ANNUAL REPORT
For the financial year ended
31 December 2018
CORPORATE DIRECTORY
ABN: 13 008 694 817
Contents
Directors
Peter F Mullins, Chairman
Giustino Guglielmo
Hector M Gordon
Mark L Lindh
Managing Director
Giustino Guglielmo
Company Secretary
Robyn M Hamilton
Registered Office and Principal
Administration Office
Level 5, 11-19 Bank Place
Melbourne, Victoria, 3000, Australia
Telephone +61 (3) 9927 3000
Facsimile +61 (3) 9614 6533
Email
admin@bassoil.com.au
Auditors
Deloitte Touche Tohmatsu
11 Waymouth Street
Adelaide, South Australia, 5000, Australia
Share Registry
Link Market Services Limited
Tower 4, 727 Collins Street
Melbourne, Victoria, 3008, Australia
Telephone +61 (3) 9615 9800
Facsimile +61 (3) 9615 9900
Stock Exchange Listing
Australian Stock Exchange Ltd
525 Collins Street
Melbourne, Victoria, 3000, Australia
ASX Codes: BAS – Ordinary Shares
Web Site: www.bassoil.com.au
Chairman’s Message .................................. 3
Managing Director’s Report ......................... 4
Reserves and Resources ............................. 9
Safety ................................................... .12
Environment ........................................... 13
Directors’ Report ..................................... 14
Remuneration Report ............................... 17
Auditor’s Independence Declaration ........... 25
Directors’ Declaration .............................. .26
Consolidated Statement of Profit or
Loss and Other Comprehensive Income ...... 27
Consolidated Statement of Financial
Position .................................................. 28
Consolidated Statement of Changes
in Equity ................................................ .29
Consolidated Statement of Cash Flows ....... 30
Notes to the Financial Statements ............. 31
Independent Auditor’s Report ................... 63
Shareholder & Other Information ............... 67
Forward Looking Statements
This Annual Report includes certain forward-
looking statements that have been based on
current expectations about future acts, events
and circumstances. These forward-looking
statements are, however, subject to risks,
uncertainties and assumptions that could
cause those acts, events and circumstances to
differ materially from the expectations
described in such forward-looking statements.
These factors include, among other things,
commercial and other risks associated with the
meeting of objectives and other investment
considerations, as well as other matters not
yet known to the Group or not currently
considered material by the Group.
CHAIRMAN’S MESSAGE
Dear fellow shareholders,
After a strong year’s performance in 2018, it gives me pleasure on behalf of your Board to present to
you the Annual Report of Bass Oil Limited for the 12 months ended 31 December, 2018.
Importantly, Bass is proud to report that it recorded zero incidents resulting in injuries over 2018, which is a
credit to all staff in Indonesia and Australia.
The Company’s achievements and plans for growth over 2019-2020 are being implemented within an
environment of unprecedented public interest and debate around the energy sector. The sector faces
increasing and intense scrutiny about the type of energy being sourced and why, how it is extracted and
processed, and the impact of those operations on how much users now have to pay for power.
Questions around the lack of transparent energy policy, and even whether many energy investments in
the equities market are ethical, are becoming highly prominent. These sentiments are being felt in both
the Australian and South East Asian energy arenas.
Bass Oil’s focus is on building an energy business initially in Indonesia and potentially broadening that in
the long-term through South East Asia if and when commercially sensible opportunities present.
While it would be unwise to ignore the near to medium term volatility in equity market sentiments
generally around oil and gas here and overseas, Bass has no operating assets in Australia.
Your Board is confident that our three-tiered growth strategy detailed further in this report, and
predicated on our cornerstone Indonesian exploration, development and production oil and gas
business, is the right balance at the right time to deliver on our stated objectives and build shareholder
value.
The gradual lift in production over 2018, through focused in-field optimisation and including a record
performance in October, was particularly pleasing to see. The Company can look forward to measurable
output and revenue expansions as our planned 2019/2020 drilling campaigns introduce extra capability
and volumes into our operations.
Our engagement with and assessment of potential acquisitions and other growth building initiatives
increased over the period. While no transaction moved to completion, this reflects your Company’s
tight due diligence and adherence to an expansion policy based on proven economics and profitability,
not sentiment.
In closing, I thank particularly this year, our shareholders for your loyalty, support of the Company, and
your personal encouragement through the year to our Board and management.
Finally, I thank our Melbourne-based executive team, our Indonesian-based operations team, and my
fellow Directors, for their diligent attention to the affairs of your Company. We will continue to work on
strategically positioning ourselves for growth amidst what we continue to believe is a dynamic
Australasian market for oil and gas juniors.
Peter Mullins
Chairman
29 March 2019
Bass Oil Limited Annual Report December 2018
3
MANAGING DIRECTOR’S REPORT
During 2018, your Company achieved a number of key objectives while putting in place an invigorated
growth structure for 2019.
The year saw Bass Oil cement its oil extraction credentials whilst casting further afield for potential
acquisitions, joint ventures and new project initiatives able to contribute to your Company’s further
growth within Indonesia’s outstanding and yet to be fully exploited energy sector.
Of particular note as 2019 commenced, was the discovery just north of our South Sumatran oil fields of
Indonesia’s largest onshore gas accumulation in 18 years. The Repsol, Petronas and Moeco discovery
holds an estimated 2 trillion cubic feet of recoverable gas and once appraised, is expected to surpass
the largest find in the Asia Pacific in 2018, the Dorado discovery in Australia.
This augurs well for Bass Oil.
The discovery is in the broader petroleum-prospective footprint which is Bass’ direct ‘hunting ground’
for material growth opportunities as we look to double oil production this year, better deploy our
strong technological capabilities in Improved Oil Recovery (IOR), work more closely with regional
universities expert in petroleum recovery dynamics and apply robust assessment of potential expansion
opportunities.
Securing a value accretive investment for future development is central to our growth strategy to build
a sustainable and profitable South East Asian-based oil business grounded in our 2016 acquisition of a
55% stake in the Tangai-Sukananti oil production assets.
Indonesia’s hydrocarbon basins are world-class and have extensive infrastructure in place – factors
favouring our growth outlook and our revised corporate strategy comprising a three tiered approach:
Company Transforming’ (Type 1) transactions via the acquisition of producing asset(s)
representing material company-changing assets. We are actively screening such opportunities;
‘Material Growth’ (Type 2 opportunities) which would emanate from measured exposure to
high impact exploration – a scenario offering larger scale potential but with a low financial
commitment from Bass. Examples include Production Sharing exploration contracts, identifying
prospective areas to request as KSOs, or working with Indonesia’s Government body, PT
Pertamina, on IOR of their legacy assets. Shortlisted opportunities are under assessment; and,
An ‘Optimisation and Technology’ focus whereby our IOR skillsets allow the assessment and
potential acquisition of mature production assets offering synergies with our existing field
production infrastructure. Such assets could be under-performing, stranded or dormant oil and
gas fields in close proximity to our existing production footprint in southern Sumatra.
Key financial highlights of the year included completion of the second deferred payment to Cooper
Energy of $500,000, and securing an extension of the remaining two payments by six months.
Bass Oil Limited Annual Report December 2018
4
MANAGING DIRECTOR’S REPORT (cont’d)
Figure 1: Tangai-Sukananti KSO
Tangai-Sukananti KSO
Bass’ experienced Indonesian on-site personnel and Jakarta-based management team operate the
Tangai-Sukananti KSO production assets containing the producing Bunian and Tangai oil fields. It was
pleasing to see our success from mid-2018 in optimising production within the KSO. This lifted total
production capacity and increased output from selected wells. The KSO is considered long-life with
production expected beyond license expiry in mid-2025.
The assets provide a future platform for growth through low-cost field development opportunities and
execution of value-accretive acquisitions requiring minimal additional corporate overheads, given Bass’
established Jakarta-based personnel.
This in-field upside comes at a time Indonesia’s energy consumption is increasing with GDP (+5% in
2017). The local supply cannot meet demand. This supply pressure will provide Bass with further
opportunities for growth in this regional energy market.
Since acquiring the Tangai-Sukananti KSO, Bass has sustained strong and consistent levels of production
at the operations (see Figure 2). The result of the 2018 de-bottlenecking operations at Bunian-3ST2
boosted production from ~300 to more than 700 barrels of oil per day, consistently, for the 4th quarter
of the year.
Bass Oil Limited Annual Report December 2018
5
MANAGING DIRECTOR’S REPORT (cont’d)
Total production for the year ending 31 December 2018 was 115,559 barrels on a 55% basis (or 57,000
barrels on a net entitlement basis). Bass expects a production up-lift during 2019, due to the drilling of
the Bunian 5 development well and the continued focus on implementation of field optimisation
activities.
Figure 2: Tangai-Sukananti Historical Production (55% basis)
Figure 3: Tangai-Sukananti KSO Producing Oil Fields and Prospects
Bass Oil Limited Annual Report December 2018
6
MANAGING DIRECTOR’S REPORT (cont’d)
Substantive technical review
In 2017-2018, Bass undertook comprehensive, integrated reservoir study and dynamic reservoir
modelling studies in order to determine the best way of developing this asset.
These studies informed a Plan Of Further Development (POFD) since approved by PT Pertamina. The
studies were conducted jointly by external consultants, UNPAD (University Padjadjaran) in Bandung and
in-house by Bass Oil in Jakarta and Melbourne.
Development scenarios and production forecasts from the Dynamic Modelling project instruct the
Company’s updated 1P and 2P reserves and contingent resource cases.
The total 100% Field 2P Reserves at 31 December, 2018 are assessed to be 2.019 million barrels of oil.
This reflects the reserves for the Bunian and Tangai oil Fields (Figure 1). In accordance with ASX
reporting requirements for fiscal environments that use production sharing contracts or similar, Bass
reports Net Entitlement 2P Reserves of 0.602 million barrels. Net Entitlement Reserves are the share of
cost oil and profit oil that Bass is entitled to receive under the KSO signed with PT Pertamina. The Net
Entitlement Reserves formula varies with the fiscal environment, cost recovery status and oil price.
Further to the field development study, Bass is planning infrastructure upgrades to the Bunian and
Tangai production facilities to support additional fluid production rate up-lifts which are anticipated
following completion of the drilling phase of the field development program.
Improved Oil Recovery (IOR) a future business cornerstone
There are billions of barrels of unrecovered oil in Indonesia that can potentially be exploited using
currently available IOR technologies on mature fields, a growth target under our business model and a
huge opportunity for experienced operators with technical expertise such as Bass Oil.
The average oil recovery factor in Indonesia is ~10-30% while analogues including the Cooper Basin are
~45% and greater.
Current estimates point to an approximate 10-25% additional recovery potential for Indonesian fields
utilising available IOR technologies. Bass will pursue this value-add business stream with vigour over
2019 including developing new IOR technology specific to the Indonesian region under our newly signed
Memoranda of Understandings (MOUs) with local and leading regional universities.
Vic/P68 (Bass 100%)
The cancellation of Vic/P68 was gazetted by the Joint Authority on 20 July 2018.
Bass Oil Limited Annual Report December 2018
7
MANAGING DIRECTOR’S REPORT (cont’d)
Business Development
Bass entered the 2019 calendar year actively engaged in the evaluation of, and negotiations on, seven
growth opportunities across our three categories of Business Development initiatives.
This strong level of potential stakeholder and project engagement resulted from a successful ramp-up
during 2018 of our initiatives to develop a pipeline of emerging opportunities designed to provide short-
term growth, and, medium to long-term organic increases in Bass’ exposure to diverse but opportunistic
and commercially economic assets.
More than 60 assets were screened over calendar 2018, many proceeding to detailed technical
evaluation. This resulted over the period under review, in a shortlist of five strategically compatible
opportunities, the signing of two Heads of Agreement, and the submission of Letters of Interest on two
assets.
One offer of acquisition was accepted. However, the transaction did not complete due to Bass’
conditions precedent not being satisfied.
Bass applies stringent and consistent evaluation criteria to all opportunities which it considers,
commencing with the Petroleum System, and including all aspects of production materiality, geographic
location, acquisition costs and execution risk.
The Business Development strategy will continue to be vigorously pursued over calendar 2019.
Bass Oil Limited Annual Report December 2018
8
RESERVES AND RESOURCES
Reserves and Contingent Resources
(For 12 month period ending 31 December, 2018)
Substantial gains were achieved by Bass in the year under review, significantly in the key indicator of
any oil and gas explorer and producer’s forward business fundamentals – its 1P (Proved) reserves figure.
This is the estimate of commercial resource volumes that all of the most recently available geological,
operational, financial and market modelling says exists, and that can be extracted economically, in this
case, from our 55%-ownership and Operatorship of the Tangai-Sukananti KSO in southern Sumatra in
Indonesia. The KSO contains the Bunian and Tangai producing oil fields.
