BROOKSIDE ENERGY LIMITED
ACN 108 787 720
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 2023
CONTENTS
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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CORPORATE DIRECTORY
NON-EXECUTIVE CHAIRMAN
Michael Fry
MANAGING DIRECTOR
David Prentice
NON-EXECUTIVE DIRECTOR
Richard Homsany
NON-EXECUTIVE DIRECTOR
Chris Robertson
GROUP SECRETARY
Katherine Garvey
REGISTERED OFFICE
Level 3, 88 William Street,
Perth Western Australia 6000
POSTAL ADDRESS
GPO Box 2570
Perth Western Australia 6001
PRINCIPAL PLACE OF BUSINESS
Level 3, 88 William Street,
Perth Western Australia 6000
Tel: (08) 6489 1600
Email: info@brookside-energy.com.au
WEBSITE
www.brookside-energy.com.au
AUDITORS
Hall Chadwick Audit (WA) Pty Ltd
283 Rokeby Road
Subiaco WA 6008, Australia
LAWYERS
Cardinal Lawyers and Consultants
60 Havelock Street
West Perth WA 6005
SHARE REGISTRY
Automic Registry Services
Level 2, 267 St Georges Terrace
Perth WA 6000
Tel: 1300 288 664 (Local)
Tel: (02) 9698 5414 (International)
Email: www.automic.com.au
SECURITIES EXCHANGE LISTING
Australian Securities Exchange
Level 40, Central Park
152-158 St George's Terrace
Perth WA 6000
ASX CODE
BRK
(Fully Paid Ordinary Shares)
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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DIRECTORS’ REPORT
The Directors submit their report for the Group and its subsidiaries (Group or Group) for the financial
year ended 31 December 2023. In order to comply with the provisions of the Corporations Act, the
directors’ report is as follows:
DIRECTORS
The names and details of the Group’s directors in office during the financial year and until the date of
this report are as follows. Directors were in office for the entire period unless otherwise stated.
Name
Michael Fry
David Prentice
Richard Homsany
Chris Robertson
Position
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director (Appointed 1 March 2024)
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The Group’s principal activities during the year were the exploration, production and appraisal of oil
and gas projects.
OPERATING RESULT
The after-tax profit for the Group for the financial year ended 31 December 2023 amounted to
$16,647,566 (2022: $15,096,105 after-tax profit).
DIVIDENDS
There were no dividends paid or recommended during or subsequent to the financial year ended 31
December 2023 (2022: Nil).
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REVIEW OF OPERATIONS
During the full year ended 31 December 2023, the Group continued to successfully pursue its
efforts to create value per share by prospecting for, acquiring, proving-up and monetising oil and
gas assets in the world-class Anadarko and Ardmore Basins in Oklahoma, USA.
The Group had gross operated production for the year of 834,296 BOE and Group net volumes
(including non-operated production) of 509,921 BOE (net to our Working Interest and after the
deduction of royalties). The Group finished the December 2023 Quarter with gross operated daily
production of 2,269 BOE per day and Group net production (including non-operated production)
of 1,410 BOE per day including 64% liquids (net to our Working Interest and after the deduction of
royalties).
Figure 1. Brookside Energy’s net production grew by 33% year-on year
During the year Brookside produced its one millionth BOE, including 715,000 BBLS of liquids, less
than 2 years since its first operated well came on production, with cumulative gross operated
production at 31 December 2023 exceeding 1.61 MMBOE.
Two wells were brought on production during the year, one in each of the SWISH and Bradbury
AOIs. The Wolf Pack Well, the first well in Brookside’s Phase Two Development Drilling program,
was our most successful well to date reaching a peak rate (IP24) of 2,034 BOE per day (88% liquids,
12% gas), a record IP24 rate for the Group. The Juanita Well, our first exploration well in the
Bradbury AOI, was brought on production after successful completion and comingling of two
separate sands in the highly productive Simpson Group, with a peak oil rate of 130 BBL per day.
During the year the Group also, announced Independent Certification of the SWISH AOI Reserves,
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DIRECTORS’ REPORT
delivering 11.9 million BOE of Proved and Probable Reserves (2P) net to Brookside’s Working
Interest and net of royalties (Net Reserves) (Refer ASX release dated 26 April 2023).
Towards year-end, the Group announced its most ambitious growth initiative to date, the Flames-
Maroons Development Plan (FMDP), a transformational multi-well drilling program with our Flames
DSU, which will see the Group monetise ~17% of our Net Reserves, and grow our Net production
to ~2,500 BOEPD (78% liquids) by the fourth quarter of 2024.
The Group’s activities continued to focus primarily on two world-class oil and gas plays – STACK
and SCOOP. The STACK (Sooner Trend, Anadarko Basin, Canadian and Kingfisher Counties) and
SCOOP (South Central Oklahoma Oil Province) Plays are being developed using modern
horizontal drilling and completion techniques targeting the Mississippian aged formations (that sit
above the Woodford Shale) and the Woodford Shale itself (which the organic rich source rock
for the hydrocarbons in the basin).
Our flagship SWISH AOI is in the core of the SCOOP Play (Figure 2).
Figure 2. Brookside Project, Oklahoma
The Group ended the year with an interest in seventy-three wells and royalty interest in one DSU
targeting the productive formations of the Anadarko Basin (see Table 1).
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DIRECTORS’ REPORT
SWISH AOI Operated Wells
The Group currently operates four wells in the SWISH AOI: the Jewell 13-12-1S-3W SXH1, Rangers
36-25-SXH1, Flames 3-10-1S-3W WXH1 and Wolf Pack 36-25-1S-4W SXH 2 Wells. All wells were on
production during the year with sales from the Wolf Pack Well established in February. Gross
production for these four wells for the quarter totalled 819,083 BOE with cumulative gross
production to 31 December 2023 of 1.6 million BOE (Figure 3).
Figure 3: Cumulative production as at 31 December 2023 for the Jewell, Rangers, Flames and Wolf Pack Wells.
SWISH AOI Operated Wells Cumulative Production
Well Name
Production
Date
Oil (BBL)
Gas (Mcf)
NGL (BBL)
BOE
Jewell
Rangers
Flames
31/08/2021
198,372
1,404,401
152,783
30/04/2022
193,861
514,991
31/07/2022
124,330
500,607
Wolfpack
28/02/2023
228,830
465,799
84,853
59,311
79,738
585,222
364,546
267,076
386,201
Total
745,394
2,885,799
376,685
1,603,045
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DIRECTORS’ REPORT
Brookside’s SWISH AOI operated wells are all producing at or above pre-drill estimates and are
on trend to meet or exceed our forecast EUR’s. Two of the wells have already achieved pay-out
and the others are on track to achieve this important milestone as modelled.
Flames-Maroons Development Plan (FMDP)
With the announcement of the transformational four-well FMDP drilling program, the Group
signalled its intent to begin monetisation of the 11.9MMBOE of low-cost, high-margin, liquids rich
reserves contained within its SWISH AOI. With Brookside as Operator, the multi-well program will
concurrently develop the Sycamore and Woodford formations in the Flames DSU (Figures 4, 5 and
6).
Figure 4: 3D image highlighting the “wine rack” style development of the Sycamore and Woodford formations within the
Flames DSU
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DIRECTORS’ REPORT
This development path is modelled on the very encouraging results delivered from the
neighbouring Continental Resources' Courbet full field development, which is situated
immediately adjacent to and south of our Flames DSU (Figures 4 and 5). This successful 15-well
program to simultaneously develop the Sycamore and Woodford formations has now been on
production for approximately 6-months and it has already produced in excess of 2,000,000 barrels
of oil and 11 BCF of rich gas. The success of the Courbet development, combined with the recent
normalisation of service costs, a positive outlook for oil and gas prices in 2024 and beyond, and
the success of the Group as Operator in the SWISH AOI provided further support for the FMDP.
Figure 5: Location of the Sanford Pad and the four FMDP wells: Fleury, Maroons, and Iginla Wells (to be drilled from the Sanford
Pad), and the Rocket Well (to be drilled from the existing Flames Well pad). Also shown are Continental Resources Courbet
Wells full field development showing the strong performance of both the Woodford wells (well names ending with HXW) and
Sycamore wells (well names ending in HXM).
The FMDP is forecast to produce 715,000 BOE Net to Brookside in its first year of operation and
average ~2,000 BOEPD Net over the same period. In addition to the Group’s current production
trajectory Brookside estimates a total Brookside Net production rate of ~2,500 BOEPD (78% liquids)
by the fourth quarter of 2024.
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DIRECTORS’ REPORT
Capital expenditure for the FMDP, inclusive of drilling, completion, surface production facilities
and tie-in, is estimated at US$40m (US$26m Net to Brookside’s Working Interest, subject to
finalisation of Working Interests through spacing pooling applications and related OCC
proceedings). Brookside’s operating subsidiary will be the operator of the FMDP and a number of
highly successful, well-funded private Oklahoma based E&P companies will be participating
alongside Brookside for their respective Working Interests.
Figure 6: Location map showing Brookside’s four operated SWISH AOI DSU’s, FMDP wells, and Continental Resources Courbet
Wells full field development south of the Flames DSU and Continental Resources Gapstow Well south of the Bruins and Jewell
DSUs.
Funding for Brookside’s Working Interest share of the FMDP will come from existing cash reserves
and cashflow from operations.
The FMDP initiative will see a surge in cash flow as the wells are brought online simultaneously and
given the well payout profile, we anticipate that this will provide the funding platform for the
subsequent phases of development in the three remaining DSUs (Bruins, Jewell, and Rangers) plus
other potential growth opportunities.
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DIRECTORS’ REPORT
Pre-work and planning for the FMDP commenced prior to the year end, with regulatory approvals
required for the commencement of operations well advanced, an IADC contract for the drilling
of four horizontal wells within the Flames DSU signed with Kenai Drilling Limited, and surface rights
for a multi-well, all-weather, off unit location (the ‘Sanford Pad’) acquired. Three wells will be
drilled from the Sanford Pad, which has been constructed (the Fleury, Maroons, and Iginla Wells)
and the fourth well (the Rocket Well) will be drilled from the existing Flames Well pad.
Land and Leasing
During the year the Group continued to evaluate new acreage opportunities and actively pursue
leasing and regulatory applications in the Oklahoma Corporation Commission (OCC) within the
SWISH AOI.
Brookside further consolidated its position in the prized Woodford “Oil Window” of the SWISH AOI
with the addition of ~400 gross acres adjacent to and north of Continental Resources’ successful
Courbet wells (full field development) and its Gapstow well (see Figures 5 and 6). This acreage
addition expanded Brookside’s holding in the core of the Woodford “Oil Window” by 12.5%.
As at 31 December 2023, the Group had ~5,015 Working Interest leasehold acres (~4,895 acres
within the SCOOP and STACK and ~120 acres associated with the Bradbury DSU in Murray County,
approximately 20 miles east-northeast of the Jewell DSU).
Production and Revenue
By the end of December, the Group had four operated SWISH wells on production; the Jewell,
Rangers, Flames and Wolf Pack wells. The Wolf Pack well was the first well in Brookside’s Phase
Two Development Drilling program and its most successful well to date reaching a peak rate
(IP24) of 2,034 BOE per day (88% liquids, 12% gas), a record IP24 rate for the Group.
The Group finished the year with gross operated production of 2,269 BOE per day and Group net
production (including non-operated production) of 1,410 BOE per day (net to our Working Interest
and after the deduction of royalties), a 33% increase year-on-year.
Gross operated and group net volumes for the year are summarised below (net volumes are
attributable to the Group’s Working Interest and net of royalties). Note volumes are reported on
a three-stream basis i.e., oil, natural gas liquids and shrunk gas (converted to BOE on an energy
equivalent basis)
Description
Gross Operated Volumes (BOE)
Group Net Volumes (BOE)
Total
Liquids
834,296
509,921
70%
69%
During the year Brookside produced its one millionth BOE, including 715,000 BBLS of liquids, less
than 2 years since its first operated well came on production, with cumulative gross operated
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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production at 31 December 2023 exceeding 1,61 MMBOE. The Group also commenced
production from the Juanita Well, its first exploration well in the Bradbury AOI, with a peak oil rate
of 130 BBL per day.
