ANNUAL REPORT
For the financial year ended
31 December 2019
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 ................... 64
Shareholder & Other Information ............... 68
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 performance in 2019, a year that has seen Bass record its maiden profit, 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, 2019.
Importantly, Bass is proud to report that it recorded zero incidents resulting in injuries over 2019, which
is a credit to all staff in Indonesia and Australia. Furthermore, the Company, its employees, consultants
and contractors have accumulated over 4 million working hours without a Lost Time Injury, a truly
creditable performance.
In 2019 Bass drilled the successful Bunian 5 development well under budget and without incident. The
Company posted two consecutive record months of production in November and December 2019 on
the back of strong production performance in the field and with the addition of production from the
Bunian 5 well. Net entitlement oil production increased 46% from 57,222 barrels to 83,276 barrels year
on year. Sales revenue increased 32% from $3.84 million to $5.05 million as a result.
Importantly, I am pleased to report that Bass recorded its maiden profit of $0.40 million this year, up
from a $0.42 million loss in 2018 representing almost a $1 million turn around.
Bass Oil’s focus is on building an energy business, initially in Indonesia. Your Board is confident that our
three-tiered growth strategy detailed further in this report, and predicated on our cornerstone
Indonesian producing asset, is the right balance at the right time to deliver on our stated objectives and
build shareholder value.
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 identifying projects with significant
growth potential, proven economics and profitability, not sentiment.
I would like to make some comments regarding the current lower oil price environment and the COVID-
19 threat. Bass has actively put measures in place to mitigate the effect of COVID-19 and the depressed
oil price. Firstly, Bass is actively monitoring and complying with all Government directions to ensure the
health and safety of all staff is protected throughout these trying times. To mitigate against the current
oil price environment the Company is safeguarding its financial position, via a reduction in overheads,
which includes a cut to directors’ fees and salaries.
Fortunately, Bass is in the stable position, given it is operating in a low-cost oilfield. The Company has
optimised its field, reducing direct operating costs to US$20/barrel at current production rates.
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 in Indonesia, a country with an emerging economy hungry
for energy to facilitate the growth of its economy.
Peter Mullins
Chairman
31 March 2020
Bass Oil Limited Annual Report December 2019
3
MANAGING DIRECTOR’S REPORT
During 2019, your Company achieved a number of key objectives while putting in place an invigorated
growth structure for the future of our business in Indonesia.
The year saw Bass Oil deliver a maiden profit on the back of record production and revenues. This
result is a validation of the Company’s strategy in focusing on exploiting the latent potential of
previously underperforming assets. This model is one that is highly scalable in Indonesia and drives our
business development focus. This augurs well for Bass Oil.
2019 saw Bass demonstrate its operating capability beyond production optimisation initiatives to
drilling our successful Bunian 5 development well, both under budget and without incident. The results
of the well are being integrated into our field models. This result, in combination with the production
performance of the Bunian and Tangai field, has resulted in an increase in field reserves with the effect
of almost replacing the entirety of 2019 production. This is discussed later in the report. In
combination, these factors provide Bass with the confidence that the fields are capable of underpinning
the future growth of our business in Indonesia.
Indonesia’s energy consumption is increasing with GDP, ~5% again in 2019. The local supply cannot
meet demand. Following the 2019 presidential elections in Indonesia it is clear that there is an
increased focus in addressing the country’s shortfall in energy supply of oil and gas.
This supply pressure will provide Bass with further opportunities for growth in this regional energy
market. Indonesia’s hydrocarbon basins are world-class and have extensive infrastructure in place –
factors favouring our growth outlook. Bass corporate growth strategy comprises a three tiered
approach to potential acquisitions:
‘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 the Improved Oil Recovery potential (IOR) of their legacy assets. Shortlisted
opportunities are under assessment; and,
An ‘Optimisation and Technology’ focus whereby our proven IOR skill set allows 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 for the year included:
Successful capital raise resulting in $1.01 million in new funds being raised
-
- Completion of $0.884 million, the final two deferred payments for the purchase of the Tangai-
Sukananti asset from Cooper Energy
- Gross revenue totalled $5.05 million – up 32% YoY
- Gross Profit $2.65 million – up 84% YoY
-
-
- Maiden Net Profit After Tax of A$0.40 million, representing a turn-around of almost $1 million
Earnings before interest, tax and depreciation and amortisation (EBITDA) $1.25 million
Earnings before interest and tax (EBIT) $0.800 million
Bass Oil Limited Annual Report December 2019
4
MANAGING DIRECTOR’S REPORT (cont’d)
In regard to COVID-19 and the current lower oil price environment, our key focus is to remain
disciplined, ensuring the health and safety of our staff, whilst delivering and optimising, ongoing
production throughout CY2020, whilst not compromising field integrity. We share the view that the
current depression in oil prices has been exacerbated by external forces, which will inevitably result in a
correction in due course, at which time, Bass will be positioned to take advantage of attractive
opportunities.
Bass is committed to supporting government and community efforts to limit the spread of the virus, and
supporting business continuity with regard to its staff and contractors.
Bass has activated a Business Continuity Plan (BCP) during this period of significant health and economic
uncertainty. The Company has implemented a series of measures to protect the health and safety of
our people, including health screening protocols, restricting travel and meetings, implementing social
distancing measures and making changes to field and office access arrangements. The BCP includes
contingency plans that will allow production operations to continue in the event of any of the field
operations team contracting the virus.
Figure 1 Tangai-Sukananti KSO Location Map
Bass Oil Limited Annual Report December 2019
5
MANAGING DIRECTOR’S REPORT (cont’d)
Tangai-Sukananti KSO
Bass’ experienced Indonesian on-site personnel and Jakarta-based technical and management teams
operate the Tangai-Sukananti KSO production assets containing the producing Bunian and Tangai oil
fields. It was pleasing to see our success from mid-2019 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.
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 3 boosted
production from ~300 to more than 700 barrels of oil per day, consistently, throughout 2019.
Total production for the year ending 31 December 2019 was 151,410 barrels on a 55% basis (or 83,276
barrels on a net entitlement basis). Bass expects a production up-lift during 2020, due to the drilling of
the Bunian 5 development well in November of last year and the continued focus on implementation of
field optimisation activities. Bass is also planning to drill the Tangai-5 development well in the second
half of 2020 to maintain overall field production capacity at or above the current facility limits subject to
a recovery in the economic climate.
Tangai-Sukananti Historical Production (55% basis)
)
l
b
b
k
(
n
o
i
t
c
u
d
o
r
P
22.5
18.
13.5
9.
4.5
0.
Figure 2: Tangai-Sukananti Historical Production (55% basis)
Bass Oil Limited Annual Report December 2019
6
MANAGING DIRECTOR’S REPORT (cont’d)
Substantive technical review
The focus of the Jakarta and Melbourne based sub-surface teams in 2020 is to update the
comprehensive, integrated reservoir study and dynamic reservoir model following the drilling of the
successful Bunian-5 development well.
