Annual Report
For the year ended 30 June 2023
1
Competent Persons Statement
Technical Statement – Hydrocarbon Reserves
The independently verified ‘Armour Energy Hydrocarbon Reserves, 30 June
2023’ 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 2023.
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 as reported in Armour
Energy’s 30 June 2022 Annual Report. There has been no new information or
data that materially affects the information included in this Annual Report
ending 30 June 2023. All the material assumptions and technical parameters
underpinning any estimates mentioned continue to apply and have not
materially changed.
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
Chair’s Report ................................................................................................................................................................ 6
Operating and Financial Review ................................................................................................................................ 7
Sustainability Report .................................................................................................................................................... 22
Managing Risk ............................................................................................................................................................. 32
Board of Directors ....................................................................................................................................................... 36
Leadership Team ......................................................................................................................................................... 37
Directors’ Report ......................................................................................................................................................... 38
Auditor’s Independence Declaration ...................................................................................................................... 53
Financial Statements .................................................................................................................................................. 55
Consolidated Statement of Profit or Loss and Other Comprehensive Income .................................................. 56
Consolidated Statement of Financial Position ........................................................................................................ 57
Consolidated Statement of Cashflows .................................................................................................................... 58
Consolidated Statement of Changes in Equity ....................................................................................................... 59
Notes to the Financial Statements ............................................................................................................................ 60
Directors’ Declaration .............................................................................................................................................. 105
Auditors Report ......................................................................................................................................................... 106
Shareholder information........................................................................................................................................... 111
Corporate Directory ................................................................................................................................................. 114
3
Energy for the Future
4
Our Business
Our Vision
To build a leading exploration and production company, focussed on
responsible and sustainable energy supply to the East Coast markets.
Our Strategy
We will achieve this by:
Prioritised long-term returns through disciplined capital allocation.
Focus on immediate opportunities to grow production.
Strengthen the balance sheet.
Maintain top quartile safety and environmental performance.
Build resources and reserves through exploration.
Focussing on these priorities will enable Armour to unlock value for its shareholders. Armour’s strategic pathway
to exploiting the Group's existing flowing wells will see volumes of 10TJ/ day within the next 6-12 months. This will
open up Armour’s opportunities to increase production further in the long term.
Our Values
Community: Having a sense of community unites us. Being a part of
a community is to be part of something greater than ourselves. It
gives us opportunities to connect with people, focus on our and
others wellbeing; safety & security; and achieve our objectives.
Accountability: We will be transparent and own the actions we take
and make.
Integrity: We conduct our business with honesty and Integrity.
We’re committed to doing what’s best for our stakeholders. We
openly collaborate and have no tolerance for politics, hidden
agendas or poor behaviour.
Resilience: the ability to adapt successfully and recover from
challenging experiences. It is the ability to endure adversity, to
learn and to grow.
5
Chair’s Report
Dear Shareholders,
This financial year was a period marked by numerous challenges met with unwavering determination and
strategic vision. Despite facing a downturn in production and operating in a cash constrained environment, our
company navigated these difficult times with remarkable resilience and optimism.
Highlights from the past 12 months, driven by the new management team include:
•
•
•
The appointment of Christian Lange as Chief Executive Officer and William Ovenden as Board Advisor.
The successful negotiation of a new Gas Sales Agreement with Shell Australia, providing higher prices
than the existing contract pricing and reflecting expected future market trends.
Execution of a Gas Supply Heads of Agreement with Australian Natural Diamonds Ltd, securing a supply
of approximately 7PJs of gas over 14 years.
• Progress in evaluating the Enterprise North Prospect and making it drill-ready based on reinterpreted 3D
seismic data with the possibility of an aggregated drilling campaign.
• Ongoing efforts to clean up the balance sheet, reducing the Secured Amortising Notes by $7.7 million
and fully paying out the Tribeca Facility.
Looking ahead, we have every reason for cautious optimism as we anticipate the maturation of the Senior
Secured Notes and the fortification of our balance sheet. I am particularly pleased to be leaving the year with
a gas sales agreement executed with Shell Energy Australia, a testament to their confidence in our long-term
potential and strategic direction. This agreement positions us to realise gas prices that significantly surpass our
current long-term contract pricing, aligning it with anticipated market trends.
While I acknowledge that the current share price and current year’s net loss is not ideal, I appreciate the loyalty
of our stakeholders. As we continue our journey to recovery, we remain determined to manage cash with
prudence and diligence. With increased realised gas prices, the prospect of new investors, and strategic
collaborations on the horizon, we anticipate that the 2024 financial year will usher in a substantially strengthened
balance sheet and a clear pathway toward achieving our goal of being cash flow positive. My belief in the
substantial growth potential of Armour's diverse asset base remains steadfast, particularly in maturing our strong
core assets to meet the demands of the East Coast Australian Gas markets.
We remain focused and determined, on transforming Armour Energy into a prominent oil and gas exploration
and production company, with a commitment to delivering value for our shareholders.
Yours sincerely
Nicholas Mather
Chair
6
Operating and Financial Review
7
Executive Summary
Armour Energy Limited (Armour or the Company) and its controlled entities (the Group) are a Brisbane based
ASX listed company focused on the responsible development of unconventional and conventional energy
resources. The company has a diverse portfolio of assets across Queensland, Northern Territory, Victoria and
South Australia with a primary focus on the discovery, development and production of Gas, LPG, Gas
Condensate and Oil.
Figure 1 – Summary of Armour’s assets and locations
Armour Energy are committed to operating in a safe, environmentally responsible and sustainable manner while
delivering long-term value for its stakeholders. The company has a track record of successful resource
development and is continuously exploring new growth opportunities to expand its business.
With a team of experienced industry professionals Armour Energy is well-positioned to capitalise on the growing
demand for energy resources in Australia and the Asia-Pacific region. The company's strategic approach to
resource development, coupled with its commitment to innovation and sustainability, sets it apart as a leader
in the industry.
Key Points
▪ Armour continued to reduce its debt under the Secured Amortising Notes by $7.7 million.
▪ Armour paid out its Tribeca Facility in November 2022.
▪ New Gas Sales Agreement with Shell Australia executed for prices higher than the existing contract and
▪
Gas Supply Heads of Agreement executed for NT Assets.
Enterprise North Prospect being fully evaluated and drill ready based on reinterpreted and merged
3D seismic data and the approval process progressing with the possibility of an aggregated drilling
campaign.
▪ As part of the annual impairment review, $4.9 million was recognised as an impairment across oil and
gas assets, and exploration and evaluation asset.
8
Operating Review
Surat Basin Assets
Kincora Gas Project Overview
The Company delivers gas to the Eastern Australian market from its Kincora Gas Project. Kincora is in its fifth full
year of operation and achieved 98% operational time (FY2022: 96%) with an average production of
approximately 3.8 TJ/day (FY2022: 4.9 TJ/day) of sales gas plus associated liquids.
Average Production per day*
FY2023
FY2022
Change
Gas (TJ)
LPG (T)
Oil/Condensate (BBL)
3.8
6.6
77.6
4.9
7.8
102.7
(22%)
(15%)
(24%)
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 78 barrels (FY2022: 103 barrels) of oil and condensate per
day, and approximately 7 tonnes (FY2022: 8 tonnes) per day of Liquid Petroleum Gas (LPG). Oil and condensate
are sold ex-Kincora and transported to Queensland and South Australian 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. The reduction in sales volumes is a result of natural decline. See
below for ways Armour are expecting to rectify this.
Kincora Gas Reserves Update
Armour reviewed its oil and gas reserves position from the prior year and adjusted for volumes produced in
the 2023 financial year. The work was conducted by Armour Energy’s qualified technical team 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 ended 30 June 2023. Highlights
from the 30 June 2023 Certified Reserves Report are below:
▪ 2P oil reserves numbers lowered primarily from produced FY2023 volumes.
▪ 2P gas reserves numbers lowered primarily from produced FY2023 volumes.
▪ Material long term potential continues to be demonstrated across the wider Kincora Project.
▪ Reserves independently verified.
Kincora Project
Raw Gas (bscf)
Sales Gas (PJ)
LPG (k Tonnes)
Condensate (k BBLS)
Oil (k BBLS)
3P
2P
1P
297
132
33
337
150
38
80
698
312
372 1,484 3,345
197 1,193 2,612
Table 2 – Combined Armour Energy Reserves
Notes to Table 2
▪
▪
▪
▪
▪
▪
▪
▪
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 11%.
Petroleum reserves can be sold on behalf of any minority interest holder.
Petroleum Reserves are stated inclusive of previous reported estimates.
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 2,077 tonnes/petajoules, Condensate Yield 9,895 barrels/petajoules.
9
The data from previous Work Programs and the reprocessing of other technical workflows continue 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.
Armour Energy Gas
Reserves, Bscf
287
286
297
129
128
132
39
35
33
350
300
250
200
150
100
50
0
Armour Energy
Oil Reserves, k BBL
2,619
2,624
2,612
1,200
1,205
1,193
229
204
197
3000
2500
2000
1500
1000
500
0
1P
Jun-21
2P
Jun-22
Jun-23
3P
1P
2P
3P
Jun-21
Jun-22
Jun-23
Figures 2 and 3 – Gas and oil reserve comparison charts
Armour remains encouraged by the potential of new pay zones across existing well stock and is looking to
exploit them in future work programs.
Kincora Production Enhancement Activities
Over the past 12 months, Armour has focussed heavily on optimising well performance, restoring lost
production and addressing pre-mature production decline. A range of optimisation initiatives have been
implemented comprising both downhole and top side well upgrades.
In addressing pre-mature decline, 6 additional wells were converted to intermittent cycling over the period.
This typically involves installing an automated control unit that cycles the well open and closed to promote
the recovery of liquids thereby reducing back pressure on the reservoir and improving gas production. In
addition to the intermitters, Parknook-3 was retrofitted with a plunger lift system to further assist in the recovery
of liquids. Common place in North America, this system utilises a plunger to periodically sweep the tubing
clear of liquids to reduce back pressure on the reservoir and promoting gas flow.
Successful well optimisation is the product of understanding the fundamentals of well completion, reservoir
properties and production history. In this regard, a number of multi-disciplinary well reviews have been
conducted throughout the year across Armour’s acreage. With access to over 4 decades of data, this work
prompted a significant data cleansing exercise resulting in a comprehensive production data base review
and redesign. The cleansed data is now suitable for import into advanced diagnostic and analytical
modelling software. Armour also engaged SLB early in the year to further assist with optimisation opportunities
by building a dynamic network systems model coupled with artificial lift diagnostics across Armour’s
producing well stock. The output of this work identified gathering system efficiencies such as optimal
compression locations, operating envelopes, and effective pigging frequencies. The well modelling analysed
the network effects of systems back pressure, completions design, intermitter function and optimal artificial
lift solutions across Armour’s well stock. The output of this work has formed the basis of Armour’s optimisation
strategy for 2024.
10
In terms of major interventions, Armour has been relatively inactive over the past 12 months. The notable
exception, however, was the restoration of production to Myall Creek #5A. Historically, Myall Creek-5A has
contributed nearly 20% of Kincora's field production until the tubing unexpectedly plugged off in February
2022. Following an unsuccessful coil tubing clean out in April 2022, a workover rig was mobilised in September
2022 and after overcoming some significant technical challenges, the well was successfully recompleted with
access to the Black Alley and Rewan formations. Coil tubing was again mobilised in January 2023 to mill out
and restore access to the Tinowon-A formation. Over the course of the year, production has steadily
increased as completion kill fluids and historic frac fluid has been recovered. The well is currently flowing at
450 MSCF/day and likely to continue to improve as the balance of the frac fluid is recovered.
Figures 4 and 5 – Myall Creek 5A and Rednook 1
Rednook #01 was another standout addition to the field’s production in FY23. Drilled in November 1987,
Rednook #01 had historically never been connected to gathering. The challenging topography and high line
pressures in the nearby Parknook field had left if stranded for over 3 decades. The well intersects both the
Showgrounds and Rewan formations which have shown long-term sustainable production of both gas and
rich hydrocarbon liquids in the nearby Parknook and Warroon fields. Rednook #01 was successfully
connected to gathering in mid-December 2022. Initial observations confirmed the expected production
profile and the well is currently producing just under 300 MSCF/day.