CORPORATE
Share Buy-Back
During the full year, the Group commenced an on-market buy-back of shares in the Group (Share
Buy-Back). The Share Buy-Back was conducted within the “10/12 limit” permitted by the
Corporations Act 2001. As at 31 December 2023 the Group had purchased 243,764,449 shares.
SUBSEQUENT EVENTS
On 9 January 2024, the Group announced the completion of the on-market buy back of its fully
paid ordinary shares that was announced 26 April 2023 (the Share Buy-Back). The Group acquired
a total of 249,999,999 shares or approximately 5% of the pre Share Buy-Back issued capital at a
cost of A$3.13 million and a Volume Weighted Average Price (VWAP) of $0.0125.
On 19 February 2024, the Group announced that the FMDP multi-well drilling program had
successfully commenced with the spudding of the first of four wells. Mobilisation of Kenai Rig 19
was completed with the drill rig safely setup and tested ahead of schedule. The rig was positioned
over the Iginla Well and drilling of the surface hole had commenced.
On 23 February 2024, the Group announced the appointment of Mr. Chris Robertson as a non-
executive director of the Group and the acquisition of the remaining back-in interest in its
controlled subsidiary Black Mesa Energy.
No other matters or circumstances have arisen since the end of the full year which significantly
affected or could significantly affect the operations of the Group, the results of these operations,
or the state of affairs of the Group in future financial years.
ENVIRONMENTAL REGULATIONS
The Group is aware of its environmental obligations with regards to these activities and ensured
that it complied with all regulations. There have not been any known breaches of the
entity’s obligations under these environmental regulations during the year under review and up
to the date of this report.
Group Specific Risks
Oil and Gas exploration and development risks
The business of oil and gas exploration, project development and production, by its nature, is
highly speculative and contains elements of significant risk with no guarantee of success. Ultimate
and continuous success of these activities is dependent on many factors such as:
(i)
(ii)
(iii)
the discovery and/or acquisition of economically recoverable reserves;
access to adequate capital for project development;
design and construction of efficient development and production infrastructure within
capital expenditure budgets;
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(iv)
(v)
(vi)
securing and maintaining title to interests;
obtaining consents and approvals necessary for the conduct of oil and gas
exploration, development and production; and
access to competent operational management and prudent financial administration,
including the availability and reliability of appropriately skilled and experienced
employees, contractors and consultants.
Whether or not income will result from projects undergoing exploration and development
programs depends on successful exploration and establishment of production facilities. Factors
including costs, actual hydrocarbons and formations, flow consistency and reliability and
commodity prices affect successful project development and operations.
Oil and gas exploration may involve drilling operations and exploration activities which do not
generate a positive return on investment. This may arise from dry wells, but also from wells that
are productive but do not produce sufficient revenues to return a profit after accounting for
drilling, operating and other associated costs. The production from successful wells may also be
impacted by various operating conditions, including insufficient storage or transportation
capacity, or other geological and mechanical conditions. In addition, managing drilling hazards
or environmental damage and pollution caused by exploration and development operations
could greatly increase the associated cost and profitability of individual wells.
There is no assurance that any exploration on current or future interests will result in the discovery
of an economic deposit of oil or gas. Even if an apparently viable deposit is identified, there is no
guarantee that it can be economically developed.
Operational Risks
Oil and gas exploration and development activities involve numerous operational risks, including
encountering unusual or unexpected geological formations, mechanical breakdowns or failures,
human errors and other unexpected events which occur in the process of drilling and operating
oil and gas wells.
The occurrence of any of these risks could result in substantial financial losses to the Group due
to injury or loss of life, damage to or destruction of property, natural resources or equipment,
environmental damage or pollution, clean‐up responsibilities and regulatory investigation,
amongst other factors. Damages occurring to third parties as a result of such risks may give rise
to claims against the Group which may not be covered fully by insurance or at all.
Title risks
The ownership of oil and gas lease rights in the USA is a combination of private and government
ownership (including Indian and tribal ownership). The acquisition of privately owned oil and gas
lease rights typically involves an initial review of the public records in the counties in which the
relevant lands lie in order to determine the ownership of the oil and gas rights. Thereafter, oil and
gas leases are negotiated with the owners of those rights. Verifying the chain of title for the USA
oil and gas leases can be complex any may result in remedial steps to be taken to correct any
defect in title.
Sovereign risks
The Group’s key project interests are situated in the USA. Accordingly, the Group is subject to the
risks associated in operating in foreign countries. These risks include economic, social or political
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DIRECTORS’ REPORT
instabilities or change, hyperinflation, currency non-convertibility or instability and changes of law
affecting foreign ownership, government participation, taxation, working conditions, rates of
exchange, exchange control, exploration licensing, export duties, repatriation of income or
return of capital, environmental protection, labour relations as well as government control over
natural resources or government relations that require the employment of local staff or
contractors or require other benefits to be provided to local residents.
The Group and its advisers will undertake all reasonable due diligence in assessing and managing
the risks associated with oil and gas exploration and production in the USA. However, any future
material adverse changes in government policies or legislation in foreign jurisdictions in which the
Group has projects is outside the control of the Group. Such changes may affect the foreign
ownership, exploration, development or activities of companies involved in oil and gas
exploration and production and in turn may affect the viability and profitability of the Group.
Additional Requirements for Capital
The oil and natural gas industry is capital intensive. The Group has made, and expects to make,
substantial capital expenditures for the acquisition, development and exploration of oil and
natural gas reserves. As and when further funds are required the Group may need to raise
additional capital, including from one or more of: the issue of equity securities; the incurrence of
further debt finance; or the contribution of capital from one or more operational or financial
partners in exchange for a portion of the Group’s interests in its assets, if and as appropriate. There
is no assurance that the Group will be able to access and secure additional funding on
reasonable terms or at all.
The Group manages financial risk through the implementation of policies and procedures that
address areas such as hedging and liquidity management. Furthermore, as operator of a
substantial majority of its assets, the Group has the flexibility to manage its capital program to
help mitigate liquidity risks.
Reliance on Key Personnel
The responsibility of overseeing the day to day operations of the Group depends on its
management and its key personnel. The Group is aware of the need to have sufficient
management to properly supervise the exploration and, if exploration is successful, the
development of the Group’s projects. As the Group’s projects and prospects progress and
develop the Board will continually monitor the management requirements of the Group and look
to employ or engage additional personnel when and where appropriate to ensure proper
management of the Group’s projects. However, there is a risk that the Group may not be able to
secure personnel with the relevant experience at the appropriate time which may impact on the
Group’s ability to complete all of its planned exploration programmes within the expected
timetable. Furthermore, you should be aware that no assurance can be given that there will be
no adverse effect on the Group if one or more of its existing Directors or management personnel
cease their employment or engagement with the Group.
Contractual and Joint Venture Risk
The Directors are not able to presently assess the risk of financial failure or default by a participant
in any joint venture to which the Group is, or may become, a party or the insolvency or other
failure by any of the contractors engaged by the Group for any exploration or other activity. Any
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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such failure or default could adversely affect the operations and performance of the Group and
the value of the Shares.
Reserves and resources
Accumulations of hydrocarbons will be classified according to the system designed by the
Society of Petroleum Engineers, through the Petroleum Resources Management System (SPE‐
PRMS) and in accordance with the Listing Rules.
The SPE‐PRMS system classifies accumulations of hydrocarbons with respect to a matrix of
uncertainty and chance of commerciality. Whilst there are a multitude of pathways through this
matrix from Prospective Resources to Contingent Resources and then to reserves, the process is
defined by the three stages of exploration, appraisal and development.
In general, estimates of economically recoverable oil and gas reserves and resources are based
upon a number of variable factors and assumptions, such as comparisons with production from
other producing areas, the assumed effects of regulation by governmental agencies,
assumptions regarding future oil and gas prices and future operating costs, all of which may vary
considerably from actual results. Actual production with respect to reserves may vary from such
estimates and such variances could be material.
Reserve and resource estimates are estimates only and no assurance can be given that any
particular level of recovery from hydrocarbon reserves will in fact be realised or that an identified
hydrocarbon resource will ever qualify as commercially viable which can be legally and
economically exploited.
Hydraulic fracturing
The Group has used and may in the future use horizontal drilling together with hydraulic fracturing
stimulation technology in its exploration, production and development activities. The use of these
technologies may be necessary for the production of commercial quantities of oil and gas from
geological formations of the type that the Group is targeting. The enactment of any new laws,
regulations or requirements by any relevant government authority in respect of hydraulic
fracturing could result in operational delays, increased operational costs and potential claims
from a third party or governmental authority. Investors should note that hydraulic fracturing has
been the subject of increased media scrutiny, particularly in the United States and more recently
Australia, due to its potential environmental impacts on land and underground water supply if
not properly managed. Restrictions or prohibitions on the use of hydraulic fracturing may reduce
the amount of oil and gas the Group can produce and may have a material impact on the
Group’s business.
INDUSTRY RISKS
Operating Risks
Oil and gas exploration, appraisal, development and production operations are subject to a
number of operational risks and hazards including fire, explosions, blow outs, pipe failures,
abnormally pressured formations and environmental hazards such as accidental spills or leaking
of petroleum liquids, gas leaks, ruptures, or discharge of toxic gases. Oil and gas exploration,
appraisal, development and production are generally considered a high- risk undertaking. The
operations of the Group may also be affected by a range of factors, including:
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operational and technical difficulties encountered in drilling;
difficulties in commissioning and operation plant and equipment;
(i)
(ii)
(iii) mechanical failure or plant breakdown;
(iv)
(v)
(vi)
(vii)
(viii)
unanticipated drilling problems which may affect production costs;
adverse weather conditions;
industrial and environmental accidents;
industrial disputes; and
unexpected shortages or increases in the costs of consumables, spare parts, plant and
equipment.
Oil and Gas Reserves and Production Estimates
Oil and Gas Reserves and production estimates are expressions of judgement based on
knowledge, experience and industry practice. Estimates which were valid when originally
calculated may alter significantly when new information or techniques become available. In
addition, by their very nature, resource estimates are imprecise and depend to some extent on
interpretations which may prove to be inaccurate. As further information becomes available
through additional fieldwork and analysis the estimates are likely to change. This may result in
alterations to development plans which may, in turn, adversely affect the Group’s operations
and the value of the Shares.
Permit grant and maintenance risks
The Group’s oil and gas exploration activities are dependent upon the grant, or as the case may
be, the maintenance of appropriate licences, concessions, leases, permits and regulatory
consents which may be withdrawn or made subject to limitations.
The maintaining of permits, obtaining renewals, or getting permits granted, often depends on the
Group being successful in obtaining the required statutory approvals for its proposed activities
and that the licences, concessions, leases, permits or consents that it holds will be renewed as
and when required. There is no assurance that such renewals will be given as a matter of course
and there is no assurance that new conditions will not be imposed in connection their grant.
Commercial Risk
The oil and gas exploration industry is competitive and there is no assurance that, even if
commercial quantities of those resources is discovered by the Group on its current projects or
future projects it may acquire an interest in, a profitable market will exist for sales of such
resources. There can be no assurance that the quality of any such resources will be such that
they can be extracted economically.
Commodity Price Volatility and Exchange Rate Risks
If the Group achieves success leading to oil and gas production, the revenue it will derive through
the sale of resources it may discover exposes the potential income of the Group to commodity
price and exchange rate risks. Commodity prices fluctuate and are affected by many factors
beyond the control of the Group. Such factors include supply and demand fluctuations for oil
and gas, technological advancements, forward selling activities and other macro-economic
factors such as inflation expectations, interest rates and general global economic conditions.
