2022 ANNUAL
REPORT
Carnarvon Energy Limited
ABN 60 002 688 851
CORPORATE
DIRECTORY
Directors
WA Foster (Chairman)
AC Cook (Managing Director)
P Moore (Non-Executive Director)
SG Ryan (Non-Executive Director)
D Bakker (Non-Executive Director)
Company Secretary
A Doering
G Sproule
Auditors
Ernst & Young
Bankers
Australia and New Zealand Banking Group Limited
Commonwealth Bank of Australia
National Australia Bank Limited
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1300 554 474 (within Australia)
+61 1300 554 474 (outside Australia)
+61 2 9287 0303
Stock Exchange Listing
Carnarvon Energy Limited’s shares are quoted on the Australian Securities Exchange.
ASX Code:
CVN - ordinary shares
CONTENTS
Chairman’s Review
Managing Director’s Review
Operating and Financial Review
Directors’ Report
Auditors Independence Declaration
Corporate Governance Statement
Consolidated Income Statement and Other
Comprehensive Income
2-3
4-5
6-25
26-46
47
48
49
Consolidated Statement of Financial Position
50
Consolidated Statement of Changes in Equity
51
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
52
53-93
94
95-99
Additional Shareholder Information
100-101
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 1
CARNARVON ENERGY LIMITED
(“CARNARVON” OR “COMPANY”)
CHAIRMAN’S
REVIEW
The past twelve months
have seen considerable
successful activity at
Carnarvon, tempered by
some disappointments.
Good progress has been made on the Dorado
development, the renewable diesel project, and a
successful Pavo exploration well. All of this has been
achieved against a background of COVID related
disruption, financial markets uncertainty and supply
chain challenges.
I wish to show my appreciation to my fellow
board members for their counsel and support,
and Carnarvon’s staff for their talented efforts and
dedication to furthering Carnarvon’s future. I’d also like
to thank our shareholders, both old and new for their
ongoing support and belief in the Company.
The Company’s focus has remained unchanged from
that established some two to three years ago with
three major areas of activity. Firstly, the development
of the Dorado field and surrounding discoveries such
as Pavo. Secondly, further exploration of the highly
prospective Bedout Sub-basin for major oil and gas
developments and finally our transition to a sustainable
energy business, such as renewable diesel.
All these activities are being conducted under the
umbrella of a net zero emissions policy to be achieved
before 2050.
2 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
In terms of the Company’s core project, the Front-
End Engineering and Design (FEED) work on the
Dorado development made substantial progress
during the year. However, the current inflationary cost
environment and period of supply chain uncertainties
means that the Joint Venture has adopted a prudent
approach which does not support a Final Investment
Decision (FID) in 2022. The Company remains focused
on value enhancement through further drilling in the
Bedout Sub-basin and optimisation of the Dorado
development concept.
A key to optimising the Dorado development includes
incorporating the success of the Pavo-1 well earlier
this year, which has considerably enhanced the
proposed Dorado development’s commerciality. The
development resource, from Dorado coupled with
the Pavo discovery, has substantially increased. Most
importantly, this increased resource lowers overall
capital and operating cost per barrel whilst allowing for
a longer production plateau.
The Pavo South prospect, which is separated from
the structure drilled in the Pavo-1 well (Pavo North) by
a narrow syncline, has the potential to add significant
additional resources, if successful, further enhancing
project returns. The Pavo North and South fields are,
by industry standards, expected to be conventional tie-
ins to the proposed Dorado infrastructure.
The Bedout Sub-basin is in its early infancy as an
exploration area and remarkably its success to date
has been excellent. Unfortunately, this was not the
case with the Apus-1 well drilled following Pavo-1.
Carnarvon has a very positive future and one that
will deliver considerable value to its shareholders. It
has been a privilege to have been involved with this
Company as Chairman over the last twelve months.
However, despite this result, the Bedout Sub-basin
has still proven to be prolific with a relatively high rate
of success. With substantial 3D seismic data acquired
over the basin, the Joint Venture has continued to
develop and select the best prospects for further
exploration.
The transition to a low carbon economy will be a
gradual one and cannot be achieved overnight.
International energy agencies have forecast that even
with the best possible steps being taken to develop
renewable energy sources, oil will remain an important
energy source over the next thirty years.
Carnarvon’s renewable diesel Joint Venture in
Narrogin, Western Australia, is the first step in the
Company’s transition to building a large sustainable
business. The project is materially progressing towards
FID. There is a significant opportunity to build this
business across Australia to one where some eight
thousand barrels of diesel per day could be produced
by 2030. To date Carnarvon has found strong interest
in the renewable diesel by consumers across various
industries. Along with the diesel, wood vinegar and
biochar are produced which can be used in soil
remediation and carbon absorption. In the future, a
portion of the biochar has the potential to be refined
into graphene raising its sale value considerably.
Recent geopolitical events in Europe have highlighted
the need for national and regional energy and fuel
security. High quality oil fields such as Dorado and
Pavo will greatly assist in raising fuel security levels in
Australia and the Asian region.
Carnarvon takes its social licence very seriously.
Our activities are conducted in accordance with
Environmental, Social and Governance policies which
have been improved and developed over the last few
years and are regularly reviewed to match regulatory
requirements and community expectations.
Looking forward, Carnarvon has a very positive future
and one that will deliver considerable value to its
shareholders. It has been a privilege to have been
involved with this Company as Chairman over the last
twelve months and once more I wish to thank all those
who have helped place Carnarvon where it is today.
William (Bill) Foster
Chairman
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 3
MANAGING
DIRECTOR’S
REVIEW
This year we successfully increased the discovered oil
and condensate resources in the Bedout Sub-Basin by
26%. This achievement occurred through the Pavo-
1 discovery which added 43 million barrels (gross,
2C) (see page 18) to the nearby Dorado field’s 162
million barrels (gross, 2C). Given the different equity
levels held in the permits, Carnarvon’s share of these
resources increased 37% from 32 million barrels (2C) in
Dorado to 44 million barrels (2C) in Pavo and Dorado.
This is a significant cumulative resource for Carnarvon,
particularly when considered as an aggregated
development utilising the proposed Dorado production
facilities.
During the year, significant progress was achieved on
the Dorado development. With Front-End Engineering
and Design (FEED) work on the Dorado production
facilities substantially complete.
The Dorado facilities engineering, and subsurface
studies have confirmed the project will initially produce
75,000 to 100,000 barrels of oil per day (gross). Given
the light sweet nature of the Dorado crude, external
market analysis has also indicated that sales are likely
to achieve a premium to Brent.
The project is further enhanced by the planned
re-injection of the associated gas into the Dorado
reservoirs which is expected to maintain strong
production rates whilst also facilitating the project’s low
relative emissions profile which is already enhanced by
a low CO2 content of less than 2% in the fluids.
Importantly, the Company has continued to pursue
high graded exploration targets in the prolific Bedout
Sub-basin. These efforts provided another stellar
exploration success with the discovery of light sweet
oil in the Pavo-1 well.
With an estimated resource of 43 million barrels (gross,
2C) (see page 18), located only 46 kilometres from
the Dorado field, the Pavo resource can be tied back
to the proposed Dorado production facilities with no
material increase in operational costs.
Significantly, the Pavo discovery proves the extension
of a working petroleum system, quality reservoirs
and trapping mechanisms some 46 kilometres east
of Dorado. This area also hosts a suite of other
exploration targets which now warrant further
assessment for drilling. In Particular, the Pavo South
structure potentially has a further 74 million barrels
(gross, Pmean) to add to the existing Dorado and Pavo
resource base.
Following a string of exploration successes in the
Bedout Sub-basin, the Company was disappointed to
announce during the period, that despite encountering
excellent quality reservoirs, the Apus-1 well did not
discover a commercial quantity of hydrocarbons. The
results indicated that whilst there was evidence that
hydrocarbons had migrated to the Apus-1 location, they
either have not been retained in the drilled closure or
migrated in sufficient quantity.
The Buffalo-10 well, which was the Company’s first
offshore well as operator, unfortunately had a similar
result to that of Apus-1. The oil column encountered
by the well was deemed residual and uncommercial.
4 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
The Company also plans to mature the renewable
diesel business and look towards securing new
opportunities where they make strong business
sense and offer compelling value and earnings for
shareholders.
Importantly, however, the Company’s exposure to the
well was mitigated by a free carry for the first US$20m
of the Buffalo-10 well costs through a farm-down of a
50% interest in the project.
I was pleased, however, that the Company’s first
operated offshore well was drilled safely and
without environmental incident. This is a credit to
the Company’s operations team and the drilling
management team at Petrofac.
Exploration endeavours, by their nature, will naturally
present a range of outcomes. But through these types
of endeavours Carnarvon now has a strong resource
base in the Bedout. With growing concerns around
global energy security, compounded by an extended
period of underinvestment in oil projects, the Company
has positioned itself, through its portfolio of assets, to
capitalise on what is expected to be a strong oil price
environment into the future. Oil fields such as Dorado,
Pavo and future exploration success are essential
to meeting global energy demand and maintain
significant potential to generate considerable returns
for the Company’s shareholders in the upcoming
years.
The Company also recognises the importance of a
responsible and sustainable energy transition, of which
the Company has an important role to play. To this
end, the Company commenced a renewable fuel Joint
Venture, FutureEnergy Australia (FEA) during the year,
which aims to pursue emerging renewable energy
supply sources and technologies, particularly where
they provide earnings opportunities linked to robust
fuel prices.
The FEA Joint Venture made considerable progress
during the year, with FEED commenced on its first
biorefinery project. The refinery is planned to be
located in the Narrogin Shire and is lining up to be
the first in Australia to produce renewable diesel at
commercial scale using sustainable biomass feedstock
sources such as waste agricultural residues.
In a significant boost to the project, the Joint Venture
secured a $2m grant from the Clean Energy Future
Fund, which acknowledges the clear benefits
renewable diesel can bring to reducing carbon
emissions and creating a carbon-neutral alternative
fuel in Western Australia.
Looking forward, our focus is on delivering our flagship
Dorado project to FID, in addition to appraising and
developing the Pavo oil discovery and progressing
our broader Bedout basin exploration. These activities
alone have the potential to generate substantial value
for shareholders. The Company also plans to mature
the renewable diesel business and look towards
securing new opportunities where they make strong
business sense and offer compelling value and
earnings for shareholders.
Adrian Cook
Managing Director and Chief Executive Officer
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 5
OPERATING AND
FINANCIAL REVIEW
OVERVIEW OF OPERATIONS
HIGHLIGHTS FOR THE COMPANY DURING
THE 2022 FINANCIAL YEAR WERE:
Pavo oil discovery with a material 43mmbl (gross, 2C) (see page 18) contingent
resource being declared.
Dorado Front End Engineering Design (FEED) materially progressed for the
project, including Wellhead Platform and Floating
Production Storage and Offloading vessel.
Production Licence granted for the Dorado Field, allowing the
Dorado Joint Venture to produce petroleum from the Dorado
Licence Area.
Additional 3D seismic surveys acquired over the Bedout
Sub-basin to unlock further prospectivity over the acreage.
Commitment to achieving net zero emissions by 2050,
if not earlier.
Commencement of a renewable diesel Joint Venture
officially launched as FutureEnergy Australia.
FEED commenced on FutureEnergy Australia’s first
renewable diesel biorefinery which has been awarded
a $2m Clean Energy Future Fund grant.
Pepper Project
EP 509 100%
TP/29 100%
Outtrim Project
WA-155-P 100%
Derby
Derby
Broome
Broome
Port Hedland
Port Hedland
Karratha
Karratha
6 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Onslow
Onslow
Timor-Leste
Timor-Leste
Darwin
Darwin
Truscott
Truscott
Wyndham
Wyndham
Kununurra
Kununurra
Timor-Leste
Taurus Project
WA-523-P 100%
Buffalo Project
TL-SO-T19-14 100%
Condor Project
AC/P62 100%
Eagle Project
AC/P63 100%
Darwin
Dorado & Pavo
WA-435-P 20%
WA-436-P 30%
WA-437-P 20%
WA-438-P 30%
WA-64-L 20%
Labyrinth Project
WA-521-P 100%
Derby
Broome
Truscott
Wyndham
Kununurra
Port Hedland
Karratha
Onslow
Figure 1: Carnarvon Interests as at
30 June 2022 in Australia and Timor-Leste.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 7
OPERATING AND
FINANCIAL REVIEW
Dorado Project Background
Carnarvon secured its interests in the Bedout Sub-
Basin permits (WA-435-P, WA-436-P, WA-437-P and
WA-438-P) in 2009. The offshore permits cover
an expansive area of 21,652km2 which is located
approximately 110km from the coast, offshore of Port
Hedland in Western Australia.
Historically, the Bedout Sub-Basin was significantly
underexplored in comparison to the prolific Carnarvon
Basin to the south-west and the Bonaparte Basin to
the north-east. Exploration drilling within the area was
limited to a string of four wells in the 1970’s, which
were followed by the Phoenix-1 and Phoenix-2 wells
drilled in the early 1980’s. At the time, the Phoenix
wells were considered gas discoveries and were not
pursued further. The unexplored potential across this
vast area and the presence of hydrocarbons within the
region, led to Carnarvon’s initial interest in the basin.
Carnarvon’s preliminary work on the permits involved
an extensive geological study and the acquisition of
modern 3D seismic data which was a marked upgrade
to the existing legacy 2D seismic. The 3D seismic
acquisition confirmed two significant prospects in
Phoenix South within WA-435-P and Roc in WA-437-P.
As a result, interest in the permits grew and the Joint
Venture farmed out equity in the project to new
partners who funded the exploration drilling costs to
test the Phoenix South and Roc targets.
The Phoenix South-1 well was drilled in 2014,
discovering light oil within a high-quality reservoir.
The discovery at Phoenix South was followed by the
discovery and appraisal of a condensate rich gas in the
Roc field. These results proved to be the catalyst for
this region which warranted further exploration.
In 2018, the Dorado-1 exploration well discovered
a significant light oil column and condensate rich
gas in three additional reservoirs. The subsequent
appraisal of the Dorado discovery was successfully
completed with the well test results exceeding pre-test
expectations and confirming the high quality of the
reservoirs in Dorado. Dorado is a world class discovery
which has ignited interest in the Bedout Sub-basin and
has proven to be transformational
for the Company.