To cap off the end of financial year, one of Armour’s historic oil wells “New Royal #08” was returned to
production. The New Royal field had been offline since being shut down in 2012 due to declining production.
With the restart of the sucker rod pump (installed Oct 2019), early indications suggest that New Royal #08 will
resume a healthy oil and incremental gas production. Both liquids and gas are currently being pumped
through the gathering network to the Kincora facility.
11
Figures 6 – New Royal 8 Rod Pump facilities installed June 2023
Looking ahead, Armour's commitment to optimising production remains steadfast. The company has a
comprehensive program planned for the calendar year 2024 encompassing a wide range of initiatives aimed
at arresting premature production decline, restoring production, and accessing previously bypassed pay.
These initiatives include further installations of automated intermitter units, plunger lift conversions, coil tubing
clan outs, reconnecting suspended and stranded wells, and optimising gathering compression. There are also
numerous low-cost opportunities to recomplete wells, install sucker rod pumps and re-perforate bypassed
pay.
Leveraging off lessons learned in FY23, a comprehensive in-well-bore program combined with new well
development in FY24 will target the sustainable growth of Armour’s production portfolio. Strategically planned
work programs developed by our in-house technical team supported by our contract work partners are
expected to significantly reduce unit production costs and improve production assurance with a substantial
increase in gas production over the next 12 months.
Surat Basin Field Development
As previously communicated, we partnered with SLB to develop a network simulation model for the Kincora
pipeline, which is nearing completion. It will identify bottlenecks and improve compression. Dynamic
modelling will optimise operational parameters and pigging regimes. We expect a 15-20% production
increase.
SLB is also reprocessing the Myall Creek 3D Seismic Survey, with early indications of promising layers and
extensions. These results will guide our 2024 calendar year development drilling program. Any new
developments in the Kincora Gas Project production licenses will strategically leverage existing infrastructure
and compression facilities, positioning us for rapid revenue growth upon development.
Near-term fracture stimulation plans have been put on hold to prioritise production growth.
Surat Basin Exploration
During the reporting period, Armour maintained its steadfast commitment to advancing a multi-year
exploration program aimed at cultivating a robust portfolio of exploration leads and drill-ready prospects.
Concurrently, we continued to prioritise the execution of strategic initiatives designed to enhance gas
deliverability within the Surat Basin.
12
Victoria Assets
Figure 7 – Victoria PEP169
Over the past 6 months, Armour has made significant progress in assessing hydrocarbon potential within
PEP169. This effort revealed several promising undrilled structures, marked as drill-ready prospects and multiple
lead possibilities, resulting from a detailed subsurface review and interpretation of both available and newly
reprocessed 2D and 3D seismic data across the permit. The exploration drilling of Enterprise North-1 is
scheduled for calendar year 2024, with approvals progressing well, including Native Title considerations. The
timing of the drilling and the new inventory of opportunities being developed gives rise to the possibility of an
aggregated drilling campaign which presents an opportunity to deliver cost efficiencies to a broader project.
Follow-up prospects and leads are being matured within PEP169, ensuring swift turnaround for subsequent
exploration drilling. The permit has a history of production from multiple fields, active gas storage facilities, and
access to gas processing infrastructure from Otway Basin offshore fields.
Factors such as proximity to processing infrastructure, gas supply shortfalls, and strong domestic gas demand
in the Otway Basin are advancing gas commercialisation in PEP169, making it an attractive location for
exploration and production.
13
Northern Basin Assets
Armour Energy is poised for an exciting phase of growth and development in the McArthur Basin, as we
implement a forward-looking strategy in alignment with our commitment to harnessing the vast potential of
this region in the Northern Territory.
Figure 8 – Location Map of Armour EPs, EPAs, and the location of the Glyde gas discovery and the Merlin Diamond
Project (note proposed EP renewal boundaries shown - subject to final regulatory approval)
Our exploration strategy for the McArthur Basin has been thoughtfully reset to embark on a 2-tier integrated
approach. We are currently in the final stages of permit renewals, which will pave the way for the next 5 years
of exploration across this acreage. This renewed strategy will enable us to simultaneously assess the extent of
the conventional gas play fairway while continuing to advance the unconventional shale potential of the
Basin. A technical review undertaken by SLB has validated the original flow rate estimate for the Glyde-1ST1
well and further upside, indicating the significant potential of this resource.
Our initial operational exploration work program, scheduled for the second half of 2024, includes extended
testing of the Glyde gas discovery and acquiring new 3D seismic over the field to plan for further
exploration/appraisal drilling. These crucial steps will pave the way to quantify gas resources, pressures, and
flow rates to optimise plans future field development. Subsequently, we plan to acquire new 2D seismic data
to define further conventional exploration drilling opportunities near and adjacent to Glyde discovery.
Approvals planning and for stakeholder engagement are underway for these operational activities.
One of our most significant achievements is the recent execution of a Heads of Agreement with Australian
Natural Diamonds Ltd, a subsidiary of Lucapa Diamond Company Ltd. This agreement, executed in February
2023, establishes a clear pathway to commercialise conventional gas in the Basin. We are committed to
supplying approximately 7 PJs of gas to the Merlin Diamond Project for an estimated 14-year lifespan. This
agreement underscores the hydrocarbon potential of the McArthur Basin and demonstrates our ability to
provide essential gas to support local mining activities, bolstering the regional economy.
14
We are also pleased to highlight a significant development on the regulatory front. On May 3rd, the Northern
Territory Government released the Final Implementation Report to the Scientific Inquiry into Hydraulic
Fracturing. The conclusion that industry risks can be effectively managed with the implementation of
recommended measures marks a pivotal moment for the onshore energy sector. This positive outcome paves
the way for unconventional exploration projects to progress toward production, promising substantial
contributions to job creation and regional revenue in the Northern Territory.
Cooper Basin Assets
Figure 9 – Armour’s PELs and PRLs across the Cooper and Eromanga basins displayed on a depth to basement image
and demonstrating indicative hydrocarbon migration pathways
Armour is advancing its strategic exploration efforts within South Australia's Cooper and Eromanga basins. Our
primary objective is to minimise risk while maximising the potential for hydrocarbon discoveries within the
region. In pursuit of this goal, in January 2023, Armour Energy secured the services of Pinemont Technologies
Australia for an Airborne AEM-PTP survey. This cutting-edge survey method has the ability to visualise
hydrocarbon fluid migration pathways beneath the Earth's surface, thereby significantly enhancing our
exploration capabilities. We plan to seamlessly integrate its findings with our existing 2D and 3D seismic data.
We have adjusted the acquisition timeline to mid-November 2023, allowing time for the completion of
Associated Activity Licenses, which will enable calibration over existing fields adjacent to Armour's permits.
Simultaneously, Armour Energy is harnessing the power of "Seisnetcs" AI processing to analyse the extensive
Cordillo 3D seismic data volume, encompassing multiple Armour Energy PRLs. The primary aim is to
comprehensively evaluate various surfaces and associated attributes, with a specific focus on identifying
subtle stacked and stratigraphic oil traps within the Triassic and Jurassic intervals.
In addition, we are embarking on an extensive review of the resource potential in the deep Permian wet gas
play resource and exploring appraisal options for the 'Paning-1' wet gas discovery. Remodelling of the
fraccability of the Paning-1 well indicates significant increased potential flow upside using modern techniques
and fluid solutions. Our investigations span across existing PELs and PRLs, guided by insights gleaned from well
reviews and published regional studies. Notably, the Arrabury Trough, situated at the north-eastern terminus
of the Patchawarra Trough, emerges as a highly promising area, boasting some of the most substantial and
favourable coal intervals in the Cooper Basin. This strategic move positions the 'Paning' play as a significant
addition to the Armour Energy prospects and leads Inventory.
15
Uganda Assets
Figure 10 – Location of the Kanywataba Block in Uganda
Uganda Oil Project Overview
Armour Uganda’s flagship project is the “Kanywataba Block’, which is highly prospective for oil and gas. The
project covers approximately 344m2 and is located in a rift basin within the Albertine Graben, within close
proximity of the Total and CNOOC operations in the North.
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%. The exploration
licence was renewed until 28 May 2023.
Within the block there are multiple developed (untested) on-trend structural traps (3-way and 4-way dip
closures) and multiple untested stratigraphic traps.
The Kingfisher oil discovery (40km NE of Kanywataba) oil seeps confirm local working petroleum system.
Force majeure conditions as a result of wet weather and the COVID-19 pandemic were lifted. Exploration
work recommenced with the 2D seismic survey to be undertaken with +100-line kilometres of infill 2D seismic
to refine prospectivity observed in the Kanywataba block.
Activities in the year and which are ongoing include:
• Reprocessing of existing 2D seismic data
• Geochemical surface soil gas sampling program
• 122 line km infill 2D seismic programme
• Basin Analysis study
16
Corporate Activities
Gas Sales Agreement
A Master Sales Agreement (MSA) has been established with Shell Energy Australia Pty Ltd (SEAU) to create a
comprehensive framework and set of general terms and conditions for potential bilateral gas trading
agreements related to the gas supply from Armour's conventional fields in the Surat Basin, Queensland.
Armour and SEAU have executed Transaction Notices (TN) within the framework of the MSA, outlining their
commitment to a 13-month gas supply arrangement starting in December 2023. The agreed-upon gas prices
specified in the TN significantly exceed the rates in Armour's existing contracts. The price for December 2023
stands at $12 per gigajoule (GJ) for a firm 5 terajoules (TJs) a day. Starting from January 1, 2024, we anticipate
a significant pricing uplift, further enhanced by a 'front-ending' mechanism that will bolster cash flows in the
initial six months of CY2024.
In addition to this, Armour and SEAU are jointly exploring initial opportunities, on a non-exclusive basis, for SEAU
to utilise Armour's Newstead Gas Storage facility, which is entirely owned and operated by Armour. This facility
possesses a licensed storage capacity of up to 7.9 petajoules. Armour, with technical support from SLB, is
currently undertaking an extensive optimisation and enhancement program focused initially on its substantial
Surat Basin portfolio. This program encompasses various aspects such as well management, reservoir and
production facility upgrades, data management, network optimisation, production enhancement, seismic
data reprocessing and acquisition, reservoir management, well intervention, and drilling activities.
Capital Raising
The Company placed 51.45m new shares at an issue price of $0.0065 on 31 October 2022, which represented
a premium of 8.3% to the last traded price of $0.006 and a 4% premium to the 5-day volume weighted
average price at the time of issue. These funds raised, together with existing funds were for general working
capital requirements.
Furthermore, a $32 million (before cost) capital raising program began in March 2023. The program comprised
the following components:
• an institutional placement to raise approximately $2.7 million (Institutional Placement)
• a 1 for 1 accelerated non-renounceable pro-rata entitlement offer to raise approximately $9.3 million
•
(Entitlement Offer); and
the issue of new convertible notes (Armour Notes) to raise approximately $20.0 million (Armour Notes
Issue). These were subject to shareholder and Secured Noteholders approval and consent (received
after year end).
The Institutional Placement and Entitlement Offer were fully underwritten by Wilsons Corporate Finance
Limited, and the Armour Notes Issue were underwritten by Bizzell Capital Partners Pty Ltd.
The capital raising program was undertaken as part of Armour’s ongoing recapitalisation program allowing
for a reduction in the Secured Amortising Note debt, refinancing of the maturing MOG Note debt and to
enable development and exploration activities to be undertaken to enhance production.
Funding agreement
Over the 2023 financial year, Armour raised $12.2 million by way of a placement of redeemable
exchangeable notes issued by Armour’s subsidiary, McArthur Oil and Gas Ltd (MOG). Total face value of
MOG Notes at 30 June 2023 were $14 million after $4.3m of outstanding notes (and accrued and unpaid
interest) converted into Armour’s shares.
17
Subsequent to year end, MOG and Armour obtained all necessary approvals and consents from Shareholders
and Secured Noteholders to allow for the exchange of the remaining MOG Notes subscribed for (together
with any accrued and unpaid interest) into Armour Convertible Notes.