Following the completion of this work development scenarios and production forecasts from the
Dynamic Modelling project will inform the Company’s future development plan and update the 1P and
2P reserves and contingent resource.
The total 100% Field 2P Reserves at 31 December, 2019 are assessed to be 2.191 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 0.567 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.
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 2020 including developing new IOR technology specific to the
Indonesian region under our Memoranda of Understandings (MOUs) with local and leading regional
universities.
The first significant step into our IOR program is the conversion of Tangai-4 to a water injection well.
Tangai-4 will host the field pilot for the Low Salinity Water Injection (LSWI) trial. The pilot is targeting an
increase in field recovery via the injection of tailored low salinity water to improve oil recoveries. The
pilot will likely commence in late Q1 2020.
Bass Oil Limited Annual Report December 2019
7
MANAGING DIRECTOR’S REPORT (cont’d)
Business Development
Bass entered the 2020 calendar year actively engaged in the evaluation of, and negotiations on a
number of 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 2019 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 20 assets proceeded to detailed technical evaluation over calendar year 2019. This resulted
over the period under review, in a shortlist of a number of strategically compatible opportunities, each
of which was the subject of a formal offer and advanced negotiations. At time of going to press two of
these opportunities are “live” and Bass will keep the market appraised of the outcome of any of these
negotiations.
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 effort will continue during calendar 2020.
Bass Oil Limited Annual Report December 2019
8
RESERVES AND RESOURCES
Reserves and Contingent Resources
(For 12 month period ending 31 December 2019)
The 2019 reserves review has been influenced by stronger than forecast performance at all existing
wells, in particular Bunian-3, throughout 2019.
Furthermore, this year saw the successful drilling and completion in November, 2019 of Bunian-5 as
another producing well on the Bunian Field. The results from Bunian-5 have also encouraged Bass to
include additional reserves in the K reservoir for the first time. Geological results from the Bunian-5 well
are being incorporated into the 2018 Field static and dynamic reservoir models to yield updated oil
volumetrics and scenarios for future drilling locations.
Whilst the gross field reserves remained relatively constant or went up slightly, the year-on-year
movements in Net Entitlement Reserves reflect a slight decrease in both the 1P and 2P reserves for the
Bunian and Tangai fields under the fiscal terms of the KSO. Overall the field reserves were revised
upwards offsetting oil produced from these fields during 2019. These upward revisions are primarily due
to Bunian-5 being successfully drilled and coming on-line in November, 2019. The outcomes at Bunian-5
endorsed the inclusion of reserves for the K reservoir at the Bunian Field. Additionally, there was an
improved performance of all existing wells, particularly Bunian-3.
The results give your Board and management a high level of confidence in our forward development
drilling program for 2020/21 and beyond.
Resources & Reserves as at 31 December, 2019
100% Field Reserves (MMbbl)
Category
Proved - 1P
Proved & Probable - 2P
Developed & Undeveloped
1.725
2.191
BAS Net Entitlement Reserves (MMbbl)
Category
Proved - 1P
Proved & Probable - 2P
Developed & Undeveloped
0.483
0.567
100% Field Contingent Resources (MMbbl)
Category
Total
1C
0.189
2C
0.426
Table 1: Tangai-Sukananti Reserves and Resources
Reserves
The 2P Field Reserves in the Tangai-Sukananti KSO are assessed as at 31 December, 2019, to be 2.191
million barrels of oil on a 100% JV basis. This reflects the proved and probable reserves for the Bunian
and Tangai oilfields (Tables 1 and 2).
Bass Oil Limited Annual Report December 2019
9
RESERVES AND RESOURCES (cont’d)
In accordance with ASX reporting requirements for fiscal environments that use production sharing
contracts or similar, Bass reported Net Entitlement 2P Reserves of 0.567 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, 2019,
are assessed to be 0.426 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.
Resources & Reserves as at 31 December, 2019
100% Field Reserves (MMbbl)
Category
100% Field Reserves at 31 Dec 2018
CY 2019 Production
Revisions
100% Field Reserves at 31 Dec 2019
Proved
1P
Proved & Probable
2P
1.777
(0.275)
0.223
1.725
2.019
(0.275)
0.447
2.191
BAS Net Entitlement Reserves (MMbbl)
Category
Proved
1P
Proved & Probable
2P
Net Entitlement Reserves at 31 Dec 2018
CY 2019 Production
Revisions
Net Entitlement Reserves at 31 Dec 2019
0.505
(0.083)
0.061
0.483
100% Field Contingent Resources (MMbbl)
Category
1C
100% Field Contingent Resources - 31 Dec 2018
0.552
0.602
(0.083)
0.048
0.567
2C
0.882
Revisions
(0.363)
(0.456)
100% Field Contingent Resources - 31 Dec 2019
0.189
0.426
Table 2: Tangai-Sukananti Reserves and Resources including revisions
Bass Oil Limited Annual Report December 2019
10
RESERVES AND RESOURCES (cont’d)
Notes on Calculation of Reserves and Resources
Bunian-5 was successfully drilled and came on line in November, 2019. Pending the revision of the Static and Dynamic Field
Models with the geological results of Bunian-5, the reserves and contingent resources have been updated by accounting for the
year’s production and using revised forecasts for the existing and planned development wells utilising the decline curve analysis
method.
The Bunian Field currently has one producing reservoir (TRM3 sandstone) but following the encouraging results at Bunian-5, the K
reservoir is expected to become a significant contributor to production. 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 2019 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 2019
11
SAFETY
Bass Oil implements daily, a strict, industry-standard health and safety regime around its Operatorship
of the Tangai-Sukananti production assets. This safety regime is energetically promoted by Pertamina,
the Indonesian state owned Oil Company.
In February 2020, the senior management of Bass reaffirmed its commitment to resourcing and
promoting our safety program to Pertamina at the annual safety review held in Bogor, Indonesia.
The Bass 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 2019,
which is a credit to all staff in Indonesia and Australia. The total Safe Work Man Hours
achieved up to 31 December 2019 was 4,070,090 hours. This is an outstanding achievement.
Our successful delivery of a safe work environment over 2019 was achieved despite
increases in work activity associated with the drilling, completion and connection of the
Bunian 5 well and production 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 2019
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 2019, 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
Indonesian UKL-UPL guidelines 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 2019 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 also ensured that the increased
movements in heavy vehicle traffic had a minimal impact on the local communities in the area.
Bass continues to strive to achieve the lightest possible footprint in the environment in which we work.
Bass Oil Limited Annual Report December 2019
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 2019.