Figure 2: Nobel’s Tom Prosser rig on site during the Dorado Appraisal campaign.
8 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Dorado Development (WA-437-P)
(Carnarvon 20%, Santos is the Operator)
The scale and quality of the Dorado Project has
enabled the Joint Venture to progress the project
through the development planning phase. Key
milestones towards the Dorado Field Development
were achieved during the year, as the project
progressed through the Front End Engineering Design
(FEED) process.
Production of the large quantities of valuable
hydrocarbons at Dorado are planned over a multi-
phased development, with the initial development
(Phase 1) involving the extraction of the liquids (oil
and condensate). The field’s gas and LPG’s will be
re-injected before being assessed for subsequent
production in a second stage of development (Phase
2). The reinjection of gases during Phase 1 is expected
to considerably enhance the recovery of liquids from
the field. As a result, the initial gross oil production rate
from the field is targeted for 100,000 barrels per day.
Plans for the Phase 1 development will consist of a
single Wellhead Platform (WHP) in 90 meters of water
depth, connected to a nearby Floating Production
Storage and Offloading (FPSO) vessel via sub-sea
flowlines and control lines.
The FPSO is planned to be located around two
kilometres from the WHP and will be connected to the
seabed by a disconnectable turret mooring system.
The FPSO includes the processing facilities for the
oil and gas being delivered from the reservoir via the
wells and the WHP. It also allows for storage of oil and
condensate as well as offloading to a separate
oil transport tanker.
The FPSO is the project’s largest component, comprising
engineering, procurement of equipment, bulk materials,
services, construction, installation, commissioning and
testing of the facility. The WHP will have the capacity
to accommodate up to 16 individual wells from a
single drill centre. The initial development will have
10 wells, meaning the WHP will have the capacity to
accommodate production from future infill drilling.
The FPSO is also being designed with flexibility to
allow tie backs following future exploration successes
within the area such as the recent Pavo oil discovery.
FEED contracts for both the FPSO and WHP were
awarded during the period with significant and detailed
design work being substantially completed following
the end of the period.
Figure 3: Proposed Dorado Field Development Layout.
Towards the end of the period, the Dorado Joint
Venture was granted a production licence for the
Dorado Field, WA-64-L. The production licence
enables the Joint Venture to produce hydrocarbons
from the licence area, as well as continue to explore
for, and appraise, any additional hydrocarbons
within this area. The grant of the production licence
represents a key regulatory approval for the
Dorado project.
Carnarvon has also commenced a formal process
to fund its share of the Dorado development. The
Company, along with its financial advisor, has been
progressing a range of potential sources of capital.
These include traditional reserve-based non-
recourse senior debt facilities, alternative funding
options (including junior debt, offtake prepayment
and royalties), and divestment of a portion of the
Company’s share of the Dorado project and associated
exploration acreage. At the end of the financial period,
both the debt and equity funding processes were well
advanced. The Company is considering all funding
options to deliver the optimal balance of capital
management while maximising value for shareholders.
In August 2022, the Joint Venture, with consideration
of the current inflationary cost environment and period
of supply chain uncertainties, adopted a prudent
approach which does not support a Final Investment
Decision (FID) in 2022.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 9
OPERATING AND
FINANCIAL REVIEW
Pavo Oil Discovery (WA-438-P)
(Carnarvon 30%, Santos is the Operator)
In February 2022, Carnarvon and Joint Venture
partner Santos commenced the Pavo-1 exploration
well, located 46 kilometres east of Dorado in a water
depth of approximately 88 metres. The well tested the
northern culmination of the greater Pavo structure, a
structural/stratigraphic trap underpinned by the Dorado
Canyon, observed also at the Dorado Field. The Caley
Member was the primary reservoir target, which is also
the primary hydrocarbon bearing interval in the Dorado
Field.
The Pavo-1 well drilled ahead in the 8.5 inch hole to a
total depth of approximately 4,235 metres MD, which
provided valuable additional information on the Early
Triassic and Upper Permian stratigraphy which had not
previously been intersected in the basin. As expected,
no commercial hydrocarbons were encountered in
these deeper sections; however, the Joint Venture has
acquired key information to de-risk and enhance the
geological understanding of a significant number of
existing prospects in the wider basin.
The Pavo-1 well encountered a 60-meter gross
hydrocarbon column within the Caley Member
reservoir. Subsequent wireline data confirmed
a 46-meter net oil pay, with an oil-water contact
intersected at 3,004 metres measured depth (MD), or
2,960 metres sub-sea (mss). The oil column is wholly
contained within the northern culmination of the Pavo
structure (Pavo North) (Figure 4).
Excellent Caley Member reservoir quality was
interpreted from wireline logs, with 19% average
porosity, permeabilities in the 100 to 1000 milliDarcy
range and hydrocarbon saturations averaging 80%.
This represents a similar reservoir quality to those
encountered in the Dorado Field. Oil samples
collected from Pavo-1 indicate that the crude is a light,
sweet oil (~52 degrees API) with a relatively low Gas/
Oil Ration (GOR) (~300scf/bbl) compared to the Dorado
fluids, however, the GOR is high enough to suggest
that sufficient gas is available on production to ensure
efficient lifting of fluid from the reservoir.
The recovery factors are inferred to be extremely good
due to the excellent reservoir parameters, the light
nature of the fluid, and the very likely strong aquifer
drive.
A 2C contingent resource for Pavo North is assessed
at 43 million barrels of oil (mmbl) gross, of which,
13mmbl is net to Carnarvon (page 18).
The Pavo oil discovery lies within industry standard
ranges for tie-back distance and could be delivered
to the Dorado facilities at a time and rate that enables
very efficient utilisation of the Dorado facility, extending
the period of time at which the Dorado project can
produce at capacity.
Given the excellent reservoir quality in the Caley
Member, the Pavo North field could be developed with
a relatively low number of production wells and tied-
back to the Dorado FPSO.
The Pavo North oil discovery proves the extension of
a working petroleum system some 46 kilometres east
of Dorado and demonstrates that quality reservoir and
trapping mechanisms are effective in this area, which
hosts a suite of other exploration targets. These will
now warrant further assessment for drilling.
Figure 4: Schematic illustrating the North and South culminations of the greater Pavo structure.
10 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Figure 5: Illustration depicting potential FPSO
tie-backs of Pavo North and South
Exploration – Greater Bedout Area
(WA-435-P, WA-436-P, WA-437-P and
WA-438-P)
(Carnarvon 20%-30%, Santos is the Operator)
The recent Pavo-1 oil discovery has further de-
risked numerous prospects within the Company’s
considerable Bedout Sub-basin acreage such as the
Pavo South prospect.
Given its close proximity to Pavo North, and near
identical prospect elements demonstrated by seismic,
the Pavo South structure is interpreted to have an
excellent geological chance of success. Indications
of a deeper, residual or paleo-oil-water contact in
the Pavo-1 well at around 3,045 metres MD, or 3,001
metres mss (Figure 4) may indicate that the two Pavo
culminations were connected at a previous point in
time. If this was the case, a common deeper contact
supports the charging of both structures with the same
oil that was discovered in the Pavo North structure.
The Pavo South resource (once drilled and confirmed)
could also be tied-back with additional wells potentially
being connected to the Pavo facilities (Figure 5).
During the year, the Company also progressed work to
assist in finding the next material drilling targets. This
includes the Joint Venture undertaking an extensive
3D seismic acquisition campaign across the Bedout
acreage. The Keraudren Extension 3D (KE-3D) seismic
survey acquisition was completed in February 2022,
which provided an additional 3,360 square kilometres
over the southern and central portions of the
WA-436-P permit and the northern area of WA-438-P
permits, in close proximity to the Pavo discovery.
The survey covers a large group of relatively shallow
structural and stratigraphic leads over multiple play
intervals in the eastern play fairway of the Bedout Sub-
basin (Figure 6).
These prospects had previously been identified on
2D seismic data and are expected to be enhanced
by the improved granularity provided by contiguous
3D seismic. This could result in the identification of
a greater number of prospects and leads within this
proven hydrocarbon basin as well as the possible
merging together of currently identified leads. The
previous 2D data was on a grid of 8 square kilometres,
meaning fields such as Pavo (approximately five
square kilometers²) and Dorado (approximately nine
square kilometres in the Caley Member) could exist in
the gaps between the
seismic lines.
At the end of the period, the Company had
commenced seismic interpretation of a preliminary
fast-tracked volume of the KE-3D. The KE-3D seismic
survey acquisition was completed over two phases,
with the initial phase acquired in mid-2021 and the
latter phase acquired in early 2022. The survey has
infilled a 3D seismic data gap between the Keraudren
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 11
OPERATING AND
FINANCIAL REVIEW
3D to the south and the Zeester 3D seismic survey
to the north. As a result, the WA-436-P permit is now
97% covered by 3D seismic data which allows the
Joint Venture to de-risk and identify prospects on the
eastern play fairway in greater detail, especially those
on trend and nearby the recent Pavo discovery.
At the beginning of the period, the Joint Venture also
acquired the Archer 3D seismic survey. A fast-track
seismic volume for the Archer 3D seismic volume,
was received during the year which is currently being
interpreted. The Archer 3D encompasses the Dorado
Field and the immediate exploration area to the south-
west at an alternative acquisition azimuth and which
complement the pre-existing Keraudren and Capreolus
3D seismic surveys.
Following the seismic acquisitions over the recent
years, 68% of the Bedout acreage is now covered by
modern 3D seismic, which is significantly enhancing
the Company’s understanding of the Bedout Sub-
basin’s prospectivity.
Apus-1 Exploration Well (WA-437-P)
(Carnarvon 20%, Santos is the Operator)
Following the significant oil discovery at Pavo,
Carnarvon and Joint Venture partner Santos
immediately drilled the Apus-1 well, 27 kilometres
southwest of Dorado in 84 meters water depth. The
Apus-1 well was targeting a structural stratigraphic
trap situated on the Apus Island, an erosional remnant
segmented on either side by the Dorado and Apus
shale-filled canyons. The erosional remnant creates
the same trapping geometry observed at both the
Dorado and Pavo discoveries. However, the two
canyons subsequently isolate Apus and associated
prospects from both Pavo and Dorado. The primary
target was the Caley Member, the same reservoir
intersected in the Dorado and Pavo Fields with the
Milne Member a secondary reservoir target.
Excellent reservoir quality was encountered while
drilling in both the Caley and Milne Members. However,
despite there being direct evidence for hydrocarbon
shows at Apus-1 over several stratigraphic intervals,
a commercial hydrocarbon pool was not intersected.
The likely reasons for well failure have been attributed
to insufficient hydrocarbons migrating to the prospect,
or insufficient retention of hydrocarbons in the
structure.
Despite the well result, highly valuable geological
information was acquired, which has enhanced the
geological understanding of the region.
Figure 6: Bedout acreage map highlighting the
recently drilled Pavo-1 and Apus-1 wells as well as
the Keraudren Ext, Keraudren Extension Phase II and
Archer 3D seismic volumes.
12 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Renewable Fuels
(Carnarvon 50%)
The development and production of advanced
biofuels was identified by Carnarvon as an attractive
opportunity to deploy modern technology to produce
lower carbon intensity renewable diesel capable of
use in currently available machinery, build a profitable,
growth orientated business outside of the core oil and
gas operations, and source future carbon offsets.
The Company chose renewable diesel (an advanced
biofuel) as its growth business because, unlike
biodiesel, it can be used as a “drop-in” replacement
for petroleum diesel. Renewable diesel is chemically
identical to petroleum diesel, but it has a lifecycle
carbon intensity of 80 - 90% lower than petroleum
diesel. End-users of the fuel would see immediate
carbon reductions without having to invest in new
capital for alternative energy solutions.
The Company made its first investment into the
biofuels sector in July 2021 through the creation of a
Joint Venture with Frontier Impact Group under the
name FutureEnergy Australia (FEA).
Carnarvon’s investment, which consisted of $2.6
million, would see the Joint Venture move its first
biorefinery project to an FID ready state which is
planned for early 2023.
The objective of FEA is to establish Australia’s first
commercial scale renewable diesel biorefinery utilising
waste woody biomass as its feedstock. On success of
its first project, FEA plans to scale production capacity
to at least 500 million litres annually in Western
Australia by 2030.
In March 2022, an exclusive option agreement for
the purchase of a 65-Ha parcel of land was obtained
near the town of Narrogin, Western Australia. Whilst
the project site would only require less than 10% of the
land, the size provides growth optionality to expand
the operations.
The following month, the Department of Water and
Environmental Regulation announced FEA’s Narrogin
renewable diesel project was awarded $2 million
from the Clean Energy Future Fund grant. The state
government funding, which will be received following
FID, would go towards project development and
construction costs.
FEA have engaged Technip Energies to commence
engineering and design of the Narrogin facility.
Technip’s work is expected to be completed at the
end of Q3 2022. In parallel, work commenced on both
environmental and development approvals, which are
expected to be received prior to FID.
Towards the end of the year, FEA secured 75% of
its base feedstock requirements with a 10-year plus
supply agreement. The balance of the feedstock
requirements is planned to be finalised later in 2022.
FEA also held its first community event at Narrogin with
strong support from the local community and Shire of
Narrogin.
Figure 7: 3D Model of proposed Narrogin biorefinery.
Figure 8: Site visit – Narrogin, Western Australia.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 13
OPERATING AND
FINANCIAL REVIEW
Following the end of the period, FEA announced it had
signed a Memorandum of understanding with West
Australian regional power company, Horizon Power,
to progress evaluation of a strategic partnership.
This partnership may include investment into multiple
renewable diesel projects, offtake, and power
purchase agreements.
The project continues to receive strong interest
domestically and internationally for renewable diesel
offtake. FEA is actively engaging with companies from
the mining, construction, fuel distribution and power
generation sectors.
Pepper Project (EP509 & TP29)
(Carnarvon 100% and operator)
EP509 and TP29 (Pepper Project) are located in the
Barrow Sub-basin of the Northern Carnarvon Basin,
within State waters. Both permits sit within shallow
water depths (less than 50 meters) and lie adjacent to
each other, immediately south-west of Barrow Island,
offshore Western Australia
The permit was acquired in June 2021 and contains
several wells which encountered non-commercial
hydrocarbon-bearing intervals. This includes the
Pepper-1 well, which intersected a live hydrocarbon
column in tight thinly-bedded turbidite sands of
the Late Jurassic Dupuy Member within a mapped
structural closure. Additionally, net hydrocarbon pay
was also recorded in topsets of the Early Cretaceous
Lower Barrow Group.
