Bounty Oil & Gas NL
Annual Report 2017

Plain-text annual report

ANNUAL REPORT2017 AUSTRALIA • Bounty group achieved record petroleum revenue of $2.7 million in 2017 with: • Tanzanian gas sales on stream for whole period, and • Improving oil prices supporting lower oil output at Naccowlah, Qld • Group petroleum revenue for the year up 44% to $2.7 million (2016: $1.08 million) primarily due to gas sales • Operating profit of $0.9 million (2016: Loss $1.08 million) before non-cash impairments • Cash and current assets at 30 June 2017 were $2.39 million with nil debt • Planning to commence oil production from southern Surat Basin projects TANZANIA – NYUNI BLOCK • Kiliwani North (KN) gas field anticipated to contribute revenue at lower rates in 2018 • Bounty seeking additional Tanzanian gas interests • New 3D seismic planned to image deep water turbidite gas plays of up to 1.3 TCF potential ANNUAL GENERAL MEETING The 2017 Annual General Meeting will be held at Amora Hotel Jamison Sydney, 11 Jamison Street, Sydney NSW 2000 on 29 November 2017 commencing at 11.00 a.m. The Notice of Meeting and Proxy Form have been mailed separately from this Annual Report. Bounty Oil & Gas NL                                                                                                        Annual Report – 2017 TABLE OF CONTENTS  Key Outcomes   Chairman’s Review  CEO’s Review  Project and Operations Review  Corporate Governance Statement  Page Inside  Cover  2  3 – 5  6 – 14  15  Directors Report including Remuneration Report  15 – 26  Auditor's Independence Declaration  Consolidated Statement of Comprehensive Income  Consolidated Statement of Financial Position  Consolidated Statement of Changes in Equity   Consolidated Statement of Cash Flows  Contents of the Notes to and Forming Part of the  Financial Statements  Directors Declaration  Independent Auditors Report to Members  27  28  29  30  31  32 – 54  55  56 – 59  Website  Bounty maintains a website at:  www.bountyoil.com  On our website you will find full  information about the Company.   Every announcement made to  the Australian Securities  Exchange (ASX) is published on  the website.  You will also find  detailed information about the  Company's Exploration and  Production Permits.  Stock Exchange Listing  Bounty Oil & Gas N.L. securities  are listed on the Australian  Securities Exchange.  Additional Information Required by ASX Listing Rules  60 – 61  ASX Code: BUY  Schedule of Petroleum Tenements  Abbreviations  Corporate Directory  62 – 63  64 – 65  66  Bounty Oil & Gas NL  ACN:      090 625 353  ABN: 82 090 625 353  Annual General Meeting:  The 2017 Annual General Meeting will be held at Amora Hotel Jamison Sydney, 11 Jamison Street, Sydney NSW 2000,  on 29 November 2017, commencing at 11.00 a.m.  The Notice of Meeting and Proxy Form have been mailed separately from this Annual Report.                                                            Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 CHAIRMAN’S REVIEW  Dear Shareholder  This year, your company received more income from oil and gas production than ever before.  Petroleum revenue topped AU$2.68 million, with the major contributions coming from Tanzania gas, and the  Naccowlah Block oil in south west Queensland.  Last year we predicted revenue from sales of Tanzanian gas at  AU$2.0 million, and this target was achieved.  Despite this excellent result, revenue reflected the continued slump in oil prices, brought about by oversupply in the  world market.  The OPEC countries steadfastly refused to reduce their production, presumably in an attempt to  drive the US shale oil business into closure, but this did not happen. The USA producers drove their cost of  production down as the oil price remained low, due to USA Producers employing smarter operating methods and  new technologies.  Recently, OPEC have reduced their daily production rate and there are now signs of the oil price  recovering.  Bounty recorded an operating profit of $896,000 before non –cash expenses of $1.28 million as a result of  conservative impairment and amortisation of oil and gas assets, as detailed in the Full Year Financial Report.  From an operations viewpoint, the Irtalie East 6 appraisal well in the Naccowlah Block, intersected oil in the  Birkhead Formation, and was cased and suspended for future production.  Bounty will pursue a number of projects in the Surat Basin, southern Queensland starting with workovers and  commencement of oil production at Alton while planning to re‐commence gas production at PL119 Downlands.  We  are also always on the lookout to strengthen our land position in the Surat Basin. Alton has produced 2 million  barrels of oil with estimated remaining 2P reserves of approximately 1.136 million barrels and is a focus project.  Bounty has increased its interests in and continues studies on the Rough Range permits in Western Australia looking  for larger oil pools sourced from the onshore Carnarvon Basin.  The climate for farming out an interest in the 500 mmbl potential Azalea Prospect; AC/P32 has continued to remain  cool, as majors are showing minimal interest in new offshore exploration.  However, a firming of the oil price should  see an increase in interest in exploration.  PEP 11 remains a project for future review.  The company has not had to call on shareholders for further equity during the past year, because of the increased  revenue from Tanzania.  This position might change if the opportunity arises, and the need to drill a well is justified  or as Bounty receives revenue from Kiliwani North it locates additional gas appraisal and production opportunities in  Tanzania with access to the gas pipeline system and gas market.  I again thank shareholders for their support this year, which has been one of consolidation for the company.  I  would like to take this opportunity to thank my fellow Board members, and the Company's dedicated executive  team for their hard work during the year.  This next year should be one of expansion for your Company.  Graham Reveleigh  Chairman  31 October 2017  2                         Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 CEO’S REVIEW  Introduction  Bounty’s  petroleum  revenue of  $2.68  million  for  the year  was  a  record and the group  is  aiming  to  lift  revenue  in  2018 by producing its 100% Surat Basin oil and gas development properties.  Oil seems to be in a recovery phase and the energy sector remains the world’s most important business exposed to  global growth.  The  Australian  Government  and  NSW  regulators  have  identified  serious  gas  production  shortfalls  in  coming  years  and  Bounty  is  actively  reviewing  PL119  Downlands  and  its  other  Surat  Basin  gas  production  opportunities  to  contribute to revenue growth. Bounty holds 15% of PEP 11 Offshore Sydney Basin in what will have the potential to  lead up to a new exploration drill of a major gas exploration project near Newcastle, NSW. Offshore operations are  not affected by the various onshore gas exploration road blocks.    Bounty anticipates good revenue growth in 2018 and beyond based on:‐    Tanzanian  gas  while  it  seeks  other  appraisal  opportunities  in  Tanzania.  Successful  exploration  of  Bounty’s  Tanzania offshore targets longer term has the potential to launch Bounty as a significant gas producer with  increasing revenue in coming years.  Commencement of oil production in the Surat Basin, Queensland.  More details on current projects are set out in the Project and Operations Review below.  Highlights for the Year:        Bounty achieved record petroleum revenue up 149% to $2.68 million (2016:$1.08 million) with a major  contribution from Tanzanian gas sales.   Operating profit of $896,000 (2016: Loss $1.08 million) before non‐cash expenses including impairment and  amortisation of oil & gas assets of $1.28 million.  Net loss of $0.38 million (2016: $4.42 million).  Cash and current assets at 30 June 2017 were $2.39 million (2016: $1.92 million) with nil debt.  In Tanzania gas production from Kiliwani North 1 averaged 15 mmcfd in the second half of the year ended 30  June 2017.  Bounty is planning to commence oil and gas production in 2018 from its Surat Basin, Queensland assets and  is aiming to expand into other gas assets potentially in Tanzania.  Oil Business  Bounty continued to put resources into additional Queensland oil and gas production, development and exploration  areas.  SW Queensland – Eromanga Basin  Oil production decreased to 11,058 bbls (2016:  18,669 bbls) and with downward pressure on oil prices revenues  declined to $0.65 million.    On  the  production  front  the  Santos  Limited  operated  ATP  1189  Naccowlah  Block  has  continued  to  provide  oil  revenue but at lower rates due to the impact of lower oil prices and deferral of development drilling.  In  July  2017  Bounty  had  success  with  the  Irtalie  East  6  appraisal  well  discovering  good  up  dip  oil  in  the  Basal  Birkhead  Formation.  Additional  appraisal  wells  are  being  considered  in  2018.There  are  a  potential  3  additional  appraisal locations in that area.  3                                         Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 SE Queensland – Surat Basin  Petroleum Lease 2 Alton (PL2) – see Map in Project and Operations Review below.  Bounty is now operator of Petroleum Lease 2 and holds:  100% of the Alton Oilfield and Alton Block.    Alton is 440 km west of Brisbane and Alton oil will be transported and sold into the Brisbane Refinery.   Development  reserves:    167,000  bbls  of  recoverable  oil  in  the  early  Triassic  age  Basal  Evergreen  sand  reservoir  included  with  a  potential  1.136  million  bbls  of  2P  reserves  located  in  the  three  sands  of  the  Boxvale/Evergreen Formations.  Production facilities at Alton Oilfield.  Surrounding  exploration  acreage  where  there  is  considerable  potential for  further  reserve  additions  with  undrilled  locations  and  attic  oil  in  the  Evergreen  Formation  and  possibly  extensive  oil  in  the  lower  Showgrounds Formation which has been proven as a high productivity sand in the area.    Bounty  is  planning  to  commence  oil  production  at  Alton  in  March  2018  which  is  expected  to  generate  additional  revenue of up to $1 million per annum with significant upside from four undrilled locations; enhanced recovery and  later an appraisal well at Eluanbrook (see below).   Bounty  holds  an  81.75%  interest  in  the  Kooroon  JV  within  PL2  Alton  and  thereby  controls  appraisal  of  the  Eluanbrook Updip target in PL2.  The main features of Eluanbrook Updip are:   Development: The estimated recoverable resource is 186,000 bbls of oil from P50 OOIP of 625,000 bbls.   Middle Triassic age Showgrounds Sandstone reservoir.    Up dip from proven 53o API gravity oil with associated gas.  Oil Growth Projects ‐ AC/P32 Timor Sea  AC/P32 is located in the Ashmore Cartier region in the oil prone and prolific Vulcan Graben region.   Bounty’s efforts at farming out AC/P 32 have been made difficult by heavy oil price declines in 2016 and 2017 but  we are seeing signs of recovery in late 2017 and Bounty is aiming to obtain a farm‐out and subsequent drill test of  the Azalea Prospect.  The prospect is located 25 km northeast of the Montara Oil Development in the Timor Sea.   Bounty’s  current  assessment  is  that  there  are  at  least  two  major  stratigraphic  prospects  in  the  area  with  the  potential to discover 500 mmbbls original oil in place in the Cretaceous age Puffin Sandstone in the Azalea area (just  to the west of where the Wisteria 1 well was drilled in 2008) with 100 mmbbls recoverable oil.  There is also the  potential to discover additional resources in the Jurassic age formations.  Bounty  is  negotiating  to  acquire  the  Cygnus/Polarcus  long  offset  3D  data  set  to  maintain  its  work  commitment  program. The permit is in good standing until mid‐2019.  A discovery will lift Bounty into a major project and to being a mid‐level Australian oil operator.  Tanzania – Kiliwani North & Gas Commercialisation  Gas  production  from  Kiliwani  North  1  contributed  net  471,343  mcf  (83,355boe)  to  Bounty  during  the  year.  Production rates were in the range 15 ‐ 30 MMcfg/d and are currently at under 10 MMcfg/d with the well curtailed  due to pressure testing.  All gas supplied is being sold under a Gas Sales Agreement with the Tanzania Petroleum Development Corporation  (TPDC)  on  a  take  or  pay  basis  in  US  dollars  at  $3/MMbtu  (approx.  US$3.09  per  Mcf),  indexed  to  the  US  CPI  and  delivered  at  well  head.  Bounty’s  share  of  cash  revenue  during  the  year  was  A$2.03  million.  The  condensate  produced is stripped and being sold to third parties.  4                                      Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 The Kiliwani project is the first step in what Bounty hopes will be further gas discoveries and development in the  large strategic Nyuni Block surrounding the production licence.  The new 517 km 36” diameter pipeline to Dar es Salaam now provides ample delivery capability for gas from  Kiliwani North and any subsequent discoveries which Bounty and its partners may make in the Block.   Tanzania ‐ Nyuni Area PSA   The Nyuni Area PSA was renewed in late 2011 for an eleven‐year period.   During  the  year  ended  30  June  2017  Bounty  increased  its  interest  in  the  Nyuni  PSA  to  10%.  This  is  increasing  Bounty’s direct participation in one of the most dynamic and successful new exploration plays worldwide.    Currently the operator, Aminex PLC, is negotiating a work program variation with TPDC to enable the acquisition of  deep water 3D seismic in the outboard sector of the PSA area and the deferral of the two exploration well drilling  commitment.  Once the variation to the work commitment licence has been granted, a re‐tender process is planned to select a 3D  seismic  contractor  capable  of  acquiring  high  resolution  3D  seismic  over  the  key  Pande  West  lead  in  2018  and  to  identify other potential prospects in the deep water with a view to bringing them to drill‐ready status.  Bounty is seeking additional gas opportunities on the east coast of Tanzania.  Once the variations to the work program commitment have been approved a re‐tender process is planned to select  a 3D seismic contractor capable of acquiring high resolution 3D seismic over the key Pande West lead and to identify  other  potential  prospects  in  the  deep  water  with  a  view  to  bringing  them  to  drill  ready  status.    Pande  West  is  analogous to some of the recent major deep‐water discoveries in the vicinity.  The drilling success rate achieved by  other  operators,  based  on  3D  seismic  in  the  main  fairway  east  of  Nyuni  Area,  is  over  90%.    The  joint  venture  is  reviewing ways to enable the potential monetisation of discoveries on the shelf and deep water through delivery  into the Tanzania National Gas Gathering System.  Unconventional Gas Business  Looming  gas  supply  shortages  in  eastern  Australia  continue  to  provide  encouragement  for  the  pursuit  of  conventional and unconventional gas in PRL’s 33 – 49 (formerly PEL 218) (Nappamerri Project); Cooper Basin, South  Australia and for deep gas in some of Bounty’s other permits principally ATP 754P; Surat Basin.  Conclusion  Management continues to look for additional opportunities to be funded by gas revenue from Tanzania and most  pleasingly Bounty now has control of its own operated oil reserves at Alton in the Surat Basin which will be placed  on production in 2018.  On  the  Growth  front  Bounty  is  seeking  additional  opportunities  so  shareholders  may  also  obtain  good  leverage  through a drill test in AC/P 32 Azalea and pursuit of our major gas prospects in Tanzania.  Bounty holds excellent  Permits and is well placed for a recovery in the petroleum business.  