based in the Surat and Roma area, supporting local
employment. Local businesses such as Surat Tyre Service is our primary tyre supplier, Bayly Motors provides
vehicle servicing, the Wagon Wheel General Store provides our supplies and Surat Ag provides our chemicals
for land management. All these businesses are family owned and employ local people.
Construction and operations employees of Armour enjoy meals and accommodation at the family-run New
Royal Hotel Motel and Balonne’s Royal Bistro. Proprietors Don and Karen Thom extend a warm welcome to the
Armour team with hearty meals, daily lunch packs and friendly service. Don is also one of our Senior Plant
Operators at the Kincora Plant.
28
Community
Armour is proud to support the local community
of Surat where our people live and work. Thriving
community organisations are the life blood in
rural and regional areas, fostering a strong
community spirit.
In 2022, Armour donated to the Surat Ladies
Bowling Club Annual Pink and Blue Bowls Day. This
community event was enjoyed by a wide cross
section of the local community and raised funds
for a cancer charity. A number of the Armour
team took part in the bowls day and surprised us
with some hidden talents.
The Queensland Police Legacy Scheme shares the Queensland Government and Queensland Police Service
priorities of giving all our children a great start and keeping our communities and children safe. In producing
the Child Safety Handbook, Queensland Police Legacy demonstrate their commitment to these priorities and
make us mindful that all children are vulnerable, and we all share in the responsibility of keeping them safe.
Armour continues to provide sponsorship to ensure that children in the Surat & St. George area receive the
handbook and continue to have access to a resource to turn to in times of need, and support so that they
can cope with the challenges they may face.
Landholders and Traditional Owners
Armour maintains its operational acreage across a large number of private landholders in the Surat area.
Seamlessly interfacing with cattle and cropping routines is the result of open communication and relationships
built on mutual trust and respect. Development and exploration schedules are developed in consultation with
landholders to minimise local impacts to their business.
In the Northern Territory, Armour undertook multiple engagements with all 38 Pastoral Leaseholders over our
acreage in preparation for the largest private airborne survey in the Northern Territory which commenced in
late June 2021.
Armour respects the Traditional Owners in the areas in which we operate. Armour has continued positive
ongoing engagement with the Northern Land Council in the Northern Territory with plans for future stakeholder
engagement with the Traditional Owners.
Industry Engagement
Armour engages and collaborates extensively across the Oil & Gas industry. This includes through the
Queensland Resources Council, Safer Together and the Northern Territory Energy Club.
Jobs, Royalties and Taxes
Armour directly employed 37 people at 30 June 2022 as well as a number of independent contractors.
Armour contributed $1.6 million (2021:$1.2m) in royalties and $0.4 million (2021:$0.6m) in payroll tax to the
Queensland Government.
29
Managing Risk
Armour is an explorer, developer and producer of gas and associated liquids. The Group operates in a volatile
pricing market. Factors specific to Armour or those which impact the market more broadly, may individually
or in combination, impact the financial and operating performance of Armour. These events may be beyond
the control of the Board or management of Armour Energy.
The material risks for Armour are outlined below. This summary is not an exhaustive list of all risks that may affect
Armour, nor have they been listed in any particular order of materiality.
Operational Risks
Production Risks
Armour has a single production operation and is therefore reliant on continued performance of operations
at the Kincora Gas project. Any issues that curtail operations at the Kincora facility could materially impact
revenue flows. There are numerous operating risks which may result in a reduction in performance that
decreases Armour’s ability to produce gas to meet customer contracts. The risks include, but are not limited
to, factors such as weather conditions, machinery failure, critical infrastructure failure or natural disasters. To
prevent or minimize production losses from such things as, machinery or infrastructure failures, Armour has in
place maintenance programs and operational procedures. These mitigants are implemented by competent
on-site operators and engineering support.
Geological Risks
Resource and Reserve estimates are prepared by external experts in accordance with the JORC code for
reporting. The estimates are inherently subjective in some respects therefore there is risk that the interpretation
of data may not align with the future experienced conditions in the field. Due care is taken with each
estimation.
Armour prepares its reserves and resources estimates in accordance with the 2018 update to the Petroleum
Resources Management System sponsored by the Society of Petroleum Engineers, World Petroleum Council,
American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers (SPE-PRMS). To
support and validate the Company’s gas and oil reserves position, an external qualified auditor is engaged
annually to provide an independent expert review.
Exploration and Development Risk
Armour’s production growth is dependent on its ability to explore, develop and deliver new resources and
reserves. Oil and gas exploration is a speculative endeavour and carries a degree of risk associated with
failure to find commercially viable hydrocarbons. Armour utilises prospect evaluation and ranking to analyse
existing acreage for exploration and development opportunities. Each project is assessed on its merits before
investment decisions are taken. Armour also seeks partnering and farm-in opportunities to manage the risk.
Safety, Environmental and Sustainability Risks
Safety Risk
Safety remains of critical importance in the planning, organisation and execution of Armour’s exploration and
operational activities. Oil and gas operations pose a risk of harm to employees, contractors or the community
in which Armour operates. Armour is committed to providing and maintaining a working environment in which
its employees and contractors are not exposed to hazards that will jeopardise an employee’s health and
safety, or the health and safety of others associated with our business. Armour has in place detailed and
proactive safety and health management plans which are reviewed regularly. Armour also participates in
the Safer Together industry working group committed to creating the leadership and collaboration needed
to build a strong and consistent safety culture.
30
Climate Change
Climate change risk, in the form of either physical or transitional risk, is a global issue impacting all businesses.
Physical risks through extreme weather events such as bushfires or floods may cause significant disruption to
Armour’s operations. The potential impact of this type of event includes damage to infrastructure, loss of
production and delay or cost increases to project delivery. Armour has in place response plans to minimise
any impact from such events as well as a comprehensive insurance program.
Climate change and the transition to a lower carbon emissions economy may lead to an increase in
regulation and expectations. An increased focus by governments, regulators and broader stakeholders in
relation to climate change and expectations of companies may impact Armour’s longer-term growth
through increased regulation and cost. The International Energy Agency (IEA) has noted that banks,
insurance companies and other operators are exiting coal. Gas plays an important role in coal-to-gas
switching and as a firming energy for renewables in reducing overall carbon emissions, however, in the longer-
term sentiment towards gas may change which may impact access to and cost of capital and insurance.
Environmental Risk
Armour’s operational activities pose a risk of harm to the environment and community through an
environmental incident or non-compliance.
Armour’s operations and projects are subject to State and Federal laws, and regulation regarding
environmental hazards. These laws and regulations set various standards regulating certain aspects of health
and environmental quality, provide for penalties and other liabilities for the violation of such standards and
establish, in certain circumstances, obligations to remediate current and former facilities and locations where
operations are or were conducted. The ability to secure and undertake exploration and operational activities
within prospective areas is also reliant upon satisfactory resolution of native title and management of
overlapping tenure.
To address these risks, Armour develops strong, long-term effective relationships with landholders, with a focus
on developing mutually acceptable access arrangements as well as appropriate legal and technical advice
to ensure it manages its compliance obligations appropriately.
Armour minimises these risks by conducting its activities in an environmentally responsible manner, in
accordance with applicable laws and regulations and where possible, by carrying appropriate insurance
coverage. In addition, Armour engages experienced consultants and other technical advisors to provide
expert advice where necessary.
Pandemic Risk
A pandemic outbreak of a communicable disease such as COVID-19 has the potential to affect personnel,
production and delivery of projects. The Company responded to Covid-19 through its health and safety
management plans to manage this risk including ongoing monitoring and response to government directions
and advice. This enables Armour to take active steps to manage risks to the Company’s staff and stakeholders
and to mitigate risks to its operations and communities where Armour operates.
Strategic and Financial Risks
Regulatory Risks
Changes in government, policy or legislation may result in material adverse impact on Armour’s operations
and financial position. Retrospective or unexpected regulatory changes may impact the viability of projects.
Companies in the oil and gas industry may also be required to pay direct and indirect taxes, royalties and
other imposts in addition to normal company taxes. Armour’s financial position may be affected by changes
in government taxation and royalty policies or in the interpretation or application of such policies.
31
Armour monitors regulatory developments and seeks opportunities to engage with governments and
regulators as well as industry bodies.
Commodity Price Risk
The prices Armour receives for the oil and gas produced is subject to the volatility of commodity prices and is
a key driver for the business’s financial performance. Armour is not of a size to have influence on gas or other
petroleum product prices and is therefore a price-taker in general terms. This is particularly the case in relation
to the Queensland gas spot market, and for oil, condensate, and LPG sales. Armour has in place some fixed-
price AUD gas sales, as well as contracts and contracted agreements for some other products.
Sovereign Risk
Armour has limited influence over the direction and development of government policy. Successive changes
to the Australian energy and resources policies, including taxation and innovation policies, have impacted
Australia’s global competitiveness and reduced the attractiveness of Australian fossil-fuel projects to foreign
investors.
Armour’s view is that whilst there is currently a negative perception of fossil fuels, gas and LPG being less
carbon intensive than alternate energy sources (such as thermal coal) will continue to play a significant role
as both a domestic and export commodity.
Access to Funding
Armour’s ability to fund operations and future growth is impacted by its ability to access funding. At 30 June
2022, Armour remained funded with the ability to raise cash reserves to be sufficient to meet the business’s
operating costs. Armour’s ability to effectively continue as an oil and gas producing business is dependent
upon several factors, including the success of the Kincora Gas Plant, successful exploration and subsequent
exploitation of Armour’s tenements.
Should these avenues be delayed or fail to materialise, Armour has a proven ability to successfully raise
additional funding through debt, equity or farm out/sell down to allow Armour to continue as a going concern
and meet its debts as and when they fall due.
Recent examples of the ability to raise funding via equity was the successful completion of the $8.2 million
private placement announced on 27 September 2021 and $5.9m raised by McArthur NT Pty Ltd via
Redeemable Exchangeable Notes during the last 12 months.
32
Board of Directors
Nicholas Mather (appointed 18
December 2009)
Executive Chairman
BSc (Hons, Geol), MAusIMM
Stephen Bizzell (appointed 9 March 2012)
Eytan Uliel (appointed 20 November 2017)
Non- Executive Director
BCom, MAICD, SA Fin
Independent Non-Executive Director
BA, LLB
currently
takeover
Nicholas Mather has been involved in the
junior resource sector at all levels for 34
years during which time he has been
instrumental in the creation of resource
companies with aggregate market caps
at
of
and
approximately $6.8Bn. Nick is currently a
Non-Executive Director of SolGold plc, Aus
Tin Mining, New Peak Metals and Lakes
Blue Energy NL. Nick is Managing Director
and co-founder of DGR Global Limited
(ASX) and was co-founder and served as
an Executive Director of Arrow Energy NL
until 2004. Nick was also the founder and
Chairman of Waratah Coal, a co-founder
and Non-Executive Director of Bow Energy
Limited until its takeover by Arrow Energy
Pty Ltd.
Nick is Executive Chairman and a member
of the Remuneration Committee.
Current directorships/other interests
DGR Global Limited
(26/10/2001 – current)
NewPeak Metal Limited
(22/01/2003 – current)
Aus Tin Mining Limited
(21/10/2010 – current)
Lakes Blue Energy NL
(07/02/2012 – current)
SolGold plc (LSE and TSX)
(11/05/2005 – current)
Former directorships (last 3 years)
Atlantic Lithium Ltd (A11) (formerly Iron
Ridge Resources Limited)
(05/09/2007 - 28 June 2021)
Interests in shares: 9,019,912
Interest in options: 7,978,634
of
Queensland
Stephen Bizzell is the Chairman of boutique
corporate advisory and funds management
group Bizzell Capital Partners Pty Ltd. He is
currently Chairman of MAAS Group Holdings
Ltd and Laneway Resources Ltd, and
Director of Strike Energy Ltd and Renascor
Resources Ltd. Stephen was previously an
Executive Director of Arrow Energy Ltd, co-
founder and Non-Executive Director of Bow
Energy Limited and formerly Non-Executive
Director
Treasury
Corporation, Stanmore Coal Ltd, Diversa
Ltd, Apollo Gas Ltd, UIL Energy Ltd and Dart
Energy Ltd. He qualified as a Chartered
considerable
has
Accountant
experience
fields of corporate
restructuring, debt and equity financing,
and mergers and acquisitions and has over
25 years’ corporate finance and public
experience.
company management
Stephen is a member of the Audit & Risk
Management Committee, Remuneration
Committee and the Health, Safety and
Environment Committee.
and
the
in
Current directorships/other interests
MAAS Group Holdings Limited
(21/10/2020 – current)
Renascor Resources Limited
(Appointed 01/09/2010 – current)
Laneway Resources Limited
(28/06/1996 – current)
Strike Energy Limited
(31/12/2018 – current)
Challenger Energy Group Plc
(01/06/2021– current)
Former directorships (last 3 years)
UIL Energy Limited
(01/08/2014 -27/12/2018)
Stanmore Coal Limited
(05/10/2009 - 15/05/2020)
Interests in shares: 19,287,066
Interest in options: 48,969,324
Eytan Uliel is a finance executive with
extensive oil and gas industry experience.
He has served as Commercial Director of
Bahamas Petroleum plc, a UK-listed
company with conventional oil exploration
acreage offshore The Bahamas. Eytan was
Chief
Financial Officer and Chief
Commercial Officer of Dart Energy Limited,
Chief Commercial Officer of its predecessor
company, Arrow International Ltd, Asian
Regional Head of
the Corporate &
Structured Finance Group at Babcock &
Brown. Eytan was also with Carnegie, Wylie
& Company as Managing Director. Eytan
commenced his career as a corporate
lawyer, with
law-firm
Freehills. He has also previously served as
Chairman and Chair of
the Audit
Committee of Easycall International Ltd
(dual ASX / SGX listed), Director and Chair of
the Audit committees of Strike Energy
Limited (ASX listed) and Jasper Investments
Ltd (SGX listed), an alternate director of
Thakral Corporation Limited (SGX listed), a
director of CH4 Gas Ltd (ASX listed until
merged with Arrow Energy Ltd), and an
alternate director of Neverfail Springwater
Ltd (ASX listed). Eytan was previously a
director and member of
the audit
committee of Lonely Planet Publications Pty
Ltd, and a director of various Arrow / Dart
entities across Asia and Europe.
leading Australian
Eytan is Chair of the Audit and Risk
Management Committee.
Current directorships/other interests
None
Former directorships (last 3 years)
None
Has no interest in Armour Energy shares or
options.
33
Leadership Team
Christian Lange
Michael Laurent
Geoff Walker
Chief Executive Officer
Chief Operating Officer
B.Eng (Mech)
is
a
Lange
Christian
highly
experienced executive within both
the Australian and
International
resources
industries, having spent
in executive and
over 30 years
operational roles globally. Christian
was an executive at leading global
oil and gasfield services provider,
Schlumberger where he spent 18
years in executive and operational
management
in Australia/NZ, the
Middle East, the United Kingdom,
Venezuela, and the USA. Christian
was also previously the Managing
listed
Director and CEO of ASX
Neptune Marine
a
company that he developed from a
single technology start up, to a
700
company employing over
in major
people and operating
offshore
Recently,
Christian was
the Founder and
Managing Director of Griffin Energy
Solutions, a specialist well engineering
and project management company.
Christian holds an MBA from the
Curtin Graduate School of Business
and is a member of the Society for
Petroleum Engineers (SPE).
provinces.
Services,
in
gas
and
both
oil &
emphasis
conventional
Michael Laurent is a professional
engineer with over 20 years of
industry
diverse
experience, having
successfully
held various senior managerial and
GM positions. His career spans a
number of sectors and includes
reservoir, drilling,
expertise
facilities, production and operations
with particular
on
resource
business
is
development. His experience
underpinned with strong strategic,
commercial and technical acumen
in
and
unconventional reservoirs. Career
accomplishments include a track
record
P&L
of
responsibility
ensuring
operational objectives and budgets
are met. Prior to joining Armour,
Michael held a variety of domestic
and
technical
leadership roles. Most recently he
worked for Santos where he was
responsible for managing Cooper
Basins
gas
appraisal/development wells and
from
field optimisation
inception through to approval and
implementation.
accepting
and
international
initiatives
and
oil
Chief Financial Officer & Joint
Company Secretary
B.Bus, CA, GAICD
and
Geoff Walker
is a chartered
accountant and member of the
Australian
Institute of Company
Directors. He has 30 plus years of
financial
commercial
experience including previous Chief
Financial Officer roles with ASX listed
Eagers Automotive Limited, Range
International
Limited and Kina
Petroleum Limited. Mr Walker brings
extensive experience formulating
and executing strategic initiatives
while managing change and
growth. Mr Walker is also currently
CFO and Company Secretary for
DGR Global Ltd, Armour’s largest
shareholder and through this role he
already has a good working
knowledge of Armour’s business
and strategic objectives.