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Furthermore, international prices of various commodities are denominated in United States dollars
whereas the income and expenditure of the Group are and will be taken into account in
Australian currency. This exposes the Group to the fluctuations and volatility of the rate of
exchange between the United States dollar and the Australian dollar as determined in
international markets.
If the price of commodities declines this could have an adverse effect on the Group’s
exploration, development and possible production activities, and its ability to fund these
activities, which may no longer be profitable.
Insurance Risks
Exploration for and development of oil and gas involves hazards and risks that could result in the
Group incurring losses or liabilities that could arise from its operations. If the Group incurs losses or
liabilities which are not covered by its insurance policies, the funds available for exploration and
development will be reduced and the value and/or title to the Group’s assets may be at risk.
The Group insures its operations in accordance with industry practice. However, in certain
circumstances the Group’s insurance may not be of a nature or level to provide adequate
insurance cover. The occurrence of an event that is not covered or fully covered by insurance
could have a material adverse effect on the business, financial condition and results of the
Group.
Insurance against all risks associated with oil and gas exploration and production is not always
available and, where available, the costs can be prohibitive or not adequate to cover all claims.
Environmental Risks
Oil and gas exploration, development and production generates potential environmental risks
and is therefore subject to environmental regulation pursuant to a variety of laws and regulations.
In particular there are regulations in place with respect to potential spills, contamination, releases
and emission of substances related, or incidental to, the production of oil and gas. These laws
and regulations set various standards regulating certain aspects of health and environmental
quality and provide for penalties and other liabilities for the violation of such standards. In certain
circumstances, these laws and regulations also create obligations to remediate current and
former facilities and locations where operations are or were conducted.
Compliance with these regulations can require significant expenditure and a breach may result
in substantial financial liability on the Group. These risks will be minimised by the Group conducting
its activities in an environmentally responsible manner, in accordance with applicable laws and
regulations and where possible, by carrying appropriate insurance coverage.
Competition
Oil and gas exploration is highly competitive in the United States. The Group competes with
numerous other oil and gas companies in the search for oil and gas reserves and resources.
Competitors include oil and gas companies that have substantially greater financial resources,
staff and facilities than those of the Group. The Group is protected from competition on permits
in which it holds exclusive exploration rights, however the Group may face competition for drilling
equipment and skilled labour. The Group may also face competition from competitors on permits
in which it currently holds exploration rights, in the event that, as a condition of any permit held,
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it is required to partially relinquish certain parts of the permit. If the Group elects to re‐apply for
these exploration rights, there is no guarantee that the Group will be successful in its application
against other competing offers.
Lease expiry
Successful drilling is fundamental to the appraisal and development of the leases in which the
Group holds an interest. In circumstances where commercial production has not been
established within the specified time frame or leases have been extended, the Group’s leases
may expire. It is common for oil and gas leases in the USA to contain provisions such that, if
commercial production is not established on the properties within a specified period, the leases
will expire and the holder of the leasehold interest loses its right to continue to explore for oil and
gas on the relevant land.
Commercialisation
The Group’s potential future earnings, profitability, and growth are likely to be dependent upon
the Group being able to successfully implement some or all of its commercialisation plans. The
Group’s ability to do so is further dependent upon a number of factors, including matters which
may be beyond the control of the Group. The Group may not be successful in securing identified
customers or market opportunities.
The Group’s ability to sell and market its production will be negatively impacted in the event it is
unable to secure adequate transportation and processing. Access will depend on the proximity
and capacity of pipelines and processing facilities. Furthermore, the Group may be required to
develop its own pipeline infrastructure or secure access to third party pipeline infrastructure in
order to deliver oil and gas to key markets or customers, or to directly deliver gas to key markets
or customers. The development of its own pipeline infrastructure will be subject to the Group
obtaining relevant approvals including pipeline licences.
Seasonality and weather
Operations on a number of the Group’s exploration permits are affected by seasonal weather
conditions. Such operations can occur during the less optimal seasons however the risk of
reduced access, significant weather downtime and substantial cost overruns is increased during
these times.
GENERAL INVESTMENT RISKS
General Economic Conditions
General economic conditions, introduction of tax reform, new legislation, the general level of
activity within the resources industry, movements in interest and inflation rates and currency
exchange rates may have an adverse effect on the Group’s exploration, development and
possible production activities, as well as on its ability to fund those activities.
Share Market Conditions
Share market conditions may affect the value of the Group’s quoted securities regardless of the
Group’s operating performance. Share market conditions are affected by many factors such as:
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 17
DIRECTORS’ REPORT
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
general economic outlook;
the introduction of tax reform or other new legislation (such as royalties);
interest rates and inflation rates;
currency fluctuations;
changes in investor sentiment toward particular market sectors in Australia and/or
overseas (such as the oil and gas exploration or production sectors within that industry);
the demand for, and supply of, capital; and
terrorism or other hostilities.
The market price of the Shares can fall as well as rise and may be subject to varied and
unpredictable influences on the market for equities in general and resource exploration stocks in
particular, which influences are beyond the Group’s control and which are unrelated to the
Group’s performance. Neither the Group nor the Directors warrant the future performance of the
Group or the Shares and subsequently any return on an investment in the Group. Shareholders
who sell their Shares may not receive the entire amount of their original investment.
Volatility in Global Credit and Investment Markets
Global credit, commodity and investment markets may experience uncertainty and volatility.
The factors which may lead to this situation are outside the control of the Group and may impact
the price at which the Shares trade regardless of operating performance and affect the Group’s
ability to raise additional equity and/or debt to achieve its objectives, if required.
Government and Legal Risk
The introduction of new legislation or amendments to existing legislation by governments
(including introduction of tax reform), developments in existing common law or the respective
interpretation of the legal requirements in any of the legal jurisdictions which govern the Group’s
operations or contractual obligations, could impact adversely on the assets, operations and
ultimately the financial performance of the Group, or the Shares. The same adverse impact is
possible by the introduction of new government policy or amendments to existing government
policy, including such matters as access to lands and infrastructure, compliance with
environmental regulations, taxation and royalties.
Unforeseen Expenditure Risk
Expenditure may need to be incurred that has not been considered in this report. Although the
Group is not aware of any such additional expenditure requirements, if such expenditure is
subsequently incurred this may adversely affect the expenditure proposals and activities of the
Group, as the Group may be required to reduce the scope of its operations and scale back its
exploration programmes. This could have a material adverse effect on the Group’s activities and
the value of the Shares.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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DIRECTORS’ REPORT
Regulatory Approvals
The Group’s exploration and development activities are subject to extensive laws and regulations
relating to numerous matters including resource licence consent, conditions including
environmental compliance and rehabilitation, taxation, employee relations, health and worker
safety, waste disposal, protection of the environment, protection of endangered and protected
species and other matters. The Group requires permits from regulatory authorities to authorise the
Group’s operations. These permits relate to exploration, production and rehabilitation activities.
Obtaining the necessary permits can be a time consuming process and there is a risk that the
Group will not obtain these permits on acceptable terms, in a timely manner or at all. The
costs and delays associated with obtaining the necessary permits and complying with these
permits and applicable laws and regulations could materially delay or restrict the Group from
proceeding with the development of a project. Any failure to comply with applicable laws and
regulations, even if inadvertent, could result in material fines, penalties or other liabilities. In
extreme cases, failure could result in the suspension of the Group’s activities or forfeiture of one
or more of the Group’s leases or permits.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 19
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
Michael Fry
Qualifications
Experience
Other
Directorships
David Prentice
Qualifications
Experience
Other
Directorships
Non-Executive Chairman
B.Comm, F.Fin
Michael Fry holds a Bachelor of Commerce degree from the University of Western
Australia, is a Fellow of the Financial Services Institute of Australasia, and is a past
member of the ASX. Michael has extensive experience in capital markets and
corporate treasury management specialising in the identification of commodity,
currency and interest rate risk and the implementation of risk management
strategies.
Michael Fry is currently the non-executive chairman of ASX Listed Technology
Metals Australia Limited (ASX:TMT).
Managing Director
Grad. Dip BA, MBA
David is a senior resources executive with 30 years domestic and international
corporate finance and executive management experience. David started his
career working in commercial and business development roles within the
resources sector working for some of Australia’s most successful gold and nickel
exploration and mining companies. During the last 16 years, David has gained
international oil and gas exploration and production sector experience (with a
specific focus on the Mid-Continent region of the United States) working in both
executive and non-executive director roles with Australian publicly traded
companies.
David Prentice is currently a Non-Executive Director of Black Mesa Energy, LLC,
Non-Executive Chairman of Noronex Limited (ASX:NRX) and Blaze Minerals
Limited (ASX:BLZ).
Richard Homsany Non-Executive Director
Qualifications
Experience
LL.B (Hons), B. Com, Grad. Dip. Fin & Inv, F Fin, MAICD, CPA
Richard is an experienced corporate lawyer and Certified Practising Accountant
(CPA) with significant experience in the resources and energy sectors. He is the
principal of Cardinals Lawyers and Consultants, a West Perth based corporate
and resources law firm. Richard was previously a partner of major law firm DLA
Phillips Fox (now known as global law firm DLA Piper).
Other
Directorships
Richard Homsany is Executive Chairman of ASX listed uranium exploration and
development Group Toro Energy Limited (ASX:TOE) and Executive Vice President,
Australia of TSX listed uranium exploration Group Mega Uranium Ltd (TSX:MGA).
He is also the Chairman of each of ASX listed lithium exploration Group Galan
Lithium Limited (ASX:GLN), ASX listed copper exploration Group Redstone
Resources Limited (ASX:RDS), TSX-V listed gold and iron ore explorer Central Iron
Ore Limited (TSX-V:CIO) and the Health Insurance Fund of Australia Ltd.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 20
DIRECTORS’ REPORT
Chris Robertson
Qualifications
Experience
Non-Executive Director
MM, BA
Chris has over 34 years of investment market experience, including 20 years in
senior roles in the funds management industry. Chris has a solid understanding of
the Group’s strategic objectives and the opportunities to create shareholder
value as well as the need to address the challenges faced around shareholder
engagement. In his capacity as a Non-Executive Director, Chris will assume
responsibilities across various Board sub-committees, including the Audit and Risk
Committee, as well as the Remuneration and Nomination Committee.
Other
Directorships
No other directorships
Katherine Garvey Group Secretary
LL.B, BA, MAICD
Qualifications
Katherine is a corporate lawyer who has significant experience in the resources
Experience
sector. Katherine advises public and proprietary companies on a variety of
corporate and commercial matters including initial public offerings and other
capital raisings, finance, acquisitions and disposals, Corporations Act and ASX
Listing Rule compliance, corporate governance and Group secretarial issues. She
has extensive experience drafting and negotiating various corporate and
commercial agreements
joint ventures,
shareholders’ agreements and business and share sale and purchase
agreements.
farm-in agreements,
including
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 21
DIRECTORS’ REPORT
CORPORATE INFORMATION
Group Corporate Structure
Brookside Energy Limited is a public Group incorporated and domiciled in Western Australia listed on
the Australian Securities Exchange (ASX:BRK). Its wholly owned subsidiaries, BRK Oklahoma Holdings
LLC, Orion Acquisitions LLC, and Anadarko Leasing LLC, and controlled subsidiary, Black Mesa Energy
LLC are Limited Liability Companies incorporated and domiciled in Oklahoma, USA.
Meetings of Directors
The number of Directors' meetings (including committees) held during the year for each director who
held office, and the number of meetings attended by each director are:
Director
Michael Fry
David Prentice
Richard Homsany
Chris Robertson
Directors Meetings
Meetings Attended
10
10
10
-
Number Held and Eligible to
Attend
10
10
10
-
Note: Both David Prentice and Michael Fry attended 10 Black Mesa Energy (BME) Board meetings
respectively from a total of 10 meetings held for the financial reporting period. The importance of
noting this is that BMP provides the technical and operational inputs for Brookside under a number of
agreements including the Drilling Program Agreement (DPA) and the Acquisition Program Agreement
(APA).