PHILIP F. KELSO  Chief Executive Officer  31 October 2017  5             Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 PROJECT and OPERATIONS REVIEW  Bounty Projects  Bounty has production and exploration operations in Africa and Australia.  Summary Land Position  Offshore Australia  AC/P 32  PEP 11  Offshore Tanzania  Nyuni PSA  Kiliwani North  Onshore Australia  Naccowlah Block Eromanga Basin  Nappamerri South Australia  Surat Basin Queensland  Rough Range Carnarvon Basin  Equity  100.00%  15.00%  Gross Km2  336.0  4576.5  Net Km2  336.0  686.5  10.00%  9.50%  2.00%  23.28%  Various  Various  1682  168.0  2544.1  1603.6  1134.4  872.1  168.2  16.8  127.2  373.3  640.5  784.8  Total  12916.7  3133.3  This table summarises Bounty’s land position as at 19 September 2017.  Bounty’s full schedule of tenements as at 19  September  2017  is  included  in  Additional  Information  Required  by  ASX  Listing  Rules  at  the  end  of  this  Annual  Report.   Bounty projects not specifically referred to below in this Project Review are summarised in Bounty’s 2017 Quarterly  Activity Reports to the ASX and on Bounty’s website:  www.bountyoil.com  6                 Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 OIL BUSINESS  Production  Bounty’s  petroleum  production  and  sales  for  the  year  ended  30  June  2017  are  summarised  in  the  Review  of  Operations set out in the Directors Report.  Development  ATP 1189P (formerly ATP 259P) Naccowlah Block and Associated PL’s SW Queensland ‐ Bounty 2%  Location:  Surrounding Jackson, Naccowlah and Watson Oilfields  Background  The Naccowlah Block covers 2544 km2, 42% of which is covered by ATP 1189P and the remainder in 22 petroleum  leases (PL’s) covering producing fields.  There is significant production infrastructure.  This area produces 34 BOPD  net to Bounty and Bounty holds 2P + 2C (Contingent) reserves of 135,000 bbls.  In past years the Operator (Santos  Limited)  has  been  very  successful  in  maintaining  production  at  a  constant  level  through  production  optimisation,  completing oil behind pipe and successful near field exploration, notably Irtalie East where Irtalie East 6 was cased  as a Birkhead future producer in July 2017.   The Jackson and Jackson South fields and associated production facilities are one of the largest in onshore Australia.   7                 Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 2016/17 Development  While  low  oil  prices  continue  to  challenge  the  economics  of  further  development  drilling,  production  and  optimisation work in the Naccowlah Block, further development drilling opportunities at the Irtalie East Field exist  and it is anticipated that additional wells will be drilled in 2018.  Surat Basin, Southeast Queensland  Group Interests in this project are  Permit  ATP 471 SG  ATP 754  PL 119/PL 441  Alton Oilfield  PL 2 C  PL 2 Alton  Kooroon JV Block  PL 2 A  PL 2 B  Status  Granted  Granted  Renewing  Granted  Granted  Granted  Granted  Interest   24.75%  50.0%  100.0%  100.0%  100.0%  81.75%  81.75%  Location:  From  Surat  Queensland  to  Alton  Oil  Field,  Background  Bounty  initially  gained  an  interest  in  the  Surat  Basin through the purchase of Ausam Resources  Pty  Ltd  in  2009,  and  has  added  to  the  acreage  it  through  strategic  acquisition.  acquired  full  control  of  PL  2.    Hydrocarbons  in  the  southern  part  of  the  Surat  Basin  are  generated  in  the  underlying  Bowen  Basin  Permian sequence and are liquids rich.  The oil is  trapped  the  Triassic  age  Showgrounds  Sandstone and in the Evergreen Formation.  In  2016  in  The northern section of Bounty's acreage  includes the Permian age Tinowan Formation  which frequently has a liquids rich gas charge and in places, like Bounty's PL 119/441 Downlands property, good  porosity and permeability.  Work continued on renewal of PL 119/441 during 2018.  8                                                         Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 PL 2 Alton ‐ Bounty 100%  PL 2  Kooroon Block – Bounty 81.75%  Location:  70 km. East of St George SE Queensland   Background  PL 2 (Alton Field) has to date produced over 2 million barrels from the Jurassic Age Evergreen Formation.  Bounty  estimates 2P reserves at Alton of 1.136 million bbls.  2018 Operations  In  2018  Bounty  will  work  over  2‐3  wells  at  Alton  and  commence  oil  production  while  it  generates  a  full  field  development plan including a plan to drill an up‐dip appraisal well at Eluanbrook in the northwest section of PL2.   Initial production of 45 bopd is expected from the Evergreen Formation and then moving to develop attic oil with  potential recoverable oil of 167,000 bbls.  Exploration ‐ Surat Basin, Queensland and Nappamerri Trough, South Australia  Other  exploration  projects  in  these  Basins  have  been  summarised  in  Bounty’s  2016/2017  Quarterly  Activities  Reports to the ASX.  9             Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 2017 Activities and Further Programmes  Growth Projects  AC/P 32 – Offshore Vulcan Sub‐basin, Ashmore and Cartier Territory ‐ Bounty 100%  Location: Offshore 500 Km west of Darwin, NT.  Background  This permit is located within the Vulcan Sub‐basin. In 2012  Bounty acquired a 100% interest in the permit and in June  2014  it  was  renewed  for  a  further  five  years  with  a  well  commitment in Year 2 and Year 5 if needed.  The principal  target is the Azalea Prospect a 500 MMboip potential pool  with recoveries in the 20 ‐ 40% range.  The Azalea Prospect is:         Located in a prolific hydrocarbon province  Surrounded by multi‐million barrel oil fields  One  of  the  largest  untested  potential  oil  pools  in  the  Timor Sea   Up dip from proven oil in Birch 1 and Swallow Oil Field  14 km to the west  Outlined by seismic amplitude and AVO anomalies  Associated  with  direct  hydrocarbon  indicators  in  the  form of gas chimneys, diagenetic and shallow gas zones overlying the up dip edge  Drill ready in water depths suitable for a jack up rig ~ 100 metres  2018 Exploration  Future Work  Interpretation and evaluation of the reprocessed seismic and inversion has defined the Azalea Prospect  with a potential 500 million barrels of oil in place of which over 100 million barrels would be recoverable.    In addition to Azalea; Bounty has established other new structural stratigraphic leads with potential in the  10 – 40‐million‐barrel recoverable range.  Bounty obtained an extension to the licence term from NOPTA to enable more definitive studies of the  potential  fluid  content  of  the  Azalea  Prospect  and  is  negotiating  to  acquire  the  long  offset  modern  3D  seismic data recently acquired by Polarcus over the permit.  10                   Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 GAS/CONDENSATE BUSINESS  Development  Kiliwani North Development ‐ Nyuni Block  Offshore Mandawa Basin Tanzania – Bounty  9.5%  Location:  30  Km  offshore  from  Rufiji  Delta  Tanzania  Background  Kiliwani North 1 well was drilled in 2008 and hit  gas  in  Neocomian  (Lower  Cretaceous  age)  Sands,  the  same  reservoir  as  at  the  adjacent  Songo Songo Gas Field.  The field was tested at  40MMcfg/d and a reserve of 28 Bcf gas (Bounty  2.66  Bcf)  was  established.    A  24‐year  production Licence was issued in 2011.   Progress During 2017  Gas  production  from  Kiliwani  North  1  contributed  net  471,343  mcf  (83,355boe)  to  Bounty during the year. Production rates were  in  the  range  15  ‐  30  MMcfg/d  and  but  are  currently  at  under  10  MMcfg/d  with  the  well  curtailed due to pressure testing.  11                 Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Future Development 2018  Production to date has established gas reserves in the Kiliwani North pool at 18 BCF (1.71 BCF or 227,000 boes net  to Bounty.)    Growth Projects  Nyuni  PSA  Block  –  Offshore  Mandawa  Basin Tanzania ‐ Bounty 10%  Location:  30  Km  offshore  from  Rufiji  Delta Tanzania  Background  This licence lies up dip from over 20 Tcf  of gas discoveries which are in the early  stages  of  being  bought  on  stream  to  a  three  train  LNG  export  facility  onshore.  There  are  several  leads  with  amplitude  anomalies  within  the  Nyuni  PSA Block which are stratigraphic targets  with  potential  for  some  2.6  TCF  gas,  at  least half of which is in shallow water.  large  There  has  been  over  a  90%  drilling  success rate with 3D seismic in adjacent,  analogous plays to the east of the Block  and  over  185  TCF  discovered  to  date  in  the same play throughout Tanzania and  Mozambique.  Nyuni Block PSA Exploration – 2018  A 3D seismic survey is planned over the deep‐water area in the Permit during 2018 subject to deferral of exploration  wells.  Currently the operator, Aminex PLC, is negotiating a work program variation with TPDC to enable the acquisition of  deep water 3D seismic in the outboard sector of the PSA area and the deferral of the two exploration well drilling  commitment.  Once the variation to the work commitment licence has been granted, a re‐tender process is planned to select a 3D  seismic  contractor  capable  of  acquiring  high  resolution  3D  seismic  over  the  key  Pande  West  lead  in  2018  and  to  identify other potential prospects in the deep water section with a view to bringing them to drill‐ready status. The  survey  will  be  designed  to  detail  the  up‐dip  extension  of  Lead  3  in  the  adjacent  Ophir/RakGas  East  Pande  permit  which  independent  consultants  suggest  could  contain  1.3  TCF  gas  within  Bounty’s  Nyuni  PSA  area.  There  are  numerous  other  deep‐water  channel/fan  features  apparent  from  the  limited  seismic  coverage  available  with  associated seismic anomalies. The Exploration Licence is in good standing.  PEP 11, Offshore Sydney Basin, New South Wales – Bounty 15%  Background  PEP 11 covers 4,576 km2 of the offshore Sydney Basin immediately adjacent to the largest gas market in Australia  and is a high impact exploration project.   12           Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 of  These  prospects  remain  one  the  most  significant  untested  gas  plays  in  Australia.  The  PEP 11 joint venture has  demonstrated  gas  considerable  generation  and  migration in the offshore  Sydney  Basin,  with  the  previously  observed  mapped  prospects  and  leads  highly  being  prospective for gas.  2018 Exploration  During  the  period  the  operator  progressed  its  plans  for  a  2D  seismic  survey at Baleen to define a drill location located approximately 30 km south east of Newcastle, New South Wales in  PEP  11,  as  a  work  commitment  for  the  petroleum  title.  This  included  engaging  acoustic  modelling  specialists,  environmental  consultants  and  geophysical  expertise  to  complete  the  revisions  to  the  Environmental  Plan  (“EP”)  following a request for modification and re‐submission received from the offshore regulator; the National Offshore  Petroleum  Safety  and  Environmental  Management  Authority  (NOPSEMA).  This  “Baleen  HR”  survey  will  cover  approximately  200‐line  km  and  is  also  proposed  to  be  tied‐in  to  the  New  Seaclem‐1  well  location  to  provide  lithological control.  An application for suspension and extension of the permit term is pending approval from the National Offshore  Petroleum Title Administrator (NOPTA) to maintain the title in good standing.    Subsequent commitments in PEP 11 include 3D seismic acquisition and an exploration well. Potential discovery of  commercial quantities of natural gas in PEP 11 provides an exciting future for the PEP 11 Joint Venture including  Bounty considering the gas market demands emerging for the east coast of Australia.  The Looming gas shortage NSW has provided increased interest in the offshore potential of PEP 11.  13           Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Bounty Oil and Gas NL – Group Petroleum Reserves and Resources (As at 30 June 2017)  The Group has reviewed all Reserves and Resources to comply with Chapter 5 of the ASX listing rules, the result is  presented net to Bounty as at 30 June 2017:‐  MMboe8 (Recoverable)  Note  Discovered3  Producing4  Naccowlah  Kiliwani North  Total Producing  Contingent5   Alton Shut In  Alton Attic  Downlands Gas Field  Downlands Oil Leg  Eluanbrook   Kiliwani North  Naccowlah  Spring Grove  Total Contingent  Total Discovered  Undiscovered Prospective6  Surat (Mardi Prospect)  AC/P 32  Nyuni  PEP 11  Total Undiscovered  1P  0.044  0.227  0.271  1C  0.048  0.020  0.101  ‐  0.016  0.185  0.456  Low  0.08  20  15  10.7  45.8  2P  0.078  0.227  0.305  2C  0.168  0.360  0.340  0.143  ‐  0.04  0.347  1.397  1.703  Best  0.21  113  24  128.8  266.2  3P  0.13  ‐  0.13  3C  0.360  0.340  0.197  0.608  0.100  0.347  1.951  2.081  High  0.42  302  44  128.8  475.4  1  1  1  1  1  2  2  2  1  2  2  2  2  2  Method / Notes  1. 2. 3. 4. 5. 6. 7. 8. Deterministic Estimates – based on actual measurements of a petroleum reservoir and contained  petroleum.  Probabilistic Estimates (P90 ≡ 1P, P50 ≡ 2P, P10 ≡ 3P) – in probabilistic maths the solution or outcome  is a prediction with uncertainties that can be measured using chance or probability.  Drilled and proven moveable oil or gas  Discovered oil which is on production including nearby undeveloped oil    Discovered oil or gas whose commercial worth is contingent upon signing sales contract, production  testing and proving economic viability, shut in petroleum awaiting renewal of permit, or zones  adjacent to Discovered oil requiring further appraisal drilling   Specific  targets  for  exploration  based  on  volume  estimation  from  seismic  surveys  and  based  on  untested models for hydrocarbon generation, migration and entrapment.  Estimates as at June 30, 2017  Converted at the rate of 182 boe = 1 MMcfg  Material Changes: Material changes from the prior period are:  1. 2. 3. The transfer of Kiliwani North Contingent Resources to Producing, and  The inclusion of Contingent Resources from PL 2 Alton which was added to the land portfolio during  the period, and  Other changes due to production, and minor adjustments based on better data and slight changes in  categorisation of resources.  14                                Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 CORPORATE GOVERNANCE STATEMENT  Bounty Oil and Gas NL’s Corporate Governance Statement is on its website www.bountyoil.com and has been  released to the ASX.  DIRECTORS’ REPORT  Your directors present their report on the consolidated entity Bounty Oil & Gas NL (“Bounty”, “company” or “the  group”) being the company and its controlled entities for the financial year ended 30 June 2017.  Directors  The names of the directors in office at any time during or since the end of the financial year are:‐     G. C. Reveleigh   C. Ross   R. Payne           (Chairman)  (Non‐executive Director)  (Non‐executive Director)  Company Secretary  The following persons held the position of company secretary and chief financial officer of the group during the  financial year:   S. Saraf   Principal Activities  The principal activity of the company and the group during the financial year was that of exploration for,  development, production and marketing of oil and gas (petroleum). Investment in listed entities is treated as a  secondary activity and business segment.  There were no significant changes in the nature of the company’s principal activities during the financial year.   Operating Results  Consolidated loss of the group attributable to equity holders after providing for income tax amounted to $387,778  (see comparative details below).  Profit/(loss) from ordinary activities before  income tax  Consolidated  2017  $  Consolidated  2016  $  (387,778)  ($4,427,200)  Income tax attributable to loss  ‐  ‐  Net profit/(loss) after income tax   (387,778)  ($4,427,200)  Revenue from continuing operations for the period was $2,677,801 up 149% on the previous year (2016: $  1,077,497).  