34
Former Directors
Roland Sleeman (11 October 2011 – 31 March 2022)
Independent Non-Executive Director
B.Eng. (Mech), MBA
Roland Sleeman has over 40 years energy industry experience, including in oil and gas production and processing,
electricity generation and gas transmission. He has had roles ranging from negotiation and management of major energy
contracts, including those for the 1980’s establishment of the NWS gas project, management of the Goldfields Gas
Pipeline and Chief Commercial Officer for Eastern Star Gas where, with Japanese partners, a modular LNG project was
well advanced prior to takeover by Santos. More recently, Roland has provided expert advice to the Australian Energy
Regulator in assessment of regulatory submissions, assisted the NT Power and Water Commission with gas and pipeline
contract management, and was and independent member of the Western Australian Rule Change Panel (which
oversaw Rules for operation of Western Australian electricity and gas markets). He is a Director and Chief Executive Officer
of Lakes Blue Energy NL.
Roland was the Chair of Remuneration Committee, Chair of the Health, Safety and Environment Committee and was also
a member of the Audit and Risk Committee.
Current directorships/other interests: Lakes Blue Energy NL
Former directorships (last 3 years): None
Interests in shares: NIL
Interest in options: NIL
35
Directors’ Report
36
The Directors present their report, together with the financial statements, on the consolidated entity (referred
to hereafter as the 'Group') consisting of Armour Energy Limited (referred to hereafter as the 'Company' or
'parent entity') and the entities it controlled at the end of, or during, the year-ended 30 June 2022.
Principal activities and significant changes in the state of affairs
The Group’s principal activities are focused on oil and gas exploration, development and production of gas
and associated liquids resources. The Group’s work programs aim to increase liquid rich gas production and
revenues while focussing on becoming one of Eastern Australia’s most prominent onshore Oil and Gas
explorers and producers.
There were no significant changes in the state of the affairs of the Company during the financial year that
have not been detailed elsewhere in this report.
A detailed operating and financial review is provided on pages 7 to 21 of this report and forms part of the
Directors’ report. Material risks to the Company are discussed on pages 30 to 32.
Directors
The Directors of Armour during the whole of the financial year and up to the date of this report are:
Nicholas Mather
Stephen Bizzell
Eytan Uliel
Executive Chairman
Non-executive director
Independent non-executive director
Their qualifications, experience and special responsibilities are included on page 33.
Company Secretary
Geoff Walker perform Armour’s Company Secretary duties. A Boardroom Pty Limited appointee, Ms Natalie
Climo, performed Company Secretarial duties over a six-month period during the financial year while the
Company transitioned to a new sole Company Secretary. Details of Mr Walker’s qualifications and experience
are set out on page 34.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee
held during financial year 2022, and the number of meetings attended by each Director were:
Board
Audit and Risk Management Committee
Held
Attended
Held
Attended
Nicholas Mather
Stephen Bizzell
Roland Sleeman
Eytan Uliel
14
14
11
14
14
14
10
13
2
2
2
2
2
2
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee.
No Remuneration Committee meetings were held during the 2022 financial year.
Corporate Structure
Armour Energy Limited is a company limited by shares that is incorporated and domiciled in Australia. It was
converted to a public company on 14 January 2011 and subsequently became an ASX-listed company on
26 April 2012.
37
Dividends
There were no dividends paid, recommended, or declared during the current or previous financial year or
since the end of the year.
Future likely developments, prospects, and business strategies
There are no further developments of which the Directors are aware of that is not detailed elsewhere in this
report which the Directors believe comment on, or disclosure of, would prejudice the interests of Armour.
Options on Issue
At the date of this report, the unissued ordinary shares of Armour Energy Limited under option are as follows:
Grant Date
1-Oct-19
17-Dec-19
23-Jun-20
30-Jun-20
12-Aug-20
24-Aug-20
17-Sep-20
1-Oct-20
1-Oct-20
19-Oct-20
19-Oct-20
22-Dec-20
24-Mar-21
8-Jul-21
29-Sep-21
23-Dec-21
2-May-22
2-May-22
Total
Date of
Expiry
30-Sep-23
30-Sep-23
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
29-Feb-24
Exercise
Price
$0.08
$0.08
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
Number under
option
40,000,000
8,000,000
31,166,497
7,018,341
9,424,831
16,894,150
35,929,524
85,138,026
59,025,859
63,791,938
24,019,471
66,778,341
62,494,099
66,355,466
73,397,439
64,530,769
12,083,333
48,333,334
774,381,418
No option holder has any right under the options to participate in any other share issue of the company
or any other entity.
Indemnity and Insurance of Directors and Officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their
capacity as a director or executive, 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 ensure the directors and
executives 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 the liability and the amount of the premium.
Indemnity and Insurance of Auditor
The Company has not, during or since the end of 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.
38
Events after the Reporting Date
Other than the below subsequent events, no other matter or circumstance has arisen since 30 June 2022 that
has significantly affected, or may significantly affect Armour's operations, the results of those operations, or
Armour's state of affairs in future financial years.
▪ Other Financial Assets - On 28 March 2022 Armour entered into a number of agreements to dispose of
the Company’s Lakes Blue Energy NL (LKO) shareholding comprising 2,125,000,000 Ordinary shares under
escrow until 2 August 2022 at 0.06c each. The disposal was subject to LKO agreement, and the escrow
being retained by buyers.
▪
The legal ownership transfer of the disposed shares from Armour Energy to the respective purchasers
occurred following 30 June 2022. A change in the fair value of these equity investments was adjusted
through other comprehensive income and the revalued book value is $1,275,000.The Other Financial
Assets current assets held for sale are classified in the Corporate reportable segment.
▪ Mr Christian Lange was appointed as Chief Executive Officer of the Company on 25 July 2022.
▪ Armour entered into a funding agreement with Armour’s largest shareholder, DGR Global Ltd, for the
provision of a $4.5M facility to be drawn over three months. This funding is provided by way of a
placement of redeemable exchangeable notes to be issued by Armour’s subsidiary, McArthur NT Pty Ltd,
at an issue price per note of $1.00 and otherwise on the terms and conditions set out in the Redeemable
Exchangeable Note Trust Deed.
Environmental Regulation
Armour is subject to significant environmental regulation in relation to its operations. Armour has conducted
an extensive review of the environmental status of the Surat Basin processing plant and associated
exploration and production fields, used for the production of Oil, Gas, LPG and Condensate, and has
estimated the potential costs for future restoration and abandonment to be $6,688,000. Armour has complied
with the conditions of its various Environmental Licences to Operate under the Environmental Protection Act
1994, through the implementation of its Health, Safety and Environmental Management System (HSEMS) and
assurance processes.
Health & Safety
Armour achieved a TRIFR of zero. Armour Energy has not received any formal notices or penalties from
regulatory authorities during the period with inspections of our operating sites by Resources Safety & Health
Queensland (RSHQ) during the period determining no regulatory non-compliance. Armour continues to work
with the regulators to meet obligations and improve on our management systems.
Climate Change
Armour recognises that the world is transitioning to a low-carbon future, and that climate change is an
important political, social, environmental, and commercial issue. In addition, the Company recognises the
increasing level of investor and regulatory expectation that the particular risks faced by the Company – and
its stance generally on climate change issues. Refer to the Sustainability Report for more information.
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.
39
Non-Audit Services
The Company’s auditor, BDO, undertook some non-audit services during the year. 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 40 to the financial statements. The non-audit services totalling $17,970 relates to other advisory services
provided.
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 40 to the financial statements do not
compromise the external auditor's independence requirements of the Corporations Act 2001 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 Partners of BDO
There are no officers of the Company who are former partners of BDO.
40
Remuneration Report (audited)
The remuneration report details the key management personnel remuneration arrangements for Armour, in
accordance with the requirements of the Corporations Act 2001 and its Regulations. This information has been
audited as required by section 308(3C) of the Corporations Act 2001.
The remuneration report is set out under the following main headings:
▪ Principles used to determine the nature and amount of remuneration.
▪ Details of remuneration and service agreements.
▪
▪ Group performance and link to remuneration.
▪ Other transactions with key management personnel and their related parties.
Share-based compensation.
The remuneration report details the remuneration arrangements for Key Management Personnel ("KMP") who
are defined as those persons who have authority and responsibility for planning, directing and controlling the
activities of Armour, directly or indirectly, including any Director (whether executive or otherwise) of Armour,
including the executive team.
The following persons are considered Key Management Personnel for Armour. Details of date of service is
included where service was for all or part of the 2022 financial year:
Name
Directors
Nicholas Mather
Stephen Bizzell
Eytan Uliel
Executive KMP
Christian Lange
Michael Laurent
Geoff Walker
Former Director
Roland Sleeman
Former Executive KMP
Toni Hawkins
Karl Schlobohm
Bradley Lingo
Mark Greenwood
Craig Gouws*
* became KMP 20 December 2021
Position
Period of Service
Executive Chairman
Became KMP 1 July 2011
Non-Executive Director
Independent Non-Executive Director
Became KMP 8 March 2012
Became KMP 20 November 2017
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Became KMP 25 July 2022
Became KMP 1 July 2020
Became KMP 25 May 2022
Independent Non-Executive Director
Ceased KMP 31 March 2022
Chief Financial Officer
Company Secretary
Chief Executive Officer
Chief Commercial Officer
Chief Financial Officer
Ceased KMP 31 December 2021
Ceased KMP 31 January 2022
Ceased KMP 4 April 2022
Ceased KMP 3 June 2022
Ceased KMP 3 June 2022
Michael Laurent resigned as COO of the Company on 30 August 2022, with a three-month notice period, to
pursue other opportunities.
Other than the above, there were no changes to KMP after the reporting date and before the date the
financial report was authorised for issue.
41
Principles used to determine the nature and amount of remuneration
Armour's remuneration policy is designed to attract, motivate, and retain Executives and Non-Executive
Directors by identifying and rewarding high performers and recognising the contribution of each person to
the continued growth and success of Armour.
The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good
reward governance practices:
▪ competitiveness and reasonableness;
▪ acceptability to shareholders;
▪ alignment of executive compensation; and
▪
transparency.
The Remuneration Committee is responsible for providing recommendations to the Board of Directors on the
remuneration arrangements for its directors and executives. The performance of Armour depends on the
quality of its directors and executives.
The Board assesses the appropriateness of the nature and amount of remuneration of such officers on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit. Such officers are given the opportunity to receive their base remuneration in
a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will
be optimal for the recipient without creating undue cost for Armour. Further details on the remuneration of
Directors and Executives are set out in this Remuneration Report.
Armour aims to reward the Executives with a level and mix of remuneration commensurate with their position
and responsibilities within Armour. The Board’s policy is to align Director and Executive objectives with
shareholder and business objectives by providing a fixed remuneration component.
The reward framework is designed to align executive reward to shareholders' interests. The Board have
considered that it should seek to enhance shareholders' interests by:
link reward with the strategic goals and performance of Armour;
focusing on sustained growth in shareholder wealth and achievement of these strategic goals; and
▪
▪
▪ ensuring total remuneration is competitive by market standards.
Additionally, the reward framework should seek to enhance executives' interests by:
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
▪
▪
▪ providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and
executive director remuneration is separate.
Details of remuneration and service agreements
Non-executive Directors’ Remuneration
The board seeks to set aggregate remuneration at a level which provides Armour with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Armour’s specific policy for determining the nature and amount of remuneration of non-executive directors
is as outlined below.
The Company's constitution and ASX listing rules require the aggregate non-executive directors'
remuneration be determined periodically by a general meeting. The most recent determination was at the
42
Annual General Meeting held on 9 November 2011 where the shareholders approved a maximum annual
aggregate remuneration of $500,000.
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-
executive directors' fees and payments are reviewed periodically by the Remuneration Committee. The
Remuneration Committee may, from time to time, receive advice from independent remuneration
consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market.
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 the
determination of his own remuneration.
If a non-executive director performs extra services, which in the opinion of the directors are outside the scope
of the ordinary duties of the director, Armour may remunerate that director by payment of a fixed sum
determined by the directors in addition to or instead of the remuneration referred to above. However, no
payment can be made if the effect would be to exceed the maximum aggregate amount payable to non-
executive directors. A non-executive director is entitled to be paid travelling and other expenses properly
incurred by them in attending director's or general meetings of Armour or otherwise in connection with the
business of Armour.
All directors can qualify for participation in the Employee Share Option Plan, subject to the approval of
shareholders.
The rights, responsibilities and remuneration terms for each non-executive director are set out in a letter of
appointment, pursuant to which:
▪ Directors are granted the rights to access Group information, and the right to seek independent
professional advice
▪ Directors are provided with a Deed of Access and Indemnity
▪ Directors are provided with coverage under Armour's directors and officers insurance policy
▪ Directors are made aware of Armour's Corporate Governance policies and procedures
▪ Directors are ordinarily entitled to remuneration of $40,000 per annum, plus reasonable expenses for travel
and accommodation,
There are no fixed terms or notice periods, with the exception of the Chairman.
▪
The remuneration of non-executive directors for the year ended 30 June 2022 is detailed on page 46 of this
remuneration report.
Executive remuneration
Armour aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components and is commensurate with their position and
responsibilities within Armour and to:
▪
link reward with the strategic goals and performance of Armour;
▪ align the interests of the executives with those of shareholders; and
▪ ensure total remuneration is competitive by market standards.
The remuneration of the executives is recommended by the Remuneration Committee and determined by
the Board. The remuneration will comprise a fixed remuneration component and may include offering specific
short and long-term incentives, in the form of:
▪ base pay and non-monetary benefits;
▪
short-term performance incentives;
▪
share-based payments; and
▪ other remuneration such as superannuation and long service leave.
43
The combination of these comprises the executive's total remuneration. The remuneration of executive
directors and other KMP for the year ended 30 June 2022 is detailed on pages 46-47 of this Remuneration
report.
Service agreements
It is the board’s policy that employment agreements are entered into with all executives and employees.
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. The termination provisions applicable are set out below.
Name
Position
Duration of service
Notice Period
Nicholas Mather
Christian Lange
Michael Laurent
Geoff Walker
Executive Chairman
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Ongoing
Ongoing
Ongoing
Ongoing
By Executive
12 months
3 months
3 months
3 months
By Company
12 months
3 months
3 months
3 months
Apart from the CEO, who has his own incentive plan (see below) bonus payments and incentive criteria
satisfaction are at the discretion of the Remuneration committee.
Salaried executives are entitled to their statutory entitlements of accrued annual leave and long service leave
together with any superannuation on termination.
No directors or key management personnel have entitlement to termination payments in the event of
removal for misconduct.
Chief Executive Officer Incentive Plan
Mr Lingo was entitled to a base salary of $299,000 inclusive of superannuation, to be assessed annually by the
Board, based on the following weighted KPI’s and up to a maximum of $100,000.
No KPI’s
1 The Board approving a debt or equity refinancing of the FIIG Notes.
2 A stabilised flow rate of in excess of 14TJ’s per day from the Kincora Gas Project.
3 The Board approving a farm-out or commercial agreement in respect of the NT Assets.
TOTAL
In addition to the bonus payment, Mr Lingo was entitled to the below Performance Shares:
No Performance Criteria
1 On the first Commercial Discovery in the Co-Era Assets being determined in accordance
with recognised standards in the oil and gas industry and announced by the Company.
The VWAP for Shares trading on ASX for 20 consecutive days is not less than 500% over
2
the closing price for Shares on the last trading day before the Commencement Date.
The Board approving a farm- out or commercial agreement in respect of the NT Assets.
3
4
The Board approving a refinancing of the FIIG Notes.
5 A stabilised flow rate of in excess of 14TJ’s per day from the Kincora Gas Project.
6 On the first Commercial Discovery on any Licences other than.
Contributed
percentage
50%
25%
25%
100%
Number of
shares
900,000
1,800,000
1,350,000
1,350,000
900,000
900,000
(a) The Kincora Gas Project; and
(b) The CoEra Assets.