Based on sparse, poor quality 2D seismic data, it is
possible the Pepper-1 well was not drilled in a crestal
location for reservoir within the turbidite depositional
system.
During the year, Carnarvon progressed several studies
to predict likely locations for improved reservoir quality.
These include seismic reprocessing of pre-existing
2D seismic lines across the permit and investigatory
reservoir studies. As this project progressed, it has
the potential to provide significant resources to the
Company’s portfolio.
14 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Condor and Eagle Projects (AC/P62 and AC/P63)
(Carnarvon 100% and operator)
Carnarvon was awarded the AC/P62 (Condor) permit
in November 2017 and the AC/P63 (Eagle) permit in
February 2018, both located within the Vulcan Sub-
basin. Carnarvon identified the opportunity to secure
these assets whilst developing its extensive regional
database across the North-West Shelf of Australia.
The Vulcan Sub-basin is a proven liquids-rich sub-
basin containing numerous oil and gas fields. The
acquisition of brand new MC3D Cygnus PSDM seismic
data has been instrumental for both the AC/P62 and
AC/P63 permits, which were previously covered by
sparse, poor quality 2D seismic data.
With considerable assistance from the improved data,
Carnarvon has identified several exciting prospects
across the Condor and Eagle projects. Within the
Condor project, four substantially sized Late Permian
carbonate reef prospects have been identified, a new
play type for the North-West Shelf of Australia. Of
the four prospects, Moa is the preferred target at 132
square kilometers and 350 meters relief.
During the year, rock physics and acoustic seismic
inversion studies were completed over the Permian
stratigraphic interval to gain further insights into
reservoir variability. With both studies completed
Carnarvon has now satisfied all primary work program
commitments.
Figure 9: Outline of the AC/P62 and AC/P63 permits
including identified prospects and leads.
The technical work on AC/P63 to date has also
successfully de-risked the reservoir, presence of
oil and the quality of hydrocarbons within the Eagle
project. The recent Orchid discovery, nearby to the
Eagle permit, has also enhanced the potential of the
identified prospects.
The standout target identified to date within AC/P63
is the Toucan prospect. Toucan is a large, Middle
Jurassic, fault bounded structure with seven square
kilometers areal extent and 140 meters structural
closure. The structure sits on the north-east flank of the
Skua Trough, with access to migration of hydrocarbons
generated by the proven Middle and Late Jurassic
(Malita, Plover and Lower Vulcan) oil-prone source
rocks.
The nearby discoveries of Skua, Talbot, Cassini and
Challis oil fields confirm effective migration from the
Skua Trough and other surrounding kitchens which
enhances the Toucan prospect.
During the year, Carnarvon reprocessed a small
portion of the Onnia 3D seismic survey, which was
then merged with the recently acquired MC3D Cygnus
PSDM seismic survey. This provides contiguous
3D seismic coverage over the permit. From this, an
acoustic 3D seismic inversion project was performed
over the permit to gain further insights into reservoir-
seal pairs within the Jurassic and deeper
stratigraphy.
For both the Condor and Eagle projects, Carnarvon
is currently seeking farm-in interest to progress the
exciting prospects both permits contain.
Buffalo Project (TL-SO-T 19-14 PSC)
(Carnarvon 100% and operator)
On 31 December 2021, the Company, along with
its 50% Joint Venture partner at that time, Advance
Energy, spudded the Buffalo-10 appraisal well with
Carnarvon as operator. The well aimed to test an
interpreted undrilled structural attic within the Elang
reservoir of the Buffalo Field, highlighted by Full-
Waveform-Inversion (“FWI”) seismic reprocessing of the
Legacy 3D seismic datasets.
Upon entering the reservoir, the top Elang Formation
was encountered 80 metres low to prognosis which
was outside of the pre-drill range of expectation. The
result subsequently disproved the presence of an
unproduced structural attic. Wireline logging recorded
an approximate 12 metre gross oil column within the
Elang Formation, with the oil column subsequently
deemed residual and uncommercial.
This demonstrated that the seismic processing
techniques employed on this project did not resolve
the underlying seismic velocity distortion or imaging
resolution issues that are present over this field.
While the results from the Buffalo-10 well are
disappointing, Carnarvon is pleased to report that its
first offshore well as operator was drilled safely and
without environmental incident which is a credit to the
operations team.
Following the Buffalo-10 well outcome, Carnarvon has
requested to relinquish the TL-SO-T 19-14 PSC area
to the regulator in Timor-Leste. Prior to the end of
the financial period, Carnarvon and Advance Energy
terminated the Joint Venture agreement, meaning
Carnarvon retains a 100% interest in the PSC until the
PSC is formally relinquished.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 15
OPERATING AND
FINANCIAL REVIEW
Taurus Project (WA-523-P)
(Carnarvon 100% and operator)
Outtrim Project (WA-155-P)
(Carnarvon 100% and operator)
The WA-523-P exploration permit was awarded
to Carnarvon in May 2016 and sits adjacent to
Carnarvon’s Buffalo permit in the Bonaparte Basin,
albeit in Australian waters. Carnarvon’s exploration
rationale for WA-523-P was to identify attractive
prospects and leads within tie-back distance of the
Buffalo Field which could then be linked via subsea
tie-back. Due to the outcome of Buffalo-10 well, the
Company does not intend to progress the identified
prospects within WA-523-P as stand-alone targets and
is preparing to surrender this permit.
The Outtrim project, WA-155-P, is in the Exmouth
Sub-Basin, within the Carnarvon Basin of the North-
West Shelf of Australia. The Outtrim permit contains
three graticular blocks, one of which contains the
Outtrim oil discovery, with a north-east graticular block
containing the Late Triassic Palmerston gas prospect;
a fault bounded late Triassic structure which sits on the
eastern side of the Alpha Arch.
An 18 month Suspension and Extension was granted
and, as a result, Permit Year 3 will now end on the 13th
December 2022. Permit Year 4 and 5 consist of the
drilling of a further well and associated planning and
analysis. As the Company is focused on delivering the
Dorado development and progressing its high-graded
exploration targets, Carnarvon is preparing to divest its
equity in this permit.
Labyrinth Project (WA-521-P)
(Carnarvon 100% and operator)
WA-521-P (“Labyrinth Project”) is located in the
Roebuck Basin in the North-West Shelf of Western
Australia. This frontier acreage, which lies directly
to the north of the Company’s Bedout permits, was
acquired by Carnarvon in 2016 and has been
de-risked following the Bedout discoveries. Carnarvon
holds 100% equity in the WA-521-P permit, comprising
an area of approximately 5,057 square kilometres.
Despite the technical work demonstrating that the
WA-521-P exploration permit is prospective for liquid
hydrocarbons, the Company does not consider these
prospects as core exploration targets due to their
critical risks of hydrocarbon source and migration,
which requires definitive data from a well to reduce
this risk.
On this basis, the Company submitted a request to
surrender the WA-521-P permit to the regulator, with
consent to surrender received following the end
of the period.
16 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Production
Reserves
Proved
Proved &
Probable
Proved,
Probable &
Possible
Commercial
Contingent Resources
Discovered, no field development plan
approved or not yet economic
Prospective Resources
Exploration prospectivity
RESERVE ASSESSMENT
Petroleum Resource Classification,
Categorisation and Definitions
Contingent Resources
Carnarvon calculates reserves and resources
according to the Society of Petroleum Engineers’
Petroleum Resource Management System (“SPE-
PRMS”) definition of petroleum resources. Carnarvon
reports reserves and resources in line with ASX Listing
Rules.
Reserves
Reserves represent that part of resources which are
commercially recoverable and have been justified
for development, while contingent and prospective
resources are less certain because some commercial
or technical hurdle must be overcome prior to there
being confidence in the eventual production of the
volumes.
Carnarvon does not yet have any reported reserves.
Contingent resources are less certain than reserves.
These are resources that are potentially recoverable
but not yet considered mature enough for commercial
development due to technological or business hurdles.
For contingent resources to move into the reserves
category, the key conditions, or contingencies, that
prevented commercial development must be clarified
and removed. As an example, all required internal and
external approvals should be in place or determined
to be forthcoming, including environmental and
governmental approvals. There also must be evidence
of firm intention by a company’s management to
proceed with development within a reasonable time
frame (typically 5 years, though it could be longer).
Based on the results of drilling and testing to date, the
following Contingent Resource estimates are provided.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 17
OPERATING AND
FINANCIAL REVIEW
Gross Contingent Resources (100%)
Gross at 30 June 2021
Light Oil and Condensate
MMSTB MMSTB MMSTB
Free & Associated Gas
BSCF
BSCF
BSCF
Barrels of Oil Equivalent
MMBOE MMBOE MMBOE
Permit
WA-437-P
WA-437-P
WA-435-P
WA-435-P
TL-SO-T 19-14
Dorado
Roc
Phoenix South
Phoenix
Buffalo
Total
1C
86
12
7
2
15
122
2C
162
20
17
7
31
236
3C
285
35
30
16
48
413
1C
367
204
-
-
-
571
2C
748
332
-
-
-
3C
1,358
580
-
-
-
1,080
1,938
1C
176
48
7
2
15
248
2C
344
78
17
7
31
477
3C
614
137
30
16
48
844
Technical Revision
Dorado
Pavo
Roc
Phoenix South
Phoenix
Buffalo
Total
Permit
WA-437-P
WA-438-P
WA-437-P
WA-435-P
WA-435-P
TL-SO-T 19-14
Gross at 30 June 2022
Permit
WA-437-P
WA-438-P
WA-437-P
WA-435-P
WA-435-P
TL-SO-T 19-14
Dorado
Pavo
Roc
Phoenix South
Phoenix
Buffalo
Total
Light Oil and Condensate
MMSTB MMSTB MMSTB
2C
3C
1C
Free & Associated Gas
BSCF
2C
BSCF
3C
BSCF
1C
Barrels of Oil Equivalent
MMBOE MMBOE MMBOE
2C
3C
1C
-
26
-
-
-
15
11
-
43
-
-
-
31
12
-
62
-
-
-
48
14
-
6
-
-
-
-
6
-
11
-
-
-
-
11
-
17
-
-
-
-
17
-
27
-
-
-
15
12
-
45
-
-
-
31
14
-
65
-
-
-
48
17
Light Oil and Condensate
MMSTB MMSTB MMSTB
2C
162
43
20
17
7
-
3C
285
62
35
30
16
-
1C
86
26
12
7
2
-
Free & Associated Gas
BSCF
2C
748
11
332
-
-
-
BSCF
1C
367
6
204
-
-
-
BSCF
3C
1,358
17
580
-
-
-
Barrels of Oil Equivalent
MMBOE MMBOE MMBOE
2C
344
45
78
17
7
-
3C
614
65
137
30
16
-
1C
176
27
48
7
2
-
133
249
428
577
1,091
1,955
260
491
862
Net Contingent Resources (Carnarvon’s Share)
Net at 30 June 2022
Permit
WA-437-P
WA-438-P
WA-437-P
WA-435-P
WA-435-P
TL-SO-T 19-14
Dorado
Pavo
Roc
Phoenix South
Phoenix
Buffalo
Total
Light Oil and Condensate
MMSTB MMSTB MMSTB
2C
3C
1C
17
8
2
1
-
-
29
32
13
4
3
1
-
54
57
19
7
6
3
-
92
18 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
BSCF
1C
Free & Associated Gas
BSCF
2C
150
3
66
-
-
-
BSCF
3C
272
5
116
-
-
-
73
2
41
-
-
-
Barrels of Oil Equivalent
MMBOE MMBOE MMBOE
2C
1C
35
8
10
1
-
-
69
13
16
3
1
-
103
3C
123
19
27
6
3
-
179
116
219
393
54
Notes on Petroleum Resource Estimates
and Competent Persons Statement
Unless otherwise stated, all petroleum resource
estimates are quoted as at 30 June 2022 at standard
oilfield conditions of 14.696 psi (101.325 kPa) and 60
degrees Fahrenheit (15.56 deg Celsius).
Carnarvon is not aware of any new information or data
that materially affects the information included in the
Reserves Statement. All the material assumptions and
technical parameters underpinning the estimates in the
Reserves Statement continue to apply and have not
materially changed.
Carnarvon uses both deterministic and probabilistic
methods for estimation of petroleum resources at the
field and project levels. Unless otherwise stated, all
petroleum estimates reported at the company level are
aggregated by arithmetic summation by category.
Conversion from gas to barrels of oil equivalent is
based on Gross Heating Value. The conversion is
based on composition of gas in each reservoir and is
4.07 Bscf/MMboe, 3.85 Bscf/MMboe, 4.16 Bscf/MMboe,
4.45 Bscf/MMboe, and 3.87 Bscf/MMboe for the Upper
Caley, Caley associated gas, Crespin, Baxter and Milne
reservoirs, respectively, that make up the Dorado
Contingent Resource. For all other gas resources the
Company uses a constant conversion factor of 5.7
Bscf/MMboe. Volumes of oil and condensate, defined
as ‘C5 plus’ petroleum components, are converted
from MMbbl to MMboe
on a 1:1 ratio.
The estimates of petroleum resources are based
on and fairly represent information and supporting
documentation prepared by qualified petroleum
reserves and resources evaluators. The estimates
have been approved by the Company’s Chief
Operating Officer, Mr Philip Huizenga, who is a full-
time employee of Carnarvon. Mr Huizenga has over
30 years’ experience in petroleum exploration and
engineering. Mr Huizenga holds a Bachelor Degree
in Engineering and a Master’s Degree in Petroleum
Engineering and is a member of the Society of
Petroleum Engineers. Mr Huizenga is a Competent
Person in accordance with ASX Listing Rules and
has consented to the form and context in which this
statement appears.
There are numerous uncertainties inherent in
estimating reserves and resources, and in projecting
future production, development expenditures,
operating expenses and cash flows. Oil and gas
reserve engineering and resource assessment must
be recognised as a subjective process of estimating
subsurface accumulations of oil and gas that cannot be
measured in an exact way.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 19
OPERATING AND
FINANCIAL REVIEW
FINANCIAL REVIEW
The Group reports an after-tax loss of $53,753,000 for
the financial year ending 30 June 2022 (2021: profit:
$17,136,000).