Other Debt Facilities
The remaining face value of the Secured Notes outstanding at 30 June 2023 was $17.2 million (original face
value of the Secured Notes at the time of issue was $55 million). As at 30 June 2023 Armour had not met certain
Financial Undertakings pursuant to the Terms and Conditions of the Secured Amortising Notes including the Debt
Service Cover Ratio, the Leverage Ratio, Minimum Cash Balance and defaulted on the principal payment due
29 June 2023 payment. The quarterly interest payment was called on from funds in the Interest Reserve Account
held by the trustee.
Subsequent to year end the Secured Noteholders approved a variation to the repayment schedule which sees
Armour paying out the Notes by 30 November 2023 and also waivers were received for any previous breach
and other non-performance of obligations.
The Tribeca Environmental Bonding Facility was repaid in full on 15th November 2022.
Investor Hub and Investor Q&A
The new Armour Energy Investor Hub hosts the latest company announcements, reports, and presentations. It
also provides an interactive online experience allowing the company’s investor community to comment on and
ask the Armour team questions regarding company news and information via the portal.
Financial Review
Results for the financial year
2023
2022
Change
Sales Revenue
Statutory NPAT
EBITDA (Non-IFRS measure)
Non-Cash Impairment
Operating Cashflow
Oil and Gas Assets Additions
Exploration Additions
Cash Balance
Debt
Earnings Per Share - Basic
Earnings Per Share - Diluted
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
c.p.s
c.p.s
14,973
(21,661)
(8,425)
(4,862)
(7,527)
(3,887)
(2,467)
337
(34,481)
(0.9)
(0.9)
17,985
(11,006)
(2,210)
(1,004)
(2,888)
(2,271)
(2,742)
3,255
(35,717)
(0.6)
(0.6)
(3,012)
(10,655)
(6,215)
(3,858)
(4,639)
(1,765)
275
(2,918)
1,236
(0.3)
(0.3)
Table 3 – Summary of financial results
Change
%
(17%)
(97%)
281%
(384%)
(161%)
(78%)
10%
(90%)
3%
(50%)
(50%)
18
Sales Revenue
Year-on-year sales were 17% lower due to a reduction in sales volumes across most products as a result of
natural decline. Oil sales volumes increased by 14%. This reduction was exacerbated by lower average prices
received across all products apart from LPG.
Pricing and Volumes
2023
2022
Change
Volumes
Gas (TJ)
LPG (Tonnes)
Oil (Bbl)
Condensate (Bbl)
Prices
Sales Gas ($/GJ)
LPG ($/tonne)
Oil and Condensate ($/Bbl)
All products Weighted Average
($/GJe)
Development Expenditure
1,413.1
2,343.8
6,373.4
21,373.3
6.70
827.9
120.1
1,729.0
2,702.6
5,585.5
29,238.4
7.43
673.7
125.6
(316)
(359)
788
(7,865)
(1)
154
(6)
Table 4 – Sale pricing and volumes
7.9
8.7
(0.8)
Change
%
(18%)
(13%)
14%
(27%)
(10%)
23%
(4%)
(9%)
Armour’s Development Expenditure of $3.9 million primarily represents the 2022/23 Work Program (2021/22:
$2.3m) in the Surat Basin.
Non-cash impairment
As part of Armour’s annual impairment review, there was a total of $4.9 million (2021/22: $1.0m) identified to
be written-off. The impairment relates largely to the ATP 2028 and ATP 2029 court appeal that Armour has
decided to withdraw from and certain costs historically capitalised to the Northern Basin assets, which no
longer hold value to Armour.
Debt
In 2023 Armour continued to reduce its total debt. The Secured Amortised Notes reduced by $7.7 million, to
$17.2 million. With an original face value of $55 million, Armour has now reduced the Notes by over 68% and
is scheduled to make the final principal repayment in November 2023.
The Tribeca Facility was fully paid out 15 November 2022.
McArthur NT Pty Ltd, a subsidiary of Armour, issued Redeemable Exchangeable Notes to the value of $12.4
million during the year at an issue price of $1 and a coupon rate of 15%. $0.2 million related to interest upon
the redemption of the notes.
19
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-23
$'000
14,973
(19,298)
(4,325)
0
(6,298)
69
(6,245)
(4,862)
0
30-Jun-22
$'000
17,985
(16,641)
1,344
(35)
(6,288)
9
(5,206)
(1,004)
174
Loss after income tax expense
(21,661)
(11,006)
Table 5 – Financial Performance
Earnings before interest, tax, depreciation, and amortisation (EBITDA) – Non-IFRS measure
Statutory NPAT
Finance Costs & Other
Profit/ (loss) before income tax and net finance expenses
Add/(Less):
Interest Income
Depreciation and amortisation
Non-cash impairment
Net (gain)/ loss on disposal of assets
Consolidated
30-Jun-23
$'000
(21,661)
6,245
(15,416)
(69)
2,198
4,862
-
30-Jun-22
$'000
(11,006)
5,143
(5,863)
(9)
2,623
1,004
35
EBITDA (non- IFRS measure)
(8,425)
(2,210)
Table 6 – EBITDA
The downside in EBITDA reflects the reduction in revenues due to natural decline and increased council rates
accrued.
20
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-23
$’000
3,255
(7,527)
(3,751)
8,360
30-Jun-22
$’000
2,358
(2,888)
(3,595)
7,380
Net cash at the end of the year
337
3,255
Table 7 – Summary of cashflows
In the year ended 30 June 2023, total net cash outflow was $2,918,000. The net cash outflow from operating
activities was $7,527,000 with $14,916,000 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 2023
1
135
0
1,166
0
1,571
Recordable
Injuries
Days Since
Recordable
Injury
Lost Time
Injuries
Days Since
Last Lost Time
Injury
Reportable
Environment
al Incidents
Days since
reportable
environment
al incident
Health and Safety
Armour Energy is committed to maintaining a strong focus on Health, Safety, and Environmental (HSE)
excellence over the next two years. Our HSE direction, is based on four priority areas that are designed to
enhance safety and efficiency in our operations. By embracing contemporary safety leadership thinking and
adapting to changes in legislation, we aim to facilitate a culture where people's expertise, insights, and the
dignity of work as actually done are central to our HSE approach.
In the 2023 financial year, Armour Energy proudly reported zero Lost Time Injuries (LTIs) and well over 1,000
days without a Lost Time Incident (LTI), with a company LTIFR of 0.
Armour Energy recognizes the dynamic nature of the energy industry and the importance of continually
evolving our HSE practices. Our commitment to safety and environmental responsibility is unwavering. This
strategic direction outlines our approach for the next two years to ensure that safety remains at the core of
our operations.
Our HSE direction is underpinned by the following key principles:
People-Centric Approach: We emphasize the importance of individuals' expertise, insights, and the dignity of
their work as crucial factors in enhancing safety and efficiency.
Compliance and Adaptation: We will remain compliant with all applicable legislation and adapt to changes
in regulatory requirements.
Continuous Improvement: Our commitment to HSE excellence involves an ongoing process of improvement,
driven by data, feedback, and innovation.
23
Our HSE strategy focuses on four priority areas to drive improvement:
a. Critical Risk and Critical Control Program
b. Best-in-Class Induction and Contractor Management
c. Emergency Response Framework
d. Environmental Compliance Framework
Armour Energy is committed to advancing our HSE practices to meet contemporary safety leadership thinking
and evolving legislative requirements. Our four priority areas will drive our improvement efforts, ensuring that
the safety and well-being of our workforce and the environment remain paramount in our operations.
We look forward to the continuous progress and success of our HSE initiatives, reflecting our core values and
attributes. Through collaboration, innovation, and unwavering dedication, we will uphold our commitment to
HSE excellence at Armour Energy.
Figure 11: Sunset driving back from Myall Creek to Surat
Industry Collaboration
Armour continues to be 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.
24
Environment
Armour's operations comply with environmental regulations as governed by both federal and state legislation.
For the fiscal year ending on 30 June 2023, Armour Energy has maintained an model environmental record,
with zero reported environmental incidents. The company has achieved 1,571 days without a reportable
incident, highlighting its commitment to environmental stewardship.
The Kincora Gas Project, an established oil and gas field, is dispersed across numerous Petroleum Leases (PLs)
in the Surat region of Queensland. Armour assumed control of the project in 2016 and is commitment to the
practical decommissioning and remediation of non-operational assets.
As a responsible Operator, Armour's focus is on implementing work programs that minimise environmental
impact. The company employs strategies such as the utilisation of existing access tracks and leases, and the
rapid reinstatement of disturbed areas. These measures help to either avoid or ensure only temporary
disturbance, thereby reducing future rehabilitation needs.
Armour also recognizes the risks that poor weed hygiene practices can pose to farmers within its operating
areas. To mitigate these risks, the company insists on the highest level of weed hygiene control. Armour works
in close consultation with landholders to adopt suitable practices and requires all contractors visiting any of
its sites to comply with these standards. Moreover, Armour has provided training to all staff members who
conduct work on landholders' properties, emphasising the importance of vehicle weed hygiene.
By adhering to these rigorous standards and practices, Armour remains committed to environmental
responsibility within the energy sector.
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 vital role it must play. As the world transitions to a low-carbon future,
climate change is being recognised as a critical political, social, environmental, and commercial issue.
Armour acknowledges the growing expectations of investors and regulatory that the risks faced by the
Company – and its stance 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, which is widely recognised for its part in reducing global emissions. Natural gas emissions per unit of
energy produced are approximately 40% lower than coal. Furthermore, natural gas significantly improves air
quality in urban centres, with negligible particulate and Sulphur Oxide emissions, and lower Nitrogen Oxide
emissions compared to other fossil fuels.
Natural gas also serves as an advantageous fuel for baseload and supplemental power generation
supporting the increasing renewables sector. Gas-fired generation, capable of full production within minutes,
is 40% less carbon-intensive than coal-fired generation.
While gas compliments intermittent renewable energy generation, it is to note that natural gas has other
indispensable applications including heating in foundries and furnaces, plastics and petrochemicals, fertilisers
and food manufacturing for which there are limited other viable alternatives.
Armour confirms that, for the period 2022-2023, it met the corporate group thresholds prescribed by the
National Greenhouse Gas Reporting (NGER) Act, with reporting to be completed in October 2023. The
Company will also report to the National Reporting Inventory (NPI) in September 2023.
25
The majority of the Company's gas-related infrastructure components (gas plant, gas pipelines, well-heads,
compressors, and associated field equipment) are "legacy assets" acquired from Origin Energy as part of the
Kincora Gas Project near Roma in Queensland, completed in 2016. Armour has established the following
initiatives to reduce emissions and environmental impact:
▪
Fugitive Emissions Reduction: Armour continues to reduce fugitive emissions through effective flange
management, leak detection programs and preventative maintenance strategy. Armour minimises gas
flaring by continuously monitoring and maintaining stable plant processes.
▪ Emission Monitoring: The annual Kincora Stack Emission Monitoring Program provides baseline air emission
data and ensures that emissions are below the EPP Air Quality Objectives.
▪ Power Generation Upgrade: Switching from diesel generators to gas.
▪ Renewable Integration: New well site facilities will include solar panel-powered electrically driven
instrumentation.
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.
▪
▪ Minimise the use of bore water with the installation of rainwater tanks at the Kincora Plant and Crew
house.
Armour continues to explore carbon capture and storage (CCS), a process that captures carbon dioxide
(CO2) and stores it deep underground. CCS is viewed as crucial in reducing carbon emissions and
transitioning to cleaner energy.
Despite the favourable landscape for the ongoing production and sale of natural gas, Armour anticipates
increasing regulations and costs related to climate change and corban emissions management. The
Company remains committed to understanding and managing the current and future 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 emissions and actively participating in the energy transition, all
while 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.
26
The Company is mindful of other social consensus-based issues connected with climate change and
environmental stewardship that may influence its operations and cost structures in the future. These dynamic
issues require ongoing monitoring and consideration, especially in the context of the Company's capital
allocation decisions, 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 where it operates. To date, there
have been no direct impacts on Armour's operations or assets related to these matters, aside from the
historical 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 variations in its financial
commitments related thereto.