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 39 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 was 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 2019
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 Chairman of Aerometrex Limited (ASX Code AMX) and 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
60,800,000
285,630,465
25,266,668
113,811,393
7,600,000
10,000,000
2,500,000
10,000,000
P F Mullins
G Guglielmo
H M Gordon
M L Lindh
COMPANY SECRETARY
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 2019
15
DIRECTORS’ REPORT (cont’d)
OPERATING AND FINANCIAL REVIEW
Operating results for year
The Group’s operating profit for the year ended 31 December 2019 after income tax was $398,418
(31 December 2018: loss of $419,615).
Review of Financial Condition
Liquidity
The Group’s consolidated statement of cash flows for the year recorded a decrease of $212,686
(2018: decrease of $729,351) in cash and cash equivalents. The cash flows were derived from
operating receipts of $5,064,484 (2018: $4,084,968) and capital raising net of transaction costs of
$944,649 (2018: $nil).
There were cash outflows to suppliers and employees of $3,768,975 (2018: $4,420,433) and taxation
paid of $486,512 (2018: $nil). Further cash outflows of deferred payments to Cooper Energy of
$883,638 (2018: $369,550), and net cash outflows in investing activities of $940,023 (2018:
$26,114) relating to expenditure on oil properties.
Cash assets at 31 December 2019 were $640,871 (2018: $854,117).
CHANGES IN THE STATE OF AFFAIRS
There have been no changes in the state of affairs.
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.
Subsequent Events – Refer to note 34 to the financial report for the details of subsequent events.
SHARE OPTIONS
Unissued shares
As at the date of this report there were 367,986,328 unissued ordinary shares under options (nil at
31 December 2018).
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 2019
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
6
6
6
6
2
2
2
2
2
2
2
2
REMUNERATION REPORT (AUDITED) (31 December 2019)
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 2019
17
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (cont’d)
There have been no changes to key management personnel after 31 December 2019 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 2019
18
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (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 2019 and 31 December
2018 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 2019
19
DIRECTOR’S REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (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 2019 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 2019
20
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (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 2019
Dec 2018
Dec 2017
June 2017
June 2016
(6 months)
Net profit/(loss)
$
Basic profit/(loss) per
share
¢ per share *
Share price at the
beginning of the year *
$
Share price at the end of
the year *
$
Dividends per share
¢
398,418
(419,615)
(98,149)
(1,357,287)
(3,044,418)
0.000
(0.000)
(0.000)
(0.001)
(0.001)
0.003
0.003
0.001
0.001
0.002
0.003
0.003
0.003
0.001
0.001
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 2019
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
52,491
38,491
34,990
4,987
3,657
3,324
125,972
11,968
G Guglielmo
208,920
19,847
Other key management
personnel
S J Brealey
R M Hamilton
156,690
14,886
69,821
-
Sub-total key
management personnel
Totals
226,511
561,403
14,886
46,701
Bass Oil Limited Annual Report December 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
57,478
42,148
38,314
137,940
-
228,767
-
-
-
-
171,576
69,821
241,397
608,104
21
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (cont’d)
Remuneration of key management personnel (cont’d)
Table 2: 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 key
management personnel
Totals
173,562
530,998
9,932
43,706
Table 3: Shareholdings of key management personnel
Shares held in Bass Oil Limited (number)
-
-
-
-
-
-
-
-
-
-
-
-
-
60,587
44,431
40,391
145,409
-
245,801
-
-
-
-
114,478
69,016
183,494
574,704
1 January 2019
Balance at
beginning of
period
Purchases
Sales
31 December 2019
Balance at end
of period
45,600,000
15,200,000
265,630,465
20,000,000
20,266,668
5,000,000
93,811,393
20,000,000
425,308,526
60,200,000
-
25,000,000
7,500,000
2,000,000
-
-
-
-
-
-
-
60,800,000
285,630,465
25,266,668
113,811,393
485,508,526
25,000,000
9,500,000
2019
Directors
P F Mullins
G Guglielmo
H M Gordon
M L Lindh (a)
Other key management
personnel
S J Brealey
R M Hamilton
(a) Mr M Lindh’s interest includes 26,885,000 (2018: 21,508,000) shares held directly and 86,926,393 (2018: 72,303,393)
shares held indirectly by related parties, Marbel Capital Pty Ltd and Chesser Nominees Pty Ltd (2018: Marbel Capital 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 2019
22
DIRECTORS’ REPORT (cont’d)
REMUNERATION REPORT (AUDITED) (31 December 2019) (cont’d)
Remuneration of key management personnel (cont’d)
Options held in Bass Oil Limited (number)
1 January 2019
Balance at
beginning of
period
Option
issued
Options
expired
Net change
other
31 December
2019
Balance at
end of period
2019
Directors
P F Mullins
G Guglielmo
H M Gordon
M L Lindh
Other key
management
personnel
S J Brealey
R M Hamilton
Options
-
-
-
-
-
-
7,600,000
10,000,000
2,500,000
10,000,000
12,500,000
1,000,000
-
-
-
-
-
-
-
-
-
-
7,600,000
10,000,000
2,500,000
10,000,000
-
-
12,500,000
1,000,000
On 30 July as part of the Entitlement issue , options were issued to key management personnel as
follows: P F Mullins 7,600,000; G Guglielmo 10,000,000; H M Gordon 2,500,000; M L Lindh 10,000,000;
S J Brealey 12,500,000 and R M Hamilton 2,500,000.
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 $24,015 (31 December 2018: $34,522)
and capital raising success fees to Adelaide Equity Partners Limited of $47,304 (31 December 2018:
$nil) (both under a corporate advisory and investor relations mandate). The fees were provided under
normal commercial terms and conditions. Amounts outstanding at balance date were $11,365 (31
December 2018: $nil). The Group has a corporate advisory & investor relations mandate with
Adelaide Equity Partners. The mandate has a monthly retainer of A$5,000 per month and can be
terminated at anytime by written notice to the other party.
During the year the Group paid rent to Adelaide Equity Partners Limited of $7,377 (31 December
2018: $3,985) (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
2018: $nil).
HEALTH, SAFETY AND ENVIRONMENT
The Company has adopted an Environment Policy and a Safety Policy and conducts its operations in
accordance with the Indonesian government regulations.
Bass Oil Limited Annual Report December 2019
23
DIRECTORS’ REPORT (cont’d)
HEALTH, SAFETY AND ENVIRONMENT (cont’d)
The Company’s petroleum exploration and development activities are subject to environmental
conditions specified by the Indonesian regulatory authorities. 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 2019 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 2019 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, 31 March 2020
Bass Oil Limited Annual Report December 2019
24
17
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
2019 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 2019.