Carnarvon’s balance sheet remains strong with
cash and cash equivalents of $112,424,000 (2021:
$98,436,000), with no debt and minimal commitments
going forward.
During the financial year, Carnarvon successfully
raised $67,194,000 after fees through a placement
of 234,806,987 new shares to professional and
institutional investors. The proceeds of the placement
contributed to the strong current financial position and
are expected to contribute to the Dorado field liquids
development.
Following the completion of the Buffalo-10 well,
Carnarvon recognised a $30,120,000 loss in relation
to its investment in the Buffalo Joint Venture which
primarily included the write-off of previously capitalised
exploration costs in relation to the Buffalo-10 well.
As the Company was free carried for the first US$20
million of the Buffalo-10 well costs, this does not reflect
the cash outlay by the Company during the period
and includes impairment of the accounting fair value
adjustment of $23,635,000 that was recognised in the
prior year.
In July 2021, Carnarvon formed the FutureEnergy
Australia Joint Venture with Front Impact Group,
investing $2,592,000 to fund a biorefinery project.
The Company recognised it’s 50% share of the loss
of $513,000 incurred by the Joint Venture during
the year as the Joint Venture commenced Front-
End Engineering and Design (FEED) work for its first
biorefinery.
During the period, the Company invested $38,598,000
on exploration and evaluation assets. These costs
were primarily in relation to the drilling costs for the
Pavo-1 and Apus-1 exploration wells, acquisition of 3D
seismic within the Bedout basin permits and FEED
activities for the Dorado development.
The Company also wrote off $10,724,000 (2021: $0)
of exploration expenditure which was previously
capitalised. This expenditure related to the TL-SO-T
19-14 production sharing contract and the WA-523-P,
WA-521-P, WA-155-P, AC/P62 and AC/P63 permits.
20 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
This prudent accounting position was taken because
it is not certain that these costs will be recovered,
particularly as the Company focuses its resources
on the proven and highly prospective Bedout Sub-
basin, which contains the Dorado development, the
recent Pavo oil discovery and a significant number of
attractive prospects.
During the financial year there was an unrealized
gain on foreign exchange of $3,800,000 (2021: loss
$1,224,000) due to the effect of a depreciation of AUD
against the Carnarvon’s USD cash and financial assets.
The Company does not currently use derivative
financial instruments to hedge financial risk exposures
and therefore it is exposed to daily movements in the
international oil prices, exchange rates, and interest
rates. The Company manages its cash position in US
Dollars and Australian Dollars to naturally hedge its
foreign exchange rate exposures having regard for
likely future expenditure.
RISK MANAGEMENT
Carnarvon recognises the importance of risk
management in order to deliver the Company’s
strategies and to provide sustainable growth to
shareholders. Carnarvon manages its risks in
accordance with its risk management policy to ensure
critical risks are identified, managed and monitored.
Carnarvon’s risk management framework is overseen
by the Risk, Governance and Sustainability Committee.
Oversight of the effectiveness of the risk management
processes and activities provides assurance to the
Board and shareholders and supports the Company’s
commitment to continuous business improvement.
MATERIAL BUSINESS RISKS
Safety, Environment and Sustainability:
Health, Safety and Environment
Climate Change
Oil and gas exploration, development and production
activities involve a variety of risks which may
impact the health and safety of Carnarvon’s people,
communities, and the environment. These impacts
could also damage Carnarvon’s reputation or lead to
fines and other penalties.
Carnarvon’s projects are subject to various laws and
regulations regarding the environment. Oil and gas
exploration, development and production can be
potentially environmentally hazardous giving rise
to substantial costs for environmental clean-up and
rehabilitation.
Carnarvon maintains high standards for health, safety,
and environmental (“HSE”) management. HSE risks
are embedded in Carnarvon’s operations and risk
management framework and actively managed.
Appropriate insurance is also maintained, and regularly
reviewed to ensure adequate coverage.
Where Carnarvon does not directly manage
exploration and development activities, Carnarvon
ensures its operating partners maintain equally high
standards for HSE management.
Climate change and management of carbon emissions
may affect Carnarvon’s operations, markets for oil and
gas and the funding and insuring of projects. Potential
risks arising from physical changes caused by climate
change include increased severe weather events
and rising sea levels which may impact Carnarvon’s
operations. There are also risks arising from policy
changes by government which may result in increased
regulation and costs which could have a material
adverse impact on Carnarvon’s operations.
Carnarvon recognises climate-related risks and the
need for these to be managed effectively. As a result,
the Company actively monitors current and potential
areas of climate change risk.
Carnarvon has committed to net zero carbon
emissions from its operations by 2050, if not earlier.
Carnarvon currently offsets all its Scope 2 emissions,
which at this time are derived from Carnarvon’s head
office.
In terms of future developments, like Dorado,
Carnarvon is committed to working with its Joint
Venture partners to reduce emissions from the
project facilities and will continue to develop
appropriate plans to offset emissions from future
projects as they mature.
Carnarvon is also seeking to diversify its portfolio by
potentially developing lower carbon intensive assets
which provide appropriate returns to shareholders.
This includes Carnarvon’s Joint Venture, FEA, to
develop a renewable diesel business in Western
Australia. Carnarvon is also examining the potential
of other renewable biofuels, including sustainable
aviation and marine fuels, as well as other ‘new energy’
opportunities.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 21
OPERATING AND
FINANCIAL REVIEW
Economic and Financial Risks:
Additional information on financial risks is
contained in Note 25 to the Financial Statements.
Oil Price
Foreign Currency Exchange
The financial performance, future value and growth of
Carnarvon is dependent upon the prevailing oil price.
The price of oil is subject to fluctuations and is affected
by numerous factors beyond the control of Carnarvon.
A sustained period of low or declining oil prices could
adversely affect the carrying value of Carnarvon’s
assets and the commercial viability of future
developments.
Carnarvon monitors and analyses oil markets and
seeks to reduce the price risk where reasonable and
practical. Carnarvon will develop a hedging strategy
upon sanction of future projects. Due to the early stage
of Carnarvon’s projects, Carnarvon does not currently
have any active hedges against the price of oil. Once
Carnarvon’s projects develop further, the Company
may enter hedging contracts to mitigate against
fluctuations in the price of oil.
Carnarvon’s financial report is presented in Australian
dollars, however, Carnarvon holds funds in both AUD
and USD. The retention of US dollars influences
Carnarvon’s reported cash holdings due to AUD / USD
exchange rates at each reporting period year end
which may result in foreign exchange gains or losses
in each period. Carnarvon also incurs some costs in
foreign currencies, typically US dollars, which means
Carnarvon is subject to fluctuations in the rates of
currency exchanges.
To mitigate against these foreign currency exchange
fluctuations, Carnarvon holds a balance between
USD and AUD as a natural hedge to committed
future expenditures denominated in both USD and
AUD. Once Carnarvon’s projects develop further, the
Company may enter into hedging contracts to mitigate
against fluctuations in foreign currency exchanges.
Funding Risk
The nature of Carnarvon’s business involves significant
capital expenditure on exploration, appraisal, and
potential development activities. Carnarvon’s business
and the development of projects which Carnarvon
pursues relies on access to debt and equity funding.
Limitations on Carnarvon’s ability to access funding
could result in the postponement or reduction of
capital expenditures, the relinquishment of rights in
relation to assets, adversely affect Carnarvon’s ability
to take advantage of opportunities and restrict the
expansion of the business. These could result in a
material adverse effect on Carnarvon’s business,
financial condition, and operations.
Carnarvon establishes funding plans for its material
projects to ensure that the optimal funding is obtained
to maximise shareholder value. This includes an
economic and commercial analysis of projects and
funding and ensuring that potential funding complies
with Carnarvon’s risk management framework.
Carnarvon also prepares short and long-term budgets
and financial models which are monitored monthly in
order to identify and manage any potential risks.
22 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Operational Risks:
Exploration
Exploration is a speculative activity with an associated
risk of discovery to find any oil and gas in commercial
quantities and a risk of development. The future
profitability of Carnarvon directly relates to the results
of exploration, development, and production activities.
If Carnarvon is unsuccessful in locating and developing
new reserves and resources that are commercially
viable, this may have a material adverse effect on
Carnarvon’s future business, operations, and financial
conditions.
Carnarvon utilises well-established prospect
evaluation and experienced personnel to identify and
evaluate prospects in order to manage exploration
risks. Carnarvon also has a process to ensure major
decisions are subject to assurance reviews which
include external experts and contractors where
appropriate.
Joint Venture Operations
Carnarvon participates in a number of joint ventures.
This is a common business arrangement employed
to share the benefits, costs and risks associated
with projects. Subject to any sole risk development
rights which may exist in joint venture agreements,
Carnarvon may require the agreement of other joint
venturers to proceed with its activities, including
a development project. Failure to agree on these
matters may have a material adverse effect on
Carnarvon’s business.
To the extent that Carnarvon is not the operator of a
joint venture, it is reliant on the efficient and effective
management of the company acting as operator.
The objectives and strategies of the operator may
not always be consistent with the objectives and
strategies of Carnarvon. However, operators must act
in accordance with the directions of the relevant voting
majority or by the voting principles in the joint venture
agreement.
Carnarvon must also pay its percentage interest
share of all costs and liabilities incurred by the joint
venture as required under the relevant joint venture
agreement. If Carnarvon fails to meet these obligations
it may experience a dilution or loss (via a buy-out) of its
interest in the joint venture or may not gain the benefit
of joint venture activities, except at a significant cost
penalty later in time.
Carnarvon manages joint venture risks through
careful joint venture partner selection, stakeholder
engagement and relationship management.
Commercial and legal agreements, including industry
standard joint operating agreements (JOA), are in place
across all joint ventures to define the responsibilities
and obligations of the joint venture.
Resource Estimates
Oil and gas resource estimates are expressions of
judgement based on knowledge, experience, and
industry practice. Estimates which are valid when
originally calculated may alter significantly or become
uncertain when new information becomes available.
Material changes to resource estimates may result
in Carnarvon altering its plans which could have a
positive or negative effect on its operations.
Carnarvon prepares its reserves and contingent
resources estimates in accordance with the definitions
and guidelines in the Society of Petroleum Engineers
2018 Petroleum Resources Management Systems.
Carnarvon engages personnel with an appropriate
level of skill and experience to prepare and review its
resource estimates. The assessment of Reserves and
Contingent Resources may also undergo independent
audit and review.
Development
The development of Carnarvon’s projects is
subject to a range of risks and uncertainties. These
developments are exposed to the risk of low side
reserve outcomes, cost overruns, timing delays,
technical issues and production decreases. A
significant poor development outcome could result in
material adverse impacts to reserve and production
forecasts, future revenues, and operating costs.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 23
OPERATING AND
FINANCIAL REVIEW
Carnarvon mitigates these risks through the careful
selection of joint venture partners, ensuring the
utilisation of high quality and experienced contractors
throughout the development process, conducting
assurance and other reviews during development, as
well as comprehensively assessing all developments
prior to making any commitment to participate.
Regulatory
Carnarvon operates in highly regulated industries and
jurisdictions. Changes in regulations or enforcement
actions could have material adverse impacts on
Carnarvon. Changes in government, monetary,
taxation, operational and other laws in the countries
in which Carnarvon operates may also impact
Carnarvon’s operations.
Carnarvon holds interests in permits which are
governed by the granting of contracts, licences,
permits, or leases by the appropriate government
authorities. Carnarvon may lose title to or its interest in
a permit if licence conditions are not met, or insufficient
funds are available to meet expenditure commitments.
Carnarvon monitors changes in relevant regulations
and engages with regulators and industry bodies to
ensure the impact of policy changes are understood,
and the company continues to comply with all
regulatory requirements.
24 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Foreign Operations
Some countries within which Carnarvon transacts
in are developing countries that have political and
regulatory structures that are maturing and have
potential for future change. There is the risk that
certain events could have a material impact on the
investment and security environment within those
countries which could impact the assets held by
Carnarvon.
Carnarvon closely monitors political developments and
events in the countries in which it transacts. Carnarvon
engages with stakeholders in those countries and
maintains local offices which are staffed by in-country
personnel who can liaise directly with regulators and
provide appropriate local expertise.
Key Personnel
Skilled employees and consultants are essential
to the successful delivery of Carnarvon’s business
strategy. Carnarvon relies on the services of certain
key management personnel, including its executive
officers, other key employees, and consultants. The
loss of any of these key personnel could have a
material adverse effect on Carnarvon’s business.
Carnarvon ensures it maintains competitive
remuneration practices relative to its industry, including
long and short-term incentive schemes, to ensure it
maintains the services of its key personnel and has the
ability to attract additional personnel as required.
Carnarvon maintains clear and regular updates on
strategy and business planning to provide clarity
on the company’s future plans. Guidance and
opportunities are provided for staff to further their
careers, and staff training and development seeks
to ensure individual development goals align with
Carnarvon’s strategy. Succession planning for key
management personnel and other key employees is
also undertaken on a periodic basis.
Basin
Equity
Joint Venture
Partner(s)
Partner
Interest
Indicative
Forward Program
Permit Interests
Permit
Australia
AC-P62
AC-P63
EP509
TP29
WA-521-P
WA-523-P
WA-435-P
WA-436-P
WA-437-P
WA-438-P
WA-64-L
WA-155-P
Bonaparte
Bonaparte
Carnarvon
Carnarvon
Roebuck
Bonaparte
Roebuck
Roebuck
Roebuck
Roebuck
Roebuck
Carnarvon
100%
100%
100%
100%
100%
100%
20%
30%
20%
30%
20%
100%
-
-
-
-
-
-
Santos Limitedi
Santos Limitedi
Santos Limitedi
Santos Limitedi
Santos Limitedi
-
-
-
-
-
-
-
-
80%
70%
80%
70%
80%
-
-
G & G studies
G & G studies
G & G studies
G & G studies
Relinquishment
Relinquishment
G & G studies
G & G studies
G & G studies
G & G studies, appraisal
Development and
production
G & G studies
Relinquishment
Timor-Leste
TL-SO-T 19-14 PSC
Bonaparte
100%
Note:
i Denotes operator where Carnarvon is non-operator partner.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 25
DIRECTORS’
REPORT
Statutory Information
The directors present their report together with the financial report of the Group, being the Company, its
controlled entities, and the Group’s interest in jointly controlled assets, for the financial year ended 30 June 2022,
and the auditor’s report thereon.
