Buru Energy Limited Annual Report
For the year ended 31 December 2018
ABN 71 130 651 437
2018 Annual Report
Contents
CHAIRMAN’S LETTER
BUSINESS REVIEW
OPERATIONS REVIEW
DIRECTORS’ REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OR LOSS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
ADDITIONAL ASX INFORMATION
CORPORATE REGISTER
1
2
6
13
19
23
24
25
26
27
28
53
54
57
67
69
BURU ENERGY LIMITED
Dear Shareholder
Your Company has had another transformational year with
the transaction with Roc Oil strengthening the Company’s
balance sheet and bringing a technically driven and proactive
partner to our core Ungani permits and operations. Despite
the volatility in the oil price, production from our Ungani
Oilfield has been solidly profitable and has underpinned
the operations of the Company. The release of the Western
Australian Government’s report of the Scientific Inquiry into
hydraulic fracturing, and Government’s subsequent decision
to lift the moratorium on hydraulic fracturing operations
has also provided a path forward for the Company to realise
significant potential value from its 100% owned extensive
tight gas resources in the Canning Basin.
However, operating conditions have at times been
challenging, with the prolonged 2017/2018 Northern
Australian wet season resulting in the Ungani Oilfield being
shut-in until 2 May 2018 with the consequent deferment of
production during that time. It is therefore pleasing that
there has been no material effect on production to date from
weather events during this year’s wet season.
The longer term production rates from the two new wells
drilled on the field, Ungani 4 and Ungani 5, have been below
expectations and this has resulted in lower oil production than
forecast. However, it is apparent that the Ungani Oilfield is now
moving from the appraisal stage into full development and
the Joint Venture plans to drill additional development wells in
2019 that are prognosed to substantially increase production
levels and more effectively recover the resources from the field.
The rig for this program has been contracted, and the drilling
activity is targeted to commence in early May 2019.
The production system for the field continues to operate
effectively with crude oil transport through the Port of
Wyndham providing a safe and efficient export route.
The Company’s exploration program during 2018 was confined
to the Ungani West 1 well pending the completion of the
Roc Oil transaction and access to a larger rig for the planned
wider exploration program in 2019. The Ungani West 1 well
encountered good quality dolomite reservoir with oil shows,
but unfortunately did not have any commercially producible
hydrocarbons.
However, the Company’s extensive permit holdings provide it
with a world scale exploration prospect portfolio, and the 2019
exploration drilling program is expected to target a number
of these prospects using the rig contracted to drill the Ungani
development wells. This is expected to be a very exciting
program and has the potential to transform both the Company
and the Canning Basin.
Chairman’s Letter
An important part of the Company’s operations is to
build enduring relationships with local communities and
stakeholders, and to demonstrate our commitment to
minimising our environmental impacts, particularly as the
world moves to a lower carbon future. In that regard, it is clear
that hydrocarbons will continue to play a significant role in the
energy mix for some considerable time to come. Australia is
well below self sufficiency in oil production, and natural gas will
provide a transition and backup for further renewable energy
production, and for the needs of the developing world.
Our business is very reliant on our employees and contractors
who have shown great support for the Company during
some difficult periods and the Board is very grateful for their
commitment and efforts.
Our stakeholders have also shown strong support, with
local communities in particular providing support and
encouragement for our activities for which we are most grateful.
The Board also greatly appreciates the continued support of
our loyal shareholders some of whom have been supporting
the Company for an extended period, and we look forward to
achieving success for them and all our stakeholders during 2019.
Eric Streitberg
Executive Chairman
1
ANNUAL REPORT 2018 Corporate Summary
Buru Energy Limited (ASX: BRU) is a Western Australian oil
and gas exploration and production company formed in 2008
with petroleum assets and tenements located onshore in
the Canning Basin in the west Kimberley region of Western
Australia. It is a 50% holder and operator of the Ungani
Oilfield project and holds 100% of potentially world class tight
wet gas resources which are widespread across its tenements.
It has secure tenure over regional acreage holdings across
the whole of the Canning Basin that contain exploration
prospects across a variety of play types. It has the balance
sheet strength and operating capability to systematically
explore these areas, and the experience and technical and
financial capability to bring further hydrocarbon discoveries
into production quickly and effectively.
Board Composition
Eric Streitberg
Eve Howell
Robert Willes
Executive Chairman
Non-executive Director
Non-executive Director
Current Issued Capital
Fully paid ordinary shares
Options (unlisted – Staff )
Trading History
Share price range during 2018
Liquidity (annual turnover as % of average issued capital)
Average number of shares traded per month
Indonesia
Timor
Browse LNG
Ichthys
Truscott
432,074,241
9,150,000
$0.19 to $0.40
26.86%
~ 9.66 million
Darwin
Katherine
Browse Basin
Wyndham
Kununurra
Carnarvon
Basin
Derby
Broome
Dorado
Pluto
Gorgon
Barrow island
Karratha
Port Hedland
Exmouth
Onslow
Canning Basin
Western Australia
Northern
Territory
0
250 km
Location of the Company’s Assets
Carnarvon
2
Business ReviewBURU ENERGY LIMITEDNWSJV North Rankin Prelude
Business Philosophy and Strategy
Shareholder Communications
The Company’s goal is to deliver material benefits to
its shareholders, the State of Western Australia, the
Traditional Owners of the areas in which it operates, and
the Kimberley community, by successfully exploring for
and developing the petroleum resources of the Canning
Basin in an environmentally and culturally sensitive manner.
The Company’s strategy over the
next 12 months includes:
• Maximising the production
levels and resources of the
Ungani Oilfield
• Systematically exploring the
Company’s extensive acreage
holdings in the Canning Basin
• Maintaining profitability and
balance sheet strength
The Company provides continuous disclosure of its operations
under its ASX obligations and more generally in regard to
stakeholder communication. It notes that its disclosure
obligations as a publicly listed company hold it to a significantly
higher standard than general community communications,
and require it to be factual and to be able to substantiate
any statements it makes, with significant penalties applying
for matters that are misleading or deceptive. The disclosure
obligations require the Company to provide shareholders with
all relevant and price sensitive information in a timely manner,
and these obligations are met by ASX releases as information
comes to hand. In addition to this continuous disclosure
process, the Company provides regular shareholder updates,
and quarterly, half yearly and annual reports. All of this
information is made available on the Company’s website (www.
buruenergy.com) which also contains details of the Company’s
background, corporate structure and general activities.
As the continuous disclosure process provides a very
significant volume of detailed operational reporting, this
Annual Report provides a general summary of these details
and also communicates to shareholders the Company’s
business philosophy, economic and financial condition and
future prospects.
EP129
EP129
Derby
Butler
Emanuel
EP129
Blina
Oilfield
L6
Broome
Port Hedland
Carnarvon
Geraldton
Perth
EP458
Fitzroy Crossing
EP436
EP426
Yulleroo
Gasfield
Yakka
Munga
Ungani
Oilfield
Hotdog
L8
Great Northern Highway
EP391
Broome
Rafael
EP457
Ungani
6 and 7
EP457
EP391
EP431
2019 drilling candidates
(circle size indicative
potential resources)
Other prospects and leads
Map of selected exploration prospects
N
0
50km
3
Business ReviewANNUAL REPORT 2018 Funding, Commitments and Prospects
Corporate Responsibility
The Company’s funding position is sound, with a strong
balance sheet, generally discretionary exploration and
development expenditure, and income from oil production
from its Ungani Oilfield.
The Company maintains a detailed process to test its
financial position on a short term and long term basis
including detailed internal cash flow models. These models
are updated as required for external and internal factors
and stress tested over various time periods to ensure all
reasonable scenarios are modelled, including the Company’s
ability to meet commitments as they fall due. Discretionary
investment decisions including exploration, development,
and production are tested against these cash flow models to
ensure the appropriate use of the Company’s funds.
Formal Board control over the Company’s activities is
maintained through these cash flow modelling scenarios
together with annual budgets that are considered in detail by
the Board. The Board also reviews monthly operational and
detailed financial accounts and cash flow projections.
Corporate Governance
The ASX core principles of corporate governance have been
integrated into the governance policy of the Company
together with specific principles relevant to a company of
Buru Energy’s nature and size. These policies are regularly
reviewed and the Company’s compliance with them formally
monitored.
The Board currently has three Directors and a majority (two
out of three) of independent Directors. The Chairman is not
independent as he is a significant shareholder and acts as
the chief executive of the Company. This arrangement does
not comply with ASX best practice guidelines but has the
support of major shareholders, and the Board is of the view
that the current composition of the Board is appropriate for
the current situation of the Company. The Board regularly
considers whether this structure continues to be appropriate.
The full Corporate Governance Statement of the Company is
included in this Annual Report at pages 57 to 66.
The Company’s responsibilities to the community and its
shareholders are supported by codes of conduct and a
number of specific policies, the details of which are available
on the Company’s website. The Company’s activities include
engagement with a broad variety of stakeholders in the areas
in which it operates including local communities, Traditional
Owners, and pastoralists. The level of this engagement varies
directly with the level of the Company’s activities but includes
a long term program of information provision and feedback.
This longer term program also includes substantial support
of local community activities through a structured program
aimed at community development.
The Company has a strong commitment to ensuring that it
engages local community members and contractors in its
activities as far as practicable.
The Kimberley region has a large and disparate Aboriginal
population that is dispersed throughout the region and the
Company’s activities interact with many communities and
more generally with Aboriginal people in the area. The
Company is committed to assisting Aboriginal people to
achieve economic independence through employment,
business development and training
Business Risk Management
The Company manages risk through a formal risk
identification and risk management system, details of which
are included in the Corporate Governance Statement. The
identified risks are considered to be in the normal course of
the Company’s involvement in the hydrocarbon exploration
and extraction industry and the Company employs
management and contractors who have relevant experience
in the industry and the ability to identify and manage
such risks as they arise. The Board has direct oversight and
involvement in the risk review and management process and
engages external consultants to assist with the process as
appropriate.
The Company has in place an operational risk management
system that is implemented through Health Safety and
Environment management systems that are subject to
detailed Government regulatory oversight. Included in the
identified operational risks are those specific risks associated
with the oil and gas industry including the production,
processing and transport of crude oil, and the testing and
evaluation of high pressure gas accumulations, and the
associated HSE risks and impacts of these activities.
4
Business ReviewBURU ENERGY LIMITED The Company’s compliance with its operational risk
management system is continuously audited internally
and externally through structured auditing and reporting
processes.
Corporate risks are also managed through a series of policies
and procedures and the Company’s formal risk identification
and management system. The systems ensure that the
Company’s financial position is sound, financial systems and
controls are robust, insurances are effective, and internal
personnel management systems ensure the business is
appropriately resourced and staffed.
The Company is cognisant of the potential effects of climate
change policies instigated by various State and Federal
governments on both the costs and time frames of projects.
It is particularly aware of the changing dynamics in relation
to community attitudes to fossil fuel extraction and use and
these factors are considered in the investment decisions
made by the Company, together with the effects such policies
may have on commodity prices on both a local and global
scale. There have been no direct effects on Buru’s operations
by these matters except for the moratorium on hydraulic
fracturing put in place by the Western Australian government
while a scientific inquiry was conducted. As expected, the
inquiry came to the conclusion that the activity was low
risk and the moratorium has been lifted in the areas of the
Company’s permits.
The Company’s activities during the year continued to be
focused on exploration, development and production within
its petroleum exploration permit and licence areas in the
Canning Basin in the northwest of Western Australia.
Oil tanker on Ungani access road
5
Business ReviewANNUAL REPORT 2018 Operations Review
Roc Oil Transactions
Traditional Owner Engagement
No petroleum activity can be conducted on the Company’s
licences without the involvement of the Traditional Owners of
the areas, and Buru has never accessed an area without this
consent.
In order to formalise these access arrangements, the
Company has Heritage Protection and Land Use Agreements
in place with Traditional Owners in all of its permit areas. For
any ground disturbing activities, the Company first requests
and funds a formal heritage survey organised and conducted
by the Traditional Owners, which may involve up to eight
Traditional Owners together with relevant anthropological
and archaeological advisers to the Traditional Owners. If a
clearance is received from the Traditional Owners to proceed
with the activity in that area, further monitoring is carried
out on site by Traditional Owners as the activity, for example
seismic surveys and drill pad clearances, is carried out. This
extensive and formalised process ensures heritage values are
protected in all of Buru’s activities.
Heritage Protection and Land Use Agreements ensure all
company operations are undertaken with respect for the
social, heritage, cultural and environmental values of the
relevant Traditional Owner group. Specifically in relation
to the Ungani Oilfield, the Company has Native Title
Agreements with the Nyikina Mangala, Karajarri Yanja and
Yawuru Native Title Groups. The agreements recognise the
importance of the Ungani area to the Traditional Owners and
highlight the Joint Venture’s commitment to ensuring that
the development of the Ungani Oilfield is undertaken with
respect for the social, cultural and environmental interests of
the Traditional Owners.
Buru has a number of Nyikina Mangala and Yawuru Aboriginal
employees both at the Ungani Oilfield, and to support
our Kimberley operations more generally. The Company
is exceeding its targets for Aboriginal employment under
the relevant agreements and enjoyed full retention of its
Aboriginal workforce in the Kimberley during 2018. Buru
also provides support for local Aboriginal ranger groups for
key areas in which it operates. The Company continues to
give preference to contracting local Kimberley Aboriginal
businesses to provide services with a ~35% increase in the
value of contracts delivered by Aboriginal businesses in 2018
compared to 2017.
On 21 May 2018, Buru announced it had entered into two
transactions with Roc Oil (Canning) Pty Limited (Roc Oil) in
relation to its Canning Basin oil production and exploration
assets. Roc Oil purchased a 50% interest in the Ungani
production licences L20 and L21 (the Ungani Oilfield) for a
total cash payment of $64 million.
The parties also agreed that Roc Oil will farm into a 50%
interest in exploration permits EP 391, EP 428 and EP 436 by
paying $20 million of a $25 million exploration program of
up to four wells. These permits cover a significant part of the
prospective Ungani conventional oil trend. This transaction
was conditional on the termination, by an Act of the
Parliament of Western Australia, of the State Agreement dated
7 November 2012. This Act was approved by the Western
Australian Government in August 2018 and consequently
the farm-in agreement was completed in September 2018.
The farm-in transaction did not include the Laurel Formation
unconventional gas accumulation within the exploration
permits which remain 100% owned by Buru. This includes the
Yulleroo Gasfield. Buru remains as operator of all permits.
Further details about the transactions were set out in Buru’s
ASX release dated 21 May 2018.
EP 457 & EP 458
Further to continued negotiations with Mitsubishi as part of
the asset swap transaction of May 2017, Buru entered into
a purchase agreement with a wholly owned subsidiary of
Mitsubishi Corporation (Diamond Resources (Barbwire) Pty
Ltd) to purchase its 37.5% interests in exploration permits
EP 457 and EP 458. Under the terms of the permit Joint
Venture agreements, the other participant in the permits,
Rey Resources Limited, exercised its pre-emptive rights
and consequently, the interests in the permits will now be
Buru 60% and Rey 40% after settlement of the transactions
expected during early 2019.
The permits are prospective for conventional oil in a number
of formations and also contain significant potential for the
Laurel Formation tight wet gas play which will be evaluated
once the changes to regulations arising from the Scientific
Inquiry have been put in place.
The Joint Venture will now review the overall prospectivity
of the permits with the forward program likely to include the
reprocessing of existing 2D seismic data and potentially the
acquisition of new seismic data in 2019.
6
BURU ENERGY LIMITED Operations Review
Production - Ungani Oilfield
The Ungani Oilfield and the associated accumulations are the
Company’s currently producing assets.
The Ungani Oilfield lies some 70 kms to the east of Broome
and produces high quality oil from a conventional dolomite
reservoir at depths of some 2,400 metres. The produced
oil is trucked to Wyndham Port where it is stored for lifting
by ship to be transported to refineries in SE Asia. All of the
producing wells in the field are currently on artificial lift with a
combination of electric submersible pumps and beam pumps.
The field facilities are simple and production is low pressure,
with principal operating costs being transport of crude oil and
operating personnel.
The field facilities are subject to ongoing modifications to
increase throughput capacity and operational efficiency
as part of the Company’s HSE monitoring and continuous
improvement strategy.
Other than a brief period of production from 6 January to
12 January 2018, the Ungani Oilfield was shut in from 1
January 2018 to 2 May 2018. The shut down was caused
by record rainfall in late 2017 and early 2018, from Cyclone
Hilda, Cyclone Joyce and then Cyclone Kelvin with the
rainfall flooding the Ungani access road and preventing truck
movements for the shipment of oil from the field.