The operating loss was determined after taking into account the following material items:       Petroleum revenue; (mainly from oil and gas sales) of $$2,677,801  A realised and mark to market gain on listed securities of $8,775.  Direct petroleum operating expenses of ($634,119).  Employee benefits expense of ($781,870).   Non‐cash expenses for:  15                     Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Impairment of production and development assets of   o o Write off of capitalised exploration expenses of  o Amortisation expenses of    ($ 834,259)  ($10,263)  ($439,242)  Details of drilling activity, exploration and development operations and cash flows for the year ended 30 June 2017  have been reported by the company to the Australian Securities Exchange in the Quarterly Activity Report and  Appendix 5B for each of the quarters during the year and in additional announcements on particular items.   A summary of revenues and results of significant business and geographical segments is set out in Note 4 to the  Financial Statements. Brief details are set out below:   Review of Operations  Production & Sales:  During the year ended 30 June 2017, the company:    Produced oil from several oil fields and leases operated by Santos Limited in ATP 1189P (formerly ATP 259),  Naccowlah Block, SW Queensland.  Produced and sold natural gas from Kiliwani North Licence, Tanzania operated by Aminex PLC.  Petroleum revenue and production in barrels of oil equivalent (boe) are summarised below:‐  Naccowlah  Block  Bounty Share  (2% interest)  646,783 11,058 Kiliwani North Licence  Bounty Share  (10%)  2,031,018 83,355 Total  2,677,801  94,413  Revenue $  Production boe  Exploration and Development  Significant exploration and development operations during the year under review were:  Australia  Onshore  Cooper Basin, South‐western Queensland   Naccowlah Block; SW Queensland:   ATP  1189P  (formerly  ATP  259P):  Oil  production  operations  continued  satisfactorily  at  the  producing  fields  including Jackson and from wells including recent wells on the Irtalie East Field.    Most Later Development Plans had been filed for the Petroleum Leases within the Naccowlah  Block ATP 1189P.  Further development drilling was deferred by the operator Santos Limited due to low oil prices  and pending cost cutting reviews however after the period a new development well – Irtalie East 6  was drilled and cased as a potential new producer from the Birkhead Zone.  Further appraisal wells  in the Irtalie East ‐ Cooroo North West project areas are likely in 2018.  16                                   Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Surat Basin; Eastern Queensland:   Petroleum Lease 2 Alton:   Completed the transfer from Bridgeport (Surat Basin) Pty Ltd of all interests in the Alton Oilfield and Alton  Block (all in Petroleum Lease 2) to the Bounty group (see PL 2 Alton below).    Commenced planning to develop these reserves initially by producing oil from Alton Oilfield.   Bounty  group  now  holds  100%  of  the  Alton  Oilfield,  100%  of  the  Alton  JV  Block  and  81.75%%  of  the  Kooroon JV all within Pl2 Alton.    As  a  result  Bounty  group  is  holding  in  the  Alton  Oilfield;  development  reserves  of  167,000  bbls  of  recoverable oil in the early Triassic age Basal Evergreen sand reservoir plus a potential 1.136 million bbls  of 2P reserves located in the three sands of the Boxvale/Evergreen Formations.   And  an  estimated  recoverable  resource  of  186,000  bbls  from  P50  OOIP  of  625,000  bbls  in  the  Middle  Triassic age Showgrounds Sandstone reservoir at the Eluanbrook Prospect within that part of PL2 known as  the Kooroon JV.   Following commencement of oil production Bounty will continue development of these resources.   ATP  754P:  Bounty  group  is  now  the  operator  of  the  ATP  754P  joint  venture  and  has  cooperated  with  Armour Energy (Surat Basin) Pty Ltd to file a Later Work Program for ATP 754P aimed at conducting a drill  test of the Mardi Prospect. Drilling of a multi‐zone test in ATP 754P is planned for 2018 to test for oil and  gas in several zones down to the Permian age sequence.  Offshore   AC/P 32 Ashmore Cartier Territory; Timor Sea:  Bounty holds 100% of this potentially major project.  o o o In 2012 Bounty acquired a 100% interest in the permit. The principal target is the Azalea Prospect a  500 MMbbl original oil in place potential pool with a recoverable oil estimate of 100 MMbbls.  At the end of the period Bounty was negotiating an extension to the licence term with the National  Offshore Titles Authority (NOPTA).   After the end of the period NOPTA granted an extension of the Year 1 to 3 program for Bounty to  licence  and  interpret  252km2  of  the  Polarcus  Cygnus  3D  Survey  Data.  This  will  enable  more  definitive  studies  of  the  potential  fluid  content  of  the  Azalea  Prospect  based  on  the  long  offset  modern data acquired over the area by that new 3D survey.  o The Azalea Prospect is:    Located in a prolific hydrocarbon province – the Vulcan Sub‐basin.  Surrounded by multi‐million barrel oil fields.   One of the largest untested potential oil pools in the Timor Sea.   Up dip from proven oil in Birch 1 and Swallow Oil Field 14 km. to the west.   Outlined by seismic amplitude and AVO anomalies.   Associated  with  direct  hydrocarbon  indicators  in  the  form  of  gas  chimneys,  diagenetic  and shallow gas zones overlying the up‐dip edge.   Drill ready in water depths suitable for a jack up rig – i.e. 120 metres.  17         Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017  PEP 11; offshore New South Wales: Bounty retains a 15% interest.  The operator is planning to commence a 2D  seismic  survey  in  late  2017  and  the  permit  is  in  good  standing.    With  major  gas  supply  issues  developing  in  eastern  Australia;  the  operator  has  identified  a  new  target  at  Baleen  Prospect  with  AVO  analysis  of  seismic  data.  Other Properties  During the period, Bounty continued to fund exploration and development expenditure in connection with its other  operated and joint venture interests located in Queensland, South Australia and Western Australia.  Bounty is  actively seeking additional projects.  Tanzania  During the period Bounty continued gas production and sales in Tanzania with accrued sales of $ 2,031,018. Gas is  sold under a Gas Sales Agreement (“GSA”) with the Tanzania Petroleum Development Corporation (“TPDC”).  The operator of the Kiliwani North Development Licence JV is Ndovu Resources Ltd (a subsidiary of Aminex PLC).    TPDC was invoiced for gas produced at the end of each month and the JV commenced receiving revenue during the  period.  There were however several delays in receipt of revenue from TPDC.  During the half‐year ended 30 June 2017 gas production from the Kiliwani North‐1 well averaged 15 mmcf per day  and commissioning has been completed.   Current production is 12 mmcfd.  Nyuni PSA:  Bounty has increased its interest to 10% and new 3D seismic was planned to image deep water turbidite gas plays of  up to 1.3 TCF potential for 2018.  A major gas target named Pande West has been identified in the deep water eastern section of the Nyuni Block  where Bounty holds a 5% interest and 3D seismic surveys are planned.  Corporate – Share Issues  During the year ended 30 June 2017 the company did not make any equity issues.   Dividends Paid or Recommended  No dividends have been paid or declared for payment for the year ended 30 June 2017 and no dividend is  recommended.  Financial Position  The net assets of the group reduced by $0.40 million in the period 1 July 2016 to 30 June 2017.   The significant  underlying movements resulted from the following  items:  o o Impairment of production and development assets of   $ 0.83 million.  Increase in net current assets by                                  $ 0.17 million.  At 30 June 2017 current assets were $ 2.40 million.   During the financial year the company invested:‐    $ 0.75 million on petroleum development property acquisitions and in completions and surface production  facility upgrades to further exploit its existing proved producing oil reserves and to increase its oil reserves.  $ 0.12 million in petroleum exploration projects in Australia and Tanzania as summarised in the Review of  Operations above.  18                     Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 The directors believe the company is in a stable financial position to expand and grow its current operations.  Significant Changes in State of Affairs  There have been no significant changes in the state of affairs of the company during the financial year.  Contingent liabilities and Contingent Assets As at the date this report, there were no contingent assets or liabilities, other than the exploration commitments set  out in Note 21.  There was no litigation against or involving Bounty Oil & Gas N.L. or its subsidiaries.  Events after the Reporting Period  No matters or circumstances have arisen since the end of the financial year which have significantly affected or may  significantly affect the operations of the company, the results of those operations, or the state of affairs of the  company in future financial years.  Future Developments, Prospects and Business Strategies Subject to the amount of its ongoing oil and gas revenues and the availability of new capital; consistent with that  income and the available cash reserves of the group, Bounty will continue:     Production, development and exploration for oil and natural gas (petroleum).  Expand in the business of the exploration for, development of and production of petroleum.  To conduct such operations principally in Australia and Tanzania.  In the coming year the group will focus on the:‐      Development of its existing oil reserves in the Surat Basin and in the Cooper Basin, Queensland aimed at  increasing group oil revenue;  Financing and if successful preparing to drill its major offshore oil targets in AC/P32, Timor Sea;  Acquisition of additional petroleum properties with existing petroleum production or reserves and resources  considered to have potential to develop and/or produce petroleum within an acceptable time frame;  Production of its developed gas reserves and deep water gas exploration in the Kiliwani North and Nyuni  Blocks, Tanzania; and  Development of new business opportunities including other overseas projects.  Environmental regulations or Issues     The company’s operations are subject to significant environmental regulation under the law of the Commonwealth  of Australia and its States and Territories in respect of its operated and non‐operated interests in petroleum  exploration, development and production. Its oil and gas production interests in the State of Queensland are  operated by Bounty group companies, AGL Energy Limited, Armour Energy (Surat Basin) Pty Ltd and Santos Limited  who comply with all relevant environmental legislation. Its offshore exploration operations in AC/P 32 Timor Sea are  conducted by the company in full compliance with all relevant environmental legislation of the Commonwealth of  Australia.  Its non‐operated offshore operations in PEP 11, NSW are similarly conducted by Asset Energy Pty Ltd a  competent operator.  Its non‐operated interests in Tanzania are operated by a company incorporated in that  jurisdiction which is a wholly owned subsidiary of a United Kingdom based operator.  It complies with all relevant  environmental legislation.  19             Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Information on Directors  The names and particulars of the directors of the company during or since the end of the financial year ended 30  June 2017, are:‐  Graham Reveleigh   —  Non‐Executive Director Qualifications  —  BSc. MSc, M. Aus IMM. Experience  —  Mr Reveleigh is a professional geologist and has nearly 48 years’ experience in the  resources industry both in Australia and overseas. Early in his career, he worked in  the oil industry, then spent most of his career in exploration, mine management  and construction in the mineral industry.  Mr Reveleigh has had extensive  experience in petroleum in recent years as a director of Drillsearch Energy Limited  and its Canadian subsidiary.  He retired as a director of those companies in late  2007. He is a Member of the Australasian Institute of Mining and Metallurgy and a  member of the Petroleum Exploration Society of Australia.  He was appointed a  director and chairman in 2005.   Special responsibilities:  Chairman of the company; geotechnical advice. Charles Ross  —  Non‐Executive Director Qualifications  —  BSc.  Experience  Mr Ross has had extensive experience in the private and public equity and  corporate finance market in Canada, USA and Europe for 23 years.  He has  operated extensively in corporate asset acquisition and divestiture, review and  development of corporate financing strategies, administration, compliance  procedures and investor relations in North America and the Euro zone.  He was a  director of Circumpacific Energy Corporation (a subsidiary of Drillsearch Energy  Limited) from 1992 until 2008.  This required management involvement in most  aspects of petroleum exploration, development and production operations in the  Western Canada Basin and other areas.  He was appointed a director in 2005.  Special responsibilities:  Audit reviews; corporate strategy. Roy Payne  —  Non‐Executive Director Qualifications  —  Solicitor Queensland. Experience  Mr Payne is a commercial lawyer with over 32 years’ experience. Prior to working  in private practice as a lawyer he worked for the Department of Justice’,  Queensland for 12 years where he qualified to be a Clerk of the Court and a  Magistrate.  Mr Payne has many years of experience in the corporate world. He has been the  chairman of a listed mining exploration company. He is currently the chairman of  the board of a private ship maintenance and repair company and was the chairman  and director for many years of two limited liability, not for profit companies that  operate a public art gallery and a gallery foundation. He has a wealth of knowledge  and experience with corporate governance and mining exploration.   Special responsibilities:  Commercial law and Queensland statutory compliance.  20               Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Directorships of other listed companies  Directorships of other listed companies currently held by the directors or held in the 3 years immediately before the  end of the financial year are as follows:  Name  Company  Mr G. Reveleigh  Hill End Gold Limited  Mr C. Ross  TSX Listed Companies; Canada: Goldex Resources Corporation, Norzan Enterprises Ltd.,  Halio Energy Inc. and Tearlach Resources Limited.  Mr R. Payne  Nil  Directors shareholdings  Period of directorship 1 July 2014 to present 1 July 2014 to present NA  The following table sets out each Directors interest in shares and options over shares of the Company or a related  body corporate as at the date of this report:‐  Mr G. Reveleigh  Mr C. Ross  Mr R. Payne  Meetings of Directors/Committees  Bounty Oil & Gas NL  Fully paid ordinary shares  Number Share options Number 23,377,928 3,200,000 ‐ ‐  ‐  ‐  During the financial year, eleven (11) meetings of directors were held. Attendances by each director during the year  were as follows:‐  Directors’ Meetings Number eligible to attend  Number attended  Mr G. Reveleigh  Mr C. Ross   Mr R. Payne  11 11 11 11  11  11  The company does not have separate audit or remuneration committees. Indemnifying Officers or Auditor  During the financial year ended 30 June 2017 the company has not entered indemnity and access deeds with any of  the directors indemnifying them against liabilities incurred as directors, including costs and expenses in successfully  defending legal proceedings.  The company has not, during or since the financial year, in respect of any person who  is or has been an auditor of the company or a related body corporate indemnified or made any agreement for  indemnifying against a liability incurred as an auditor, including costs and expenses in successfully defending legal  proceedings.  