Carnarvon Energy Limited is a listed public company incorporated and domiciled in Australia.
Directors
The names and details of the Company’s directors in office at any time during or since the end of the financial
year are as follows. Directors were in office for this entire period unless otherwise stated.
William (Bill) A Foster
Chair
BE (Chemical)
Appointed as a director on 17 August 2010 and
appointed as Chair on 11 November 2020.
Mr Foster is an internationally experienced energy
executive who has worked with Chevron, a Middle
Eastern National Oil Corporation as well as US and
ASX listed independents. He spent 30 years with
Marubeni Corporation as Energy Advisor until his
recent retirement, assisting in the development of
their Oil, Gas and LNG business. During this time, a
global business was established with Tokyo, London,
Houston, Singapore and Perth offices. Mr Foster
was a director of Marubeni’s various exploration and
production subsidiaries and a former director of Tap Oil
Ltd.
Mr Foster’s activities have covered a broad range
of areas relevant to the oil and gas industry and he
has extensive, commercial, financial and mergers
and acquisitions experience, as well as that from his
engineering background.
During the past three years Mr Foster has not served
as a director of any other listed company.
26 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Adrian C Cook
Chief Executive Officer and Managing Director
B Bus, CA, MAppFin, FAICD
Appointed as a director on 1 July 2011
Mr Cook has over 30 years’ experience in commercial
and financial management, primarily in the energy
industry. Immediately prior to joining Carnarvon, he
was the Managing Director of Buru Energy Limited,
an ASX listed oil and gas exploration and production
company with interests in the Canning Basin in
Western Australia. Mr Cook has also held senior
executive positions within Clough Limited’s oil and
gas construction business and was on the executive
committee at ARC Energy Limited, an ASX listed mid
cap oil and gas exploration and production company.
Mr. Cook is a fellow of the Australian Institute of
Company Directors.
During the past three years Mr Cook has not served as
a director of any other listed company. Mr Cook joined
Carnarvon on 2 November 2009 and was appointed
to the Board on 1 July 2011.
Peter Moore
Non-Executive Director
Gavin Ryan
Non-Executive Director
B.Sc (Hons Geology), MBA, PhD, GAICD.
LLB (Hons), MAICD
Appointed as a director on 18 June 2015.
Appointed as a director on 30 July 2018.
Dr Moore has extensive experience in exploration
and production in Australia and internationally gained
through senior roles with a number of globally
recognised companies. Dr Moore led Woodside’s
worldwide exploration efforts as the Executive Vice
President Exploration reporting to the CEO and was
the Head of the Geoscience function (Exploration,
Development, Production, M&A).
During the past three years Dr Moore served as a
non-executive Director of Beach Energy Limited
(since 2017).
Dr Moore is Chair of the Risk, Governance and
Sustainability Committee and a member of the Audit
Committee and the Remuneration and Nomination
Committee.
Mr Ryan is a lawyer who has extensive legal and
commercial skills in oil and gas gained through an
extensive international career with organisations such
as BHP Petroleum, BP, PTTEP and Shell. Mr Ryan
has experience in government relations, production
sharing contracts and petroleum project construction
contracts.
During the past three years, Mr Ryan has not served
as a director on any other listed Company.
Mr Ryan is Chairman of the Remuneration and
Nomination Committee and a member of the
Audit Committee and the Risk, Governance and
Sustainability Committee.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 27
DIRECTORS’
REPORT
Mr Alex Doering
Mr Gavan
Sproule
Mr Thomson
Naude
28 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Debra Bakker
Non-Executive Director
MAppFin., BBus (FinAcc), Grad Dip FINSIA, GAICD
Appointed as director on 5 October 2020
Debra is an experienced financier and deal maker
with more than 27 years’ experience in the resources
industry with significant international experience.
Debra has previously held senior positions with
Commonwealth Bank of Australia, Standard Bank
London Group and Barclays Capital. Debra is the also
an experienced non-executive director having held a
number of positions with ASX resource companies.
During the past three years, Ms Bakker has served as
a non-executive director for IGO Limited (since 2016),
Azumah Resources Ltd (ceased 2019) and Capricorn
Metals Ltd (ceased 2019).
Ms Bakker is Chair of the Audit Committee and
a member of the Remuneration and Nomination
Committee and the Risk, Governance and
Sustainability Committee.
Company Secretary
Mr Alex Doering was appointed as Joint company
secretary in August 2019. Mr Doering is a qualified
Chartered Accountant, an Associate of the
Governance Institute of Australia and the Financial
Controller at Carnarvon Energy.
Mr Gavan Sproule was appointed as Joint company
secretary in March 2022. Mr Sproule is a Fellow of the
Governance Institute of Australia and General Counsel
at Carnarvon Energy.
Mr Thomson Naude was appointed Company
Secretary in November 2013 and retired as Company
Secretary in March 2022. Mr Naude is a qualified
Chartered Accountant, a member of Governance
Institute of Australia and the Chief Financial Officer at
Carnarvon Energy.
DIRECTORS’
REPORT
Directors’ meetings
The number of directors’ meetings held and attended by each of the directors during the reporting period was as
follows:
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
(a) Number of meetings held and eligible to attend during period of office
(b) Number of meetings attended
(b)
11
11
11
11
11
(a)
11
11
11
11
11
Audit Committee
Names and qualifications of Audit and Risk Committee members
The Committee is to include at least 3 members. Current members of the committee are Ms Bakker (Chair of the
Committee) Dr Moore and Mr Ryan. Qualifications of Audit and Risk Committee members are provided in the
Directors section of this directors’ report.
Audit Committee meetings
The number of Audit and Risk Committee meetings held and attended by the members during the reporting
period was as follows:
D Bakker
P Moore
SG Ryan
(a) Number of meetings held during period of office
(b) Number of meetings attended
(a)
2
2
2
(b)
2
2
2
Risk, Governance and Sustainability Committee
Names and qualifications of Risk, Governance and Sustainability (“RGS”) Committee members
The RGS Committee is to include at least 3 members. Current members of the committee are Dr Moore (Chair of
the Committee), Mr Ryan and Ms Bakker. Qualifications of RGS Committee members are provided in the Directors
section of this directors’ report.
RGS Committee meetings
The number of RGS Committee meetings held and attended by the members during the reporting period was as
follows:
P Moore
D Bakker
SG Ryan
(a) Number of meetings held during period of office
(b) Number of meetings attended
(a)
4
4
4
(b)
4
4
4
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 29
DIRECTORS’
REPORT
2022 REMUNERATION IN BRIEF
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022 (“FY22”)
FY22 remuneration outcomes at a glance
Benchmark increases
for senior executives
Total fixed remuneration (TFR) increased from the previous year
according to industry benchmarks.
KMP Fixed
Remuneration
Short Term
Incentive (STI)
No STI awarded to
KMP during the year.
There was no STI awarded during the year in relation to FY22
KPIs as the Company’s share price did not exceed the ASX Energy
Index share price performance gate for the period. KMP (other
than CEO) were granted 403,110 performance rights on 1 July
2021 and 544,931 performance rights were granted to the CEO
on 12 November 2021 following shareholder approval at the AGM.
These performance rights represent the 12-month deferred equity
component for the FY21 STI award, the terms for which were not
agreed and communicated to participants until after 30 June 2021
and hence they have been recognised in FY22.
No performance rights vested during the year. KMP (other than the
CEO) were granted 1,586,560 LTI performance rights on 1 July 2021
and 2,179,724 LTI performance rights were granted to the CEO on
12 November 2021 following approval at the AGM. 2,262,710 LTI
performance rights were granted and issued to KMP (other than the
CEO) subsequent to the year end and 2,893,092 LTI performance
rights were awarded to the CEO subsequent to the year-end which
are subject to shareholder approval at the AGM to be held on 18
November 2022. These LTI performance rights are subject to the
achievement of absolute and relative (to peer group) share price
performance conditions in three years’ time before they vest.
Fees payable to non-executive directors remain unchanged from
FY21 levels. Non-executive directors did not receive any other form
of remuneration or incentives.
Long Term
Incentive (LTI)
No performance rights
vested during the year.
Non-executive
directors
No change to fees.
The statutory disclosures required by the Corporations Act are set out in the remuneration report on pages 31 to
43. These disclosures, particularly the inclusion of accounting values for LTI performance rights awarded but not
vested, can vary significantly from the cash value of remuneration realised by senior executives. This is because
the Accounting Standards require a value to be placed on a right at the time it is granted to a senior executive
and then reported as remuneration even if ultimately the senior executive does not receive any actual value, for
example because performance conditions are not met and the rights do not vest.
The following is an unaudited and non-IFRS summary of the cash value of remuneration realised by executive
KMP for FY22, which the company believes is useful to shareholders, The amounts include cash salary and
superannuation. No share-based payments vested to KMP during the year and therefore no value is included in
the table below.
Table 1: Cash value of remuneration realised for executive KMP (unaudited):
Name
A Cook
Managing Director & Chief Executive Officer
P Huizenga
Chief Operating Officer
T Naude
Chief Financial Officer
Total
Salary
$
2022
Super
$
Total cash
$
Salary
$
Super
$
STI Cash
$
Total cash
$
2021
591,791
16,843
608,634
606,288
35,381
124,414
766,083
533,136
23,030
556,166
550,286
34,037
58,283
642,606
334,164
26,447
360,611
314,125
27,434
33,752
375,311
1,459,091
66,320 1,525,411
1,470,699
96,852
216,449
1,784,000
30 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
REMUNERATION REPORT (AUDITED)
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
This report has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth) (Corporations
Act) for the consolidated entity for the financial year ended 30 June 2022. It has been audited as required by
section 308(3C) of the Corporations Act and forms part of the Directors’ Report.
Key Management Personnel (“KMP”)
The Company’s KMP are listed in Table 2. They are the Company’s non-executive directors (NED) and executive
KMP who have authority and responsibility for planning, directing and controlling the activities of the Company,
directly or indirectly.
Table 2: Key management personnel during FY22
Name
Executive KMP
A Cook
P Huizenga
T Naude
Non-executive Directors
W Foster
P Moore
G Ryan
D Bakker
Position
Period as KMP during the year
Managing Director & Chief Executive Officer (CEO)
Chief Operating Officer
Chief Financial Officer
Independent Chairman
Non-executive Director
Non-executive Director
Non-executive Director
All of FY22
All of FY22
All of FY22
All of FY22
All of FY22
All of FY22
All of FY22
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 31
REMUNERATION REPORT (AUDITED) (CONT’D)
Summary of Carnarvon’s remuneration policy framework
Carnarvon’s vision is to become a major Australian energy provider with expertise and capability that enables the
generation of material returns for shareholders over any given medium-term time horizon and outperformance
against the ASX Energy Index (ASX:XEJ).
Carnarvon’s remuneration framework seeks to focus executives on delivering that purpose:
•
•
•
•
Fixed remuneration aligns to market practice and prevailing economic conditions. It seeks to attract, motivate
and retain executives focused on delivering Carnarvon’s purpose.
‘At risk’ performance-based incentives link to shorter-term and longer-term Company goals. The goals
contribute to the achievement of Carnarvon’s purpose.
Short term incentives are considered and awarded against an annual performance ‘gate’ whereby the
company’s share price performance must exceed the ASX Energy Index (ASX:XEJ) before performance
against any other criteria is considered. If that gate is passed, then incentives are awarded 50% in cash and
50% as performance rights with the total incentives related to the achievement of the STI measures in table
5. This ensures even short-term incentives are judged through the lens of shareholder interests. The Board
has the discretion to approve the settlement of the STI performance rights in cash or equity.
Longer term ‘at risk’ incentives are also designed to directly align with shareholder objectives and interests.
Half of longer-term incentives are based on the Company’s share price performance against peers
considered to be alternative investments to Carnarvon. The other half is based on the Company’s absolute
share price appreciation. Both measures are assessed over a three-year period and are entirely share based
rewards to executives.
How Carnarvon makes decisions about remuneration
The Board determines Carnarvon’s KMP remuneration based on recommendations made to the Board by its
Remuneration and Nominations Committee. The Committee is to include at least 3 members who are all non-
executive directors.
Members of the Committee during the 30 June 2022 financial year were Mr Ryan (Chairman of Remuneration
and Nomination Committee), Dr Moore and Ms Bakker. Qualifications of Remuneration & Nomination Committee
members are provided in the Directors section of this directors’ report.
The Remuneration and Nomination Committee Charter is available at Carnarvon’s website: www.carnarvon.com.
au/corporate-governance/. Carnarvon’s Managing Director & CEO may attend Committee meetings by invitation
in an advisory capacity. Other executives may also attend by invitation. The Committee excludes executives from
any discussion about their own remuneration.
Remuneration & Nomination Committee meetings
The number of Remuneration & Nominations Committee meetings and the number attended by each of the
members during the reporting period were as follows:
SG Ryan
PS Moore
D Bakker
a) Number of meetings held during period of office.
b) Number of meetings attended.
(a)
1
1
1
(b)
1
1
1
32 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
External advisers and remuneration advice
Where an adviser is engaged by the company in relation to remuneration matters, the adviser is engaged by
and reports to the Board or chair of the Remuneration and Nominations Committee. This protocol ensures any
recommendations are free from undue influence by management. The Board or Committee chair deals with the
adviser on all material matters. Management involvement is only to the extent necessary to coordinate the work.
The Remuneration and Nominations Committee engaged BDO Australia during the year to perform a review and
recommendation on the Company’s overall remuneration structure including KMP remuneration. The fee paid for
the review was $14,600. The Board utilised a large and reputable organisation to perform the independent review
which was conducted in direct communication with the Chair of the Remuneration and Nomination Committee,
whose remuneration was not subject of the review. On this basis, the Board is satisfied that the remuneration
recommendation was made free from undue influence by the member or members of the key management
personnel to whom the recommendation relates.
The Board and Committee seek recommendations from the Managing Director & CEO about executive
remuneration. The Managing Director & CEO does not make any recommendation about his own remuneration.