On behalf of the Board
Chairman
Melbourne, 31 March 2020
Bass Oil Limited Annual Report December 2019
26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the financial year ended 31 December 2019
Revenue
Oil revenue
Cost of oil sold
Gross profit
Other income
Interest received
Operator fees
Other income
Total revenue and other income
Administrative expenses
Employee benefits expense
Finance costs
Profit/(loss) before income tax
Income tax expense
Profit/(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
Consolidated
Note
2019
$
2018
$
4
5
7
8
10(a)
5,052,319
(2,398,969)
2,653,350
3,838,237
(2,395,667)
1,442,570
770
70,443
-
1,778
60,970
448,566
2,724,563
1,953,884
(1,065,617)
(859,472)
(58,709)
740,765
(342,347)
398,418
(1,399,759)
(622,220)
(31,686)
(99,781)
(319,834)
(419,615)
-
-
-
-
Total comprehensive profit/(loss) for the year
398,418
(419,615)
Basic and diluted earnings/(loss) per share
26
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 2019
27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
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
Right of use assets
Oil properties
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Lease liabilities
Provision for tax
Borrowings
Note
2019
$
2018
$
11
12
13
14
15
12
15
16
17
18
21
22
10(e)
23
640,871
1,408,644
32,694
277,357
3,853
854,117
1,312,608
131,060
55,944
3,882
2,363,419
2,357,611
337,925
27,469
1,769
169,779
1,945,213
2,482,155
4,845,574
1,296,255
144,760
92,320
715,359
-
175,898
27,312
3,178
-
1,345,408
1,551,796
3,909,407
751,391
75,587
-
870,624
896,366
Total current liabilities
2,248,694
2,593,968
Non current liabilities
Provisions
Lease liabilities
Total non current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
22
24
33
25
100,346
83,808
184,154
2,432,848
2,412,726
246,896
-
246,896
2,840,864
1,068,543
26,674,268
3,129,996
25,728,503
3,129,996
(27,391,538)
(27,789,956)
2,412,726
1,068,543
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2019
28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2019
Note
Contributed
equity
Accumulated
losses
Consolidated
Currency
translation
reserve
Share option
reserve
Total
$
$
$
$
$
At 1 January 2019
25,728,503
(27,789,956)
3,129,996
-
1,068,543
Net profit for the year
Total comprehensive
income for the period
Shares issued
Transaction costs on
share issues
Tax consequences of
share issue costs
-
-
398,418
398,418
1,008,708
(74,043)
11,100
-
-
-
-
-
-
-
-
-
-
398,418
398,418
-
1,008,708
-
-
(74,043)
11,100
At 31 December 2019
26,674,268
(27,391,538)
3,129,996
-
2,412,726
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
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2019
29
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2019
Consolidated
Note
2019
$
2018
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Taxation paid
Net cash (used in)/provided by
operating activities
Cash flows from investing activities
Proceeds from plant and equipment
Oil properties expenditure
Purchase plant and equipment
Net cash (used in)/provided by
investing activities
32
16
18
16
Cash flows from financing activities
Proceeds from issue of shares and equity options
Payment share issue costs
Principal elements of lease payments
Payment of deferred consideration
23
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
5,064,484
(3,768,975)
770
(31,706)
(486,512)
4,084,968
(4,420,433)
1,778
-
-
778,061
(333,687)
-
(940,023)
-
3,895
(26,834)
(3,175)
(940,023)
(26,114)
1,008,708
(64,059)
(111,740)
(883,638)
(50,729)
(212,691)
(555)
854,117
-
-
-
(369,550)
(369,550)
(729,351)
(24,361)
1,607,829
Cash and cash equivalents at the end of the year
11
640,871
854,117
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Bass Oil Limited Annual Report December 2019
30
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
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 2019 was authorised for issue in accordance with a resolution of the directors on
31 March 2020.
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.
Going Concern
The consolidated financial statements have been prepared on the going concern basis, which assumes
that the Group will be able to realise its assets and extinguish its liabilities in the normal course of
business and at amounts stated in the financial report.
For the year ended 31 December 2019 the Group made a profit after tax of $398,418 (31 December
2018: incurred a loss of $419,615), had a net cash inflow from operating activities of $778,061 (31
December 2018: outflows of $333,687) had a net cash outflow from investing activities of $940,023
(31 December 2018: $26,114) and a net cash outflow from financing activities of $50,729 (31
December 2018: $369,550). At 31 December 2019, the Group has a cash balance of $640,871 (31
December 2018: $854,117) and the current assets exceed current liabilities by $114,725 (31
December 2018: current liabilities exceed current assets by $236,357).
Subsequent to year end, the spot oil price has decreased significantly and the worldwide spread of
COVID-19 along with current economic uncertainty has caused significant disruption to businesses
and economic activity. The current low oil price environment and the subsequent quarantine measures
imposed by the Australian and Indonesian governments, along with the travel and trade restrictions
imposed by Australia and other countries in early 2020, are likely to have a negative impact on the
operations of the Group in the year ending 31 December 2020.
The Group’s key focus is to remain disciplined, ensuring the health and safety of our staff, whilst
delivering and optimising, ongoing production throughout FY2020, whilst not compromising field
integrity.
The Group has activated a Business Continuity Plan (BCP) during this period of significant health and
economic uncertainty. The BCP includes contingency plans that will allow production operations to
continue in the event of any of the field operations team contracting the virus.
Bass Oil Limited Annual Report December 2019
31
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
As the situation remains fluid as at the date these financial statements are authorised for issue, the
directors of the Group considered that the financial effects of COVID-19 and the current low oil price
environment on the Group's consolidated financial statements cannot be reasonably estimated.
Nevertheless, the economic effects arising from the COVID-19 outbreak and the current low oil price
are expected to affect the consolidated results of the Group for the first half and full year of 2020.
The Group has implemented a number of cost control measures including the following:
Deferring the drilling of Tangai-5;
All discretionary capital expenditure not essential to maintaining the operation has been
deferred to 2021;
Focus on accelerating Cost Recovery approvals;
Minimised the contractor workforce in the field as a result of decreasing non-essential tasks to
sustain operations;
Ensuring all expenditure is minimised, including eliminating any discretionary operational
expenditure that is not cost recoverable;
All director fees and executive director salary cut by 50% till March 2021; and
Ongoing discussions with the Indonesian Tax office regarding the status of the current tax
liability as disclosed in note 10 to the financial statements (plus any interest) with the
objective of entering into a payment plan acceptable to both parties.
The Directors have prepared a cash flow forecast through to March 2021 which indicates that
assuming the Group is successful in achieving the above matters; the Group will have sufficient cash
to continue as a going concern.
The cash flow has been prepared using the current oil price and foreign exchange rates. Should the oil
price fall below current levels, the Australian dollar appreciate against the US dollar above current
levels, or should the Indonesian tax office not agree to enter into an acceptable payment plan for the
current tax liability, the Group will be required to raise additional funds. At the date of signing this
report, the Directors have reasonable grounds to believe that the Group will be able to raise further
funds if required and that it is appropriate to prepare the financial report on the going concern basis.