INDEMNIFYING OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every
Officer, or agent of the Group shall be indemnified out of the property of the Group against any liability
incurred by them in their capacity as Officer, or agent of the Group or any related corporation in
respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings,
whether civil or criminal.
The Group currently has Directors’ and Officers’ liability insurance in place. The liabilities insured are
legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of the Group, and any other payments arising from
liabilities incurred by the officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use
by the officers of their position or of information to gain advantage for themselves or someone else or
to cause detriment to the Group.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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DIRECTORS’ REPORT
PROCEEDINGS ON BEHALF OF GROUP
No person has applied to the Court for leave to bring proceedings on behalf of the Group or to
intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on
behalf of the Group for all or any part of those proceedings. The Group was not a party to any such
proceedings during the year.
NON-AUDIT SERVICES
No non‐audit services were provided by the external auditors during the year ended 31 December
2023.
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, Hall Chadwick Audit (WA) Pty Ltd,
to provide the Directors of the Group with an Independence Declaration in relation to the audit of
the annual report. This Independence Declaration is set out on page [insert] and forms part of this
Directors’ Report for the year ended 31 December 2023.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, there were no other significant changes in the state of affairs of the
Group that occurred during the financial year under review not otherwise disclosed in this report or in
the financial statements.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Disclosure of information regarding likely developments in the operations of the Group in future
financial years and the expected results of those operations is likely to result in unreasonable prejudice
to the Group. Therefore, this information has not been presented in this report.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 23
DIRECTORS’ REPORT
REMUNERATION REPORT
This Remuneration Report, which forms part of the directors’ report, sets out information about the
remuneration of Brookside Energy Limited’s Directors and its Key Management Personnel for the
financial year ended 31 December 2023.
A.
INTRODUCTION
The information provided in this Remuneration Report has been audited as required by Section
308(3C) of the Corporations Act 2001. Information regarding the remuneration of Key Management
Personnel (KMP) is required by Corporations Regulations 2M.3.03. KMP are those individuals who have
the authority and responsibility for planning, directing and controlling the activities of the Group and
the Group.
A.1
Brookside’s KMPs
Key Management Personnel for Brookside include the following Directors who were in office during
the financial year:
Name
Michael Fry
David Prentice
Richard Homsany
Chris Robertson
Category
Non-Executive
Director
Executive
Director
Non-Executive
Director
Non-Executive
Director
Position
Independent
Chairman
Managing
Director
Non-Executive
Director
Non-Executive
Director
Appointed
Retired
20 April 2004
20 April 2004
3 February 2020
1 March 2024
-
-
-
-
A.2 Comments on Remuneration Report at Brookside’s most recent AGM
The Group received 98.03% of “yes” votes on its Remuneration Report for the 2022 financial year. The
Group did not receive any specific feedback from shareholders at the 2023 Annual General Meeting
on its remuneration practices.
A.3
Relationship between Remuneration of Key Management Personnel and Shareholder Wealth
During the Group's development phases of its business, the Board anticipates that the Group will retain
earnings (if any) and other cash resources for the development of its projects. Accordingly, the Group
does not currently have a policy with respect to the payment of dividends and returns of capital.
Therefore, there was no relationship between the Board's policy for determining, or in relation to, the
nature during the current and previous financial years.
The Board did not determine the nature and amount of remuneration of the KMP by reference to
changes in the price at which shares in the Group traded between the beginning and end of the
current and previous financial years. However, where the Directors of the Group receive incentive
options, such options generally would only be of value if the Group’s share price increased sufficiently
to warrant exercising the incentive options.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 24
DIRECTORS’ REPORT
A.4
Additional information
The gain/(loss) of the group for the five years to 31 December 2023 are summarised below:
Revenue
EBITDA
EBIT
Profit/(loss) after income tax
2023
$’000
51,437
27,573
16,648
16,648
2022
$’000
52,997
21,838
15,846
15,096
2021
$’000
12,580
(1,021)
(2,321)
(2,611)
2020
$’000
366
(1,664)
(1,755)
(2,437)
2019
$’000
2,187
1,873
1,520
918
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end (AUD)
Total dividends declared (cents per share)
Basic earnings/(loss) per share (cents per
share)
2023
0.01
-
2022
0.011
-
2021
0.020
-
2020
0.007
-
2019
0.009
-
0.34
0.35
(0.10)
(0.22)
0.09
B.
REMUNERATION POLICY DURING THE REPORTING PERIOD
The Brookside Board is committed to transparent disclosure of its remuneration strategy and this report
details the Group’s remuneration objectives, practices and outcomes for KMP, which includes
Directors and senior executives, for the period ended 31 December 2023. Any reference to
“Executives” in this report refers to Executive Directors.
B.1
Remuneration Policy Framework
The key objective of Brookside’s remuneration policy is to be a key enabler for the Group in achieving
its strategic goal of continuing to build a successful oil and gas exploration and production Group. It
has been designed to reward executives and employees fairly and responsibly in accordance with
the regional and international market in which the Group operates, and to ensure that Brookside:
• Provides competitive rewards that attract, retain and motivate executives and employees of
the highest calibre, who can successfully deliver, particularly as the Group moves through the
current phase of rapidly increased development and production;
Sets demanding levels of expected performance that have a clear linkage to an executive’s
remuneration;
•
• Benchmarks remuneration against appropriate comparator peer groups to make the Group
competitive in a tight skilled human resources market, through an offering of both short- and
long-term incentives and competitive base salaries;
• Provides a level of remuneration structure to reflect each executive’s respective duties and
responsibilities;
• Aligns executive incentive rewards with the creation of value for shareholders;
• Complies with legal requirements and appropriate standards of governance.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 25
DIRECTORS’ REPORT
B.2
Policy for Executive Remuneration for Future Reporting Periods
Executive Remuneration consists of the following key elements:
Fixed remuneration or base salaries; and
•
• Variable remuneration, being the “at risk” component related to performance comprising;
o Short Term Incentives (STI).
C.
REMUNERATION COMPONENTS
C.1
Fixed Remuneration
Fixed remuneration was reviewed by the Remuneration and Nomination Committee in 2018. The fixed
remuneration component is detailed in Key Management Personnel remuneration for the year ended
31 December 2023 table.
C.2
STI Plan for the 2023 Reporting Period
The Group continues to utilise its Security Incentive Plan, approved by shareholders on 8 December
2020, under which securities in the Group may be issued to employees and/or directors.
Policy for and Components of Executive and Non-Executive Remuneration during the
C.3
Reporting Period
Remuneration Policy
Non-Executive Director Fees
The overall level of annual Non-Executive Director fees was approved by shareholders in accordance
with the requirements of the Group’s Constitution and the Corporations Act. The maximum aggregate
Directors’ fees payable to all of the Group’s Non-Executive Directors is $500,000 per annum. This
aggregate amount was approved by shareholders at the 2012 Annual General Meeting.
Equity Compensation
During the year ended 31 December 2023, there was no equity based compensation.
Remuneration Structure
Non-Executive Directors receive a fixed remuneration of base fees plus statutory superannuation. In
addition, and in recognition of the higher workloads and extra responsibilities of participating on a
Board committee, if applicable, they also received a committee fee and chairing a committee also
warrants a higher fee. In addition to these fees, Non-Executive Directors are entitled to reimbursement
of reasonable travel, accommodation and other expenses incurred in attending meetings of the
Board, committee or shareholder meetings whilst engaged by Brookside. Non-Executive Directors do
not earn retirement benefits other than superannuation and are not entitled to any compensation on
termination of their directorships.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 26
DIRECTORS’ REPORT
D.
DETAILS OF REMUNERATION
Remuneration of Key Management Personnel is set out below:
Primary
Post- employment
Base Salary
and Fees
$
Bonus
STI
$
Share-
based
Benefits
$
Superannuation
Contributions
$
Termination
Payments
$
TOTAL
$
Percentage
Equity
Related
%
31 December 2023
Executive Directors
David Prentice
276,000
Non-Executive Directors
Michael Fry
Richard Homsany
80,000
40,000
Total 31 Dec 2023
396,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
276,000
80,000
40,000
396,000
0%
0%
0%
-
As at 31 December 2023, the Group had accrued $10,000 in outstanding director fees (31 December
2022: $10,000).
Primary
Post- employment
Base Salary
and Fees
$
Bonus
STI
$
Share-
based
Benefits
$
Super-
annuation
Contributions
$
Termination
Payments
$
TOTAL
$
Percentage
Equity
Related
%
31 December 2022
Executive Directors
David Prentice
276,000
Non-Executive Directors
Michael Fry
Richard Homsany
80,000
40,000
Total 31 Dec 2022
396,000
-
-
-
-
829,791
80,651
329,057
1,239,499
-
-
-
-
-
1,105,791
75%
-
-
-
160,651
369,057
1,635,499
50%
89%
-
E. ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
E.1
Shares held by Key Management Personnel
The number of shares in the Group held during year by each Director of Brookside Energy Limited and
other Key Management Personnel, including their personally related parties, are set out below.
There were no shares granted during the year as compensation.
Director
Balance at
1 Jan 2023
Issued on exercise
of options
Acquired
Disposed
Balance at
31 Dec 2023
David Prentice
111,000,000
Michael Fry
Richard Homsany
Total
28,000,000
4,800,000
143,800,000
-
-
-
-
-
-
-
-
-
-
-
-
111,000,000
28,000,000
4,800,000
143,800,000
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 27
DIRECTORS’ REPORT
Director
David Prentice
Michael Fry
Richard Homsany
Total
(i)
Balance at
1 Jan 2022
Issued on exercise
of options
Acquired
Disposed
Balance at
31 Dec 2022
12,999,999
13,125,000
4,000,000
30,124,999
98,000,001
-
-
111,000,000
15,000,000
125,000
(250,000)
800,000(i)
-
-
28,000,000
4,800,000
113,800,001
125,000
(250,000)-
143,800,000
800,000 Shares were issued to Richard Homsany and 40,000,000 Shares were issued to Richard
Homsany’s nominee, which is not a related party.
E.2
Options Held by Key Management Personnel
Options held by Key Management Personnel during the reporting period are as follows:
Director
David Prentice
Michael Fry
Richard Homsany
Total
Director
Balance at
1 Jan 2023
Granted as
Remuneration
Acquired
Exercised
Disposed
Balance at
31 Dec 2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 Jan 2022
Granted as
Remuneration
Acquired
Exercised(i)
Disposed
Balance at
31 Dec 2022
David Prentice
Michael Fry
97,499,999
15,125,000
Richard Homsany
800,000
Total
113,424,999
-
-
-
-
500,002
(98,000,001)
-
-
-
(15,000,000)
(125,000)
(800,000)
-
500,002
(113,800,001)
(125,000)
-
-
-
-
(i)
Refer to Note 18 for details of the fair value of the Options on the date of its being exercised.
E.3
Share Rights by Key Management Personnel
Share Rights held by Key Management Personnel during the reporting period are as follows:
Director
Balance at
1 Jan 2023
Granted as
Remuneration
Acquired
Exercised
Other
David Prentice
2,318,182
Michael Fry
Richard
Homsany
Total
Director
David Prentice
Michael Fry
Richard
Homsany
Total
-
-
2,318,182
Balance at
1 Jan 2022
-
-
-
-
-
-
-
-
-
-
-
-
Granted as
Remuneration
2,318,182(i)
-
-
2,318,182
Acquired
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
Other
Balance at
31 Dec 2023
2,318,182
-
-
2,318,182
Balance at
31 Dec 2022
2,318,182
-
-
2,318,182
-
-
-
-
-
-
-
-
(i)
Refer to Note 18 for details of the fair value of the Share Rights.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 28
DIRECTORS’ REPORT
E.4
Loans to Key Management Personnel
No loans were made to key management personnel of the Group during the financial year or the
prior corresponding period.
E.5
Other Transactions and Balances with Key Management Personnel
Other than as stated above, there have been no other transactions with key management personnel
during the year.