Bass lifted its 1P Net Entitlement Reserves by 76% over the course of the year to 0.505 mmbbls
compared with 0.320 mmbbls at 31 December, 2017.
This was achieved while also holding steady, our 2P (Proved plus Probable) Net Entitlement Reserves
(the slightly broader resource estimate than 1P that points to wider but not yet fully proven extraction
potential) to 0.602 mmbbls compared with 0.670 mmbbls at 31 December, 2017. This was a slight
decrease of 2% but allows for volume reductions due to production from our fields over calendar 2018.
The 1P gains from enabling reserves in the Probable category to be moved into the Proved category,
were attributable to a number of factors. These included the capability of Bass’ Indonesian operations
team; a stronger underlying performance of the assets; and higher production from the Bunian-3 well
due to de-bottlenecking operations. Also contributing to the reserves upgrade was the completion by
the Company of two years of technical studies which delivered a Dynamic Model allowing development
scenarios to inform the 1P and 2P cases.
The results give your Board and management a high level of confidence in our forward development
drilling program for 2019 and beyond. Strategically, the Dynamic Model can be updated with future
drilling results.
Reserves
The 2P Field Reserves in the Tangai-Sukananti KSO are assessed as at 31 December, 2018, to be 2.019
million barrels of oil. This reflects the reserves for the Bunian and Tangai oilfields (Figure 1).
In accordance with ASX reporting requirements for fiscal environments that use production sharing
contracts or similar, Bass reported Net Entitlement 2P Reserves of 0.602 million barrels. Net Entitlement
Reserves are the share of cost oil and profit oil that Bass is entitled to receive under the KSO signed with
PT Pertamina. The Net Entitlement Reserves formula varies with the fiscal environment, cost recovery
status and oil price.
Contingent Resources
The total 100% field 2C Contingent Resources for the Tangai-Sukananti KSO as at 31 December, 2018,
are assessed to be 0.882 million barrels of oil. The field Contingent Resources comprise volumes
attributed to currently producing or future planned wells in the Bunian and Tangai oil fields post licence
expiry in July, 2025. This presents a future development opportunity to increase reserves.
Bass Oil Limited Annual Report December 2018
9
RESERVES AND RESOURCES (cont’d)
Resources & Reserves as at 31 December, 2018
100% Field Reserves (MMbbl)
Category
Proved 1P
Proved & Probable 2P
Developed & Undeveloped
1.777
2.019
BAS Net Entitlement Reserves (MMbbl)
Category
Proved 1P
Proved & Probable 2P
Developed & Undeveloped
0.505
0.602
100% Field Contingent Resources (MMbbl)
Category
Total
1C
0.552
2C
0.882
Resources & Reserves Movements Year-On-Year
100% Field Reserves (MMbbl)
Category
Proved 1P
Proved & Probable 2P
100% Field Reserves at 31 Dec 2017
CY 2018 Production
Revisions
% change from 2017
100% Field Reserves at 31 Dec 2018
0.930
(0.207)
1.054
+113%
1.777
2.320
(0.207)
(0.094)
-4%
2.019
BAS Net Entitlement Reserves (MMbbl)
Category
Proved 1P
Proved & Probable 2P
Net Entitlement Reserves at 31 Dec 2017
CY 2018 Production
Revisions
% change from 2017
Net Entitlement Reserves at 31 Dec 2018
0.320
(0.057)
0.242
+76%
0.505
100% Field Contingent Resources (MMbbl)
Category
1C
100% Field Contingent Resources at 31 Dec 2017
0.215
Revisions
% change from 2017
0.337
+157%
100% Field Contingent Resources at 31 Dec 2018
0.552
0.670
(0.057)
(0.011)
-2%
0.602
2C
0.310
0.572
+185%
0.882
Bass Oil Limited Annual Report December 2018
10
RESERVES AND RESOURCES (cont’d)
Notes on Calculation of Reserves and Resources
The review of reserves and contingent resources at 31 December, 2018, reflects the results from the completion of two years of geo-technical
assessments. In 2017-2018, Bass undertook comprehensive, integrated geophysics, geology, petrophysics and reservoir analyses and dynamic
reservoir modelling studies in order to determine the best way of developing the KSO.
These studies informed a Plan Of Further Development (POFD) since approved by PT Pertamina. The studies were conducted jointly by external
consultants, UNPAD (University Padjadjaran) in Bandung and in-house by Bass Oil in Jakarta and Melbourne.
Development scenarios and production forecasts from the Dynamic Modelling project instruct the 1P and 2P reserves and contingent resource
cases and also led to the decision not to report 3P reserves or resources this year.
The Bunian Field has two producing reservoirs (TRM3 and K1 sandstones) and the Tangai Field has one producing reservoir (the M sandstone).
All reserves and resources are estimated by deterministic estimation methodologies consistent with the definitions and guidelines in the Society
of Petroleum Engineers (SPE) 2007 Petroleum Resources Management System (PRMS).
Under the SPE PRMS guidelines, “Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of
development projects to known accumulations from a given date forward under defined conditions”. Net Entitlement Reserves are the reserves
that Bass has a net economic entitlement to - that is, a share of cost oil and profit oil that Bass is entitled to receive under the KSO signed with
PT Pertamina.
Contingent Resources are “those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations
by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more
contingencies”.
Qualified Petroleum Reserves and Resources Evaluator Statement
The information contained in this section regarding Bass Oil’s 2018 reserves and contingent resources is based on and fairly represents
information and supporting documentation reviewed by Mr Giustino Guglielmo who is an employee of Bass Oil Limited and holds a Bachelor of
Engineering (Mech). He is a member of the Society of Petroleum Engineers (SPE) and a Fellow of the Institution of Engineers Australia (FIEAust)
and as such, is qualified in accordance with ASX listing rule 5.4.1 and has consented to the inclusion of this information in the form and context
in which it appears in this section.
Bass Oil Limited Annual Report December 2018
11
SAFETY
Bass Oil implements daily, a strict, industry-standard health and safety regime around its Operatorship
of the Tangai-Sukananti production assets.
This approach, under our Heath, Safety, Environment, Quality and Community (HSEQC) protocols,
prioritises the ongoing design, implementation and monitoring of robust and inclusive safety cultures
and outcomes across the entire business but in particular, to ensure the well-being of our Indonesian
field teams and reliability of field operations.
In short, we strive for ‘zero incidents’ in all activities.
Bass is proud to report that it recorded zero incidents resulting in injuries over 2018, which is a credit to
all staff in Indonesia and Australia.
Australia’s national oil and gas industry lobby, APPEA, has a target of 3.0 such events in one year per one
million working hours.
The total Safe Work Man Hours achieved over 2018 was 1,172,742 hours, with an average per month for
the organic employee of ~ 5,000 hours, contractor 19,000 hours and outsourcing 20,000 hours.
Our successful delivery of a safe work environment over 2018 was achieved despite increases in work
activity and production rates (due to well optimisation initiatives).
All staff and employees are to be commended for their diligence in making Bass a safe place to work.
The challenge, however, is always an ongoing one. We will continue to minimise potential hazards and
risks associated with the operations moving forward, as our assets and operating environment change.
Bass Oil Limited Annual Report December 2018
12
ENVIRONMENT
In addition to our Safety focus, the Company is highly focused to preserve the natural onshore
environment in which we operate, including respect for local communities within our operating
footprint.
Over 2018, our field teams fully met regulated air management and noise management requirements.
Our monitoring systems indicated all parameters of ambient air quality and emissions were better than
established quality standards.
Noise monitoring in production operations was conducted in accordance with the provisions of the UKL-
UPL and indicated that noise levels at all locations monitored met the set quality standards.
In terms of on-site surface Water Quality and Aquatic Biota, new internal monitoring systems to ensure
local water quality remains good and not impacted by production processes, are being implemented, with
stability to date in the diversity index of plankton being monitored in local water bodies.
Laboratory analysis of samples of water drainage, surface water and wells showed good water quality
that met biological measuring standards.
Bass Oil’s environmental protocols include respect for community. In 2018 the Company continued to
deliver on its Corporate Social Responsibility program, via community development assistance,
especially for the villages of Tanjung Leaning and Kayu Ara.
Bass Oil Limited Annual Report December 2018
13
DIRECTORS’ REPORT
The Directors present their report on the results of Bass Oil Limited consolidated entity (“BAS” or “Bass”
or “the Company” or “the Group”) for the year ended 31 December 2018.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of
this report follow. Directors were in office for the entire period unless otherwise stated.
Peter F Mullins FFin
Chairman and non-executive independent director (Appointed 16 December 2014)
Mr Mullins has over 40 years banking experience in Australia and New York, USA, specialising in
Institutional and Corporate Finance across the Agriculture, Defence, Energy, Infrastructure, Mining,
Oil & Gas, Property and Wine industries. He is experienced in Mergers and Acquisitions,
Privatisations, Structured Finance, IPO’s and Capital Raisings.
Mr Mullins retired as Head of Institutional Banking SA&NT with the Commonwealth Bank of Australia
in 2009 to take up a part time role as Senior Advisor, Institutional, Corporate and Business Banking
for Commonwealth Bank in SA&NT. He retired from this role in 2013.
Mr Mullins was a Director of Somerton Energy Limited, a listed oil and gas exploration company, from
April 2010 until it merged with Cooper Energy Limited in July 2012.
He is a Fellow of the Financial Services Institute of Australasia and graduated from the Advanced
Management Program at the University of Melbourne – Mt Eliza, in 1987.
Mr Mullins served on the Audit and Risk Committee during the period.
Giustino (Tino) Guglielmo BEng (Mech)
Managing director from 1 February 2017, previously was Executive Director
(Appointed 16 December 2014)
Mr Guglielmo is a Petroleum Engineer with over 36 years of technical, managerial and senior
executive experience in Australia and internationally.
Mr Guglielmo was the CEO and Managing Director of two ASX listed companies; Stuart Petroleum
Limited for seven years and Ambassador Oil & Gas Limited for three years. Both companies merged
with larger ASX listed companies generating significant value for shareholders following the
identification of compelling resource potential in their respective petroleum resource portfolios.
Mr Guglielmo also worked at Santos Limited, Delhi Petroleum Limited, and internationally with NYSE
listed Schlumberger Corp. His experience spans the Cooper basin, Timor Sea, Gippsland basin, and
exposure to US land and other international basins.
Mr Guglielmo has been a member of the Resources and Infrastructure Task Force and the Minerals
and Energy Advisory Council, both South Australian Government advisory bodies. He is a Fellow of the
Institution of Engineers, Australia, a member of the Society of Petroleum Engineers and Australian
Institute of Company Directors. Mr Guglielmo resigned as a director of Octanex Limited - on 17 July
2018.
Mr Guglielmo served on the Audit and Risk Committee during the period.
Hector M Gordon BSc (Hons)
Non-executive independent director (Appointed 23 October 2014)
Mr Gordon currently serves on the Board of Cooper Energy Limited as a Non-Executive Director.
Mr Gordon is a geologist with over 40 years of experience in the upstream petroleum industry,
primarily in Australia and southeast Asia. Until June 2017 Mr Gordon was employed by Cooper Energy
Limited as Executive Director - Exploration & Production.
Bass Oil Limited Annual Report December 2018
14
DIRECTORS’ REPORT (cont’d)
Mr Gordon's previous employers also include Beach Energy, Santos Limited, AGL Petroleum, TMOC
Resources, Esso Australia and Delhi Petroleum Pty Ltd. He is currently a Non-Executive Director of
Cooper Energy Limited, which is a substantial shareholder of Bass Oil Limited.
Mr Gordon is a member of the American Association of Petroleum Geologists and a member of the
Society of Petroleum Engineers.
Mr Gordon served as Chair of the Audit and Risk Committee during the period.
Mark L Lindh - Non-executive independent director (Appointed 16 December 2014)
Mr Mark Lindh is a corporate advisor with in excess of 15 years’ experience in advising mining and
resources companies with a particular focus on the energy sector.
He is a founding director of Adelaide Equity Partners Limited, an investment and advisory company.
He is currently a Non-Executive Director of Advanced Braking Technology Limited.
Mr Lindh served on the Audit and Risk Committee during the period.
INTERESTS IN THE SHARES & OPTIONS OF THE COMPANY
As at the date of this report, the interests of the Directors in the shares and options of Bass Oil
Limited were:
Number of Ordinary Shares
Number of Options over Ordinary
Shares
P F Mullins
G Guglielmo
H M Gordon
M L Lindh
COMPANY SECRETARY
45,600,000
265,630,465
20,266,668
94,162,682
-
-
-
-
Mrs R Hamilton was appointed Company Secretary on the 31st March 2011. She has been a
Chartered Accountant for over 25 years.