Production for the year totalled approximately 330,000 bbls
(gross) of crude oil at an average rate of approximately 1,300
bopd for the 251 days that the field was on production. In
accordance with the 21 May 2018 completion date of the sale
of 50% of the Ungani Oilfield to Roc Oil, production prior to
that date was 100% to Buru and production subsequent to
that date 50% to Buru. A significant milestone was achieved
during September 2018 with the production of the millionth
barrel of oil from the field.
A significant milestone was achieved during September 2018 with
the production of the millionth barrel of oil from the field.
Ungani production operations
7
ANNUAL REPORT 2018
Operations Review
Ungani Production Facility
Following the Joint Venture’s decision to conclude drilling
activity on the Ungani Oilfield after completion of the Ungani
4 sidetrack, production will be confined to the existing wells
until the recommencement of drilling operations in May
2019. The results of both the recently drilled wells, further
production data, and mapping of the reprocessed Ungani 3D
seismic volume will be incorporated into reservoir models to
revise the resource potential of the field and guide the further
drilling program in the field.
With the geological knowledge gained from the additional
wells, and the performance of the existing wells with
artificial lift, the development of the Ungani Oilfield is now
moving from appraisal/early production into longer term
development. This may involve the drilling of horizontal wells
to more effectively drain the reservoir. The contracted Loc
405 rig has the capability to effectively undertake the 2019
development program.
The Ungani 1ST1 and Ungani 2 wells were on production via
electric submersible pumps (ESPs) throughout the period
with Ungani 4 and Ungani 5 both commissioned prior to the
May 2018 production restart with flowlines constructed to the
Ungani Production Facility.
Initial testing operations on the Ungani 4 well established
a flow rate of some 350 bopd of clean oil. This oil flow rate
was anomalously low which was interpreted to be due to
significant reservoir damage incurred during the drilling
and completion of that well and the Joint Venture agreed to
undertake a sidetrack of the well as the first operation in the
2018 drilling program and this was completed in December
2018.
The Ungani 5 well initially flow tested at rates of up to 1,200
bopd of essentially clean oil. Flow rates on this well also
declined quickly and a beam pump was installed in November
and production is continuing. The Ungani Far West 1 well was
brought on production late in September with good initial
flow rates which then declined as expected as water cuts
increased. A beam pump was installed, and production is
continuing.
8
BURU ENERGY LIMITED Operations Review
Sales
Ungani crude oil is trucked by Fuel Trans Australia Pty Ltd
to Wyndham Port and stored in Cambridge Gulf Limited’s
storage Tank 10 prior to its FOB sale to Trafigura. The price
received FOB Wyndham represents the realised Brent linked
oil price less the buyer’s (Trafigura) fixed marine transport
discount.
Gross sales of Ungani crude during the period totalled
approximately 350,000 bbls. Given the 80,000bbl storage
capacity at Wyndham, there will always be a variance between
volumes produced and sold on an annualised basis. All
liftings during the 2018 year are shown in the table below:
Quantity
Revenue
Buru
Gross A$
Share %
Lifting Date
Ship
11 Jan 18
MT Sao Domingos Savio
8 Jun 18
Magic Wand
10 Jul 18
Palanca Muscat
16 Aug 18
MT Security
21 Oct 18
MT VS Lisbeth
1 Jan 19
Palanca Miami
bbls
53,377
72,722
53,328
51,962
74,432
46,8672
$ 4.2 M
$ 6.6 M
$ 4.9 M
$ 4.7 M
$ 8.0 M
$ 3.2 M
TOTAL
352,688
$ 31.6 M
Quantity Net
bbls
53,377
58,616
26,664
25,981
37,261
23,434
Revenue
FOB Price
Net A$
$ 4.2 M
$ 5.3 M
$ 2.4 M
$ 2.4 M
A$/BBL
$79.58
$90.28
$91.33
$90.68
$ 4.0 M
$107.57
$ 1.6 M
$68.643
225,333
$ 19.9 M
$88.21
100%1
81%1
50%
50%
50%
50%
64%
1. Production prior to the 21 May 2018 transaction with Roc Oil was 100% to Buru with production after that date being 50% to Buru.
2. Lifting took place during the period 31 December 2018 to 1 January 2019. Total lifting was for 69,687bbls, with 46,867bbls
recognised as revenue in 2018 with the remainder recognised as revenue in 2019.
3. Provisional price subject to January 2019 pricing. Final price was ~A$75/bbl with the adjustment to revenue recognised in 2019.
Ship loading at Wyndham Port
Buru’s share of revenue from the Ungani Oilfield for the
year totalled A$19,877,000 at an average received price
of A$88/bbl. Cost of sales totalled A$10,417,000 at A$46/
bbl giving a gross profit from sales of Ungani crude net
to Buru of A$9,460,000, before amortisation charges, at
an average annualised margin of A$42/bbl. The margin is
heavily dependent on production rate and the expected
increase in production from the 2019 drilling program should
substantially improve the operating margin.
9
ANNUAL REPORT 2018 Operations Review
Lennard Shelf Oilfields
Exploration
The Blina and Sundown and associated oilfields remained
shut-in during the period with maintenance and well
inspections continuing. Systematic operations to complete
site remediation were continued during the year with
all legacy wells with no future potential expected to be
remediated during 2019.
Technical studies of the Lennard Shelf have identified a
number of prospects and these will be further evaluated in
the coming year with the objective of undertaking future
drilling programs.
Exploration drilling activity during the year was confined
to the Ungani West 1 well with the operational focus on
Ungani production and working with Roc Oil to assess the
prospectivity of the area prior to the 2019 drilling program.
The 2018 drilling program was undertaken with the DDGT 1
rig, which although adequate for the 2018 drilling program
has limited depth capacity and is not suitable for deeper
exploration prospects and the drilling of more complex wells
at Ungani.
Ungani West 1
The Ungani West 1 exploration well is located on Production
License L20 some 1,600 metres to the west of the Ungani
Production Facility and was funded 80% by Roc Oil under the
terms of the Farm In Agreement between the parties, with
Buru Energy contributing 20%. The prospect lies between the
producing Ungani and Ungani Far West oilfields and although
of modest size was considered a viable exploration target.
The results of the well indicated that although oil shows were
encountered in a well developed Ungani Dolomite reservoir
section, there were no producible hydrocarbons and the well
was suspended for use as a future water injection well.
Although this was a disappointing result, the excellent
reservoir encountered and the evidence for extensive oil
migration are encouraging for further exploration.
Exploration Review and 2019 Drilling Program
preparation
It is intended to drill both high graded exploration prospects
and further Ungani production wells during 2019, and the
2018 geological and geophysical program concentrated on
preparing for this program.
A number of initiatives were undertaken, apart from the
internal geological and geophysical analyses, and these
included an extensive 3D seismic reprocessing program, a
geochemical exploration program and the contracting of the
Loc 405 higher capacity drilling rig.
DDGT 1 drilling rig
10
BURU ENERGY LIMITED 2019 drilling program
The proposed drilling program includes both exploration and
development wells and will require a rig with considerably
more capability than the DDGT1 rig used for the 2018 program
and hence that rig was demobilised at the conclusion of the
2018 program. The rig contracted for the 2019 drilling program
is NewGen Drilling Pty Ltd (NGD) Loc 405 rig which is a fully
automated modular rig with a nominal depth capacity of 5,000
metres, as well as the capacity to drill high angle and horizontal
wells. Because of its modular nature and self-erecting
capability, the rig is very well suited to remote operations in
areas such as the Canning Basin.
The rig contract was executed at the end of the year and the
rig is available for mobilisation from Perth for the 2019 drilling
program, which is planned to commence as early as practicable
in the dry season (nominally early May 2019).
Unconventional Gas Assets
Buru has title and exclusive rights to the extensive tight wet gas
resources of the Laurel Formation through the central part of
the Fitzroy Trough of the Canning Basin. Buru and its previous
Joint Venture partner undertook a comprehensive evaluation of
the wet gas resources in the Yulleroo Gasfield area where it had
drilled three wells additional to the 1967 Yulleroo 1 discovery,
and undertaken a hydraulic stimulation (frac) program in the
Yulleroo 2 well in 2010 with encouraging results.
Further review of the Yulleroo resource has identified a number
of horizons in the existing wells where there is potential for
conventional gas accumulations, and these are currently being
evaluated for testing in 2019 with the objective of quantifying
their ability to supply local industry and power generation from
conventional gas.
Scientific Inquiry into hydraulic stimulation (fraccing)
On 27 November 2018 the Western Australian Government
released the report of the independent Scientific Inquiry into
hydraulic fracture stimulation, together with the Government’s
response to the report. This response included a range of
regulatory measures that will take some time to implement.
The moratorium on fraccing in the northern Perth Basin and
Canning Basin was lifted as part of this response, however, the
implementation of the additional regulations and approvals
arising from the report’s recommendations means that there is
likely to be a substantial delay before any activities are able to
be carried out.
The Company has already demonstrated that under the
existing regulatory regime it has conducted fracs on three
wells on a total of 14 zones with no issues and will continue
to work constructively with Government to ensure the safe,
commercially and environmentally sustainable developments,
of the tight gas and liquid resources of the Canning Basin.
Operations Review
Loc 405 drilling rig
11
ANNUAL REPORT 2018 Operations Review
Health, Safety and Environment
As an onshore petroleum operator in Western Australia, Buru
Energy is regulated by the Department of Mines, Industry,
Resources and Safety (DMIRS) under the Petroleum and
Geothermal Energy Resources Act 1967 (PGER Act), Petroleum
Pipelines Act 1969 and associated regulations. Buru’s
activities are also regulated by the Department of Water and
Environmental Regulation (DWER) under the Rights and Water
and Irrigation Act 1914 and the Environmental Protection Act
1986 and other relevant agencies and regulations.
Health, safety and environmental approvals are required to
be in place prior to undertaking petroleum activities. During
all activities, the Company implements a structured internal
environmental audit process to identify opportunities for
improvement and measurement of HSE performance. Regular
external audits and inspections are also undertaken by
regulatory agencies to measure compliance against
approved plans.
Environmental performance objectives are objectives set by
the Company for minimising the environmental impacts and
environmental risks of the petroleum activity. Environmental
performance objectives have associated measurement criteria
that determine if the Company has met the objectives for the
activity with both metrics included in the Environment Plan for
a petroleum activity and must be approved by the regulator
(DMIRS) prior to undertaking that activity. Since 2012/13, the
Company has had year-on-year improvement in compliance
with measurement criteria with no measurement criteria
requiring action since 2016.
The Company also recorded good health and safety
performance over 2018 with a single reportable health and
safety incident relating to a contractor straining a stomach
muscle during routine operations.
During 2018, Buru Energy was not aware of any material
non-compliance in relation to health safety or environmental
legislation.
12
BURU ENERGY LIMITED Directors’ Report
For the year ended 31 December 2018
The Directors present their report together with the consolidated financial statements of the Group comprising Buru Energy
Limited (“Buru Energy” or “Group”) and its subsidiaries for the year ended 31 December 2018, and the auditor’s report thereon.
The remuneration report for the year ended 31 December 2018 on pages 19 to 22 forms part of the Directors’ report.
Directors
The Directors of the Company at any time during or since the end of the financial year are:
Name, qualifications and
independence status
Mr Eric Streitberg, BSc (App Geoph)
Executive Chairman
Experience, special responsibilities and other directorships
Mr Streitberg has more than 40 years of experience in petroleum geology and
geophysics, oil and gas exploration and oil and gas company management. He was
a founding shareholder and held the position of Managing Director of ARC Energy
Limited from 1997 until August 2008, during which time ARC Energy Limited was
transformed from a junior oil and gas exploration company into a mid-size Australian
oil and gas producer. He was also the founding shareholder and Managing Director of
Discovery Petroleum which was a key participant in the renaissance of the Perth Basin
as a significant gas producer until the takeover of that company in 1996. Prior to that he
held various senior international exploration roles with Occidental Petroleum and BP. He
was a founding shareholder and Non-executive Director of Adelphi Energy Limited from
2005 until its takeover in 2010.
He is a Fellow of the Australian Institute of Mining and Metallurgy and the Australian
Institute of Company Directors, a member of the Society of Exploration Geophysicists,
Petroleum Exploration Society of Australia and the American Association of Petroleum
Geologists.
Mr Streitberg is a Director and past Chair of the Australian Petroleum Production and
Exploration Association and has also chaired the APPEA Exploration and Environment
Committees. He is a past Chair of the Marine Parks and Reserves Authority of Western
Australia.
Mr Streitberg is a Certified Petroleum Geologist and Geophysicist and holds a Bachelor
of Science (App. Geoph.) from the University of Queensland.
Mr Streitberg has been a Director since October 2008 and has been the Executive
Chairman since May 2014, he is a member of the Audit and Risk Committee and the
Remuneration and Nomination Committee.
13
ANNUAL REPORT 2018 Directors’ Report
For the year ended 31 December 2018
Name, qualifications and
independence status
Ms Eve Howell
Independent Non-executive Director
Mr Robert Willes
Independent Non-executive Director
14
Experience, special responsibilities and other directorships
Ms Howell has over 40 years of experience in the oil and gas industry in a number of
technical and managerial roles, primarily with Amoco Corporation, Apache Energy Ltd
and Woodside Energy Ltd. She is a director of MMA Offshore Ltd.
Ms Howell has previously served on a number of boards including Downer EDI Ltd,
Tangiers Petroleum (as Executive Chairman), the Fremantle Port Authority, the Australian
Petroleum Production and Exploration Association where she chaired the Environment
Committee, and as a board member and President of the Australian Mines and Metals
Association. She is a Graduate of the Australian Institute of Company Directors.
Ms Howell began her exploration career in the UK and since 1981 has worked for
several Australian based companies including Apache during a time when the company
developed significant oil production from the offshore Carnarvon Basin and became
the second largest domestic gas supplier in Western Australia. She held various
senior positions with Apache in Australia including Exploration Manager, Business
Development Manager and Managing Director. Between 2006 and 2011, Ms Howell was
a Woodside Executive Committee member, with her positions including Executive Vice
President - North West Shelf and Executive Vice President – Health, Safety and Security
for all Woodside’s operations.
Ms Howell holds a Bachelor of Science (with Honours in Geology and Mathematics) from
King’s College, University of London and an MBA from the Edinburgh Business School,
Heriot Watt University.
Ms Howell has been a Director since July 2014, is the Chairperson of the Remuneration
and Nomination Committee and a member of the Audit and Risk Committee.
Mr Willes has over 30 years of extensive international experience in the oil and gas and
energy industries. He is currently Managing Director of Challenger Energy Ltd, an ASX-
listed oil and gas explorer with exposure to the emerging world-scale shale gas province
in South Africa’s Karoo Basin. He has previously served on a number of boards including
the Australian Petroleum Production and Exploration Association (APPEA), North West
Shelf Gas Pty Ltd, North West Shelf Liaison Co. Pty Ltd, North West Shelf Australia LNG Pty
Ltd, North West Shelf Shipping Services Co. Pty Ltd, Carbon Reduction Ventures Pty Ltd
and Perth Centre for Photography. His early career with BP involved several positions in
petroleum product supply, trading and marketing, and as a lead negotiator for numerous
gas transactions in Europe. He subsequently joined BP’s Group Mergers and Acquisitions
team, where he led the divestments of Burmah Castrol’s Chemicals Division and Great
Yarmouth Power Ltd, and advised the Corporation on a number of acquisition opportunities.
In Australia, Mr Willes was BP’s General Manager of the North West Shelf LNG Project. He
also had overall accountability for BP’s interests in the Browse LNG and Greater Gorgon LNG
Projects, and for Business Development activities in Asia Pacific. More recently, Mr Willes
was CEO of Eureka Energy Limited, and was instrumental in managing the recommended
A$107million on-market takeover by Aurora Oil and Gas Limited. Mr Willes is a Graduate of
the Australian Institute of Company Directors and member of the Association of International
Petroleum Negotiators. He holds an Honours Degree in Geography from Durham University
in the UK, and has completed Executive Education Programmes at Harvard Business School
in the USA and Cambridge University in the UK.
Mr Willes has been a Director since July 2014, is the Chairperson of the Audit and Risk
Committee and a member of the Remuneration and Nomination Committee.
BURU ENERGY LIMITED Directors’ Report
For the year ended 31 December 2018
Company Secretary
Mr Shane McDermott, CA, AGIA, BComm (Accounting and Finance) has an accounting and auditing background having worked
at a large international accounting practice before joining Buru Energy in 2009. Mr McDermott has been Company Secretary
since December 2011 and is the Chief Financial Officer of the Company. He is a member of the Institute of Chartered Accountants
Australia and an Associate of the Governance Institute of Australia.