Should the Group be unsuccessful in achieving the initiatives set out above, a material uncertainty
would exist that may cast significant doubt on the ability of the Group to continue as a going concern
and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of
business.
The financial report does not include any adjustments 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.
The financial report does not include any adjustments 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.
Bass Oil Limited Annual Report December 2019
32
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(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 2019.
AASB 16 Leases
The group leases office space in Melbourne and Jakarta. The group also leases office equipment and
motor vehicles in Jakarta.
Impact of application of AASB 16 Leases
AASB 16 provides a comprehensive model for the identification of lease arrangements and their
treatment in the financial statements. AASB 16 supersedes the lease guidance including AASB 117
Leases and the related Interpretations when it became effective for the accounting period beginning
on 1 January 2019. The date of initial application of AASB 16 for the Company was 1 January 2019.
The Group has chosen the modified retrospective application of AASB 16 in accordance with AASB
16:C8(a). Consequently, the Group will not restate the comparative information.
In contrast to lessee accounting, AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117.
Impact of the new definition of a lease
The Group has made 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 change in definition of a lease mainly relates to the concept of control. AASB 16 distinguishes
between leases and service contracts on the basis of whether the use of an identified asset is
controlled by the customer. Control is considered to exist if the customer has:
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 has applied 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.
Bass Oil Limited Annual Report December 2019
33
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(b) New Accounting Standards and Interpretations (cont’d)
In preparation for the first-time application of AASB 16, the Company 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.
Operating leases
AASB 16 has changed 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 has:
a) Recognised Right-Of-Use assets (ROU Assets) and lease liabilities in the consolidated
statement of financial position, initially measured at the present value of the future lease
payments;
b) Recognised depreciation of right-of-use assets and interest on lease liabilities in the
consolidated statement of profit or loss;
c) Separated 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 lease incentives (e.g. rent-free period) are recognised as part of the measurement of
the right-of-use assets and lease liabilities. Previously, lease incentives resulted in the recognition of
a lease liability incentive, amortised as a reduction of rental expenses on a straight-line basis.
Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 136
Impairment of Assets. This replaces the previous requirement to recognize 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 opted to recognise a lease expense on a straight-
line basis as permitted by AASB 16.
As at 31 December 2018, the Group had non-cancellable lease commitments of $262,835 after
removing arrangements that relate to leases which are of a short-term nature and leases of low-value
assets, therefore the Group recognised ROU Assets with a net book value of $262,835 and
corresponding lease liabilities of $262,835 at 1 January 2019. Rolling these balances forward to 31
December 2019, the Group recorded ROU Assets with a net book value of $169,779, and
corresponding lease liabilities of $176,128.
The impact on profit or loss as at 31 December 2019 is to decrease administrative expenses by
$195,250, to increase depreciation by $107,123, and to increase interest expense by $25,033.
Under AASB 117, all lease payments on operating leases were presented as part of cash flows from
operating activities. The impact of the changes under AASB 16 resulted in an increase in the cashflows
from operating activities by $111,740 and a decrease in cashflows from financing activities by
$111,740.
The Group has made use of the practical expedient to not separate non-lease and lease components
at the adoption date (AASB16.15).
Critical judgements required in the application of AASB 16
Determination of whether it is reasonably certain that an extension or termination option will be
exercised
Bass Oil Limited Annual Report December 2019
34
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(b) New Accounting Standards and Interpretations (cont’d)
The Group reflected a reasonable expectation of the period over which the underlying asset will be
used as this approach provides the most useful information to the readers of the financial statements.
For lease agreements with 12 months or less remaining from adoption date (1 January 2019), the
Group has made an assessment on the terms over which it was reasonably certain to extend the
agreements by including lease payments and length of lease.
Determination of whether variable payments are in-substance fixed
For lease agreements subject to lease payments with fixed increases, the Group factored in the fixed
increases into its calculation of the lease liability. The Group has no lease agreements subject to lease
payments based on a variable index.
Key sources of estimation uncertainty in the application of AASB 16
Determination of the appropriate rate to discount the lease payments
The Group estimated the incremental borrowing rates applicable to the lease portfolio, which is the
rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar
economic environment, by using a country and asset risk adjusted rate depending on the location and
nature of the asset. The incremental borrowing rate applied to leases in Indonesia was 10.95% and
the incremental borrowing rate on leases in Australia was 5%.
The following is a reconciliation of total operating lease commitments at 31 December 2018 to the
lease liabilities recognised at 1 January 2019:
Operating lease commitments disclosed at 31 December 2018
Discounted using the incremental borrowing rate at the date of initial application
Less: short term leases recognised on a straight line basis as expense
Opening leases at 1 January 2019
The recognised right of use assets relate to the following types of assets:
Office Premises
Office Computers
Motor Vehicles
Total
735,480
511,887
(249,052)
262,835
93,750
26,455
142,630
262,835
(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.
Bass Oil Limited Annual Report December 2019
35
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(c) Basis of consolidation (cont’d)
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.
(d) Foreign currency translation
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 2019 was A$/US$ 1:0.7006 (31 December 2018:
1:0.7058, 31 December 2017: 1:0.7800).
(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.
(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.
Bass Oil Limited Annual Report December 2019
36
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(f) Financial assets (cont’d)
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.
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.
Bass Oil Limited Annual Report December 2019
37
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(f) Financial assets (cont’d)
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.
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.
(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
Bass Oil Limited Annual Report December 2019
38
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(i) Plant and equipment (cont’d)
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 Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets (such as tablets and personal computers,
small items of office furniture and telephones). For these leases, the Group recognises the lease
payments as an operating expense on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be
readily determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
Fixed lease payments (including in-substance fixed payments), less any lease incentives
receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or
rate at the commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the
options; and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an
option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method) and by reducing the carrying amount to reflect
the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-
of-use asset) whenever:
The lease term has changed or there is a significant event or change in circumstances
resulting in a change in the assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised
discount rate.
The lease payments change due to changes in an index or rate or a change in expected
payment under a guaranteed residual value, in which cases the lease liability is remeasured
by discounting the revised lease payments using an unchanged discount rate (unless the lease
payments change is due to a change in a floating interest rate, in which case a revised
discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised discount rate at the effective
date of the modification.
Bass Oil Limited Annual Report December 2019
39
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(j)
Leases (cont’d)
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore
the site on which it is located or restore the underlying asset to the condition required by the terms
and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent
that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset,
unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the
underlying asset.
If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that
the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the
useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial
position.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for
any identified impairment loss as described in Note 2(k) below.
(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.
(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.