The Board and Committee have regard to industry benchmarking information.
How Carnarvon links performance to incentives
Carnarvon’s remuneration policy includes short term (STI) and long-term (LTI) incentive plans. The plans seek to
align management performance with shareholder interests.
The STI is an operationally focused target incentive plan which is only considered after the Company’s share
price achieves a specified performance gate. STI, if awarded, is 50% in cash and 50% in performance rights with a
vesting period of 12 months.
The LTI links to an increase in total shareholder return over an extended period and is a share-based incentive
through the Company’s performance rights plan.
SENIOR EXECUTIVE REMUNERATION STRUCTURE
This section details the remuneration structure for senior executives (Key Management Personnel, or KMP).
Service contracts
The contract duration, period of notice and termination conditions for key management personnel are as follows:
(i) Adrian Cook, Chief Executive Officer, is engaged as a full time employee. Termination by the Company is with
12 months notice or payment in lieu thereof. Termination by Mr Cook is with 6 months’ notice.
(ii) Philip Huizenga, Chief Operating Officer, is engaged as a full time employee. Termination by the Company
is with 3 months notice or payment in lieu thereof and an additional payment of 3 months’ remuneration.
Termination by Mr Huizenga is with 3 months’ notice.
(iii) Thomson Naude, Chief Financial Officer, is engaged as a full time employee. Termination by the Company
is with 3 months notice or payment in lieu thereof and an additional payment of 3 months’ remuneration.
Termination by Mr Naude is with 3 months’ notice.
Remuneration mix
Remuneration for KMP is a mix of a fixed cash salary component and an ‘at risk’ component. The ‘at risk’
component means that specific targets or conditions must be met before there is any entitlement to receive that
component.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 33
REMUNERATION REPORT (AUDITED) (CONT’D)
What is the balance between fixed and ‘at risk’ remuneration?
The remuneration structure and packages offered to KMP for the period were:
•
•
Fixed remuneration; and
‘At risk’ remuneration comprising:
-
-
Short term incentive (STI) – annual cash and performance rights with a 12 month vesting period, which
may be offered at the discretion of the Board, linked to Company and individual performance over a year.
Long term incentive (LTI) – performance rights-based incentive, which may be granted annually at the
discretion of the Board, linked to the absolute and relative share price performance conditions measured
over three years.
The balance between fixed and ‘at risk’ remuneration depends on the senior executive’s role. The CEO has the
highest level of ‘at risk’ remuneration reflecting the greater level of responsibility of this role.
Table 3: Shareholder wealth indicators FY18 – FY22:
Share price at year-end
Basic earnings/(loss) per share
FY18
$0.15
$0.14
FY19
$0.60
$(0.64)
FY20
$0.195
$(0.26)
FY21
$0.25
$1.09
FY22
$0.195
$(3.31)
Table 4 sets out the relative proportions of the three elements of the executives KMP’s total remuneration
packages from 1 July 2021.
Table 4: Remuneration mix1
Position
CEO
Other KMP
1
Performance Based Remuneration
Fixed Remuneration
%
34
50
STI
%
33
25
LTI
%
33
25
Total ‘at risk’
%
66
50
The remuneration mix assumes maximum ‘at risk’ awards. Percentages shown later in this report reflect the
actual incentives paid as a percentage of total fixed remuneration, movements in leave balances and other
benefits and share based payments calculated using the relevant accounting standards.
Fixed remuneration
What is fixed remuneration?
How is fixed remuneration reviewed?
Senior executives are entitled to a fixed cash remuneration
amount inclusive of the guaranteed superannuation contribution.
The amount is not based upon performance. Senior executives
may decide to salary sacrifice part of their fixed remuneration for
additional superannuation contributions and other benefits.
Fixed remuneration is determined by the Board based on external
review and advice that takes account of the role and responsibility
of each senior executive. It is reviewed annually against industry
benchmarking information.
34 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
Fixed remuneration for the year
Total fixed remuneration (TFR) of KMP is provided in Table 1 on Page 41. Page 41 reports on the remuneration for
KMP as required under the Corporations Act.
Short Term Incentive (STI)
What is the STI?
How does the STI link
What are the performance
conditions or KPIs?
The STI is part of ‘at risk’ remuneration offered to senior executives. It measures
individual and Company performance over a 12-month period. The period
coincides with Carnarvon’s financial year. It is paid as 50% in cash and, 50% in
performance rights and is offered to senior executives at the discretion of the
Board based on company performance and performance against objectives.
Once the performance rights have vested, the Board has the discretion to
approve the settlement of the STI performance rights in cash or equity.
The STI is an at-risk opportunity for senior executives and is subject to the
achievement of the performance threshold (see below), it rewards senior
executives for meeting or exceeding key performance indicators. The key
performance indicators link to Carnarvon’s key purpose and goals set for KMP
during the reporting period. The STI aims to motivate senior executives to meet
Company expectations for success. Carnarvon can only achieve its purpose if it
attracts and retains high performing senior executives.
Carnarvon’s key performance indicators (KPIs) are set by the Board for
each 12-month period beginning at the start of a financial year. They reflect
Carnarvon’s financial and operational goals that are essential to it achieving
its purpose. Senior executives may also have individual KPIs which are linked
to the below Company KPIs to reflect their particular responsibilities to each
KPI. The KPIs are chosen as they are value catalysts which are linked to the
Company’s strategic objectives. For the reporting period, the performance
measures comprised:
STI Measures
Company KPI’s
Dorado Pre FID Financing
Bedout exploration drilling
Buffalo development FID
Buffalo drilling
Dorado FID
Exploration permit farm out
Other Corporate
New Ventures
Other KPI’s, eg growth, people, culture, governance &
environment
Individual KPI’s
Refer to Table 5 for more information.
Weighting
80%
20%
15%
10%
5%
5%
5%
5%
10%
5%
20%
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 35
REMUNERATION REPORT (AUDITED) (CONT’D)
The value of the STI awards to individual KMPs
Incentive payments are based on a percentage of a senior executive’s fixed remuneration. The CEO can earn up
to a maximum of 100% of his fixed remuneration. The value of the award that can be earned by other KMP is up to
a maximum of 50% of their fixed remuneration.
Assessment of performance conditions
The Board assesses the extent to which KPIs were met for the period after the close of the relevant financial year.
The Board assesses the achievement of the KPIs for the CEO. The Board assesses the performance of other
KMPs on the CEOs recommendation.
Assessment of threshold level of performance before an STI is paid
To align with shareholder interests, at the end of Carnarvon’s financial year there is a calculation of the share price
performance against the ASX Energy Index (ASX:AEJ). Carnarvon’s share price performance must exceed the
ASX Energy Index in order for the Board to then consider the outcomes for the CEO and other KMP against each
of the KPI measures.
What happens if an STI is awarded
On achievement of the relevant KPIs Carnarvon will pay STI awards 50% in cash and 50% in performance rights
with a vesting period of 12 months provided the participants are employed by the company over the vesting
period and as at the vesting date. Carnarvon includes the cash and nominal value of any performance rights STI
awards in its financial statements for the relevant financial year.
STI PERFORMANCE FOR THE YEAR
At the completion of the financial year, the board tested each senior executive’s performance against the STI
performance conditions set for the year after exercising its discretion in relation to the hurdle measures.
The first test is a ‘gate’ in relation to the Company’s share price performance compared with the return of the ASX
Energy Index. If Carnarvon’s share price does not exceed the performance of the Index within the period, no STI
will be awarded, regardless of whether other targets have been met.
The change in Carnarvon’s share price over the financial year did not exceed the change in the ASX Energy
Index, and accordingly no STI was awarded.
Carnarvon share price (ASX:CVN) at 1 July 2021
Carnarvon share price (ASX:CVN) at 30 June 2022
Change in share price over the period
ASX Energy Index (ASX:XEJ) at 1 July 2021
ASX Energy Index (ASX:XEJ) at 30 June 2022
Change in ASX Energy Index over the period
26.5 cents per share
19.5 cents per share
-26.4%
8,017
10,026
25.1%
The percentage of the maximum STI that will be awarded or forfeited for the period for each executive KMP, was
as follows (awarded/ forfeited):
KMP
Adrian Cook
Mr Huizenga
Mr Naude
STI Awarded
-
-
-
STI Forfeited
100%
100%
100%
There was no STI award for FY22 as the change in Carnarvon’s share price over the financial year did not exceed
the change in the ASX Energy Index.
36 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
Despite there being no award during the year, the outcomes of the company related performance conditions are
outlined in Table 5.
Table 5: Outcome of FY22 STI Company KPIs:
STI Measure
Description
Dorado pre FID
Financing
Bedout exploration
drilling
Buffalo development FID
Buffalo drilling
Dorado Financing completed before FID
with funding covering CVN’s full share of
its development capex (unless the Board
resolves not to have full funding at FID).
Successful drilling outcomes for Pavo or Apus,
resulting in the discovery of hydrocarbons with
a reasonable likelihood of being commercial
Advanced development plan prepared by 30
June 2022 with milestones to target FID by
31 December 2022 (provided Buffalo-10 has
commercial volumes of oil)
Buffalo Drilling – Completed safely, and within
10% of AFE before 31 December 2021
Dorado FID
Dorado FID taken by 30 June 2022
Exploration permit farm
out
Farm-out of at least one permit interest by 30
June 2022 or by this time complete a value
adding commercial deal on a permit(s)
Other Corporate
Confidential
New Ventures
Non-hydrocarbon new venture implementation
by 30 June 2022 (stretch 31 December 2021)
New Ventures
Secured cash flow stream from any sources
(oil & gas, alternative energies) by 30 June
2022 where asset capable of generating
>A$2m p.a. in EBITDAX
Other KPI’s, Sustainability,
growth, people,
culture, governance &
environment
Continue build and implementation of ESG
and other policies by 30 June 2022 to ensure
CVN clean safe operation Buffalo and other
drilling and production facilities.
STIP weight
(%):
STI Performance
and score
20%
15%
10%
5%
5%
5%
5%
5%
5%
5%
Score:
KPI not achieved by
30 June 2022.
Score:
KPI achieved.
Score:
KPI not achieved.
Score:
KPI not achieved.
Score:
KPI not achieved.
Score:
KPI not achieved.
Score:
KPI not achieved.
Goal achieved with
renewable diesel
joint venture.
Score:
KPI achieved.
Score:
KPI not achieved.
Score:
KPI achieved.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 37
REMUNERATION REPORT (AUDITED) (CONT’D)
STI performance rights issued
Whilst there was no STI award during the year in relation to FY22 performance, KMP were granted 403,110
performance rights on 1 July 2021 and 544,931 performance rights on 12 November 2021 (following approval of
grant of performance to Mr Cook at the Company’s 2021 AGM) based on the achievement of FY21 KPI’s. As the
terms of the award were not agreed and communicated until 1 July 2021 (and 12 November 2021 for the CEO) and
therefore the performance rights were included in the FY22 remuneration report. Subsequent to 30 June 2022,
the Board exercised its discretion to settle these awards in cash and they were exercised on 5 July 2022 and
settled in cash on 18 July 2022.
LONG TERM INCENTIVE (LTI)
What is the LTI?
The LTI is an equity based ‘at risk’ incentive plan which operates through a
performance rights scheme approved by Carnarvon shareholders. The LTI aims
to reward results that promote long term growth in shareholder value or total
shareholder return (TSR).
Carnarvon offers LTIs to KMP at the discretion of the Board.
How does the LTI link to
Carnarvon’s key purpose?
The LTI links to Carnarvon’s key purpose by aligning the longer term ‘at risk’
incentive rewards with outcomes that match shareholder objectives and
interests by:
How are the number of
rights issued to senior
executives calculated?
•
•
benchmarking shareholder returns against a group of companies considered
alternative investments to Carnarvon and against absolute target returns
giving share based rather than cash-based rewards to executives. This links
their own rewards to shareholder expectations of company performance,
especially share price growth.
The award of performance rights is at the absolute discretion of the Board.
The number of performance rights granted to the executives under the LTI is
calculated as fixed remuneration at 30 June of the Financial Year multiplied by
the relevant percentage (2022: CEO: 100%, other KMP: 50%) divided by the
market value. The Market Value is the market value of a fully paid ordinary share
in the Company, calculated using the Company’s closing share price on 30 June.
What equity based grants
are given and are there
plan limits?
Carnarvon grants performance rights using the formula set out above. If the
performance conditions are met, senior executives have the opportunity to
acquire one Carnarvon share for every vested performance right. There are no
plan limits as a whole for the LTI due to the style of the plan.
38 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
What are the performance
conditions?
Why choose these
Performance conditions?
The two performance conditions used by Carnarvon are based on Total
Shareholder Return (TSR) (1) in absolute terms and (2) relative to the returns of a
group of companies considered alternative investments to Carnarvon, calculated
using the closing share prices at a testing date of 30 June.
The participants must also be employed by the Company over the vesting period
and as at the vesting date.
The vesting schedule of 50% of the performance rights is subject to relative TSR
testing is as follows:
Relative TSR Performance
Less than 50th percentile
Between 50th and 75th percentile
75th percentile or better
Level of vesting
Zero
Pro rata between 50% and 100%
100%
Peer Group: 88 Energy, Buru Energy, Central Petroleum, Cooper Energy, Elixir
Energy, Empire Energy, Galilee Energy, Helios Energy, Horizon Oil, Karoon
Energy, Strike Energy, Warrego Energy.
The vesting schedule of 50% of the performance rights is subject to absolute
TSR testing is as follows:
Absolute TSR Performance
10% per annum return
Between 10% and 20% per annum
Above 20% per annum
% of performance rights that will vest
33%
Pro rata between 33% and 100%
100%
Relative TSR is an appropriate performance hurdle because it ensures a
proportion of each participants remuneration in linked to the return received by
shareholders from holding shares in a company in the peer group for the same
period.
Absolute TSR is an appropriate performance hurdle because it ensures KMP
performance is rewarded when a year-on-year improvement in shareholder
value is achieved.
What happens to LTI
performance rights on a
change of control?
The Board reserves the discretion for early vesting in the event of a change of
control of the Company. Adjustments to a participant’s entitlements may also
occur in the event of a company reconstruction and certain share issues.
LTI equity awards issued or in operation during the year.