Board and Committee Meetings
The number of Board and Committee meetings and the number of meetings attended by each of the Directors of the Company
during the year were:
Meeting
Board Meetings
Audit & Risk
Committee Meetings
Remuneration & Nomination
Committee Meetings
Director
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eric Streitberg
Eve Howell
Robert Willes
14
14
14
14
14
14
3
3
3
3
3
3
4
4
4
4
4
4
Principal Activities
The principal activity of the Group during the period was oil and gas exploration and production in the Canning Basin, in the
northwest of Western Australia. There were no significant changes in the nature of the Group’s principal activities during the
period.
Operations Review
The Operations Review for the year ended 31 December 2018 is set out on pages 6 to 12 and forms part of this Directors’ Report.
Operating Results
The consolidated profit of the Group after providing for income tax for the year ended 31 December 2018 was $29,737,000 (31
December 2017: loss of $6,217,000).
Financial Position
The net assets of the Group totalled $94,324,000 as at 31 December 2018 (31 December 2017: $64,090,000).
Dividends
The Directors do not propose to recommend the payment of a dividend for the period. No dividends have been paid or declared
by the Company during the current period.
Significant Changes in the State of Affairs
No significant change in the state of affairs of the Group occurred during the period other than already referred to elsewhere in
this report.
After Balance Date Events
No significant events have occurred subsequent to balance date other than those already disclosed in the Operations Review.
15
ANNUAL REPORT 2018 Directors’ Report
For the year ended 31 December 2018
Likely Developments
The Group’s likely developments in its operations in future financial years and the expected results of those operations have
been included generally in the Operations Review. Other than as disclosed elsewhere, disclosure of information regarding likely
developments in the operations of the consolidated entity in future financial years and the expected results of those operations
is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed.
Environmental Regulations
Buru Energy is subject to environmental regulation under relevant Australian and Western Australian legislation in relation to
its oil and gas exploration and production activities. DMIRS is the primary regulator in Western Australia for petroleum activities
though the Group’s activities are also regulated by DWER. The Directors actively monitor compliance with these regulations. As
at the date of this report, the Directors are not aware of any material breaches in respect of the regulations.
Directors’ Interests
The relevant interest of each Director in the shares or options issued by the Company, as notified by the Directors to the ASX in
accordance with s205G(1) of the Corporations Act 2001, at the date of this report were as follows:
Directors
Eric Streitberg
Eve Howell
Robert Willes
Total
Share Options
Ordinary Shares
Unlisted Options
21,225,409
294,000
132,000
21,651,409
-
-
-
-
At the date of this report, the unissued shares of the Company under option (all of which are unlisted and held by employees of
the Company) were as follows:
Date of Expiry
31 December 2019
31 December 2020
Exercise Price
Number of shares under Option
$0.31
$0.50
4,000,000
5,150,000
All share options are over ordinary shares in the Company. All options are unlisted and expire on the earlier of their expiry date
or within 30 days from termination of the employee’s employment. These options do not entitle the holder to participate in any
share issue of the Company or any other body corporate. Further details about options granted to senior executives during the
financial year are included in the Remuneration Report on pages 19 to 22. No options have been granted since the end of the
reporting period.
16
BURU ENERGY LIMITED Directors’ Report
For the year ended 31 December 2018
Indemnification and Insurance of Officers
The Company has agreed to indemnify all current Directors and officers of the Company and its controlled entities against all
liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors
and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good
faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.
During the year, the Company has paid insurance premiums of $95,590 (2017: $79,860) in respect of Directors’ and officers’
liability. The premiums cover current and former Directors and officers, including senior executives of the Company and
Directors and secretaries of its controlled entities. The insurance premiums relate to:
•
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their
outcome; and
• other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper
use of information or position to gain a personal advantage.
Proceedings on Behalf of Company
No person has applied for leave from any Court to bring proceedings on behalf of the Company or intervene in any proceedings
to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the period.
Non-audit Services
During the period, the Company’s auditor did not perform any other services in addition to their statutory full year audit, half
year review, Joint Venture audits and a royalty audit. During the year ended 31 December 2018, the amount paid or payable to
the Group’s auditor (KPMG Australia) for statutory and other audit and review services totalled to $91,500 (31 December 2017:
$96,000).
17
ANNUAL REPORT 2018 Directors’ Report
For the year ended 31 December 2018
Auditor’s Independence Declaration
The lead auditor’s independence declaration is set out on page 23 and forms part of the Directors’ Report for the year ended 31
December 2018.
Rounding off
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191 and in
accordance with that instrument, amounts in the Consolidated Financial Statements and Directors’ Report have been rounded off
to the nearest thousand dollars, unless otherwise stated.
This report is made in accordance with a resolution of Directors.
Mr Eric Streitberg
Executive Chairman
Perth
26 March 2019
Mr Robert Willes
Non-executive Director
Perth
26 March 2019
18
BURU ENERGY LIMITED
Remuneration Report - Audited
For the year ended 31 December 2018
Principles of remuneration - Audited
The Directors present their Remuneration Report for Buru Energy for the year ended 31 December 2018. This remuneration
report outlines the remuneration arrangements of the Company’s Directors and other key management personnel (KMP) in
accordance with the requirements of the Corporations Act 2001 and its Regulations. In accordance with section 308(3C) of the
Corporations Act 2001, the Remuneration Report has been audited and forms part of the Directors’ Report.
KMP have the authority and responsibility for planning, directing and controlling the activities of the Group and comprise the
Directors, executives and senior management in accordance with s300A of the Corporations Act 2001.
Remuneration levels for KMP are competitively set to attract and retain appropriately qualified and experienced Directors and
executives. The remuneration structures explained below are designed to reward the achievement of the Company’s strategic
objectives and achieve the broader outcome of the creation of shareholder value. The Company’s remuneration structures take
into account:
•
•
the capability and experience of KMP; and
the Group’s corporate, operational and financial performance.
Remuneration packages include a mix of fixed and variable remuneration, and short and long term performance based
incentives.
Fixed remuneration
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges related
to employee benefits), as well as employer contributions to superannuation funds. Remuneration levels are reviewed annually
by the Remuneration and Nomination Committee through a process that considers individual, segment and overall performance
of the Group. In addition, external consultants may provide analysis and advice to ensure the Directors, executive and senior
management remuneration is competitive in the market place. Remuneration is also reviewed on promotion.
Performance linked remuneration
Performance linked remuneration includes both short term and long term incentives, and is designed to reward KMP for meeting
or exceeding the Company’s expectations and agreed objectives. Any short term incentive (STI) is an ‘at risk’ bonus provided in
the form of cash, while any long term incentive (LTI) is provided under the Employee Share Option Plan (ESOP) to KMP. The LTIs
are structured to ensure that incentives are appropriately aligned to sustainable shareholder value creation.
Short term incentive bonuses
The payments of any STI bonuses are linked to the fulfilment of key performance indicators (KPIs). The KPIs are designed to
promote shareholder value creation and include financial and non-financial measures. The financial and non-financial KPIs
include base and stretch targets related to health and safety results, production levels, exploration outcomes and share price
appreciation. All STI bonuses are subject to Board approval.
Long-term incentive bonuses
The Remuneration and Nomination Committee considers that an LTI scheme structured around equity based remuneration is
necessary to attract and retain the highest calibre of professionals to the Group, whilst preserving the Group’s cash reserves.
The purpose of these schemes is to align the interests of KMP with shareholders and to reward, over the medium term, KMP for
delivering value to shareholders through share price appreciation.
Options are issued under the ESOP in accordance with the thresholds set in the plan approved by shareholders. The number
of options available to be issued under the ESOP is limited to 5% of the total number of ordinary shares in the Company. The
options are issued for no consideration and vest immediately. All options refer to options over ordinary shares of Buru Energy
Limited which are exercisable on a one for one basis.
19
ANNUAL REPORT 2018 Remuneration Report - Audited
For the year ended 31 December 2018
Consequences of performance on shareholder wealth
The Board considers that the most effective way to increase shareholder wealth is through the successful exploration and
development of the Group’s oil and gas exploration permits and increasing production at the Group’s production licenses. The
Board considers that the Group’s LTI schemes incentivise KMP to achieve these outcomes by providing rewards, over the short
and long term that are directly correlated to delivering value to shareholders through share price appreciation. The Company’s
relative share price performance is the primary measure when the Board considers the effectiveness of STI and LTI remuneration
consequences on shareholder wealth.
Service contracts
The employment contract with the Executive Chairman, Mr Eric Streitberg, is unlimited in term but capable of termination with
three months’ notice by either party, or by payment in lieu thereof at the discretion of the Company.
Service contracts with all other current non-Director KMP are unlimited in term but capable of termination on three months’
notice by either party, or by payment in lieu thereof at the discretion of the Company.
The Remuneration & Nomination Committee determined the amount of remuneration payable to KMP under each agreement.
KMP are also entitled to receive their contractual and statutory entitlements including accrued annual and long service leave,
together with any superannuation benefits, on termination of employment. Remuneration levels are reviewed each year to take
into account cost-of-living changes, any change in the scope of the role performed by KMP and any changes required to meet
the principles of the Group’s remuneration policy.
Services from remuneration consultants
There were no services received from remuneration consultants during the period.
Non-executive Directors
Total fixed remuneration for all Non-executive Directors, last voted upon by shareholders at the 2012 Annual General Meeting, is
not to exceed $600,000 per annum. The Non-executive Directors’ base fee is $94,000 plus statutory superannuation per annum.
The Chairman’s base fee is ordinarily $150,000 plus statutory superannuation per annum, however the current Chairman, Mr
Streitberg, is not eligible for this remuneration as he is not acting in a non-executive capacity. An additional fee of $7,100 plus
statutory superannuation per annum is payable for Non-executive Directors being a member of a Committee and the fee for
chairing a Committee is $14,250 plus statutory superannuation.
20
BURU ENERGY LIMITED Key Management Personnel Remuneration - Audited
Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel of the consolidated entity are:
Remuneration Report - Audited
For the year ended 31 December 2018
Salary &
Fees
Annual
leave
Short term
STI
cash
bonus
Non-
monetary
benefits (A)
Post-
employment
Other
long term
Share-based
payments
Superannuation
benefits
Long service
leave
Termination
benefits
Total
ESOP (B)
Total
s300A(1)(e)(i)
proportion of
remuneration
performance
related
s300A(1)(e)(vi)
value of share
based payments as
a proportion
of remuneration
Non-executive Directors
Ms E Howell, NED
Mr R Willes, NED
Total Non-executive
Directors’ Remuneration
Executive Directors
Mr E Streitberg,
Executive Chairman
Total Directors’
Remuneration
Executives
Mr N Rohr, General Counsel
(Ceased employment May 2018)
Mr S McDermott, Chief Financial
Officer & Company Secretary
Mr A Forcke, General Manager
- Commercial (Commenced
employment July 2018)
Total Executive Officer
Remuneration
Total Directors and Executive
Officer Remuneration
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
115,350
113,392
115,350
113,392
230,700
226,784
586,462
610,462
47,692
47,692
817,162
47,692
837,245
47,692
170,000
368,478
274,292
263,339
13,077
31,000
21,769
21,513
156,154
26,923
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,150
-
-
-
-
-
-
-
-
-
16,594
17,935
16,594
17,935
1,650
17,265
7,031
10,482
115,350
113,392
115,350
113,392
230,700
226,784
650,748
676,089
881,448
902,872
184,727
416,743
317,242
295,334
2,764
185,841
-
-
600,446
61,769
14,150
631,817
52,513
-
11,445
27,747
687,810
712,076
1,417,608
109,461
14,150
28,039
1,569,258
2017
1,469,061
100,205
-
45,682
1,614,949
10,958
10,772
10,958
10,772
21,916
21,544
58,900
58,900
80,816
80,444
16,150
38,285
28,229
26,568
16,625
-
61,004
64,853
141,820
145,297
-
-
-
-
-
-
9,830
6,678
9,830
6,678
-
-
-
-
-
-
-
-
-
-
-
204,000
-
-
-
-
-
5,596
8,669
10,044
180
-
8,849
15,640
18,679
22,318
-
-
-
-
-
-
-
-
-
-
-
32,966
27,985
32,966
126,308
124,164
126,308
124,164
252,616
248,328
719,478
741,667
972,094
989,994
404,877
493,590
382,125
364,912
27,985
230,631
-
-
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
6.68%
11.03%
9.03%
12.13%
-
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
6.68%
7.32%
9.03%
12.13%
-
204,000
55,970
1,017,633
-
65,932
858,501
204,000
55,970
1,989,727
-
65,932
1,848,495
Notes in relation to the table of KMP remuneration
A. Non-monetary benefits to KMP relate to the provision of car parking, life insurance and salary continuance insurance.
B. The fair value of the options issued under the ESOP in 2018 are calculated at the date of grant using the Black & Scholes option-pricing model and expensed at grant date. The value
disclosed is the portion of the fair value of the options recognised in this reporting period.
ANNUAL REPORT 2018
21
Remuneration Report - Audited
For the year ended 31 December 2018
Loans to Key Management Personnel
There were no loans outstanding at the end of the period to key management personnel or their related parties.
Shares held by Key Management Personnel
KMP
Held at
1 Jan 18
Granted as
remuneration
Exercise of
options
Purchased
Sold
Held at
31 Dec 18
Mr E Streitberg
29,747,406
Ms E Howell
Mr R Willes
Mr S McDermott
294,000
132,000
100,000
Mr A Forcke
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,521,997)
21,225,409
-
-
-
-
294,000
132,000
100,000
1,000,000
Analysis of share based payments - ESOP
The movement during the period by number of options granted under the ESOP to KMP during the period is detailed below.
KMP
Held at
1 Jan 18
Granted as
remuneration
Exercised
Lapsed /
Forfeited
Held at
31 Dec 18
Vested during
the year
Vested and
exercisable
Mr N Rohr
300,000
-
(2,908)
(297,092)
-
-
-
Mr S McDermott
300,000
300,000
Mr A Forcke
-
300,000
-
-
-
-
600,000
300,000
600,000
300,000
300,000
300,000
No options have been granted since the end of the financial year. All options were provided at no cost to the recipients and
expire on the earlier of their expiry date or 30 days after the termination of the individual’s employment. All options vested
immediately and were exercisable from grant date. No terms of options granted as remuneration to a KMP have been altered or
modified by the issuing entity during the reporting period or the prior period. During the reporting period, 2,908 shares were
issued on the exercise of options previously granted as remuneration.
Analysis of share based payments - SARs
No Share Appreciation Rights (SARs) were granted to KMP during the reporting period. The movement during the period by
number of SARs granted to KMP during the period is detailed below.
KMP
Held at
1 Jan 18
Granted as
remuneration
Exercised
Lapsed
Held at
31 Dec 18
Vested during
the year
Vested and
exercisable
Mr N Rohr
221,839
Mr S McDermott
67,596
-
-
-
-
(221,839)
(67,596)
-
-
-
-
-
-
During the reporting period, no shares were issued on the exercise of SARs previously granted as remuneration.
22
BURU ENERGY LIMITED Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Auditor’s Independence Declaration
To the Directors of Buru Energy Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Buru Energy Limited for
the financial year ended 31 December 2018 there have been:
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
i.
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
To the Directors of Buru Energy Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Buru Energy Limited for
the financial year ended 31 December 2018 there have been:
KPMG
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Jane Bailey
Corporations Act 2001 in relation to the audit; and
Partner
no contraventions of any applicable code of professional conduct in relation to the audit.
Perth
KPMG
26 March 2019
Jane Bailey
Partner
Perth
26 March 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards
Legislation.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards
Legislation.