The Board does not currently consider the Company to be subject to a material financial impact because 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.
Armour recognises the key physical and transitional risks from climate change that may impact the Company
in the future.
1. Physical risks: These include one-off significant disruption such as extreme weather events, as well as
more gradual 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: These risks associated with the global move towards a low-carbon economy. The
Company could be at risk due to reduced demand for oil and gas products, increased regulation or
higher stakeholder expectations impacting the Company’s reputation.
The potential impacts of the above risks to the Company could include reduced revenue, increased costs, a
higher cost of capital, or an inability to access capital or insurance. These risks are covered in greater detail
in the "Managing Risk" section of this report.
27
People
34
Direct
employees
19%
Female
workforce
50%
Site based employees
from the Region
As a small operation, people are at the core of our business. Armour directly employs 34 people with 19%
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.
Of our site-based team, approximately 50% are employed from within the Darling Downs and Western
Queensland region and 28% of them are from the local area.
During the 2023 financial year, under new management, Armour has established new corporate values that
can be found on page 6 of this report. 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.
28
Community
Figure 12: Surat Sunrise 08 Feb 2023
Armour operates in the Surat region of Queensland and strives to continue being 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 o f 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 continues 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 Hamilton provide the necessary contractor services to Armour.
These contractors provide specialist skills and work closely with the Armour operational team. They use local
people for their team.
29
Materials and parts supplies are sourced as much as possible from vendors based in the Surat and Roma area,
supporting local commerce. 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 and their team 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.
Community
Figure 13 and 14: Surat Shire Hall – The Kids’ Cancer Project Fundraiser: An Evening with Owen Finegan
Armour takes pride in supporting the local community of Surat, where our employees reside and work.
Flourishing community groups are the heart of rural and regional regions, nurturing a robust sense of
community unity.
As is now tradition, Armour donated to the 2023 Surat Ladies Bowling Club Annual Pink and Blue Bowls Day. A
number of the Armour team (local and from Brisbane) took part in the bowls day. Armour has sponsored this
event, which raises funds for both breast and prostate cancer charities, for the past 7 years.
Armour continues to sponsor the Queensland Police Legacy Scheme to ensure that children in the Surat & St.
George area receive a Child Safety 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.
Armour has participated in a Women in Business Luncheon event in Brisbane and hosted a fundraising event
at the Surat Town Hall during the year in support of The Kids’ Cancer Project. The hosted event raised $16,368
to support critical cancer research efforts, while supporting local businesses who were used for catering and
wait staff.
30
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 34 people at 30 June 2023 (2022: 37) as well as a number of independent contractors.
Armour contributed $1.7 million (2022: $1.6m) in royalties and $0.4 million (2022: $0.4m) in payroll tax to the
Queensland Government.
31
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
Figure 15: Kincora Terminal
32
Armour has a single production operation and is therefore reliant on continued performance of operations of
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 minimise 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 internal 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.
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.
33
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.
Armour monitors regulatory developments and seeks opportunities to engage with governments and
regulators as well as industry bodies.
34
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
2023, 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 of assets 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 $32 million
capital raise program.
35
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
of
and
at
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.
Stephen Bizzell is the Chairman of boutique
corporate advisory and funds management
group Bizzell Capital Partners Pty 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
of Queensland
Treasury Corporation,
Stanmore Coal Ltd, Diversa Ltd, Apollo Gas
Ltd, UIL Energy Ltd and Dart Energy Ltd.
Qualified as a Chartered Accountant with
considerable experience in the fields of
corporate restructuring, debt and equity
financing, mergers and acquisitions. He has
over 25 years’ of corporate finance and
public company management experience.
Stephen is a member of the Audit & Risk
Management
and
Remuneration Committee.
Committee
Current directorships/other interests
Current directorships/other interests
MAAS Group Holdings Limited
DGR Global Limited
(26/10/2001 – current)
NewPeak Metal Limited
(22/01/2003 – current)
Clara Resources Limited
(21/10/2010 – current)
Lakes Blue Energy NL
(07/02/2012 – current)
SolGold plc (LSE and TSX)
(11/05/2005 – current)
(21/10/2020 – current)
Renascor Resources Limited
(01/09/2010 – current)
Savannah Goldfields 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)
Stanmore Coal Limited
Former directorships (last 3 years)
(05/10/2009 - 15/05/2020)
Atlantic Lithium Ltd (A11) (formerly Iron
Ridge Resources Limited)
Interests in shares: 4,864,142
Interest in options: 1,204,089
(05/09/2007 - 28 June 2021)
Interests in shares: 5,186,689
Interest in options: 159,573
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
the Corporate &
Regional Head of
Structured Finance Group at Babcock &
Brown. Eytan was also with Carnegie, Wylie
& Company as Managing Director. Eytan
commenced his career as a corporate
law-firm
lawyer, with
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
Challenger Energy Group Plc
(01/06/2021– current)
Former directorships (last 3 years)
None
Interests in shares: 250,000
36
Leadership Team
Christian Lange
Chief Executive Officer
International
the Australian and
Christian Lange is a highly experienced executive within
both
resources
industries, having spent over 30 years in executive and
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 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).
Geoffrey Walker
Chief Financial Officer & Joint Company Secretary
B.Bus, CA, GAICD
Geoff 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
largest
Secretary
shareholder and through this role he already has a
good working knowledge of Armour’s business and
strategic objectives.
for DGR Global Ltd, Armour’s
37
Directors’ Report
38
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 2023.
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 9 to 21 of this report and forms part of the
Directors’ report. Material risks to the Company are discussed on pages 32 to 35.
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 36.
Company Secretary
Mr Geoffrey Walker has been Armour’s Company Secretary since 25 May 2022.
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 2023, and the number of meetings attended by each Director were:
Board
Audit and Risk Management Committee
Held
Attended
Held
Attended
Nicholas Mather
Stephen Bizzell
Eytan Uliel
12
12
12
12
12
12
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 2023 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.
Dividends
There were no dividends paid, recommended, or declared during the current or previous financial year or
since the end of the year.
39
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 Date of Expiry Exercise Price Number under option
1-Oct-19
17-Dec-19
23-Jun-20
30-Jun-20
12-Aug-20
24-Aug-20
17-Sep-20
1-Oct-20
19-Oct-20
22-Dec-20
24-Mar-21
9-Jul-21
29-Sep-21
24-Dec-21
2-May-22
2-May-22
1-Aug-22
1-Aug-22
Total
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
$4.00
$4.00
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
$2.50
800,000
160,000
623,330
140,367
188,497
337,883
718,590
2,883,278
1,756,228
1,335,567
1,249,882
1,327,109
1,467,949
1,290,615
241,667
966,667
241,667
123,022
15,852,317
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.
40
Events after the Reporting Date
Other than the below subsequent events, no other matter or circumstance has arisen since 30 June 2023 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.
▪
▪
▪
The Company’s shares were consolidated on a 50:1 basis
The Company issued 21,000,000 Armour Convertible Notes to DGR for the exchange of outstanding MOG
Notes and to settle existing debt
The Company issued Armour Convertible Notes to exchange other outstanding MOG Notes as per the
approvals received at Extraordinary General Meeting held 2 August 2023
▪ On 25 August 2023, Armour received approvals and consents for the following special resolutions from
the Secured Amortising Noteholders:
o Additional assets included as Approved Disposals allowing Armour to progress non-core asset
sales, with at least 90% of the proceeds to be paid to Noteholders as unscheduled
amortisation payments
The issuance of Armour Convertible Notes
The Maturity Date amended to 30 November 2023
o
o
o Waiver of the non-payment of the scheduled principal payment due 29 June 2023 and any
previous breach or other non-performance of obligations
o Waiver of the shortfall in the Interest Reserve Account, where funds were used to pay the June
quarters interest payment
▪ DGR Global Limited and Armour Energy Limited have established a new UK-incorporated company
Conjugate Energy Limited (Conjugate) which will hold interests in oil exploration projects in the Albertine
Graben, Uganda. Conjugate intends to seek admission to a UK stock exchange and raise funds primarily
to drill two exploration wells or drill ready prospects with substantial resources of oil. Any admission will be
subject to, inter alia, compliance with the relevant regulatory requirements and accordingly there can
be no certainty that any admission will occur or the timeframe in which it will occur.
▪ Armour entered into a funding agreement with Armour’s largest shareholder, DGR Global Ltd, for the
provision of a $17 million facility to be drawn down as necessary. The form of the funding will be
determined at the timing of funding.
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 $12,359,000. 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.
41
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.
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 39 to the financial statements. The non-audit services totalling $3,000 relates to whistleblower hotline
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 39 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.
42
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 2023 financial year:
Name
Directors
Nicholas Mather
Stephen Bizzell
Eytan Uliel
Executive KMP
Geoffrey Walker
Christian Lange
Former Executive KMP
Michael Laurent
Position
Period of Service
Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Became KMP 1 July 2011
Became KMP 8 March 2012
Became KMP 20 November 2017
Chief Financial Officer
Chief Executive Officer
Became KMP 25 May 2022
Became KMP 25 July 2022
Chief Operating Officer
Ceased KMP 30 November 2022
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.
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.
43
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
Annual General Meeting held on 30 November 2022 where the shareholders approved the adoption of the
Remuneration Report as set out in the 30 June 2022 Annual Report.
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.
44
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.
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 2023 is detailed on page 49 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.
The combination of these comprises the executive's total remuneration. The remuneration of executive
directors and other KMP for the year ended 30 June 2023 is detailed on pages 49-50 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.
45
Name
Position
Duration of service
Notice Period
Nicholas Mather
Christian Lange
Geoffrey Walker
Executive Chairman
Chief Executive Officer
Chief Financial Officer
Ongoing
Ongoing
Ongoing
By Executive
12 months
3 months
3 months
By Company
12 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 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.
Voting and comments made at the Company's 2022 Annual General Meeting ('AGM')
At the November 2022 AGM, 97.35% (2022: 77.29%) of the eligible votes received supported the adoption of
the remuneration report for the year ended 30 June 2022. The Company did not receive any specific
feedback at the AGM regarding its remuneration practices.
46
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
Year Cash salary and fees
$
Non- monetary
$
Post-employment
benefits
Superannuation
$
Share-based
payments
Shares
$
Directors:
N Mather
S Bizzell
E Uliel
2023
2022
2023
2022
2023
2022
Current other Key Management Personnel:
C Lange1
G Walker2
Total Current KMP
2023
2022
2023
2022
2023
2022
168,000
168,000
40,000
40,000
40,000
40,000
332,187
150,000
15,375
730,187
263,375
-
-
-
-
-
-
38,465
13,968
-
52,433
-
-
-
-
-
-
-
N/A
25,292
20,023
2,050
45,315
2,050
-
-
-
-
-
-
93,651
50,000
5,125
143,651
5,125
Total
$
168,000
168,000
40,000
40,000
40,000
40,000
489,595
233,991
22,550
971,586
270,550
1 My Lange was employed as Chief Executive Officer 25 July 2022. Mr Lingo was employed as CEO from 12 June 2020 to 4 April 2022.
2 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.
47
Previous Directors:
R Sleeman1
Short-term benefits
Year Cash salary and fees
Non- monetary
2023
2022
30,000
-
Previous other Key Management Personnel:
K Schlobohm2
M Laurent3
B Lingo4
T Hawkins5
M Greenwood6
C Gouws5
Total KMP
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
23,871
290,486
336,061
173,048
153,942
272,733
112,138
1,020,673
1,365,168
-
-
68,108
38,395
-
-
-
52,434
106,503
Post-employment
benefits
Superannuation
Share-based
payments
Shares
Total
N/A
N/A
N/A
N/A
N/A
N/A
-
-
30,000
-
10,830
23,568
15,289
11,784
23,568
11,880
56,145
88,139
-
-
60,950
7,299
30,095
90,121
27,832
143,651
155,347
23,871
301,316
488,687
234,031
195,821
386,422
151,850
1,272,902
1,715,157
1 Mr Sleeman resigned as director on 31 March 2022.
2 Mr Schlobohm resigned as Company Secretary on 31 January 2022.
3 Mr Laurent resigned as Chief Operating Officer on 30 November 2022.
4 My Lange was employed as Chief Executive Officer 25 July 2022. Mr Lingo was employed as CEO from 12 June 2020 to 4 April 2022.