DIVIDENDS
During the year and to the date of this report, no dividends were recommended, provided for or paid.
PRINCIPAL ACTIVITY
The principal activity of the Group during the year was oil production from low cost oil production
assets in Indonesia. The Company realigned its corporate strategy following the acquisition of a 55%
interest in Tangai-Sukananti KSO, which contains producing assets located in the prolific oil and gas
region of South Sumatra, Indonesia.
Bass Oil Limited Annual Report December 2018
15
DIRECTORS’ REPORT (cont’d)
OPERATING AND FINANCIAL REVIEW
Operating results for year
These financial statements are for the year ended 31 December 2018. The comparatives are for a six
month period to 31 December 2017.
The Group’s operating loss for the year ended 31 December 2018 after income tax was $419,615 (31
December 2017: $98,149).
Review of Financial Condition
Liquidity
The Group’s consolidated statement of cash flows for the year recorded a decrease of $729,351 (31
December 2017: increase of $574,634) in cash and cash equivalents. The cash flows were derived
from operating receipts of $4,084,968 (31 December 2017: $2,275,692), other receipts of $5,673 (31
December 2017: $8,757) and capital raising net of transaction costs of $nil (31 December 2017:
$858,663).
Cash outflows relating to operations were $4,420,433 (31 December 2017: $2,021,261). There were
cash outflows of deferred payment to Cooper Energy of $369,550 (31 December 2017: $390,000),
also net cash outflows in investing activities of $26,114 (31 December 2017: $157,217) mainly
relating to expenditure on oil properties.
Cash assets at 31 December 2018 were $854,117 (31 December 2017: $1,607,829).
CHANGES IN THE STATE OF AFFAIRS
During the prior year the Group changed the Company’s financial year-end from 30 June to 31
December in order to align the reporting dates with its Indonesian operations. Previously our financial
years started on the 1st July and ended on the 30th June. Bass had a shorter six month financial year
from 1 July 2017 to 31 December 2017 and has re-commenced with a twelve month financial year
starting on 1 January 2018 and ending on 31 December 2018.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Since assuming the operator role at the Tangai-Sukananti KSO, Bass has highlighted a number of
prospective targets and leads that warrant further testing and development.
The Company’s view is that there is a substantial quantity of oil reserves that remain undeveloped,
within the Bunian and Tangai Fields.
SHARE OPTIONS
Unissued shares
As at the date of this report there were nil unissued ordinary shares under options (366,688,205 at
31 December 2017).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
BAS maintains a directors and officers insurance policy and has paid an insurance premium for the
policy. The contract of insurance prohibits disclosure of the amount of the premium and the nature of
the liabilities insured. Pursuant to the constitution the Company has entered into Deeds of Indemnity
with the Directors and Chief Financial Officer.
Bass Oil Limited Annual Report December 2018
16
DIRECTORS’ REPORT (cont’d)
INDEMNIFICATION OF OFFICERS AND AUDITORS
The company has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer or auditor of the company or of any
related body corporate against a liability incurred as such an officer or auditor.
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the
year and the number of meetings attended by each director was as follows:
P F Mullins
G Guglielmo
H M Gordon
M L Lindh
Board Meetings
Audit and Risk Committee
Held
Attended
Held
Attended
6
6
6
6
5
6
6
6
2
2
2
2
1
2
2
2
REMUNERATION REPORT (AUDITED) (31 December 2018)
This Remuneration Report outlines the director and executive remuneration arrangements of the
Group in accordance with the Corporations Act 2001 and its Regulations. For the purposes of this
report, key management personnel (KMP) of the Group are defined as those persons having authority
and responsibility for planning, directing and controlling the major activities of the Group, directly or
indirectly, including any director (whether executive or otherwise) of the parent company, and
includes the Company Secretary.
Details of Key Management Personnel (including executives of the Group)
(i) Directors
P F Mullins
Chairman
G Guglielmo
Managing Director
H M Gordon
Director (Non-executive)
M L Lindh
Director (Non-executive)
(ii) Executives
S J Brealey
Staff Geologist New Ventures
R M Hamilton
Company Secretary
Bass Oil Limited Annual Report December 2018
17
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
There have been no changes to key management personnel after 31 December 2018 and before the
date the financial report was authorised for issue.
The Board of Directors (“the Board”) is responsible for determining and reviewing remuneration
arrangements for the directors and executives. No remuneration consultant was engaged nor was any
remuneration advice sought during the period.
The Board assesses the appropriateness of the nature and amount of remuneration of executives on a
periodic basis by reference to relevant employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from retention of a high quality, high performing executive
team.
Remuneration Philosophy
The performance of the Company largely depends upon the quality of its directors and executives. To
this end, the Company embodies the following principles in its remuneration framework:
Provide competitive rewards to attract high calibre executives.
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive director and
executive remuneration is separate and distinct.
Non-Executive Director Remuneration
Remuneration policy
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability
to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to
shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the
fee structure is reviewed annually. The Board considers advice from external consultants if required,
as well as the fees paid to non-executive directors of comparable companies when undertaking the
annual review process.
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of
non-executive directors shall be determined from time to time by a general meeting. The latest
determination was at the Annual General Meeting held on 3 October 2001, when shareholders
approved an aggregate remuneration of AUD 250,000 per year.
Structure
The remuneration of non-executive directors consists of director’s fees and committee fees for the
non-executive director who chairs the Audit and Risk Committee. The payment of additional fees for
chair of the Audit and Risk Committee recognises the additional time commitment required by a non-
executive director who chairs a sub-committee. The non-executive directors also receive retirement
benefits in the form of superannuation. There are no other retirement benefits, other than
superannuation.
Bass Oil Limited Annual Report December 2018
18
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
The table below summaries the non-executive director remuneration (excluding superannuation):
Board fees
Chairman
Directors
Incremental Audit and Risk Committee fees
Chairman
AUD
75,000
50,000
5,000
No other fees are paid for serving on Board committees or on boards of wholly owned subsidiaries.
Non-executive directors have been encouraged by the Board to hold shares in the Company.
The remuneration of non-executive directors for the period ending 31 December 2018 and 31 December
2017 is detailed in Table 1 and 2 respectively of this Remuneration Report.
Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company so as to:
Reward executives for individual performance;
Align the interests of executives with those of shareholders; and
Ensure that total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the Board engages external
consultants as needed to provide independent advice. No consultant was engaged in the current year.
Remuneration consists of fixed remuneration being base salary and superannuation and/or consultancy
fees.
The proportion of base salary and superannuation and/or consultancy fees for each executive is set out
in Table 1.
Fixed remuneration
Objective
Fixed remuneration is reviewed regularly by the Board, with access to external advice if required.
Structure
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms
including cash and superannuation. It is intended that the manner of payment chosen will be optimal
for the recipient without creating undue costs for the Company. The fixed remuneration component of
executives is detailed in Table 1.
Bass Oil Limited Annual Report December 2018
19
DIRECTOR’S REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
Employment contracts
Managing Director and Chief Executive Officer
Mr G Guglielmo was appointed Managing Director and Chief Executive Officer (“CEO”) on 1 February
2017.
The Managing Director and CEO is employed under a rolling contract and under the terms of the
contract, Mr Guglielmo receives fixed remuneration of AUD$300,000 per annum. If there is cause for
termination, the Company can terminate the contract immediately without compensation, other than
any employee entitlements up to the date of termination. Otherwise, the contract may be terminated
at any time by either side giving six months notice in writing or by the Company paying six months
salary in lieu of notice, unless mutually agreed.
Staff Geologist New Ventures
Dr S Brealey was appointed Staff Geologist New Ventures on 16 May 2018.
The Staff Geologist New Ventures is employed under a maximum term contract of 24 months and
under the terms of the contract, Dr Brealey receives fixed remuneration of AUD$225,000 per annum.
A short term incentive (STI) of up to 50% of his base salary will be payable in cash in July each year
based upon performance against criteria to be agreed with the Managing Director.
If there is cause for termination, the Company can terminate the contract immediately without
compensation, other than any employee entitlements up to the date of termination. Otherwise, the
contract may be terminated at any time by either side giving three months notice in writing or by the
Company paying three months salary in lieu of notice, unless mutually agreed.
Consultancy Services Agreements
The Group has entered into consultancy agreements with Robyn Hamilton.
Details of the agreements entered into by the Group and outstanding as at 31 December 2018 are set
out below:
Type
Details
Term
Robyn Hamilton
Consultancy
Minimum of 1 day per
week at an agreed hourly
rate, from 6 October 2014
The agreement is on a
going forward basis with
the Company being able to
terminate the agreement,
at no less than one
month’s notice.
Bass Oil Limited Annual Report December 2018
20
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
Company performance
The remuneration of Bass executives and contractors is not formally linked to financial performance
measures of the Company. In accordance the Section 300A of the Corporations Act 2001 the following
table summarises Bass’ performance over a four and half year period:
Measure
Dec 2018
Dec 2017
June 2017
June 2016
June 2015
(6 months)
Net (loss)/profit
$
Basic (loss) per share
¢ per share *
Share price at the
beginning of the year *
$
Share price at the end of
the year *
$
Dividends per share
¢
(419,615)
(98,149)
(1,357,287)
(3,044,418)
(714,995)
(0.000)
(0.000)
(0.001)
(0.001)
(0.001)
0.003
0.001
0.001
0.002
0.003
0.003
0.003
0.001
0.001
0.002
Nil
Nil
Nil
Nil
Nil
*
Prices have been rounded to three decimal points
Remuneration of key management personnel
No key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
Table 1: Remuneration for the year ended 31 December 2018
Short-term
benefits
Post
employment
Share-
based
payments
Long-term
benefits
Salary & fees
Superannuation Options
Long service
leave
Total
USD
USD
USD
USD
USD
Non-executive Directors
P F Mullins
H M Gordon
M L Lindh
Sub-total non-executive
directors
Managing Director
55,353
40,592
36,901
5,234
3,839
3,490
132,846
12,563
G Guglielmo
224,590
21,211
Other key management
personnel
S J Brealey
R M Hamilton
104,546
9,932
69,016
-
Sub-total non-executive
directors
Totals
173,562
530,998
9,932
43,706
Bass Oil Limited Annual Report December 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
60,587
44,431
40,391
145,409
-
245,801
-
-
-
-
114,478
69,016
183,494
574,704
21
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
Remuneration of key management personnel (cont’d)
Table 2: Remuneration for the six months ended 31 December 2017 (restated)
Short-term
benefits
Post
employment
Share-
based
payments
Long-term
benefits
Salary & fees
Superannuation Options
Long service
leave
Total
USD
USD
USD
USD
USD
Non-executive Directors
P F Mullins
H M Gordon
M L Lindh
Sub-total non-executive
directors
Managing Director
29,216
21,425
19,478
2,775
2,036
1,850
70,119
6,661
G Guglielmo
116,865
11,102
Other key management
personnel
R M Hamilton
Totals
41,791
-
228,775
17,763
-
-
-
-
-
-
-
-
-
-
-
31,991
23,461
21,328
76,780
-
127,967
-
-
41,791
246,538
Table 3: Shareholdings of key management personnel
Shares held in Bass Oil Limited (number)
1 January 2018
Balance at
beginning of
period
Purchases
Sales
31 December 2018
Balance at end
of period
2018
Directors
P F Mullins
G Guglielmo
H M Gordon
M L Lindh (a)
Other key management
personnel
S J Brealey
R M Hamilton
45,600,000
265,630,465
20,266,668
202,529,453
534,026,586
-
7,500,000
-
-
-
-
-
-
-
-
-
-
45,600,000
265,630,465
20,266,668
(108,366,771)
94,162,682
(108,366,771)
425,659,815
-
-
-
7,500,000
(a) Mr M Lindh’s interest includes 21,508,000 (2017: 21,508,000) shares held directly and 72,654,682 (2017: 181,021,453)
shares held indirectly by related parties, Marbel Capital Pty Ltd and Chesser Nominees Pty Ltd (2017: South Australian
Resource Investments Pty Ltd and Chesser Nominees Pty Ltd), all subsidiaries of Adelaide Equity Partners Ltd, a director
related entity of Mr M Lindh.