23
ANNUAL REPORT 2018
Consolidated Statement Of Financial Position
As at 31 December 2018
in thousands of AUD
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
NON-CURRENT ASSETS
Oil and gas assets
Exploration and evaluation expenditure
Property, plant and equipment
Financial assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Provisions
Total Current Liabilities
NON-CURRENT LIABILITIES
Loans and borrowings
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
31 December
2018
31 December
2017
12a
10
11
6
7
8
9
15
16
17
16
17
64,011
2,677
2,376
69,064
31,398
6,036
2,507
40
39,981
109,045
3,650
3,000
1,980
8,630
2,000
4,091
6,091
14,721
94,324
271,857
919
(178,452)
94,324
16,859
1,289
3,018
21,166
55,646
6,363
4,117
40
66,166
87,332
8,757
5,250
1,427
15,434
2,250
5,558
7,808
23,242
64,090
271,803
1,185
(208,898)
64,090
The notes on pages 28 to 52 are an integral part of these consolidated financial statements
24
BURU ENERGY LIMITED
Consolidated Statement Of Comprehensive Income Or Loss
For the year ended 31 December 2018
Note
31 December
2018
31 December
2017
in thousands of AUD
Revenue
Cost of sales
Amortisation of oil and gas assets
Gross profit / (loss)
Other income
Gain on sale of oil and gas assets
Gain on acquisition of oil and gas assets
Exploration and evaluation expenditure
Impairment of inventories
Corporate and administrative expenditure
Share based payment expenses
Movement in fair value of financial assets
Operating profit / (loss)
Net finance income / (expense)
Profit / (loss) before tax
Income tax expense
Other comprehensive income net of income tax
Total comprehensive income / (loss)
Earnings / (loss) per share and diluted earnings / (loss) per share (cents)
14
The notes on pages 28 to 52 are an integral part of these consolidated financial statements
2
6
6
11
3
18
4
5
19,877
(10,417)
(5,365)
4,095
-
36,337
-
(4,904)
(157)
(5,779)
(481)
-
29,111
626
29,737
-
-
29,737
6.89
7,893
(4,224)
(4,219)
(550)
455
-
4,331
(2,353)
(207)
(6,286)
(499)
(12)
(5,121)
(1,096)
(6,217)
-
-
(6,217)
(1.69)
25
ANNUAL REPORT 2018 Consolidated Statement Of Changes In Equity
For the year ended 31 December 2018
in thousands of AUD
Share
capital
$
Share based
payment
reserve
Retained
losses
$
$
Total
equity
$
Balance as at 1 January 2017
258,211
1,213
(203,208)
56,216
Comprehensive loss for the period
Loss for the period
Total comprehensive loss for the period
-
-
Transactions with owners recorded directly in equity
Issue of ordinary shares, net of transaction costs
13,592
Share based payment transactions
Share options / share appreciation rights forfeited
Total transactions with owners recorded directly in equity
Balance as at 31 December 2017
-
-
13,592
271,803
(6,217)
(6,217)
(6,217)
(6,217)
-
-
-
499
(527)
(28)
-
-
527
527
1,185
(208,898)
13,592
499
-
14,091
64,090
Total
equity
$
in thousands of AUD
Share
capital
$
Share based
payment
reserve
Retained
losses
$
$
Balance as at 1 January 2018
271,803
1,185
(208,898)
64,090
Comprehensive income for the period
Income for the period
Total comprehensive income for the period
Transactions with owners recorded directly in equity
Issue of ordinary shares on conversion of options
Share based payment transactions
Share options / share appreciation rights exercised/forfeited
Total transactions with owners recorded directly in equity
-
-
16
-
38
54
Balance as at 31 December 2018
271,857
The notes on pages 28 to 52 are an integral part of these consolidated financial statements
-
-
-
481
(747)
(266)
919
29,737
29,737
29,737
29,737
-
-
709
709
16
481
-
497
(178,452)
94,324
26
BURU ENERGY LIMITED Consolidated Statement Of Cash Flows
For the year ended 31 December 2018
31 December
2018
31 December
2017
in thousands of AUD
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from sales
Cash receipts from other income
Payments to suppliers and employees
Payments for exploration and evaluation
Net cash outflow from operating activities
12b
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Receipts from sale of / (payments for) plant and equipment
Payments for exploration and evaluation
Payments for oil and gas development
Receipt from sale of interest in Ungani Oilfield
6
Previous JV partner’s final contribution towards Ungani Oilfield
Net cash inflow / (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
Repayment of loan and interest
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the period
12a
The notes on pages 28 to 52 are an integral part of these consolidated financial statements
18,269
-
(14,393)
(5,745)
(1,869)
677
44
-
(12,810)
64,000
-
51,911
15
(2,875)
(2,860)
47,182
16,859
(30)
64,011
7,893
455
(10,200)
(2,458)
(4,310)
423
(75)
(142)
(10,192)
-
1,500
(8,486)
13,592
(5,000)
8,592
(4,204)
21,052
11
16,859
27
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
Basis of Preparation
Buru Energy Limited (Buru Energy or the Company) is a for profit company domiciled in Australia. The address of the Company’s
registered office is Level 2, 16 Ord Street, West Perth, Western Australia. The consolidated financial statements of the Company as
at, and for the year ended 31 December 2018 comprise the Company and its subsidiaries (together referred to as the Group) and
the Group’s interest in jointly controlled entities. The Group is primarily involved in oil and gas exploration and production in the
Canning Basin in the Kimberley region of northwest Western Australia.
This section sets out the basis upon which the Group’s financial statements are prepared as a whole. Significant accounting
policies and key judgements and estimates of the Group that summarise the measurement basis used and assist in
understanding the financial statements are described in the relevant note to the financial statements or are otherwise provided
in this section. The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements of the Group comply
with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards
Board (IASB). The financial statements were approved by the Board of Directors on 26 March 2019. The accounting policies
have been applied consistently by Group entities to all periods presented in these consolidated financial statements. The
consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the
statement of financial position:
•
•
Financial assets are measured at fair value; and
Share based payments are measured at fair value.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in
accordance with that instrument, amounts in the Consolidated Financial Statements and Directors’ Report have been rounded off
to the nearest thousand dollars, unless otherwise stated.
Basis of Consolidation
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases. Intra-group balances and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars, which is each of the Group entities’ functional
currency. Transactions in foreign currencies are translated to Australian dollars at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated
to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the income statement.
28
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
Use of Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Information about assumptions and estimation uncertainties in applying accounting policies that have the most significant effect
on the amount recognised in the financial statements are:
• Note 5 – Recognition of tax losses
• Note 6 – Oil and gas assets
• Note 7 – Exploration and evaluation expenditure
• Note 16 – Loans and borrowings
• Note 17 – Provisions
• Note 18 – Measurement of share-based payments
Results for the Year
This section explains the results and performance of the Group including additional information about those individual line items
in the financial statements most relevant in the context of the operations of the Group, including accounting policies that are
relevant for understanding the items recognised in the financial statements and an analysis of the Group’s result for the year by
reference to key areas, including operating segments, revenue, expenses, employee costs, taxation and earnings per share.
1. Segment Information
An operating segment is a component of Buru Energy that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of Buru Energy’s other
components. All operating segments’ operating results are reviewed regularly by the Group’s Executive Chairman, Chief
Financial Officer and other executives to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available. Segment results that are reported to the Executive
Chairman and Chief Financial Officer include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and head office expenses. Segment
capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible
assets other than goodwill.
The Group has only one reportable geographical segment being the Canning Basin in northwest Western Australia. The
reportable operating segments are based on the Group’s strategic business units: oil, gas and exploration. The following
summary describes the operations in each of the Group’s reportable operating segments:
• Oil: Primarily includes the development and production of the Ungani Oilfield and the currently shut in Blina and
Sundown Oilfields.
• Gas: Exploration and appraisal of gas is currently concentrated in the Yulleroo area where gas resources have been
•
identified in the Laurel Formation.
Exploration: The exploration program is focused on prospects along the Ungani oil trend and evaluation of the other
areas in the Group’s portfolio.
Information regarding the results of each reportable segment is included below. Performance is measured in regard
to the Group and its segments principally with reference to earnings before interest and tax, and capital expenditure
on exploration and evaluation assets, oil and gas assets, and property, plant and equipment. The corporate segment
represents a reconciliation of reportable segments revenues, profit or loss and assets to the consolidated figures.
29
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
1.
Segment Information (Continued)
Profit or loss
Oil
Gas
Exploration
Corporate*
Total
in thousands of AUD
Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17
External revenues
Operating costs
19,877
7,893
(10,417)
(4,224)
Amortisation of oil and gas assets
(5,365)
(4,219)
Gross Profit / (Loss)
4,095
(550)
Other income
Exploration and evaluation expenditure
Gain on acquisition of oil and gas assets
-
-
-
-
-
4,331
Gain on sale of interest in oil and
36,337
gas assets
Impairment of inventories
Corporate and administrative expenditure
Share based payment expenses
Movement in fair value of financial assets
-
-
-
-
-
-
-
-
-
EBIT
40,432
3,781
Net finance income / (expense)
-
-
Reportable segment profit / (loss)
40,432
3,781
before tax
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,904)
(2,353)
-
-
-
-
(157)
(207)
-
-
-
-
-
-
-
-
-
-
-
-
-
19,877
7,893
(10,417)
(4,224)
(5,365)
(4,219)
4,095
(550)
455
-
455
-
-
-
-
(4,904)
(2,353)
-
4,331
36,337
-
(157)
(207)
-
-
-
-
-
-
(5,779)
(6,286)
(5,779)
(6,286)
(481)
(499)
(481)
(499)
-
(12)
-
(12)
(5,061)
(2,560)
(6,260)
(6,342)
29,111
(5,121)
-
-
626
(1,096)
626
(1,096)
(5,061)
(2,560)
(5,634)
(7,438)
29,737
(6,217)
* Corporate represents reconciliation of reportable segments to IFRS measures
Total Assets
Oil
Gas
Exploration
Corporate*
Total
in thousands of AUD
Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17 Dec 18 Dec 17
Current assets
Oil and gas assets
Exploration and evaluation assets
Property, plant and equipment
Financial assets
Total Assets
1,947
1,359
31,398 55,646
-
-
-
-
-
-
-
-
-
-
6,036
6,363
-
-
-
-
2,038
1,659 65,079 18,148 69,064 21,166
-
-
-
-
-
-
-
-
-
-
- 31,398 55,646
-
6,036
6,363
2,507
4,117
2,507
4,117
40
40
40
40
33,345 57,005
6,036
6,363
2,038
1,659 67,626 22,305 109,045 87,332
Capital Expenditure
6,675 17,917
Total Liabilities
Current liabilities
3,070
7,727
Loans and borrowings (Non-current)
-
-
Provisions (Non-current)
Total Liabilities
1,224
2,136
4,294
9,863
-
-
-
-
-
-
-
-
-
-
* Corporate represents reconciliation of reportable segments to IFRS measures
-
468
86
81
6,761 18,466
1,650
1,779
3,910
5,928
8,630 15,434
-
-
2,000
2,250
2,000
2,250
2,704
3,321
163
101
4,091
5,558
4,354
5,100
6,073
8,279 14,721 23,242
30
BURU ENERGY LIMITED 2. Revenue
in thousands of AUD
Sales of crude oil
Notes to the Financial Statements
For the year ended 31 December 2018
31 Dec 2018
31 Dec 2017
19,877
19,877
7,893
7,893
Revenue from the sale of crude oil in the course of ordinary activities is recognised in the income statement at the fair
value of the consideration received or receivable. Revenue is recognised when a customer obtains control of the goods
or services. Under existing contracts the sale of oil is recognised on Free on Board terms, whereby the customer obtains
control of the oil as it is loaded onto the vessel.
3. Corporate and Administrative Expenditure
in thousands of AUD
Personnel and associated expenses
Office and other administration expenses
31 Dec 2018
31 Dec 2017
2,970
2,809
5,779
3,243
3,043
6,286
The above expense excludes share based payments disclosed at note 18.
4. Net Finance Income / (Expense)
in thousands of AUD
31 Dec 2018
31 Dec 2017
Interest income on bank deposits and receivables
Interest expense on borrowings (note 16)
Net foreign exchange gain / (loss)
Interest expense of unwinding of the fair value difference of
borrowings (note 16)
Net finance income / (expense) recognised in profit or loss
1,031
(375)
(30)
-
626
404
-
11
(1,511)
(1,096)
Finance income comprises interest income on funds invested (including financial assets). Interest income is recognised
as it accrues in profit or loss, using the effective interest method. All borrowing costs are recognised in profit or loss using
the effective interest method. Foreign currency gains and losses are reported on a net basis.
31
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
5. Taxation
in thousands of AUD
Current income tax
Current income tax charge
Adjustments in respect of previous current income tax
Deferred income tax
Tax relating to origination and reversal of temporary differences
Total income tax expense reported in equity
Numerical reconciliation between tax expense and pre-tax accounting profit
Accounting profit / (loss) before tax
Income tax (expense) / benefit using the domestic corporation tax rate of 30%
(Increase) / decrease in income tax due to:
Non-deductible expenses
Temporary differences and tax losses not brought to account as a DTA
Tax losses utilised
Income tax benefit / (expense) on pre-tax loss
31 Dec 2018
31 Dec 2017
-
-
-
-
-
-
29,737
(8,921)
(166)
-
9,087
-
-
-
-
-
-
-
(6,217)
1,865
(161)
(1,704)
-
-
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current
tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred
tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
32
BURU ENERGY LIMITED
Notes to the Financial Statements
For the year ended 31 December 2018
5.
Taxation (Continued)
Unrecognised net deferred tax assets
Net deferred tax assets have not been recognised in respect of the following items.
in thousands of AUD
Deferred tax assets
Business related costs
Accruals
Provisions
Development expenditure
Inventories
Tax losses
PRRT
Deferred tax liabilities
Exploration expenditure
Property, plant and equipment
Investments in listed entities
Prepayments
Rehabilitation
31 Dec 2018
31 Dec 2017
Movement
4
32
1,821
763
-
35,941
128,710
167,271
(1,811)
(447)
(36)
(2)
(367)
(2,663)
302
15
2,095
3,493
1,189
41,278
175,409
223,781
(1,811)
(877)
(36)
-
(739)
(3,463)
(298)
17
(274)
(2,730)
(1,189)
(5,337)
(46,699)
(56,510)
-
430
-
(2)
372
800
Net DTA not brought to account
164,608
220,318
(55,710)
Deferred tax is not provided for temporary differences on the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit, nor differences relating to
investments in subsidiaries to the extent that they will not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date. In accordance with the group’s accounting
policies for deferred taxes, a deferred tax asset is recognised for unused tax losses only if it is probable that future taxable
profits will be available to utilise those losses. Determination of future taxable profits requires estimates and assumptions
as to future events and circumstances, in particular, whether successful development and commercial exploitation, or
alternatively sale, of the respective areas of interest will be achieved. This includes estimates and judgements about oil
and gas prices, reserves, exchange rates, future capital requirements, future operational performance and the timing
of estimated cash flows. Changes in these estimates and assumptions could impact on the amount and probability of
estimated taxable profits and accordingly the recoverability of deferred tax assets.
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of these items because it is not yet probable that future taxable profit will be available
against which the Group can utilise the benefits.
33
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
5.
Taxation (Continued)
Tax consolidation
The company and its 100% owned entities have formed a tax consolidated group. Members of the consolidated entity
have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned controlled
entities on a pro-rata basis. The agreement provides for the allocation of income tax liabilities between the entities
should the head entity default on its tax payment obligations. At balance date, the possibility of default is remote.
Tax effect accounting by members of the Consolidated Group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides
for the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members
of the tax consolidated group in accordance with a group allocation approach which is consistent with the principles of
AASB 112 Income Taxes. The allocation of taxes under the tax funding agreement are recognised as an increase/decrease
in the controlled entities intercompany accounts with the tax consolidated group head entity, Buru Energy. In this regard,
Buru Energy has assumed the benefit of tax losses from the member entities. The nature of the tax funding agreement is
such that no tax consolidation contributions by or distributions to equity participants are required.
Petroleum Resource Rent Tax
Petroleum Resource Rent Tax (PRRT) is considered for accounting purposes to be a tax on income. Accordingly, current
and deferred PRRT expense is measured and disclosed on the same basis as income tax.
Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as
part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount
of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability
in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of
cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified
as operating cash flows.
34
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
6. Oil and Gas Assets (Ungani Oilfield)
in thousands of AUD
31 Dec 2018
31 Dec 2017
Carrying amount at beginning of the period
Oil and gas assets acquired
Carrying value of oil and gas assets sold
Development expenditure
Transfer from property, plant and equipment
Amortisation expense
Carrying amount at the end of the period
55,646
-
(27,663)
6,675
2,105
(5,365)
31,398
21,550
20,398
-
17,917
-
(4,219)
55,646
On 21 May 2018, Buru Energy announced that Roc Oil (Canning) Pty Limited (Roc Oil) had purchased a 50% interest in the
Ungani production licences L20 and L21 (the Ungani Oilfield) for a total cash payment of $64,000,000. The Company’s
interest in the Ungani Oilfield before the sale had a carrying value of $55,326,000 for 100%, or $27,663,000 for the 50%
interest sold. The 50% interest was sold for consideration of $64,000,000 resulting in a gain on partial sale of oil and gas
assets of $36,337,000.
Oil and gas assets are measured at cost less amortisation and impairment losses. The assets useful lives are reviewed,
and adjusted if appropriate, at each reporting date. The carrying amount of oil and gas assets is reviewed bi-annually.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and included in the
profit or loss. Oil and gas assets are amortised over the life of the area according to the rate of depletion of the proved
and probable hydrocarbon reserves. When no reserves are certified, oil and gas assets are amortised on a straight line
basis over its estimated useful life until such time when reserves are certified. Retention of petroleum assets is subject to
meeting certain work obligations/commitments.