5 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.
6 Mr Greenwood was employed as Chief Commercial Officer from 1 June 2021 to 3 June 2022.
48
Employee Incentives
Armour has an incentive scheme which rewards long-term 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 2023.
Share-based compensation
For the year ended 30 June 2023 $455,303 of other employment benefits were taken as ordinary shares in lieu
of cash (2022: $920,476). 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 2023
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 2023, there were no options granted as remuneration to Key Management
Personnel (2022: NIL). There are no options on issue over unissued ordinary shares in Armour Energy Ltd on
30 June 2023 to Key Management Personnel.
Performance Shares
There were no performance shares granted or vested during the year.
Shares issued on exercise of remuneration options
There were no options exercised during the year that were previously granted as remuneration (2022: NIL).
49
Shareholdings
The details of all ordinary shares in Armour Energy Ltd as of 30 June 2023 held by Key Management Personnel
is set out below:
Directors / Key
Management Personnel
Balance at
1-Jul-22
Granted as/ in
lieu of
compensation
Number
Options
exercised
Net changes
Other
Balance at
30-Jun-23
Number
Number
Number
Directors
N Mather
S Bizzell
Eytan Uliel
Executive KMP
C Lange
G Walker
Former KMP
M Laurent
Number
9,019,912
19,287,066
-
-
-
-
-
-
8,683,471
13,789,114
5,605,375
-
33,912,353
22,472,585
-
-
-
-
-
-
-
80,100,662
89,120,574
189,817,534
209,104,600
7,500,000
7,500,000
-
-
8,683,471
13,789,114
(5,605,375)
-
271,812,821
328,197,759
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 2023 (2022: NIL).
Option holdings
The details of all option holdings in Armour Energy Ltd as of 30 June 2023 held by Key Management Personnel
is set out below:
Directors/ Key
management
personnel
Directors
N Mather
S Bizzell
Executive KMP
M Laurent
Balance at
1-Jul-22
Net Change
other
Balance at
30-Jun-23
Total vested
Total Vested and
exercisable
7,978,634
60,204,432
-
-
7,978,634
60,204,432
7,978,634
60,204,432
7,978,634
60,204,432
250,000
68,433,066
(250,000)
(250,000)
-
-
-
68,183,066
68,183,066
68,183,066
"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.
Performance rights shares
There were no performance shares issued during the year.
Options
There were no other options held nominally on 30 June 2023 (2021: NIL).
50
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 2023 was $0.003
($0.15 per share adjusted for the 50:1 consolidation).
The earnings of Armour for the five years to 30 June 2023 are summarised below:
Sales revenue
Loss after income tax
2023
$’000
14,973
(21,661)
2022
$’000
17,985
(11,006)
2021
$’000
17,502
(11,592)
2020
$’000
21,104
(9,571)
2019
$’000
27,819
(11,684)
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
2023
0.3
2022
0.6
2021
2.6
2020
2.0
2019
6.7
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 2023.
The early redemption of 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.
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
Corporate bond holdings
Stephen Bizzell
MOG Notes
Stephen Bizzell
100
425,000
Corporate bond payments
Stephen Bizzell
-
-
-
-
484,920
(909,920)
100
-
Interest
Principal
$
$
Additions /
Disposals
$
Total paid
during 2023
$
2,929
14,000
-
16,929
51
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 Energy & McArthur Oil & Gas completed capital raisings during the year with Bizzell Capital Partners
joint leading the capital raisings and was paid, along with related entities management, capital raising fees
and other fees totalling $156,484 (FY2022: $503,927) on arm’s length terms. Mr Stephen Bizzell is also a
director of Centec Securities Pty Ltd and during the year Centec received trustee services fees of $26,917 in
relation to the McArthur Oil and Gas notes.
As at 30 June 2023, Bizzell Capital Partners and related entities controlled by Mr Stephen Bizzell held
209,104,600 ordinary shares, 6 million unquoted options, 54,204,432 quoted options, and 100 Senior Secured
Amortising notes (2022: 6 million unquoted options), NIL MOG notes (2022: 425,000 notes) and 100 Senior
Secured Amortising notes (2022: 100 notes). The notes 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 2023, Samuel Holdings Pty Ltd and related entities controlled by Mr Nicholas Mather
held 89,120,574 shares (2022: 9,019,912) and 7,978,634 options (2022: 7,978,634) in the Armour Group.
Other than the above, there were no other transactions with Key Management Personnel for the year ended
30 June 2023.
This concludes the Remuneration report, which has been audited.
52
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
29 September 2023
53
Auditor’s Independence Declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
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 2023, 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, 29 September 2023
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.
54
Financial Statements
For the year ended 30 June 2023
These consolidated financial statements should be read in conjunction with the accompanying notes
55
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 June 2023
Consolidated
30 June 2023
30 June 2022
$’000
$’000
Note
Revenue
Revenue from contracts with customers
Cost of goods sold
Gross profit/(loss)
Net (loss)/gain on sale of assets
Other income
Interest revenue
Expenses
Exploration expenditure impairment and write off
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
14,973
(19,298)
17 985
(16,641)
(4,325)
1,344
-
-
69
(4,434)
(6,245)
(5,843)
(428)
(455)
(35)
404
9
(489)
(5,206)
(5,974)
(515)
(718)
(21,661)
(11,180)
-
174
(21,661)
(11,006)
(211)
-
(211)
1,275
(174)
1,101
(21,872)
(9,905)
Cents
Cents
(0.9)
(0.9)
(0.6)
(0.6)
56
Consolidated Statement of Financial Position
As at 30 June 2023
Consolidated
30 June 2023
30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Other financial 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
19
16
17
18
19
20
21
22
23
24
24
22
23
25
26
27
$’000
337
1,600
2,478
983
800
6,198
254
6,452
196
32,299
59,506
7,832
948
185
100,966
107,418
17,190
320
416
32,406
50,332
2,075
693
46
12,359
15,173
65,505
41,913
157,948
(184)
(115,851)
41,913
$’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
108,037
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
57
Consolidated Statement of Cashflows
For the year ended 30 June 2023
Consolidated
30-Jun-23
30-Jun-22
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
Redemption of notes
Proceeds from borrowings
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
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the reporting
period
14,916
(20,786)
69
(107)
(1,619)
-
(7,527)
(65)
(3)
(3,946)
-
1,275
(1,012)
(3,751)
12,654
12,421
(4,297)
2,000
(304)
(13,646)
(468)
8,360
(2,918)
3,255
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
Cash and cash equivalents at the end of the reporting period
12
337
3,255
58
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Issued capital
Reserves
Consolidated
Balance at 1 July 2022
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
Transfers to reserves
Share issue costs
Share-based payments
Balance at 30 June 2023
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:
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 2022
(184)
(115,851)
Issued capital
Reserves
$’000
145,983
-
-
-
11,707
-
(469)
727
157,948
$’000
133,771
-
-
-
11,014
-
(545)
1,743
145,983
$’000
125
-
(211)
(86)
-
(98)
-
$’000
1,917
-
1,101
1,101
-
(2,893)
-
Accumulated
losses
$’000
(94,288)
(21,661)
-
(21,661)
-
98
-
-
Accumulated
losses
$’000
(86,175)
(11,006)
-
(11,006)
-
2,893
-
-
125
(94,288)
Total equity
$’000
51,820
(21,661)
(211)
(21,872)
11,707
-
(469)
727
41,913
Total equity
$’000
49,513
(11,006)
1,101
(9,905)
11,014
-
(545)
1,743
51,820
59
These consolidated financial statements should be read in conjunction with the accompanying notes
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 29 September
2023. 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 2023:
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.
60
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 2023 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.
61
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 2023, the Group generated a pre-tax consolidated net loss of $21,661,000, operating
cash outflows of $7,527,000 and net current liabilities of $43,880,000. The Group had cash and cash equivalents
of $337,000 as at 30 June 2023 and has net assets totalling $41,913,000. The Group has achieved relatively stable
production during the year ended 30 June 2023, resulting in $14,973,000 of revenue.
62
The Company has Secured Amortising Notes (Secured Notes) on issue with a remaining face value of the Notes
outstanding at 30 June 2023 of $17,217,200 (original face value of the Secured Notes at the time of issue was
$55,000,000). The Secured Notes had as at 30 June 2023, a principal and interest repayment schedule to 29
March 2024. In addition, as at 30 June 2023, Armour had not met certain Financial Undertakings pursuant to the
Terms and Conditions of the Secured Amortising Notes including the Debt Service Cover Ratio, the Leverage
Ratio and Minimum Cash Balance. Accordingly, the debt has been classified as current for accounting
purposes.
Armour provided notice to the Note Trustee that it breached its covenants in December 2022, which continued
through the remainder of the year. Following the end of the financial year Armour received the necessary
approvals for additional amendments to the terms of the Notes. These amendments allow Armour to issue
Armour Convertible Notes, dispose of non-core assets and amend the Maturity Date to 30 November 2023. The
approvals and consents received also waived any breach or non-performance of obligations by Armour to the
date of the resolution.
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 and therefore the entity may be unable to realise its assets and discharge
its liabilities in the normal course of business.
The Directors and management have assessed the Group’s ability to continue as a going concern and are
confident in the Group’s prospects. Several key factors support this assessment:
1. DGR Global Limited has provided a formal letter of financial support to Armour that it will provide
funding to ensure Armour is able to discharge its liabilities in the ordinary course of business.
2. Armour has entered into an agreement for the 13-month supply of gas by Armour to Shell, which provides
Armour with a material increased realised gas price and thereby underlying revenues from December
2023. The price for December 2023 is $12/ GJ in line with the government price cap, with an uplift in price
for calendar year 2024.
3. The cash generating ability of the Kincora Project is anticipated to increase as the Group moves ahead
with its 2024/25 drilling program. This program is expected to materially increase production levels,
leading to a significant increase to revenue.
4. 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, such as
that approved at the Extraordinary General Meeting held 2 August 2023. Capital raised will be
executed 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.
5. Refinancing of maturing debt facilities.
The Directors and management are dedicated to the successful execution of the Group’s strategic plans, which
include increased drilling activities, expanding investor collaborations and realising revenue growth. These
initiatives are intended to mitigate the material uncertainties regarding the Group’s ability to continue as a
going concern.
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.
63
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
Going Concern
Exploration and evaluation assets
18
25
Oil and Gas assets
Provision for restoration and abandonment
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 2023, 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.
64
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.
Major customers
During the year ended 30 June 2023 approximately 63% (2022: 56%) 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.
65
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
Additions to non-current assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Corporate
2023
$'000
2022
$'000
Total
2023
$'000
EEA
2023
$'000
-
-
(43)
-
(4,434)
-
-
-
(4,477)
2022
$'000
-
-
-
-
(489)
-
-
-
(489)
Surat
2023
$'000
14,973
14,973
(2,950)
(2,050)
(428)
-
49
(967)
(6,346)
2022
$'000
17,985
17,985
3,872
(2,484)
(515)
(19)
2
(1,556)
(700)
-
-
(5,432)
(149)
-
-
20
(5,278)
(10,838)
-
-
(6,194)
(139)
-
(15)
7
(3,650)
(9,991)
724
32,839
1,379
34,089
10,829
73,371
2,279
67,615
3
2,672
358
5,189
2022
$'000
17,985
17,985
(2,322)
(2,623)
(1,004)
(34)
9
(5,206)
(11,180)
174
(11,006)
4,016
106,893
1,143
108,036
14,973
14,973
(8,425)
(2,198)
(4,862)
-
69
(6,245)
(21,661)
-
(21,661)
11,557
108,882
-
108,882
-
-
27,709
21,301
39,260
34,917
66,969
56,217
-
-
66,969
56,217
66
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 2023
$'000
30 June 2022
$'000
9,472
1,890
3,611
14,973
11,005
2,472
4,508
17,985
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 condensate, 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 a range of 10 to 21 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 2023
$'000
-
-
69
-
30 June 2022
$'000
(35)
-
9
404
69
378
67
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 sales
Management fee
Consultancy and legal costs
Insurance not included in cost of sales
Director fees
Depreciation and amortisation
Office equipment
Amortisation of intangibles
Other expenses
Consolidated
30 June 2023
$'000
30 June 2022
$'000
13,831
3,417
2,050
9,584
4,573
2,484
19,298
16,641
2,611
456
1,393
228
258
7
141
749
2,275
456
1,956
193
278
17
122
677
Total general and administrative expenses
5,843
5,974
Share-based payments
455
718
Total superannuation expense (included in costs of goods sold and
general and administrative expenses)
505
600
68
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 35.