Bass Oil Limited Annual Report December 2018
22
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2018) (cont’d)
Remuneration of key management personnel (cont’d)
Options held in Bass Oil Limited (number)
1 January 2018
Balance at
beginning of
period
Option
issued
Options
expired
Net change
other
31 December
2018
Balance at
end of period
2018
Directors
P F Mullins
G Guglielmo
H M Gordon
M L Lindh
Other key
management
personnel
S J Brealey
R M Hamilton
Options
-
-
-
-
-
-
7,200,000
(7,200,000)
41,941,650
(41,941,650)
3,200,000
(3,200,000)
40,295,515
(40,295,515)
-
-
2,500,000
(2,500,000)
-
-
-
-
-
-
-
-
-
-
-
-
On 20 February 2018 Piggy Back options were issued to key management personnel as follows: P F
Mullins 7,200,000; G Guglielmo 41,941,850; H M Gordon 3,200,000; M L Lindh 40,295,515 and R M
Hamilton 2,500,000. The Piggy Back options were not exercised and were cancelled after they expired
on 15 December 2018.
Other transactions and balances with key management personnel and their related parties
In accordance with AASB 124: “Related Party Disclosures”, key management personnel (KMP) have
authority and responsibility for planning, directing and controlling the activities of the Bass Oil
Limited. Hence, KMP are deemed to include the following:
the non-executive Directors of Bass Oil Limited; and
certain executives in the Managing Director’s senior leadership team.
During the year the Group paid corporate advisory and investor relations fees to Adelaide Equity
Partners Limited (a director related entity of Mr M Lindh) of $34,522 (31 December 2017: $35,059)
(under a corporate advisory and investor relations mandate). This mandate was terminated as at 30
June 2018. The fees were provided under normal commercial terms and conditions. Amounts
outstanding at balance date were $nil (31 December 2017: $6,435).
During the year the Group paid rent to Adelaide Equity Partners Limited of $3,985 (31 December
2017: $nil) (under a rental of premises mandate). The fees were provided under normal commercial
terms and conditions. Amounts outstanding at balance date were $nil (31 December 2017: $nil).
HEALTH, SAFETY AND ENVIRONMENT
The Company has adopted an Environment Policy and a Safety Policy and conducts its operations in
accordance with the APPEA Code of Environmental Practice 2008.
The Company’s petroleum exploration and development activities are subject to environmental
conditions specified in the Offshore Petroleum and Greenhouse Gas Storage Act 2006, associated
Regulations and Directions, as well as the Environment Protection and Biodiversity Conservation Act
Bass Oil Limited Annual Report December 2018
23
DIRECTORS’ REPORT (cont’d)
HEALTH, SAFETY AND ENVIRONMENT (cont’d)
1999. During the period there were no known contraventions by the Company of any relevant
environmental regulations.
The Company considers all injuries are avoidable and has policies and procedures to ensure employees
and contractors manage safety accordingly. There is a continuous process of monitoring and evaluating
our procedures. During the year there were no recorded health and safety incidents.
CORPORATE GOVERNANCE
The Company’s Corporate Governance Statement for the year ended 31 December 2018 may be
accessed from the Company’s website at www.bassoil.com.au.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 in relation to the audit for the year ended 31 December 2018 is included on page 25.
Non-audit services
The Directors are satisfied that the provision of non-audit services, during the period, 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 Audit and Risk Committee, in
conjunction with the Chief Financial Officer, assesses the provision of non-audit services by the auditors
to ensure that the auditor independence requirements of the Corporation Act 2001 in relation to the
audit are met.
Details of amounts paid or payable to the auditor for non-audit services provided during the period by
the auditor are outlined in note 9 to the financial statements.
The directors are of the opinion that the services as disclosed in note 9 to the financial statements do
not compromise the external auditor’s independence, based on advice received from the Audit and Risk
Committee, 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
Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional & 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.
Signed in accordance with a resolution of the Directors
Chairman
Melbourne, 29 March 2019
Bass Oil Limited Annual Report December 2018
24
AUDITOR’S INDEPENDENCE DECLARATION
Bass Oil Limited Annual Report December 2018
25
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Bass Oil Limited, I state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity, are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December
2018 and its performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
(c) the financial statements and notes comply with International Financial Reporting Standards as
stated in Note 2(a).
This declaration has been made after receiving the declarations required to be made to the directors
in accordance with section 295A of the Corporations Act 2001 for the financial year ended
31 December 2018.
On behalf of the Board
Chairman
Melbourne, 29 March 2019
Bass Oil Limited Annual Report December 2018
26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the financial year ended 31 December 2018
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
Revenue
Oil revenue
Cost of oil sold
Gross profit
Other income
Interest received
Operator fees
Other income
Total revenue and other income
Administrative expenses
Depreciation
Employee benefits expense
Finance costs
Change in fair value of the equity options
Profit/(loss) before income tax
Income tax expense
Loss for the year
Other comprehensive loss, net of income tax
Items that may be reclassified to profit or loss
Other comprehensive loss, net of income tax
4
5
6
7
8
10(a)
3,838,237
(2,395,667)
1,442,570
1,778
60,970
448,566
1,953,884
(1,398,603)
(1,156)
(622,220)
(31,686)
-
(99,781)
(319,834)
(419,615)
-
-
2,370,639
(1,478,890)
891,749
463
23,961
13,735
929,908
(675,376)
(85)
(256,752)
(19,199)
(16,566)
(38,070)
(60,079)
(98,149)
-
-
Total comprehensive loss for the year
(419,615)
(98,149)
Basic and diluted (loss)/earnings per share
25
(0.000)
(0.000)
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2018
27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
Note
2018
$
Consolidated
31 December 2017
$
(Restated)
1 July 2017
$
(Restated)
11
12
13
14
15
12
15
16
17
20
21
10(e)
22
20
21
23
32
24
854,117
1,312,608
131,060
55,944
3,882
1,607,829
1,133,418
66,442
104,944
-
1,035,603
908,134
76,046
51,057
12,409
2,357,611
2,912,633
2,083,249
175,898
27,312
3,178
1,345,408
1,551,796
3,909,407
751,391
75,587
870,624
-
896,366
2,593,968
-
246,896
-
246,896
2,840,864
1,068,543
265,189
31,660
1,775
1,523,640
1,822,264
4,734,897
792,752
159,272
559,197
-
1,361,093
2,872,314
101,672
281,160
-
382,832
3,255,146
1,479,751
212,122
27,312
967
1,593,957
1,834,358
3,917,607
412,076
175,453
503,417
280,190
741,503
2,112,639
91,530
297,990
969,784
1,359,304
3,471,943
445,664
25,728,503
3,129,996
25,720,096
3,261,878
24,704,769
3,144,969
(27,789,956)
(27,502,223)
(27,404,074)
1,068,543
1,479,751
445,664
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Inventories
Other financial assets
Total current assets
Non current assets
Trade and other receivables
Other financial assets
Plant and equipment
Oil properties
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Provision for tax
Other financial liabilities
Borrowings
Total current liabilities
Non current liabilities
Trade and other payables
Provisions
Borrowings
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2018
28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2018
Note
Contributed
equity
Accumulated
losses
Consolidated
Currency
translation
reserve
Share option
reserve
Total
$
$
$
$
$
At 1 January 2018
25,720,096
(27,502,223)
3,129,996
131,882
1,479,751
Net loss for the year
Total comprehensive
income for the period
Transfer on expiry and
cancellation of options
Tax consequences of
share issue costs
-
(419,615)
-
(419,615)
-
-
-
(419,615)
-
(419,615)
131,882
(131,882)
-
8,407
-
-
-
8,407
At 31 December 2018
25,728,503
(27,789,956)
3,129,996
-
1,068,543
At 1 July 2017
Currency translation
differences
Net loss for the year
Total comprehensive
income for the period
Shares issues on
exercise of options
Transfer from other
liabilities on exercise of
options
Tax consequences of
share issue costs
24,704,769
(27,404,074)
-
-
(2,699,305)
33
-
-
-
-
3,129,996
(98,149)
-
(98,149)
3,129,996
844,902
166,122
4,303
-
-
-
-
-
-
-
-
-
3,129,996
(98,149)
3,031,847
-
844,902
131,882
298,004
-
4,303
At 31 December 2017
25,720,096
(27,502,223)
3,129,996
131,882
1,479,751
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2018
29
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net cash (used in)/provided by
operating activities
Cash flows from investing activities
Proceeds from other financial assets
Proceeds from plant and equipment
Oil properties expenditure
Purchase plant and equipment
Net cash (used in)/provided by
investing activities
Cash flows from financing activities
Proceeds from issue of shares and equity options
Payment of deferred consideration
22
Net cash (used in)/provided by financing
activities
Net (decrease)/increase in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at the beginning of the year
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
4,084,968
(4,420,433)
1,778
2,275,692
(2,021,261)
463
31
(333,687)
254,894
17
17
16
-
3,895
(26,834)
(3,175)
(26,114)
-
(369,550)
(369,550)
(729,351)
(24,361)
1,607,829
8,294
-
(155,518)
(1,699)
(148,923)
858,663
(390,000)
468,663
574,634
(16,949)
1,050,144
Cash and cash equivalents at the end of the year
11
854,117
1,607,829
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2018
30
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 1. Corporate Information
The consolidated financial statements of Bass Oil Limited (“Parent Entity” or “Company”) and its
controlled entities (collectively as “Consolidated Entity” or “the Group”) for the year ended
31 December 2018 was authorised for issue in accordance with a resolution of the directors on
28 March 2019.
Bass Oil Limited is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are oil production.
Note 2. Summary of Significant Accounting Policies
Basis of Preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation of
certain non-current assets and financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts are presented in United States dollars, unless
otherwise noted.
In the application of the Group’s accounting policies, which are described below, management is
required to make judgements, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements. Actual results may
differ from these estimates.
Comparatives
This financial report is for the year ended 31 December 2018. The Group changed its balance date
from 30 June to 31 December in order to align the reporting dates with its Indonesian operations. The
comparatives are for the six months 1 July 2017 to 31 December 2017.
Going Concern
The financial report has been prepared on the going concern basis which contemplates continuity of
normal business activities and the realisation of assets and settlement of liabilities in the ordinary
course of business.
For the financial year ended 31 December 2018 the Group incurred a loss after tax of $419,615 (31
December 2017: $98,419), had a net cash outflow from operating activities of $333,687 (31
December 2017: inflows of $254,894) and had a net cash outflow from investing activities of $26,114
(31 December 2017: $148,923). At 31 December 2018, the Group has a cash balance of $854,117
(31 December 2017: $1,607,829) and the current liabilities exceed current assets by $236,357 (31
December 2017: surplus of $40,319).
The Directors have prepared cash flow forecasts which indicate that the current cash resources will
not be sufficient to fund planned drilling commitments, business development opportunities and
working capital requirements (which assumes the Indonesian tax authorities will agree the proposed
instalment arrangement to be negotiated as disclosed in Note 10) without the raising of additional
funds, and unless additional funding is obtained, cash resources will be exhausted by 30 June 2019.
The Group will be required to secure additional funding (which may include debt, a pro-rata issue to
shareholders and/or a placement of shares) of at least $700,000 by 30 June 2019 and a further
$1,500,000 if the Group is to proceed with the planned drilling programme and business development
opportunities through to 31 March 2020.
Based on the Group’s cash flow forecast and achieving the funding referred to above, the Directors
believe that the Group will be able to continue as a going concern.
Bass Oil Limited Annual Report December 2018
31
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
If the Group is unable to successfully secure the above additional funding, there is significant
uncertainty as to whether the Group will continue as a going concern and, therefore, whether they will
realise their assets and extinguish their liabilities in the normal course of business.
No adjustments have been made relating to the recoverability and classification of recorded asset
amounts and the amount and classification of liabilities that might be necessary should the Group not
continue as a going concern.
(a) Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply
with other requirements of the law. The financial statements comprise the consolidated statements of
the Group. For the purpose of preparing the consolidated financial statements, the Company is a for-
profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company and the Group
comply with International Financial Reporting Standards.
(b) New Accounting Standards and Interpretations
The Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for
an accounting period that begins on or after 1 January 2018.
New and revised Standards and amendments thereof and Interpretations effective for the current year
that are relevant to the Group include:
AASB 9 Financial Instruments and related amending Standards
AASB 15 Revenue from Contracts with Customers and related amending Standards
AASB 9 Financial Instruments and related amending Standards
In the current year, the Group has applied AASB 9 Financial Instruments (as amended) and the
related consequential amendments to other Accounting Standards that are effective for an annual
period that begins on or after 1 January 2018. The transition provisions of AASB 9 allow an entity not
to restate comparatives.
There were no financial assets or financial liabilities which the Group had previously designated as at
FVTPL under AASB 139 that were subject to reclassification or which the Group has elected to
reclassify upon the application of AASB 9. There were no financial assets or financial liabilities which
the Group has elected to designate as at FVTPL at the date of initial application of AASB 9.
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1
January 2018 based on the facts and circumstances that existed at that date and concluded that the
initial application of AASB 9 has had no material impact on the Group’s financial assets as regards
their classification and measurement.