E.6
Compensation Options: Granted and vested during and since the financial year ended 31
December 2023
During the financial year ended 31 December 2023, there were no options granted (2022: Nil), no
director options lapsed (2022: Nil), and no director options exercised (2022: 113,800,001). As at 31
December 2023 there was no options on issue.
E.7
Performance bonuses
No performance-based bonuses have been paid to key management personnel during the financial
year.
F.
SERVICE AGREEMENTS
Director
Base Salary
Terms of the Agreement
Notice Period
$23,000 per month
Until termination
6 Months
David Prentice
CEO/Managing Director
Michael Fry
Non-Executive Chairman
$80,000 per annum
Richard Homsany
Non-Executive Director
$40,000 per annum
Until termination in
accordance with the
Group’s Constitution
Until termination in
accordance with the
Group’s Constitution
Reasonable
notice
Reasonable
notice
- - END OF REMUNERATION REPORT - -
This report is made in accordance with a resolution of the Directors.
David Prentice
Managing Director
28 March 2024
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 29
To the Board of Directors
AUDITOR’S
CORPORATIONS ACT 2001
INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
As lead audit Partner for the audit of the financial statements of Brookside Energy Limited for year
ended 31 December 2023, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
• any applicable code of professional conduct in relation to the audit.
Yours Faithfully
HALL CHADWICK AUDIT (WA) PTY LTD
Dated this 28th day of March 2024
Perth, Western Australia
NIKKI SHEN CA
Director
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 30
CORPORATE GOVERNANCE STATEMENT
Brookside Energy Limited (Group) and the Board of Directors are committed to achieving the highest
standards of corporate governance. The Board continues to review the framework and practices to
ensure they meet the interests of shareholders. The Group and its controlled entities together are
referred to as the Group in this statement.
A description of the Group’s main corporate governance practices is set out on the Group’s website
http://brookside-energy.com.au/corporate-governance.
All these practices, unless otherwise stated, were in place for the entire period and comply with the
ASX Corporate Governance Principles and Recommendations and are contained in the acGrouping
Appendix 4G for the period ended 31 December 2023.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 31
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the financial year ended 31 December 2023
Royalty revenue
Royalties expense
Production expense
Gross profit
Interest revenue
Other income
Director and employee related expenses
Compliance and registry expenses
Accounting and audit fees
Promotion and communication cost
Finance costs
Amortisation expense
Share based payments expense
Interest on financing
Other expenses
Fair value loss on equity investment
Impairment expense
Gain/(loss) on foreign exchange movement
Profit/(Loss) before income tax expense
Notes
For the year
ended
31 Dec 2023
For the year
ended
31 Dec 2022
$
$
2
2
2
2
7
18
11.B
2.B
51,436,980
(20,150,949)
(1,955,464)
29,330,567
52,996,833
(25,796,630)
(1,224,860)
25,975,343
704,623
1,332,883
22,872
971,156
(1,191,771)
(169,709)
(666,109)
(180,057)
(14,767)
(10,923,983)
-
(97)
(1,574,014)
-
-
-
16,647,566
(1,432,093)
(238,772)
(263,334)
(309,972)
(450,000)
(5,989,993)
(1,391,755)
(750,000)
(888,938)
(15,000)
(143,409)
-
15,096,105
Income tax expense
Net profit/(loss) for the period
3
-
-
16,647,566
15,096,105
Other comprehensive income
Items that may be reclassified subsequently to
profit and loss:
Exchange differences on the translation of
foreign operations
Other comprehensive income/(loss) for the year
net of taxes
(1,781,505)
3,478,315
14,866,061
18,574,420
Total comprehensive income/(loss) for the year
14,866,061
18,574,420
Earnings/(loss) Per Share
Basic and diluted earnings/(loss) per share
(cents)
14
0.34
0.35
The Grouping notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2023
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets fair value through profit or loss
Other
Total Current Assets
Non-Current Assets
Property, plant, and equipment
Producing assets
Exploration and evaluation assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Total Current Liabilities
Non Current Liabilities
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Total Equity
Notes
As at
31 Dec
2023
$
As at
31 Dec
2022
$
4
5
7
6
8
26,233,914
3,679,095
105,000
143,630
30,161,639
1,097
32,593,556
32,360,881
64,955,534
95,117,173
33,901,798
4,164,595
105,000
83,153
38,254,546
1,182
26,450,725
29,054,948
55,506,855
93,761,401
11,385,758
11,385,758
21,995,456
21,995,456
298,055
298,055
11,683,813
83,433,360
73,800
73,800
22,069,256
71,692,145
9
10
264,956,415
4,108,509
(185,631,564)
268,081,261
10,950,274
(207,339,390)
83,433,360
71,692,145
The Grouping notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Share
Capital
Accumulated
Losses
$
$
Share
Based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 January 2022
252,356,277
(222,435,495)
4,976,039
1,141,165
36,037,986
Profit (Loss) for the period
Other comprehensive income
Total comprehensive loss for the period
Shares issued in lieu of placement
Shares issued in lieu of services
Share options exercised
Limited recourse loan
Share rights issued during the period
Share/Option issue costs
Balance at 31 December 2022
-
-
-
15,096,105
-
15,096,105
-
-
-
-
-
-
1,276,709
78,046
-
-
3,478,315
3,478,315
-
-
-
-
-
-
-
-
-
-
-
-
15,096,105
3,478,315
18,574,420
137,201
37,000
16,105,757
1,276,709
78,046
(554,974)
71,692,145
(207,339,390)
6,330,794
4,619,480
137,201
37,000
16,105,757
-
-
(554,974)
268,081,261
Balance at 1 January 2023
268,081,261
(207,339,390)
6,330,794
4,619,480
71,692,145
Profit for the period
Other comprehensive income
Total comprehensive loss for the period
Share buyback
SBP and Options Reserve Expiry
Balance at 31 December 2023
-
-
-
(3,124,846)
264,956,415
16,647,566
-
16,647,566
-
-
-
-
-
-
(1,781,505)
(1,781,505)
-
16,647,566
(1,781,505)
14,866,061
(3,124,846)
5,060,260
(185,631,564)
(5,060,260)
1,270,534
2,837,975
83,433,360
The Grouping notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 34
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Notes
For the year
ended
31 Dec 2023
$
For the year
ended
31 Dec 2022
$
51,562,000
(33,275,046)
667,000
55,442,054
(21,849,890)
22,872
Net cash provided by operating activities
11.A
18,953,954
33,615,036
Cash flows from investing activities
Proceeds from exploration project participant
Payments for exploration activities
Payments for producing assets
Net cash used in investing activities
Cash flows from financing activities
Payments for share buy-back
Proceeds from exercise of options
Payments of share issue costs
Payments of borrowing costs
Proceeds from borrowings
Repayment of borrowings
Net cash (used in)/provided by financing
activities
Net (decrease)/increase in cash and cash
equivalents
Cash at beginning of the period
Effect of exchange rates on cash
Cash at end of period
11.B
11.B
-
(22,259,707)
(1,003,000)
(23,821,017)
(7,932,671)
(23,262,707)
(31,753,688)
(3,124,838)
-
-
-
-
-
16,245,700
(555,000)
(450,000)
7,500,000
(8,250,000)
(3,124,838)
14,490,700
(7,433,591)
16,352,048
33,901,798
(234,293)
26,233,914
17,038,540
511,210
33,901,798
The Grouping notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.A.
BASIS OF PREPARATION
These financial statements are general purpose financial statements, which have been prepared in
accordance with the requirements of the Corporations Act 2001, Accounting Standards and
Interpretations and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements for the Group. For the
purposes of preparing the consolidated financial statements, the Group is a for-profit entity.
The accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated. The financial statements are for the Group consisting of Brookside Energy
Limited and its subsidiaries.
The financial statements have been prepared on a historical cost basis. Historical cost is based on the
fair values of the consideration given in exchange for goods and services.
The Group is an ASX listed public Group, incorporated in Australia and operating in Australia and the
USA. The Group’s principal activities during the year were the exploration and appraisal of oil and gas
projects.
The financial report is presented in Australian dollars.
1.A.1. Functional and Presentation Currency
The consolidated financial statements are presented in Australian dollars (AU$), which is the Group’s
presentation currency unless otherwise stated. The functional currency is outlined in Note 1.G.
1.A.2. Accounting Policies
The same accounting policies and methods of computation have been followed in this consolidated
financial report as were applied in the 31 December 2022 financial statements except for the impact
(if any) of the new and revised standards and interpretations as outlined in Note 1.B.
1.A.3. Going Concern
The financial report has been prepared on the going concern basis which contemplates continuity of
normal business activities and realisation of assets and settlement of liabilities in the ordinary course of
business.
The Directors have reviewed the business outlook, cash flow forecasts and immediate capital
requirements and are of the opinion that the use of the going concern basis of accounting is
appropriate as the Directors believe the Group will be able to pay its debts as and when they fall due.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.B.
ADOPTION OF NEW AND REVISED STANDARDS
1.B.1.
Changes in accounting policies on initial application of Accounting Standards
Standards and Interpretations applicable to 31 December 2023
In the year ended 31 December 2023, the Directors have reviewed all of the new and revised
Standards and Interpretations issued by the AASB that are relevant to the Group and effective for the
year reporting periods beginning on or after 1 January 2023.
As a result of this review, the Directors have determined that there is no material impact of the new
and revised Standards and Interpretations on the Group and therefore no material change is
necessary to Group accounting policies.
Standards and Interpretations in issue not yet adopted applicable to 31 December 2023.
The Directors have also reviewed all of the new and revised Standards and Interpretations in issue not
yet adopted that are relevant to the Group and effective for the year reporting periods beginning on
or after 1 January 2024.
As a result of this review, the Directors have determined that there is no material impact of the new
and revised Standards and Interpretations in issue not yet adopted on the Group and therefore no
material change is necessary to Group accounting policies.
1.C.
STATEMENT OF COMPLIANCE
The general purpose consolidated financial statements for the period ended 31 December 2023 were
approved and authorised for issue on [insert] March 2024.
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that
the financial report, comprising the financial statements and notes thereto, complies with International
Financial Reporting Standards (IFRS).
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.D.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of Brookside Energy Limited
and its subsidiaries as at 31 December each year (the Group). Control is achieved where the Group
has the power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
Group, using consistent accounting policies. Investments in subsidiaries are accounted for at cost in
the parent entity’s financial statements.
In preparing the consolidated financial statements, all interGroup balances and transactions, income
and expenses and profit and losses resulting from intra-group transactions have been eliminated in
full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group. Control exists
where the Group has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The
purchase method of accounting involves allocating the cost of the business combination to the fair
value of the assets acquired, and the liabilities and contingent liabilities assumed at the date of
acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for
the period from their acquisition.
1.E.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The application of accounting policies requires the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
Exploration and evaluation expenditure
The Directors have conducted a review of the Group’s capitalised exploration expenditure to
determine the existence of any indicators of impairment. Based upon this review, the Directors have
determined that no impairment exists.
Amortisation and estimation of reserves
Amortisation is provided on a unit of production basis which results in a write off of the cost proportional
to the depletion of the proven and probable oil and gas reserves.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.F.
REVENUE
The Group currently generates revenue from its revenue interests in production projects. Revenue is
measured at the fair value of the consideration received or receivable. Revenue is reduced for
estimated customer returns, rebates and other similar allowances.
Sale of oil and gas (operator)
Revenue is recognised when or as the Group transfers control of goods or services to a customer at
the amount to which the Group expects to be entitled.
Non-operated oil and gas revenues
The Group’s proportionate share of production is received as a net payment from the operator
representing its share of sale proceeds, which is the net of costs incurred by the operator, if any. Such
non-operator revenues are recognised at the net amount of proceeds to be received by the Group.
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield
on the financial asset.
1.G.
FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of Brookside Energy Limited is Australian dollars. Each
entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial statements are taken to profit or loss with the
exception of differences on foreign currency borrowings that provide a hedge against a net
investment in a foreign entity. These are taken directly to equity until the disposal of the net investment,
at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities
carried at fair value are reported as part of the fair value gain or loss.
The functional currency of the foreign operations, BRK Oklahoma Holdings LLC, Orion Acquisitions LLC,
Black Mesa Energy LLC and Anadarko Leasing LLC is US dollars, “USD”.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.H.
PRODUCING ASSETS
Producing assets represent the accumulation of all exploration, evaluation and development
expenditure incurred in respect of areas of interest in which drilling has commenced or in the process
of commencing. When further development expenditure is incurred in respect of operating wells after
the commencement of production, such expenditure is carried forward as part of the producing asset
only when substantial future economic benefits are thereby established, otherwise such expenditure
is classified as part of the cost of production.
Amortisation is provided on a unit of production basis which results in a write off of the cost proportional
to the depletion of the proven and probable oil and gas reserves.
The net carrying value of each area of interest is reviewed regularly and to the extent to which this
value exceeds its recoverable amount, the excess is either fully provided against or written off in the
financial year in which this is determined.
2.
REVENUES AND EXPENSES
REVENUE
Oil and gas sales - operator (Point in time)
Oil and gas sales - non-operator (Point in time)
Oil and gas revenue
Royalties expenses1
Other revenue
Overhead income from program participants
Other
1 Royalty expenses represent amounts paid or payable to third party mineral owners.
EXPENSES
Other expenses
Administration expenses
Insurance expenses
Travel expenses
Depreciation expenses
Consultant fees
year ended
31-Dec-23
$
49,790,812
1,646,168
51,436,980
(20,150,949)
31,286,031
-
year ended
31-Dec-22
$
51,199,478
1,797,355
52,996,833
(25,796,630)
27,200,203
-
1,042,291
995,215
2,037,506
681,439
312,589
994,028
year ended
31-Dec-23
$
year ended
31-Dec-22
$
1,226,272
55,885
199,227
1,811
90,819
1,574,014
555,577
52,352
199,846
1,659
79,504
888,938
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.
INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in statement of profit or loss and
other comprehensive income
Prima facie tax benefit on profit from ordinary activities before
income tax at 30% (2022: 30%)
Add tax effect of:
Non-allowable items
Losses not recognised
Impact of different tax rate (USA)
Less tax effect of:
Lossess recouped deferred tax balances not recognised
Income tax benefit reported in the consolidated statement of
profit or loss and other comprehensive income
3.A.
UNRECOGNISED DEFERRED TAX LIABILITIES AND ASSETS
Unrecognised deferred tax liabilities at 30% (31 December 2022:
30%):
Other deferred tax liabilities
Less: Deferred tax assets recognised (tax losses)
Unrecognised deferred tax assets at 30% (31 December 2022: 30%):
Carry forward revenue losses
Provisions and accruals
Capital raising
Less: Deferred tax liabilities
Year ended
31-Dec-23
$
Year ended
31-Dec-22
$
-
-
-
-
-
-
4,994,270
4,528,832
-
(3,291,550)
(1,702,720)
(5,844,089)
1,895,917
(580,660)
-
-
-
-
-
-
Year ended
31-Dec-23
$
Year ended
31-Dec-22
$
2,787,774
(11,880)
2,775,894
-
-
-
Year ended
31-Dec-23
$
Year ended
31-Dec-22
$
6,881,966
27,000
454,566
(11,880)
7,351,652
4,490,793
25,500
768,665
-
5,284,958
The unrecognised deferred tax liabilities and deferred tax asset primarily relate to future taxable
income to be derived and related deductible capitalised expenditure to be claimed respectively.
Net deferred tax asset of have not been formally tested for their availability in accordance with
income tax legislation, therefore as at balance date it is uncertain whether these losses could be
applied against future taxable income. The Group will undergo detailed testing of those tax losses at
a time when the use of those losses is relevant to offsetting taxable income.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.
INCOME TAX EXPENSE (continued)
The tax benefits of the above deferred tax assets will only be obtained if:
(a)
the Group derives future assessable income of a nature and of an amount sufficient to enable
the benefits to be utilised;
the Group continues to comply with the conditions for deductibility imposed by law; and
(b)
(c) no changes in income tax legislation adversely affect the Group in utilising the benefits.
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the statement of financial position
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset
to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance date. Income taxes relating to items
recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.
INCOME TAX EXPENSE (continued)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
4.
CASH AND CASH EQUIVALENTS
Cash at bank
As at
31-Dec-23
$
26,233,914
26,233,914
As at
31-Dec-22
$
33,901,798
33,901,798
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts. Cash at bank earns interest at
floating rates based on daily bank deposit rates.
5.
TRADE & OTHER RECEIVABLES
Accrued revenue are generally due for settlement within periods ranging from 30 days to 60 days.
There are no receivables that are past due date, and no expected credit loss is required to be
recognised at balance date.
Current
Accrued revenue
Other receivables
As at
31-Dec-23
$
As at
31-Dec-22
$
3,648,450
30,645
3,679,095
3,240,045
924,550
4,164,595
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.
TRADE & OTHER RECEIVABLES (continued)
The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all
trade receivables as these items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective
basis as they possess shared credit risk characteristics. They have been grouped based on the days
past due and also according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales over the past 48 months before 31
December 2023 and 31 December 2022 respectively as well as the corresponding historical credit
losses during that period. The historical rates are adjusted to reflect current and forwarding looking
macroeconomic factors affecting the customer’s ability to settle the amount outstanding.
The group has identified gross domestic product (GDP) of the countries in which the customers are
domiciled to be the most relevant factors and accordingly adjusts historical loss rates for expected
changes in these factors. However, given the short period exposed to credit risk, the impact of these
macroeconomic factors has not been considered significant within the reporting period.
Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make
payments within 180 days from the invoice date and failure to engage with the Group on alternative
payment arrangement amongst other is considered indicators of no reasonable expectation of
recovery.
6.
EXPLORATION AND EVALUATION
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phases – at cost
Opening Balance
Capitalised expenses
Transfer to Producing assets
Foreign currency transaction on movement
As at
31-Dec-23
$
As at
31-Dec-22
$
32,360,881
29,054,948
29,054,948
15,780,667
13,088,450
(8,342,685)
(1,439,832)
32,360,881
29,928,519
(17,785,111)
1,130,873
29,054,948
The recoupment of costs carried forward in relation to areas of interest in the exploration and
evaluation phases are dependent on the successful development and commercial exploitation or
sale of the respective areas.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.
EXPLORATION AND EVALUATION (continued)
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:
o
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploitation of the area of interest, or alternatively, by its
sale; or
o exploration and evaluation activities in the area of interest have not at the balance
date reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, 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, studies, exploratory drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortised 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 (for 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 has been 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
reclassified to producing assets.
7.
PRODUCING ASSETS
Balance at beginning of period
Transferred from exploration and evaluation assets
Add: acquisition of working interest
Add: capitalisation of production expense
Less: Write-off of producing wells
Less: amortisation
Foreign currency translation on movement
As at
31-Dec-23
$
26,450,725
8,342,685
-
8,750,530
-
(10,923,983)
(26,401)
As at
31-Dec-22
$
6,556,585
17,785,111
-
7,932,671
(143,409)
(5,989,993)
309,760
32,593,556
26,450,725
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.
PRODUCING ASSETS (continued)
Estimates and judgements
Assumptions used to carry forward the producing assets.
During the year ended 31 December 2023, no producing assets were assessed as impaired.
The estimation of reserves requires significant management judgement and interpretation of complex
geological and geophysical models in order to make an assessment of the size, share, depth and
quality of reservoirs and their anticipated recoveries. Estimates have been used to determine the fair
value of the oil and gas properties for the purpose of the assessment of depletion and amortisation
charges.
8.
LIABILITIES
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other current liabilities(i)
Accrued and other payables
As at
31-Dec-23
$
As at
31-Dec-22
$
1,257,329
9,764,209
364,220
6,301,436
15,611,154
82,866
11,385,758
21,995,456
(i)
Other current liabilities – relates to revenues and royalties payable to third party mineral owners.
Terms and conditions
(a)
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
Trade payables and other payables are carried at amortised cost and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise
when the Group becomes obliged to make future payments in respect of the purchase of these
goods and services. Trade and other payables are presented as current liabilities unless payment is
not due within 12 months.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9.
SHARE CAPITAL
Issued and paid up capital
4,764,545,628 Ordinary shares
(31 December 2022: 5,012,272,899)
9.A. MOVEMENTS IN SHARE CAPITAL
At the beginning of the period
Shares issued during the period:
- Share based payment to employee
- Placement
- Payment of advisor fees in ordinary shares
- Exercise of options
- Exercise of options – non-cash
Share buy back
Share issue costs – paid in cash
At end of the period
9.B. MOVEMENTS IN NUMBER OF SHARES ON ISSUE
At the beginning of the period
Shares issued during the period:
- Share based payment to employee
- Placement
- Payment of advisor fees in ordinary shares
- Exercise of options
- Exercise of options – non-cash
Share buy back
At end of the period
As at
31-Dec-23
$
As at
31-Dec-22
$
264,956,415
268,081,261
Year ended
31-Dec-23
$
Year ended
31-Dec-22
$
268,081,261
252,356,277
-
-
-
-
-
(3,124,846)
-
264,956,415
-
137,201
37,000
16,105,757
-
-
(554,974)
268,081,261
Year ended
31-Dec-23
Number
5,012,272,899
Year ended
31-Dec-22
Number
3,375,340,370
2,272,728
-
-
-
-
-
12,472,777
2,000,000
1,464,159,751
158,300,001
(249,999,999)
-
4,764,545,628
5,012,272,899
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9.
SHARE CAPITAL (continued)
9.C.
TERMS AND CONDITIONS OF CONTRIBUTED EQUITY
9.C.1 Ordinary shares
Ordinary shares have the right to receive dividends as declared and in the event of the
winding up of the Group, to participate in the proceeds from the sale of all surplus assets in
proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their
holder to one vote, either in person or by proxy, at a meeting of the Group.
9.D. OPTIONS
At the end of the reporting period, no options over unissued shares were on issue.
9.E.
MOVEMENTS IN NUMBER OF OPTIONS ON ISSUE
At the beginning of the period
- Options free attaching to placement
- Options issued to directors, employee and Group secretary
- Options issued to lead manager
- Options issued to advisor
- Options exercised
- Options expired during the period
At end of the period
As at
31-Dec-23
Number
As at
31-Dec-22
Number
-
-
-
-
-
-
-
-
1,622,459,752
-
-
-
-
(1,622,459,752)
-
-
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10.
RESERVES
Nature and purpose of reserves
Share-based Payments Reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and
Directors as part of their remuneration. Refer to Note 18 for further details of these plans.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign
subsidiary accounts.