21                                                     Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 The company has paid premiums to insure each of the directors and officers in office at any time during the financial  year against liabilities up to a limit of $10 million for damages and for costs and expenses incurred by them in  defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company,  other than conduct involving a wilful breach of duty in relation to the company.  The amount of the premium was  $13,900 for all nominated directors.  Share Options  All options over ordinary shares or securities of Bounty Oil & Gas NL issued in a prior period have lapsed  unexercised. No options were issued during the year ending 30 June 2017 or have since been issued up to the date  of this report.  Accordingly at balance date on 30 June 2017 and at the date of this report, no unissued ordinary shares or securities  of Bounty Oil & Gas NL or any other entity comprising the consolidated entity were under option. No ordinary shares  of the company were issued pursuant to exercise of options during the year ending 30 June 2017.  Legal Matters or Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any  proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all  or any part of those proceedings.  The company was not a party to any such proceedings or any other litigation during the reporting period. Non‐Audit Services  The independent auditor to the company; Mr William Moyes has not provided non audit services to the company  during or after the end of the financial year.    Remuneration of Directors and Management Information on the remuneration of directors and other key management personnel is contained in the  Remuneration Report which forms part of this Directors Report and is set out on the following pages.  Auditor’s Independence Declaration  The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on  Page 27.  Signed in accordance with a resolution of the Board of Directors made pursuant to s. 298(2) of the Corporations Act  2001.  On behalf of the Directors.  GRAHAM REVELEIGH  Chairman  Dated:  29 September 2017  22                                               Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 REMUNERATION REPORT  This remuneration report forms part of the Directors Report for the year ended 30 June 2017 and details the nature  and amount of remuneration for the Bounty Oil & Gas NL non‐executive directors and other key management  personnel of the group.  The prescribed details for each person covered by this report are detailed below under the following headings:   Director and senior management details   Remuneration policy   Non‐executive directors policy   Senior management personnel policy   Remuneration of directors and key management   Key terms and employment contracts  Directors and Key Management details  The term “key management” as used in this remuneration report to refers to the following directors and executives.  Directors  The following persons acted as directors of the company during or since the end of the financial year:‐   Mr G. C. Reveleigh   (Chairman)   Mr C. Ross   (Non‐Executive Director)   Mr R. Payne  (Non‐Executive Director)  Executives  The following persons acted as senior management of the company during or since the end of the financial year:   Mr P. F. Kelso   (Chief Executive Officer)  The company does not consider other employees and consultants to be Key Management Personnel.  Remuneration policy  The remuneration policy of Bounty Oil & Gas NL has been designed to align key management personnel objectives  with shareholder and business objectives by providing a fixed remuneration component and bonuses issued at the  discretion of the board of the company.  The board of Bounty Oil & Gas NL believes the remuneration policy to be  appropriate and effective in its ability to attract and retain the best key management personnel to run and manage  the company, as well as create goal congruence between directors, executives and shareholders.  All remuneration paid to key management personnel (directors and others) is valued at the cost to the company and  expensed or where appropriate transferred to capital items.  Shares issued to key management personnel are  valued as the difference between the market price of those shares and the amount paid by the key management  person. Share options are valued using the Black‐ Scholes methodology. Shares and options granted to key  management personnel (directors and others) are subject to any necessary approvals required by the ASX Listing  Rules.  23                 Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 Performance‐based remuneration  Given the long‐term nature of and risk variables involved in exploration and development of petroleum resource  projects as compared to other sectors e.g. retail revenues; remuneration of directors or other key management  personnel is not performance based.  Non‐executive directors’ policy  The board policy is to remunerate non‐executive directors at market rates for time, commitment and  responsibilities. The maximum aggregate amount of fees that can be paid to non‐executive directors is within the  maximum amount specified in the company's Constitution.  Any increase of that amount is subject to approval by  shareholders at the Annual General Meeting.  Fees for non‐executive directors are not linked to the performance of  the company.   Remuneration of non‐executive directors is determined by the Board exclusive of the director under consideration  after considering the individual time commitment, duties and function of the subject Director.  Further  considerations of the amount of remuneration are made by referral to amounts paid to Directors, both executive  and non‐executive, by other listed entities of comparable size to the Company in the oil and gas exploration  industry.  The board of directors as a whole determines the proportion of any fixed and variable compensation for each other  key management person.  Any consulting fees payable to Directors as to specific projects outside the normal day to day duties of the Directors  are agreed upon prior to commencement of work on the specific projects.  The company makes cash bonus payments to key directors from time to time. Bonus payments by way of share  based payments are made from time to time subject to any necessary shareholder approval.  All such payments are  expensed at the time of issue at the prevailing market price.  Each director is paid in cash.  Shares and share options have on occasions been granted to directors as part of their  remuneration.  Senior management personnel policy   The board's policy for determining the nature and amount of remuneration of key management personnel who are  senior management executives of the company is as follows:‐  The remuneration structure comprises a combination of, short term benefits including base fees and long‐term  incentives and is based on a number of factors, including length of service, particular experience of the individual  concerned, and overall performance of the company.  The contracts for service between the company and key  executive management personnel are for fixed terms which may continue at the end of the term.  There were no  provisions for retirement benefits in contracts with senior management executives of the company made or  continued during the year ended 30 June 2017.  The company may make cash bonus payments to senior management executives and to selected employees from  time to time. Bonus payments and long‐term incentives by way of share based payments are classed as long‐term  incentives and are made from time to time subject to any necessary shareholder approval.  All such payments are  expensed at the time of issue at the prevailing market price.  Key management personnel who are employees receive a superannuation guarantee contribution required by the  government and do not receive any other retirement benefits.  Some individuals, however, have chosen to sacrifice  part of their salary to increase payments towards superannuation.  The chief executive officer, Mr P. F. Kelso, is engaged through a fixed term service agreement with a personally  related entity containing the following material conditions:   Management fees of $398,000 per annum payable by equal monthly instalments.    Payment of lease fees for a motor vehicle and parking.  Escalation of fees of 3% from 1 July 2019.  24     Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017    Bonuses at the discretion of the board of directors and there are no retirement or other fixed benefits.  The personally related entity is responsible for all statutory entitlements.  Services:  To include non‐exclusive executive management, capital raising, communication, management  strategy, budgets, investment policy and all other duties normally incidental to the position of chief  executive officer.  Other than the directors and the chief executive officer, at the date of this Report all other personnel are permanent  or part time employees of the company and not classified as key management personnel.  Key Management Remuneration  Details of the remuneration of directors and the other key management personnel of the group (as defined in AASB  124 Related Party Disclosures) and the one highest paid executive of Bounty Oil & Gas N.L. are set out in the  following tables.  Key Management Remuneration  2017  Key Management Person Short‐term Benefits $ Cash, salary and  commissions  Consulting  Fees + Other Cash bonus  and Non‐ cash  benefits (2) Post‐ employment  Benefits  Super‐ annuation  Share based  payment  Total Options  Non‐Executive Directors  Mr G. Reveleigh (1)  Mr C. Ross (1)  Mr R. Payne  Other Key Management  Personnel – Chief Executive  officer  Mr P.F. Kelso (1)  60,000  30,000  ‐  ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 20,000 398,000  52,212 17,868 ‐ ‐  ‐  ‐  ‐  60,000 30,000 20,000 468,080 1. 2. Paid to a personally related entity of the director/executive.   Compensation for the 2017 financial year as set out in this column included non‐cash benefits of $52,212.  Key Management Remuneration  2016  Key Management Person Short‐term Benefits $ Cash, salary and  commissions  Consulting  Fees + Other Cash bonus  and Non‐ cash  benefits (4) Non‐Executive Directors  Mr G. Reveleigh (3)  Mr C. Ross (3)  Mr R. Payne  Other Key Management  Personnel – Chief Executive  officer  Mr P.F. Kelso (3)  60,000  30,000  ‐  ‐ ‐ ‐ 398,000  59,962 ‐ ‐ ‐ ‐ Post‐ employment  Benefits  Super‐ annuation  Share based  payment  Total Options  ‐ ‐ 20,000 ‐  ‐  ‐  60,000 30,000 20,000 457,962 3. 4. Paid to a personally related entity of the director/executive.   Compensation for the 2016 financial year as set out in this column included non‐cash benefits of $59,962.  25                                           Bounty Oil & Gas NL                                                                                                   Annual Report ‐ 2017 No  director  or  senior  management  person appointed during the above periods  received  a payment as  part of his  consideration for agreeing to be appointed to that position.  Share–based payments  During the financial year ended 30 June 2017 no share‐based payments were made to Key Management Persons.   Fully paid ordinary shares  No fully paid ordinary shares were issued to Key Management Persons during the period.  Share Options  1. No share options were issued to directors or other key management persons or executives as part of their  remuneration during the year ended 30 June 2017 or since that date.  2. During the year, no directors or senior management held or exercised options that were granted to them as  part of their compensation in previous periods.  Loans to directors and executives  No loans were made to key management personnel including their personally related entities during the financial  year ended 30 June 2017 and no loans were outstanding at the end of the prior period, except that during the year,  the Group advanced sums totalling $104,107 to the Operator of joint operations in which the Group has petroleum  interests. The CEO Mr. P. Kelso is a director of the Operator. The advances were made in the ordinary course of  business to support the joint operation activities.    Other Key Management Personnel Disclosures:  Further information on disclosure in connection with Key Management Personnel and Share Base Payments are set  out in the following Notes to the Financial Statements:‐  1. 2. 3. Note 19:  Share Based Payments  Note 20:  Key Management Personnel Disclosures  Note 22:  Related Party Transactions.    Performance income as a proportion of total remuneration  The percentage of remuneration paid to directors and key management personnel during the financial year ended  30 June 2017 which was performance based was: Nil.  Employee Share Scheme  Bounty Oil & Gas N.L. has a current Employee Share Plan (the Plan) approved by shareholders.  Under  the  Plan  all  share  issues  to  directors  or  other  Key  Management  Personnel  must  receive  prior  shareholder  approval.  No ordinary shares of the company were issued under the Plan during the year ending 30 June 2017.  26    Bounty Oil & Gas NL Annual Report – 2017 Consolidated statement of profit and loss and other comprehensive income for the year ended 30 June 2017 Petroleum revenue Net Investment (loss)/income Other income Direct petroleum operating expense Changes in inventories Employee benefits and contractor expense Depreciation expense Amortisation of oil producing assets Occupancy expense Corporate activity costs Rehabilitation expense Impairment of oil and gas assets Exploration expenses write off General legal and professional costs Other expenses Loss before Tax Income tax expense Loss for the period from continuing operations Loss for the year Other comprehensive income for the year, net of income tax Total Comprehensive loss for the period Total comprehensive income/(loss) attributable to owners of the parent Earnings/(loss) per share Basic (cents per share) Diluted (cents per share) Year-ended Notes 30-Jun-17 $ 30-Jun-16 $ 5 5 5 5 6 13/14 2,677,801 8,775 (7,201) (634,119) (122) (781,870) (47,411) (439,242) (100,826) (82,143) (25,816) (834,259) (10,263) (58,133) (52,959) 1,077,497 (69,245) 285,360 (1,104,439) 9,385 (820,309) (88,457) (340,320) (134,303) (67,922) (37,110) (2,949,269) (48,883) (97,009) (42,176) (387,788) (4,427,200) 7 - - (387,788) (4,427,200) (387,788) (4,427,200) - - (387,788) (4,427,200) (387,788) (4,427,200) (0.04) (0.04) (0.47) (0.47) The above consolidated statement of comprehensive income should to be read in conjunction with the accompanying notes. 28 Bounty Oil & Gas NL Annual Report – 2017 Consolidated statement of financial position as at 30 June 2017 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Other current financial assets Total current assets Non-current assets Trade receivables Exploration and evaluation assets Production and development assets Property, plant and equipment Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Unearned revenue Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained losses Equity attributable to owners of the parent Total equity Notes 30-Jun-17 $ 30-Jun-16 $ 9 10 11 12 10 14 (b) 14(a) 13 15 16 16 17 1,024,462 1,319,983 26,270 24,939 2,395,654 39,943 9,688,826 7,329,025 559,403 1,760,668 89,092 49,034 24,450 1,923,244 - 9,124,857 8,384,715 629,112 17,617,197 18,138,684 20,012,851 20,061,928 783,882 24,162 808,044 475,498 26,764 502,262 5,888 1,290,528 1,296,416 - 1,263,487 1,263,487 2,104,460 1,765,749 17,908,391 18,296,179 43,440,163 201,600 (25,733,372) 17,908,391 43,440,163 201,600 (25,345,584) 18,296,179 17,908,391 18,296,179 The above consolidated statement of financial position should to be read in conjunction with the accompanying notes. 