AASB 15 Revenue from Contracts with Customers and related amending Standards
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as
amended) which is effective for an annual period that begins on or after 1 January 2018. AASB 15
introduced a 5-step approach to revenue recognition. Far more prescriptive guidance has been added
in AASB 15 to deal with specific scenarios.
Bass Oil Limited Annual Report December 2018
32
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
The Group’s accounting policies for its revenue streams are disclosed in detail in note 2(p) below.
Apart from providing more extensive disclosures for the Group’s revenue transactions, the application
of AASB 15 has not had a significant impact on the financial position and/or financial performance of
the Group.
At the date of authorisation of the financial statements the new and revised Australian Accounting
Standards, Interpretations and amendments that have been issued but are not yet effective and
would have an effect the financial statements, is set out below:
AASB 16 Leases
AASB 16 provides a comprehensive model for the identification of lease arrangements and their
treatment in the financial statements of both lessees and lessors. AASB 16 will supersede the current
lease guidance including AASB 117 Leases and the related Interpretations when it becomes effective
for accounting periods beginning on or after 1 January 2019. The date of initial application of AASB 16
for the Group will be 1 January 2019.
Impact of the new definition of a lease
The Group will make use of the practical expedient available on transition to AASB 16 not to reassess
whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with
AASB 117 and Interpretation 4 will continue to apply to those leases entered or modified before 1
January 2019.
The right to obtain substantially all of the economic benefits from the use of an identified asset,
and
The right to direct the use of that asset.
The Group will apply the definition of a lease and related guidance set out in AASB 16 to all lease
contracts entered into or modified on or after 1 January 2019 (whether it is a lessor or a lessee in the
lease contract). In preparation for the first-time application of AASB 16, the Group has carried out an
implementation project. The project has shown that the new definition in AASB 16 will not change
significantly the scope of contracts that meet the definition of a lease for the Group.
Impact on lessee accounting
Operating leases
AASB 16 will change how the Group accounts for leases previously classified as operating leases under
AASB 117, which were off-balance sheet. On initial application of AASB 16, for all leases (except as
noted below), the Group will:
Recognise right-of-use assets and lease liabilities in the consolidated statement of financial
position, initially measured at the present value of the future lease payments;
Recognise depreciation of right-of-use assets and interest on lease liabilities in the consolidated
statement of profit or loss;
Separate the total amount of cash paid into a principal portion (presented within financing
activities) and interest (presented within operating activities) in the consolidated cash flow
statement.
Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 136
Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous
lease contracts.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as
personal computers and office furniture), the Group will opt to recognise a lease expense on a
straight-line basis as permitted by AASB 16.
Bass Oil Limited Annual Report December 2018
33
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
As at 31 December 2018, the Group has non-cancellable operating lease commitments of $754,477
(Note 27).
A preliminary assessment indicates that $432,000 of these arrangements relate to leases other than
short-term leases and leases of low-value assets, and hence the Group will recognise a right-of-use
asset of $432,000 and a corresponding lease liability of $432,000 in respect of all these leases. The
impact on profit or loss is to decrease other expenses by $108,000 to increase depreciation by
$88,000 and to increase interest expense by $20,000.
The preliminary assessment indicates that $322,477 of these arrangements relate to short-term
leases and leases of low-value assets.
Under AASB 117, all lease payments on operating leases are presented as part of cash flows from
operating activities. The impact of the changes under AASB 16 would be to reduce the cash generated
by operating activities by $432,000 and to increase net cash used in financing activities by the same
amount.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of Bass Oil Limited and its
subsidiaries as at 31 December each year (the Group).
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
The financial statements of subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. In preparing the consolidated financial statements, all
intercompany balances and transactions, income and expenses and profit and losses resulting from
intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group.
Bass Oil Limited Annual Report December 2018
34
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(d) Foreign currency translation
Functional and presentation currency
The Directors have elected to change the Group’s functional and presentation currency from
Australian dollars (“A$”) to United States (US) dollars effective from 1 January 2018. The change in
functional and presentation currency is a voluntary change which is accounted for retrospectively. All
other accounting policies are consistent with those adopted in the annual financial report for the six
months ended 31 December 2017. The financial report has been restated to US dollars using the
procedures outlined below:
1. Income Statement and Statement of Cash Flows have been translated into US dollars using
average foreign currency rates prevailing for the relevant period.
2. Assets and liabilities in the Statement of Financial Position have been translated into US
dollars at the closing foreign currency rates on the relevant balance sheet dates.
3. The equity section of the Statement of Financial Position, including foreign currency
translation reserve, retained earnings, share capital and the other reserves, have been
translated into US dollars using historical rates.
4. Earnings per share and dividend disclosures have also been restated to US dollars to reflect
the change in presentation currency.
For Bass Oil Limited, the Parent company, United States Dollars (USD) is the functional currency of
the company from 1 January 2018. The change was made to reflect that USD has become the
predominant currency in the company, counting for a significant part of the company’s cash flow, cash
flow management and financing. The change has been implemented with prospective effect.
Transactions and balances
Transactions in currencies other than an entity’s functional currency are initially recorded in the
functional currency by applying the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in currencies other than an entity’s functional currency are
retranslated at the foreign exchange rate ruling at the reporting date. Foreign exchange differences
arising on translation are recognised in the income statement.
Foreign exchange differences that arise on the translation of monetary items that form part of the net
investment in a foreign operation are recognised in the translation reserve in the consolidated
financial statements.
Non-monetary assets and liabilities that are measured in terms of historical cost in currencies other
than an entity’s functional currency are translated using the exchange rate at the date of the initial
transaction. Non-monetary assets and liabilities denominated in currencies other than an entity’s
functional currency that are stated at fair value are translated to the functional currency at foreign
exchange rates ruling at the dates the fair value was determined.
The year-end exchange rate used for 31 December 2018 was A$/US$ 1:0.7058 (31 December 2017:
1:0.7800, 30 June 2017: 1:0.7692).
(e) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and short term
deposits with an original maturity of three months or less that are readily convertible to known cash
amounts of cash which are subject to an insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
Bass Oil Limited Annual Report December 2018
35
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(f)
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or
fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
the financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through
other comprehensive income (FVTOCI):
the financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss
(FVTPL).
Despite the foregoing, the Group may make the following irrevocable election/designation at initial
recognition of a financial asset:
the Group may irrevocably elect to present subsequent changes in fair value of an equity
investment in other comprehensive income if certain criteria are met (see (iii) below); and
the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI
criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch (see (iv) below).
(i) Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and
of allocating interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets
that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and other premiums or discounts)
excluding expected credit losses, through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial
recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective
interest rate is calculated by discounting the estimated future cash flows, including expected credit
losses, to the amortised cost of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial
recognition minus the principal repayments, plus the cumulative amortisation using the effective
interest method of any difference between that initial amount and the maturity amount, adjusted for
any loss allowance.
Bass Oil Limited Annual Report December 2018
36
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(f) Financial assets (cont’d)
The gross carrying amount of a financial asset is the amortised cost of a financial asset before
adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured
subsequently at amortised cost and at FVTOCI. For financial assets other than purchased or originated
credit-impaired financial assets, interest income is calculated by applying the effective interest rate to
the gross carrying amount of a financial asset, except for financial assets that have subsequently
become credit-impaired (see below). For financial assets that have subsequently become
credit-impaired, interest income is recognised by applying the effective interest rate to the amortised
cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired
financial instrument improves so that the financial asset is no longer credit-impaired, interest income
is recognised by applying the effective interest rate to the gross carrying amount of the
financial asset.
For purchased or originated credit-impaired financial assets, the Group recognises interest income by
applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from
initial recognition. The calculation does not revert to the gross basis even if the credit risk of the
financial asset subsequently improves so that the financial asset is no longer credit-impaired.
Interest income is recognised in profit or loss and is included in the "finance income – interest
income" line item.
(ii) Debt instruments classified as at FVTOCI
The corporate bonds held by the Group are classified as at FVTOCI. The corporate bonds are initially
measured at fair value plus transaction costs. Subsequently, changes in the carrying amount of these
corporate bonds as a result of foreign exchange gains and losses (see below), impairment gains or
losses (see below), and interest income calculated using the effective interest method (see (i) above)
are recognised in profit or loss. The amounts that are recognised in profit or loss are the same as the
amounts that would have been recognised in profit or loss if these corporate bonds had been
measured at amortised cost. All other changes in the carrying amount of these corporate bonds are
recognised in other comprehensive income and accumulated under the heading of investments
revaluation reserve. When these corporate bonds are derecognised, the cumulative gains or losses
previously recognised in other comprehensive income are reclassified to profit or loss.
(iii) Equity instruments designated as at FVTOCI
On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument
basis) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not
permitted if the equity investment is held for trading or if it is contingent consideration recognised by
an acquirer in a business combination.
A financial asset is held for trading if:
it has been acquired principally for the purpose of selling it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group
manages together and has evidence of a recent actual pattern of short-term profit-taking; or
it is a derivative (except for a derivative that is a financial guarantee contract or a designated
and effective hedging instrument).
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction
costs. Subsequently, they are measured at fair value with gains and losses arising from changes in
fair value recognised in other comprehensive income and accumulated in the investments revaluation
Bass Oil Limited Annual Report December 2018
37
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(f) Financial assets (cont’d)
reserve. The cumulative gain or loss is not be reclassified to profit or loss on disposal of the equity
investments, instead, it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognised in profit or loss in accordance
with IFRS 9, unless the dividends clearly represent a recovery of part of the cost of the investment.
Dividends are included in the ‘finance income’ line item in profit or loss.
The Group has designated all investments in equity instruments that are not held for trading as at
FVTOCI on initial application of IFRS 9.
(iv) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i)
to (iii) above) are measured at FVTPL. Specifically:
•
Investments in equity instruments are classified as at FVTPL, unless the Group designates an
equity investment that is neither held for trading nor a contingent consideration arising from
a business combination as at FVTOCI on initial recognition (see (iii) above).
Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria (see (i) and
(ii) above) are classified as at FVTPL. In addition, debt instruments that meet either the
amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial
recognition if such designation eliminates or significantly reduces a measurement or recognition
inconsistency (so called ‘accounting mismatch’) that would arise from measuring assets or
liabilities or recognising the gains and losses on them on different bases. The Group has not
designated any debt instruments as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair
value gains or losses recognised in profit or loss to the extent they are not part of a designated
hedging relationship (see hedge accounting policy). The net gain or loss recognised in profit or loss
includes any dividend or interest earned on the financial asset and is included in the ‘other gains and
losses’ line item.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments
that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract
assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial recognition of the respective financial
instrument.
The Group always recognises lifetime ECL for trade receivables, contract assets and lease receivables.
The expected credit losses on these financial assets are estimated using a provision matrix based on
the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast direction of
conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been
a significant increase in credit risk since initial recognition. However, if the credit risk on the financial
instrument has not increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over
the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of
lifetime ECL that is expected to result from default events on a financial instrument that are possible
within 12 months after the reporting date.
Bass Oil Limited Annual Report December 2018
38
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(g) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are
determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs necessary to make the sale.
(h) Joint arrangements
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 consolidated entity has recognised its share of jointly held assets, liabilities, revenues and
expenses of joint operations. These have been incorporated in the financial statements under the
appropriate classifications.
(i) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as
follows:
Office furniture and equipment – over 3 to 10 years
The assets' residual values, useful lives and amortisation methods are reviewed and adjusted, if
appropriate, at each financial year end. Gains or losses on disposals are determined by comparing
proceeds with the carrying amount and are included in profit or loss.
(j) Leases
The determination of whether an arrangement is or contains a lease is based on substance of the
arrangement and requires assessment of whether the fulfilment of the arrangement is dependent on
the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over
the lease term. Operating lease incentives are recognised as a liability when received and
subsequently reduced by allocating lease payments between rental expense and reduction of the
liability.
(k) Impairment of non-financial assets other than indefinite life intangibles
Non-financial assets other than indefinite life intangibles are tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
The Group conducts an annual internal review of asset values, which is used as a source of
information to assess any indicators for impairment. If any impairment exists, an estimate of the
asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of an assets fair value less costs of disposal
and value in use. Non-financial assets that suffered an impairment are tested for possible reversal of
the impairment whenever events or changes in circumstances indicate that the impairment may have
reversed.
Bass Oil Limited Annual Report December 2018
39
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(l) Oil properties
Oil properties are carried at cost including construction, installation of infrastructure such as roads and
the cost of development of wells.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it’s probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the profit or loss during the financial period in which they are incurred.