The estimated quantities of proved and probable hydrocarbon reserves and resources reported by the group are
integral to the calculation of amortisation (depletion) and assessments of possible impairments. Estimated reserves
and resources quantities are based upon interpretations of geological and geophysical models and assessment of the
technical feasibility and commercial viability of producing the reserves and resources. Management prepare estimates
which conform to guidelines prepared by the Society of Petroleum Engineers. These assessments require assumptions to
be made regarding future development and production costs, commodity prices, exchange rates and fiscal regimes. The
estimates of reserves and resources may change from period to period as the economic assumptions used to estimate
the reserves can change from period to period, and as additional geological data is generated during the course of
operations. The Ungani Oilfield does not currently have certified reserves and is therefore currently being amortised on a
straight line basis over a 10 year period.
35
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
7.
Exploration and Evaluation Expenditure
in thousands of AUD
31 Dec 2018
31 Dec 2017
Carrying amount at beginning of the period
Exploration expenditure capitalised
Disposal of exploration expenditure
Movement in rehabilitation provision for exploration assets
Carrying amount at the end of the period
6,363
-
-
(327)
6,036
21,962
468
(16,067)
-
6,363
Exploration and evaluation expenditure in respect of each area of interest is accounted for using the successful efforts method
of accounting. The successful efforts method requires all exploration and evaluation expenditure to be expensed in the period
it is incurred, except the costs of successful wells and the costs of acquiring interests in new exploration assets, which are
capitalised as intangible exploration and evaluation. The costs of wells are initially capitalised pending the results of the well.
An area of interest refers to an individual geological area where the presence of oil or a natural gas field is considered
favourable or has been proved to exist, and in most cases will comprise an individual prospective oil or gas field.
Exploration and evaluation expenditure is recognised in relation to an area of interest when the rights to tenure of the
area of interest are current and either:
•
•
such expenditure is expected to be recovered through successful development and commercial exploitation of the
area of interest or, alternatively, by its sale; or
the exploration activities in the area of interest have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves and active and significant operations in, or in relation to, the area
of interest are continuing.
Where an ownership interest in an exploration and evaluation asset is exchanged for another, the transaction is recognised by
reference to the carrying value of the original interest. Any cash consideration paid, including transaction costs, is accounted
for as an acquisition of exploration and evaluation assets. Any cash consideration received, net of transaction costs, is treated
as a recoupment of costs previously capitalised with any excess accounted for as a gain on disposal of non-current assets.
The carrying amounts of the Group’s exploration and evaluation assets are reviewed at each reporting date to determine
whether any of the following indicators of impairment exists:
•
•
•
•
tenure over the licence area has expired during the period or will expire in the near future, and is not expected to be
renewed; or
substantive expenditure on further exploration for and evaluation of resources in the specific area is not budgeted or
planned; or
exploration for and evaluation of resources in the specific area has not led to the discovery of commercially viable
quantities of resources, and the Group has decided to discontinue activities in the specific area; or
sufficient data exists to indicate that although a development is likely to proceed, the carrying amount of the
exploration and evaluation asset is unlikely to be recovered in full from successful development or from sale.
Where an indicator of impairment exists, a formal estimate of the recoverable amount is made and any resultant
impairment loss is recognised in the income statement. When a discovered oil or gas field enters the development phase
the accumulated exploration and evaluation expenditure is transferred to oil and gas assets.
Determining the recoverability of exploration and evaluation expenditure capitalised requires estimates and judgements as
to future events and circumstances, in particular, whether successful development and commercial exploitation or sale of
the respective area of interest is likely. Critical to this assessment are estimates and assumptions as to the timing of expected
cash flows, exchange rates, commodity prices and future capital requirements. If, after having capitalised the expenditure a
judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the income statement.
36
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
8. Property, Plant and Equipment (PPE)
in thousands of AUD
Cost
Plant and
equipment
Office
equipment
Fixtures and
fittings
Cultural
assets
Intangible
Assets
Total
Carrying amount at 1 Jan 2017
5,602
1,620
1,799
877
897
10,795
Additions
Disposals
Balance at 31 Dec 2017
Carrying amount at 1 Jan 2018
Additions
Disposals
Transfers
Balance at 31 Dec 2018
Depreciation
82
(98)
5,586
5,586
86
(108)
(2,105)
3,459
3
(7)
1,616
1,616
-
-
-
1,616
-
(1,712)
87
87
-
-
-
87
-
-
877
877
-
-
-
-
-
897
897
-
-
-
877
897
Carrying amount at 1 Jan 2017
(2,069)
(1,552)
(1,234)
Depreciation for the period
Disposal
Balance at 31 Dec 2017
Carrying amount at 1 Jan 2018
Depreciation for the period
Disposal
Transfer
(401)
32
(2,438)
(2,438)
(275)
73
767
(47)
7
(1,592)
(1,592)
(9)
-
-
(258)
1,444
(48)
(48)
(10)
-
-
Balance at 31 Dec 2018
(1,873)
(1,601)
(58)
-
-
-
-
-
-
-
-
-
(686)
(182)
-
(868)
(868)
(29)
-
-
85
(1,817)
9,063
9,063
86
(108)
(2,105)
6,936
(5,541)
(888)
1,483
(4,946)
(4,946)
(323)
73
767
(897)
(4,429)
Carrying amounts
At 31 December 2017
At 31 December 2018
3,148
1,586
24
15
39
29
877
877
29
-
4,117
2,507
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset. Gains and losses on disposal of an item of PPE are
determined by comparing the proceeds from disposal with the carrying amount of PPE and are recognised net in profit
or loss. Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with
the expenditure will flow to the Group, and its cost can be measured reliably. The costs of the day-to-day servicing of PPE
are recognised in profit or loss as incurred. Depreciation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of each component of PPE, since this most closely reflects the expected pattern of consumption of
the future economic benefits embodied in the asset.
The estimated useful lives for the current and comparative period are as follows:
•
•
•
•
•
plant & equipment
office equipment
fixtures and fittings
intangibles
cultural assets
10 – 30 years
3 – 20 years
6 – 20 years
5 years
not depreciated
The useful life, residual value and the depreciation method applied to an asset are reassessed at least annually. Heritage
and cultural assets with the potential to be maintained for an indefinite period through conservation, restoration and
preservation activities are considered to have an indefinite life and not depreciated.
37
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
9.
Financial Assets
in thousands of AUD
Non-Current
Financial assets - FVTPL
31 Dec 2018
31 Dec 2017
40
40
The Group’s financial assets FVTPL comprise of ASX listed shares held in New Standard Energy Limited.
The Group’s exposure to market risk and impairment losses related to financial assets are disclosed in note 26.
10. Trade and Other Receivables
in thousands of AUD
Accrued income
Interest receivable
Joint Venture receivables
GST receivable
Total trade receivables
Prepayments
Other receivables
Total
31 Dec 2018
31 Dec 2017
1,609
409
18
232
2,268
121
288
2,677
-
54
394
476
924
199
166
1,289
The Group’s exposure to credit and currency risks and impairment losses related to trade receivables are
disclosed in note 26.
11. Inventories
in thousands of AUD
Materials and consumables at net realisable value
Petroleum products at cost
31 Dec 2018
31 Dec 2017
2,038
338
2,376
1,659
1,359
3,018
Inventories are valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion and selling expenses. Cost is determined as follows:
• Materials and consumables, which include drilling and maintenance stocks, are valued at the cost of acquisition which
includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition; and
•
Petroleum products, comprising extracted crude oil stored in tanks and pipeline systems, are valued using the full
absorption cost method.
Materials and consumables are accounted for on a FIFO basis. During the year, the Group tested its inventories for
impairment and wrote down materials and consumables inventories to their net realisable value, which resulted in a loss
of $157,000 (2017: $207,000).
38
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
12. (a) Cash and Cash Equivalents
in thousands of AUD
Bank balances
Term deposits available at call
Cash and cash equivalents in the statement of cash flows
31 Dec 2018
31 Dec 2017
1,655
62,356
64,011
1,291
15,568
16,859
The Group’s exposure to interest rate risk and sensitivity analysis for financial assets is disclosed in note 26.
(b) Reconciliation of Cash Flows from Operating Activities
in thousands of AUD
Cash flows from operating activities
Note
31 Dec 2018
31 Dec 2017
Income / (Loss) for the period
29,737
(6,217)
8
6
11
6
18
4
Adjustments for:
Depreciation
Amortisation on development expenditure
Impairment on inventories
Gain on sale of interest in oil and gas assets
Gain on acquisition of oil and gas assets
(Gain) / loss on asset disposal
Share based payment expenses
Net finance (income) / costs
Operating loss before changes in working capital and provisions
Changes in working capital
Change in trade and other receivables
Change in trade and other payables
Change in financial assets
Change in inventories
Change in provisions
Cash used in operating activities
Net cash outflow from operating activities
323
5,365
157
(36,337)
-
(9)
481
(626)
(909)
(1,125)
(1,189)
-
1,021
333
(960)
(1,869)
888
4,219
207
-
(4,331)
325
499
1,096
(3,314)
(530)
648
12
(1,360)
234
(996)
(4,310)
39
ANNUAL REPORT 2018
Notes to the Financial Statements
For the year ended 31 December 2018
13. Capital and Reserves
Share capital
On issue at the beginning of the period
Issued under Rights Issue and Top-up Placement
Conversion of 31c options to fully paid shares
Ordinary Shares
Ordinary Shares
31 Dec 2018
31 Dec 2017
No.
No.
432,021,333
339,997,078
-
92,024,255
52,908
-
On issue at the end of the period – fully paid
432,074,241
432,021,333
The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares
are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company’s residual assets.
The share-based payments reserve represents the fair value of equity-based compensation to the Group’s employees.
14. Earnings / (Loss) Per Share
in thousands of AUD
31 Dec 2018
31 Dec 2017
Earnings / (loss) attributable to ordinary shareholders
29,737
(6,217)
Basic and diluted earnings / (loss) per share
Weighted average number of ordinary shares
31 Dec 2018
31 Dec 2017
No.
No.
Issued ordinary shares at beginning of the period
432,021,333
339,997,078
Effect of shares issued
30,668
27,985,458
Weighted average number of ordinary shares at the end of the period
432,052,001
367,982,536
The Group presents basic and diluted earnings or loss per share (EPS or LPS) data for its ordinary shares. Basic EPS or LPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS or LPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of
all dilutive potential ordinary shares, which comprise share options granted to employees.
The Company’s potential ordinary shares, being its options granted, are not considered dilutive as the options were ‘out
of the money’ as at 31 December 2018.
15. Trade and Other Payables
in thousands of AUD
Trade payables
Accruals
Other payables
31 Dec 2018
31 Dec 2017
818
2,559
273
3,650
3,248
5,337
172
8,757
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 26.
40
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
16. Loans and Borrowings
in thousands of AUD
Borrowings at beginning of the year
Repayment to Alcoa on 14 July 2017
Interest expense of unwinding of the fair value difference
Interest expense
Repayment to Alcoa on 28 December 2018
Loan at the end of the year
in thousands of AUD
Current
Non-current
31 Dec 2018
31 Dec 2017
7,500
-
-
375
(2,875)
5,000
10,989
(5,000)
1,511
-
-
7,500
31 Dec 2018
31 Dec 2017
3,000
2,000
5,000
5,250
2,250
7,500
All borrowings are initially recognised at fair value less transaction costs and are subsequently carried at amortised cost.
The Group’s exposure to currency and liquidity risk related to loans and borrowings is disclosed in note 26.
The 2018 instalment of the Alcoa liability of $2,500,000 plus interest of $375,000 was paid on 28 December 2018.
A further $500,000 was paid to Alcoa subsequent to the end of the year in accordance with the accelerated capital
repayment mechanism calculated on Ungani crude sales for 2018. The next instalment of $2,500,000 will be payable
on or before 31 December 2019 with the remainder of the liability due by the end of 2020. The debt remains
unsecured, subject to an agreed interest rate of 5% and subject to annual accelerated capital repayments based on
Buru Energy’s Ungani crude sales.
In the prior year, the Alcoa loan was not based upon market terms as it was interest free and was therefore accounted for
in accordance with AASB 139 Application Guidance 64 (AG64), which states that “the fair value of an originated long-term
loan or borrowing that carries no interest can be estimated as the present value of all future cash payments discounted
using the market rate of interest for a similar instrument with a similar credit rating”.
41
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
17. Provisions
in thousands of AUD
Current
Provision for annual leave
Provision for long-service leave
Provision for site restoration
Non-Current
Provision for long-service leave
Provision for site restoration
Movements in the site restoration provision
in thousands of AUD
Opening balance
Provision used during the period
Revaluation of provision during the period
Balance at the end of the period
31 Dec 2018
31 Dec 2017
729
181
1,070
1,980
163
3,928
4,091
541
137
749
1,427
101
5,457
5,558
31 Dec 2018
31 Dec 2017
6,206
(100)
(1,108)
4,998
4,765
(110)
1,551
6,206
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it
is probable that an outflow of economic benefits will be required to settle the obligation and that the obligation can be
measured reliably.
The site restoration provision is in respect of the Group’s obligation to rectify environmental liabilities relating to
exploration and production in the Canning Basin in accordance with the requirements of DWER and DMIRS. The
provision is derived from an internal review of the liabilities. Due to the long-term nature of the liability, there is
significant uncertainty in estimating the costs that will be incurred at a future date. Changes to estimated future costs
are recognised in the statement of financial position by adjusting the rehabilitation asset and liability. The rehabilitation is
expected to continue to occur progressively.
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior periods plus related on-costs; that benefit is discounted
to determine its present value, and the fair value of any related assets is deducted. The discount rate is the yield at the
reporting date on AA credit-rated or government bonds that have maturity dates approximating the terms of the Group’s
obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are
recognised in profit or loss in the period in which they arise.
42
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
18. Share-based Payments
Fair value expensed in thousands of AUD
31 Dec 2018
31 Dec 2017
Employee Share Option Plan expense
481
481
499
499
The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with
a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market performance conditions at the vesting date. For share-
based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences between expected and actual outcomes. Share-based
payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are
accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained
by the Group. When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date is
recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the vesting period
of the grant. The fair value of share options granted under the Employee Share Option Plan are measured using the Black &
Scholes valuation model. Measurement inputs include share price on a measurement date, exercise price of the instrument,
expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available
information) weighted average expected life of the instruments (based on historical experience and general option holder
behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining fair value.
Employee Share Option Plan (ESOP)
At the 2018 Annual General Meeting, shareholders reapproved the Company’s ESOP for a further three years. Options are
issued for no consideration and vest immediately on grant date. All options refer to options over ordinary shares of Buru
Energy Limited which are exercisable on a one for one basis. The inputs used in the measurement of the fair values at
grant date of the equity settled share based payment plans were as follows:
Number ESOP
options granted
Share Price
at Grant Date
Exercise
Price
Volatility
Expected
Dividends
Risk free
interest rate
Expiry
Date
Fair
Value
5,250,000
$0.25
$0.50
92%
Nil
2.0% 31 Dec 20
$0.09
The number and weighted average exercise prices of share options are as follows:
Weighted average exercise price ($)
Number of options
Outstanding unlisted options as at 1 January 2018
Exercised 8 May 2018
Exercised 27 June 2018
Granted 3 August 2018
Forfeited during the period ended 31 December 2018
Forfeited during the period ended 31 December 2018
Outstanding as at 31 December 2018
0.31
0.31
0.31
0.50
0.31
0.50
0.42
4,550,000
(50,000)
(2,908)
5,250,000
(497,092)
(100,000)
9,150,000
The unlisted share options outstanding as at 31 December 2018 have a weighted average exercise price of $0.42 (Dec
2017: $0.31), and a weighted average contractual life of 1.9 years (Dec 2017: 2.0 years). All options outstanding fully
vested in previous reporting periods.
Share Appreciation Rights (SARs)
No SARs were issued or exercised during the current reporting period and all SARs lapsed on 3 January 2018.
43
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
19. Group Entities
Parent entity
Buru Energy Limited
Subsidiaries
Terratek Drilling Tools Pty Limited
Royalty Holding Company Pty Limited
Buru Energy (Acacia) Pty Limited
Buru Operations Pty Limited
Noonkanbah Diamonds Pty Ltd (Formerly Yakka
Munga Pastoral Company Pty Limited)
Buru Fitzroy Pty Limited
Country of
incorporation
Australia
Ownership
interest
Ownership
interest
31 Dec 2018
31 Dec 2017
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Buru Energy Limited is the head entity of the tax consolidated group. All subsidiaries are members of the tax
consolidated group.