As the performance criteria was not met during the year, no performance shares were issues to Mr Lingo
during the financial year.
44
Mr Lange is entitled to base remuneration of $480,000 inclusive of superannuation plus a bonus of up to 100%
of base salary per annum, measured and weighted against progress towards and achievement of agreed
KPI’s.
No KPI’s
Contributed
Percentage
1
2
3
4
5
6
7
8
9
Negotiate a new gas sales agreement with $8M upfront payment and renegotiate the
current APLNG contract.
Negotiate $160M farm-out of NT projects which maintains a minimum 30% equity for AJQ.
Negotiate a deal with AGL on Silver Springs Facility to substantially reduce AJQ Surat OPEX.
Be instrumental in raising a minimum of $3M through an issue of AJQ notes to Bizzell Capital
Partners clients.
Raise a minimum of $5M through an issue of AJQ shares at an appropriate time.
Deliver a $15M Surat Basin Farm-out deal on 5 wells and 400sqkm of 3d seismic.
Successfully renegotiate Tribeca debt facility into Armour Notes.
Successfully renegotiate FIIG bonds into Armour Notes.
Lead completion of the in-well-bore remediation work and maintain well productivity safely
and within budget.
10 Overall lifting production to at least 10Tj’s per day and making new discoveries of at least
*
*
*
*
*
*
*
*
*
*
30Pj’s.
*Mr Lange’s KPI contribution percentages are yet to be agreed.
In addition to the bonus payment, Mr Lange is entitled to a Long-Term Incentive Plan:
The receipt of 40 million options as follows, with initial tranche vesting after 1 year’s employment with AJQ,
satisfactory progress towards and achievement of KPI’s and once the 30-day VWAP exceeds $0.025, $0.05
and $0.10 respectively:
• 13 million with an exercise price of $0.009
• 13 million with an exercise price of $0.025
• 14 million with an exercise price of $0.05
Voting and comments made at the Company's 2021 Annual General Meeting ('AGM')
At the 2022 AGM, 77.29% (2021: 97.9%) of the eligible votes received supported the adoption of the
remuneration report for the year ended 30 June 2021. The Company did not receive any specific feedback
at the AGM regarding its remuneration practices.
45
Amounts of remuneration
The table below for the remuneration of KMP of Armour is prepared in accordance with the Australian Accounting Standards and Corporations Act 2001.
Short-term benefits
Post-employment
benefits
Share-based
payments
Year
Cash salary and
fees
$
Cash bonus
$
Non-
monetary
$
Superannuation
Shares
Directors:
N Mather
S Bizzell
E Uliel
2022
2021
2022
2021
2022
2021
168,000
168,000
40,000
40,000
40,000
40,000
Current other Key Management Personnel:
M Laurent
G Walker*
Total Current KMP
2022
2021
2022
2021
2022
2021
336,061
339,361
15,375
599,436
587,361
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
68,108
47,074
-
N/A
68,108
47,074
23,568
22,156
2,050
25,618
22,156
$
-
-
-
-
-
-
60,950
60,950
5,125
66,075
60,950
Total
$
Relating to
performance
%
168,000
168,000
40,000
40,000
40,000
40,000
488,687
469,541
22,550
759,237
717,541
-
-
-
-
-
-
-
-
-
-
-
46
Previous Directors:
R Sleeman**
Year
2022
2021
Cash salary and
fees
$
30,000
40,000
Previous other Key Management Personnel:
K Schlobohm***
B Lingo***
M Greenwood#
T Hawkins
C Gouws*
R Arden*
Total Current KMP
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
23,871
40,000
173,048
276,708
272,733
20,000
153,942
150,292
112,138
-
41,497
1,365,168
1,155,890
Short-term benefits
Cash bonus
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-
monetary
$
-
-
-
-
38,395
24,069
-
4,809
-
15,581
-
N/A
-
-
106,503
91,533
Post-employment
benefits
Share-based
payments
Superannuation
Shares
$
-
-
-
-
15,289
24,309
23,568
2,695
11,784
13,059
11,880
-
2,908
88,139
65,127
$
-
-
-
-
7,299
92,102
90,121
58,333
30,095
35,094
27,832
-
-
155,347
246,479
Total
$
30,000
40,000
23,871
40,000
234,031
417,188
386,422
85,869
195,821
214,026
151,850
-
44,405
1,781,232
1,559,029
Relating to
performance
%
-
-
-
-
3.1
-
-
-
-
-
-
-
-
3.1
-
* Mr Walker was employed as CFO from 25 May 2022. Mr Gouws was employed as CFO from 20 December 2021 to 3 June 2022. Mrs Hawkins was employed as CFO from 1 December 2020 to 31
December 2021. Mr Aden was employed as CFO from 23 July 2019 to 07 August 2020
** Mr Sleeman resigned as director on 31 March 2022.
*** Mr Schlobohn resigned as Company Secretary on 31 January 2022.
**** Mr Lingo resigned as Chief Executive Officer on 4 April 2022.
# Mr Greenwood was employed as Chief Commercial Officer from 1 June 2021 to 3 June 2022.
47
Armour has an incentive scheme which rewards employees for contributing to the overall performance of
Armour. The underlying objective of the incentive arrangements is to:
▪ Ensure employees understand Armour's business drivers, objectives, and performance;
▪
▪
Strengthen the involvement and focus of employees in achieving the business' objectives; and
Improve teamwork, communication, and interaction among employees.
Under the incentive scheme, Armour may at its discretion, on an annual basis, pay a bonus to permanent
employees who are employed by Armour on the final day of the relevant financial year (that is, 30 June).
The maximum amount of bonus that will be paid to each employee in any year is set out in the employee's
contract of employment and is set at a maximum 50% of base annual salary.
Apart from the CEO, the actual amount of bonus paid to each individual employee will be dependent on:
▪
▪
For 70% of the potential maximum award, the individual employee's performance relative to pre-agreed
key performance indicators ('KPIs'); and
For 30% of the potential maximum award, the overall corporate performance compared to
predetermined corporate performance targets but subject to satisfactory personal performance.
There were no bonuses awarded in financial year 2022.
Share-based compensation
For the year ended 30 June 2022 $920,476 of other employment benefits were taken as ordinary shares in lieu
of cash (2021: $287,615). The number of shares awarded was determined with reference to the share value
based on a 10-day volume weighted average price (VWAP) at the time of qualification for the share
allotment.
Options granted as part of remuneration for the year ended 30 June 2022
Under the Company's employee share option plan (ESOP), which was approved by shareholders at the 2016
AGM, share options may be issued to directors and executives as part of their remuneration. The options are
not issued based on performance criteria but are issued to the majority of directors and executives of Armour
to align comparative shareholder return and reward for directors and executives.
During the year ended 30 June 2022, there were no options granted as remuneration to Key Management
Personnel (2021: NIL). There are no options on issue over unissued ordinary shares in Armour Energy Ltd on
30 June 2022 to Key Management Personnel.
Performance Shares
There were no performance shares granted or vested during the year. With Mr Lingo’s resignation his
performance shares that remained unvested (5,850,000) were forfeited.
With the exception of tranche 2, value per performance share at grant date is calculated using the share
price at the date of issue. Tranche 2 contains market-based performance conditions and the value per
performance share at grant date is calculated using a Monte Carlo simulation model, which takes into
account factors such as the market based vesting condition, the share price at the date of issue and volatility
of the underlying share price and the time to maturity of the performance share.
Shares issued on exercise of remuneration options
There were no options exercised during the year that were previously granted as remuneration (2021: NIL).
48
Shareholdings
The details of all ordinary shares in Armour Energy Ltd as of 30 June 2022 held by Key Management Personnel
is set out below:
Key Management
Personnel
Directors
N Mather
S Bizzell
Executive KMP
M Laurent
Former KMP
R Sleeman
K Schlobohm
T Hawkins
Mark Greenwood
Craig Gouws
Balance at
1-Jul-21
Number
6,169,912
13,287,066
Granted as/
in lieu of
compensation
Number
-
-
Net changes
Balance at
Other
30-Jun-22
Number
2,850,000
6,000,000
Number
9,019,912
19,287,066
3,150,000
2,455,375
-
5,605,375
59,999
650,002
516,031
-
-
-
664,498
1,309,068
5,070,947
1,045,000
23,833,010
10,544,888
(59,999)
(1,314,500)
(1,825,099)
(5,070,947)
(1,045,000)
(465,545)
-
-
-
-
-
33,912,353
Note: "Net change other" above includes the balance of shares held on appointment / resignation, and shares acquired
or sold for cash on similar terms and conditions to other shareholders.
All other directors and key management personnel did not hold any shares in the Company at the start,
during or at the end of the year. There were no other shares held nominally as of 30 June 2022 (2021: NIL).
Option holdings
The details of all option holdings in Armour Energy Ltd as of 30 June 2022 held by Key Management Personnel
is set out below:
Directors/ Key
management
personnel
Directors
N Mather
S Bizzell
Executive KMP
K Schlobohm
M Laurent
Balance at
1-Jul-21
Net Change
other
Balance at
30-Jun-22
Total vested
Total Vested and
exercisable
Number
Number
Number
Number
Number
6,867,134
33,206,324
1,111,500
26,998,108
7,978,634
60,204,432
7,978,634
60,204,432
7,978,634
60,204,432
129,476
250,000
(129,476)
-
-
250,000
-
250,000
-
250,000
40,452,934
27,980,132
68,433,066
68,433,066
68,433,066
"Net Change other" above includes the balance of options held on appointment / resignation, options acquired or sold
for cash on similar terms and conditions to other shareholders, and options that have expired unexercised.
All other directors and key management personnel did not hold any options in the Company at the start,
during or at the end of the year.
49
Performance rights shares
The following table illustrates the number of, and movements in, performance shares issued for during the year.
Key
management
personnel
Balance at
1-Jul-21
Net Change
other
Number
Number
B Lingo
7,2000,000
(5,850,000)
Balance at
30-Jun-22
Number
1,350,000
Total vested
Number
1,350,000
Options
There were no other options held nominally on 30 June 2022 (2021: NIL).
Group performance and link to remuneration
During the financial year, Armour has generated losses as its principal activity was the discovery and
production of oil and gas assets, as well as exploration for economically viable reserves of both conventional
and unconventional natural oil and gas.
Armour Energy Limited listed on the ASX on 26 April 2012. The closing share price as of 30 June 2022 was 0.6
cents per share.
The earnings of Armour for the five years to 30 June 2022 are summarised below:
Sales revenue
Loss after income tax
2022
$’000
17,985
(11,006)
2021
$’000
17,502
(11,592)
2020
$’000
21,104
(9,571)
2019
$’000
27,819
(11,684)
2018
$’000
14,749
(12,198)
Armour was in the exploration and development stage up until the 2018 financial year and as such, the link
between remuneration, Group performance and shareholder wealth was tenuous. Share prices are subject
to the influence of oil and gas prices and market sentiment toward the sector, and as such increases or
decreases may occur quite independent of Executive performance or remuneration.
Armour is currently in the production and development stage, therefore the link between Group performance
and shareholder wealth should be more strongly linked in future years.
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
$ cents
Share price at financial year end (cents)
2022
0.6
2021
2.6
2020
2.0
2019
6.7
2018
9.0
Other transactions with key management personnel and their related parties
Company debt instruments held by key management personnel
There were no convertible notes held by key management personnel on 30 June 2022.
The early redemption of all existing Convertible Notes on issue on 29 March 2019 was repaid through a
refinancing transaction involving the issue of the $55 million new Secured Amortising Notes, some of which
were subscribed for by key management personnel, as set out below.
50
Notes held at
the start of the
year
Number
Received as
part of
remuneration
Number
Additions
Disposals /
other
Number
Number
Notes held at
the end of the
year
Number
100
-
-
-
-
425,000
-
-
100
425,000
Interest
Principal
$
$
7,166
31,696
Additions /
Disposals
Total paid
during 2022
$
-
$
38,862
Corporate bond holdings
Stephen Bizzell
MOG Notes
Stephen Bizzell
Corporate bond payments
Stephen Bizzell
No other directors and key management personnel held any debt instruments in the Company at the start,
during or at the end of the year.
Bizzell Capital Partners Pty Ltd and related entities
Mr Stephen Bizzell (a Director), is the Chairman of boutique corporate advisory and funds management group
Bizzell Capital Partners Pty Ltd.
Armour entered into an agreement with Bizzell Capital Partners Pty Ltd as Lead Manager for the capital raising
program detailed in ASX announcements on 27 September 2021.
Armour Energy & McArthur Oil & Gas completed capital raising during the year with Bizzell Capital Partners
jointly lead capital raisings and was paid, along with related entities management, capital raising fees and
other fees totalling $503,927 (FY2021: $468,505) on arm’s length terms.
As at 30 June 2022, Bizzell Capital Partners and related entities controlled by Mr Stephen Bizzell held
19,287,066 shares (2021: 13,287,066), 60,204,432 options (2021: 33,206,324) of which 6,000,000 were unquoted
options (2021: 6,000,000), 425,000 convertible MOG notes, and 100 corporate bonds (2021:100). The
corporate bonds were purchased on the same terms and conditions as all other bondholders.
Samuel Holdings Pty Ltd and related entities
Samuel Holdings Pty Ltd is an entity controlled by Mr Nicholas Mather (Executive Chairman) who is the sole
director.
As at 30 June 2022, Samuel Holdings Pty Ltd and related entities controlled by Mr Nicholas Mather held
9,019,912 shares (2021: 6,169,912) and 7,978,634 options (2021: 6,867,134) in the Armour Group.
Other than the above, there were no other transactions with Key Management Personnel for the year ended
30 June 2022.
This concludes the Remuneration report, which has been audited.
51
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 immediately after this Directors' report.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors
of Armour support and have adhered to the ASX corporate governance principles, where appropriate for
the Company. Armour’s corporate governance statement has been released as a separate document and
is located on our website at www.armourenergy.com.au/corporategovernance.
This Directors' 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
Nicholas Mather
Executive Chairman
30 September 2022
52
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY R M SWABY TO THE DIRECTORS OF ARMOUR ENERGY LIMITED
As lead auditor of Armour Energy Limited for the year ended 30 June 2022, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Armour Energy Limited and the entities it controlled during the year.