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
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)
Income tax benefit
Consolidated
30 June 2023
$'000
4,441
199
1,605
30 June 2022
$'000
3,059
960
1,187
6,245
5,206
Consolidated
30 June 2023 30 June 2022
$'000
$'000
-
-
-
-
(174)
-
174
-
(21,661)
(11,180)
(6,498)
(3,354)
137
135
383
(5,843)
5,843
-
-
252
4
(61)
(3,159)
2,985
-
(174)
69
(b) Reconciliation of net deferred tax
Opening
balance
Net charged
to income
Net charged
to OCI
Net
charged to
equity
1-Jul-22
$'000
$'000
$'000
$'000
Closing
Balance
30-Jun-23
$'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)
3,185
152
11
47
99
2,007
1,065
1,362
1,100
338
-
91
8
2,263
(13)
25
111
-
2,140
383
-
(1,100)
(34)
1
(17)
-
Deferred tax asset
9,465
3,759
Deferred tax liability
Exploration & Evaluation assets
Oil & Gas assets
Leased Assets
(8,109)
(1,021)
(335)
(592)
(3,217)
50
Deferred tax liability
(9,465)
(3,759)
Net deferred tax
-
Deferred tax assets not recognised
Unused tax losses
Capital raising costs in equity
Financial assets at fair value through OCI
66,485
19,477
130
-
275
-
66,625
19,752
Potential tax benefit at 30%
19,987
5,926
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,448
139
36
158
99
4,147
1,448
1,362
-
304
1
74
8
13,224
(8,701)
(4,238)
(285)
(13,224)
85,962
405
-
86,367
25,910
70
Opening
balance
Net charged
to income
Net
charged to
OCI
Net
charged
to equity
$'000
$'000
$'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)
1-Jul-21
$'000
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
Deferred tax liability
(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
Financial assets at fair value through OCI
56,543
333
697
9,952
(203)
-
-
-
(697)
Potential tax benefit at 30%
17,272
2,924
(209)
Closing
Balance
30-Jun-22
$'000
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
-
19,987
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 2023 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.
71
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.
72
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 2023 30 June 2022
$'000
$'000
(21,661)
(11,006)
2,530,685
2,530,685
1,873,540
1,873,540
(0.9)
(0.9)
(0.6)
(0.6)
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 2023
$'000
312
25
30 June 2022
$'000
2,944
311
337
3,255
Other cash and cash equivalents include bank accounts held by the Group as operator in joint operations in
tenements.
73
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.
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
Write off 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) / (decrease) in other current assets
Increase / (decrease) in trade and other payables
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
Increase / (decrease) in employee benefits
Consolidated
30-Jun-23
$’000
(21,661)
30-Jun-22
$’000
(11,006)
2,198
-
455
4,434
428
2,078
1,025
536
1,187
2,369
(56)
(479)
(41)
2,623
35
718
489
515
187
892
(76)
(472)
3,084
561
(438)
-
Net cash used in operating activities
(7,527)
(2,888)
Equity settled share-based payment transactions are disclosed in Note 35.
Apart from in Note 35, there are no other non-cash financing and investing activities to disclose.
74
(b) Reconciliation of liabilities arising from financing activities
Balance at 1 July 2021
Net cash used (in)/ for financing activities
Amortisation
Balance at 30 June 2022
Borrowed Amounts
Tribeca
Loan
Corporate
Bonds
$’000
5,229
-
(40)
$’000
32,208
(8,800)
469
5,189
23,877
-
-
Net cash used in financing activities
(5,403)
(7,700)
Interest Payable
Issue Costs
Amortisation
-
-
-
-
214
469
Consolidated
Redeemable
Exchangeable
Notes
$’000
Other
Borrowed
funds
$’000
Total
$’000
-
6,180
-
6,180
-
8,124
1,981
(1,088)
617
1,393
38,830
203
(2,417)
-
429
1,596
36,842
210
210
1,153
(3,826)
75
-
-
2,056
(1,088)
1,300
Balance at 30 June 2023
-
16,646
15,814
3,034
35,494
Note 14. Current assets – Trade and other receivables
Trade receivables
Other receivables
Consolidated
30 June 2023
$'000
1,406
194
30 June 2022
$'000
1,439
105
1,600
1,544
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 2023 (30 June 2022: 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. 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.
75
As at 30 June 2023, included in trade receivables is one significant debtor accounting for approximately 69%
(2022: 52%) of the total trade receivables.
Note 15. Current assets – Inventories
Gas
Oil and Condensate
LPG
Materials & Consumables
Consolidated
30 June 2023
$'000
30 June 2022
$'000
64
105
2
2,307
2,478
126
84
4
2,321
2,535
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 2023
$'000
30 June 2022
$'000
254
-
254
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
carrying value of the tenements was revalued in FY 2022 when the sale contract with PZE was entered into
to a book value of $1,986,717. The consideration amount was for the registered interest in PL 28, 69 and 89.
76
The agreement was subsequently renegotiated. The value accounted for in Assets held for sale is the result
of Armour selling only PL 89. The value held for PL 28 and PL69 has been transferred back to Oil and Gas
Assets.
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
in the 2023 financial year.
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
Exploration and evaluation assets written off
Provision for impairment
Consolidated
30 June 2023
$'000
30 June 2022
$'000
44,412
(12,113)
43,119
(8,853)
32,299
34,266
Consolidated
30 June 2023
$'000
30 June 2022
$'000
(8,853)
(3,260)
(8,364)
(489)
(12,113)
(8,853)
Consolidated
30 June 2023
$'000
30 June 2022
$'000
34,266
2,467
(1,174)
(3,260)
32,013
2,742
-
(489)
32,299
34,266
Upon further review there were a number of assets held as part of the exploration and evaluation assets which
were held in the Northern Territory. These specific items were reviewed as part of annual stocktake once they
were moved to Kincora and it was determined that they are not expected to have any future further value to
the Company. As such, the Group has written off $1,174,000 of exploration and evaluation assets.
77
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 2023. The Group determined that there was a trigger present for ATP 2028
and ATP 2029 as the appeal made to the government in relation to its determination of the Potential
Commercial Area (PCA) application was withdrawn. As such, it was determined that it was appropriate for an
impairment to be recognised in relation to these assets as the carrying value of the Group's interest exceeded
what is expected to be its recoverable amount. This resulted in an impairment provision of $3,260,000 recorded
during the year ended 30 June 2023. This amount includes an accrual for the amounts that the Company are
required to settle the case.
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 2023, 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.
78
Note 18. Non-current assets - Oil and gas assets
Oil & gas assets - at cost
Provision for Restoration and Abandonment
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
Provision for Restoration and Abandonment
Transfers to assets held for sale
Depreciation charge
Provision for impairment
Consolidated
30 June 2023
$'000
91,520
5,671
(14,797)
(12,443)
69,951
(4,389)
(6,056)
(10,445)
59,506
30 June 2022
$'000
85,892
-
(12,896)
(12,015)
60,981
(4,389)
(6,056)
(10,445)
50,536
Consolidated
30 June 2023
$'000
30 June 2022
$'000
50,536
4,036
5,671
1,741
(2,050)
(428)
59,506
52,763
2,271
-
(1,896)
(2,087)
(515)
50,536
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.
79
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.
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 2023.
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. The net carrying value of the CGU is
$41,688,325. 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 2033.
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 13% to the future cash flows are based on the weighted average cost of capital,
adjusted for the Group’s known risks.
80
The following represents inputs to the future cash flows. Forecasted commodity prices have been used where
available. Where the forward price curve does not extend far enough into the future, the price at the end of
the forward curve has been held steady:
Commodity & foreign exchange
Assumptions
Projected average Oil price $USD/bbl
Contracted Gas $AUD/GJ
Projected average Spot Market Gas price
$AUD/GJ
Projected average LPG price $USD/T
Projected average USD/AUD fx rate
83.05
13.50
16.10
486.91
1.4084
Sensitivity
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. 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.
It is estimated the recoverable amount of the CGU would equal its carrying amount if they key assumptions
were to change as follows:
Commodity spot prices for oil, gas and LPG
Discount rate
Production levels from undeveloped wells
Change in key assumption
Decrease by
Increase by
Decrease by
41.0%
23.5%
55.9%
The Group has recorded an impairment of $427,984 relating to oil and gas assets. This impairment relates to
specific costs that Armour do not expect to be recouped and do not hold any future economic benefit.
Note 19. Non-current assets - Other financial assets
Current other financial assets
Non-Current other financial assets
Consolidated
30 June 2023
$'000
30 June 2022
$'000
800
7,832
8,632
-
9,614
9,614
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 2023, this deposit was $800,392 (2022: $1,636,250). The maturity of the Secured Amortising Notes
has been amended to November 2023. The deposit is classified as current as at 30 June 2023 in line with the
maturity date (2022: non-current).
Consolidated
30 June 2023
$'000
30 June 2022
$'000
81
Financial assets at fair value through other comprehensive income
Less: cumulative fair value movement
Financial assurances
Security deposits
700
(211)
489
6,454
1,689
700
-
700
5,613
3,301
8,632
9,614
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.
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 2023
$'000
30 June 2022
$'000
700
-
(211)
489
1,150
(1,725)
1,275
700
Financial assets at fair value through other comprehensive income is the value of the investment in Auburn
Resources NL (which were received in consideration for the sale of Ripple Resources Pty Ltd in the 2021
financial year). This was derived by the expected net realisable value of the assets of the company.
Last year included LKO Ordinary shares and convertible notes, which were sold during the year.
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.
82
Note 20. Non-current assets - Right-of-use assets
Right of use Assets
Less: Accumulated depreciation
Consolidated
30 June 2023
$'000
30 June 2022
$'000
2,374
(1,426)
2,169
(1,061)
948
1,108
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
Consolidated
30 June 2023
$'000
30 June 2022
$'000
7,054
335
7,142
2,659
7,192
1,551
1,404
2,037
17,190
12,184
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 28.
Trade payables are generally non-interest bearing and are generally on short term in nature and therefore are
not discounted.
83
Note 22. Current and non-current liabilities - Lease liabilities
Current Lease liability
Non-Current Lease liability
Consolidated
30 June 2023
$'000
30 June 2022
$'000
320
693
274
851
1,013
1,125
Refer to Note 29 for further information on financial risk management.
Contracts
Balance at 1 July 2021
Interest Expense
Modification to lease terms
Lease payments
Balance at 30 June 2022
Additions
Interest Expense
Modification to lease terms
Lease payments
Balance at 30 June 2023
Motor Vehicles
$’000
6
108
12
107
(142)
85
52
7
90
(116)
118
Plant &
Equipment
$’000
2
Land &
Buildings
$’000
1
689
57
-
(167)
579
-
48
-
(169)
458
564
47
-
(150)
461
-
51
48
(123)
437
Total
$’000
9
1,361
116
107
(459)
1,125
52
106
138
(408)
1,013
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.
84
Note 23. Current and non-current liabilities - Employee benefits
Current Employee Benefits
Non-Current Employee Benefits
Accounting policy for employee benefits
Short-term employee benefits
Consolidated
30 June 2023
$'000
30 June 2022
$'000
416
46
462
454
49
503
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 and non-current liabilities – Borrowings
Current Borrowings
Non-Current Borrowings
Consolidated
30 June 2023
$'000
30 June 2022
$'000
32,406
2,075
21,821
13,896
34,481
35,717
85
Total current and non-current borrowings
Tribeca Loan Facility
Secured Amortising Notes
Secured Amortising Notes - issue costs
Convertible Notes
Convertible Notes - issue costs
Other facilities
Consolidated
30 June 2023
$'000
30 June 2022
$'000
-
17,217
(571)
16,052
(238)
2,022
5,189
24,917
(1,040)
6,177
-
474
34,481
35,717
Other facilities is predominantly made up of a loan from DGR Global Limited.