20. Parent Entity Disclosures
As at, and throughout the year ended 31 December 2018 the parent company of the Group was Buru Energy Limited.
in thousands of AUD
Result of the parent entity
Company
12 months ended
Company
12 months ended
31 Dec 2018
31 Dec 2017
Total comprehensive profit / (loss) for the period
30,113
(5,615)
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity at year end
Share capital
Reserves
Accumulated losses
Total equity
69,062
107,548
16,004
22,095
271,857
907
(187,311)
85,453
21,147
84,583
21,690
29,630
271,803
1,173
(218,023)
54,953
44
BURU ENERGY LIMITED
Notes to the Financial Statements
For the year ended 31 December 2018
21. Joint Operations
A joint arrangement is an arrangement over which two or more parties have joint control. Joint control exists only when
decisions about the relevant activities - i.e. those that significantly affect the returns of the arrangement - require the
unanimous consent of the parties sharing control of the arrangement. In accordance with AASB 11, the arrangements
have been classified as joint operations (whereby the jointly controlling parties have rights to the assets and obligations
for the liabilities relating to the arrangement) as opposed to a joint venture because separate vehicles have not been
established through which activities are conducted. The Group therefore recognises its assets, liabilities and transactions,
including its share of those incurred jointly, in its consolidated financial statements.
The consolidated entity has an interest in the following joint operations as at 31 December 2018 whose principal activities
were oil and gas exploration, development and production.
Permit/Joint Operation
December 2018
Beneficial Interest
December 2017
Beneficial Interest
Operator
L20
L21
EP 391
EP 428
EP 436
EP 457*
EP 458*
50.00%
50.00%
50.00%
50.00%
50.00%
60.00%
60.00%
100.00%
Buru Energy Ltd
100.00%
Buru Energy Ltd
100.00%
Buru Energy Ltd
100.00%
Buru Energy Ltd
100.00%
Buru Energy Ltd
37.50%
Buru Fitzroy Pty Ltd
37.50%
Buru Fitzroy Pty Ltd
Country
Australia
Australia
Australia
Australia
Australia
Australia
Australia
* Pending DMIRS approval of the transaction with Diamond Resources (Barbwire) Pty Ltd
22. Operating Leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
in thousands of AUD
Less than one year
Between one and five years
31 Dec 2018
31 Dec 2017
2,014
1,629
3,643
1,990
3,554
5,544
Leases in terms of which the Group does not assume substantially all the risks and rewards of ownership are classified as
operating leases. The leased assets are not recognised in the Group’s statement of financial position. The Group leases
a corporate office in West Perth and an office/warehouse facility in Broome. These leases expire in October 2022 and
November 2019 respectively. The Group also leases a crude oil storage tank at Wyndham Port with an expiry date in June
2020 and also maintains operating leases for vehicles. The total operating lease amount recognised as an expense during
the period was $2,013,000 (31 Dec 2017: $2,097,000).
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the
lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction
of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for
by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
45
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
22. Operating Leases (Continued)
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific
asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset and the
arrangement conveys the right to use the asset. At inception or upon reassessment of the arrangement, the Group
separates payments and other consideration required by such an arrangement into those for the lease and those for
other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable
to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the
underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the
liability is recognised using the Group’s incremental borrowing rate.
23. Capital and Other Commitments
in thousands of AUD
31 Dec 2018
31 Dec 2017
Exploration expenditure commitments
Contracted but not yet provided for and payable:
Within one year
One year later and no later than five years
3,333
467
3,800
3,188
263
3,451
The commitments are required in order to maintain the petroleum exploration permits in which the Group has interests in
good standing with the Department of Mines, Industry Regulation & Safety (DMIRS), and these obligations may be varied from
time to time, subject to approval by DMIRS. The commitments within one year above primarily relate to a well commitment on
EP129. In February 2019, DMIRS approved an application from Buru for a one-year suspension on this commitment as the WA
Government is still in the process of implementing the regulations required following the lifting of the fraccing moratorium.
24. Contingencies
There were no material contingent liabilities or contingent assets for the Group as at 31 December 2018 (31 Dec 2017: nil).
25. Related Parties
Key management personnel compensation
The key management personnel compensation comprised:
31 Dec 2018
31 Dec 2017
1,569,258
1,614,949
141,820
204,000
18,679
55,970
145,297
-
22,317
65,932
1,989,727
1,848,495
in AUD
Short term employee benefits
Post-employment benefits
Termination benefits
Long term employee benefits
Share-based payments
46
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
25. Related Parties (Continued)
Individual Directors and executives compensation disclosures
Information regarding individual Directors and executives compensation and some equity instruments disclosures as required
by Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors’ report on pages 19 to 22.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Group since the end of
the previous financial year and there were no material contracts involving directors’ interests existing at the end of the period.
Other related party transactions
No other related party transaction has occurred during the reporting period.
26. Financial Risk Management
Credit risk
The carrying amount of the Group’s financial assets represents the Group’s maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Carrying amount
in thousands of AUD
Note
31 Dec 2018
31 Dec 2017
Cash and cash equivalents and term deposits at call
Trade receivables
12a
10
64,011
2,268
66,279
16,859
924
17,783
The Group’s cash and cash equivalents and term deposits at call are held with bank and financial institution
counterparties, which are rated at least AA-, based on rating agency Fitch Ratings.
Trade and other receivables include accrued income on sales of Ungani crude, accrued interest receivable from Australian
accredited banks, JV receivables and tax amounts receivable from the Australian Taxation Office. The Group has elected
to measure loss allowances for trade and other receivables at an amount equal to the 12 month Expected Credit Loss
(ECL). When determining the credit risk of a financial asset, the Group considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both the quantitative and qualitative information
and analysis, based on the Group’s historical experience and informed credit assessment, including forward-looking
information. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days
past due. The Group considers a financial asset to be in default when the financial asset is more than 90 days past due.
As at 31 December 2018, no receivables were more than 30 days past due and therefore the ECL at 31 December 2018
was nil. All Ungani sales are made to Trafigura Pte Ltd (Singapore) and to date the Group has always received full
consideration for these sales within seven days and there is no reason to believe that this will not continue going forward.
No other receivables are considered to have a material credit risk.
47
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
26. Financial Risk Management (Continued)
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. This is monitored through rolling cash flow forecasts. The Group maintains sufficient cash to
safeguard liquidity risk.
The following are contractual maturities of trade and other payables (excluding provisions) and loans and borrowings:
in thousands of AUD
Less than 1 year
1 – 5 years
Carrying amount
31 Dec 2018
31 Dec 2017
6,650
2,000
8,650
14,008
2,250
16,258
The borrowings from Alcoa of Australia Limited are subject to an agreed interest rate of 5% on the outstanding balances
payable annually in arrears (Note 16).
Market risk
Market risk is the risk that changes in market prices, such as currency rates, interest rates and equity prices will affect
the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on sales that are denominated in a currency other than the functional currency of the
Group (AUD). All sales of crude oil are denominated in US dollars. The Group does not hedge its foreign currency exposure.
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
in thousands
Cash and cash equivalents
Accrued income
Gross balance sheet exposure
31 Dec 2018
31 Dec 2017
AUD
75
1,609
1,684
USD
53
1,126
1,179
AUD
USD
85
-
85
66
-
66
The average exchange rate from AUD to USD during the period was AUD 1.0000 / USD 0.7479 (Dec 2017: AUD 1.0000 / USD
0.7669). The reporting date spot rate was AUD 1.0000 / USD 0.7058 (Dec 2017: AUD 1.0000 / USD 0.7800). A 10 percent
strengthening of the Australian dollar against the USD over the period would have decreased the profit after tax for the
financial period by $1,986,000 (Dec 2017: increased loss after tax by $718,000). A 10 percent weakening of the Australian
dollar against the USD over the period would have increased the profit after tax for the financial period by $1,986,000 (Dec
2017: decreased loss after tax by $877,000). This analysis assumes that all other variables remain constant.
48
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
26. Financial Risk Management (Continued)
Commodity price risk
The Group is exposed to commodity price fluctuations through the sale of Ungani crude at a fixed differential against the
dated Brent crude. The Group does not hedge its commodity price exposure.
The Group’s exposure to commodity price risk at balance date was as follows, based on notional amounts:
in thousands
Sales of crude oil
Gross balance sheet exposure
31 Dec 2018
31 Dec 2017
AUD
1,609
1,609
USD
1,126
1,126
AUD
USD
-
-
-
-
The average Brent Platts price for crude sold over the period was AUD88/bbl (Dec 2017: AUD68/bbl). A 10 percent
strengthening of the dated Brent crude price over the period would have increased the profit after tax for the financial
period by $1,986,000. A 10 percent weakening of the dated Brent crude price over the period would have decreased the
profit after tax for the financial period by $1,986,000. This analysis assumes that all other variables remain constant.
Interest rate risk
At balance date the Group’s exposure to market risk for changes in interest rates relate primarily to the Group’s short term
cash deposits. The interest rate risk is only applicable to interest revenue as the Group does not have any interest-bearing
short or long term borrowings other than the loan to Alcoa which has a fixed interest rate. The Group constantly analyses
its exposure to interest rates, with consideration given to potential renewal of the terms of existing deposits. Fixed rate
instruments are term deposits held with bank and financial institution counterparties and are available at call, therefore
the fair value approximates the carrying amount.
At the reporting date the Group’s interest-bearing financial instruments were as follows:
in thousands of AUD
Fixed rate instruments
Cash and cash equivalents with fixed interest
Total fixed interest bearing financial assets
in thousands of AUD
Variable rate instruments
Cash and cash equivalents with variable interest
Total variable interest bearing financial assets
Carrying amount
31 Dec 2018
31 Dec 2017
62,356
62,356
15,568
15,568
Carrying amount
31 Dec 2018
31 Dec 2017
1,655
1,655
1,291
1,291
49
ANNUAL REPORT 2018 Notes to the Financial Statements
For the year ended 31 December 2018
26. Financial Risk Management (Continued)
Other market price risk
Equity price risk arises from equity securities held in other listed exploration companies. The Group monitors these
financial assets on a regular basis including regular monitoring of ASX listed prices and ASX releases. The Group did
not enter into any commodity derivative contracts during the year. The Group’s equity investments are listed on the
Australian Securities Exchange.
Capital management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so as to maintain
future exploration and development of its projects. Capital consists of share capital of the Group. In order to maintain
or adjust its capital structure, Buru Energy may in the future return capital to shareholders, issue new shares, borrow
funds from financiers or sell assets. Buru Energy’s focus has been to maintain sufficient funds to fund exploration and
development activities.
The 2018 instalment of the Alcoa liability of $2,500,000 plus interest of $375,000 was paid on 28 December 2018.
A further $500,000 was paid to Alcoa subsequent to the end of the year in accordance with the accelerated capital
repayment mechanism calculated on Ungani crude sales for 2018. The next instalment of $2,500,000 will be payable on
or before 31 December 2019 with the remainder of the liability due by the end of 2020. The debt remains unsecured,
subject to an agreed interest rate of 5% and subject to annual accelerated capital repayments based on Buru Energy’s
Ungani crude sales (see note 16).
27. Changes in significant accounting policies
The Group has initially adopted AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments from 1
January 2018.
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
It replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations. Under AASB 15, revenue
is recognised when a customer obtains control of the goods of services. Under existing contracts the sale of oil is
recognised on Free on Board terms, whereby the customer obtains control of the oil as it is loaded onto the vessel. AASB
15 did not have a significant impact on the Group’s accounting policies.
AASB 9 Financial Instruments
AASB 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to
buy or sell non-financial items. This standard replaces AASB 139 Financial Instruments: Recognition and Measurement.
AASB 9 largely retains the existing requirements in AASB 139 for the classification and measurement of financial liabilities.
However, it eliminates the previous AASB 139 categories for financial assets if held to maturity, loans and receivables and
available for sale. The adoption of AASB 9 has not had a significant effect on the Group’s accounting policies related to
financial liabilities. The impact of AASB 9 on the classification and measurement of financial assets is set out below.
Classification and measurement of financial assets and financial liabilities
Under AASB 9, on initial recognition, a financial asset is classified as measured at: Amortised cost; FVOCI – debt
investment; FVOCI – equity investment; or FVTPL. The classification of financial assets under AASB 9 is generally based
on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives
embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the
hybrid financial instrument as a whole is assessed for classification.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as FVTPL:
It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
•
•
50
BURU ENERGY LIMITED Notes to the Financial Statements
For the year ended 31 December 2018
27. Changes in significant accounting policies (Continued)
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.
On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to
be measured at amortised cost or at FVOCI to be recognised at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
The following accounting policies apply to the subsequent measurement of financial assets held by the Group:
•
•
Financial assets at amortised cost – These assets are subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit and loss. Any gain or loss on derecognition is recognised in profit or loss.
Fair value through profit or loss – These assets are subsequently measured at fair value. Dividends and all other net
gains and losses are recognised directly in profit or loss.
Impairment of financial assets
AASB 9 replaces the ‘incurred loss’ model in AASB 139 with an ‘expected credit loss’ (ECL) model. The new impairment
model applies to financial assets measured at amortised cost but not to investments in equity investments. Under AASB 9,
credit losses are recognised earlier than under AASB 139. The financial assets at amortised cost consist of trade and other
receivables, and cash and cash equivalents. Under AASB 9, loss allowances are measured on either of the following bases:
•
•
12 month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and
Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the
assets. Impairment losses related to trade and other receivables are presented separately in the statement of profit or loss
and other comprehensive income.
Impact on adoption of AASB 9
The effect of adopting AASB 9 resulted in $12,000 being reclassified from other comprehensive income into profit and
loss in the consolidated statement of comprehensive income and loss, as well as $12,000 being reallocated from the
financial asset reserve into accumulated losses on the consolidated statement of financial position and the consolidated
statement of changes in equity as at 31 December 2017.
28. Standards issued but not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2019, and have not been applied in preparing these consolidated financial statements. Those which may
be relevant to the Group are set out below. The Group does not plan to adopt these standards early.
AASB 16 Leases – Application date of standard 1 January 2019
This standard AASB 16 Leases will result in almost all leases being recognised on the balance sheet, as the distinction between
operating and finance lease have been removed. The new standard requires a lessee to recognise assets (the right to use the
leased item) and liabilities (obligations to make lease repayments). Short term leases (less than 12 months) and leases of low
value assets are exempt from the lease accounting requirements. Lessor accounting remains similar to current practice. AASB
16 is effective for annual reporting periods beginning on or after 1 January 2019, with early adoption permitted.
The standard will affect primarily the accounting for the Group’s operating leases. As at 31 December 2018, the Group
had non-cancellable operating lease commitments of $3,643,000 (note 22). The Company is currently completing its
assessment of the effects of applying the new standard on the Group’s financial statements, including the extent to which
these commitments will result in the recognition of lease assets and liabilities for future lease payments and how this will
affect the Group’s net assets, profit and classification of cash flows.
51
ANNUAL REPORT 2018
Notes to the Financial Statements
For the year ended 31 December 2018
29. Subsequent Events
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material or unusual nature which in the opinion of the Directors of the Group, has significantly affected or is
likely to affect the results or operations of the Group in future financial years.
30. Auditors’ Remuneration
Audit services
31 Dec 2018
31 Dec 2017
KPMG Australia: Audit and review of financial reports
KPMG Australia: Audit of Joint Venture reports
KPMG Australia: Audit of Traditional Owner Royalty Statements
KPMG Australia: Other audit/assurance services
76,000
5,500
5,000
5,000
73,500
5,500
5,000
12,000
All amounts payable to the Auditors of the Company were paid or payable by the parent entity.
52
BURU ENERGY LIMITED Directors’ Declaration
For the year ended 31 December 2018
1
In the opinion of the Directors of Buru Energy Limited (‘the Company’):
(a) the consolidated financial statements and notes that are contained on pages 24 to 52 and the Remuneration report in
the Directors’ report, set out on pages 19 to 22, 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 2018 and of its performance, for the
financial period ended on that date; 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.
2
3
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Executive
Chairman and Chief Financial Officer, for the year ended 31 December 2018.
The Directors draw attention to the consolidated financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Mr Eric Streitberg
Executive Chairman
Perth
26 March 2019
Mr Robert Willes
Non-executive Director
Perth
26 March 2019
53
ANNUAL REPORT 2018
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Buru Energy Limited
Report on the audit of the Financial Report
To the shareholders of Buru Energy Limited
Opinion
Report on the audit of the Financial Report
We have audited the Financial Report of Buru
Energy Limited (the Company).
Opinion
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
We have audited the Financial Report of Buru
Corporations Act 2001, including:
Energy Limited (the Company).
• giving a true and fair view of the Group's
In our opinion, the accompanying Financial Report
financial position as at 31 December 2018 and
of the Company is in accordance with the
of its financial performance for the year ended
Corporations Act 2001, including:
on that date; and
• giving a true and fair view of the Group's
• complying with Australian Accounting Standards
financial position as at 31 December 2018 and
of its financial performance for the year ended
on that date; and
and the Corporations Regulations 2001.