Oil properties are amortised on the Units of Production basis using the latest approved estimate of
Proven (1P) Reserves. Amortisation is charged only once production has commenced. No amortisation
is charged on areas under development where production has not yet commenced.
(m) Provision for restoration
The Group records the present value of its share of the estimated cost to restore operating locations.
The provision is based on the net present value of the current agreed monthly payment to Pertamina
to cover the anticipated obligations relating to the reclamation, waste site closure, plant closure,
production facility removal and other costs associated with the restoration of the site. Pertamina is
responsible for all restoration.
When the liability is recorded the carrying amount of the production asset is increased by the
restoration costs which are depreciated over the producing life of the asset. Over time, the liability is
increased for the change in the present value based on a risk free discount rate and monthly payment
to Pertamina. The unwinding of the discount is recorded as an accretion charge within finance costs.
Any changes in the estimate of the provision for restoration arising from changes in the amount
required to be paid to Pertamina or changes in the discount rate of the restoration provision are
recorded by adjusting the provision and the carrying amount of the production or exploration asset
and then depreciated over the producing life of the asset. Any change in the discount rate is applied
prospectively.
(n) Trade and other payables
Trade payables and other payables are carried at amortised cost due to their short term nature they
are not discounted. They represent liabilities for goods and services provided to the Group prior to the
end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services.
(o) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(p) Revenue recognition
Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been
transferred to the buyer. Revenue is recognised and measured at the fair value of the consideration or
contributions received, net of goods and service tax (“GST”), to the extent it is probable that the
economic benefits will flow to the Group and the revenue can be reliably measured.
Sales revenue
Sales revenue is recognised on the basis of the Group’s interest in a producing field (“entitlements”
method), when the physical product and associated risks and rewards of ownership pass to the purchaser,
which is at the time the oil is received at the Pertamina terminal. Revenue earned under a production
sharing contract (“KSO”) is recognised on a net entitlements basis according to the terms of the KSO.
Bass Oil Limited Annual Report December 2018
40
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(p)
Revenue recognition (cont’d)
Other income
Other income is recognised in profit or loss at the fair value of the consideration received or
receivable, net of GST, when the significant risks and rewards of ownership have been transferred to
the buyer or when the service has been performed.
Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will
flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on
a time basis, by reference to the principle outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount on initial recognition.
(q) Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual
leave and sick leave in the period the related service is rendered.
Liabilities recognised in respect of short term employee benefits, are measured at their nominal values
using the remuneration rate expected at the time of settlement.
(r) Income tax and other taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred
income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of 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 profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
or
when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can be utilised. The
carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Bass Oil Limited Annual Report December 2018
41
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(r) Income tax and other taxes (cont’d)
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
Indonesian First Tranche Petroleum
A provision for deferred income tax payable related to tax potentially payable by the Group on its
share of First Tranche Petroleum which has already been recovered from Tangai-Sukananti KSO
production. This tax is payable in the event the contractors exhaust the pool of cost recovery prior to
expiry of the KSO. The cost recovery pool has been exhausted during the year and tax is now
payable.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST or VAT except:
when the GST or VAT incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST or VAT is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST or VAT included.
The net amount of GST or VAT recoverable from, or payable to, the taxation authority is included as
part of receivables or payables in the statement of financial position.
Commitments and contingencies are disclosed net of the amount of GST or VAT recoverable from, or
payable to, the taxation authority.
(s) Earnings per share
Basic earnings per share is calculated as net profit/(loss) attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
(t) Critical accounting estimates and judgements
The preparation of a financial report in conformity with Australian Accounting Standards requires
management to make judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
These accounting policies have been consistently applied by each entity in the consolidated entity, and
the estimates and underlying assumptions are reviewed on an ongoing basis. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying values of assets and liabilities within the next financial year are discussed below.
Bass Oil Limited Annual Report December 2018
42
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 2. Summary of Significant Accounting Policies (cont’d)
(t) Critical accounting estimates and judgements (cont’d)
(i)
Impairment of Oil Property Assets
Oil properties impairment testing requires an estimation of the value in use of the cash
generating unit to which deferred costs have been allocated. The fair value less cost to sell
calculation requires the entity to estimate the future cash flows expected to arise from the cash
generating unit and a suitable discount rate in order to calculate present value. Other
assumptions used in the calculations which could have an impact on future years includes
available reserves and oil prices.
(ii) Useful Life of Oil Property Assets
As detailed at Note 2 (n) oil properties are amortised on a unit-of-production basis, with
separate calculations being made for each resource. Estimates of reserve quantities are a
critical estimate impacting amortisation of oil property assets.
(iii) Estimates of Reserve Quantities
The estimated quantities of Proven and Probable hydrocarbon reserves reported by the
Company are integral to the calculation of the amortisation expense relating to oil properties,
and to the assessment of possible impairment of these assets. Estimated reserve quantities are
based upon interpretations of geological and geophysical models and assessments of the
technical feasibility and commercial viability of producing the reserves. These assessments
require assumptions to be made regarding future development and production costs,
commodity prices, exchange rates and fiscal regimes. The estimates of reserves may change
from period to period as the economic assumptions used to estimate the reserves can change
from period to period, and as additional geological data is generated during the course of
operations. Reserves estimates are prepared in accordance with the Company’s policies and
procedures for reserves estimation which conform to guidelines prepared by the Society of
Petroleum Engineers.
Note 3. Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise receivables, payables, cash, deposits and
borrowings.
The Group manages its exposure to key financial risks, including oil price, interest rate and currency
risk in accordance with the Group’s financial risk management policy. The objective of the policy is to
support the delivery of the Group’s financial targets whilst protecting future financial security.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency
risk, commodity price risk, credit risk and liquidity risk. The Group uses different methods to measure
and manage different types of risk to which it is exposed. These include monitoring levels of exposure
to interest rate and foreign exchange risk and assessments of market forecasts for interest rates,
foreign exchange and commodity prices. The risks are summarised below.
Primarily responsibility for identification and control of financial risks rests with the Managing Director
under the authority of the Board. The Board reviews and agrees management’s assessment for
managing each of the risks identified below.
The carrying amounts and net fair values of the Group’s financial assets and liabilities at 31 December
2018 are cash and cash equivalents $854,117, trade and other receivables $1,488,506, other financial
assets $31,194, trade and other payables $751,391 and borrowings $896,366.
Bass Oil Limited Annual Report December 2018
43
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risk comprises three types of risk: foreign currency risk,
commodity price risk and interest rate risk. Financial instruments affected by market risk include
deposits, trade and other receivables, trade and other payables, and borrowings.
The sensitivity analyses in the following sections relate to the position as at 31 December 2018.
The sensitivity analyses have been prepared on the basis that the amount of the financial instruments
in foreign currencies is all constant. The sensitivity analyses are intended to illustrate the sensitivity
changes in market variables on the Group’s financial instruments and show the impact on profit and
loss and shareholders’ equity, where applicable.
Foreign currency risk
The Group has transactional currency exposure arising from corporate costs which are denominated in
Australian dollars (AUD), and oil sales costs which are denominated in Indonesian Rupiah (IDR) and
United States dollars. The Group does not undertake any hedging activities.
The Group owns oil production assets in Indonesia and is exposed to foreign currency risk arising from
various currency exposures, to the United States dollar.
The Board approved the policy of holding certain funds in United States dollars to manage foreign
exchange risk. The Group’s exposure to foreign exchange risk at the reporting date was as follows:
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Borrowings
31 December 2018
AUD
$
88,238
5,514
127,625
896,366
IDR
$
56,515
414,910
609,940
-
At the reporting date, if the currencies set out in the table above, strengthened or weakened against
the United States dollar by the percentage shown, with all other variables held constant, net profit for
the year would increase/(decrease) and net assets would increase/(decrease) by:
Impact on post tax profit
Exchange rate +10%
Exchange rate -10%
Impact on equity
Exchange rate +10%
Exchange rate -10%
31 December 2018
AUD
$
(93,024)
93,024
(93,024)
93,024
IDR
$
(13,851)
13,851
(13,851)
13,851
Bass Oil Limited Annual Report December 2018
44
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Foreign currency risk (cont’d)
Management believes the risk exposures as at the reporting date are representative of the risk
exposure inherent in the financial instruments. A movement of +/– 10% is selected because a review
of recent exchange rate movements and economic data suggests this range is reasonable.
Commodity Price Risk
The Group is exposed to commodity price fluctuations through the sale of petroleum products
denominated in US dollars. The Group may enter into commodity crude oil price swap and option
contracts to manage its commodity price risk.
If the US dollar oil price changed by +/-10% from the average oil price during the period, with all
other variables held constant, the estimated impact on post-tax profit and equity would have been:
Impact on post tax profit
USD oil price +10%
USD oil price -10%
Impact on equity
USD oil price +10%
USD oil price -10%
Interest rate risk
31 December 2018
$
383,824
(383,824)
383,824
(383,824)
The Group’s exposure to market interest rates is related primarily to the Group’s cash and cash
equivalents.
The Group constantly analyses its interest rate opportunity and exposure. Within analysis
consideration is given to existing positions and alternative arrangement on fixed or variable deposits.
Bass Oil Limited Annual Report December 2018
45
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Interest rate risk (cont’d)
The following sensitivity analysis is based on the interest rate opportunity/risk in existence at
reporting date.
At reporting date, if interest rates changed by +/- 1%, with all other variables held constant, the
estimated impact on post-tax profit and equity would have been:
Impact on post tax profit
Interest rates +1%
Interest rates - 1%
Impact on equity
Interest rates +1%
Interest rates -1%
31 December 2018
$
8,541
(8,541)
8,541
(8,541)
A movement of + and-1% is selected because this is historically within the range of rate movements
and available economic data suggests this range is reasonable.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built
an appropriate liquidity risk framework for the management of the Group’s short, medium and longer
term funding and liquidity management requirements. The Group manages liquidity risk by
maintaining adequate banking facilities through monitoring of future rolling cash flow forecasts of its
operations, which reflect management’s expectations of the settlement of financial assets and
liabilities.
The financial liabilities are trade and other payables, and borrowings. At 31 December 2018, the
Group had $751,391 (2017: $792,752) in trade and other payables. Trade payables are non-interest
bearing and have a contractual maturity of less than 30 days. At 31 December 2018 the Group had
borrowings of $896,366 (2017: $1,361,093) which are incurring interest at 7.5% (2017: interest-
free).
The only financial assets are cash and cash equivalents, trade and other receivables, and other
financial assets. At 31 December 2018, the Group had $854,117 (2017: $1,607,829) in cash and cash
equivalents, $1,488,506 (2017: $1,398,607) in trade and other receivables, and $31,194 (2017:
$31,660) in other financial assets.
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The table includes both interest
and principal cash flows.
Bass Oil Limited Annual Report December 2018
46
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Liquidity risk (cont’d)
Weighted
average
effective
interest rate
Less than one
year
One to two
years
Greater than
two years
Total
%
$
$
$
$
-
751,391
7.50
896,366
-
792,752
1.81
1,361,093
-
-
-
-
-
-
751,391
896,366
101,672
894,424
-
1,361,093
31 December 2018
Trade and other
payables
Borrowings
31 December 2017
Trade and other
payables
Borrowings
Credit risk
Credit risk arises from financial assets of the Group, which comprise cash and cash equivalents, trade
and other receivables, and other financial assets.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group have adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or other security, where appropriate, as a means of
mitigating the risk of financial loss from defaults.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for
losses, represents the Group’s maximum exposure to credit risk without taking account of any
collateral or other security obtained.
In addition, receivable balances are monitored on an ongoing basis with the result being that the
Group’s exposure to bad debts is not significant. Currently there are no receivables that are impaired
or past due but not impaired.
Apart from Pertamina, the Indonesian State owned oil Company, the largest customer of the Group,
the Group does not have significant credit risk exposure to any other counterparty.
The credit risk on liquid funds is banks with high ratings assigned by international credit rating
agencies.
Fair value of financial instruments
The Directors consider that the carrying amount of the financial assets and liabilities recorded in the
financial statements approximate their fair values unless otherwise stated.
Capital management
Capital is defined as equity. When managing capital, management’s objective is to ensure the entity
continues as a going concern as well as to maintain optimal returns to shareholders.
The Group will seek to raise further capital, if required, to fund its future strategy for the development
of the Tangai-Sukananti field.
The Group is not subject to any externally imposed capital requirements.