KMP (other than CEO) were granted 1,586,560 LTI performance rights on 1 July 2021 and 2,179,724 LTI
performance rights were granted to the CEO following approval at the AGM on 12 November 2021 on the basis
outlined in the tables above. KMP (other than CEO) were also awarded 2,262,710 LTI performance rights on 1 July
2022 on the basis outlined in the tables above. The CEO was awarded 2,893,092 LTI performance rights on 1
July 2022, which are subject to shareholder approval at the AGM to be held on 18 November 2022.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 39
REMUNERATION REPORT (AUDITED) (CONT’D)
REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS:
The fees paid to non-executive directors are determined using the following principles. Fees are:
•
•
•
•
not incentive or performance based, but are fixed amounts;
determined by reference to the nature of the role, responsibility and time commitment required for the
performance of the role including membership of board committees;
are benchmarked against industry peers on an annual basis; and
driven by a need to attract and retain a diverse and well-balanced group of individuals with relevant
experience and knowledge
Following an independent benchmarking analysis against Carnarvon’s peers, the board made no change to its
fee structure or quantum in the current year. The benchmarking analysis was conducted by comparing Carnarvon
non-executive director fees to those of a peer group comprising ASX-listed companies of similar size in both
the resources and oil and gas sectors. Following the review, the Chair’s fee remains at $150,000 per annum and
the base board fee $100,000 per annum to ensure Carnarvon will be able to attract and retain quality board
candidates.
The board added a Risk, Governance and Sustainability (“RGS”) Committee to the board structure to reflect
the changing nature of the company’s operations and the increased need to focus on environmental, social,
governance and stakeholder expectations. This brings the total of board committees to three, each chaired by a
non-executive director. Committee chairs are paid an additional fee of $5,000 to reflect the workload required of
them in fulfilling those roles. No additional fees are payable to any director for membership of board committees.
Directors are not paid superannuation contributions by the Company.
Non-executive directors are entitled to be reimbursed at cost for their reasonable expenses incurred in the
performance of their directors’ duties.
At $465,000, the aggregate remuneration of Carnarvon non-executive directors remains well below the annual
limit of $600,000 approved by shareholders at the 2018 Annual General Meeting.
Details of the fees payable to non-executive directors for Board and committee membership for FY22 are set out
in Table 6.
Table 6: FY22 non-executive directors’ fees and board committee fees per annum:
Board
Chair
$
150,000
Member
$
100,000
Chair
Audit
$
5,000
Member
Audit
$
-
Board Committees
Chair
Remuneration
and Nomination
$
5,000
Member
Remuneration
and Nomination
$
-
Chair
RGS
$
5,000
Member
RGS
$
-
40 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
Directors’ and executive officers’ remuneration, Company and consolidated (continued)
Short term
benefits
Salary
and fees
($)
Short term
cash bonus
($)
Post-
employment
Superannuation
contributions
($)
Share-based
payments
Performance
Rights
($)6,7
Long term
benefits
Annual
Leave
($)5
Long service
leave
($)5
Total
($)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$105,000
$102,500
$150,000
$133,905
$105,000
$76,694
$105,000
$105,000
Name
Directors
Non-Executive
Mr WA Foster1 (Chairman)
2022
2021
Mr SG Ryan
2022
2021
Mrs D Bakker2
2022
2021
Dr P Moore3
2022
2021
Mr PJ Leonhardt (Retired)4
2022
2021
Executive
Mr AC Cook (Chief Executive Officer)
2022
2021
Other Executives
Mr PP Huizenga (Chief Operating Officer)
2022
2021
Mr TO Naude (Chief Financial Officer)
2022
2021
Total compensation: KMP
2022
2021
Directors’ fees are paid or payable to the director or a director-related entity.
1 Mr Foster was appointed as the chairman on 11 November 2020.
2 Ms Bakker was appointed as a non-executive director on 5 October 2020. Ms Bakker was appointed Chair of the Audit committee on 11 December 2020.
3 Dr Moore was appointed as Chair of the Risk, Governance and Sustainability Committee on 11 December 2020.
4 Mr Leonhardt retired as a non-executive director and chairman on 11 November 2020.
5
$1,924,091
$1,943,511
$591,791
$606,288
$111,239
-
$523,134
-
$334,164
$314,125
$190,207
-
$533,136
$550,286
$104,900
-$14,685
$824,580
-
-
$124,414
-
$216,448
-$10,766
-$11,643
-$3,756
-$18,938
$38,804
-$3,215
$23,480
-$3,071
$26,447
$27,434
$16,843
$35,381
$42,616
-$8,400
$23,030
$34,037
$66,320
$96,852
-
$58,283
-
$33,752
-
$54,713
$2,594
-$1,040
$4,416
-$6,255
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$150,000
$133,905
$105,000
$105,000
$105,000
$76,694
$105,000
$102,500
-
$54,713
$1,163,618
$746,040
$787,771
$638,351
$499,746
$365,984
$2,916,135
$2,223,186
Total
at risk
%
Total issued
in equity
%
-
-
-
-
-
-
-
-
-
-
45.0%
16.7%
24.1%
9.1%
22.3%
9.2%
28.3%
9.7%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
These amounts represent the leave entitlement accrual for the year. The annual leave benefits have been included as long term benefits as they are expected to be utilised over a period
greater than 12 months.
6 KMP were granted 948,041 STI performance rights during the year which were exercised and settled in cash in the amount of $184,868 subsequent to year-end.
7 KMP were granted 3,766,284 LTI performance rights during the year and 2,262,710 LTI performance rights subsequent to year-end.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 41
REMUNERATION REPORT (AUDITED) (CONT’D)
Ordinary shares held by key management personnel
The movement during the reporting period in the number of ordinary shares in Carnarvon Energy Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2021
Net acquired/
(sold) on market
Award under
Employee Share Plan
Received on
exercise of options
Held at
30 June 2022
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
1,425,938
15,938,797
964,232
305,221
304,774
-
-
-
-
270,000
Other Executives
PP Huizenga
TO Naude
12,076,196
4,074,357
-
(55,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,425,938
15,938,797
964,232
305,221
574,774
12,076,196
4,019,357
Plan shares held by key management personnel
Included in the above table are plan shares held by key management personnel held under the previous ESP
loan scheme which are accounted for as in substance options. The balance and movement during the reporting
period in the number of plan shares directly, indirectly or beneficially, by each key management person, including
their related parties, is as follows:
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
Other Executives
PP Huizenga
TO Naude
Held at
1 July 2021
Granted as
compensation
Employee Share
Plan cancellations
Exercised
Held at
30 June 2022
-
12,945,592
-
-
11,976,196
3,992,512
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,945,592
-
-
11,976,196
3,992,512
Performance rights - LTIP held by key management personnel
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
Other Executives
PP Huizenga
TO Naude
Total
Held at
1 July 2021 Granted
Exercised
Held at
30 June 2022
Vested and
exercisable at
30 June 2022
Vested and
unexercisable at
30 June 2022
-
-
-
-
-
-
-
-
2,179,724
-
-
1,001,092
585,468
3,766,284
-
-
-
-
-
-
-
-
2,179,724
-
-
1,001,092
585,468
3,766,284
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (CONT’D)
Performance rights - STIP held by key management personnel
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
Other Executives
PP Huizenga
TO Naude
Total
Held at
1 July 2021 Granted Exercised
Held at
30 June 2022
Vested and
exercisable at
30 June 2022
Vested and
unexercisable at
30 June 2022
-
-
-
-
-
-
-
-
544,931
-
-
255,279
147,831
948,041
-
-
-
-
-
-
-
-
544,931
-
-
255,279
147,831
948,041
-
544,931
-
-
255,279
147,831
948,041
-
-
-
-
-
-
-
The above STIP performance rights were exercised on 5 July 2022 and settled in cash at the Board’s discretion
on 18 July 2022.
Details of performance rights granted to KMP during the year ended 30 June 2022 are:
Fair
value
per
right
$
0.24
0.33
0.19
0.26
0.19
0.26
Grant
date
12 November
2022
12 November
2022
Expiry
date
1 July
2032
1 July
2032
1 July 2022 1 July
2032
1 July 2022 1 July
2032
1 July 2022 1 July
2032
1 July 2022 1 July
2032
Vesting
date
30 June
2025
30 June
2022
30 June
2025
30 June
2022
30 June
2025
30 June
2022
Number of
performance
rights
granted
2,179,724
Number of
performance
rights
vested
-
Exercise
price
-
Maximum
value to be
recognised
in future
periods
$
348,755
-
-
-
-
-
544,931
544,931
-
1,001,092
-
79,499
255,279
255,279
-
585,468
-
46,494
147,831
147,831
-
4,714,325
948,041
474,748
KMP
A Cook
Instrument
Performance
rights - LTIP
Performance
rights – STIP1
P Huizenga Performance
A Cook
rights - LTIP
T Naude
P Huizenga Performance
rights – STIP1
Performance
rights - LTIP
Performance
rights – STIP1
T Naude
Total
1
The above STIP performance rights were exercised on 5 July 2022 and settled in cash at the Board’s
discretion on 18 July 2022.
End of Remuneration Report
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 43
Non-audit services
The auditors have not performed any non-audit services over and above their statutory duties during the current
reporting period.
Directors’ interests
At the date of this report, the relevant interests of the directors in securities of the Company are as follows:
Name
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
Ordinary Shares
1,425,938
15,938,797
964,232
305,221
574,774
Diversity
For the year ended 30 June 2022, women made up 20% of the Board and 29% of the Company’s general work
force.
The Board has set the following measurable diversity objectives for the 2022 financial year:
2022 Measurable objectives
Progress
Aim to have not less than 30% of the
directors of each gender
Female Board representation in 2022 was 20% (2021: 20%).
Dedicated mentoring program for the
female employees of the Company
The Company provided ongoing training, mentoring and professional
support in the development of all employees’ careers.
Maintain flexible work practices
The Company continued to maintain its flexible work practices which
includes a parental leave policy and provides employees the ability
to maintain flexible hours and to work from home where required.
Likely developments
The likely developments for the 2022 financial year are contained in the operating and financial review as set out
on pages 6 to 25.
Environmental regulation and performance
The Group’s oil and gas exploration and development activities are concentrated in offshore Western Australia.
Environmental obligations are regulated under both State and Commonwealth law in Western Australia,
depending on whether a permit sits in State or Commonwealth waters. The Group is not aware of any significant
environmental breaches during the year ended 30 June 2022.
Dividends
No dividends were paid during the year and the directors do not recommend payment of a dividend in respect of
the current financial year (2021: Nil).
Auditor’s independence declaration
The auditor’s Independence Declaration under Section 307C of the Corporations Act is set out on page 47 and
forms part of the directors’ report for the financial year ended 30 June 2022.
Principal activities
During the course of the 2022 financial year the Group’s principal activities continued to be directed towards oil
and gas exploration, development and production.
44 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT Identification of independent directors
The independent directors are identified in the Company’s Corporate Governance Statement. The Corporate
Governance Statement is available on Carnarvon Energy’s website at: www.carnarvon.com.au/about-us/
corporate-governance/.
Significant changes in state of affairs
In the opinion of the directors no significant changes in the state of affairs of the Group occurred during the
current financial year other than as outlined in the operating and financial review as set out on pages 6 to 25.
Indemnification and insurance of directors and officers
During the period the Company paid a premium to insure the directors and officers of the Company and its
controlled entities. The policy prohibits the disclosure of the nature of the liabilities covered and the amount of
the premium paid.
Deeds of Access and Indemnity have been executed by the Company with each of the directors and Company
Secretary. The deeds require the Company to indemnify each director and Company Secretary against any legal
proceedings, to the extent permitted by law, made against, suffered, paid or incurred by the directors or Company
Secretary pursuant to, or arising from or in any way connected with the director or Company Secretary being an
officer of the Company.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of the proceedings. The Company was not a party to any such proceedings during the year.
Operating and financial review
An operating and financial review of the Group for the financial year ended 30 June 2022 is set out on page 6 to
25 and forms part of this report.
Indemnity of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as
part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
Events subsequent to reporting date
On 1 July 2022, the Company awarded 4,528,782 performance rights to KMP (other than the CEO) and other
employees under the company’s performance rights plan.
On 18 July 2022, the Company cancelled and settled in cash 948,041 vested performance rights relating to the
FY21 short term incentive plan, following the exercise of the performance rights on 5 July 2022.
On 15 August 2022, the regulator consented to the surrender of the WA-521-P permit by the Company.
Other than above, there is no other matters or circumstance has arisen since 30 June 2022 that in the opinion of
the directors has significantly affected, or may significantly affect in future financial years:
(i) The Group’s operations; or
(ii) The results of those operations; or
(iii) The Group’s state of affairs
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 45
Rounding off
The Company is an entity of the kind referred to in the Australian Securities and Investments Commission
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016. As a result,
amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars,
unless otherwise stated.
Signed in accordance with a resolution of the directors.
William A Foster
Chairman
Perth, 31 August 2022
46 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE
DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Auditor’s independence declaration to the directors of Carnarvon
Energy Limited
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
As lead auditor for the audit of the financial report of Carnarvon Energy Limited for the financial year
ended 30 June 2022, I declare to the best of my knowledge and belief, there have been:
Auditor’s independence declaration to the directors of Carnarvon
Energy Limited
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
As lead auditor for the audit of the financial report of Carnarvon Energy Limited for the financial year
b) No contraventions of any applicable code of professional conduct in relation to the audit; and
ended 30 June 2022, I declare to the best of my knowledge and belief, there have been:
c) No non-audit services provided that contravene any applicable code of professional conduct in
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit.
relation to the audit;
This declaration is in respect of Carnarvon Energy Limited and the entities it controlled during the
b) No contraventions of any applicable code of professional conduct in relation to the audit; and
financial year.
c) No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Carnarvon Energy Limited and the entities it controlled during the
Ernst & Young
financial year.
T S Hammond
Ernst & Young
Partner
31 August 2022
T S Hammond
Partner
31 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:LT:CARNARVON:013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 47
TH:LT:CARNARVON:013
CORPORATE GOVERNANCE
STATEMENT
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As
such, Carnarvon Energy Limited and its Controlled Entities (‘the Group’) have adopted the fourth edition of the
Corporate Governance Principles and Recommendations which was released by the ASX Corporate Governance
Council in February 2019 and became effective for financial years commencing on or after 1 January 2020.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2022 is dated as at 30 June
2022 and was approved by the Board on 31 August 2022. The Corporate Governance Statement is available on
Carnarvon Energy’s website at www.carnarvon.com.au/about-us/corporate-governance/.