• complying with Australian Accounting Standards
and the Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as
at 31 December 2018
The Financial Report comprises:
at 31 December 2018
• Consolidated statement of profit or loss and
other comprehensive income, Consolidated
• Consolidated statement of financial position as
statement of changes in equity, and
Consolidated statement of cash flows for the
• Consolidated statement of profit or loss and
year then ended
other comprehensive income, Consolidated
statement of changes in equity, and
Consolidated statement of cash flows for the
year then ended
• Notes including a summary of significant
accounting policies
• Directors' Declaration.
• Notes including a summary of significant
The Group consists of Buru Energy Limited (the
Company) and the entities it controlled at the year
end or from time to time during the financial year.
accounting policies
• Directors' Declaration.
The Group consists of Buru Energy Limited (the
Company) and the entities it controlled at the year
end or from time to time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Basis for opinion
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
audit of the Financial Report section of our report.
have fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters
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 fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
Key Audit Matters
This matter was 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 this matter.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
This matter was 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 this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards
Legislation.
54
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards
Legislation.
BURU ENERGY LIMITED
Independent Auditor’s Report
Disposal of Oil and Gas assets ($64 million)
Refer to Note 6 Oil and Gas Assets
The key audit matter
How the matter was addressed in our audit
On 21 May 2018, the Group announced the sale of
its 50% interest in Ungani production licences for a
total cash consideration of $64 million.
In the 2018 consolidated financial statements, the
Group has recognised a $36 million gain after tax.
The disposal of oil and gas assets is a key audit
matter due to:
• the timing of the sale which required an
assessment at the half year regarding sale
recognition and recoverability of the receivable,
noting that settlement was completed at year
end.
• the size of the transaction and the resultant
measurement of the gain which has a
significant impact on the consolidated financial
statements.
Other Information
Our procedures included:
• We read the sale and purchase agreements and
related documents for the transfer of titles.
• We assessed whether the Group accurately
determined the value of assets and liabilities de-
recognised as at the transaction completion date
and whether the gain on the sale was correctly
recorded.
• We inspected supporting documents for the
cash consideration received.
• Our tax specialists considered the tax impacts of
the disposal including considering external
advice obtained by the Group.
Other Information is financial and non-financial information in Buru Energy Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
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,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
55
ANNUAL REPORT 2018
Independent Auditor’s Report
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• 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. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Buru
Energy Limited for the year ended 31 December
2018, complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report
included in pages 19 to 22 of the Directors’ report
for the year ended 31 December 2018.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
Jane Bailey
Partner
Perth
26 March 2019
KPMG
56
BURU ENERGY LIMITED
Corporate Governance Statement
The ASX Listing Rules require listed entities to disclose the extent to which they have followed the Corporate Governance
Principles and Recommendations set by the ASX Corporate Governance Council during the reporting period. This corporate
governance statement summarises the Company’s corporate governance practices that have been in place during the year
taking into consideration the corporate governance principles relevant to a company of Buru Energy’s nature and size.
This Corporate Governance Statement has been prepared on the basis of disclosure under the 3rd edition of the ASX Corporate
Governance Principles and Recommendations, detailing the Company’s compliance with these principles during the financial
year ended 31 December 2018 on an “if not, why not” basis.
This Corporate Governance statement can be viewed in the corporate governance section of the Company’s website: www.
buruenergy.com.
ASX Principle 1 – Lay solid foundations for management and oversight
Role of the Board
The respective roles and responsibilities of both the Board and management are set out in the Board Charter which can be
viewed in the corporate governance section of the Company’s website.
The Board is collectively responsible for the governance of the Company and for promoting its success. The Board’s primary
purpose is to govern the Company on behalf of all shareholders. The Board’s specific job outputs are to maintain a link between
the Company’s shareholders and its operations and to create and maintain governance policies that address the broadest levels
of all decisions and situations. The Board retains the responsibility for setting the Company’s strategic direction and objectives
and for setting limitations on the means by which management may achieve those objectives. Limitations on management
are primarily imposed by approved corporate strategy and expenditure limits. The Board delegates to management the
responsibility for developing the capability to achieve Buru Energy’s aims and objectives and employing that capability
within the limitations set by the Board. The Board monitors and maintains this delegation by requiring regular reporting by
management to the Board.
The mandate to lead Buru Energy is placed by shareholders in the hands of the entire Board. The principles endorsed by the
Board are as follows:
• no person within Buru Energy, whether a Board member or a member of management, can have any authority unless the
Board grants that authority;
•
•
all Board members are accountable individually and as a whole for any lapses of performance or behaviour by Buru Energy;
and
the Board possesses authority only as a group, the Chairman and individual Directors have no power unless specifically given
it by the Board collectively.
A Director or other officer of Buru Energy who makes a business judgment will have met the requirements as a Director of Buru
Energy and their equivalent duties at common law and in equity, if they:
• make the judgment in good faith for a proper purpose;
• do not have a material personal interest in the subject matter of the judgment;
•
•
inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
rationally believe that the judgment is in the best interests of Buru Energy.
The Director’s or officer’s belief that the judgment is in the best interests of Buru Energy is a rational one unless the belief is one
that no reasonable person in their position would hold.
To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee and a Remuneration and
Nomination Committee. Further details on both Committees are included in this Corporate Governance Statement.
57
ANNUAL REPORT 2018 Delegation to management
The Board delegates a portion of its authority through management limitations, policies and holding the Executive Chairman
accountable. It also recognises in its policies, strategic direction and setting of objectives for management, its accountability to
legal and ethical obligations and its broader responsibility to non-equity stakeholders and the community. Senior executives are
responsible for supporting the Executive Chairman and assisting him with the management of the Company in accordance with
the delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the Company’s
materiality thresholds to the Executive Chairman.
Election of directors
The Remuneration and Nomination Committee oversees the appointment and induction process for Directors and Committee
Members, and the selection, appointment and succession planning processes for the Company’s Executive Chairman, executives
and senior management. The Committee makes recommendations to the Board on the appropriate skill mix, personal qualities,
expertise and diversity of each position. When a Board vacancy exists or there is a need for particular skills, the Committee in
consultation with the Board determines the selection criteria based on the skills deemed necessary. The Committee identifies
potential Board candidates with advice from external consultants when necessary. The Board then appoints the most suitable
candidate. Board candidates appointed through this process must stand for election at the next general meeting of shareholders
following their appointment.
All relevant information is to be provided in the Notice of Meeting seeking the election or re-election of a director including:
• biographical details including qualifications and experience;
• other directorships and material interests;
•
•
•
•
term of office;
statement by the board on independence of the director;
statement by the board as to whether it supports the election or re-election; and
any other material information.
Terms of appointment
To facilitate a clear understanding of roles and responsibilities, all non-executive directors have a signed letter of appointment.
This letter of appointment letter includes acknowledgement of:
• director responsibilities under the Corporations Act, Listing Rules, the Company’s Constitution and other applicable laws;
•
corporate governance processes and Company policies;
• board and board committee meeting obligations;
•
•
•
•
conflicts and confidentiality procedures;
securities trading and required disclosures;
access to independent advice and employees;
confidentiality obligations;
• directors fees;
•
expenses reimbursement;
• directors and officers insurance arrangements;
• other directorships and time commitments; and
• board performance review and succession.
The Executive Chairman and senior executives have signed executive services agreements. For further information refer to the
Remuneration Report.
58
Corporate Governance StatementBURU ENERGY LIMITED Corporate Governance Statement
Role of Company Secretary
The Company Secretary is accountable to the Board for:
•
•
•
•
advising the Board and committees on corporate governance matters;
the completion and distribution of board and committee papers;
completion of board and committee minutes; and
the facilitation of director induction processes and ongoing professional development of directors.
All directors have access to the Company Secretary who has a direct reporting line to the Chairman.
Diversity
The Board is committed to having an appropriate level of diversity on the Board and in all areas of the Group’s business. The
Board has established a policy regarding gender, age, ethnic and cultural diversity. Details of the policy are available on the
Company’s website.
The key elements of the Group’s diversity policy are as follows:
• disclose the Group’s commitment to attracting and retaining a diverse range of talented people to work in all levels of its
business, from entry positions to Board members;
•
annual assessment of gender diversity on the Board and in all areas of the Group’s business and reporting against the gender
diversity objectives approved by the Board.
Due to workforce numbers, Buru Energy is not a ‘relevant employer’ under the Workplace Agenda Equality Act. The Group’s
gender diversity as at the end of the reporting period was as follows:
Period
Gender
Level
Directors
Senior Executives
All Other Employees
TOTAL
31 December 2018
31 December 2017
Males
Females
Males
Females
Number
2
2
31
35
%
67
100
86
85
Number
1
-
5
6
%
33
-
14
15
Number
2
2
27
31
%
67
100
84
84
Number
1
-
5
6
%
33
-
16
16
Due to the technical nature of the company’s operations it is difficult to find suitably qualified and experienced female staff,
however, the Company actively encourages and supports its female staff in their career development.
In respect of Aboriginal engagement, the Company’s objectives in 2018 were as follows:
• Continue to grow and develop the Company’s Aboriginal workforce
• Continue to increase partnering with local Kimberley Aboriginal businesses to provide services
The Company enjoyed full retention of our Aboriginal workforce in the Kimberley during 2018. Buru also provides support for
local Aboriginal ranger groups for key areas in which we operate. The Company continues to put preference on contracting local
Kimberley Aboriginal businesses to provide services with an ~35% increase in the value of contracts delivered by Aboriginal
businesses in 2018 compared to 2017. Services were provided by Aboriginal businesses in the areas of civil works, rehabilitation
operations, rehabilitation monitoring, site security and inspections and environmental monitoring.
59
ANNUAL REPORT 2018 Performance review
Approximately every three years, or more frequently if appropriate, the Remuneration and Nomination Committee will undertake
an evaluation of the performance of the Board, its Committees, individual Directors, and senior executives. The other Directors
have an opportunity to contribute to the review process. The reviews generate recommendations to the Board, which votes on
them. The Committee’s nomination of existing Directors for reappointment is not automatic and depends on, amongst other
things, the outcome of the review process. The Committee reviews and makes recommendations to the Board on remuneration
packages and policies applicable to the executive officers and Directors of the Company and of other Group executives for
the Group. It is also responsible for short and long term incentive performance packages, superannuation entitlements and
retirement and termination entitlements.
During the 2018 year there was no formal performance reviews undertaken of the Board. Non-executive Directors only received
a modest increase in line with CPI and there was no change to the Executive Chairman’s remuneration. A formal performance
review of executive management was completed during the 2018 year in accordance with the above process.
Board Meetings
Full Board meetings are conducted in accordance with the Company’s constitution at least nine times a year, but generally
monthly, at venues, dates and times agreed, where practical, in advance. In accordance with the constitution, the quorum for a
meeting is two Directors, however all meetings are scheduled so that all Directors can attend.
The agenda for each Board meeting is developed by the Company Secretary in consultation with the Executive Chairman. Board
papers are distributed to Directors at least three business days before the meeting, unless the meeting has been called urgently.
Board papers contain the information required for the Directors to make informed decisions in the efficient discharge of their
responsibilities. The minutes of Board meetings are circulated, approved and signed by the Chairman within fourteen days of the
date of the meeting.
Urgent matters that cannot wait until the next scheduled Board meeting and for which an impromptu Board meeting cannot be
arranged are dealt with by a circular resolution in accordance with Buru Energy’s Constitution (Article 11.22). Circular resolutions
are normally preceded by telephone or email correspondence if practical, and are approved by the Executive Chairman before
being circulated. The resolution is passed when it is signed by the last of the Directors. Signed circular resolutions are entered
into the minute book. The Board meets informally as required to discuss matters and to ensure members are fully informed of
the Company’s operations. Directors are also provided with a weekly report setting out material matters that have occurred.
Independent professional advice and access to company information
Each Director has the right to access all relevant Company information and to speak to and have access to management. Subject
to prior consultation with and approval by the Chairman, each Director may seek independent professional advice in respect of
the Company and the Board’s affairs from a suitably qualified adviser at the Group’s expense. A copy of the advice received by a
Director in these circumstances will, subject to the Chairman’s discretion, be made available to all other members of the Board.
No Director sought such advice during the year.
ASX Principle 2 – Structure the board to add value
Composition of the Board & Director Independence
The names of the Directors of the Company in office at the date of this statement, and information regarding Director’s
independence, experience and length of service, is set out in the Directors’ Report.
The composition of the Board is determined using the following principles:
•
•
•
•
a minimum of three and no more than eight Directors, with extensive knowledge relevant to the conduct of the Company’s
business;
a majority of independent Non-executive Directors;
a Non-executive Independent Director as Chairman (however this is not currently complied with as set out below); and
all Directors are subject to re-election every three years, except for the Managing Director (currently the functional role of the
Executive Chairman).
The Board should, collectively, have the appropriate level of personal qualities, skills, experience and time commitment to
properly fulfil its responsibilities or have ready access to such skills where they are not available.
60
Corporate Governance StatementBURU ENERGY LIMITED Corporate Governance Statement
The Board considers the mix of skills and the diversity of Board members when assessing the composition of the Board. The
Board assesses existing and potential Directors’ skills to ensure they have appropriate capabilities, experiences, skills and
ability to add value to the Company’s business as a whole. The composition of the Board is also assessed having regard to
the Company’s Diversity Policy, which is designed to promote and achieve diversity at all levels of Buru Energy’s business,
including the Board. A detailed skills matrix of the Board for a company of Buru Energy’s size and nature is not considered
necessary. The Board assesses the independence of each Director annually in light of the interests declared by them. Directors
will be considered independent if they meet the definition of an ‘Independent Director’ in accordance with the ASX Corporate
Governance Council Corporate Governance Principles and Recommendations.
Mr Eric Streitberg is a major shareholder of the Company and undertakes full time executive duties with the Company.
Consequently his role as the Executive Chairman of the Company does not comply with ASX Recommendation 2.5 which states
that the Chairman of the Board should be an Independent Director. This has been the arrangement following the restructure
of the Buru Energy Board in 2014. This does not comply with ASX best practice guidelines, but the Board is of the view that the
current composition of the Board is appropriate for the current situation of the Company.
Nomination Committee
The Company has a combined Nomination Committee and Remuneration Committee. The composition of the Remuneration
and Nomination Committee is a minimum of three members, the majority of whom are independent Non-executive Directors.
The members of the Remuneration and Nomination Committee during the period were:
• Ms Eve Howell – Chairperson, Independent Non-executive
• Mr Robert Willes – Independent Non-executive
• Mr Eric Streitberg
The Company Secretary is the Secretary of the Remuneration and Nomination Committee. The Executive Chairman and
Company Secretary do not attend meetings involving matters pertaining to themselves. The Remuneration and Nomination
Committee meet at least three times a year and as often as required as determined by the Chairperson of the Committee. The
number of meetings that the Committee held, and the number of meetings attended by each Committee member during the
year is disclosed in the Directors’ Report. Any Committee member may convene a meeting of the Committee and two members
constitute a quorum. The Committee has the right to access management and may engage independent professional advisers as
it requires, to assist it to discharge its purpose and responsibilities. The minutes of meetings are circulated, approved and signed
by the Chairman within twenty one days of the date of the meeting. Further details on the Remuneration and Nomination
Committee, including its charter, the Board Renewal and Performance Evaluation Policy and the Diversity Policy can be viewed in
the corporate governance section of the Company’s website.
Director Education
Each new Director will undergo a formal induction at the earliest opportunity to enable them to gain an understanding of
the Company’s financial, strategic, operational and risk management position and to participate fully and actively in Board
decision-making. Directors also have the opportunity to visit Company facilities and meet with management to gain a better
understanding of business operations. Directors are also given access to continuing education opportunities to update and
enhance their skills and knowledge.
ASX Principle 3 – Act ethically and responsibly
Code of conduct
Buru Energy has established a Code of Conduct and this can be viewed in the corporate governance section of the Company’s
website. The Code of Conduct applies to all Directors, senior executives, employees and contractors working on Buru Energy
sites. It sets out the practices necessary to maintain confidence in the Company’s honesty and integrity and the practices
necessary to take into account the legal obligations and the expectations of the Company’s stakeholders and the responsibility
and accountability of individuals for reporting and investigating reports of unethical practices.
The Code of Conduct sets out the procedure to be followed if there is, or may be, a conflict between the personal or other
interests of a Director and the business of the Company including the notification of an interest to the Board and a withdrawal
from a meeting in which the material matter is discussed. There have been no reports of a departure from the Code of Conduct.