Bass Oil Limited Annual Report December 2018
47
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 4. Other Income
Recovery of Consultancy fees
Royalty revenue
Net foreign exchange gains
Note 5. Administrative Expenses
Audit and tax fees
Consultants fees other
Corporate related costs
Directors’ remuneration
Foreign exchange losses
Insurance
Legal expenses
Loss on disposal of assets
Operating lease costs
Travel
Other administrative expenses
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
4,050
311,632
132,884
448,566
13,735
-
-
13,735
Note
9
Consolidated
12 months to
31 December 2018
$
6 months to
31 December 2017
$
69,179
352,120
71,853
145,409
-
28,173
132,527
-
69,409
158,330
371,603
1,398,603
77,965
164,188
60,679
76,780
3,158
12,095
36,000
815
49,489
59,602
134,605
675,376
Note 6. Depreciation and Amortisation
Depreciation and amortisation included in the profit and loss is as follows:
Depreciation plant and equipment
Amortisation of oil properties
Note
16
17
Consolidated
12 months to
31 December 2018
$
6 months to
31 December 2017
$
1,156
201,171
202,327
85
225,835
225,920
Bass Oil Limited Annual Report December 2018
48
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 7. Employee Benefits Expense
Wages and salaries
Superannuation
Provision for annual leave
Medical expense
Termination benefits
Workers’ compensation
Note 8. Finance Costs
Interest on borrowings
Accretion interest
Note 9. Auditor’s Remuneration
Amounts received or due and receivable by Deloitte
for:
An audit or review of the financial report of the entity
paid to:
Deloitte Touche Tohmatsu Australia
Deloitte Touche Tohmatsu Indonesia
The auditor of Bass Oil Limited is Deloitte Touche
Tohmatsu
Tax services paid to Deloitte Touche Tohmatsu
Australia
Total
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
606,031
31,143
4,041
5,808
(27,425)
2,622
622,220
203,427
11,102
(9,844)
6,500
42,872
2,695
256,752
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
6,671
25,015
31,686
-
19,199
19,199
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
43,823
13,280
57,103
12,076
69,179
61,938
12,100
74,038
3,927
77,965
Bass Oil Limited Annual Report December 2018
49
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 10. Income Tax
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
(a) Income tax recognised in profit or loss
Current tax
In respect of the current financial year
311,427
55,780
Deferred tax
In respect of the current financial year
Total income tax expenses recognised in profit
or loss
The income tax expense for the year can be
reconciled to the accounting profit or loss as
follows:
Profit/(loss) before tax
Income tax calculated at 30% (2017: 30%)
Difference in tax rates
Cost recovery profit that is not liable to income
tax in Indonesia
Change in fair value of options recorded in other
liabilities
Other
Current financial year temporary differences not
recognised
Current year revenue tax losses not recognised
Income tax expense recognised in the profit or
loss
(b) Recognised deferred tax assets and
(liabilities)
Deferred tax assets and (liabilities) are
attributable to the following:
Other assets
Trade and other payables
Provisions
Borrowings
Share issue costs
Net deferred tax assets not recognised
Net deferred tax assets and (liabilities)
(c) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in
respect of the following items:
Temporary differences
Revenue tax losses
Capital tax losses
8,407
319,834
(99,781)
(29,934)
77,857
4,299
60,079
(38,070)
(11,421)
13,945
(15,470)
(114,636)
-
54,891
(15,480)
247,970
4,970
245
(9,313)
176,289
319,834
60,079
(6,887)
8,999
601
-
11,870
14,583
(14,583)
-
(7,154)
20,774
(494)
5,852
20,766
39,744
(39,744)
-
14,583
4,890,304
163,887
5,068,774
39,744
4,642,335
181,116
4,863,195
Bass Oil Limited Annual Report December 2018
50
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 10. Income Tax (cont’d)
Deferred tax assets have not been recognised in respect to these items as it is not probably at this
time that future taxable profits will be available against which the group can utilise the benefit.
(d) Movement in recognised net deferred tax
assets
Opening balance
Recognised in equity
Recognised in income
Closing balance
(e) Movement in provision for tax
Opening balance
Current tax expense
Closing balance
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
-
(8,407)
8,407
-
-
(4,299)
4,299
-
559,197
311,427
870,624
503,417
55,780
559,197
The provision for tax relates to income tax payable in Indonesia. The tax only becomes payable when
there are no cost recoveries available to be carried forward at the end of the tax year in Indonesia
(31 December). There were no cost recoveries available to be carried forward at 31 December 2018,
meaning that the tax is payable on 30 April 2019. The Group has entered into discussions with the
Indonesian tax office regarding a payment plan for the tax provision of $870,624. The proposed terms
are equal monthly instalments of $96,736 commencing April 2019 and ending December 2019. Late
payments may incur interest penalties at a rate of 2% per month from the payment deadline until
date of payment.
The provision for tax covers the tax years from 2010 to 2018.
Note 11. Cash and Cash Equivalents
Cash at bank and in hand
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
854,117
854,117
1,607,829
1,607,829
Bass Oil Limited Annual Report December 2018
51
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 12. Trade and Other Receivables
Current
Trade debtors (i)
Other receivables
Goods and services tax
Value-added tax
Non-current
Other receivables
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
913,619
7,690
5,514
385,785
1,312,608
880,095
6,352
5,382
241,589
1,133,418
175,898
175,898
265,189
265,189
(i) At balance date, there are no trade receivables that are past due but not impaired. Due to the
short term nature of these receivables, their carrying value approximates fair value. Trade
receivables are non-interest bearing and are generally on 60 day terms. Details regarding the
credit risk of receivables are disclosed in Note 3. All sales from the Tangai-Sukananti KSO are to
Pertamina, the Indonesia State owned oil Company.
Note 13. Other Current Assets
Prepayments
Accrued revenue
Note 14. Inventories
Oil inventories in tank (at cost)
Maintenance spares (at cost)
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
56,794
74,266
131,060
59,219
7,223
66,442
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
31,438
24,506
55,944
83,832
21,112
104,944
Bass Oil Limited Annual Report December 2018
52
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 15. Other Financial Assets
Current
Security deposit
Non-current
Security deposit
Note 16. Plant and Equipment
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
3,882
3,882
-
-
27,312
27,312
31,660
31,660
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
Office equipment, furniture and fittings
Opening balance, net of accumulated
depreciation
Purchases
Disposals
Foreign exchange movement
Depreciation charge for the year
6
Closing balance, net of accumulated depreciation
Cost
Accumulated depreciation
Net carrying amount
Note 17. Oil Properties
Tangai-Sukananti KSO
1,775
3,175
-
(616)
(1,156)
3,178
32,457
(29,279)
3,178
967
1,699
(816)
10
(85)
1,775
32,871
(31,096)
1,775
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
1,345,408
1,345,408
1,523,640
1,523,640
Movement in the carrying value of oil properties
Balance at the beginning of year
Expenditure during the period
Disposals during the period
Depreciation, depletion and amortisation
6
Balance at the end of year
1,523,640
26,834
(3,895)
(201,171)
1,345,408
1,593,957
155,518
-
(225,835)
1,523,640
Bass Oil Limited Annual Report December 2018
53
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 18. Subsidiaries
Name of Subsidiary
Principal activity
Place of
incorporation and
operation
Proportion of ownership
interest and voting
power held by the Group
BSOC Business Services Pty Ltd Non-operating
Australia
Bass Oil Sukananti Ltd
Oil Producer
British Virgin Islands
31 Dec 18
31 Dec 17
100%
100%
100%
100%
Note 19. Joint Arrangements
Name of Joint Venture
Principal activity
Place of
incorporation and
operation
Proportion of ownership
interest and voting
power held by the Group
Tangai-Sukananti KSO (i)
Oil Producer
Indonesia
31 Dec 18
31 Dec 17
55%
55%
(i) Joint arrangements in which Bass Oil Limited is the operator.
Note 20. Trade and Other Payables
Current
Trade payables (i)
Other payables
Non-current
Other payables
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
191,955
559,436
751,391
-
-
191,438
601,314
792,752
101,672
101,672
(i) The Group settles creditors on average within 30 days and no interest is charged.
Note 21. Provisions
Current
Employee benefits
Non-current
Restoration
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
75,587
75,587
246,896
246,896
159,272
159,272
281,160
281,160
Bass Oil Limited Annual Report December 2018
54
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 21. Provisions (cont’d)
Movement in the carrying value of restoration provision
Balance at the beginning of year
Expenditure during the period
Accretion interest
Balance at the end of year
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
281,160
(40,532)
6,268
246,896
297,990
(20,265)
3,435
281,160
The restoration provision was agreed with Pertamina EP and will be fully paid when the license expires
in July 2025.
Note 22. Borrowings
Current
Non-current
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
896,366
-
896,366
1,361,093
-
1,361,093
The acquisition of Cooper Energy Sukananti Ltd now Bass Oil Sukananti Limited from Cooper Energy
Limited was settled on 28 February 2017. A deferred settlement of AUD 2,270,000 was agreed to be
repaid by 31 December 2018. The company paid the first repayment of AUD 500,000 in December
2017 and the second repayment of AUD 500,000 in June 2018.
The Company secured an extension of 6 months for the remaining payments. The timetable for a
third payment of AUD 500,000, due 30 September 2018, has been deferred until 31 March 2019 and
the fourth and final payment of AUD 770,000, due 31 December 2018, has now been deferred until
30 June 2019. In return for the deferral of the final two payments, the Company has agreed to pay
Cooper Energy an interest cost of 7.5% per annum on the outstanding AUD 1,270,000, over the
period of the deferral.
Apart from the extension interest, the deferred settlement is interest free. The borrowing is secured
by a registered charge over the shares the Company holds in Bass Oil Sukananti Limited. The amount
due has been recorded at its net present value.
Bass Oil Limited Annual Report December 2018
55
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 23. Contributed Equity
Issued and paid up capital
2018
Shares
2017
Shares
2018
$
2017
$
Ordinary share fully paid
2,606,167,481
2,606,167,481
25,728,503
25,720,096
Movements in ordinary shares
on issue
Ordinary shares on issue at
beginning of period
Exercise of options
Transfer from other liabilities on
exercise of options (Note 21)
Tax consequences of share
issues costs
Ordinary shares on issue at end
of period
2,606,167,481
2,239,217,584
25,720,096
24,704,769
-
-
-
366,949,897
-
-
-
-
844,902
166,121
8,407
4,304
2,606,167,481
2,606,167,481
25,728,503
25,720,096
Terms and Conditions of Contributed Equity
Ordinary shares entitle the holder to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote,
either in person or by proxy, at a meeting of the Company.
Share Options on Issue
At 31 December 2018, the Company has nil (31 December 2017: nil) share options on issue. However
in the prior period, 366,949,897 shareholders who had exercised their $0.003 options were entitled to
receive a 1:1 Piggy Back option on completion of an entitlement and acceptance form. 366,688,205
shareholders accepted their Piggy Back options which were exercisable on a 1:1 basis for 366,688 205
ordinary shares of the Company at an exercise price of $0.006 and an expiry date of 15 December
2018. On 15 December 2018 the options expired and were cancelled. No options were exercised.
Movements in options on issue
Balance at the beginning of year
Options issued
Options exercised
Consolidated
Note
12 months to
31 December 2018
Options
6 months to
31 December 2017
Options
-
386,103,275
366,688,205
-
-
(366,949,897)
Options expired and cancelled
(366,668,205)
(19,153,378)
Closing value
-
-
Bass Oil Limited Annual Report December 2018
56
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 24. Accumulated Losses
Balance at the beginning of year
Net loss
Options expired and cancelled
Balance at the end of year
Note 25. Earnings per Share
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
(27,502,223)
(27,404,074)
(419,615)
131,882
(98,149)
-
(27,789,956)
(27,502,223)
The following reflects the income used in the basic earnings per share computations.
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
Basic earnings/(loss) per share
Net loss attributable to ordinary equity shareholders of
the parent
(0.000)
(0.000)
(419,615)
(98,149)
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
Issued ordinary shares at 1 January (2017:1 July)
2,606,167,481
2,239,217,584
Effect of shares issued November 2017
Effect of shares issued December 2017
Weighted average number of ordinary shares at
31 December
-
-
15,656,861
26,937,980
2,606,167,481
2,281,812,425
Bass Oil Limited Annual Report December 2018
57
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 26. Key Management Personnel Disclosures
The aggregate compensation made to directors and other members of key management personnel of
the Group is set out below:
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
530,998
43,706
574,704
228,775
17,763
246,538
Short-term employee benefits
Post-employment benefits
Note 27. Commitments and Contingencies
(a) Non-cancellable operating lease commitments
Future operating lease rentals relating to the rent of the Group’s office in Melbourne that is not
provided for in the financial statements and payable:
Within one year
After one year but not more than five years
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
13,730
-
13,730
18,750
14,625
33,375
Set out below are the Group’s share of operating lease commitments that are in Tangai–Sukananti
KSO.