Bass Oil Limited Annual Report December 2019
40
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(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.
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.
Bass Oil Limited Annual Report December 2019
41
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(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.
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.
Bass Oil Limited Annual Report December 2019
42
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(r)
Income tax and other taxes (cont’d)
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.
(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 value in use 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.
Bass Oil Limited Annual Report December 2019
43
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 2. Summary of Significant Accounting Policies (cont’d)
(t) Critical accounting estimates and judgements (cont’d)
(ii) Useful Life of Oil Property Assets
As detailed at Note 2 (l) in the Annual Report, 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. 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
2019 are cash and cash equivalents $640,871, trade and other receivables $1,746,569, other financial
assets $31,322, trade and other payables $1,296,255.
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 2019.
Bass Oil Limited Annual Report December 2019
44
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 3. Financial Risk Management Objectives and Policies (cont’d)
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
31 December 2019
AUD
$
342,728
1,402
IDR
$
131,213
334,455
156,368
934,082
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 2019
AUD
$
18,776
(18,776)
18,776
(18,776)
IDR
$
(46,841)
46,841
(46,841)
46,841
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.
Bass Oil Limited Annual Report December 2019
45
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 3. Financial Risk Management Objectives and Policies (cont’d)
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 2019
$
505,232
(505,232)
505,232
(505,232)
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.
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 2019
$
6,409
(6,409)
6,409
(6,409)
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.
Bass Oil Limited Annual Report December 2019
46
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Liquidity risk (cont’d)
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 2019, the
Group had $1,296,255 (2018: $751,391) in trade and other payables. Trade payables are non-
interest bearing and have a contractual maturity of less than 30 days. At 31 December 2019 the
Group had borrowings of $nil (2018: $896,366) which are incurring interest at nil (2018: 7.5%).
The only financial assets are cash and cash equivalents, trade and other receivables, and other
financial assets. At 31 December 2019, the Group had $640,871 (2018: $854,117) in cash and cash
equivalents, $1,746,569 (2018: $1,488,506) in trade and other receivables, and $31,322 (2018:
$31,194) 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.
Weighted
average
effective
interest rate
Less than one
year
One to two
years
Greater than
two years
Total
%
$
$
$
$
31 December 2019
Trade and other
payables
Borrowings
31 December 2018
Trade and other
payables
Borrowings
Credit risk
-
-
-
1,296,255
-
751,391
7.50
896,366
-
-
-
-
-
-
-
-
1,296,255
-
751,391
896,366
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.
Bass Oil Limited Annual Report December 2019
47
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 3. Financial Risk Management Objectives and Policies (cont’d)
Credit risk (cont’d)
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 2019
48
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
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
Operating lease costs
Travel
Other administrative expenses
Consolidated
Note
2019
$
-
-
-
-
2018
$
4,050
311,632
132,884
448,566
Note
9
Consolidated
2019
$
2018
$
58,107
298,392
54,170
138,001
13,459
21,067
46,325
-
125,618
310,478
69,179
352,120
71,853
145,409
-
28,173
132,527
69,409
158,330
372,759
1,065,617
1,399,759
Note 6. Depreciation and Amortisation
Depreciation and amortisation included in the profit and loss is as follows:
Depreciation plant and equipment
Depreciation of right of use assets
Amortisation of oil properties
Consolidated
Note
16
17
18
2019
$
1,361
107,123
340,218
448,702
2018
$
1,156
-
201,171
202,327
Bass Oil Limited Annual Report December 2019
49
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 7. Employee Benefits Expense
Consolidated
Note
2019
$
2018
$
Wages and salaries
Superannuation
Provision for annual leave
Medical expense
Termination benefits
Workers’ compensation
Payroll tax
Note 8. Finance Costs
Interest on borrowings
Interest on leases
Accretion interest
717,880
34,733
3,862
8,990
89,178
2,497
2,332
859,472
Consolidated
Note
2019
$
31,706
25,033
1,970
58,709
606,031
31,143
4,041
5,808
(27,425)
2,622
-
622,220
2018
$
6,671
-
25,015
31,686
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
2019
$
2018
$
45,463
11,220
56,683
1,424
58,107
43,823
13,280
57,103
12,076
69,179
Bass Oil Limited Annual Report December 2019
50
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 10. Income Tax
Consolidated
Note
2019
$
2018
$
(a) Income tax recognised in profit or loss
Current tax
In respect of the current financial year
331,247
311,427
Deferred tax
In respect of the current financial year
11,100
8,407
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% (2018: 30%)
Difference in tax rates
Cost recovery profit that is not liable to income
tax in Indonesia
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
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
342,347
319,834
740,765
222,230
82,812
(281,018)
-
14,980
303,343
(99,781)
(29,934)
77,857
(15,470)
54,891
(15,480)
247,970
342,347
319,834
(9,271)
7,717
1,792
22,983
23,220
(23,220)
-
(6,887)
8,999
601
11,870
14,583
(14,583)
-
23,220
5,193,647
162,679
5,379,546
14,583
4,890,304
163,887
5,068,774
Bass Oil Limited Annual Report December 2019
51
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
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
Less payments
Closing balance
Consolidated
Note
2019
$
2018
$
-
(11,100)
11,100
-
870,624
331,247
(486,512)
715,359
-
(8,407)
8,407
-
559,197
311,427
-
870,624
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 was 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 $715,359.
The provision for tax covers the tax years from 2010 to 2019.
Note 11. Cash and Cash Equivalents
Cash at bank and in hand
Note
Consolidated
2019
$
640,871
640,871
2018
$
854,117
854,117
Bass Oil Limited Annual Report December 2019
52
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 12. Trade and Other Receivables
Current
Trade debtors (1)
Other receivables
Goods and services tax
Value-added tax
Non-current
Other receivables
Consolidated
Note
2019
$
1,072,787
7,110
1,402
327,345
1,408,644
2018
$
913,619
7,690
5,514
385,785
1,312,608
337,925
337,925
175,898
175,898
(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)
Note
Note
Consolidated
2019
$
26,580
6,114
32,694
Consolidated
2019
$
59,650
217,707
277,357
2018
$
56,794
74,266
131,060
2018
$
31,438
24,506
55,944
Bass Oil Limited Annual Report December 2019
53
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 15. Other Financial Assets
Current
Security deposit
Non-current
Security deposit
Note 16. Plant and Equipment
Consolidated
Note
2019
$
2018
$
3,853
3,853
3,882
3,882
27,469
27,469
27,312
27,312
Consolidated
Note
2019
$
2018
$
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. Leases
(a)
Right of Use Assets
3,178
-
-
(47)
(1,362)
1,769
32,002
(30,233)
1,769
1,775
3,175
-
(616)
(1,156)
3,178
32,457
(29,279)
3,178
Office Premises
Computers
Motor Vehicles
Total
Consolidated
Opening balance
93,750
26,455
142,630
262,835
Depreciation
(34,855)
(16,459)
(55,809)
(107,123)
Foreign exchange
movement
Closing balance, net of
accumulated depreciation
4,533
1,440
8,094
14,067
63,428
11,436
94,915
169,779
Bass Oil Limited Annual Report December 2019
54
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 17. Leases (cont’d)
The Group leases several assets including buildings, IT equipment and vehicles. The average lease
term is 3 years (2018: 3 years).