61
ANNUAL REPORT 2018 Trading in Company securities by Directors and employees
The key elements of the Company’s share trading policy for Directors and employees are:
•
•
•
•
•
•
•
Identification of those restricted from trading – Directors and Senior Executives may acquire shares in the Company, but are
prohibited from dealing in Company shares or exercising options:
-
in respect of a well drilling program in which Buru Energy has an interest, from the date on which the casing string above
the first objective is set (or such earlier time or event as may be notified to staff by the Executive Chairman) until the close
of trading on the day that the drilling rig has been released from the relevant location;
-
two weeks prior to the release of Buru Energy’s half-year and annual reports;
- whilst in possession of price sensitive information not yet released to the market.
to raise the awareness of legal prohibitions including transactions with colleagues and external advisers;
to raise awareness that the Group prohibits entering into transactions that limit economic risks related to unvested share-
based payments;
to raise awareness that the Group prohibits those restricted from trading in Company shares as described above from
entering into transactions such as margin loans that could trigger a trade during a prohibited period;
to require details to be provided of intended trading in the Company’s shares;
to require details to be provided of the subsequent confirmation of the trade; and
the identification of processes for unusual circumstances where discretions may be exercised in cases such as financial
hardship.
The policy also details the insider trading provisions of the Corporations Act 2001 and is reproduced in full on the Company’s
website.
ASX Principle 4 – Safeguard integrity in corporate reporting
Audit Committee
The Company has a combined Audit Committee and Risk Committee. The Audit and Risk Committee advises on the
establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the
Group.
The Audit and Risk Committee is responsible for oversight and review of:
the annual and half yearly statutory financial statements;
•
• procedures and issues that could have a significant impact on financial results (for example impairment testing);
• Buru Energy’s internal controls including accounting controls;
•
external auditor’s independence and monitoring the audit process in accordance with the international auditing standards
and any other applicable regulations;
the appropriateness of the external auditor’s provision of non-audit services;
the need for and, if required, the scope and conduct of internal audit;
the establishment and implementation of a risk management process to identify, assess, monitor and control risk;
•
•
•
• management’s periodic risk assessments and recommendations;
•
•
•
the adequacy of Buru Energy’s insurances;
compliance with appropriate regulations (including environmental and safety); and
reporting on reserves in accordance with the appropriate regulations and guidelines.
The Audit and Risk Committee reviews the performance of the external auditors on an annual basis and will meet with them
during the year to:
• discuss the external audit plans, identifying any significant changes in structure, operations, internal controls or accounting
•
•
policies likely to impact the financial statements and to review the fees proposed for the audit work to be performed;
review the half-year and full year financial reports prior to lodgement with the ASX, and any significant adjustments required
as a result of the auditor’s findings, and to recommend Board approval of these documents, prior to announcement; and
review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor the
implementation of any recommendations made.
62
Corporate Governance StatementBURU ENERGY LIMITED Corporate Governance Statement
The composition of the Audit and Risk Committee is a minimum of three members and is ordinarily comprised of only Non-
executive Directors. The members of the Audit and Risk Committee during the period were:
• Mr Robert Willes (Chairperson) – Independent Non-executive
• Ms Eve Howell – Independent Non-executive
• Mr Eric Streitberg – (Not independent but required to meet the minimum number of three members)
The external auditors, the Executive Chairman (when not a member of the Committee) and the Chief Financial Officer, are invited
to Audit and Risk Committee meetings at the discretion of the Committee.
The Audit and Risk Committee meet at least three times a year and as often as required as determined by the Chairman of the
Committee. The number of meetings that the Committee held, and the number of meetings attended by each Committee
member during the year is disclosed in the Directors’ Report. Any Committee member may convene a meeting of the Committee
and two members constitute a quorum. The Committee has the right to access management and may engage independent
professional advisers as it requires, assisting to discharge its purpose and responsibilities. The Company Secretary is the
Secretary of the Audit and Risk Committee. The minutes of meetings are circulated, approved and signed by the Chairman within
twenty one days of the date of the meeting. The external auditor met with the Audit and Risk Committee twice during the year.
Further details on the Audit and Risk Committee including its charter can be viewed in the corporate governance section of the
Company’s website.
Financial Statements
The Executive Chairman and the Chief Financial Officer have declared in writing to the Board that in respect of both the 31
December 2018 financial report and 30 June 2018 half-year financial report of the Company and its controlled entities that:
•
•
•
•
•
the Company’s financial records have been properly maintained;
the financial statements comply with accounting standards;
the financial statements give a true and fair view;
these statements are based on a sound system of risk management; and
the Company’s risk management and internal controls are operating efficiently and effectively.
These representations are made prior to the board approval of the release of the financial reports and is made after enquiry of,
and representation by, appropriate levels of management.
External Auditor
The external auditor attends the annual general meeting to answer questions concerning the conduct of the audit, the
preparation and content of the auditor’s report, accounting policies adopted by the Group and the independence of the auditor
in relation to the conduct of the audit.
Internal Audit
Given the size and scale of Buru Energy, it does not have an internal audit function.
63
ANNUAL REPORT 2018 ASX Principle 5 – Make timely and balanced disclosure
The Board provides shareholders with information using a comprehensive Continuous Disclosure and Market Communications
Policy which includes identifying matters that may have a material effect on the price of the Company’s securities, notifying them
to the ASX, posting them on the Company’s website, and issuing media releases. More details of the policy are available on the
Company’s website.
In summary, the Continuous Disclosure and Market Communications Policy operates as follows:
•
•
•
the Executive Chairman and Company Secretary are responsible for interpreting the Group’s policy and where necessary
informing and seeking approval from the Board. The Executive Chairman and Company Secretary are primarily responsible
for all external communications including releases made on the ASX;
the full annual report is made available to all shareholders via the Company’s website. A physical copy will be sent to any
shareholder that specifically requests it. The full annual report includes relevant information about the operations of the
Group during the year, changes in the state of affairs and details of future developments;
the half-yearly report is made available to all shareholders via the Company’s website. A physical copy will be sent to any
shareholder that specifically requests it. The half-yearly report contains summarised financial information and a review of the
operations of the Group during the period;
• proposed major changes in the Group which may impact on share ownership rights are submitted to a vote of shareholders;
all announcements made to the ASX, and related information (including information provided to analysts or the media
•
during briefings), are placed on the Company’s website after they are released to the ASX;
the full texts of notices of meetings and associated explanatory material are placed on the Company’s website; and
all of the above information, dating back to the listing of the Company, is made available on the Company’s website within
one day of public release, and is emailed to all shareholders who lodge their email contact details with the Company.
Information on lodging email addresses with the Company is available on the Company’s website.
•
•
ASX Principle 6 – Respect the rights of security holders
Company website and corporate governance
The following information is included in the Corporate Information section of the Company’s website:
company overview;
•
• profiles of directors and senior executives;
•
•
corporate directory; and
corporate governance documents including key policies, board and committee charters and the Company’s Constitution.
Investor Relations
The Board aims to ensure that shareholders and investors have appropriate access to Company information. The Company has
a strategy to promote effective two way communication with shareholders through a policy of open disclosure to shareholders,
regulatory authorities and the broader community of all material information with respect to the Company’s affairs including, but
not limited to:
• process for performance evaluation of the board, its committees, the Executive Chairman and senior executives;
•
the link between remuneration paid to directors and key executives and corporate performance, as more fully disclosed in
the annual Remuneration Report;
shorter, more comprehensible notices of meetings.
•
64
Corporate Governance StatementBURU ENERGY LIMITED Corporate Governance Statement
The Company will ensure that:
•
•
all documents that are released to the ASX are made available as soon as possible on the Company’s website; and
all other information on the Company’s website is updated on a regular basis.
The Company will also make timely announcements concerning:
changes to directors;
changes to the Executive Chairman’s contract or remuneration package;
•
•
• grant, expiry or vesting of employee share options or share appreciation rights;
•
•
•
share purchases or divestment by Directors;
conflicts of interest & related party transactions; and
significant changes to accounting policies.
In addition to communicating with shareholders, the Company also communicates with investors who may or may not be
shareholders. These communication activities must not involve the disclosure of confidential or potentially market sensitive
information. When briefings with investors and analysts are held any price sensitive information included in such presentations
is first made available to the market.
Participation at Meetings
The Board encourages full participation of shareholders at the Annual General Meeting, to ensure a high level of accountability
and identification with the Group’s strategy and goals. Important issues are presented to the shareholders as single resolutions.
Shareholders are requested to vote on the appointment and aggregate remuneration of Directors, the granting of options
and shares to Directors, the Remuneration report and changes to the Constitution and all other matters requiring shareholder
approval. A copy of the Constitution is available to any shareholder who requests it.
Shareholder communications
Shareholders have the option of electing to receive all Company and share registry communications electronically, and also to
send communications via email or to the Company website. All shareholders have the ability to request an electronic copy of ASX
releases.
ASX Principle 7 – Recognise and manage risk
Risk Committee
The Company has a combined Audit Committee and Risk Committee. Information on that Committee in included above under
ASX Principle 4.
Risk management
The Audit and Risk Committee oversees the establishment, implementation, and annual review of the Group’s Risk Management
System. Management has established and implemented the Risk Management System for assessing, monitoring and managing
all risks, including material business risks, for the Group (including sustainability risk). The Executive Chairman and the Chief
Financial Officer have provided assurance, in writing to the Board, that the financial reporting risk management and associated
compliance and controls have been assessed and found to be operating effectively. The operational and other risk management
compliance and controls have also been assessed and found to be operating effectively.
Management provide the risk profile to the Audit and Risk Committee that outlines the material business risks to the Group.
Risk reporting includes the status of risks through integrated risk management programs aimed at ensuring risks are identified,
assessed and appropriately managed. The Audit and Risk Committee reports the status of material business risks to the Board
on an annual basis, and a review was undertaken with senior management during the year. Further details of the Group’s risk
management policy and internal compliance and control system are available on the Company’s website.
65
ANNUAL REPORT 2018 The risks involved with oil and gas exploration generally and the specific risks associated with Buru Energy’s activities in particular
are regularly monitored and all exploration and investment proposals reviewed include a conscious consideration of the issues
and risks of each proposal. The Company’s executive and senior management have extensive experience in the industry and
manage and monitor potential exposures facing Buru Energy. The Group’s operations are subject to significant environmental
regulation under both Commonwealth and State legislation in relation to its oil and gas exploration and production activities.
The Group is committed to achieving a high standard of environmental performance and continuous improvement. It has
established a Group-wide Environmental Policy together with operation and activity specific environmental management
plans to manage this area of the Company’s activities. Compliance with the requirements of environmental regulations and
with specific requirements of site environmental approvals was substantially achieved across all operations with no instances of
material, non-compliance in relation to approval requirements noted. Based on the results of enquiries made, the Board is not
aware of any significant breaches during the period covered by this report.
Internal Audit
Given the size and scale of Buru Energy, it does not have an internal audit function.
The Board is responsible for the overall internal control framework, but recognises that no cost-effective internal control system
will preclude all errors and irregularities. Comprehensive practices have been established to ensure:
•
•
capital expenditure and commitments above a certain size obtain prior Board approval;
financial exposures are controlled, further details of the Group’s policies relating to interest rate management, forward
exchange rate management and credit risk management are included in the financial statements;
• occupational health and safety standards and management systems are monitored and reviewed to achieve high standards
of performance and compliance with regulations;
• business transactions are properly authorised and executed;
•
•
•
the quality and integrity of personnel;
financial reporting accuracy and compliance with the financial reporting regulatory framework; and
environmental regulation compliance.
ASX Principle 8 – Remunerate fairly and responsibly
Remuneration Committee
The Company has a combined Nomination Committee and Remuneration Committee. Information on that Committee is
included above under ASX Principle 2.
The Company is committed to adopting remuneration practices that:
align the interests of employees and shareholders;
•
•
attract and retain suitably qualified employees; and
• motivate employees to achieve superior performance.
The Remuneration and Nomination Committee is responsible for making recommendations to the Board on remuneration
policies and employment practices applicable to directors, senior executives and employees of the Company.
For details of the Company’s policies and practices regarding the remuneration of directors and senior executives and
remuneration paid to directors and senior executives please refer to the Remuneration Report.
For details of the Company’s Employee Share Option Plan please refer to the Remuneration Report. Note that employees are
prohibited from entering into hedge contracts which limit the economic risk of participation in this plan.
Formal appraisals are conducted at least annually for all employees. Training and development and appropriate remuneration
and incentives with regular performance reviews create an environment of cooperation and constructive dialogue with
employees and senior management.
66
Corporate Governance StatementBURU ENERGY LIMITED Additional ASX Information
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
The distribution of ordinary shares ranked according to size as at 28 February 2019 was as follows:
Category
Ordinary Shares
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
341,618,630
74,449,550
8,828,093
6,698,414
479,554
432,074,241
1,601,186
%
79.06
17.23
2.04
1.55
0.12
100.00
0.37
No of Holders
478
2,212
1,151
2,281
1,078
7,200
1,778
The 20 largest ordinary shareholders of the ordinary shares as at 28 February 2019 were as follows:
Rank
Name
Number of ordinary shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BIRKDALE ENTERPRISES PTY LTD
CHEMCO PTY LTD
COOGEE RESOURCES PTY LTD
WANDJI INVESTMENTS LIMITED
MR ERIC CHARLES STREITBERG
MAXIGOLD HOLDINGS PTY LTD
MR STEPHEN HARRY JONES
ROCKET SCIENCE PTY LTD
AMK INVESTMENTS (WA) PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR JOHN PHILIP DANIELS
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
PERSHING AUSTRALIA NOMINEES PTY LTD
SINO PORTFOLIO INTERNATIONAL LIMITED
MAJOR DEVELOPMENT GROUP PTY LTD
CITICORP NOMINEES PTY LIMITED
JH NOMINEES AUSTRALIA PTY LTD
PARAMON HOLDINGS PTY LTD
TWINSOUTH HOLDINGS PTY LTD
Total twenty largest shareholders
Balance of register
Total register
%
6.64
30.72
15.99
31.68
14.97
100.00
24.69
%
9.82
8.11
4.01
3.70
2.22
1.94
1.49
1.42
1.26
1.10
1.09
0.99
0.99
0.95
0.88
0.86
0.82
0.79
0.69
0.69
42,443,638
35,056,269
17,333,333
16,000,000
9,572,400
8,398,003
6,443,780
6,149,197
5,450,000
4,758,972
4,693,004
4,282,171
4,264,622
4,121,996
3,820,588
3,707,890
3,544,697
3,400,000
3,000,000
3,000,000
192,380,560
239,693,681
44.52
55.48
432,074,241
100.00
67
ANNUAL REPORT 2018 Additional ASX Information
The following interests were registered on the Company’s register of Substantial Shareholders as at 28 February 2019:
Shareholder
Birkdale Enterprises Pty Ltd
Chemco Pty Ltd
Voting rights
Ordinary shares
At a general meeting of shareholders:
Number of ordinary shares
35,056,269
33,333,333
%
8.11
7.71
(a) On a show of hands, each person who is a member or sole proxy has one vote.
(b) On a poll, each shareholder is entitled to one vote for each fully paid share.
Unlisted Options
There are no voting rights attached to the unlisted options.
Other information
Buru Energy Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
The Company is listed on the Australian Securities Exchange. ASX Code: BRU
The Company and its controlled entities schedule of interests in permits as at 28 February 2019 were as follows:
Permit
L6
L8
L17
L20
L21
EP129*
EP391
EP428
EP431
EP436
EP457**
EP458**
Type
Ownership
Operator
Production licence
Production licence
Production licence
Production licence
Production licence
Exploration permit
Exploration permit
Exploration permit
Exploration permit
Exploration permit
Exploration permit
Exploration permit
100.00%
100.00%
100.00%
50.00%
50.00%
100.00%
50.00%
50.00%
100.00%
50.00%
60.00%
60.00%
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Energy Ltd
Buru Fitzroy Pty Ltd
Buru Fitzroy Pty Ltd
* Excluding Backreef Area
** Pending DMIRS approval of the transaction with Diamond Resources (Barbwire) Pty Ltd.
68
BURU ENERGY LIMITED Directors
Mr Eric Streitberg
Ms Eve Howell
Mr Robert Willes
Company Secretary
Mr Shane McDermott
Executive Chairman
Independent Non-executive Director
Independent Non-executive Director
Registered and Principal Office
Level 2
16 Ord St
West Perth WA 6005
Telephone:
Email:
Website:
+61 (08) 9215 1800
info@buruenergy.com
www.buruenergy.com
Share Registry
Link Market Services Limited
Level 12, QV1 Building
250 St Georges Terrace
Perth WA 6000
Telephone:
Email:
Website:
1300 554 474
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Auditors
KPMG
235 St George’s Terrace
Perth WA 6000
Stock Exchange
Australian Stock Exchange
Exchange Plaza
2 The Esplanade
PERTH WA 6000
ASX Code:
Shares on issue:
Unlisted options:
BRU
432,074,241
9,150,000
Corporate Register
69
ANNUAL REPORT 2018 buruenergy.com