R M Swaby
Director
BDO Audit Pty Ltd
Brisbane, 30 September 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
53
Financial Statements
For the year ended 30 June 2022
These consolidated financial statements should be read in conjunction with the accompanying notes
54
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 June 2022
Consolidated
30 June 2022
30 June 2021
$’000
$’000
Note
Revenue
Revenue from contracts with customers
Cost of goods sold
Gross profit
Net (loss)/gain on sale of assets
Other income
Interest revenue
Expenses
Exploration expenditure impairment
Finance costs
General and administrative expenses
Oil and gas expenditure impairment
Share-based payments
Loss before income tax expense
Income tax benefit
Loss after income tax expense for the year attributable to the
owners of Armour Energy Limited
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Change in fair value of financial assets at fair value through
other comprehensive income
Income tax items that will not be reclassified to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year attributable to the owners
of Armour Energy Limited
Basic loss per share
Diluted loss per share
7
8
7
7
7
17
9
8
18
8
10
19
10
11
11
17 985
(16,641)
17,502
(22,151)
1,344
(4,649)
(35)
404
9
(489)
(5,206)
(5,974)
(515)
(718)
15,857
601
70
(853)
(6,316)
(4,338)
(11,500)
(464)
(11,180)
(11,592)
174
-
(11,006)
(11,592)
1,275
(174)
1,101
(637)
(637)
(9,905)
(12,229)
Cents
Cents
(0.6)
(0.6)
(1.0)
(1.0)
These consolidated financial statements should be read in conjunction with the accompanying notes
55
Consolidated Statement of Financial Position
As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets held for sale
Total current assets
Non-current assets
Intangibles
Exploration and evaluation assets
Oil and gas assets
Other financial assets
Right-of-use assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Employee benefits
Provision for restoration and abandonment
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued Capital
Reserves
Accumulated Losses
Total equity
Note
12
14
15
16
17
18
19
20
21
22
23
24
25
22
23
26
27
28
Consolidated
30 June 2022
30 June 2021
$’000
3,255
1,544
2,535
1,348
8,682
3,262
11,944
355
34,266
50,536
9,614
1,108
214
96,093
$’000
2,358
2,104
2,097
876
7,435
-
7,435
230
32,013
52,763
10,778
1,361
36
97,181
108,037
104,616
12,184
274
454
21,821
34,733
13,896
851
49
6,688
21,484
56,217
51,820
145,983
125
(94,288)
51,820
9,056
369
497
13,620
23,542
23,877
964
32
6,688
31,561
55,103
49,513
133,771
1,917
(86,175)
49,513
56
These consolidated financial statements should be read in conjunction with the accompanying notes
Consolidated Statement of Cashflows
For the year ended 30 June 2022
Consolidated
30-Jun-22
30-Jun-21
Note
$’000
$’000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid on lease liability
Other Interest paid
Government grants
Net cash used in operating activities
13
Cash flows from investing activities
Refund/(payments) for security deposits
Payments for property, plant, and equipment
Payments for oil and gas assets
Deposits received for investment sales
Proceeds from sale of exploration assets
Payments for acquisition of exploration and evaluation assets
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceed from issue of notes
Proceeds from funding partners
Payment of principal portion of lease liability
Repayment of borrowings
Transaction costs on the issue of shares and notes
Net cash from financing activities
13
13
13
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the reporting
period
20,528
(20,281)
3
(43)
(3,095)
-
(2,888)
706
(96)
(2,504)
1,275
-
(2,976)
(3,595)
9,256
6,180
1,405
(323)
(8,800)
(338)
7,380
897
2,358
18,901
(21,995)
34
(65)
(4,461)
524
(7,062)
(1,414)
(30)
(11,436)
-
21,664
(4,011)
4,773
21,025
-
-
(262)
(18,800)
(562)
1,401
(888)
3,246
Cash and cash equivalents at the end of the reporting period
12
3,255
2,358
These consolidated financial statements should be read in conjunction with the accompanying notes
57
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Issued capital
Reserves
Consolidated
Balance at 1 July 2021
Loss after income tax expense
Other comprehensive income, net of tax
Total comprehensive income
Transactions with owners in their capacity as owners:
Transfers to reserves
Shares issued during the year
Share issue costs
Share-based payments
Balance at 30 June 2022
Consolidated
Balance at 1 July 2020
Loss after income tax expense
Other comprehensive income, net of tax
Total comprehensive income
Transactions with owners in their capacity as owners:
Shares issued during the year
Share issue costs
Recognition of deferred tax assets relating to share issue costs
Share-based payments
Balance at 30 June 2021
$’000
133,771
-
-
-
-
11,014
(545)
1,743
145,983
Issued
capital
$’000
114,311
-
-
-
19,460
907
(1,194)
287
133,771
These consolidated financial statements should be read in conjunction with the accompanying notes
Accumulated
losses
$’000
(86,175)
(11,006)
-
(11,006)
$’000
1,917
-
1,101
1,101
(2,893)
2,893
-
-
-
-
-
125
(94,288)
Total equity
$’000
49,513
(11,006)
1,101
(9,905)
-
11,014
(545)
1,743
51,820
Accumulated
Total equity
Reserves
$’000
2,446
-
(637)
(637)
-
-
-
108
1,917
losses
$’000
(74,583)
(11,592)
-
(11,592)
-
-
-
-
(86,175)
$’000
42,174
(11,592)
(637)
(12,229)
19,460
907
(1,194)
395
49,513
58
Notes to the Financial Statements
Note 1. General information
Armour Energy Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is Level 27, 111 Eagle Street, Brisbane QLD 4000.
The financial statements cover Armour Energy Limited as a Group consisting of Armour Energy Limited and the
entities it controlled at the end of, or during, the reporting period. The financial statements are presented in
Australian dollars, which is Armour Energy Limited's functional and presentation currency.
The Group is principally engaged in the exploration, development and production of oil and gas resources in
Australia.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 September
2022. The Directors have the power to amend and reissue the financial statements.
Note 2. Statement of Compliance
The Group’s Financial Statements as at and for the year ended 30 June 2022:
Is a general-purpose financial report.
Is prepared on a going concern basis (discussed further in Note 4).
1.
2.
3. Has been prepared in accordance with the Corporations Act 2001.
4. Has been prepared in accordance with accounting standards and interpretations in this report, which
encompass the:
a. Australian Accounting Standards (“AASBs”) and other authoritative pronouncements of the
b.
Australian Accounting Standards Board; and
International Financial Reporting Standards and Interpretations (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”).
6.
5. Has been prepared under the historical cost convention, except for, the revaluation of financial assets
at fair value through other comprehensive income. The methods used to measure fair values are
discussed further in Note 28.
Is presented in Australian Dollars (“AUD”), which is both the Company’s and the Group’s presentation
currency. All values are rounded to the nearest thousand ($’000) except when indicated otherwise. The
company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to 'rounding-off' of amounts in the financial statements.
Includes significant accounting policies in the notes to the Financial Statements that summarise the
recognition and measurement basis used and are relevant to the understanding of the Financial
Statements.
7.
8. Presents reclassified comparative information where required for consistency with the current year’s
presentation.
9. Adopts all new and amended standards and interpretations issued by the relevant bodies (listed
above), that are mandatory for application beginning on or after 1 July 2021. None had a significant
impact on the Financial Statements.
10. Has not early adopted any standards and interpretations that have been issued or amended but are
not yet effective.
59
Note 3. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in
the respective notes or below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in Note 33.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Armour Energy
Limited ('Company' or 'parent entity') as at 30 June 2022 and the results of all subsidiaries for the year then ended.
Armour Energy Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances, and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Accounting policy for Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
60
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.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continued use. They are measured at the
lower of their carrying amount and fair value less costs of disposal, except for financial assets which are
specifically exempt from this requirement. For non-current assets or assets of disposal groups to be classified as
held for sale, they must be available for immediate sale in their present condition and their sale must be highly
probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of
disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value
less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative
impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other
expenses attributable to the liabilities of assets held for sale continue to be recognised.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. At each reporting date, Management reviews the carrying
values of its assets to determine whether there is any indication that those assets have been impaired. If such
an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use is compared to the assets carrying value. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable amount.
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.
Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received, and the Group will comply with all attached conditions. Government grants relating to
costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that
they are intended to compensate.
Note 4. Going concern
The financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of
business.
For the year ended 30 June 2022, the Group generated a consolidated net loss before tax of $11,180,000 and
incurred operating cash outflows of $2,888,000. As at 30 June 2022, the Group had cash and cash equivalents
of $3,255,000, net current liabilities of $22,789,000 and net assets of $51,820,000.
On 22 September 2022, the Tribeca Facility (refer note 24) expired under the existing terms of the agreement.
The Directors are in advanced negotiations to extend this facility further but as at the date of this financial report
a formal renewal has not been executed and is subject to documentation and various conditions.
The Group has achieved relatively stable production during the year ended 30 June 2022, resulting in
$17,985,000 of revenue. The group is forecasting to increase revenue over the coming 12 months by executing
61
a number of commercial arrangements to deliver work programs designed to exploit the Group's existing
flowing wells.
Whilst there is confidence in the performance of the Kincora Gas Plant and optimism for the future ramp up of
production from the Kincora Gas Project, at the date of signing these accounts the above conditions give rise
to a material uncertainty which may cast significant doubt over the Group’s ability to continue as a going
concern.
Notwithstanding the above, the Directors consider it appropriate to prepare the financial statements on a going
concern basis after having regard to the above and the following matters:
1. The cash generating ability of the Kincora Project is anticipated to increase as the Group moves ahead
with our in-well bore program which will increase production from existing infrastructure while also
pursuing farmouts to undertake work programs and increase production.
2. The Directors are in advanced negotiations to extend the Tribeca facility. In the event this is not finalised
and the Company is unable to proceed to an executed extension of the facility suitable to both parties,
a related company, DGR Global Limited, has provided a formal letter of financial support for the
provision of funding sufficient to settle the remaining balance of the Tribeca facility of $4,500,000. This
funding may come in various forms including a debt facility.
3. The Group has the ability to manage capital and liquidity by taking some or all of the following actions:
a. Raising additional capital or securing other forms of financing, as and when necessary, to meet
the levels of expenditure required to meet the Group's working capital requirements.
b. Reducing its level of capital expenditure through farm-outs and/or joint ventures.
c. Managing its working capital expenditure, and
d. Disposing of non-core assets.
4.
Increasing cashflow earnings – increasing production through delivering work programs; achieving cost-
saving target; pursuing higher gas and other products sales prices through proactive business
development and negotiations.
5. Proposed refinancing of maturing debt facilities.
Should the Group be unable to continue as a going concern, it may be required to realise its assets and liabilities
other than in the ordinary course of business, and at amounts that differ from those stated in the financial
statements.
The financial statements do not include any adjustment relating to the recoverability and reclassification of the
recorded assets amounts, or to the amount and classification of liabilities that might be required should the
Group not be able to achieve the matters set out above and thus be able to continue as a going concern.
Note 5. Use of estimates and judgements
The Group has identified a number of critical accounting policies under which significant judgements, estimates
and assumptions are made. Actual results may differ from these estimates under different assumptions and
conditions. This may materially affect financial results and the carrying amount of assets and liabilities to be
reported in the next and future periods. These estimates and underlying assumptions are reviewed on an
ongoing basis.
Additional information relating to these critical accounting policies is embedded within the following notes:
Note
4
17
18
26
Going Concern
Exploration and evaluation assets
Oil and Gas assets
Provision for restoration and abandonment
62
There are no other critical accounting judgements, estimates and assumptions that are likely to affect the
current or future financial years.
Note 6. Operating segments
Identification of reportable operating segments
The Group has identified its operating segment based on the internal reports that are reviewed and used by
the Board (chief operating decision makers "CODM") in assessing performance and determining the allocation
of resources. The Group is managed primarily on a geographic basis, which is the location of the respective
areas of interest (tenements) in Queensland, Northern Territory, South Australia and Victoria, Australia.
Operating segments are determined on the basis of financial information reported to the Board.
For the year ended 30 June 2022, Management identified the Group as having two main reporting segments,
being Exploration, Evaluation and Appraisal activities (EEA), and the Production and Development of petroleum
products (oil, gas, LPG and condensate) in the Surat Basin, Queensland (Surat), and will report on these
segments accordingly.
The Corporate and other segment represents administration and other overheads that are not allocated to the
operating segments.
The chief operating decisions maker (CODM) reviews EBITDA (Earnings before Interest, Tax, Depreciation and
Amortisation) monthly. The accounting policies adopted for internal reporting to the CODM are consistent with
those adopted in the financial statements.
Types of products and services
The principal products and services of each of these operating segments are as follows:
EEA
The Group does not produce any products or services from this operating segment; it involves expenditure to
explore and evaluate potential future economic reserves and resources.
Surat
The Group produces petroleum products from its Kincora operating plant in the Surat Basin, which includes a
mix of Gas, LPG, Oil and Condensate and sells these to LNG and Domestic customers.
Intersegment transactions
An internally determined cost base is set for all intersegment services provided. All such transactions are
eliminated on consolidation of the Group's financial statements.
Intersegment receivables, payables, and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and
loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest
rates. Intersegment loans are eliminated on consolidation.
Intersegment Assets
Segment assets are clearly identifiable based on their nature and physical location.
Intersegment Liabilities
Liabilities are allocated to segments where there is a direct nexus between the liability and the operations of
the segment. Borrowings and tax liabilities are generally considered to relate to the whole Group and are not
allocated. Segment liabilities include trade and other payables and certain provisions.
63
Major customers
During the year ended 30 June 2022 approximately 56% (2021: 52%) of the Group's external revenue was derived
from sales to one Australian based customer.
Unallocated items
The following items of income, expenses, assets, and liabilities are not allocated to operating segments as they
are not considered core to the operation of any segment:
▪ Corporate head office costs and salaries of non-site-based staff.
▪ Proceeds from capital raisings.
64
Operating segment information
Revenue
Revenue from contracts with
customers
Total segment revenue
EBITDA
Depreciation and amortisation
Impairment of assets
Gain on disposal of assets
Interest revenue
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Corporate
2022
$'000
2021
$'000
Total
2022
$'000
EEA
2022
$'000
-
-
-
-
(489)
-
-
-
(489)
2021
$'000
-
-
-
-
(853)
15,857
-
-
15,004
Surat
2022
$'000
17,985
17,985
3,872
(2,484)
(515)
(19)
2
(1,556)
(615)
2021
$'000
17,502
17,502
869
(6,397)
(11,500)
-
69
(723)
(17,682)
-
-
(6,194)
(139)
-
(15)
7
(3,650)
(8,689)
-
-
(4,513)
(482)
-
-
1
(3,920)
(8,914)
34,089
33,574
67,615
66,856
5,189
3,043
-
-
21,301
19,022
34,917
36,081
17,985
17,985
(2,322)
(2,623)
(1,004)
(34)
9
(5,206)
(11,180)
174
(11,006)
106,893
1,143
108,036
56,217
-
56,217
2021
$'000
17,502
17,502
(3,644)
(6,879)
(12,353)
15,857
70
(4,643)
(11,592)
-
(11,592)
103,473
1,143
104,616
36,081
-
55,103
65
Accounting policy for operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating
decision makers ("CODM") to make decisions about resources to be allocated to the segment and assess its
performance and for which discrete financial information is available. This may include start-up operations
which are yet to earn revenues.
Operating segments are presented using the 'management approach', where the information presented is on
the same basis as the internal reports provided to the CODM.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 Operating Segments are
reported separately. However, an operating segment that does not meet the quantitative criteria is still reported
separately where information about the segment would be useful to users of the financial statements.
Note 7. Revenue and other income
Revenue from contracts with customers
The Group generated revenue from the sale of petroleum products that have similar performance obligations
and are goods that are transferred at a point in time.
Revenue from contracts with customers
Gas
LPG
Oil and Condensate
Consolidated
30 June 2022
$'000
30 June 2021
$'000
11,005
2,472
4,508
17,985
12,623
1,785
3,094
17,502
The Group satisfies its performance obligation at a point in time when control of oil and gas products has
transferred to the customer. Specifically:
▪
▪
for oil and LPG sales, this is when the products are collected by the truck at the production site; and
for gas sales, this is at the point of the custody transfer meter at Run 2 of the Roma to Brisbane Pipeline
(RBP).
Revenue on sale of goods is variable depending on physical production amounts. Payment is due by the
customer within 30 days from the end of the invoiced month.
Other Income
Net (loss)/ gain on sale of assets
Government grants
Interest Received
Other*
* Inventory sales ($284k) and gain on note conversion ($120k)
Consolidated
30 June 2022
$'000
(35)
-
9
404
30 June 2021
$'000
15,857
601
70
-
378
16,528
66
Accounting policy for revenue
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Group: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods
or services promised.
Interest
Interest revenue is recognised as interest accrues using the effective interest rate 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.
Note 8. Expenses
Loss before income tax includes the following specific expenses:
Cost of goods sold
Operating expenses
Employee expenses
Oil and gas properties depreciation
Total cost of goods sold
General and administrative expenses
Employee expenses not included in cost of goods sold
Management fee
Consultancy and legal costs
Insurance not included in Cost of goods sold
Director fees
Depreciation and amortisation
Office equipment
Amortisation of intangibles
Other expenses
Total general and administrative expenses
Share-based payments
Total superannuation expense (included in costs of goods sold and
general and administrative expenses)
Consolidated
30 June 2022
$'000
30 June 2021
$'000
9,584
4,573
2,484
13,197
3,761
5,193
16,641
22,151
2,275
456
1,956
193
278
17
122
677
5,974
718
600
1,639
456
656
272
277
14
24
1,000
4,338
464
805
Employee benefits expenses
The Group’s accounting policy for liabilities associated with employee benefits are set out in Note 23 and
the share-based payments policy in Note 36.