Share based payment reserve
Foreign currency translation reserve
SHARE BASED PAYMENT RESERVE
Balance at the beginning of the period
Options issued during the period:
- Options issued to directors
- Options issued to lead manager
- Options issued to advisor
Options expired during the period:
- Options expired
As at
31-Dec-23
$
As at
31-Dec-22
$
1,270,534
2,837,975
4,108,509
6,330,794
4,619,480
10,950,274
As at
31-Dec-23
$
6,330,794
As at
31-Dec-22
$
4,976,039
-
-
-
(5,060,260)
-
-
-
-
Limited recourse loan (refer to note 9 and note 18)
-
1,276,709
Share Rights issued during the period:
- Share Rights issued to director (Note 18)
- Share Rights issued to employee (Note 18)
Balance at end of period
10.B
FOREIGN CURRENCY RESERVE
At beginning of the period
Movement during the period
Balance at end of period
-
-
39,409
38,637
1,270,534
6,330,794
As at
31-Dec-23
$
4,619,480
(1,781,505)
2,837,975
As at
31-Dec-22
$
1,141,165
3,478,315
4,619,480
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. CASH FLOW INFORMATION
11.A. RECONCILIATION OF NET PROFIT AFTER TAX TO THE NET CASH FLOWS FROM OPERATIONS
Net profit/ (loss)
Non-cash items
Share based payment expense
(Gain)/Loss on foreign exchange movement
Impairment expenses
Fair value gain on financial assets
Depreciation expense
Amortisation expense
Changes in assets and liabilities
Decrease/(Increase) in receivables and other assets
Increase/(decrease) in payables and accruals
Net cash flows (used in)/from operating activities
Reconciliation of cash:
Cash balances comprises
AUD accounts
USD accounts
Year ended
31-Dec-23
$
Year ended
31-Dec-22
$
16,647,566
15,096,105
-
-
-
-
1,811
10,923,983
1,391,755
(12,711)
143,409
15,000
1,659
5,989,993
425,023
(9,044,429)
18,953,954
-
(2,969,876)
13,959,702
33,615,036
-
1,579,082
24,654,833
26,233,914
3,681,030
30,220,768
33,901,798
11.B. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Balance as at as at 1 January 2022
Net cash from financing activities
Interest accrued on borrowings
Repayments in cash
Balance as at 31 December 2022
Balance as at as at 1 January 2023
Net cash from financing activities
Interest accrued on borrowings
Repayments in cash
Balance as at 31 December 2023
Loans
$
-
7,500,000
750,000
(8,250,000)
-
-
-
-
-
-
Convertible
notes
$
Lease
liability
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
KEY MANAGEMENT PERSONNEL DISCLOSURES
12.A. REMUNERATION OF DIRECTORS AND EXECUTIVES
Details of remuneration paid to Key Management Personnel have been disclosed in the Directors’
Report.
Aggregate of remuneration paid to Key Management Personnel during the period as follows:
Short term employee benefits
Post-employment benefits
Share-based payments
13.
SEGMENT INFORMATION
As at
31-Dec-23
$
396,000
-
-
396,000
As at
31-Dec-22
$
396,000
-
1,239,499
1,635,499
Brookside Energy Limited operates predominantly in one industry being the oil and gas industry in the
USA.
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the Board of Directors in assessing performance and determining the allocation of resources.
The Group is managed primarily on the basis of its oil and gas interests in the USA and its corporate
activities in Australia. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments
are considered to have similar economic characteristics.
Types of reportable segments
(i) Oil and gas exploration and exploitation: Segment assets, including acquisition cost of
exploration licenses and all expenses related to the projects in the USA are reported on in this
segment.
(ii) Corporate, including treasury, corporate and regulatory expenses arising from operating an ASX
listed entity. Segment assets, including cash and cash equivalents, and investments in financial
assets are reported in this segment.
Basis of accounting for purposes of reporting by operating segments.
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker
with respect to operating segments are determined in accordance with accounting policies that are
consistent to those adopted in the annual financial statements of the Group.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13.
SEGMENT INFORMATION (continued)
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives
the majority of economic value from the asset. In the majority of instances, segment assets are clearly
identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, deferred tax assets and intangible assets have
not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct link between the incurrence of the liability
and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to
the Group as a whole and are not allocated. Segment liabilities include trade and other payables.
31-Dec-23
Segment performance
Segment revenue
Segment results
Included within segment result:
- Interest on financing
- Finance costs
- Amortisation expenses
- Share based payment expense
Segment assets
Segment liabilities
31-Dec-22
Segment performance
Segment revenue
Segment results
Included within segment result:
- Interest on financing
- Finance costs
- Amortisation expenses
- Share based payment expense
Segment assets
Segment liabilities
Addition to non-current assets
Corporate
$
Oil & Gas
and other
USA entities
$
Total
$
40,250
(1,554,653)
52,729,613
18,202,219
52,769,863
16,647,566
-
(97)
-
-
2,220,643
(254,091)
21,251
(4,259,219)
(450,000)
(750,000)
-
(1,391,755)
6,466,182
195,946
-
-
-
(10,923,983)
-
92,896,530
(11,429,722)
-
(97)
(10,923,983)
-
95,117,173
(11,683,813)
53,969,610
19,355,324
-
-
(5,989,993)
-
87,295,219
21,873,310
37,861,190
53,990,861
15,096,105
-
(450,000)
(750,000)
(5,989,993)
(1,391,755)
93,761,401
22,069,256
37,861,190
During 2023, $49,790,812 or 97% of the Group’s revenues depended on five customers in the segment.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14.
EARNINGS/(LOSS) PER SHARE
The following reflects the income and share data used in the calculation of basic and diluted
earnings/(loss) per share:
As at
31-Dec-23
$
As at
31-Dec-22
$
Profit/(Loss) used in calculation of basic and diluted EPS
16,647,566
15,096,105
Weighted average number of ordinary shares outstanding during
the year used in calculating diluted EPS
4,899,384,509
4,275,161,851
Basic earnings per share is calculated as net profit or loss attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net gain or loss attributable to members of the parent,
adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would
result from the dilution of potential ordinary shares; divided by the weighted average
number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
15. AUDITOR’S REMUNERATION
The auditor of Brookside Energy Limited is HLB Mann Judd.
Amounts received or due and receivable to the auditor for:
Audit or reviewing the financial report.
Year ended
31 Dec 2023
$
Year ended
31 Dec 2022
$
65,000
65,000
64,840
64,840
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16.
FINANCIAL INSTRUMENTS
The main risks arising from the Group’s financial instruments are market risk, currency risk and interest
rate risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital.
The Board has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing each of these risks and they are
summarised below.
The Group’s principal financial instruments comprise cash and short-term deposits. The main purpose
of the financial instruments is to earn the maximum amount of interest at a low risk to the Group. The
Group also has other financial instruments such as trade debtors, creditors and borrowings which arise
directly from its operations.
Market Risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments.
The Group is exposed to movements in market interest rates on short term deposits. The policy is to
monitor the interest rate yield curve out to 120 days to ensure a balance is maintained between the
liquidity of cash assets and the interest rate return. The Group does not have short- or long-term debt,
and therefore this risk is minimal.
Currency Risk
Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a
currency that is not he functional currency of the Group. The Group deposits are denominated in both
US and Australian dollars. At the year end the majority of deposits were held in US dollars. Currently,
there are no foreign exchange programs in place. The Group treasury function manages the purchase
of foreign currency to meet operational and budgetary requirements.
The Group’s sensitivity to foreign exchange rates has increased during the year mainly to the exposure
of deposits held in US dollars (Note 11A) and US dollars payables (Note 8) at year end in the Group. If
the US dollars exchange rate strengthened (weakened) against all other currencies as at 31
December 2023 by 10% then profit or loss and equity would increase by $1,486,606 (decrease by
$1,486,606).
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will
fluctuate as a result of changes in market interest rates and the effective weighted average interest
rates on classes of financial assets and financial liabilities. The Group does not have short- or long-term
debt, and therefore this risk is minimal. The weighted average interest rate on cash balances at the
end of the year was 4.35% (2022: 0.10%).
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group has adopted the policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or other security where appropriate, as a means of
mitigating the risk of financial loss from defaults.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16.
FINANCIAL INSTRUMENTS (continued)
The Group operates in the energy exploration and production sector; it therefore is not materially
exposed to credit risk in relation to trade receivables. The Group does not have any significant credit
risk exposure to any single counterparty or any Company of counterparties having similar
characteristics.
The Group’s maximum exposure to credit risk at each balance date in relation to each class of
recognised financial assets is the carrying amount, net of any allowance for doubtful debts, of those
assets as indicated in the statement of financial position. The maximum credit risk exposure of the
Group at 31 December 2023 is Nil (2022: Nil).
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages
liquidity risk by monitoring forecast cash flows on a rolling monthly basis. The Group does not have any
significant liquidity risk as the Group does not have any collateral debts. Financial assets and liabilities
are of a short term nature at balance date and therefore a maturity analysis table is not material to
disclose.
Capital Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so it may continue to provide returns for shareholders and benefits for other stakeholders.
Accordingly, the objective of the Group’s capital risk management is to balance the current working
capital position against the requirements to meet exploration programmes and corporate overheads.
This is achieved by maintaining appropriate liquidity to meet anticipated operating requirements, with
a view to initiating appropriate capital raisings as required.
The directors consider that the carrying value of the financial assets and financial liabilities recognised
in the consolidated financial statement approximate their fair value.
16.A. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities measured at fair value in the statement of financial position are
grouped into three levels of the following fair value measurement hierarchy in accordance with AASB
7 Financial Instruments:
Disclosures
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly;
Level 3: unobservable inputs for the asset or liability.
Financial assets of $105,000 (2022: $105,000) represents level 1 financial instruments being shares in a
listed Company.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and financial liabilities approximates fair value because of
their short-term maturity.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. CONTINGENT ASSETS AND LIABILITIES
There are no contingent liabilities or contingent assets.
18.
SHARE BASED PAYMENTS
Share-based payments made during the full year ended 31 Dec 2023 are summarised below.
Payment of advisor fees in ordinary shares
Fair value loss on acquisition of producing assets
Fair value loss on loan repayment
Options issued to directors
Options issued to advisor and lead manager
Limited recourse loan (refer to note 9) (i)
Share Rights issued to director (ii)
Share Rights issued to employee
As at
31 Dec 2023
$
As at
31 Dec 2022
$
-
-
-
-
-
-
-
-
-
37,000
-
-
-
-
1,276,709
39,409
38,637
1,391,755
(i) Limited recourse loan incur interest at the rate of 3% per annum, have a two-year term and are secured against securities
issued under the Securities Incentive Plan (SIP).
(ii) 2,318,182 share rights issued to director David Prentice. There were no vesting conditions on any share rights and the fair
value of the rights has been expensed in full.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value of the share rights issued is
determined by using the closing market price and the optionality in the limited recourse loan was
determined by using a Black and Scholes model.
The fair value of the optionality in the limited recourse loan is as follows:
Number
Grant Date
Expiry Date
Exercise Price
Total Value
Recipient
148,800,001
23 June 2022
23 June 2024
9,500,000
23 June 2022
23 June 2024
$0.011
$0.011
$1,200,091
Directors
$76,618
Officers
Number
Underlying
share price
Expected
volatility
Expected
dividends
Risk free rate
148,800,001
9,500,000
$0.015
$0.015
85%
85%
Nil
Nil
2.93%
2.93%
Value per
option
$0.0081
$0.0081
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19.
SUBSIDIARIES
The consolidated financial statements include the assets, liabilities and results of the following
subsidiaries:
Subsidiary
Incorporation
2023
Ownership
2022
Ownership
BRK Oklahoma Holdings, LLC
Orion Acquisitions, LLC
Anadarko Leasing, LLC
Black Mesa Energy, LLC
USA
USA
USA
USA
100%
100%
100%
100%
100%
100%
100%
100%
20.
PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial performance
Loss for the period
Other comprehensive income
Total comprehensive income
Contingent liabilities
Year Ended
31-Dec-23
$
Year Ended
31-Dec-22
$
1,754,327
37,614,339
39,368,666
6,465,000
37,525,014
43,990,014
254,090
254,090
195,946
195,946
264,956,401
(232,090,619)
(1,596,726)
31,269,056
268,081,239
(230,617,965)
6,330,794
43,794,068
(1,554,653)
-
(1,554,653)
(4,259,375)
-
(4,259,375)
As at 31 December 2022 and 2023, the Group had no contingent liabilities.
Contractual Commitments
As at 31 December 2022 and 2023, the Group had no contractual commitments.
Guarantees entered into by parent entity
As at 31 December 2022 and 2023, the Group had not entered into any guarantees.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. COMMITMENTS AND CONTINGENCIES
The Group has no material commitments or contingencies.
22.