Future operating lease rentals relating to the rental of the Jakarta office and equipment in the Jakarta
office that are not provided for in the financial statements and payable:
Within one year
After one year but not more than five years
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
136,321
131,566
267,887
86,022
52,041
138,063
Future operating lease rentals relating to the field equipment and vehicles in Indonesia that are not
provided for in the financial statements and payable:
Within one year
After one year but not more than five years
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
306,085
166,775
472,860
45,098
9,351
54,449
Bass Oil Limited Annual Report December 2018
58
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 27. Commitments and Contingencies (cont’d)
(b)
Employment agreements
The Group may terminate Mr Guglielmo’s employment agreement by giving six months’ notice. The
Group has a contingent liability of $116,000 (2017: $117,000) in relation to this agreement, if
Mr Guglielmo is not required to work out the notice period.
The Group may terminate Dr Brealey’s employment agreement by giving three months’ notice. The
Group has a contingent liability of $43,000 (2017: $nil) in relation to this agreement, if Dr Brealey is
not required to work out the notice period.
Note 28. Parent Entity Disclosures
Information relating to Bass Oil Limited
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Foreign exchange reserve
Share option reserve
Accumulated losses
Total shareholder’s equity
Parent
2018
$
477,256
2,680,639
1,025,995
2,851,970
(171,331)
25,728,504
3,165,011
-
2017
$
1,548,394
3,750,299
1,483,033
3,174,686
575,613
25,720,096
3,165,011
131,882
(29,064,846)
(28,441,376)
(171,331)
575,613
Loss of the parent entity
Total comprehensive income/(loss) of the parent entity
(755,352)
(755,352)
(563,939)
(563,939)
The Parent Entity has a net asset deficiency of $171,331 as at 31 December 2018. This amount
includes current liabilities pertaining to the deferred settlement to Cooper Energy Limited of
$1,270,000 which is payable in two instalments by 31 March 2019 and 30 June 2019 (note 22). It is
expected that the settlement on 30 June 2019 will be funded by the raising of additional funds as
discussed in note 2.
The commitments and contingencies of the parent entity are the same as disclosures in Note 29
excluding the commitments relating to Tangai-Sukananti KSO.
Note 29. Related Party Disclosures
Terms and conditions of transactions with related parties other than KMP
During the year the Group paid corporate advisory and investor relations fees to Adelaide Equity
Partners Limited (a director related entity of Mr M Lindh) of $34,522 (31 December 2017: $35,059)
(under a corporate advisory and investor relations mandate). This mandate was terminated as at 30
June 2018. The fees were provided under normal commercial terms and conditions. Amounts
outstanding at balance date were $nil (31 December 2017: $6,435).
Bass Oil Limited Annual Report December 2018
59
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 29. Related Party Disclosures (cont’d)
During the year the Group paid rent to Adelaide Equity Partners Limited of $3,985 (31 December
2017: $nil) (under a rental of premises mandate). The fees were provided under normal commercial
terms and conditions. Amounts outstanding at balance date were $nil (31 December 2017: $nil).
The acquisition of Bass Oil Sukananti Limited formally Cooper Energy Sukananti Limited from Cooper
Energy Limited (a shareholder and director related entity) was agreed and approved by shareholders
at a Special General Meeting on 13 February 2017. The transaction was settled on the 28 February
2017 with the payment of AUD 500,000 cash and the issue of 180,000,000 ordinary shares, valued at
AUD 360,000. Additionally, a deferred settlement of AUD 2,270,000 was agreed to be paid by 31
December 2018. The Company paid the first repayment of AUD 500,000 in December 2017 and the
second repayment of AUD 500,000 in June 2018.
The Company secured an extension of 6 months for the remaining payments. The timetable for a third
payment of AUD 500,000, due 30 September 2018, has been deferred until 31 March 2019 and the
fourth and final payment of AUD 770,000, due 31 December 2018, has now been deferred until 30
June 2019. In return for the deferral of the final two payments, the Company has agreed to pay
Cooper Energy an interest cost of 7.5% per annum on the outstanding AUD1,270,000 over the period
of the deferral. The deferred settlement secured by a registered charge over the shares the Company
holds in Bass Oil Sukananti Limited.
Note 30. Segment Information
For management purposes there is only one operating segment, which is oil production.
The chief operating decision maker only reviews consolidated financial information. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of
the operating segment, has been identified as the Board.
The Board does not currently receive segment Statement of Financial Position and Statement of
Comprehensive Income information. For exploration activities the Board managed each exploration
activity of each permit through review and approval of joint venture cash calls, Authority for
Expenditure (AFE’s) and other operational information. For oil production (from the Tangai–Sukananti
KSO located in South Sumatra Basin in Indonesia) the Board manages the activity through review of
production details, review and approval of the joint venture cash calls and other operational
information.
The result for the year ended 31 December 2018 was from oil production.
The consolidated entity operates in the oil and gas industry in Indonesia.
The consolidated assets and liabilities as at 31 December 2018 and 2017 relate to oil production.
For the current financial year, the Group’s revenue of $3,838,237 was received from the sale of oil in
Indonesia to Pertamina EP (the Indonesian State owned oil Company).
Bass Oil Limited Annual Report December 2018
60
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 31. Reconciliation of Cash Flows from Operating Activities
For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank, and short
term deposits at call.
Reconciliation of profit after income tax to net cash provided/used in operating activities
Net loss after tax
Adjustments for:
Depreciation
Loss on disposal of fixed assets
Amortisation
Impairment of receivables
Change in fair value of options
Accretion interest
Foreign exchange adjustment
Changes in assets and liabilities
(Increase)/decrease in trade and other
receivables
Decrease/(increase) in other assets
(Increase) in inventories
Increase/(decrease) in provisions
Increase/(decrease) in trade and other payables
Increase in provision for tax
Increase in deferred tax
Exchange rate fluctuation
Net cash flows used in operating activities
Non-cash transactions
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
(419,615)
(98,149)
6
1,156
-
201,171
182,974
-
24,927
(98,854)
(108,241)
(375,092)
(66,361)
49,000
(124,165)
(28,662)
311,427
8,407
-
(333,687)
85
815
225,835
-
16,566
19,199
-
164,351
(278,777)
10,296
(53,887)
2,574
350,058
55,844
4,304
131
254,894
There were no non-cash transactions during the current financial year.
Note 32. Reserves
Currency translation reserve (i)
Share option reserve (ii)
Consolidated
Note
12 months to
31 December 2018
$
6 months to
31 December 2017
$
3,129,996
-
3,129,996
3,129,996
131,882
3,216,878
(i)
The Currency translation reserve was recognised at 31 December 2017 with the change in
functional and presentational currency to USD. In order to derive US dollar opening balances,
the Australian dollar functional currency assets and liabilities at 1 July 2017 were converted at
the spot rate of US$1:A$0.77 on the reporting date; and the contributed equity, reserves and
retained earnings were converted at applicable historical rates and the difference has given rise
to the recognition of the Currency translation reserve.
Bass Oil Limited Annual Report December 2018
61
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
Note 32. Reserves (cont’d)
(ii) The Share Option Reserve relates to the fair value of the piggy back share options and the
amount will be released into issued capital as the piggy back options are exercised.
Note 33. Foreign Currency Translation
(a) Change in functional and presentation currency of Bass Oil Limited
An entity’s functional currency is the currency of the primary economic environment in which the
entity operates. During the financial year 2017 the Company completed the acquisition of shares in
Cooper Energy Sukananti Limited. Consequently, the directors determined that the functional currency
of its subsidiary is US dollars, as the US dollar is the currency that mainly influences the revenues and
costs of its main trading subsidiary, and is therefore the currency of the primary economic
environment in which it operates. The parent’s functional currency was previously Australian dollars.
The change in functional currency of the parent entity has been applied prospectively with effect from
1 January 2018 in accordance with the accounting standards.
Following the change in functional currency, the Company has elected to change its presentational
currency from Australian dollars to US dollars. The directors believe that changing the presentational
currency to US dollars will enhance comparability with its industry peer group, a majority of which
report in US dollars. The change in presentation currency represents a voluntary change in accounting
policy, which has been applied retrospectively.
To give effect to the change in functional and presentation currency, the assets and liabilities of the
parent, which had an Australian dollar functional currency at 31 December 2017 were converted to US
dollars at a fixed exchange rate on 1 January 2018 of US$1:A$0.7800 and the contributed equity,
reserves and retained earnings were converted at applicable historical rates. In order to derive US
dollar opening balances, the Australian dollar functional currency assets and liabilities at 1 July 2017
were converted at the spot rate of US$1:A$0.7692 on the reporting date; revenue and expenses for
the six month period ended 31 December 2017 were converted at the average exchange rates of
US$1:A$0.7800 for the reporting period, or at the exchange rates ruling at the date of the
transaction to the extent practicable, and equity balances were converted at applicable historical
rates.
The above stated procedures resulted in the recognition of a foreign currency translation reserve of
US$3,129,996, at 31 December 2017 which was not previously recognised, as set out in the
statement of changes in equity found in the financial report for the year ended 31 December 2018.
(b)
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates applicable at the date of transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date. Non-monetary
items that are measured in terms of historical cost in a foreign currency are translated at the date of
the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
Note 34. General Information
Bass Oil Limited (the Company) is a listed public company incorporated in Australia. The address of
its registered office and principle place of business is as follows:
Level 5
11-19 Bank Place
Melbourne, VIC, 3000
Australia
Bass Oil Limited Annual Report December 2018
62
INDEPENDENT AUDITOR’S REPORT
Bass Oil Limited Annual Report December 2018
63
Bass Oil Limited Annual Report December 2018
64
Bass Oil Limited Annual Report December 2018
65
Bass Oil Limited Annual Report December 2018
66
SHAREHOLDER AND OTHER INFORMATION
Compiled as at 28 March 2019
DISTRIBUTION OF ORDINARY SHARES
Ordinary Shares
Number of Holders
Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total on Issue
198
309
190
629
810
2,136
59,526
853,462
1,590,227
26,428,055
2,577,236,211
2,606,167,481
1,453 holders held less than a marketable parcel of ordinary shares. There is no current on-market
buy back.
SUBSTANTIAL SHAREHOLDERS
As disclosed in notices given to the Company.
Name of substantial shareholder
Interest in number of shares
Beneficial and non-beneficial
% of shares
Cooper Energy Ltd
Miller Anderson Pty Ltd
Tattersfield Group
VOTING RIGHTS
353,361,294
265,630,465
171,475,048
13.56
10.19
6.58
At meetings of members or classes of members:
(a)
each member entitled to vote may vote in person or by proxy, attorney or representative;
(b)
(c)
on a show of hands, every person present who is a member or a proxy, attorney or
representative of a member has one vote; and
on a poll, every person present who is a member or a proxy, attorney or representative of a
member has:
(i)
(ii)
for each fully paid share held by him, or in respect of which he is appointed a proxy,
attorney or representative, one vote for the share;
for each partly paid share, only the fraction of one vote which the amount paid (not
credited) on the share bears to the total amounts paid and payable on the share
(excluding amounts credited),
subject to any rights or restrictions attached to any shares or class or classes of shares.
Bass Oil Limited Annual Report December 2018
67
SHAREHOLDER AND OTHER INFORMATION
Compiled as at 28 March 2019
THE 20 LARGEST SHAREHOLDERS OF ORDINARY SHARES
Holder
Somerton Energy Ltd
Miller Anderson Pty Ltd
Tattersfield Securities Ltd
Miss S Masalkovski
Starbush Pty Ltd
Mr M Saboundjian
Mr P Sciancalepore & Mrs P Sciancalepore
Marbel Capital Pty Ltd
Icon Holdings Pty Ltd
Wingmont Pty Ltd
Crescent Nominees Limited
Mr S H Bell & Mrs J K Berveling
Small Business Finance Pty Ltd
Yavern Creek Holdings Pty Ltd
Black Prince Pty Ltd
Mr W C Wheelahan
Mr N Guglielmo & Mr G Guglielmo
Mr R Kong & Ms X Zhao
Mark Lindh and Belinda Lindh < Belmar Super Fund
A/C>
Mr H Gordon
Ordinary shares
% of total issued
353,361,294
243,200,000
120,004,173
97,030,000
94,610,138
76,000,000
60,000,000
58,718,059
50,000,000
45,600,000
44,706,875
39,602,382
37,401,351
35,000,000
30,000,000
30,000,000
22,430,465
22,400,000
21,508,000
20,266,668
13.56
9.33
4.60
3.72
3.63
2.92
2.30
2.25
1.92
1.75
1.72
1.52
1.44
1.34
1.15
1.15
0.86
0.86
0.83
0.78
The 20 largest shareholders hold 1,501,839,405 shares, representing 57.63% of the issued share
capital.
Bass Oil Limited Annual Report December 2018
68