29  Bounty Oil & Gas NL Annual Report – 2017 Consolidated statement of changes in equity for the year ended 30 June 2017 Balance at 1 July 2015 (Loss) for the year Other comprehensive income for the period Total comprehensive income for the period Shares issued during the period Balance at 30 June 2016 Balance at 1 July 2016 Loss for the period Other comprehensive income for the period Total comprehensive income for the period Shares issued during the period Balance at 30 June 2017 Notes Ordinary share capital $ 43,440,163 - - - - 43,440,163 43,440,163 - - - - 43,440,163 17 17 Retained earnings/ (Accumulated losses) $ (20,918,384) (4,427,200) - Total $ 22,723,379 (4,427,200) - (4,427,200) (4,427,200) - - (25,345,584) 18,296,179 (25,345,584) (387,788) - (387,788) - (25,733,372) 18,296,179 (387,788) - (387,788) - 17,908,391 Option reserve $ 201,600 - - - - 201,600 201,600 - - - - 201,600 The above consolidated statement of changes in equity should to be read in conjunction with the accompanying notes. 30 Bounty Oil & Gas NL Annual Report – 2017 Consolidated statement of cash flows for the year ended 30 June 2017 Cash flows from operating activities Receipts from petroleum operations Proceeds from sale of listed shares Payments for acquisition of listed shares Payments to suppliers and employees Interest and dividend received Other Year-ended Notes 30-Jun-17 $ 30-Jun-16 $ 1,617,215 52,605 (44,319) (2,002,886) 12,173 - 1,177,989 - (5,344) (1,883,301) 13,259 9,275 Net cash (used in) operating activities 18 (365,212) (688,122) Cash flows from investing activities Payments for exploration and evaluation assets Payments for oil production & development assets Payments for property plant and equipment Proceeds from disposal of other assets Proceeds from disposal of oil production & development assets Loans repayment/(advanced) Net cash generated by/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Net cash (used in) financing activities (508,296) 244,030 (7,428) - - (79,107) (350,801) (83,350) (656,954) - 1,320,000 340,000 13,000 932,696 - - - - Net increase/(decrease) in cash and cash equivalents (716,013) 244,574 Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at the end of the period 1,760,668 1,508,539 9 (20,193) 1,024,462 7,555 1,760,668 The above consolidated statement of cash flow should be read in conjunction with the accompanying notes. 31 Bounty Oil & Gas NL Annual Report – 2017 Contents of the notes to the consolidated financial statements 1. Statement of compliance 2. Summary of significant accounting policies 3. Critical accounting estimates and judgments 4. Segment Information 5. Revenue and other income 6. Employee benefit expense 7. Income tax expense 8. Earnings/(loss) per share 9. Cash and cash equivalents 10. Trade and other receivables 11. Inventories 12. Other current financial assets 13. Property, plant and equipment 14. Non current assets 15. Trade and other payables 16. Provisions 17. Issued capital 18. Reconciliation of cash flow from continuing operations 19. Share based payments 20. Key management personnel 21. Commitments 22. Related party transactions 23. Financial instruments 24 . Controlled entities 25. Interest in joint operations 27. Business combinations 26. Parent entity information 27. Contingent liabilities and contingent assets 28. Events occurring after the reporting period 29. Auditors remuneration 30. Company details 32 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 1. Statement of compliance Bounty Oil and Gas N.L. Is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange. This financial report includes the consolidated financial statements and notes of Bounty Oil & Gas NL (“parent entity”) and controlled entities (“consolidated group” or “group”) and the Group’s interest in jointly controlled assets for the financial year ended 30 June 2017. Supplementary financial information about the parent entity is disclosed in Note 26. The Financial Statements are presented in Australian currency. The group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial report was authorised for issue by the directors on 29 September 2017. 2. Summary of significant accounting policies The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB), the Corporations Act 2001 and comply with other requirements of the law. Compliance with AASB 101 ensures compliance with International Financial Reporting Standard IAS 1 Presentation of Financial Statements. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. a. Basis of preparation The consolidated financial statements have 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 Australian dollars, unless otherwise noted. The following significant accounting policies have been adopted in the preparation and presentation of the financial reports. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. The company is a company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. b. Application of new and revised accounting standards The following standards and interpretations which became effective and were applied for the first time during the year ended 30 June 2017 were assessed to have no material impact on the Group: The Group’s accounting policies are consistent with those of the previous financial year except for new policies adopted from 1 July 2016 as follows: AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations (AASB 1 & AASB 11) AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012–2014 Cycle AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101. 33 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 b. Accounting standards and interpretations issued but not yet effective At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective or early adopted by the Group. AASB 15 Revenue from Contracts with Customers AASB 9 Financial Instruments AASB 16 Leases AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses (AASB 112) AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107 AASB 2016-5 Classification and Measurement of Share-based Payment Transactions AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investments Property, Annual Improvements 2014-2016 Cycle and Other Amendments AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle AASB Interpretation 23 Uncertainty over Income Tax Treatments c. Basis of consolidation (i) Controlled entities The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Bounty Oil & Gas NL at the end of the reporting period. A controlled entity is any entity over which Bounty Oil & Gas NL has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 24 to the financial statements. In preparing the consolidated financial statements all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. For the reporting period the only controlled entities that Bounty Oil & Gas NL had were Ausam Resources Pty Limited (100%), and Interstate Energy Pty Limited (100%). 34 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 c. Basis of consolidation (continued) (ii) Joint arrangements Under AASB 11 'Joint Arrangements' investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. Bounty Oil & Gas NL has assessed the nature of its joint arrangements and determined them to be joint operations. Bounty Oil & Gas NL 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 headings. Details of the joint operations are set out in note 25. (iii) Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are, with limited exceptions, recognised at their fair value at the acquisition date. d. Interests in joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation: • its assets, including its share of any assets held jointly; • its liabilities, including its share of any liabilities incurred jointly; • its share of the revenue from the sale of the output by the joint operation; and • its expenses, including its share of any expenses incurred jointly. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASBs applicable to the particular assets, liabilities, revenues and expenses. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group's consolidated financial statements only to the extent of other parties' interests in the joint operation. e. Income tax The income tax expense / (income) for the year comprises current income tax expense / (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Current and deferred income tax expense / (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. 35 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 e. Income tax (continued) Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Tax Consolidation - Bounty Oil & Gas NL and its wholly owned Australian subsidiary have not formed an income tax consolidation group under tax consolidation legislation. Each entity in the Group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand alone taxpayer’ approach to allocation. f. Going concern basis The directors have prepared the financial report on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. For the period ended 30 June 2017, the Group realised a net loss after tax of $387,788 (2016: $4,427,200). This was largely as a result of non-cash impairment of production assets. The net cash utilised by operating activities for the period ended 30 June 2017 was $365,212 (2016: net cash utilised $688,122). The Group’s net asset position at 30 June 2017 was $17,908,391 (30 June 2016: $18,296,179) and its cash balance amounted to $1,024,462 (30 June 2016: $1,760,668). The directors’ cash flow forecasts project that the group will continue to be able to meet its liabilities and obligations (including those exploration commitments as disclosed in Note 21) as and when they fall due for a period of at least 12 months from the date of signing of this financial report. The cash flow forecasts are dependent upon the generation of sufficient cash flows from operating activities to meet working capital requirements, the ability of the group to manage discretionary exploration and evaluation expenditure on non-core assets via farmout or disposal of certain interests and or a reduction in its future work programmes. The directors are of the opinion that the use of the going concern basis of accounting is appropriate as they are satisfied as to the ability of group to implement the above. g. Fair value measurement AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilites. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets and liabilites carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. Consequential amendmends were also made to other standards. AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that a significant input to the measurement can be categorised into as follows: - level 1: Measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. -level 2: Measurements based on inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. -level 3: Measurements based on unobservable inputs for the asset or liability. The carrying values of financial assets and liabilites recorded in the financial statements approximates their respective fair values, determined in accordance with the acounting policies described above and adjusted for capitalised transaction costs, if any. 36 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 h. Trade and other receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 120 days from the date of recognition for land development and resale debtors, and no more than 30 days for other debtors. Collection of trade receivables is reviewed on an ongoing basis. Debts, which are known to be uncollectible, are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount for the provision is recognised in the income statement. i. Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Freehold land and building are shown at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm’s length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the statement or comprehensive income. Each year the difference between depreciation based on the re-valued carrying amount of the asset charged to the statement of comprehensive income and depreciation based on the assets original cost is transferred from the revaluation surplus to retained earnings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is 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 income statement during the financial period in which they are incurred. j. Depreciation The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the Group from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. Depreciation on assets is calculated over their estimated useful life as follows: Class of fixed asset Office furniture and fittings Computer equipment Plant and equipment Estimated useful life 5 years 4 years 5 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 37 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 j. Depreciation (continued) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When re-valued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. k. Exploration and evaluation expenditure Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: • the rights to tenure of the area of interest are current; and, • at least one of the following conditions is also met: i) the exploration and evaluation expenditures are expected to be recouped through successful exploration, development and commercial exploitation of the area of interest, or alternatively, by its sale; or, ii) exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable petroleum reserves or resources and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, geophysical surveys, studies, exploratory drilling, sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (or the cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then re-classified to development. l. Production and development assets The group follows the full cost method of accounting for production and development assets whereby all costs, less any incentives related to the acquisition, exploration and development of oil and gas reserves are capitalised. These costs include land acquisition costs, geological and geophysical expenses, the costs of drilling both productive and non productive wells, non producing lease rentals and directly related general and administrative expenses. Proceeds received from the disposal of properties are normally credited against accumulated costs. When a significant portion of the properties is sold, a gain or loss is recorded and reflected in profit or loss. With respect to production assets, depletion of production and development assets and amortisation of production facilities and equipment are calculated using the unit of production method based on estimated proven oil and gas reserves. For the purposes of depletion calculation proved oil and gas reserves before royalties are converted to a common unit measure. The estimated costs for developing proved underdeveloped reserves, future decommissioning and abandonments, net of estimated salvage values, are provided for on the unit of production method included in the provision for depletion and amortisation. In applying the full cost method of accounting, the capitalised costs less accumulated depletion are restricted from exceeding an amount equal to the estimated discounted future net revenues, based on year end prices and costs, less the aggregate estimate future operating and capital costs derived from proven and probable reserves. Development expenditure is recognised at cost less accumulated amortisation and any impairment losses. Where commercial production in an area of interest has commenced, the associated costs together with any forecast future capital expenditure necessary to develop proved and probable reserves are amortised over the estimated economic life of the field on a units-of- production basis. Changes in factors such as estimates of proved and probable reserves that affect unit of production calculations are dealt with on a prospective basis. 38 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 m. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. n. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of petroleum products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. o. Leased assets Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. p. Financial instruments Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. De-recognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are de-recognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Classification and subsequent measurement i) Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a company of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method. iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. v) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. 39 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 q. Impairment of assets Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. r. Foreign currency transactions and balances Functional and presentation currency The functional currency is measured using the currency of the primary economic environment in which the Group operates (the “functional” currency). The financial statements are presented in Australian dollars which is the Group’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement. s. Employee benefits Wages and salaries, annual leave Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. Share based payments – employee share plan Share based compensation has from time to time been provided to eligible persons via the Bounty Oil & Gas N.L. Employee Share Plan (“Plan”). Under AASB 2 “Share-based Payments”, the Employee Share Plan shares are deemed to be equity-settled share-based remuneration. Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of the quoted market price or binomial pricing model. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. t. Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. u. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet. 40 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 v. Rehabilitation obligations Provisions for future environmental restoration are recognised where there is a present obligation as a result of exploration, development, production or storage activities having been undertaken and it is probable that an outflow of economic benefits will be required to settle the obligation. The estimated future obligations include the costs of removing facilities, abandoning wells and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at reporting date, with a corresponding charge in the cost of the associated asset. The amount of the provision for future restoration costs relating to exploration, development and production facilities is capitalised and depleted as a component of the cost of those activities. The unwinding of the effect of discounting on the provision is recognised as a finance cost. w. Revenue and other income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established. All revenue is stated net of the amount of goods and services tax (GST). x. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. y. Earnings per share i) Basic earnings per share Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential z. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. aa. 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 from the proceeds. 41 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 3. Critical accounting estimates and judgments In the application of the group’s accounting policies, which are described in Note 1, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical and industry experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgments that management has made in the process of applying the group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements: Exploration and evaluation assets The group’s policy is discussed in Note 2(k) & (l). Its policy for production and development assets is discussed in Note 1(n). The application of these policies requires management to make certain estimates and assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through profit or loss. Estimate of reserve quantities The estimated quantities of proven and probably hydrocarbon reserves and resources reported by the group are integral to the calculation of amortisation (depletion) and depreciation expense and to assessments of possible impairment of assets. Estimated reserve quantities are based upon data from exploration and development drilling, interpretations of geological and geophysical models and assessment of the technical feasibility and commercial viability of producing the reserves. Management prepares reserve estimates which conform to guidelines prepared by the Society of Petroleum Engineers, USA. Where appropriate these estimates are then verified by independent technical experts. 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 or reservoir data is generated during the course of operations. Provision for rehabilitation and decommissioning The group estimates the future removal and decommissioning costs of oil and gas production facilities, wells, pipelines and related assets at the time of installation of the assets. In most instances the removal of these assets will occur many years in the future. The estimates of future removal costs therefore requires management to make adjustments regarding the removal date, future environmental legislation, the extent of decommissioning activities and future removal technologies. Impairment of production and development assets The group assesses whether oil and gas assets are tested for impairment on a semi-annual basis. This requires an estimation of the recoverable amount from the cash generating unit to which each asset belongs. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and or subsequent disposal. The expected net cash flows are discounted to their present values in determining the recoverable amount. During the year, the group carried out semi annual reviews of its petroleum production, development and exploration properties. The reviews led to the recognition of an impairment loss of $0.83 million in relation to ATP 1189 Naccowlah joint operations, which has been recognised in profit or loss. These properties are reported as in the core oil and gas segment. 42 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 4. Segment Information Identification of Reportable Segments Information reported to the Chief Operating Decision Maker, being the CEO, for the purposes of resource allocation and assessment of the performance is more specifically focused on the category of business units. The Group’s reportable segments under AASB 8 Operating Segments are therefore as follows: Core Petroleum Segment - Oil and gas exploration, development and production Secondary Segment - Investment in listed shares and securities. Segment revenue and results Core Oil & Gas Segment Production projects Development projects Exploration projects Secondary Segment Listed securities Total from continuing operations Other revenue Central admin costs and directors remuneration Loss before tax Segment revenue Segment profit/(loss) 30-Jun-17 $ 30-Jun-16 $ 2,677,801 1,077,497 - - - - 30-Jun-17 $ 735,253 - (10,263) 30-Jun-16 $ (3,404,602) - (48,883) 8,775 2,686,576 (69,245) 1,008,252 8,775 733,765 (7,201) (1,114,352) (387,788) (69,245) (3,522,730) 285,360 (1,189,830) (4,427,200) Segment revenue Revenue reported above represents revenue/income generated from external sources. There were no intersegment sales during the period (2016: nil). Accounting policies of reportable segments The accounting policies of the reportable segments are the same as the group’s accounting policies described in Note 1. Segment profit/(loss) in this Note represents the profit/(loss) earned by each segment without allocation of central administration costs and directors remuneration, other investment revenue such as interest earned, finance costs and income tax expense. This is the measure reported to the Chief Operating Decision Maker for the purpose of resource allocation and assessment of segment performance. Information about major customers Included in the revenue arising from direct sales of oil and gas of $2,677,801 (2016: $1,077,497) are revenues of approximately $2,031,018 (2016: $549,307) which arose from sales to the Group’s largest customer. The revenue from the Group’s second largest customer was approximately $430,110 (2016: $233,598). No other single customer contributed 10% or more to the Groups revenue for both 2017 and 2016. Other segment information Core Oil & Gas Segment Production projects Development projects Exploration projects Other Total Core Oil & Gas Segment Production projects Development projects Exploration projects Total Amortisation, depreciation & depletion Additions to non-current assets 30-Jun-17 $ 479,074 - - 7,579 486,653 30-Jun-16 $ 414,785 - - 30-Jun-17 $ 722,626 78,057 117,621 13,992 428,777 7,427 925,731 30-Jun-16 $ 376,247 377,564 69,466 - 823,277 Impairment losses (expenses) 30-Jun-17 $ 834,259 - 10,263 844,522 30-Jun-16 $ 2,949,269 - 48,883 2,998,152 43 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 4. Segment Information (continued) Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Segment liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilites incude trade and other payables and provisions. The unallocated items include items that are not considered part of the core operations of any segment. Core Oil & Gas Segment Production projects Development projects Exploration projects Secondary Segment Listed securities Unallocated Total Segment assets Segment liabilities 30-Jun-17 $ 6,782,937 1,098,146 9,688,826 30-Jun-16 $ 7,364,626 1,020,089 9,124,857 30-Jun-17 $ 1,842,602 8,734 23,796 30-Jun-16 $ 1,431,794 8,734 23,796 24,939 2,418,003 20,012,851 24,450 2,527,906 20,061,928 - 229,328 2,104,460 - 301,425 1,765,749 Geographical Segment information The following table details the group’s geographical segment reporting of revenue and carrying amount of assets in each geographical region where operations are conducted. Revenue Carrying amounts of non current assets 30-Jun-17 $ 648,356 2,031,018 2,679,375 30-Jun-16 $ 1,275,738 17,874 1,293,612 30-Jun-17 $ 13,514,153 4,103,044 17,617,197 30-Jun-16 $ 13,918,791 4,219,893 18,138,684 30-Jun-17 $ 2,655,056 22,745 2,677,801 30-Jun-16 $ 1,046,307 31,190 1,077,497 14,396 (5,621) 8,775 - (69,245) (69,245) 12,985 (20,193) 7 (7,201) 13,259 7,555 264,546 285,360 2,679,375 1,293,612 Australia Tanzania Total 5. Revenue and other income Sales revenue: Oil and gas sales Revenue from tariffs Total sales revenue Investment income: Investment income from financial assets at fair value through Profit and loss (held for trading listed shares) Realised gain Unrealised gain/(loss) Total investment income Other income: Interest received Gains/(losses) on foreign currency Other income Total other revenue Total revenue 44 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 6. Employee benefit expense Directors fees Consultancy fees - Internal Wages & salaries Other employee benefit expenses Total Employee benefit expense 30-Jun-17 $ 110,000 398,000 218,389 55,481 781,870 30-Jun-16 $ 110,000 398,000 222,219 90,090 820,309 Recharge and recoveries The Group has the policy to allocate a portion of employee benefit expense to production, development, exploration and evaluation assets based on employee time committed to various projects. 7. Income tax expense The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit/(income tax benefit) from continuing operations before income tax at 30% (2016: 30%) Consolidated group Add: tax effect of non deductible expenses Less: tax effect of expenditure claimed as deduction Tax effect of Unused tax losses not recognised as deferred tax asset Income tax expense attributable to loss from ordinary activities $ (116,337) 303,801 (169,396) $ (1,325,475) 1,056,376 (57,411) 18,068 (326,510) - - The potential future income tax benefit arising from tax losses and timing differences has not been recognised as an asset because recovery of tax losses is not probable and recovery of timing differences is not assured beyond reasonable doubt. The potential future income tax benefit will be obtained if: 1) the relevant company derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised, or the benefit can be realised by another company in the Group in accordance with Division 170 of the Income Tax Assessment Act 1997; 2) the relevant company and/or group continues to comply with the conditions for deductibility imposed by the Act; and 3) no changes in tax legislation adversely affect the Company and/or the group in realizing the benefit. Bounty Oil and Gas NL and its wholly-owned subsidiaries have not formed a tax consolidation group. 8. Earnings/(loss) per share Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share) (0.04) (0.04) (0.47) (0.47) Net (loss)/profit used in the calculation of basic and diluted earnings/(loss) per share (387,788) (4,427,200) Weighted average number of ordinary shares for the purposes of basic and diluted EPS 9. Cash and cash equivalents Deposits on call Cash at bank Total Cash and cash equivalents No. of Shares No. of Shares 953,400,982 953,400,982 $ 126,981 897,481 1,024,462 $ 75,413 1,685,255 1,760,668 45 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 10. Trade and other receivables Current Trade receivables Prepayments Other receivables GST receivable Loans to third party Non-current Trade receivables Total trade and other receivables 30-Jun-17 $ 1,208,775 2,686 105,376 3,146 - 30-Jun-16 $ 60,130 3,512 450 - 25,000 39,943 1,359,926 - 89,092 The average credit period on sale of goods is 30 days. The Group generally recognise an allowance for doubtful debts for receivables if management forms an opinion that receivable may not be recoverable. The balance outstanding at 30 June 2017 is primarily in relation to gas sales made to the largest customer during the financial year, the majority of which has been received subsequent to year end. All other trade receivables were outstanding for an average period of 15 days as at 30 June 2017. Ageing of past due but not impaired 60 – 90 days 90-120 days 120+ days Total $ 372,681 57,302 119,783 549,765 $ - - - - In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. 