67
Note 9. Finance costs
Interest expense
Financing fees
Amortisation of debt facilities and associated issue costs
Note 10. Income tax
(a) Component of income tax expense (benefit)
Income tax benefit is made up of:
Deferred tax
Aggregate income tax expense
Income tax charged in equity is made up of:
Deferred tax
Aggregate income tax charged in equity
Consolidated
30 June 2022
$'000
3,059
960
1,187
30 June 2021
$'000
3,918
725
1,673
5,206
6,316
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(174)
-
174
-
-
-
-
-
The prima facie tax on loss before income tax is reconciled to the income tax
expense as follows:
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible in calculating taxable income:
Share-based payments
Expenses not deductible for tax purposes
Other timing differences
Current year tax losses not recognised
Prior year over (under)
(11,180)
(11,592)
(3,354)
(3,478)
252
4
(61)
(3,159)
2,985
-
113
-
-
(3,365)
2,173
1,192
Income tax benefit
(174)
-
68
(b) Reconciliation of net deferred tax
Opening
balance
Net charged
to income
Net charged
to OCI
Net
charged to
equity
1-Jul-21
$'000
$'000
$'000
$'000
Closing
Balance
30-Jun-22
$'000
Deferred tax asset
Carried forward tax losses
Accruals/provisions
Property, Plant & Equipment (Armour)
Capital raising costs through P&L
Capital raising costs in equity
Provision for rehabilitation (Surat Basin)
Available for sale financial assets
Amortisation of Convertible Notes
Amortisation of Tribeca Facility
Lease Liabilities
Unrealised FX Loss
Holloman Exploration License (Reset CB)
Holloman Tax Cost base (transaction costs)
693
299
11
49
160
2,007
1,437
1,362
843
400
8
108
8
2,492
(147)
-
(2)
(61)
-
-
-
-
-
-
-
(198)
(174)
-
257
(62)
(8)
(17)
-
-
-
-
-
-
-
Deferred tax asset
7,385
2,254
(174)
Deferred tax liability
Exploration & Evaluation assets
Oil & Gas assets
Leased Assets
Prepayments
Accrued Income
(8,462)
1,514
(411)
(12)
(14)
353
(2,535)
76
12
14
Deferred tax liability
(7,385)
(2,080)
-
-
-
-
-
-
Net deferred tax
-
174
(174)
Deferred tax assets not recognised
Unused tax losses
Capital raising costs in equity
Available for sale financial assets
56,543
333
697
57,573
9,952
(203)
-
9,749
-
-
(697)
(697)
Potential tax benefit at 30%
17,272
2,924
(209)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,185
152
11
47
99
2,007
1,065
1,362
1,100
338
-
91
8
9,465
(8,109)
(1,021)
(335)
-
-
(9,465)
-
66,485
130
-
66,625
19,987
69
Deferred tax asset
Carried forward tax losses
Accruals/provisions
Property, Plant & Equipment (Armour)
Capital raising costs through P&L
Capital raising costs in equity
Provision for rehabilitation (Surat Basin)
Available for sale financial assets
Amortisation of Convertible Notes
Amortisation of Tribeca Facility
Lease Liabilities
Unrealised FX Loss
Holloman Exploration License (Reset CB)
Holloman Tax Cost base (transaction costs)
Opening
balance
Net charged
to income
Net
charged to
OCI
Net
charged
to equity
1-Jul-20
$'000
2,944
322
13
72
121
1,379
1,228
1,362
563
58
-
-
-
$'000
$'000
$'000
(2,251)
(23)
(2)
(23)
(61)
628
-
-
280
342
8
108
8
-
-
-
-
-
-
209
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
-
-
-
-
Closing
Balance
30-Jun-21
$'000
693
299
11
49
160
2,007
1,437
1,362
843
400
8
108
8
Deferred tax assets
8,062
(986)
209
100
7,385
Deferred tax liability
Exploration & Evaluation assets
(8,649)
Oil & Gas assets
Unrealised FX Gain
Leased Assets
Prepayments
Accrued Income
654
-
(67)
-
-
187
860
-
(344)
(12)
(14)
Deferred tax liability
(8,062)
677
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,462)
1,514
-
(411)
(12)
(14)
(7,385)
Net deferred tax
-
(309)
209
100
-
Deferred tax assets not recognised
Unused tax losses
Capital raising costs in equity
Financial assets at fair value through OCI
53,318
7,243
-
-
-
-
Potential tax benefit at 30%
15,995
2,173
-
-
697
-
209
-
333
-
-
100
60,560
333
697
18,477
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or
Same Business Test (SBT) must be passed. The majority of losses are carried forward as at 30 June 2022 under
COT. Deferred tax assets which have not been recognised as an asset, will only be obtained if:
1. The Group derives future assessable income of a nature and of an amount sufficient to enable the losses
to be realised;
2. The Group continues to comply with the conditions for deductibility imposed by the law; and
3. No changes in tax legislation adversely affect the Group in realising the losses.
70
Deferred tax assets
In determining the recoverability of the recognised deferred tax assets, management has assessed that it will
be utilised through eligible expenditure under the research and development grant. To the extent that the
Group does not have sufficient eligible expenditure the ability to utilise the net deferred tax assets could be
impacted.
Accounting policy for 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 the changes in deferred tax assets and liabilities
attributable to temporary differences, 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 be
applied 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 interests in subsidiaries, associates or 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 at 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 entities which intend to settle
simultaneously.
Armour Energy Limited (the 'head entity') and its wholly owned Australian subsidiaries have formed an income
tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated
group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
71
Note 11. Earnings per share
Loss after income tax attributable to the owners of the parent
entity
Weighted average number of shares used in (thousands)
Basic earnings
-
- Diluted earnings
Earnings per share (cents) attributable to the ordinary equity
holders of the parent entity
Basic loss per share
Diluted loss per share
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(11,006)
(11,592)
1,873,540
1,873,540
1,201,060
1,201,060
(0.6)
(0.6)
(1.0)
(1.0)
Options and rights are not considered dilutive as the Group has made a loss and they are considered anti-
dilutive.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Armour Energy 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.
Note 12. Current assets – Cash and cash equivalents
Cash at bank and in hand
Other cash and cash equivalents
Consolidated
30 June 2022
$'000
2,944
311
30 June 2021
$'000
2,311
47
3,255
2,358
Other cash and cash equivalents include bank accounts held by the Group as operator in joint operations in
tenements.
Accounting policy for cash and cash equivalents
Cash and cash equivalents include 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.
72
Note 13. Cash flow information
(a) Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net gain on sale of assets
Share-based payments
Impairment of exploration and evaluation expenditure
Impairment of oil and gas expenditure
Interest expense on borrowing facilities
Amortisation of borrowing facilities and issue costs
Inventory adjustment
Change in operating assets and liabilities:
Increase in other current assets
Increase decrease in trade and other payables
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
Consolidated
30-Jun-22
$’000
(11,006)
30-Jun-21
$’000
(11,592)
2,623
35
718
489
515
187
892
(76)
(472)
3,084
561
(438)
5,231
(15,858)
464
853
11,500
(1,937)
1,673
(115)
(7)
2,323
(88)
491
Net cash used in operating activities
(2,888)
(7,062)
Equity settled share-based payment transactions are disclosed in Note 36.
Apart from in Note 36, there are no other non-cash financing and investing activities to disclose.
(b) Reconciliation of liabilities arising from financing activities
Balance at 1 July 2020
Borrowed Amounts
Tribeca
Loan
Corporate
Bonds
$’000
5,664
-
$’000
49,172
-
Net cash used (in)/ for financing activities
(1,367)
(17,433)
Amortisation
932
469
Balance at 30 June 2021
Net cash used in financing activities
Amortisation
5,229
-
(40)
32,208
(8,800)
469
Consolidated
Redeemable
Exchangeable
Notes
$’000
Other
Borrowed
funds
$’000
Total
$’000
55,059
60
223
60
1,110
(17,690)
-
1,401
1,393
38,830
203
(2,417)
-
429
-
-
-
-
-
6,180
Balance at 30 June 2022
5,189
23,877
6,180
1596
36,842
73
Note 14. Current assets – Trade and other receivables
Trade receivables
Other receivables
Consolidated
30 June 2022
$'000
1,439
105
30 June 2021
$'000
2,099
5
1,544
2,104
Key judgement - Allowance for expected credit losses
The Group has not recognised any expense in profit or loss in respect of the expected credit losses for the year
ended 30 June 2022 (30 June 2021: NIL). Based on the historical recovery of receivables, the small number of
customers and customer payment obligations per gas sales agreements, the historical loss rates are adjusted
for current and forward-looking information on economic factors affecting the Group’s customers, including
the COVID-19 pandemic. As such the company considers that the estimated expected credit loss is not material
for the Group.
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30 days.
Due to the short-term nature of these receivables, their carrying value is assumed to approximate fair value.
The maximum exposure to credit risk is the carrying value of receivables. Collateral is not held as security, and
the receivables are not exposed to foreign exchange risk.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based
on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
As at 30 June 2022, included in trade receivables is one significant debtor accounting for approximately 52%
(2021: 57%) of the total trade receivables.
Note 15. Current assets – Inventories
Gas
Oil and Condensate
LPG
Materials & Consumables
Consolidated
30 June 2022
$'000
30 June 2021
$'000
126
84
4
2,321
2,535
198
46
6
1,847
2,097
74
Accounting policy for inventories
Oil and Gas inventory is measured at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
The cost of Oil and Gas inventory includes direct materials, direct labour, transportation costs and variable and
fixed overhead costs related to production activities.
Consumable inventory on hand is stated at the lower of cost and net realisable value. Net realisable value is
the estimated recoverable price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
The cost of consumable inventory comprises purchase and delivery costs, net of rebates and discounts received
or receivable.
The assignment of cost to inventory items is done by utilising the first in first out (FIFO) formula, meaning inventory
on hand at the end of the periods are assigned the cost of items most recently purchased.
Note 16. Current assets - Assets held for sale
Oil and gas assets
Other Financial Assets
Oil and Gas Assets
Consolidated
30 June 2022
$'000
30 June 2021
$'000
1,987
1,275
3,262
-
-
-
On 31 May 2022 PZE and Armour agreed that PZE will acquire Armour’s interest in the Waldegrave (PL28, PL69,
PL89, PL320W, PL12W) and Snake Creek East (PL11 and PL11W) Projects for consideration valued at $1,986,717,
with the majority due in a milestone payment within 6 months of the transaction date. Armour has 46.25%
interest in the Waldegrave Project and a 25% interest in the Snake Creek East Project.
The transaction is subject to the satisfaction of various conditions including consents and approvals including:
•
•
•
•
A Tolling Agreement to be agreed.
Ministerial approval of the interest transfer.
Conclusion of Due Diligence investigations.
Execution of Buyer and Seller Parent guarantees.
The opening carrying value of the tenements was $2,495,386 with a revaluation loss of $508,669 recognised in
the current period on entering into the sale contract with PZE with the revalued book value being $1,986,717.
The Oil and Gas current assets held for sale are classified in the Surat reportable segment.
Other Financial Assets
On 28 March 2022 Armour entered into a number of agreements to dispose of the Company’s Lakes Blue
Energy NL (LKO) shareholding comprising 2,125,000,000 Ordinary shares under escrow until 2 August 2022 at
0.06c each. The disposal was subject to LKO agreement, and the escrow being retained by buyers.
The legal ownership transfer of the disposed shares from Armour Energy to the respective purchasers occurred
following 30 June 2022.
In the prior financial year shares in LKO were revalued to nil due to a trading suspension issued by the ASX.
Subsequently Armour entered a sale contract to sell the shares for $1,275,000. As a result, a change in the fair
value of these equity investments was adjusted through other comprehensive income.
75
Note 17. Non-current assets - Exploration and evaluation assets
Exploration and evaluation assets
Less: Accumulated impairment
Movements in the provision for impairment amounts
Balance at the beginning of the year
Provisions raised
Movements in carrying amounts
Balance at the beginning of the year
Additions
Additions acquired with CoEra Pty Ltd¹
Disposals2,3
Provision for impairment
Consolidated
30 June 2022
$'000
30 June 2021
$'000
43,119
(8,853)
40,377
(8,364)
34,266
32,013
Consolidated
30 June 2022
$'000
30 June 2021
$'000
(8,364)
(489)
(7,511)
(853)
(8,853)
(8,364)
Consolidated
30 June 2022
$'000
30 June 2021
$'000
32,013
2,742
-
-
(489)
35,209
4,153
1,064
(7,560)
(853)
34,266
32,013
1Cooper Basin Assets
Armour acquired 100% of the issued capital of CoEra Limited, an Australian company previously a fully owned subsidiary of
Oilex Limited. CoEra’s assets include a substantial footprint of exploration licences on the oil rich Western and Northern Flanks
of the Cooper Basin. The Basin is one of Australia’s most prolific producing oil and gas province, which historically has a high
exploration success rate and low-cost development pathways. Armour issued 24,500,000 shares ($906,000) as consideration
for the purchase. In accordance with AASB 3, this transaction has been treated as an asset acquisition.
2 Ripple Resources
Ripple Resources Pty Ltd was sold to Auburn Resources Limited (Auburn). In consideration, Armour received 5,600,000 fully
paid ordinary Auburn shares worth $700,000. Following completion, Armour holds approximately 12.5% of Auburn’s issued
share capital.
3South Nicholson Basin
In FY 2020, a farm-in agreement was executed between Armour and Santos QNT Limited (Santos) for 70% of Armour’s
South Nicholson Basin tenements, ATP1087, ATP1107, ATP1192 and ATP1193 (applications), and the Northern Territory
tenements EP172 and EP177, both of which are also in the application phase. An initial $15,000,000 was received as part
of the farm-in agreement.
In early FY 2021, the Company entered into an agreement with Santos to amend the South Nicholson Basin farm-in
agreement, resulting in an immediate cash payment of $6,000,000 as an acceleration of future contingent permit transfer
payments.
Armour entered into another agreement with Santos to sell its remaining 30% legal and beneficial interest in ATP 1087,
ATP(A)1192, ATP(A)1193, EP(A)172 and EP(A)177, and retain 100% of ATP 1107, for an additional $12,164,000.
76
The disposal represents the sale of the net cost remaining of these abovementioned assets (Ripple Resources and South
Nicholson Basin) after considering the R&D Exploration Grant received from the government in relation to ATP 1087 and
the $15,000,000 cash payment received for the original Farm-in Agreement made during the 2020 financial year.
Accounting policy for exploration and evaluation assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but
do not include overheads or administration expenditure not having a specific nexus with a particular area of
interest. These costs are only carried forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable reserves and active or significant
operations in relation to the area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest.
A provision is raised against exploration and evaluation expenditure where the Directors are of the opinion that
the carried forward net cost may not be recoverable or the right of tenure in the area lapses. The increase in
the provision is charged against the results for the year. 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 transferred to oil
and gas assets and amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
Provision for Impairment of Exploration and Evaluation assets
In accordance with the Group’s accounting policy, the Exploration and Evaluation assets were tested for
indicators of impairment at 30 June 2022. The Group determined that there was a trigger present for ATP 1107
and some costs attributed to the NT Assets. As such, an impairment provision of $489,000 was recorded during
the year ended 30 June 2022.
Key judgements - carrying value of exploration and evaluation assets
The Group performs regular reviews on each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis
of drilling results performed to balance date.
The Directors have assessed that for the exploration and evaluation assets recognised at 30 June 2022, the facts
and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. In
considering this the Directors have had regard to the facts and circumstances that indicate a need for
impairment as noted in Accounting Standard AASB 6 “Exploration for and Evaluation of Mineral Resources”.
Accounting policy for farm-in arrangements
Armour does not record any expenditure made by the farmee in its account. It also does not recognise any
gain or loss on its exploration and evaluation farm-in arrangements but reallocates the costs previously
capitalised in relation to the whole interest as relating to the interests held. Any cash consideration received
directly from the farmee is credited against costs previously capitalised in relation to the whole interest with any
excess accounted for by Armour as a gain on disposal.
77
Note 18. Non-current assets - Oil and gas assets
Oil & gas assets - at cost
Less: Accumulated amortisation
Less: Provision for impairment
Less: R&D grants relating to Oil & gas assets
Less: GAP grants relating to Oil & gas assets
Movements in carrying amounts
Balance at the beginning of the year
Additions
Depreciation charge
Transfers to assets held for sale
Provision for impairment
Consolidated
30 June 2022
$'000
85,892
(12,896)
(12,015)
60,981
(4,389)
(6,056)
(10,445)
50,536
30 June 2021
$'000
85,517
(10,809)
(11,500)
63,208
(4,389)
(6,056)
(10,445)
52,763
Consolidated
30 June 2022
$'000
30 June 2021
$'000
52,763
2,271
(2,087)
(1,896)
(515)
50,536
58,333
11,123
(5,193)
-
(11,500)
52,763
Accounting policy for oil and gas assets
Capitalised oil and gas assets are development costs and expenditures incurred to develop new wells; to define
further moveable hydrocarbons in existing tenement areas; to expand the capacity of the project and to
maintain production. Development costs also includes costs transferred from the exploration and evaluation
phase once production commences in the area of interest.