SUBSEQUENT EVENTS
On 9 January 2024, the Company announced the completion of the on-market buy back of its
fully paid ordinary shares that was announced 26 April 2023 (the Share Buy-Back). The Group
acquired a total of 249,999,999 shares or approximately 5% of the pre Share Buy-Back issued
capital at a cost of A$3.13 million and a Volume Weighted Average Price (VWAP) of $0.0125.
As previously announced, the Company intends to seek shareholder approval for a new buy-
back (beyond the 10% in 12-months limitation). This new buy-back is targeted to commence
upon the completion of the FMDP, however, once we have shareholder approval, we will have
flexibility to consider commencing the new buy-back sooner (i.e. before the completion of the
FMDP) if for example we see a period of sustained higher energy prices and/or we generate cash
flow in excess of what is required for our ongoing development of the SWISH AOI Reserves.
No other matters or circumstances have arisen since the end of the full year which significantly
affected or could significantly affect the operations of the Group, the results of these operations,
or the state of affairs of the Group in future financial years.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 58
Directors’ Declaration
1)
In the opinion of the directors of Brookside Energy Limited (the ‘Group’):
a)
the financial statements, notes and the additional disclosures are in accordance with the
Corporations Act 2001 including:
i) giving a true and fair view of the Group’s financial position as at 31 December 2023 and
of its performance for the year then ended; and
ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and
when they become due and payable; and
c)
the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2)
This declaration has been made after reviewing the declarations required to be made to the
directors in accordance with Section 295A of the Corporations Act 2001 for the financial year
ended 31 December 2023.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for
and on behalf of the Directors by:
David Prentice
Managing Director
28 March 2024
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
Page 59
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF BROOKSIDE ENERGY LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Brookside Energy Limited (“the
Company”) and its controlled entities (collectively “the Group”), which comprises the
consolidated statement of financial position as at 31 December 2023, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information,
and the directors’ declaration.
In our opinion, the accompanying financial report of Brookside Energy Limited is in accordance
with the Corporations Act 2001, including:
i)
ii)
Giving a true and fair view of the Group’s financial position as at 31 December
2023 and of its performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations
Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance about whether the financial report
is free from material misstatement. Our responsibilities under those standards are further
described in the Auditor’s Responsibility section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We are independent of the Group in accordance with the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (the code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
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Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current year. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of
the Financial Report section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying financial report.
1. Revenue and related risk of fraud – Note 2
Why significant
How our audit addressed the key audit
matter
The Group's revenue are primarily from the
sale of oil and gas and sales revenue
to
recognised
$51,436,980
(2022:
$52,996,833).
the year amounts
year
the
for
for
to
the
Revenue recognition was a key audit matter
due
risk
(overstatement and/or misappropriation),
importance and materiality of the matter to
users’ understanding of the financial report.
associated
fraud
Our work included, but was not limited to, the
following procedures:
• Ensuring
that accounting policies
comply with Australian Accounting
standards;
• Performing testing over a sample of
revenue to supporting evidence;
• Ensuring the adequacy of disclosures
made within the financial report.
• Comparing sales recorded to external
information,
production
including
volumes and commodity prices to
determine
reasonableness of
revenue recognised.
the
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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2. Producing assets – Note 7
Why significant
Australian Accounting Standards require the
Group to assess whether there are any
indicators that oil and gas properties may be
impaired. If an indicator exists, the Group
must estimate the recoverable amount of the
asset. At year end, the Group concluded that
there were no
impairment charges or
reversals of previous impairment charges
required for any of its Cash Generating Units
(CGUs).
there was an
In determining whether
indicator of
impairment
impairment or
reversal, the Group considered whether
there was a significant change
in the
external or internal factors as set out in Note
6 to the financial statements. The key
assumptions, judgements and estimates
used
the Group’s assessment of
impairment are also disclosed in Note 6.
in
The assessment of impairment indicators is
complex and highly
judgemental and
includes assessing a range of external and
internal factors and modelling a range of
assumptions
the
recoverable amount of a CGU. Accordingly,
this matter was considered to be a key audit
matter.
impact
could
that
How our audit addressed the key audit
matter
We evaluated whether
there had been
significant changes in the external or internal
factors considered by the Group in assessing
whether indicators of impairment or reversal of
impairment existed.
This included assessing the foreign exchange
rates and commodity prices with reference to
market prices
(where available), market
research, market practice, market indices, oil
production data and historical performance. In
addition, future estimated net revenue and
profit stream of each CGUs were reviewed.
We also considered the adequacy of the
financial report disclosures regarding
the
assumptions, key estimates and judgements
applied by management for the Group’s
assessment of indicators of impairment of
non-current assets. These have been
disclosed in Note7.
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3. Exploration and Evaluation – Note 6
Why significant
In accordance with AASB 6 Exploration and
Evaluation of Mineral Resources, the Group
capitalises all exploration and evaluation
expenditure, including acquisition costs, and
subsequently applies the cost model after
recognition.
focussed on
Our audit
the Group’s
assessment of the carrying amount of the
capitalised exploration and evaluation asset,
as this is one of the most significant assets
of the Group.
We have planned our work to address the
audit risk that the capitalised expenditure
might not meet the recognition criteria of the
standard. In addition, we considered it
necessary to assess whether facts and
circumstances existed to suggest that the
carrying amount of an exploration and
evaluation asset may be impaired under
AASB 6.
As at 31 December 2023 the carrying value
of exploration and evaluation assets was
$32,360,881
(2022: $29,054,948), as
disclosed in Note 6.
How our audit addressed the key audit
matter
Our work included, but was not limited to, the
following procedures:
• Conducting a detailed
review of
management’s
of
impairment trigger events prepared in
accordance with AASB 6 including:
assessment
o Assessing whether the rights to
tenure of the areas of interest
remained current at report date
as well as confirming that rights
to tenure are expected to be
renewed for tenements that will
expire in the near future;
o Holding discussions with the
Directors as to the status of
exploration
ongoing
programmes for the areas of
interest, as well as assessing if
there was evidence
that a
decision had been made to
discontinue activities in any
specific areas of interest; and
exploration
activities for the areas of interest had
reached a stage where a reasonable
assessment
economically
of
recoverable reserves existed;
• Considering whether
• Testing, on a sample basis, exploration
and evaluation expenditure incurred
during the year for compliance with
AASB 6 and the Group’s accounting
policy; and
• Assessing the appropriateness of the
relates disclosures in Note 6.
Other Information
Other information is financial and non-financial information in the annual report of the Group
which is provided in addition to the Financial Report and the Auditor’s Report. The directors
are responsible for Other Information in the annual report. The Other Information we obtained
prior to the date of this Auditor’s Report was the Director’s report. The remaining Other
Information is expected to be made available to us after the date of the Auditor’s Report.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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Our opinion on the Financial Report does not cover the Other Information and, accordingly,
the auditor does not and will not express an audit opinion or any form of assurance conclusion
thereon, with the exception of the Remuneration Report. In connection with our audit of the
Financial Report, our responsibility is to read the Other Information. In doing so, we consider
whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. We are
required to report if we conclude that there is a material misstatement of this Other Information
in the Financial Report and based on the work we have performed on the Other Information
that we obtained prior the date of this Auditor’s Report we have nothing to report.
Directors’ Responsibilities for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the Directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 1.C, the Directors also state, in
accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting
Standards.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern
and using a going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our
objectives are to obtain reasonable assurance about whether the financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with Australian Auditing Standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individual or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial
report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. An audit involves
performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
The procedures selected depend on the auditor’s judgement, including assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of the financial report that gives a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control.
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Auditor’s Responsibilities for the Audit of the Financial Report (cont)
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the Directors, as well as
evaluating the overall presentation of the financial report. We conclude on the appropriateness of the
Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the financial report
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern. We evaluate the overall presentation,
structure and content of the financial report, including the disclosures, and whether the financial report
represents the underlying transactions and events in a manner that achieves fair presentation. We
obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the audit. We remain solely responsible for our audit
opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit. The Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements. We also provide the Directors with a statement that we
have complied with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards. From the matters communicated with the Directors, we
determine those matters that were of most significance in the audit of the financial report of the current
period and are therefore key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the directors’ report for the year ended
31 December 2023.
In our opinion, the Remuneration Report of Brookside Energy Limited for the year ended
31 December 2023, complies with section 300A of the Corporations Act 2001.
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Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
HALL CHADWICK AUDIT (WA) PTY LTD
Dated this 28th day of March 2024
Perth, Western Australia
NIKKI SHEN CA
Director
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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ADDITIONAL SHAREHOLDERS’ INFORMATION
A.
CORPORATE GOVERNANCE
A statement disclosing the extent to which the Group has followed the best practice
recommendations set by the ASX Corporate Governance Council during the reporting period is
detailed in the Group’s Appendix 4D and Corporate Governance Statement, which will be lodged
with the ASX at the same time as this report.
B.
SHAREHOLDING
Substantial Shareholders
B.1. Quoted Securities
The Group’s only class of quoted securities on issue during the year was fully paid ordinary shares. No
listed options were on issue during the year and no options were exercised during the year.
B.2.
Unquoted Securities
At the date of this report there were no unquoted options over ordinary shares in the Group and no
unquoted options were exercised during the year
B.3.
Number of holders in each class of equity securities and the voting rights attached
There are 4,485 holders of ordinary shares. Each shareholder is entitled to one vote per share held.
On a show of hands every shareholder of ordinary shares present at a meeting in person or by proxy,
is entitled to one vote, and upon a poll each share is entitled to one vote.
B.4.
Distribution schedule of the number of holders in each class of equity security
By Class
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
Holders of
Ordinary Shares
71
16
5
1,619
2,774
4,485
Number of
Ordinary Shares
6,262
43,758
40,464
103,655,595
4,660,799,549
4,764,545,628
%
0.00%
0.00%
0.00%
2.18%
97.82%
100.00%
B.5. Marketable Parcel
There are 252 shareholders with less than a marketable parcel.
BROOKSIDE ENERGY LIMITED | 2023 ANNUAL REPORT
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ADDITIONAL SHAREHOLDERS’ INFORMATION
B.6.
Restricted Securities
The Group has no restricted securities at the current date.
B.7.
Twenty largest holders of each class of quoted equity security
Fully paid ordinary shares
The names of the twenty largest holders of fully paid ordinary shares, the number of securities and
percentage of share capital held is as follows:
Name
No. of Shares
%
BNP PARIBAS NOMINEES PTY LTD
HEDTEK PTY LTD
STANDARD PASTORAL GROUP PTY LTD
MR DAVID PRENTICE (AND ASSOCIATED ENTITIES)
BEARAY PTY LIMITED
TUTAM PROPERTIES AU PTY LTD
MR IVAN MURRAY HANDASYDE
CELTIC CAPITAL PTY LTD
CITICORP NOMINEES PTY LIMITED
BUTTONWOOD NOMINEES PTY LTD
STONEHORSE ENERGY LIMITED
GREYHOUND INVESTMENTS PTY LTD
MR DOUGLAS PAUL TALBOT
MR WILLIAM ANTHONY MURRAY
RUDIE PTY LTD
ENSEL SUPERANNUATION FUND PTY LTD
MR GRACJAN PIOTR LAMBERT
HOLDSWORTH BROS PTY LTD
DR DANIEL GEORGE PECHAR & MRS KATRINA JANE PECHAR
MR MICHAEL FRY AND ASSOCIATED ENTITIES
417,425,886
200,118,197
125,000,000
111,000,000
74,111,113
70,418,000
67,158,474
62,090,200
55,935,122
50,307,140
45,000,000
44,000,000
43,485,817
40,000,000
39,980,236
37,396,934
33,772,728
30,000,000
28,600,003
28,000,000
8.76%
4.20%
2.62%
2.33%
1.56%
1.48%
1.41%
1.30%
1.17%
1.06%
0.94%
0.92%
0.91%
0.84%
0.84%
0.78%
0.71%
0.63%
0.60%
0.59%
Total
Total Issued Capital
1,603,799,850
33.66%
4,764,545,628
100%
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