11. Inventories Oil in inventory Other inventory 12. Other current financial assets Financial assets at fair value through profit and loss - shares in listed corporations Total current financial assets Note 23(d) 13. Property, plant and equipment Plant and Equipment Plant and equipment – at cost Less accumulated depreciation Total Property, plant and equipment Movement in carrying amounts: Movements in the carrying amounts for each class of property, plant and equipment between the beginning and end of the financial year. Opening Balance Additions Impairment of production assets Reclassification to receivables Disposal Depreciation Carrying amount at the end of the year 46 $ 26,270 - 26,270 $ 40,243 8,791 49,034 $ $ 24,939 24,939 24,450 24,450 $ 776,996 (217,593) $ 811,921 (182,809) 559,403 629,112 $ $ 629,112 56,346 - (78,644) - (47,411) 559,403 1,676,758 115,186 (89,983) - (984,392) (88,457) 629,112 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 14. Non current assets (a): Production and development assets SW Queensland Joint operation interest in ATP1189 Naccowlah Block – at cost Less: Amortisation Less: Impairment Note 25 East Queensland PL119 Downlands – at cost Less: Depletion and amortisation Nyuni Block, Tanzania- Kiliwani North Joint operation interest in Nyuni Block - Kiliwani North at cost Less: Amortisation 25 Rehabilitation costs – all petroleum properties All other development assets Total production and development assets 30-Jun-17 30-Jun-16 $ $ 3,123,441 (565,000) (834,259) 3,025,444 (400,000) - 3,818,960 (2,518,609) 3,785,404 (2,518,609) 2,635,813 (200,000) 2,624,512 - 770,533 847,875 1,098,146 7,329,025 1,020,089 8,384,715 Movement in carrying amounts of production & development assets: $ $ Opening balance at the beginning of the year Additions Movement in rehabilitation Reclassification from exploration asset Reclassification to exploration asset of ATP1189 Naccowlah costs Disposal of PL 214 Utopia Impairment of production and development assets (i) Amortisation of production assets Carrying amount at the end of the year 8,384,715 751,764 (77,342) - (456,611) - (834,259) (439,242) 7,329,025 12,011,882 261,061 (463,022) 114,400 - (340,000) (2,859,286) (340,320) 8,384,715 (i) In accordance with the Group's accounting policies and procedures, the Group performs its impairment testing at the end of each reporting period. A number of factors presented indicators of impairment for the ATP 1189 Naccowlah JV during the reporting period ended 30 June 2017, including low average oil prices throughout the period. No other impairments are recognised for this reporting period. Key assumptions used: Crude oil price (US$) Average AUD:USD exchange rate CPI (%) Pre-tax discount rate (%) (b): Exploration and evaluation assets Exploration assets Total exploration and evaluation assets 2017-2019 $58 increasing to $70 $0.785 2.5% 9.0% 25 Movement in carrying amounts of exploration and evaluation assets: Opening balance at the beginning of the year Additions Reclassification from (to) development asset Write off – Exploration and evaluation asset Carrying amount at the end of the year 15. Trade and other payables Current Trade payables Amounts owing to Joint Operations GST, FBT, PAYG & superannuation liability Total trade and other payables 47 2020+ $78 increasing to $109 $0.77 2.5% 9.0% $ $ 9,688,826 9,688,826 9,124,857 9,124,857 $ $ 9,124,857 117,621 456,611 (10,263) 9,688,826 9,218,674 69,466 (114,400) (48,883) 9,124,857 $ $ 171,597 597,682 14,603 783,882 98,170 200,837 176,491 475,498 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 16. Provisions Current - Provision for employee leave entitlement Non-current - Provision for employee leave entitlement Non-current - Rehabilitation costs – petroleum properties 30-Jun-17 $ 30-Jun-16 $ 24,162 24,162 26,764 26,764 8,598 1,281,930 1,290,528 7,373 1,256,114 1,263,487 Movement in provisions Opening balance Unwinding of discount on provision De-recognition of rehabilitation provisions on disposal of petroleum asset Net provisions recognised/(expensed) Balance at the end of the period The provision for rehabilitation costs represents the present value of the Directors’ best estimate of the future sacrifice of economic benefits that will be required to remove the facilities and restore the affected areas at the Group’s operation sites. The rehabilitation of the petroleum properties is expected to be undertaken between 1 to 20 years. The discount rate used in the calculation of the provision as at 30 June 2017 was 3%, broadly equivalent to the Australian Government 10 year bond rate. 1,256,114 25,816 - 8,598 1,290,528 1,731,061 37,110 (506,970) (5,087) 1,256,114 17. Issued capital A reconciliation of the movement in capital for the Company can be found in the Consolidated Statement of Changes in Equity 953,400,982 fully paid ordinary shares (2016: 953,400,982) Nil options transferred to reserve on expiry (2016: Nil) (a) Movement in fully paid ordinary shares Balance at beginning of period Shares issued during the period Balance at end of period $ $ 43,440,163 201,600 43,641,763 43,440,163 201,600 43,641,763 No. of Shares No. of Shares 953,400,982 953,400,982 - - 953,400,982 953,400,982 18. Reconciliation of cash flow from continuing operations Reconciliation of Cash Flow from continuing operations with profit/(loss) after income tax. Profit/(Loss) from continuing operations after income tax $ $ (387,788) (4,427,200) Non-cash flows in profit/(loss) from continuing operations: Unearned income on rental lease Depreciation and Amortisation Unrealised (gain)/loss on listed securities Unrealised foreign exchange (gain)/loss Movement in provisions Bad and doubtful debts (Profit)/loss on sale of property,plant & equipment Write-off of exploration assets Impairment of petroleum production assets Accrued interest income (Increase) in trade and other receivables Decrease in financial assets through profit and loss (Increase)/Decrease in inventory Movement in rehabilitation obligation Increase/(Decrease) in trade & other payables Net Cash from continuing operations 48 8,832 486,653 5,621 20,193 5,996 13,000 - 10,263 834,259 (819) (1,125,264) (6,110) 122 100,058 (330,228) (365,212) - 428,777 69,245 (7,555) 37,110 - (207,198) 48,883 2,949,269 - (5,470) (5,344) (9,385) 89,320 351,426 (688,122) Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 19. Share based payments 2017 No share based payment compensation was granted to directors or senior management during the financial year ended 30th June 2017 and there was Nil expensed (2016: Nil). During the year, no directors or senior management exercised options that were granted to them as part of their compensation in prior periods. 2016 No share based payment compensation was granted to directors or senior management during the financial year ended 30th June 2016 and there was Nil expensed. During the year, no directors or senior management exercised options that were granted to them as part of their compensation in prior periods. 20. Key management personnel a) Key Management Personnel Compensation The aggregate remuneration made to Key Management Personnel of the group is set out below: Short term employee benefits Share based payments Total 30-Jun-17 $ 30-Jun-16 $ 578,081 - 578,081 607,962 - 607,962 Apart from the details disclosed in this note, no director or key management person has entered into a material contract with the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ or executives’ interests existing at year-end. Information regarding individual directors' and executives' compensation and some equity instrument disclosures as permitted by the Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors' Report. b) Equity Instrument Disclosures Relating to Key Management Personnel i) Options provided as remuneration and shares issued on exercise of such options: Nil ii) Share holdings The movement during the reporting period in the number of ordinary shares in Bounty Oil and Gas N.L. held, directly, indirectly or beneficially, by each key management person, inculding related parties, is as follows: 2017 Directors G Reveleigh R Payne C Ross Executives P Kelso 2016 Directors G Reveleigh R Payne C Ross Executives P Kelso Balance at Start of the Year Purchases Received on exercise of Options Received other Sales Held at the end of Year 23,377,928 - 3,200,000 - - - 23,377,928 - - - - - - - 3,200,000 - - 52,040,836 849,153 - - - 52,889,989 23,377,928 - - - - 23,377,928 - - - - - - 3,200,000 - - - - 3,200,000 52,696,662 - - - 655,826 52,040,836 No shares were granted to key management personnel during the financial year or during the previous financial year. c) Key Management Personnel - Joint operations advances No loans were made to key management personnel including their personally related entities during the financial year ended 30 June 2017 and no loans were outstanding at the end of the prior period, except that during the year, the Group advanced sums totalling $104,107 to the Operator of joint operations in which the Group has petroleum interests. The CEO Mr. P. Kelso is a director of the Operator. The advances were made in the ordinary course of business to support the joint operation activities. 49 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 20. Key management personnel (continued) d) Other transactions with key management personnel Other than the transactions disclosed in the Remuneration Report contained in the Directors’ Report, during the financial year, $30,000 was paid for rent and $17,868 was paid in legal fees to a firm in which Mr. P. Kelso is a principal . Aggregate amounts of each of the above types of other transactions with entities associated with key management personnel of Bounty Oil & Gas NL: Legal, corporate fees Rent of office 21. Commitments 30-Jun-17 $ 17,868 30,000 47,868 30-Jun-16 $ - 30,000 30,000 In order to maintain current rights of tenure to its exploration permits, the company has certain obligations to perform work in accordance with the work programmes, as approved by the relevant statutory body, when the permits are granted. These work programs form the exploration commitment which may be renegotiated, varied between permits, or reduced due to farm-out, sale, reduction of exploration area and/or relinquishment of non-prospective permits. Work in excess of the work programs may also be undertaken. The following discretionary exploration expenditure requirements have not been provided for in the accounts: Payable Not longer than 1 year Longer than 1 year and not longer than 5 years There are no lease commitments at the balance date. 22. Related party transactions a. The Group’s main related parties are as follows: Key Management Personnel $ 1,236,046 3,090,115 4,326,161 $ 650,000 2,275,000 2,925,000 Any person(s) having authority or responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group are considered as key management personnel. Disclosures relating to key management personnel are set out in Note 20 and in the Directors Report. Controlled entities Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 24. All inter-company loans and receivables are eliminated on consolidation and are interest free with no set repayment terms. b. Transactions with other related parties: The Group has a related party relationship with its joint ventures/joint operations (note 25) and with its key management personnel. The Company and its controlled entities engage in a variety of related party transactions in the ordinary course of business. These transactions are generally conducted on normal terms and conditions. There were no transactions with related parties other than as disclosed in Note 20 and this Note 22. 23. Financial instruments a) Capital management: The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders. The Group’s overall strategy remains unchanged from last financial year.The Group's capital structure consists of equity (comprising issued capital, reserves and retained earnings as detailed in Consolidated Statement of Changes in Equity) and no debt. The Group is not subject to any externally imposed capital requirements. The Board reviews the capital structure of the Group on an on-going basis. As part of this review, the Board considers the cost of capital and associated risks. 50 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 23. Financial instruments (continued) The gearing ratio at the end of the reporting period was nil (2016: nil). b) Categories of financial instruments: Financial assets Cash and cash equivalents Loans and receivables Available for sale financial assets designated as at FVTPL Total financial assets Note 12 Financial liabilities Other amortised cost - trade creditors Total financial liabilities 30-Jun-17 30-Jun-16 $ 1,024,462 1,359,926 24,939 2,409,327 $ 1,760,668 89,092 24,450 1,874,210 (783,882) (783,882) (475,498) (475,498) c) Financial risk management objectives: The main risks the company is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk. Foreign currency risk: Foreign currency risk is managed by retaining majority of its cash and payables in Australian currency. Petroleum sales are received in USD with short term credit terms. Liquidity risk: The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Credit risk: The Group has adopted a policy of only dealing with credit worthy counterparties and only transacts with financial institutions that are rated the equivalent of AA and above. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and transactions concluded are spread amongst approved counterparties. Trade receivables consist of a limited number of customers, all of which are large creditworthy organisations. The Company does not have any material credit risk exposure to any single debtor or company of debtors under financial instruments or collateral securities entered into by the Company. Commodity risk: The sales revenue of the company is derived from sales of oil at the prevailing TAPIS or Dated Brent oil price on the Singapore market in USD. Natural gas sales are governed by a fixed price contract. Sales volumes are not sufficient to undertake the expense of entering derivative contracts to manage that risk. d) Fair value of financial instruments: Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used). The fair values of financial assets and liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. The fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis. Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. Consolidated Note Fair value hierarchy 30-Jun-17 $ 30-Jun-16 $ Financial assets at fair value through profit or loss Quoted bid prices in an active market 12 Level 1 24,939 24,450 e) Sensitivity analysis The company does not perform sensitivity analysis with respect to interest rate risk, foreign currency risk, liquidity risk, credit risk or price risk. 51 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 24 . Controlled entities The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with the accounting policy described in note 2 (c)(i). Name of entity Ausam Resources Pty Ltd. Interstate Energy Pty Ltd. Country of Incorporation Australia Australia Class of shares Ordinary Ordinary 30-Jun-17 30-Jun-16 Equity holding % (1) 100 100 100 100 (1) The proportion of ownership interest is equal to the proportion of voting power held. Principal activity Production Principal place of business Measurement Method Proportionate Adelaide, Australia 25. Interest in joint operations Set out below are the joint arrangements of the Group as at 30 June 2017, which in the opinion of the directors are material to the Group: Name of the joint arrangement ATP 1189P Naccowlah block Nyuni PSA Kiliwani North ATP 754P PEP11 The Group’s joint operations agreements require majority consent from all parties for all relevant activities. The joint participants own the assets of the joint operations as tenants in common and are jointly and severally liable for the liabilities incurred by the joint operations. These entities are therefore classified as joint operations and the group recognises its direct right to the jointly held assets, liabilities, revenues and expenses as described in note 2(c)(ii) & 2(d). Proportionate Dar es Salaam, Tanzania Proportionate Dar es Salaam, Tanzania Proportionate Brisbane, Australia Proportionate Perth, Australia Exploration Production Exploration Exploration Ownership interest (%) (*approx) 10% 9.5%* 50% 15% 10% 9.5%* 50% 15% 2% 2% The accounting policies adopted for the group’s joint operations are consistent with those in previous financial year. The company’s share of revenue and expenses from joint operations are included in the Consolidated Statement of Comprehensive Income. The company’s share of the assets and liabilities held in joint operations are included in the Consolidated Statement of Financial Position. The company holds significant petroleum production and development joint operations interests included in the Consolidated Statements as follows: (i) a 9.5% interest in Kiliwani Gas Development Block as part of larger, the Nyuni Block in Tanzania. (ii) a 2% interest in various Petroleum Leases and part of ATP 1189P, Queensland and associated oil production tangibles and pipelines referred to as the Naccowlah Block. Details of the total revenue and expenses derived from or incurred in Kiliwani Gas Development Block and ATP 1189P joint operations and the company’s share of the assets and liabilities employed in these joint operations are as follows: $ $ Revenue from petroleum Petroleum and all other expenses Net Profit/(Loss) from joint operations Current assets Trade receivables Inventories Non current assets Property, plant & equipment (net of accumulated depreciation) Other non-current assets Total assets in joint operations Current liabilities Trade and other payables Non current liabilities Provisions Total liabilities in joint operations Net interest in joint operations 52 2,677,801 (1,108,289) 1,569,512 1,077,497 (1,532,830) (455,333) 1,169,722 26,270 504,228 4,926,296 6,626,516 56,658 49,035 492,327 6,082,891 6,680,911 525,832 200,837 1,049,917 1,575,749 1,038,789 1,239,626 5,050,767 5,441,285 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 25. Interest in joint operations (continued) Interests in other joint operation entities Also included in the Consolidated Financial Statements as at 30 June 2017, the group held interests in joint operations whose principal activities were exploration, evaluation and development of oil and gas but not accruing material revenue. The company contributes cash funds to the joint operations by way of cash calls for a specified percentage of total exploration and development activities. Other than the ATP1189P Naccowlah Block and Kiliwani North, Tanzania production Joint Operations none of the joint operations hold any material assets and accordingly the Company’s share of exploration, evaluation and development expenditure is accounted for in accordance with the policy set out in Note 1. 