Amortisation of oil and gas assets is computed by the units of production basis over the estimated proved and
probable (2P) reserves. Proved and probable reserves reflect estimated quantities of economically recoverable
reserves which can be recovered in the future from known mineral deposits. These reserves are amortised from
the date on which production commences. The amortisation is calculated from recoverable proven and
probable reserves and a predetermined percentage of the recoverable measured, indicated, and inferred
resource. This percentage is reviewed annually.
Restoration costs expected to be incurred are provided for as part of development phase that give rise to the
need for restoration. These costs are amortised along with other capitalised oil and gas expenditures as
described above.
Provision for impairment of oil and gas assets
Recognition and measurement
The Group assesses impairment of oil and gas assets at each reporting date by evaluating conditions specific
to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable
amount of the asset is determined. Where applicable, value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates.
78
The assessment of the value in use and the decline in production performance in some of Surat Basin production
wells indicated the recoverable amount of the Group’s Surat Basin CGU could require an impairment for the
year ended 30 June 2022.
Calculating the Group’s recoverable amount
The recoverable amount is the higher of an asset’s:
a) fair value less cost of disposal
b) its value in use.
Oil & Gas assets are assessed on a cash generating unit (CGU) basis. A CGU is the smallest identifiable group of
assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups
of assets. Management has determined Surat’s fields to be the Group’s CGU with shared management and
personnel and operating as one cash operating unit. Individual assets within a CGU can become impaired if its
future use changes or if the benefit from ongoing use is expected to be less than the carrying value of the
individual asset.
Valuation method
As part of the Group’s impairment assessment management consider the future demand for its products,
impact of any changes in economic, regulatory or legal environment and other indicators such as market
capitalisation and reserve updates.
The value in use is calculated using expected future cash flows from continuing use of the CGU, including the
anticipated capital expenditure to achieve this and its ultimate disposal. The cashflows are discounted to their
present value using a post-tax discount rate reflecting the current market assessment of time value of money
and the risks specific to the asset or CGU. The assumption is made that undeveloped wells will be funded and
developed before 2037.
The future cash flows are most sensitive to estimates of future commodity prices, foreign exchange rates (to the
extent that they influence commodity prices) and discount rates. The assets will become impaired with a
decrease in the oil and gas prices to the extent of 55% of the assumed prices.
Future commodity prices are based on the Group’s current best prudent estimate of expected market prices
with reference to current spot rates, forward curves and external market analysis.
Foreign exchange rates are based on external market forward indexes from a few of the big four banks
estimates.
The discount rate applied of 10% to the future cash flows are based on the weighted average cost of capital,
adjusted for the Group’s known risks.
The following represents inputs to the future cash flows:
Commodity & Fx Assumptions
FY 2023
FY 2024
Oil $USD/bbl
Contracted Gas $AUD/GJ
Spot Market Gas $AUD/GJ
LPG $USD/T
USD/AUD fx rate
75
6.45
12.00
500
1.43
75
6.84
12.00
500
1.43
FY 2025 and
beyond
86
6.51
12.00
402
1.33
In the event that future circumstances change from these assumptions, the recoverable amounts of the CGU
could change materially and result in further impairment losses or the reversal of impairment losses.
79
Apart from the sale of the Waldegrave (PL28, PL69, PL89, PL320W, PL12W) and Snake Creek East (PL11 and
PL11W where the carrying value of the assets was impaired to the value attributed to the assets in the sale
contract no other assets were impaired. As such, the Group has recorded an impairment of $515,000 relating
to oil and gas assets.
Note 19. Non-current assets - Other financial assets
Financial assets at fair value through other comprehensive income
Less: cumulative fair value movement
Financial assurances
Security deposits
Consolidated
30 June 2022
$'000
30 June 2021
$'000
700
-
700
5,613
3,301
5,402
(4,252)
1,150
5,613
4,015
9,614
10,778
Financial assurances include cash held in term deposit accounts with the Westpac bank and security deposits
includes amounts held with various state government agencies and security deposits held for leasing and
borrowing requirements.
Borrowing requirements include Secured Amortising Notes which require three times the amount of interest
that would be payable on the immediately following interest payment date to be held in a separate account.
As at 30 June 2022, this deposit was $1,636,250 (2021: $2,339,000).
Financial assurances and security deposits are cash backed bank guarantees.
Movements in financial assets at fair value through Other
Comprehensive Income
Opening balance at 1 July
Additions/ (disposals & transfers)
Fair Value adjustments through Other Comprehensive Income
Consolidated
30 June 2022
$'000
30 June 2021
$'000
1,150
(1,725)
1,275
1,087
700
(637)
700
1,150
Financial assets at fair value through other comprehensive income comprise:
• Ordinary shares and convertible notes in LKO, which were transferred to assets available for sale, refer
•
to note 16.
The value of the investments in Auburn Resources NL (which were received in consideration for the
sale of Ripple Resources Pty Ltd in the 2021 financial year) was derived by the expected net realisable
value of the assets of the company.
80
Accounting policy for other financial assets.
For equity securities that are not held for trading, the Group has made an irrevocable election at initial
recognition to recognise changes in fair value through other comprehensive income rather than profit or loss.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of
the financial asset. Financial assets with embedded derivatives are considered in their entirety when
determining whether cash flows are solely payment of principal and interest. Refer to Note 29 for detail of the
Group's fair value accounting policy.
Security deposits and financial assurances are measured at amortised cost.
Note 20. Non-current assets - Right-of-use assets
Motor vehicles - right-of-use
Less: Accumulated depreciation
Consolidated
30 June 2022
$'000
30 June 2021
$'000
2,169
(1,061)
2,055
(694)
1,108
1,361
Accounting policy for right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment in line with AASB138 Impairment of Assets or adjusted for any remeasurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Note 21. Current liabilities - Trade and other payables
Trade payables
Deposits Held
Accrued expenses
Other payables
GST payable
Unearned Income
Other tax liabilities
Trade payables
Consolidated
30 June 2022
$'000
30 June 2021
$'000
7,192
1,551
1,404
1,938
58
-
42
12,184
3,820
2,075
1,938
1,009
124
59
31
9,056
81
Accounting policy for trade and other payables
These amounts represent financial liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid.
Financial liabilities are carried at amortised cost and are initially measured at fair value including transaction
costs. They are subsequently measured at amortised cost using the effective interest rate method.
Details on how the fair value of financial instruments is determined are disclosed in Note 29.
Trade payables are non-interest bearing and are generally on 30-60 days terms. Due to their short-term nature
trade and other payables are not discounted.
Note 22. Current and non-current liabilities - Lease liabilities
Current Lease liability
Non-Current Lease liability
Consolidated
30 June 2022
$'000
30 June 2021
$'000
274
851
369
964
1,125
1,333
Refer to note 30 for further information on financial risk management.
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price
of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or an
interest rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit
or loss if the carrying amount of the right-of-use asset is fully written down.
Note 23. Current and non-current liabilities - Employee benefits
Current Employee Benefits
Non-Current Employee Benefits
Consolidated
30 June 2022
$'000
30 June 2021
$'000
454
49
503
497
32
529
82
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected
to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable
Long-term employee benefits
The liability for long service leave not expected to be settled within 12 months of the reporting date are
recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability.
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 wages and salary levels, experience of employee departures, and periods of service.
Expected future payments are discounted using market yields at the reporting date on Australian corporate
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash
outflows.
Note 24. Current liabilities – Borrowings
Tribeca Loan Facility
Secured Amortising Notes
Secured Amortising Notes - issue costs
Redeemable Exchangeable Notes
Other facilities
Consolidated
30 June 2022
$'000
30 June 2021
$'000
5,189
10,450
(469)
6,177
476
5,229
8,800
(469)
-
60
21,821
13,620
The Group was non-compliant with respect to a Tribeca facility covenant as at 31 December 2021. The Tribeca
facility agreement amendments executed on 29 December 2021 include the removal of this financial
requirement once the amendments become effective following fulfillment of the Condition’s Precedent,
including approval by the Company’s shareholders.
Facility terms and security disclosures
Tribeca loan facility
On 26 July 2018, Armour Energy Limited and its subsidiary, Armour Energy (Surat Basin) Pty Ltd (Armour Surat)
entered into a credit facility agreement (Tribeca Facility Agreement) with Equity Trustees Limited (in its capacity
as the trustee of the Tribeca Global Natural Resources Credit Fund) and Tribeca Global Natural Resources Credit
Master Fund (together Tribeca) for the provision of an environmental bonding finance facility. The Facility is
secured by a guarantee from the Company, in seven bank accounts controlled by Westpac Banking
Corporation (the Credit Accounts) in the name of Armour Surat, and a second ranking featherweight security
interest over all the present and after-acquired property of Armour Surat.
The Tribeca Facility has a 9% per annum coupon rate payable by Armour Surat quarterly in arrears on amounts
drawn. In consideration of Tribeca entering into an Amendment Agreement, Armour issued Tribeca a total of
48,333,334 listed options with ASX code AJQOA which are exercisable at $0.05 and expire on 29 February 2024.
On 29 December 2021 Armour entered into an agreement to issue 145,000,000 Shares and 24,166,666 listed
Options to Talbragar River Holdings Pty Ltd and 145,000,000 Shares and 24,166,667 listed Options to PECAL Pty
Ltd to be sold with the proceeds to be remitted to Armour less an administrative fee. The net proceeds will be
solely applied to paydown the Tribeca facility balance outstanding. As at 30 June 2022, 45,000,000 shares had
been sold under this arrangement and proceeds of $186,173 received and used to pay down the balance on
the Tribeca facility.
83
Redeemable exchangeable notes
The redeemable exchangeable notes are a part of the steps taken to raise capital for the demerger and IPO
of the McArthur Basin Assets. These notes, which mature 31 October 2022, are unsecured and fully subordinated
to the Secured Amortising Notes and Tribeca Facility. Interest is incurred at 15% per annum, with the interest
being payable on exchange, maturity, or redemption. MOG and Armour intend to obtain all necessary
approvals and consents to allow for the exchange of the MOG Notes being subscribed for by DGR and the
existing MOG Notes already on issue (together with any accrued and unpaid interest) into Armour Convertible
Notes.
Movement in carrying amounts
Face value of loan facility
Issue costs of loan facility
Other equity securities - value of conversion rights, net of
issue costs
Net repayments at NPV
Amortisation of conversion rights
Amortisation of issue costs
Note 25. Non-current liabilities – Borrowings
Total secured liabilities
Secured Amortised Notes
Secured Amortised Notes - issue costs
Total current and non-current
Secured Amortising Notes
Face value of Secured Amortising Notes
Issue costs of Secured Amortising Notes
Amortisation of Secured Amortising Notes costs
Consolidated
30 June 2022
$'000
30 June 2021
$'000
6,759
(137)
(2,893)
(1,118)
2,576
3
5,189
6,759
(137)
(2,893)
(1,261)
2,739
22
5,229
Consolidated
30 June 2022
$'000
30 June 2021
$'000
14,467
(571)
13,896
24,917
(1,040)
23,877
Consolidated
30 June 2022
$'000
30 June 2021
$'000
24,917
(2,351)
1,311
23,877
33,717
(2,351)
842
32,208
84
Facility terms and security disclosures
Secured Amortising Notes
In FY 2019, Armour Energy Limited announced a $55 million Secured Amortising Notes facility, refinancing all
outstanding convertible notes on issue and providing additional funding for exploration and general working
capital.
The main terms of the Secured Amortising Notes are as follows:
▪
Issue date of 29 March 2019, with 55,000 $1,000 Notes issued raising a total of $55,000,000, before costs.
▪ Notes will amortise by 52% from 29 March 2021 until and including the day immediately prior to the
▪
Maturity Date.
The notes are secured over all of the assets of the Group (other than its shares in Armour Energy
International Pty Ltd).
▪ Coupon rate attached is 8.75% per annum, payable quarterly in arrears.
▪
The Maturity Date for the notes is five years from issue date.
In April 2022 Armour received approval from Noteholders for amendments to the Conditions of the Secured
Amortising Notes. The approved amendments include:
▪ Amendments to Financial Undertakings, including the Debt Service Cover Ratio, the Leverage Ratio and
the cash balances Armour must maintain.
▪ Amendments to increase a certain limit on incurring Financial Indebtedness.
▪ Consent from the Noteholders to extend the due date for the environmental bonding finance facility.
Repayments of $8.8 million were made during the financial year.
Refer to Note 30 for further information on financial risk management.
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method.
Note 26. Non-current liabilities - Provision for restoration and abandonment
Restoration and abandonment
Key judgement - provision for rehabilitation
Consolidated
30 June
2022
$'000
6,688
30 June
2021
$'000
6,688
The Group's restoration and abandonment obligations for the Surat Basin processing plant and associated
exploration and production fields is treated as a non-current liability in accordance with AASB 137 - Provisions,
Contingent Liabilities and Contingent Assets. The restoration and abandonment liability are valued by the
Financial Provisioning Scheme in accordance with legislative requirements as required. For the provision
recognised at 30 June 2022, the facts and circumstances do not suggest that the carrying amount of the
provision has materially changed.
85
Accounting policy for restoration provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past
event. It is probable the Group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the reporting date. The discount rate used to determine the present value reflects
current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision resulting from the passage of time is recognised in finance costs.
Provisions for rehabilitation and abandonment of Oil and Gas assets are measured at the cost of legal and
constructive obligations to restore operating locations in the period in which the obligation arises. The nature of
rehabilitation activities includes the removal of facilities, abandonment of wells and restoration of affected
areas. Typically, the obligation arises when the asset is installed at the production location.
A provision has been recognised for the costs to be incurred for the restoration and abandonment of the Surat
Basin processing plant and associated exploration and production fields, used for the production of oil, gas,
LPG and condensate. It is anticipated that the sites will require restoration in approximately 20 years.
Note 27. Equity - Issued capital
Issued and paid-up capital
Ordinary shares - fully paid
Share issue costs
Recognition of deferred tax asset relating to share
issue costs
Movements in ordinary share capital
Details
Balance
Shares issued for cash (Entitlement Offer)
Shares issued for cash (Entitlement Offer)
Shares issued for cash (Entitlement Offer)
Shares issued for cash (Placement)
Shares issued for cash (Placement)
Shares issued under services contracts
Consolidated
30-Jun-22
30-Jun-21
30-Jun-22
30-Jun-21
Shares
Shares
2,039,451,327
1,529,816,120
-
-
-
-
$'000
154,633
(10,739)
$'000
141,876
(10,194)
2,089
2,089
2,039,451,327
1,529,816,120
145,983
133,771
Date
Shares
#
30-Jun-20
12-Aug-20
779,247,711
18,849,710
24-Aug-20
33,788,306
17-Sep-20
67,859,048
18-Sep-20
29,893,030
23-Sep-20
146,158,694
29-Sep-20
2,173,913
Shares issued under Share and Purchase Agreement
15-Oct-20
24,500,000
Shares issued for cash (Placement)
Shares issued under employment contracts
Shares issued under employment contracts
Shares issued for cash (Entitlement Offer)
Shares issued under employment contracts
Shares issued under employment contracts
Shares issued for cash (Placement)
Shares issued under employment contracts
Shares issued under employment contracts
Share issue costs
Balance
16-Oct-20
56,374,176
19-Oct-20
2,650,000
20-Nov-20
1,019,623
23-Dec-20
112,800,818
8-Jan-21
8-Jan-21
360,000
88,011
24-Mar-21
249,976,294
1-Apr-21
360,000
1-Apr-21
3,716,786
30-Jun-21 1,529,816,120
Issue
price
$0.02
$0.02
$0.02
$0.02
$0.02
$0.02
$0.04
$0.02
$0.02
$0.02
$0.02
$0.02
$0.06
$0.04
$0.02
$0.03
Value
$'000
114,311
434
777
1,561
688
3,362
50
907
1,297
61
33
2,594
7
5
8,749
7
123
(1,195)
133,771
86
Details
Share issues for supplier payment
Placement
Employee issued shares*
Employee issued shares*
Share issues for supplier payment
Share issues for supplier payment
Placement
Employee issued shares*
Share issues for supplier payment
Share issues for supplier payment
Placement
Share issues for supplier payment
Employee issued shares*
Share issues for supplier payment
Employee issued shares*
Share issues for supplier payment
Share issued for Tribeca debt repayment**
Share issue costs
Balance
Date
Shares
7-Jul-21
5,344,617
9-Jul-21
80,407,143
9-Aug-21
12,124,630
9-Aug-21
360,000
9-Aug-21
7,484,481
12-Aug-21
1,924,455
29-Sep-21
220,192,320
6-Oct-21
8,793,109
8-Nov-21
3,939,519
8-Nov-21
1,260,417
23-Dec-21
95,192,307
23-Dec-21
1,016,053
17-Jan-22
9,723,263
17-Jan-22
2,090,000
14-Apr-22
9,936,018
14-Apr-22
4,846,875
2-May-22
45,000,000
30-Jun-22 2,039,451,327
Issue
price
$0.03
$0.04
$0.03
$0.02
$0.03
$0.03
$0.03
$0.03
$0.03
$0.02
$0.03
$0.02
$0.02
$0.02
$0.02
$0.02
$0.00
Value
143
2,814
303
7
187
60
5,725
237
98
30
2,475
19
194
42
159
78
186
(545)
145,983
* Certain staff members have agreed to accept shares in lieu of cash salaries
** Refer to note 24 for details of this arrangement
Ordinary shares
Ordinary shares participate in dividends and the proceeds on winding up of Armour Energy Ltd. At shareholder
meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one
vote on show of hands.