Amounts recognised in profit and loss
Depreciation expense on
right-of-use assets
Interest expense on lease
liabilities
Expense relating to short
term leases
Expense relating to leases
of low value assets
The total cash outflow for leases amounts to $111,740.
(b)
Lease Liabilities
Current
Non-current
Maturity analysis:
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Note 18. Oil Properties
31 December 2019
107,123
25,033
4,517
-
31 December 2019
92,320
83,808
176,128
31 December 2019
92,320
69,563
14,245
-
-
-
176,128
Tangai-Sukananti KSO
Note
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
Bass Oil Limited Annual Report December 2019
Consolidated
2019
$
1,945,213
1,945,213
1,345,408
940,023
-
(340,218)
1,945,213
2018
$
1,345,408
1,345,408
1,523,640
26,834
(3,895)
(201,171)
1,345,408
55
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 19. 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 19
31 Dec 18
100%
100%
100%
100%
Note 20. Joint Arrangements
Name of Joint Venture
Principal activity
Place of
incorporation and
operation
Proportion of ownership
interest and voting
power held by the Group
31 Dec 19
31 Dec 18
Tangai-Sukananti KSO (i)
Oil Producer
Indonesia
55%
55%
(i) Joint arrangements in which Bass Oil Limited is the operator.
Note 21. Trade and Other Payables
Current
Trade payables (i)
Other payables
Consolidated
Note
2019
$
2018
$
328,387
967,868
1,296,255
191,955
559,436
751,391
(i) The Group settles creditors on average within 30 days and no interest is charged.
Bass Oil Limited Annual Report December 2019
56
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 22. Provisions
Current
Employee benefits
Non-current
Restoration
Make Good
Consolidated
Note
2019
$
2018
$
144,760
144,760
92,519
7,827
100,346
75,587
75,587
246,896
-
246,896
2018
$
281,160
-
(40,532)
6,268
246,896
Movement in the carrying value of restoration provision
Balance at the beginning of year
Re-estimation of liability
Expenditure during the period
Accretion interest
Balance at the end of year
Note
Consolidated
2019
$
246,896
(140,989)
(15,358)
1,970
92,519
The restoration provision was agreed with Pertamina EP and will be fully paid when the license expires
in July 2025.
Note 23. Borrowings
Current
Non-current
Consolidated
Note
2019
$
-
-
-
2018
$
896,366
-
896,366
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, was paid on the 30 April 2019 and the fourth and
final payment of AUD 770,000, due 31 December 2018, was paid on the 31 July 2019. The Company
paid 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 was secured by a registered charge over the shares
the Company holds in Bass Oil Sukananti Limited. The security has been released.
Bass Oil Limited Annual Report December 2019
57
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 24. Contributed Equity
Issued and paid up capital
2019
Shares
2018
Shares
2019
$
2018
$
Ordinary share fully paid
2,606,167,481
2,606,167,481
25,728,503
25,728,503
Movements in ordinary shares
on issue
Ordinary shares on issue at
beginning of period
2,606,167,481
2,606,167,481
25,728,503
25,720,096
Issue of ordinary shares
735,972,615
Transaction costs
Tax consequences of share
issues costs
Ordinary shares on issue at end
of period
-
-
-
1,008,708
(74,043)
-
-
11,100
8,407
-
3,342,140,096
2,606,167,481
26,674,268
25,728,503
On 5 July 2019 the Company issued 75,000,000 ordinary shares in a private placement to
sophisticated and professional investors through the issue of New Shares at A$0.002 per share. The
placement included a 1 for 2 free attaching option exercisable at A$0.004 on or before 30 July 2021.
The placement raised $105,300 before costs.
On 30 July 2019 the Company issued 240,972,615 ordinary shares in a non-renounceable entitlement
offer of new shares on a 1 for 2 basis, at an issue price of A$0.002 per share. The Rights Issue
included a 1 for 2 free attaching option exercisable at A$0.004 on or before 30 July 2021.
On 8 October 2019 the Company issued 195,000,000 ordinary shares and on 23 October 2019 the
Company issued 225,000,000 ordinary shares, both as part of the shortfall shares from the Rights
Issue. In total the rights issue raised $903,408 before costs and expenses.
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
As at 31 December 2019, the Company has 367,986,328 (2018: nil) share options on issue,
exercisable on a 1:1 basis for 367,986,328 (2018: nil) ordinary shares of the Company at an exercise
price of A$0.004 and an expiry date of 31 July 2021.
Movements in options on issue
Balance at the beginning of year
Options issued
Options exercised
Options expired and cancelled
Closing value
Consolidated
Note
2019
Options
2018
Options
-
-
367,986,328
366,688,205
-
-
-
(366,668,205)
367,986,328
-
Bass Oil Limited Annual Report December 2019
58
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 25. Accumulated Losses
Balance at the beginning of year
Net profit/(loss)
Options expired and cancelled
Balance at the end of year
Note 26. Earnings per Share
Consolidated
Note
2019
$
2018
$
(27,789,956)
(27,502,223)
398,418
-
(419,615)
131,882
(27,391,538)
(27,789,956)
The following reflects the income used in the basic earnings per share computations.
Consolidated
Note
2019
$
2018
$
Basic earnings/(loss) per share
Net profit/(loss) attributable to ordinary equity
shareholders of the parent
0.000
(0.000)
398,418
(419,615)
Issued ordinary shares at 1 January
Effect of shares issued July 2019
Effect of shares issued October 2019
Weighted average number of ordinary shares at
31 December
Note
2019
$
2018
$
2,606,167,481
2,606,167,481
138,451,459
87,410,959
-
-
2,832,029,899
2,606,167,481
Note 27. Key Management Personnel Disclosures
The aggregate compensation made to directors and other members of key management personnel of
the Group is set out below:
Short-term employee benefits
Post-employment benefits
(a)
Employment agreements
Note
Consolidated
2019
$
561,403
46,701
608,104
2018
$
530,998
43,706
574,704
The Group may terminate Mr Guglielmo’s employment agreement by giving six months’ notice. The
Group has a contingent liability of $115,000 (2018: $116,000) 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 (2018: $43,000) in relation to this agreement, if
Dr Brealey is not required to work out the notice period.
Bass Oil Limited Annual Report December 2019
59
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 29.