Facility terms and security disclosures
Tribeca loan facility
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
Consolidated
30 June 2023
$'000
30 June 2022
$'000
6,759
(137)
(2,893)
(6,442)
2,576
137
-
6,759
(137)
(2,893)
(1,118)
2,576
3
5,189
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 was
secured by a guarantee from the Company, in 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 Environmental Bonding Facility was repaid in full on 15th November 2022.
Secured Amortising Notes
Current Borrowings
Non-Current Borrowings
Consolidated
30 June 2023
$'000
30 June 2022
$'000
16,646
-
16,646
9,981
13,896
23,877
86
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 2023
$'000
30 June 2022
$'000
17,217
(2,351)
1,780
16,646
24,917
(2,351)
1,311
23,877
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 has been amended to 11.75% per annum during the year, payable quarterly in arrears.
▪
The Maturity Date for the notes is five years from issue date. This was amended in August 2023 to 30
November 2023.
Armour provided notice to the Note Trustee that it breached its covenants in December 2022, which subsisted
through the remainder of the year. Following the end of the financial year Armour received approval for
additional amendments to the terms which allows Armour to issue Armour Convertible Notes, dispose of non-
core assets and amend the Maturity Date to 30 November 2023. The approvals and consents received also
waived any breach or non-performance of obligations by Armour to the date of the resolution.
Due to the delay on completing the Capital Raise Program, Armour defaulted on the June principal repayment.
This was subsequently made in August 2023. Furthermore, the interest repayment for the June quarter was
withdrawn from the Interest Reserve Account.
See Note 4 Going concern for further details on how Armour plan to meet these new terms.
Redeemable exchangeable notes
Consolidated
30 June 2023
$'000
30 June 2022
$'000
Face value of Redeemable Exchangeable Notes
Interest Payable on Redemption or Maturity
Issue costs of Redeemable Exchangeable Notes
Amortisation of Redeemable Exchangeable Notes costs
14,070
1,981
(1,088)
851
15,814
6,177
-
-
-
6,177
87
The redeemable exchangeable notes were a part of the steps taken to raise capital for the demerger and IPO
of the McArthur Basin Assets. This funding has been provided by way of a placement of an unsecured
subordinated redeemable exchangeable notes facility issued by Armour’s subsidiary, McArthur Oil and Gas Ltd
(MOG).
The main terms of the Redeemable Exchangeable Notes are as follows:
▪ Notes do not amortise.
▪
The Notes constitute direct and unsecured obligations of the Company and rank subordinated and
junior to the Secured Amortising Notes.
▪ Coupon rate attached is 15% per annum, accrued and capitalised monthly from the Issue date.
▪
The coupon on the Notes will be payable on Exchange, the Maturity Date or Redemption Date.
▪
Subsequent to year end, the Maturity Date for the notes was amended to 30 September 2023.
The demerger and IPO transaction did not progress as swiftly as initially envisaged due to both the time required
to revise the demerger structure to ensure that acceptable commercial and taxation outcomes were achieved
following disclosures and feedback from the Australian Taxation Office in late 2021, 2022 and also the recent
share market volatility caused by the global geopolitical situation which has also slowed global IPO activity.
Due to various obstacles and upon appointment of new management Armour moved towards
commercialising the Northern Basin Assets through various other initiatives such as that announced on 20
February 2023, with the execution a Heads of Agreement to supply gas to a nearby site.
Subsequent to 30 June 2023 MOG and Armour obtained all necessary approvals and consents to allow for the
exchange of the Outstanding MOG Notes on issue (together with any accrued and unpaid interest) into Armour
Convertible Notes (refer to Note 38 for details). This funding enables Armour to continue to optimise the value of
its substantial asset base including pursuing several small production enhancement projects in the Surat area.
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 25. Non-current liabilities - Provision for restoration and abandonment
Restoration and abandonment
Balance at the beginning of the year
Increase to provision
Consolidated
30 June
2023
$'000
12,359
30 June
2022
$'000
6,688
Consolidated
30 June
2023
$'000
30 June
2022
$'000
6,688
5,671
6,688
-
12,359
6,688
88
Key judgement - provision for rehabilitation
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 2023, the facts and circumstances suggested that the carrying amount of the provision
has materially changed due to Armour’s reassessment of the costs required to restore the Oil and Gas Assets as
a result of inflation and labour costs.
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 26. 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
Consolidated
30-Jun-23
30-Jun-22
30-Jun-23
30-Jun-22
Shares
Shares
4,921,342,072
-
2,039,451,327
-
$’000
167,067
(11,208)
$’000
154,633
(10,739)
-
-
2,089
2,089
4,921,342,072
2,039,451,327
157,948
145,983
89
Movements in ordinary share capital
Details
Balance
Share issues for cash (supplier payment)
Conditional placement
Employee issued shares
Employee issued shares
Share issues for cash (supplier payment)
Share issues for cash (supplier payment)
Placement
Employee issued shares
Share issues for cash (supplier payment)
Share issues for cash (supplier payment)
Conditional placement
Share issues for cash (supplier payment)
Share issue costs
Employee issued shares
Share issues for cash (supplier payment)
Employee issued shares
Share issues for cash (supplier payment)
Talbragar Share issues for Tribeca
Balance
Details
Balance
Employee Shares
Supplier Invoices
Pecal Share placement
Talbragar Share placement
Tenstar Trading Placement
Employee Shares
Placement
Accelerated ANREO
Employee Shares
Employee Shares
Entitlement Offer
Entitlement Offer
Share issue costs
Balance
Date
Shares
#
1-Jul-20 1,529,816,120
7-Jul-21
5,344,617
80,407,143
9-Jul-21
12,124,630
9-Aug-21
360,000
9-Aug-21
7,484,481
9-Aug-21
1,924,455
12-Aug-21
220,192,320
29-Sep-21
8,793,109
6-Oct-21
3,939,519
8-Nov-21
8-Nov-21
1,260,417
95,192,307
23-Dec-21
1,016,053
23-Dec-21
17-Jan-22
17-Jan-22
14-Apr-22
14-Apr-22
2-May-22
9,723,263
2,090,000
9,936,018
4,846,875
45,000,000
30-Jun-22 2,039,451,327
Date
Shares
1-Jul-22
2,039,451,327
11-Jul-22
33,733,549
11-Jul-22
12,766,000
1-Aug-22
72,500,000
1-Aug-22
100,000,000
29-Nov-22
51,450,000
29-Nov-22
22,097,282
30-Mar-23
663,364,020
30-Mar-23
715,131,860
6-Apr-23
21,371,292
6-Apr-23
30,742,376
11-May-23
588,630,436
18-May-23
570,103,930
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
Issue
price
$0.006
$0.007
$0.006
$0.007
$0.007
$0.006
$0.004
$0.004
$0.007
$0.005
$0.004
$0.004
Value
$'000
133,771
143
2,814
303
7
187
60
5,725
237
98
30
2,475
19
(545)
194
42
159
78
186
145,983
Value
145,983
219
89
456
768
334
133
2,653
2,861
139
148
2,355
2,280
(469)
30-Jun-23
4,921,342,072
157,948
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.
90
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
1/10/2020
19/10/2020
22/12/2020
24/03/2021
9/07/20211
29/09/20212
24/12/20213
2/05/20224
2/05/20225
1/08/20226
1/08/20227
Balance
Expiry Date
Number
30/09/2023
30/09/2023
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
29/02/2024
#
40,000,000
8,000,000
31,166,497
7,018,341
9,424,831
16,894,150
35,929,524
144,163,885
87,811,409
66,778,341
62,494,099
66,355,466
73,397,439
64,530,769
12,083,333
48,333,334
12,083,333
6,151,099
792,615,850
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
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%
100.00%
100.00%
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.
6 In August 2022, 12,083,333 options were issued to Talbragar River Holdings Pty Ltd as a component of the arrangements to settle the Tribeca
Facility.
7 In August 2022, 12,083,333 options were issued to Pecal Pty Ltd as a component of the arrangements to settle the Tribeca Facility. In June
2023, 5,932,234 options issued to Pecal Pty Ltd were cancelled by agreement between both parties.
In total, there were 18,234,432 (2022: 264,700,341) options issued in financial year 2023, 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.
91
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.
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 27. Equity – Reserves
Financial assets at fair value through other comprehensive income
reserve
Share-based payments option reserve
Performance shares reserve
Consolidated
30 June 2023
$'000
30 June 2022
$'000
(5,087)
(4,876)
4,903
-
(184)
4,903
98
125
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.
92
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
(5,977)
1,101
-
Balance at 1 July 2021
Revaluation - gross
Share-based payments
$'000
4,903
-
-
Share-based
payments
option reserve
Performance
shares reserve
Balance at 30 June 2022
(4,876)
4,903
Revaluation - gross
Transfer to Retained
Earnings
(211)
-
-
-
Balance at 30 June 2023
(5,087)
4,903
-
Note 28. Fair value measurement
$'000
98
-
-
98
-
(98)
Equity
conversion
right - Tribeca
Loan
$'000
2,893
-
Total
$'000
1,917
1,101
(2,893)
(2,893)
-
-
0
-
125
(211)
(98)
(184)
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
2023
2022
Consolidated
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
489
700
Total
$'000
489
700
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 2023 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 the net assets Auburn Resources Limited held at 30 June 2023. Armour hold 11.5% of
Auburn’s Ordinary Shares.
93
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 29. 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.
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.
94
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 table on page 100.
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.
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.
95
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 (2022: 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
2023
2022
Interest-bearing - fixed rate
2023
Tribeca facility
Secured Amortising
Notes
Exchangeable
Notes
Lease liability
Loan from Related
Party
2022
2023
2022
2023
2022
2023
2022
2023
2022
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%
11.75%
8.75%
15.00%
15.00%
8.88%
6.30%
14.07%
-
17,190
12,184
-
5,189
17,217
12,299
16,052
6,177
318
382
2,075
-
-
-
-
-
15,236
-
-
279
295
-
-
-
-
-
-
-
-
-
416
715
-
-
17,190
12,184
-
5,189
17,217
27,535
16,052
6,177
1,013
1,392
2,075
-
Interest payable on the Secured Amortising Notes is quarterly in arrears. The Secured Amortising Notes maturity
date has been amended to 30 November 2023. 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.
96
Note 30. 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
Armour Energy (Victoria) Pty Ltd
Armour Energy (Surat Basin) Pty Ltd
Armour Energy (Queensland) Pty Ltd
McArthur Oil and Gas Limited
McArthur NT Pty Ltd
CoEra Pty Ltd
Cordillo Energy Pty Ltd
Holloman Petroleum Pty Ltd
Victoria / Australia
Queensland / Australia
Queensland / Australia
Northern Territory / Australia
Northern Territory / Australia
South Australia/ Australia
South Australia/ Australia
South Australia/ Australia
Note 31. Interests in joint operations
Ownership interest
30-June-
2023
%
30-June-
2022
%
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%
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-2023
30-June-2022
Ownership interest
Queensland, Australia
ATP119P South – Waldegrave*
ATP119P South - Snake Creek East* Queensland, Australia
Queensland, Australia
ATP 212P - PL 30
Queensland, Australia
ATP212P - PL512, PPL22
Queensland, Australia
Weribone Pooling Area
Queensland, Australia
PCA157 Bainbilla Block
Queensland, Australia
ATP 754P
Victoria, Australia
PEP 169
Victoria, Australia
PEP 166
Uganda
Kanywataba Block
* ATP 119P is 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.