Options
The following share options were on issue at reporting date.
Grant Date
01/10/2019
17/12/2019
23/06/2020
30/06/2020
12/08/2020
24/08/2020
17/09/2020
01/10/2020
19/10/2020
22/12/2020
24/03/2021
9/07/20211
29/09/20212
24/12/20213
2/05/20224
2/05/20225
Balance
Expiry Date
Number
#
30/09/2023
40,000,000
30/09/2023
8,000,000
29/02/2024
31,166,497
29/02/2024
29/02/2024
7,018,341
9,424,831
29/02/2024
16,894,150
29/02/2024
35,929,524
29/02/2024
144,163,885
29/02/2024
87,811,409
29/02/2024
66,778,341
29/02/2024
62,494,099
29/02/2024
66,355,466
29/02/2024
73,397,439
29/02/2024
64,530,769
29/02/2024
12,083,333
29/02/2024
48,333,334
774,381,418
Exercise
price
$
$0.08
$0.08
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
vested
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
87
1 In July 2021, 20,101,786 options were issued for nil consideration as free attaching securities to 80,407,143 Placement Shares of the same
date. The remaining 46,253,680 options were issued as partial consideration to various parties for the management of the Company's capital
raising program.
2 In September 2021, 73,397,439 options were issued for nil consideration as free attaching securities to 220,192,320 Placement Shares of the
same date.
3 In December 2021, 31,730,769 options were issued for nil consideration as free attaching securities to 95,192,307 Placement Shares, the
remaining 32,800,000 options were issued as partial consideration to various parties for the management of the Company's capital raising
program.
4 In May 2022, 12,083,333 options were issued to Talbragar River Holdings Pty Ltd as a component of the arrangements to settle the Tribeca
Facility.
5 In May 2022, 48,333,334 options were issued to Tribeca as a component of the arrangements to settle the Tribeca Facility and in
consideration of Tribeca entering into an Amendment Agreement.
In total, there were 264,700,341 (2021: 423,496,239) options issued in financial year 2022, exercisable at 5 cents and expiring 29 February 2024.
Capital risk management
The Group's objectives when managing capital is 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.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the number of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value
adding relative to the current Company's share price at the time of the investment. The Group 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 Group is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during
the financial year.
Accounting policy for issued capital
Ordinary shares are classified as equity.
The fair value of the shares issued to settle outstanding debts to suppliers is based on the market value of the
shares at the date of issue.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.
Note 28. Equity - Reserves
Financial assets at fair value through other comprehensive income
reserve
Share-based payments option reserve
Performance shares reserve
Tribeca Loan Option Reserve*
*Options expired during the financial year
Consolidated
30 June 2022
$'000
30 June 2021
$'000
(4,876)
4,903
98
-
125
(5,977)
4,903
98
2,893
1,917
88
Financial assets at fair value through other comprehensive income reserve
The reserve is used to recognise increments and decrements in the fair value of financial assets at fair value
through other comprehensive income.
Share-based payments reserve: Options and Performance shares
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of
their remuneration, and other parties as part of their compensation for services.
Tribeca Loan Option Reserve
The reserve is used to recognise the value of equity benefits provided to Tribeca as part of the Tribeca bonding
facility arrangements. These options have expired during the year and no longer form part of the equity reserve.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Financial
assets at fair
value through
OCI
$'000
(5,340)
(637)
-
Balance at 1 July 2020
Revaluation - gross
Share-based payments
$'000
4,887
-
16
Share-based
payments
option reserve
Performance
shares reserve
Balance at 30 June 2021
(5,977)
4,903
Revaluation - gross
Transfers on expiry of options
1,101
-
-
-
Balance at 30 June 2022
(4,876)
4,903
Note 29. Fair value measurement
Equity
conversion
right - Tribeca
Loan
$'000
2,893
-
-
Total
$'000
2,446
(637)
108
2,893
1,917
-
(2,893)
1,101
-
-
125
$'000
6
-
92
98
-
-
98
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured, or disclosed at fair value, using a three-
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Financial assets (liabilities) at fair value through
other comprehensive income
Year
2022
2021
Consolidated
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
700
700
1,150
1,150
89
Assets and liabilities held for sale are measured at fair value.
The fair values of all financial assets and liabilities approximate their carrying amounts principally due to their
short-term nature or the fact that they are measured and recognised at fair value.
The financial asset held at 30 June 2022 are shares held in Auburn Resources NL. These shares were received for
the sale of Ripple Resources Pty Ltd. The level 3 inputs used in determining the fair value of the Auburn Resources
NL investment is based on seed capital raising programs held in August, September and November 2021. This
program issued shares with an issue price of 12.5 cents per share.
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs, and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting
date and transfers between levels are determined based on a reassessment of the lowest level of input that is
significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise
is either not available or when the valuation is deemed to be significant. External valuers are selected based on
market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable, with external sources of data.
Note 30. Financial risk management
General Objectives, Policies and Processes
The Group's principal financial instruments consists of deposits with banks, receivables, other financial assets,
payables, borrowings, and secured amortising notes.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies, and processes for managing those risks or the methods used to measure them from previous years
unless otherwise stated in this note.
The Board has overall responsibility for the determination of the Group’s risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance
function.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. These policies include identification and analysis of the risk
exposure of the Group and appropriate procedures, controls, and risk limits. Finance identifies, evaluates and
manages financial risks within the Group's operating units. Finance reports to the Board on a monthly basis.
Further details regarding these policies are set out below.
90
Market risk
Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments and
investments in listed securities. It is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other
market factors (other price risk).
The Group is exposed to market risk on investments in equity securities, and these investments are measured at
fair value based one the expected net realisable value of the assets of the company. Management considers
market risk on this class of assets to be minor given the low value of the assets, and stability of the assets
underlying the investments.
Price risk
The Group has short-term and longer-term commercial contracts for the sale of its oil and gas products, some
of which contain pricing which is adjusted annually for the Consumer Price Index (CPI) and some of which are
set with reference to the variable Australian domestic gas price.
To manage these exposures, forward Australian domestic price forecasts are monitored regularly and reported
to the board.
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market commodity prices on the gas and associated
liquid products it produces. The Group is not of a size to have influence on gas or other petroleum product prices
and is therefore a price-taker in general terms. The Group manages this risk by continuously monitoring actual
and forecast commodity prices and analysing the impact these changes will have on profitability and cashflow.
Interest rate risk
Interest rate risk arises principally from cash and cash equivalents. The Company's secured amortising notes has
a fixed coupon rate, and thus no variable interest rate exposures. The objective of interest rate risk management
is to manage and control interest rate risk exposures within acceptable parameters while optimising the return.
For further details on interest rate risk refer to the tables below.
As at the reporting date, the Group had no variable rate borrowings outstanding.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming
references, and setting appropriate credit limits. The Group 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 Group does not hold any collateral.
Credit risk is reviewed regularly by the Board. It arises from exposure to receivables as well as through deposits
with financial institutions.
The Group's cash at bank and financial assurances are held with Australian financial institutions to mitigate credit
risk, being Macquarie Bank (local currency short term rating A-2) and Westpac (local currency short term rating
A-1+).
Refer to Note 14 for credit risk exposure of trade and other receivables.
91
Liquidity risk
Liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and
payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets
and liabilities.
Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as
they fall due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always
have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions.
Liquidity risk is reviewed regularly by the Board.
For further details on liquidity risk refer to the tables below.
Financing arrangements
The Group had no access to undrawn borrowing facilities at the end of the reporting period (2021: NIL).
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The
tables have been prepared based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables include both interest and principal cash
flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying
amount in the statement of financial position.
Year
Non-derivatives
Non-interest bearing
Trade payables
2022
2021
Interest-bearing - fixed rate
2022
Tribeca facility
Secured Amortising
Notes
Exchangeable
Notes
Lease liability
2021
2022
2021
2022
2021
2022
2021
Weighted
average
interest rate
%
1 year or less
Between 1
and 2 years
Between 2
and 5 years
$'000
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
9.00%
9.00%
8.75%
8.75%
15.00%
-%
8.88%
8.88%
12,185
9,056
5,189
5,516
12,299
11,462
6,177
-
382
391
-
-
-
-
15,236
12,299
-
-
295
295
-
-
-
-
-
15,236
-
-
715
1,009
12,185
9,056
5,189
5,516
27,535
38,997
6,177
-
1,391
1,695
Interest payable on the Secured Amortising Notes is quarterly in arrears. The Secured Amortising Notes mature
on 29 March 2024. The Group manages liquidity risk by monitoring forecast cash flows and liquidity ratios such
as working capital.
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed.
92
Note 31. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 3:
Name
Principal place of business /
Country of incorporation
Ownership interest
30-June-2022
%
30-June-2021
%
Armour Energy (Victoria) Pty Ltd
Victoria / Australia
Armour Energy (Surat Basin) Pty Ltd
Queensland / Australia
Armour Energy (Queensland) Pty Ltd
Queensland / Australia
McArthur Oil and Gas Limited
Queensland / Australia
McArthur NT Pty Ltd
CoEra Pty Ltd
Cordillo Energy Pty Ltd
Queensland / Australia
South Australia/ Australia
South Australia/ Australia
Holloman Petroleum Pty Ltd
South Australia/ Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Note 32. Interests in joint operations
Information relating to joint operations that are material to the Group are set out below:
Name
Principal place of business /
Country of incorporation
30-June-2022
30-June-2021
Ownership interest
ATP119P South – Waldegrave*
Queensland, Australia
ATP119P South - Snake Creek East*
Queensland, Australia
ATP 212P - PL 30
ATP212P - PL512, PPL22
Weribone Pooling Area
PCA157 Bainbilla Block
ATP 754P
PEP 169
PEP 166
Kanywataba Block
Queensland, Australia
Queensland, Australia
Queensland, Australia
Queensland, Australia
Queensland, Australia
Victoria, Australia
Victoria, Australia
Uganda
* ATP 119P was subject to sale contract with PZE (Surat) Pty Ltd refer to Note 16
%
%
46.25%
25.00%
90.00%
84.00%
50.64%
24.75%
50.00%
51.00%
25.00%
16.82%
46.25%
25.00%
90.00%
84.00%
50.64%
24.75%
50.00%
51.00%
25.00%
16.82%
Accounting policy for joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group entered into joint
arrangement with various parties for interest in exploration tenements as disclosed above. Exploration
expenditures incurred in relation to these joint operations have been capitalised in accordance with AASB 6
Exploration for and Evaluation of Mineral Resources.
93
Note 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/ (Loss) after income tax
Parent
30-June-2022 30-June-2021
$'000
$'000
(7,426)
(8,638)
Other Comprehensive income for the year, net of tax
Total Comprehensive income
1,101
(6,325)
(637)
(9,275)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Financial assets at fair value through other comprehensive income
reserve
Share-based payments option reserve
Performance shares reserve
Tribeca Loan Option Reserve
Accumulated losses
Total equity
Parent
30-June-2022 30-June-2021
$'000
$'000
870
941
89,992
85,897
19,430
12,491
38,760
36,385
145,983
133,771
(4,876)
(5,977)
4,903
98
-
4,903
98
2,893
(94,876)
(86,176)
51,232
47,137
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
As at 30 June 2022, the parent entity is a guarantor for its subsidiary Armour Energy (Surat Basin) Pty Ltd for debts
relating to the Tribeca loan facility.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30
June 2021.
94
Note 34. Related party transactions
Parent entity
Armour Energy Limited is the parent entity of the Group and listed on the ASX on 26 April 2012.
Subsidiaries
Interests in subsidiaries are set out in Note 31.
Joint Operations
Interests in joint ventures are set out in Note 32.
Key management personnel
Disclosures relating to key management personnel are set out in Note 35 and the remuneration report included
in the Directors' report.
Transactions with related parties
The following transactions occurred with related parties during the reporting period:
Payment for goods and services:
Payment for services from entity with significant influence - DGR Global Ltd1
Payment for services from other related party - Bizzell Capital Partners2
Consolidated
30 June 2022
30 June 2021
$
$
456,000
503,927
456,000
468,505
1 The Group has a commercial arrangement with DGR Global Ltd (a major shareholder) for the provision of various services,
whereby DGR Global provides resources and services including the provision of its administration staff, its premises (for the
purposes of conducting the Group's business operation), use of existing office furniture, equipment, and certain stationery,
together with general telephone, reception and other office facilities ("Services").
In consideration for the provision of the Services, the Group pays DGR Global a monthly management fee of $38,000 (2021:
$38,000). For the year ended 30 June 2022 $456,000 (2021: $456,000) was paid or payable to DGR Global for the provision of
the Services. The total amount outstanding at year end was $797,918 (2021: $243,424). As at 30 June 2022 DGR Global held
4,550 secured amortising notes totalling $4,550,000 (2021: 4,550). The notes were purchased on the same terms and
conditions as other noteholders.
2 Armour entered into an agreement with Bizzell Capital Partners Pty Ltd as Lead Manager for the capital raising programs.
Armour Energy & McArthur Oil & Gas completed capital raising during the year with Bizzell Capital Partners jointly lead capital
raisings and was paid, along with related entities management, capital raising fees and other fees totalling $503,927 (FY2021:
$468,505) on arm’s length terms.
As at 30 June 2022, Bizzell Capital Partners and related entities controlled by Mr Stephen Bizzell held 6 million unquoted
options, 54,016,932 quoted options, 425,000 MOG notes and 100 Senior Secured Amortising notes (2021: 6 million unquoted
options, 26,392,319 quoted options and 100 Senior Secured Amortising notes). The notes were purchased on the same terms
and conditions as all other bondholders.
95
Company debt instruments held by key management personnel
The number of convertible notes in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Secured amortising notes holdings
Stephen Bizzell
Notes held
at the start
of the year
No.
Additions
Disposals/
Other
No.
No.
Notes held at
the end of the
year
No.
100
-
-
100
No other directors and key management personnel held any debt instruments in the Company at the start,
during or at the end of the year.
Note 35. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the
Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Short-term non-monetary benefits
Refer to the Remuneration Report on pages 41 to 51.
Consolidated
30 June 2022
$
30 June 20211
$
1,365,168
88,139
214,123
106,503
1,773,933
1,155,890
65,127
246,479
91,533
1,559,029
Note 36. Share-based payments
Types of share-based payments
Employee Share Option Plan (ESOP)
Share options are granted to employees. The employee share option is designed to align participants' interests
with those of shareholders by increasing the value of the Armour Energy Ltd.'s shares.
When a participant ceases employment prior to the vesting of their share options, the share options are forfeited
after 90 days unless cessation of employment is due to termination for cause, whereupon they are forfeited
immediately or death. The Group prohibits KMP's from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally three years. There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in
cash.
Summary of share-based payment plans
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share-based payment share options granted during the year under the employee share option plan.