Parent Entity Disclosures
Information relating to Bass Oil Limited
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Foreign exchange reserve
Accumulated losses
Total shareholder’s equity
Parent
2019
$
404,242
2,606,217
162,343
2,866,962
2018
$
477,256
2,680,639
1,025,995
2,851,970
(260,745)
(171,331)
26,674,268
3,129,996
25,728,504
3,129,996
(30,065,009)
(29,029,831)
(260,745)
(171,331)
Loss of the parent entity
Total comprehensive income/(loss) of the parent entity
(1,035,178)
(1,035,178)
(755,352)
(755,352)
The Parent Entity has a net asset deficiency of $260,745 as at 31 December 2019.
The commitments and contingencies of the parent entity are the same as disclosures in Note 28
excluding the commitments relating to Tangai-Sukananti KSO.
Note 30. 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 $24,015 (31 December 2018: $34,522)
and capital raising success fees to Adelaide Equity Partners Limited of $47,304 (31 December 2018:
$nil) (both under a corporate advisory and investor relations mandate). The fees were provided under
normal commercial terms and conditions. Amounts outstanding at balance date were $11,365 (31
December 2018: $nil). The Group has a corporate advisory & investor relations mandate with
Adelaide Equity Partners. The mandate has a monthly retainer of A$5,000 per month and can be
terminated at anytime by written notice to the other party.
During the year the Group also paid rent to Adelaide Equity Partners Limited of $7,377 (31 December
2018: $3,985) (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
2018: $nil).
Bass Oil Limited Annual Report December 2019
60
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 30. Related Party Disclosures (cont’d)
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 2019, was paid on the 30 April 2019 and the fourth and
final payment of AUD 770,000, due 31 December 2019, was paid on the 31 July 2019. The Company
paid 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 was secured by a registered charge over the shares
the Company holds in Bass Oil Sukananti Limited. The security has been released.
Note 31. 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 2019 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 2019 and 2018 relate to oil production.
For the current financial year, the Group’s revenue of $5,052,319 was received from the sale of oil in
Indonesia to Pertamina EP (the Indonesian State owned oil Company).
Bass Oil Limited Annual Report December 2019
61
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 32. 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 profit/(loss) after tax
Adjustments for:
Depreciation
Amortisation
Impairment of receivables
Accretion interest
Non-cash decrease in provision
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
(Decrease)/increase in provision for tax
Increase in deferred tax
Net cash flows used in operating activities
Note 33. Reserves
Currency translation reserve (i)
Note
6
Consolidated
2019
$
2018
$
398,418
(419,615)
108,485
340,213
-
27,003
(204,658)
(26,315)
643,146
(258,064)
98,366
(221,413)
125,311
534,880
(155,265)
11,100
778,061
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)
Note
Consolidated
2019
$
3,129,996
3,129,996
2018
$
3,129,996
3,129,996
(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 2019
62
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2019
Note 34. Subsequent Events
The current low oil price environment together with the outbreak of COVID-19 and the subsequent
quarantine measures imposed by the Australian and Indonesian governments as well as the travel
and trade restrictions imposed by Australia and other countries in early 2020 have caused disruption
to businesses and economic activity. The Group considers this to be a non-adjusting post balance
sheet event.
This has had a negative impact on the operations of the Group. The Group’s operations are located
in Australia and Indonesia.
In regard to COVID-19 and the current lower oil price environment, the Group’s key focus is to
remain disciplined, ensuring the health and safety of our staff, whilst delivering and optimising,
ongoing production throughout CY2020, whilst not compromising field integrity. The Group is of the
view that the current depression in oil prices has been exacerbated by external forces, which will
inevitably result in a correction in due course, at which time, the Group will be positioned to take
advantage of attractive opportunities.
The Group is committed to supporting government and community efforts to limit the spread of the
virus, and supporting business continuity with regard to its staff and contractors.
The Group has activated a Business Continuity Plan (BCP) during this period of significant health and
economic uncertainty. The Group has implemented a series of measures to protect the health and
safety of our people, including health screening protocols, restricting travel and meetings,
implementing social distancing measures and making changes to field and office access
arrangements. The BCP includes contingency plans that will allow production operations to continue
in the event of any of the field operations team contracting the virus.
As the situation remains fluid (due to continuing changes in government policy and evolving business
and customer reactions thereto) as at the date these financial statements are authorised for issue,
the directors of the Group considered that the financial effects of COVID-19 and the current low oil
price environment on the Group's consolidated financial statements cannot be reasonably estimated.
Nevertheless, the economic effects arising from the COVID-19 outbreak and the current low oil price
are expected to affect the consolidated results of the Group for the first half and full year of 2020.
No other matter or circumstance has occurred subsequent to year end that has significantly affected,
or may significantly affect, the operations of the Company, the results of those operations or the
state of affairs of the entity in subsequent financial years.
Note 35. 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 2019
63
3
4
5
SHAREHOLDER AND OTHER INFORMATION
Compiled as at 27 March 2020
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
193
305
184
599
954
2,235
58,914
852,264
1,529,555
24,923,118
3,314,776,245
3,342,140,096
1,515 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
285,630,465
171,475,048
10.57
8.55
5.13
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 2019
68
SHAREHOLDER AND OTHER INFORMATION
Compiled as at 27 March 2020
THE 20 LARGEST SHAREHOLDERS OF ORDINARY SHARES
Holder
Somerton Energy Ltd
Miller Anderson Pty Ltd
Tattersfield Securities Ltd
Miss S Masalkovski
Mr M Saboundjian
Scintilla Strategic Investments Limited
Marbel Capital Pty Ltd
Wingmont Pty Ltd
Mr S H Bell & Mrs J K Berveling
Yavern Creek Holdings Pty Ltd
Mr B W Smith
Mr W C Wheelahan
Crescent Nominees Limited
Mr N Guglielmo & Mr G Guglielmo
Mr P Sciancalepore & Mrs P Sciancalepore
Mr M K Pagliarulo
Small Business Finance Pty Ltd
Mr M K H Raabe
Accord MBO Pty Ltd
Emmett Enterprises Pty Ltd
Ordinary shares
% of total issued
353,361,294
243,200,000
120,004,173
103,649,828
95,000,000
79,115,710
68,176,383
60,800,000
59,403,577
53,250,000
62,000,000
45,000,000
44,706,875
42,430,465
40,000,000
39,833,333
37,401,351
36,000,000
31,000,000
30,000,000
10.57
7.28
3.59
3.10
2.84
2.37
2.04
1.82
1.78
1.59
1.56
1.35
1.33
1.27
1.20
1.19
1.12
1.08
0.93
0.90
The 20 largest shareholders hold 1,634,332,989 shares, representing 48.91% of the issued share
capital.
Bass Oil Limited Annual Report December 2019
69