97
Note 32. 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-2023 30-June-2022
$'000
$'000
(12,026)
(7,426)
Other Comprehensive income for the year, net of tax
Total Comprehensive income
(211)
(12,237)
1,101
(6,325)
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-2023 30-June-2022
$'000
$'000
1,353
870
107,635
89,992
37,166
19,430
39,261
38,760
157,948
145,983
(5,085)
(4,876)
4,903
-
-
4,903
98
-
(89,392)
(94,876)
(68,374)
51,232
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
As at 30 June 2023, the parent entity is not a guarantor for its subsidiary Armour Energy (Surat Basin) Pty Ltd as
the Tribeca loan facility was paid out during the year.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30
June 2022.
98
Note 33. 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 30.
Joint Operations
Interests in joint ventures are set out in Note 31.
Key management personnel
Disclosures relating to key management personnel are set out in Note 34 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
Payment for services from other related party – Samuel Capital Pty Ltd3
Consolidated
30 June 2023
30 June 2022
$
$
1,514,360
156,484
6,586
456,000
503,927
-
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 (2022:
$38,000). For the year ended 30 June 2023 $456,000 (2022: $456,000) was payable to DGR Global for the provision of the
Services. The total amount outstanding at year end was $1,271,410 (2022: $797,918).
As at 30 June 2023 DGR Global continues to hold 4,550 secured amortising notes (2022: 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 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 $156,484 (FY2022: $503,927) on
arm’s length terms. Mr Stephen Bizzell is also a director of Centec Securities Pty Ltd and during the year Centec received
trustee services fees of $26,917 in relation to the McArthur Oil and Gas notes.
As at 30 June 2023, Bizzell Capital Partners and related entities controlled by Mr Stephen Bizzell held 209,104,600 ordinary
shares, 6 million unquoted options, 54,204,432 quoted options, and 100 Senior Secured Amortising notes (2022: 6 million
unquoted options), NIL MOG notes (2022: 425,000 notes) and 100 Senior Secured Amortising notes (2022: 100 notes). The
notes were purchased on the same terms and conditions as all other bondholders.
3 Samuel Capital Pty Ltd provided marketing consulting totalling $6,586.
99
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:
Notes held
at the start
of the year
No.
Additions
Disposals/
Other
No.
No.
Notes held
at the end
of the year
No.
Secured amortising notes holdings
Stephen Bizzell
100
-
-
MOG redeemable exchangeable notes holdings
425,000
484,920
(909,920)*
5,000,000
11,428,000
(2,422,590)*
14,005,410
100
-
Bizzell Capital Partners
DGR Global Limited
*Redeemed into shares
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 34. 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 44 to 54.
Note 35. Share-based payments
Consolidated
30 June 2023
$
30 June 2022
$
1,020,672
56,145
143,651
46,391
1,467,859
1,365,168
88,139
214,123
106,503
1,773,933
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.
100
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.
Outstanding at the beginning of the year
Issued during the year
Expired during the year
2023
WAEP
$0.05
2023
Number
2,000,000
2022
WAEP
$0.05
2022
Number
2,000,000
-
-
-
-
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 2023 (2022: NIL). The options issued during the year are part of an independent contractor agreement.
The options outstanding as at 30 June 2023 expire 29 February 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 year1,2
Granted during the year
Expired during the year
Exercisable at the end of the year
Consolidated
2023 WAEP
30 June 2023 2022 WAEP
30 June 2022
$0.150
$0.050
$0.161
$0.054
Number
56,333,334
$0.15
-
-
56,333,334
$0.15
Number
49,000,000
48,333,334
(41,000,000)
56,333,334
The opening balance of options were issued in two tranches:
1 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.
2 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.
101
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
Forefeited during the year
Share-based payment expense
Option expense
Consolidated
30 June 2023
Number
30 June 2022
Number
1,350,000
7,200,000
-
-
(1,350,000)
-
(5,850,000)
-
-
1,350,000
There was no option expense recognised in the statement of profit or loss for the year ended 30 June 2023 (2022:
NIL).
Performance shares expense
There was no option expense recognised in the statement of profit or loss for the year ended 30 June 2023 (2022:
NIL).
The share-based payment expense relates to shares issued to employees in lieu of cash. $455,000 was issued in
the year ended 30 June 2023.
Share issue costs
There were approximately 70m (2022: 441m) ordinary shares issued $280,588 (2022: $503,927) in lieu of cash for
invoices related to the management of the capital raises issued during the year.
Other transactions settled in shares
For the year ended 30 June 2023 $638,000 of employment benefits were taken as ordinary shares in lieu of cash
(2022: $920,000).
Value of shares issued to creditors for various services delivered during the year totalled $89,000 (2022: $638,000)
There were approximately 67m options issued with an exercise price of $0.05 as part of the negotiations to settle
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.
102
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.
Note 36. 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 2023
30 June 2022
$’000
$’000
32,122
129,287
3,539
164,948
25,034
112,043
3,627
140,704
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 37. 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.
Other than the above, the Group had no other contingent assets or liabilities at 30 June 2023.
Note 38. Events after the reporting period
Other than the below subsequent events, no other matter or circumstance has arisen since 30 June 2023 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.
▪
▪
▪
The Company’s shares were consolidated on a 50:1 basis
The Company issued 21,000,000 Armour Convertible Notes to DGR for the exchange of outstanding MOG
Notes and to settle existing debt
The Company issued Armour Convertible Notes to exchange other outstanding MOG Notes as per the
approvals received at Extraordinary General Meeting held 2 August 2023
103
▪ On 25 August 2023, Armour received approvals and consents for the following special resolutions from
the Secured Amortising Noteholders:
o Additional assets included as Approved Disposals allowing Armour to progress non-core asset
sales, with at least 90% of the proceeds to be paid to Noteholders as unscheduled
amortisation payments
The issuance of Armour Convertible Notes
The Maturity Date amended to 30 November 2023
o
o
o Waiver of the non-payment of the scheduled principal payment due 29 June 2023 and any
previous breach or other non-performance of obligations
o Waiver of the shortfall in the Interest Reserve Account, where funds were used to pay the June
quarters interest payment
▪ DGR Global Limited and Armour Energy Limited have established a new UK-incorporated company
Conjugate Energy Limited (Conjugate) which will hold interests in oil exploration projects in the Albertine
Graben, Uganda. Conjugate intends to seek admission to a UK stock exchange and raise funds primarily
to drill two exploration wells or drill ready prospects with substantial resources of oil. Any admission will be
subject to, inter alia, compliance with the relevant regulatory requirements and accordingly there can
be no certainty that any admission will occur or the timeframe in which it will occur.
▪ Armour entered into a funding agreement with Armour’s largest shareholder, DGR Global Ltd, for the
provision of a $17 million facility to be drawn down as necessary. The form of the funding will be
determined at the timing of funding.
Note 39. 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 2023
$
30 June 2022
$
122,500
119,252
Other services - BDO Audit Pty Ltd and related entities
Other non-audit services*
3,000
17,970
Total
125,500
137,222
*The non-audit services included the advice on solvency and whistleblowing services.
Note 40. 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 2022. These did not have any material impact on the disclosures or on the amounts recognised in Armours
consolidated financial statements.
104
Armour Energy Limited
Directors’ Declaration
30 June 2023
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 2023 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 Chair
29 September 2023
105
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
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 2023, 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 the Group, 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 2023 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.
106
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.
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.
Our procedures included but were not limited
to:
•
•
•
•
•
•
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.
107
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.
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.
Our procedures included but were not limited
to:
•
•
•
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.
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.
108
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 2023, 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.
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.
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.
109
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 43 to 52 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Armour Energy Limited, for the year ended 30 June 2023,
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, 29 September 2023
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.
110
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 27 September 2023.
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
Securities
%
No. of holders
87,594,508
84.9
5,268,609
6,978,821
1,429,362
1,489,268
359,546
5.1
6.8
1.4
1.4
0.3
103,120,114
100.00%
101
72
287
189
576
915
2,140
1,457
Unmarketable Parcels
1,682,351
1.6
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
520,000
70,800
210,900
93,000
63,700
1,600
54.2
7.4
22.0
9.7
6.6
0.2
960,000
100.0%
3
1
10
11
17
2
44
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
0
0
40,000
0
0
0
0.0
0.0
100.0
0.0
0.0
0.0
40,000
100.0%
0
0
1
0
0
0
1
%
4.7
3.4
13.4
8.8
26.9
42.8
100.00%
68.1
%
6.8
2.3
22.7
25.0
38.6
4.5
100.0%
%
0.0
0.0
100.0
0.0
0.0
0.0
100.0%
111
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
11,368,270
1,156,621
1,786,923
283,826
227,543
29,247
14,852,430
7,036,853
76.5
7.8
12.0
1.9
1.5
0.2
100.0%
47.4
25
16
67
37
87
117
349
342
%
7.2
4.6
19.2
10.6
24.9
33.5
100.00%
98.0
Substantial holders
The Company is aware of the following substantial holdings:
Name
DGR GLOBAL LIMITED
TENSTAR TRADING LIMITED
Twenty largest holders of each quoted class (as at 27 September 2022)
Ordinary Shares (AJQ)
Name
DGR GLOBAL LIMITED
TENSTAR TRADING LIMITED
BAM OPPORTUNITIES FUND PTY LTD
ROOKHARP CAPITAL PTY LIMITED
MR PAUL COZZI
BIZZELL CAPITAL PARTNERS PTY LTD
CITICORP NOMINEES PTY LIMITED
CANCELER PTY LTD
SAMUEL CAPITAL PTY LTD
ASLAN EQUITIES PTY LTD
CHOICE INVESTMENTS DUBBO PTY LTD
MR PAUL AINSWORTH
WARBONT NOMINEES PTY LTD
MR SIMON WILLIAM TRITTON
PMK PROPERTIES PTY LTD
MR NEVILLE AYROUTH
MR PETER MAROUN KAHWAJI
MR WAYNE RICHARDS
SYPCO HOLDINGS PTY LTD
BILLY THE PONY PTY LTD
Total of Twenty Largest Holders
Total Shares Held
Ordinary
Shares –
Number Held
20,407,149
18,362,233
Issued Capital
%
19.79
17.81
Number held
20,407,149
18,362,233
5,024,317
4,467,347
4,175,213
4,118,210
2,423,918
1,560,000
1,519,428
1,380,578
1,039,030
1,020,000
1,000,000
700,505
644,802
604,000
555,198
530,082
500,000
500,000
70,532,010
103,120,114
Issued capital
%
19.8
17.8
4.9
4.3
4.0
4.0
2.4
1.5
1.5
1.3
1.0
1.0
1.0
0.7
0.6
0.6
0.5
0.5
0.5
0.5
68.4%
100%
112
Listed options (AJQOA)
Name
DGR GLOBAL LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BIZZELL CAPITAL PARTNERS PTY LTD
MR PAUL COZZI
ANTIBELLA PTY LTD
ROOKHARP CAPITAL PTY LIMITED
BERENES NOMINEES PTY LTD
CANCELER PTY LTD
CITICORP NOMINEES PTY LIMITED
MR PAUL DOMINIC HILLMAN
CHOICE INVESTMENTS DUBBO PTY LTD
MR TIMOTHY LUKE CROWLEY & MRS LENA MARY CROWLEY
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
MR PAUL AINSWORTH
DR DENNIS RICHARD LOWE
TENSTAR TRADING LIMITED
DR DENNIS RICHARD LOWE & MRS YVONNE LOWE
BAM OPPORTUNITIES FUND PTY LTD
SAMUEL HOLDINGS PTY LTD
MR TIMOTHY LUKE CROWLEY
Total of Twenty Largest Holders
Total Listed Options Held
Voting Rights
All ordinary shares carry one vote per share without restriction.
Restricted securities
There are no restrictions over any security holdings as at 28 September 2023.
Number held
2,648,780
1,256,591
1,067,809
933,734
661,321
647,342
600,000
460,000
372,451
280,000
271,063
220,000
217,392
200,000
196,656
163,899
154,091
150,965
150,773
148,418
10,801,285
14,852,430
Issued Options
%
17.8
8.5
7.2
6.3
4.5
4.4
4.0
3.1
2.5
1.9
1.8
1.5
1.5
1.3
1.3
1.1
1.0
1.0
1.0
1.0
72.7%
100%
113
Corporate Directory
Directors
Nicholas Mather
Stephen Bizzell
Eytan Uliel
Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Company Secretary
Geoffrey 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
114
115