96
Outstanding at the beginning of the year
Issued during the year
Expired during the year
2022
WAEP
$0.05
2022
Number
2,000,000
-
-
2021
WAEP
$0.33
$0.05
$0.33
2021
Number
6,750,000
2,000,000
(6,750,000)
Outstanding/ exercisable at the end of the year
$0.05
2,000,000
$0.05
2,000,000
There were no options issued to employees and Directors under the Armour Energy Employee Share Option Plan
during 2022 (2021: NIL). The options issued during the year are part of an independent contractor agreement.
The options outstanding as at 30 June 2022 expire 29/2/2024 and have an exercise price of $0.05 (share price
on grant date $0.021).
Other option issues
The following table illustrates the number of, and movements in, other options issued for commercial
consideration during the year.
Balance at the start of the year
Granted during the year2,3
Expired during the year1
Exercisable at the end of the year
Consolidated
2022 WAEP
30 June 2022 2021 WAEP
30 June 2021
$0.150
$0.050
$0.161
$0.054
Number
49,000,000
48,333,334
(41,000,000)
$0.15
Number
49,000,000
-
-
56,333,334
$0.15
49,000,000
The opening balance of options were issued in two tranches:
1 On 31 July 2018, the Company issued 41,000,000 options to Tribeca Global Resources Credit Master Fund (Tribeca) at an
exercise price of $0.166 per ordinary share (adjusted to $0.161 per ordinary share following the 2018 entitlement issue). The
options were issued as part of the agreement for Tribeca to provide a $6.8 million environmental bonding funding facility
(see the financial liabilities note 24 for further details). These options expired on 31 July 2021.
2 Bizzell Capital Partners managed the private placement that closed on 23 September 2019 and was entitled to receive an
allotment of 8,000,000 unlisted options exercisable at 8 cents through to 30 September 2023. Of the 8 million, 2 million were
subsequently transferred to an unrelated sub-underwriter.
3 In consideration of Tribeca entering into an Amendment Agreement, Armour issued Tribeca a total of 48,333,334 listed
options with ASX code AJQOA which are exercisable at $0.05 and expire on 29 February 2024.
Performance rights shares
The following table illustrates the number of, and movements in, performance shares issued for during the year.
Balance at the start of the year
Granted during the year
Expired during the year*
*Non vested portion of Mr Lingo’s performance shares forfeited on resignation
Consolidated
30 June 2022
Number
30 June 2021
Number
7,200,000
7,200,000
-
(5,850,000)
1,350,000
-
-
7,200,000
97
Share-based payment expense
Option expense
There was no option expense recognised in the statement of profit or loss for the year ended 30 June 2022 (2021:
$16,000).
Performance shares expense
There was no option expense recognised in the statement of profit or loss for the year ended 30 June 2022 (2021:
$92,000).
The balance of the share-based payment expense relates to shares not yet issued at 30 June 2022.
Share issue costs
There were approximately 441m (2021:14.3m) ordinary shares issued $11,014,000 (2021: $284,000) in lieu of cash
for invoices related to the management of the capital raises performed during the year.
Other transactions settled in shares
For the year ended 30 June 2022 $920,000 of employment benefits were taken as ordinary shares in lieu of cash
(2021: $287,000).
Value of share issued to creditors for various services delivered during the year totalled $638,000.
There were approximately 48m options issued with an exercise price of $0.05 as part of the negotiations to
extend the Tribeca loan facility during the year.
Accounting policy for 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 or
supplier 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 is measured at fair value on grant date. Fair value is independently
determined using the 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 Group 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 is recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
98
Note 37 Commitments
Exploration Expenditure Commitments
Committed at the reporting date but not recognised as liabilities,
payable:
Within one year
One to five years
More than five years
Consolidated
30 June 2022
30 June 2021
$’000
$’000
25,034
112,043
3,627
140,704
14,952
14,722
2,127
131,801
Capital Commitments
The Group has certain obligations to expend minimum amounts on exploration in tenement areas. These
obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations
of the Group. The commitments are to keep tenements in good standing, work programs should meet certain
minimum expenditure requirements. If the minimum expenditure requirements are not met, the Group has the
option to negotiate new terms or relinquish the tenements. The Group also has the ability to meet expenditure
requirements by joint venture or farm-in agreements.
Note 38. Contingent liabilities
Exploration Liabilities
Under the Company's native title agreement over EP 171 and EP 176, the Company is required to pay the
greater of either $10,000 or 3% of exploration costs on each anniversary date.
Under the Company's native title agreement over EP 174, EP 190, EP 191 and EP 192, the Company is required
to pay the greater of either $5,000 or 3% of exploration costs on each anniversary date.
Armour is currently disputing the determination of the Queensland Government in relation to ATP 2029. Armour
initially took action in the State’s Land Court for five parcels of land and subsequently withdrew from Surat Basin’s
ATP 2028 dispute but remains confident in relation ATP 2029. Management remains confident that the appeal
will be successful and for both parties to pay for their own costs incurred. As such it is improbable that any
outflow of economic resources will be required to settle any obligation and therefore no contingent liability has
been recognised.
Other than the above, the Group had no other contingent assets or liabilities at 30 June 2022.
99
Note 39. Events after the reporting period
Other than the below subsequent events, no other matter or circumstance has arisen since 30 June 2022 that
has significantly affected, or may significantly affect Armour's operations, the results of those operations, or
Armour's state of affairs in future financial years.
• Other Financial Assets - On 28 March 2022 Armour entered into a number of agreements to dispose of
the Company’s Lakes Blue Energy NL (LKO) shareholding comprising 2,125,000,000 Ordinary shares
under escrow until 2 August 2022 at 0.06c each. The disposal was subject to LKO agreement, and the
escrow being retained by buyers.
The legal ownership transfer of the disposed shares from Armour Energy to the respective purchasers
occurred following 30 June 2022. A change in the fair value of these equity investments was adjusted
through other comprehensive income and the revalued book value is $1,275,000.The Other Financial
Assets current assets held for sale are classified in the Corporate reportable segment.
• Mr Christian Lange was appointed as Chief Executive Officer of the Company on 25 July 2022.
• Armour entered into a funding agreement with Armour’s largest shareholder, DGR Global Ltd, for the
provision of a $4.5M facility to be drawn over three months. This funding is provided by way of a
placement of redeemable exchangeable notes to be issued by Armour’s subsidiary, McArthur NT Pty
Ltd, at an issue price per note of $1.00 and otherwise on the terms and conditions set out in the
Redeemable Exchangeable Note Trust Deed.
Note 40. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd
and related entities.
Audit services - BDO Audit Pty Ltd
Audit or review of the financial statements
Consolidated
30 June 2022
$
30 June 2021
$
119,252
93,141
Other services - BDO Audit Pty Ltd and related entities
Other non-audit services*
17,970
2,475
Total
137,222
95,616
*The non-audit services included the advice on solvency and whistleblowing services.
Note 41. Accounting Policies
New and Revised Accounting Standards and Interpretations
Adoption of new and revised accounting standards
Armour has applied the required amendments to Standards and Interpretations that are relevant to its
operations and effective for the current reporting period for the first time for the financial year commencing
1 July 2021. These did not have any material impact on the disclosures or on the amounts recognised in Armours
consolidated financial statements.
100
Armour Energy Limited
Directors’ Declaration
30 June 2022
The Directors' of the Group declare that:
a) the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
b) the attached financial statements and notes comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in Note 2 to the financial
statements;
c) the attached financial statements and notes give a true and fair view of the Group's financial position
as at 30 June 2022 and of its performance for the financial year ended on that date; and
d) 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)(a) of the Corporations Act
2001.
On behalf of the Directors
Nicholas Mather
Executive Chairman
30 September 2022
101
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Armour Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Armour Energy Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of Armour Energy Limited, is in accordance with the
Corporations Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 4 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
102
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying value of Oil & Gas assets
Key audit matter
How the matter was addressed in our audit
Refer to Note 18 in the financial report.
Our procedures included but were not limited to:
The Group has significant oil and gas assets,
which represent a major portion of total assets.
Due to the quantum of this asset and the
subjectivity involved in assessing the asset for
impairment we have determined this is a key
audit matter.
•
•
•
•
•
•
Evaluating management’s assessment if
any impairment indicators in accordance
with AASB 136 Impairment of Assets have
been identified across the Group’s oil and
gas projects.
Comparing oil and gas price assumptions
against third-party forecasts and relevant
market data to determine whether the
Group’s forecasts were within the range.
Reviewing contracts and agreements with
the Group’s external customers to
understand the existing level of
contracted oil and gas sales.
Reviewing the Group’s reserve estimation
against reports provided by external
experts
Performing sensitivity analysis on key
assumptions used by the Group to assess
the impact on forecasted cash flows.
Selecting a sample of capitalised
expenditure additions and agreeing to
supporting documentation, as well as
ensuring they qualify for recognition as
assets under AASB 116 Property, Plant and
Equipment.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
103
Carrying value of Exploration and Evaluation assets
Key audit matter
How the matter was addressed in our audit
Refer to Note 17 in the financial report.
Our procedures included but were not limited to:
The carrying value of the Group’s exploration
and evaluation asset is impacted by the Group’s
ability, and intention, to continue to explore.
During the year, the Group continued to focus
on its Northern Australia gas exploration
projects.
The carrying value of the exploration and
evaluation assets was a key audit matter due to
the significance of the total balance in the
statement of financial position and the level of
procedures undertaken to evaluate
managements application of the requirements
of AASB 6 Exploration for the Evaluation of
Mineral Resources in light of any indicators of
impairment that may be present.
• Obtaining evidence that the Group has
valid rights to explore in the areas
represented by the capitalised exploration
and evaluation expenditure by obtaining
supporting documentation such as license
agreements and also considering whether
the Group maintains the tenements in
good standing;
• Making enquiries of management with
respect to the status of ongoing
exploration programs in the respective
areas of interest and assessing the Group’s
cash flow budget for the level of budgeted
spend on exploration projects and held
discussions with management of the Group
as to their intentions and strategy; and
Enquiring of management, reviewing ASX
announcements and reviewing directors'
minutes to ensure that the Group had not
decided to discontinue activities in any
applicable areas of interest and to assess
whether there are any other facts or
circumstances that existed to indicate
impairment testing was required.
•
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
104
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included pages 41 to 51 of the directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of Armour Energy Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
R M Swaby
Director
Brisbane, 30 September 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
105
Shareholder information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this
report is as follows. The information is current as at 6 September 2022.
%
40.3%
14.1%
30.2%
7.4%
4.4%
3.6%
100.0%
54.0%
%
86.4%
9.1%
4.6%
-%
-%
-%
Distribution Schedules
AJQ – Armour Energy Limited fully paid ordinary shares
Range
100,001 and Over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Securities
% No. of holders
2,214,431,685
98.1%
24,072,422
18,266,831
1,336,314
330,068
13,556
2,258,450,876
31,997,475
1.1%
0.8%
0.1%
-%
-%
100.0%
1.4%
878
307
659
162
96
78
2,180
1,177
Unlisted options exercisable at $0.0782 expiring 30 September 2023
Range
100,001 and Over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
% No. of holders
47,585,000
335,000
80,000
-
-
-
99.1%
0.7%
0.2%
-%
-%
-%
38
4
2
-
-
-
48,000,000
100.0%
44
100.0%
Unlisted options exercisable at $0.05 expiring 29 February 2024
Range
100,001 and Over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
% No. of holders
2,000,000
100%
-
-
-
-
-
-%
-%
-%
-%
-%
2,000,000
100%
1
-
-
-
-
-
1
%
100%
-%
-%
-%
-%
-%
100%
106
AJQOA – quoted options exercisable at $0.05 expiring 29 February 2024
Range
100,001 and Over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Securities
% No. of holders
744,229,803
99.4%
211
2,755,362
1,269,454
168,836
116,486
8,143
0.4%
0.2%
0.0%
-%
-%
526,036,543
3,271,367
100.0%
0.4%
36
42
22
41
13
345
143
%
57.8%
9.9%
11.5%
6.0%
11.2%
3.6%
100.0%
39.2%
Substantial holders
The Company is aware of the following substantial holdings:
Name
DGR Global Limited (per notice received 9 July 2021)
David Rooke (per notice received 16 October 2020)
Mr Paul Cozzi (per notice received 23 July 2021)
Aslan Equities Pty Ltd
Citicorp Nominees Pty Ltd
Ordinary
Shares –
Number Held
374,709,708
66,127,375
161,500,000
134,953,356
121,617,659
Issued
Capital %
16.6%
11.2%
7.2%
6.0%
5.4%
107
Twenty largest holders of each quoted class (as at 6 September 2022)
Ordinary Shares (AJQ)
Name
DGR GLOBAL LIMITED
MR PAUL COZZI
ASLAN EQUITIES PTY LTD
CITICORP NOMINEES PTY LIMITED
ROOKHARP CAPITAL PTY LIMITED
TALBRAGAR RIVER HOLDINGS PTY
CHOICE INVESTMENTS DUBBO PTY
CANCELER PTY LTD
MR PAUL AINSWORTH
PECAL PTY LTD
MR PETER MAROUN KAHWAJI
CPS CONTROL SYSTEMS PTY
PINEMONT TECHNOLOGIES
MR NEVILLE AYROUTH
HEALTH CARE MEDICAL AND DENTAL
MR MICHAEL ROBERT LAURENT
MR SIMON WILLIAM TRITTON
PANORAMIC ROAD PTY LTD
BU & WANG PROPERTY NOMINEES
MR NIKHILKUMAR KANTILAL SHAH
Total of Twenty Largest Holders
Total Shares Held
Number held
374,709,708
161,500,000
134,953,356
121,617,659
105,000,000
63,367,933
51,951,472
39,000,000
39,000,000
25,000,000
19,100,000
19,025,382
18,019,735
16,003,338
15,750,000
15,746,333
15,012,608
13,500,000
13,461,823
12,892,230
1,274,611,577
Issued
capital %
16.6%
7.2%
6.0%
5.4%
4.6%
2.8%
2.3%
1.7%
1.7%
1.1%
0.8%
0.8%
0.8%
0.7%
0.7%
0.7%
0.7%
0.6%
0.6%
0.6%
56%
2,258,450,876
100%
108
Listed options (AJQOA)
Name
DGR GLOBAL LIMITED
J P MORGAN NOMINEES AUSTRALIA
BIZZELL CAPITAL PARTNERS PTY
MR PAUL COZZI
ANTIBELLA PTY LTD
ROOKHARP CAPITAL PTY LIMITED
BERENES NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
CANCELER PTY LTD
CHOICE INVESTMENTS DUBBO PTY
PECAL PTY LTD
MR TONY ADAMS
MERRILL LYNCH (AUSTRALIA)
MR PAUL AINSWORTH
MR PAUL DOMINIC HILLMAN
DR DENNIS RICHARD LOWE
TALBRAGAR RIVER HOLDINGS PTY
MR MICHAEL ALAN TAYLOR
TENSTAR TRADING LIMITED
DR DENNIS RICHARD LOWE &
Total of Twenty Largest Holders
Total Listed Options Held
Number held
Issued Options
%
132,438,967
18%
62,829,504
53,390,427
40,186,654
33,066,007
32,367,088
20,250,000
18,622,516
15,000,000
13,553,113
12,083,333
12,000,000
10,869,565
10,000,000
10,000,000
9,832,773
9,051,281
8,500,000
8,194,931
7,704,505
8%
7%
5%
4%
4%
3%
2%
2%
2%
2%
2%
1%
1%
1%
1%
1%
1%
1%
1%
519,940,664
748,548,084
69%
100%
Voting Rights
All ordinary shares carry one vote per share without restriction.
Restricted securities
There are no restrictions over any security holdings as at 13 September 2022.
109
Corporate Directory
Directors
Nicholas Mather
Stephen Bizzell
Eytan Uliel
Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Company Secretary
Geoff Walker
Registered Office /
Principal Place of Business
Postal / Contact Address
Level 27
111 Eagle Street
BRISBANE QLD 4000
GPO Box 5261
BRISBANE QLD 4001
Telephone
+61 7 3303 0620
Email
info@armourenergy.com.au
Share Registry
Auditor
Solicitors
Link Market Services Limited
Level 21
10 Eagle Street
BRISBANE QLD 4000
BDO Audit Pty Ltd
Level 10
12 Creek Street
BRISBANE QLD 4000
Hopgood Ganim Lawyers
Level 21 Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
Stock exchange listing
ASX code: AJQ
Website
www.armourenergy.com.au
Corporate Governance Statement
Armour Energy Limited's latest Corporate Governance Statement can be found on our website at
https://www.armourenergy.com.au/corporategovernance
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