26. Parent entity information The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are same as those applied in the consolidated financial statements. Refer to Note 1 for a summary of the significant accounting policies relating to the Group. After review of policies, the Board resolved to reclassify the intercompany loans to controlled entities as non current assets. The individual financial statements for the parent entity Bounty Oil & Gas NL show the following aggregate amounts: Statement of Financial Position Assets Current assets Non-current assets Total Assets 2,173,027 18,839,432 21,012,459 30-Jun-17 $ 30-Jun-16 $ 6,649,795 14,400,508 21,050,303 795,621 1,096,721 1,892,342 19,120,117 509,411 1,075,373 1,584,784 19,465,519 43,440,163 201,600 (24,521,646) 19,120,117 43,440,163 201,600 (24,176,244) 19,465,519 (345,401) - (345,401) (4,401,841) - (4,401,841) 1,083,546 2,708,865 3,792,411 450,000 1,800,000 2,250,000 Liabilities Current liabilities Non-current liabilities Total Liabilities Net Assets Equity Issued capital Reserves Retained earnings/Accumulated losses Total Equity Statement of Profit and Loss and other Comprehensive Income Loss for the year Other comprehensive income/(loss) Total Comprehensive loss for the year Commitments for Capital Expenditure No longer than 1 year Longer than 1 year and not longer than 5 years Total There are no operating lease commitments at the balance date. 53 Bounty Oil & Gas NL Annual Report – 2017 Notes to the consolidated financial statements for the year ended 30 June 2017 27. Contingent liabilities and contingent assets As at the date this report, there were no contingent assets or liabilities, other than the exploration commitments set out in Note 21 and the following: There is no other litigation against or involving Bounty Oil & Gas N.L. or its subsidiaries of which the Directors are aware. 28. Events occurring after the reporting period No matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. other than the litigation with OWK referred to in Contingent liabilities and contingent assets above. 29. Auditors remuneration Remuneration of the auditors of the Company for: - Auditing or reviewing the financial reports for year - Other services 30-Jun-17 $ 26,500 - 26,500 The auditor to Bounty Oil & Gas NL is William M Moyes, Suite 1301, Level 13, 115 Pitt Street, Sydney NSW 2000. 30-Jun-16 $ 48,000 - 48,000 30. Company details Bounty Oil & Gas NL’s registered office and its principal place of business are as follows: Registered Office Level 7, 283 George Street, Sydney, NSW, 2000, Australia Tel: (02) 9299 7200 Principal place of business Level 7, 283 George Street, Sydney, NSW, 2000, Australia Tel: (02) 9299 7200 54 Bounty Oil & Gas NL DIRECTORS’ DECLARATION Annual Report – 2017 a) The directors of Bounty Oil and Gas NL (“the Company”) declare that the financial statements and notes, as set out on pages 16 to 42 are in accordance with the Corporations Act 2001: (i) comply with Accounting Standards and the Corporations Regulations 2001; and (ii) give a true and fair view of the financial position as at 30th June 2017 and of the performance for the year ended on that date of the Company; b) The Chief Executive Officer and the Chief Financial Officer have each declared that: (i) The financial records of the company for the financial year have been properly maintained in accordance with Section 286 of the Corporations Act 2001. (ii) The financial statements and notes for the financial year comply in all material respects with the Accounting Standards; (iii) The financial statements and notes give a true and fair view. c) In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Graham Reveleigh Director Dated: 29 September 2017 55 Bounty Oil & Gas NL Annual Report – 2017 1. Additional Information Required by ASX Listing Rules The following is additional information provided in accordance with the Listing Rules of the Australian Securities Exchange Limited. Analysis of equity security holders as at 25 September 2017: a) Analysis of numbers of holders of fully paid ordinary shares: No. of Securities 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and above No. of Shareholders 206 118 447 1,753 1,043 3,567 b) Twenty largest holders of quoted equity securities at 25 September 2017: Ordinary Shareholders Comadvance Pty Ltd. Robert A Hutchfield Red Kite Capital Inc. Les Selwood Pty Ltd. David Alan McSeveny Bang Vi Khanh Tri-Ex Holdings Pty Ltd. WH Ave LLC G E Reveleigh & Co Pty Ltd. Kestrel Petroleum Pty Ltd. Barry Sheedy & Associates Pty Ltd. Granborough Pty Ltd. Level 1 PL Ann Spooner Jordan Vujic William John & S Tyler Simon Saliba GH Corporate Services Pty Ltd Robert Cameron Galbraith Milica Vujic 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Fully paid number 45,590,563 34,580,200 27,022,000 21,517,764 24,063,006 19,480,000 19,177,778 18,000,000 17,479,118 15,175,000 13,893,700 12,000,000 11,284,254 7,772,217 7,023,826 7,000,000 7,000,000 6,783,061 6,500,000 6,017,870 % 4.78% 3.63% 2.83% 2.26% 2.52% 2.04% 2.01% 1.89% 1.83% 1.59% 1.46% 1.26% 1.18% 0.82% 0.74% 0.73% 0.73% 0.71% 0.68% 0.63% Total Top 20 Holders 327,360,357 34.34% c) Options at 25 September 2017: i) ii) there were no listed and quoted options over ordinary shares. there were no unlisted options over ordinary shares. 60 Bounty Oil & Gas NL Annual Report – 2017 2. Substantial Shareholders As at 25 September 2017 there were no substantial shareholders as disclosed in substantial shareholders notices given to the company. 3. Issued Shares and Distribution a) The total number of fully paid ordinary shares on issue on 25 September 2017 was 953,400,982. b) There were 2,276 holders of less than a marketable parcel of ordinary shares, totalling 55,500,138 shares. c) The percentage of the total holding of the 20 largest shareholders of ordinary shares was 34.34% of issued capital. 4. Stock Exchange Listing Quotation has been granted for all the ordinary shares of the company on the Australian Securities Exchange (ASX) under the code BUY. 5. Income Tax The company is taxed as a public company. 6. Voting Rights On show of hands one vote for every registered Shareholder and on a poll, one vote for each share held by a registered Shareholder. 7. Additional Information Information in these financial statements (or in the annual report) that relates to or refers to petroleum exploration and prospectivity or petroleum or hydrocarbon reserves or resources is based on information compiled and/or written by Mr Philip F Kelso the CEO of Bounty Oil & Gas NL. Mr Kelso is a Bachelor of Science (Geology) and has practised geology and petroleum geology for in excess of 40 years. He is a member of the Petroleum Exploration Society of Australia and a Member of the Australasian Institute of Mining and Metallurgy. Mr Kelso is a qualified person as defined in the ASX Listing Rules: Chapter 19 and consents to the reporting of that information in the form and context in which it appears in this report. The company continues to comply with the ASX Listing Rules disclosure requirements. The company reports to ASX which makes available all reports to those who wish to access them. All ASX releases and other background information are posted regularly on the company’s website. The company intends to post on its website its annual report and all other required notices to its shareholders. The board reviews and receives advice on areas of operational and financial risks. Business risk management strategies are developed as appropriate to mitigate all identified risks of the business. The directors are aware of the guidelines for the content of a code of conduct to guide compliance with legal and other obligations to shareholders but have not formally established such a code. Where applicable to its activities, the directors ensure that the company is responsible to its shareholders, employees, contractors, advisers, individuals and the community. 8. Secretary The name of the Secretary of the company is Sachin Saraf. 9. Share Buy Back There is no current on market share buy back. 61 Bounty Oil & Gas NL Annual Report – 2017 Schedule of Petroleum Tenements - 19 September 2017 Permit Basin Interest Gross km2 Net km2 Operator Australia Offshore AC/P32 PEP 11 Australia Onshore PRL 33 – PRL 49 FO inclusive replacing EL 218 (Post Permian) ATP 1189P (formerly 259P) Naccowlah Block PL 23 PL 24 PL 25 PL 26 PL 35 PL 36 PL 62 PL 76 PL 77 PL 78 PL 79 PL 82 PL 87 PL 105/PL 287 PL 496 (ex PL 107) PL 495 (ex PL 109) PL 133 PL 149 PL 175 PL 181 PL 182 PL 189 Ashmore Cartier Territory - Vulcan Basin 100% 336 336 Bounty NSW - Sydney Basin 15% 4,577 686.5 Asset Energy PL8 SA – Cooper - Eromanga Basin. 23.28% 1,603.5 373.3 Beach Energy1 SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. SW Qld – Cooper - Eromanga Basin. 62 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1,064.5 21.3 Santos 2 234.6 200.9 256 255.9 136.5 60.9 64.7 39.5 12.2 12.1 6.5 10.4 27.5 12.2 12.2 9.2 12.2 12.2 27.5 18.3 27.5 18.3 4.7 4.0 5.1 5.1 2.7 1.2 1.3 0.8 0.2 0.2 0.1 0.2 0.6 0.2 0.2 0.2 0.2 0.2 0.6 0.4 0.6 0.4 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Santos 2 Bounty Oil & Gas NL Annual Report – 2017 PL 302 PL 2 Alton Oilfield PL 2A PL 2B PL 2C PL 119 (PL 441) ATP 1190 (SG) (4) ATP 754P PPL 58 Pipeline Licence6 EP 359 EP 435 PL 104-L16 (Petroleum Lease) Tanzania Offshore Nyuni Block Kiliwani North Development Block Total SW Qld – Cooper - Eromanga Basin. Qld - Surat Basin Qld - Surat Basin Qld - Surat Basin Qld - Surat Basin Qld - Surat Basin Qld - Surat Basin Qld - Surat Basin Qld – Surat Basin WA - Carnarvon Basin WA - Carnarvon Basin WA - Carnarvon Basin 2% 100% 81.75% 81.75% 100% 100% 24.748% 50% 100% 10% 10% 10% 12.2 16 66.8 136.7 45.2 21.4 15.3 833 555 238 79.1 0.2 16 54.6 111.7 16.5 21.4 3.8 416.5 55.5 23.8 7.9 Santos 2 Bounty Bounty Bounty Bounty Ausam AGL Ausam7 Ausam7 Rough Range 3 Rough Range 3 Rough Range 3 Mandawa Basin Mandawa Basin 10% 9.5% 1,682 168.2 Ndovu5 168 16.8 Ndovu5 12,917 2,359.20 1. Beach Energy Limited 2. Santos Limited group companies 3. Rough Range Oil Pty Ltd. 4. (SG) – Spring Grove joint venture block 5. Ndovu Resources Limited (a subsidiary of Aminex PLC) 6. Pipeline Licence 58 7. Ausam Resources Pty Ltd is a wholly owned subsidiary of Bounty Oil & Gas NL 8. Asset Energy Pty Ltd is a wholly owned subsidiary of Advent Energy Ltd 63 Bounty Oil & Gas NL Annual Report – 2017 ABBREVIATIONS The following definitions are provided for readers who are unfamiliar with industry terminology: AVO Barrel (bbl/BBL) Specialised analysis of seismic data comparing amplitude of sound waves versus collection point offsets A unit of volume of oil production, one barrel equals 42 US gallons, 35 imperial gallons or approximately 159 litres Basin BCF/Bcf BOPD/BPD A segment of the earth’s crust which has down warped and in which sediments have accumulated, such areas may contain hydrocarbons. Billion cubic feet, i.e. 1,000 million cubic feet (equivalent to approximately 28.3 million cubic metres) of gas. Barrels of oil per day; barrels per day. Contingent Resources Discovered resources, not yet fully commercial CSG GIIP Lead License MCF/Mcf MDRT MMB/mmb, MMBO/mmbo MMCF/mmcf, MMCFG/mmcfg, MMCFGPD/mmcfgpd P10 P90 Coal seam gas. Gas initially in place A structural or stratigraphic feature which has the potential to contain hydrocarbons An agreement in which a national or state government gives an oil Company the rights to explore for and produce oil and/or gas in a designated area. Thousand cubic feet – the standard measure for natural gas. Measured depth below Rotary Table Million barrels, million barrels of oil. Million cubic feet, million cubic feet of gas, million cubic feet of gas per day 10% probability of occurrence 90% probability of occurrence Permeability The degree to which fluids such as oil, gas and water can move through the pore spaces of a reservoir rock. Permit Play A petroleum tenement, lease, licence or block. A geological concept which, if proved correct, could result in the discovery of hydrocarbons. Plug and Abandon (P&A) The process of terminating operations in a well. Cement plugs are set in the borehole and the rig moves off the location. The borehole is thus left in a safe condition. In some cases, where the Operator considers it possible that the well may be re-entered at a later date, the well may be only temporarily plugged and abandoned. Pmean The average (mean) probability of occurrence 64 Bounty Oil & Gas NL Annual Report – 2017 Porosity The void space in a rock created by cavities between the constituent mineral grains. Liquids are contained in the void space. Prospect (petroleum) A geological or geophysical anomaly that has been surveyed and defined, usually by seismic data, to the degree that its configuration is fairly well established and on which further exploration such as drilling can be recommended. Prospective Resources Undisclosed resources PSA PSC PRL Reserves Reservoir Production Sharing Agreement Production Sharing Contract Petroleum Retention Lease Quantities of economically recoverable hydrocarbons estimated to be present within a trap, classified as prove, probably or possible. A subsurface volume of rock of sufficient porosity and permeability to permit the accumulation of crude oil and natural gas under adequate trap conditions. Seal, Sealing Formation A geological formation that does not permit the passage of fluids. Refer also to Cap Rock. Seismic Survey A type of geophysical survey where the travel times of artificially created seismic waves are measured as they are reflected in a near vertical sense back to the surface from subsurface boundaries. This data is typically used to determine the depths to the tops of stratigraphic units and in making subsurface structural contour maps and ultimately in delineating prospective structures. Spud To start the actual drilling of a well. Stratigraphic Trap A type of petroleum trap which results from variations in the lithology of the reservoir rock, which cause a termination of the reservoir, usually on the up dip extension. Structure Sub-basin TCF/Tcf TVDS Up-dip A discrete area of deformed sedimentary rocks, in which the resultant bed configuration is such as to form a potential trap for migrating hydrocarbons. A localised depression within a basin. Trillion cubic feet. Total vertical depth below Sea Level At a structurally higher elevation within dipping strata. 65 Bounty Oil & Gas NL Annual Report – 2017 CORPORATE DIRECTORY Board of Directors Share Registry Graham C Reveleigh (Chairman) Charles Ross Roy Payne Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross, WA, 6153 Chief Executive Officer Philip F. Kelso Company Secretary Sachin Saraf Telephone: Facsimile: Email: registrar@securitytransfer.com.au +61 3 9628 2200 +61 8 9315 2233 Bankers BankWest, Sydney Commonwealth Bank of Australia, Sydney Registered and Principal Office Legal Counsel Level 7 , 283 George Street, Sydney, NSW, 2000, Australia, Telephone: +61 2 9299 2007 +61 2 9299 7300 Facsimile: corporate@bountyoil.com Email: www.bountyoil.com Website: Dentons Australia 77 Castlereagh Street Sydney, NSW, 2000 Independent Consulting Petroleum Engineers NauticAWT Level 10, 300 Ann Street, Brisbane, QLD, 4000. Apex Energy Consultants Inc, 700, 815 8th Avenue S.W. Calgary, Alberta, T2P 3P2 Canada Auditors William M Moyes Suite 1301 , Level 13 115 Pitt Street Sydney NSW 2000 Telephone: +61 2 8256 1100 Facsimile: +61 2 8256 1111 66 

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