48 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
CONSOLIDATED INCOME STATEMENT AND
OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2022
Other income
Foreign exchange gain/(loss)
Gain on loss of control of subsidiary
Administrative expenses
Movement in fair value of financial assets
Directors’ fees
Employee benefits expense
New venture and advisory costs
Exploration expenditure written off
Loss on disposal of financial assets
Share of loss of Joint venture
Impairment of investment in joint venture
Consolidated
Notes
2
8
20(a)
12
14
14
2022
$000
336
3,800
-
(2,988)
(525)
(465)
(2,597)
(2,098)
(10,724)
(26)
(30,633)
(7,833)
2021
$000
492
(1,244)
23,635
(2,429)
302
(473)
(1,021)
(2,049)
-
-
(77)
-
(Loss)/gain before income tax
(53,753)
17,136
Taxes
Current income tax expense
(Loss)/gain for the year
6(a)
-
-
(53,753)
17,136
Other comprehensive income
Other Comprehensive income to be reclassified to profit or loss
in subsequent periods (net of tax):
Exchange differences arising on translation of foreign operations
-
126
Total comprehensive income for the year
(53,753)
17,262
Total comprehensive income for the period attributable to
members of the entity
(53,753)
17,262
Loss /Earnings per share:
Basic (loss)/earnings per share (cents per share)
Diluted (loss) /earnings per share (cents per share)
5
5
(3.31)
(3.31)
1.09
1.09
The above consolidated income statement and other comprehensive income should be read in conjunction with
the accompanying notes to the financial statements.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 49
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 30 June 2022
Current assets
Cash and cash equivalents
Other receivables
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Financial assets
Exploration and evaluation expenditure
Right-of-use assets
Investment in Joint Ventures
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Lease liabilities
Total current liabilities
Non-current liabilities
Employee benefits
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
(Accumulated losses)/retained profit
Notes
17(b)
7
10
9
8
12
11
14(2)
15
20(b)
11
20(b)
11
Consolidated
2022
$000
112,424
674
184
2021
$000
98,436
351
728
113,282
99,515
80
557
157,263
390
2,079
128
1,339
129,500
593
26,199
160,369
157,759
273,651
257,274
2,531
569
221
3,321
132
220
352
1,310
604
203
2,117
202
441
643
3,673
2,760
269,978
254,514
16
16
314,096
1,011
(45,129)
246,268
(378)
8,624
Total equity
269,978
254,514
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes to the financial statements.
50 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the year ended 30 June 2022
Issued
capital
$000
245,856
Reserve
shares
$000
(7,820)
(Accumulated
losses) /
retained profit
$000
(8,512)
Translation
reserve
$000
26
Share based
payments
reserve
$000
7,108
Balance at 1 July 2020
Comprehensive Income
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners
and other transfers
Exercise of options
Exercise of ESP shares
Total transactions with
owners and other transfers
-
-
-
-
-
-
17,136
-
17,136
150
262
182
412
182
-
-
-
Balance at 30 June 2021
246,268
(7,638)
8,624
Balance at 1 July 2021
246,268
(7,638)
8,624
Comprehensive Income
Loss for the year
Total comprehensive loss for
the year
-
-
Transactions with owners
and other transfers
Share based payments
Proceeds from capital raise
Transaction costs related to
capital raise
Exercise of ESP shares
Total transactions with
owners and other transfers
-
70,442
(3,248)
634
-
763
67,828
763
-
-
-
-
(53,753)
(53,753)
-
-
-
-
-
-
126
126
-
-
-
152
152
-
-
-
-
-
-
-
Total
$000
236,658
17,136
126
17,262
150
444
594
-
-
-
-
-
-
7,108
254,514
7,108
254,514
(53,753)
(53,753)
626
70,442
(3,248)
1,397
626
-
-
-
626
69,217
Balance at 30 June 2022
314,096
(6,875)
(45,129)
152
7,734
269,978
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes to the financial statements.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 51
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 30 June 2022
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Notes
Consolidated
2022
$000
(5,957)
337
2021
$000
(5,349)
492
Net cash used in operating activities
17(a)
(5,620)
(4,857)
Cash flows from investing activities
Exploration and development expenditure
Research and development refundable tax offset
Other financial assets
Acquisition of property, plant and equipment
Investment in joint ventures
Cash recognised / (derecognised) on gain /
(loss) of control of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from capital raise - net of transaction costs
Proceeds from repayment of Employee Share Plan loans
Proceeds from exercise of options
Payment of principal portion of lease
Net cash provided by financing activities
9
11
(38,126)
-
(66)
(18)
(14,493)
146
(9,413)
286
-
(120)
(196)
(30)
(52,557)
(9,473)
67,194
1,397
-
(226)
68,365
-
445
150
(217)
378
Net increase in cash and cash equivalents held
10,188
(13,952)
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
17(b)
98,436
3,800
112,424
113,632
(1,244)
98,436
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes to
the financial statements.
52 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL
STATEMENTS
1.
REPORTING ENTITY
The consolidated financial report of Carnarvon Energy Limited (‘Company’) for the financial year ended
30 June 2022 comprises the Company and its controlled entities (the “Group”).
Carnarvon Energy Limited is a for profit oil, gas and energy exploration and production company limited
by shares incorporated in Australia at the registered office of Level 2, 76 Kings Park Road, West Perth,
Western Australia, whose shares are publicly traded on the Australian Stock Exchange.
The financial report was authorised for issue by the directors on 31 August 2022.
The basis for the preparation of the following notes can be found in note 29 and the significant
accounting policies used in the preparation can be found in note 30.
2.
OTHER INCOME
Interest revenue
3.
OTHER EXPENSES
The following expenses are included in administrative and
employee benefit expenses in the consolidated income statement:
Depreciation – property, plant and equipment
Depreciation – right-of-use assets
Defined contribution – superannuation expense
Consolidated
2022
$000
336
336
2021
$000
492
492
Consolidated
2022
$000
(66)
(203)
(311)
2021
$000
(53)
(203)
(318)
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 53
NOTES TO THE FINANCIAL
STATEMENTS
4.
AUDITORS’ REMUNERATION
As a result of work in relation to and required for the 30 June 2022 period, the auditor of the Group,
Ernst & Young, has charged the following fees:
Fees to Ernst & Young Australia:
Fees for auditing statutory financial report of the parent covering the
group and auditing the statutory financial report of any controlled
entities
2022
$
2021
$
(98,875)
(67,600)
5.
(LOSS)/ EARNINGS PER SHARE
The calculation of basic and diluted earnings per share was based on a weighted average number of
shares calculated as follows:
Issued ordinary shares at 1 July
Shares issued
Weighted average number of ordinary shares 30 June (basic)
Weighted average number of ordinary shares 30 June (diluted)
(Loss)/Earnings used in calculating basic and diluted loss per share
2022
2021
Number of shares
1,565,379,917
234,806,987
1,623,920,837
1,623,920,837
1,564,379,917
1,000,000
1,565,127,862
1,565,127,862
2022
$
(53,753,000)
2021
$
17,136,000
As the consolidated entity incurred a loss for the year ended 30 June 2022, the effect of 5,844,325
performance rights on issue is considered to be antidilutive and therefore not factored in determining
the diluted earnings per share.
As at 30 June 2022, the Group has 42,069,399 reserve shares on issue under the employee share plan
(refer Note 16). Based on the weighted average exercise price of these in substance options, they are
also considered to be anti-dilutive and therefore have not impacted the calculation of diluted loss per
share.
54 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
6.
TAXES
(a) Income tax expense
Current Income tax expense
Current Income tax (benefit) / expense
Adjustment for prior period
Deferred tax (income)
Origination and Reversal of temporary differences – current
Adjustment for prior period
Consolidated
2022
$000
2021
$000
-
99
99
-
236
236
(99)
(99)
(236)
(236)
Total income tax (benefit) / expense
-
-
Numerical reconciliation between pre-tax profit and income tax expense:
Profit/(Loss) for the period
(53,753)
17,136
Income tax using the statutory rate of 30% (2021: 30%)
(16,126)
5,141
Non-deductible expenditure
Non-assessable gain on loss of control
Share based payment expense
Accounting loss on Joint Venture agreement
Revaluation/impairment of financial assets
Impairment of assets
Other permanent adjustment
Current year tax benefit not brought to account
Under(over) provision in prior years
Income tax (benefit) / expense
-
-
188
9,190
158
5,567
(26)
1,049
-
-
-
-
(7,090)
-
-
-
(91)
3
2,037
-
-
-
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 55
NOTES TO THE FINANCIAL
STATEMENTS
6.
TAXES (CONT’D)
(b) Current tax liability
-
-
The current tax liability of nil (2021: nil) represents the amount of income tax payable in respect of current
and prior financial periods.
Tax Consolidation
Effective 1 July 2003, for the purposes of Australian income taxation, Carnarvon and its 100%-owned
Australian controlled entities formed a tax consolidated group. The head entity of the tax consolidated
group is Carnarvon.
The impact of consolidating for tax purposes is that Carnarvon’s Australian controlled entities are treated
as divisions of Carnarvon rather than as separate entities for tax purposes. At the date of this report, the
members of the group have not entered into a tax sharing arrangement.
(c) Deferred tax assets and liabilities
Deferred tax liabilities
Capitalised exploration deducted immediately
Unrealised foreign exchange gains
Gross deferred tax liabilities
Deferred tax assets
Carry forward revenue tax losses
Unrealised foreign exchange loss
Property, plant and equipment
Share issue costs
Provisions
Accruals
Lease liability and right-of-use-assets
Gross deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Unrecognised deferred tax asset
Net deferred tax assets
(d) Partially unrecognised tax losses and PRRT credits (not tax effected)
Total Australian tax losses
Unaugmented PRRT losses
56 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Consolidated
2022
$000
2021
$000
47,179
1,146
48,325
2022
$000
63,118
-
89
846
211
28
15
38,850
-
38,850
2021
$000
49,068
374
94
160
242
27
15
64,307
49,980
(48,325)
(15,983)
(38,850)
(11,130)
-
-
2022
$000
210,394
187,974
2021
$000
163,560
151,242
7.
OTHER RECEIVABLES
Current
Other receivables
Cash held as security
The Group’s exposure to credit and currency risks is disclosed in Note 25.
8.
FINANCIAL ASSETS
Financial assets at FVTPL
Reconciliation
Reconciliation of the fair values at the beginning and end of the
current financial year are set out below:
Beginning balance
Fair value movements
Disposal of financial assets
Closing balance
Other financial assets
Carrying value at the end of period
Consolidated
2022
$000
456
218
674
2022
$000
557
1,339
(525)
(323)
491
66
557
2021
$000
133
218
351
2021
$000
1,339
1,037
302
-
1,339
-
1,339
On 6 September 2017, CWX Global Limited (formerly Loyz Energy Limited) (“CWX”) issued 331,653,000
shares to Carnarvon. The shares were received as settlement for a deferred consideration asset relating
to the sale of Carnarvon’s share in oil producing Concessions in Thailand to CWX in 2014. As part of the
settlement, Carnarvon is also entitled to 12% of any sale proceeds over US$45m, should CWX sell the
Concessions.
During the reporting period, Carnarvon disposed of 96,127,400 shares at average of S$0.002/share.
The shares in CWX held by Carnarvon at 30 June 2022 has been accounted for as a fair value through
profit or loss financial asset under Australian Accounting Standards and classified as a “level 1” financial
asset under the fair value hierarchy using the share price of CWX as at 30 June 2022.
Other financial assets:
On 4 March 2022, Carnarvon entered into a 12-month call option to purchase a 65Ha site in the Shire of
Narrogin, approximately 200kms southeast of Perth, Western Australia, for its biorefinery project.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 57
Consolidated
2022
$000
2021
$000
729
18
-
747
601
-
-
66
667
128
80
610
119
-
729
548
-
-
53
601
62
128
Consolidated
2022
$000
184
2021
$000
728
NOTES TO THE FINANCIAL
STATEMENTS
9.
PROPERTY, PLANT AND EQUIPMENT
Fixtures and fittings
Gross carrying amount at cost:
Balance at beginning of financial year
Additions
Disposals
Balance at end of financial year
Depreciation and impairment losses:
Balance at beginning of financial year
Additions
Disposals
Depreciation charge for year
Balance at end of financial year
Carrying amount opening
Carrying amount closing
10.
OTHER ASSETS
Current
Deposits and prepayments
58 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
11.
RIGHTS-OF-USE ASSETS AND LEASE LIABILITIES
The Group has leases which predominantly relate to office premise and office car bays. Amounts
recognised in the statement of financial position and the carrying amounts of the Group’s right-of-use
assets and lease liabilities and the movement during the period are as follows:
Rights-of-use asset
Consolidated
Balance at beginning of financial year
Additions
Depreciation expense
Balance at end of financial year
2022
$000
593
-
(203)
390
2021
$000
796
-
(203)
593
Lease liabilities
Consolidated
Balance at beginning of financial year
Additions
Interest expense
Lease payments
Balance at end of financial year
Current lease
Non-current lease
Balance at end of financial year
2022
$000
644
-
23
(226)
441
221
220
441
2021
$000
830
-
31
(217)
644
203
441
644
The following are the amounts recognised in profit or loss:
Consolidated
Depreciation – right-of-use assets
Interest expense – lease liabilities
2022
$000
(203)
(23)
2021
$000
(203)
(31)
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 59
NOTES TO THE FINANCIAL
STATEMENTS
12.
EXPLORATION AND EVALUATION EXPENDITURE
Cost:
Balance at beginning of financial year
Additions
Derecognition on loss of control of subsidiary
R&D refundable tax offset
Exploration expenditure written off
Balance at end of financial year
Consolidated
2022
$000
129,500
38,487
-
-
(10,724)
157,263
2021
$000
122,622
9,335
(2,171)
(286)
-
129,500
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on
successful development and commercial exploitation, or alternatively, sale of the respective areas of
interest.
Written off exploration expenditure relates to TL-SO-T 19-14 production sharing contract and the
WA-523-P, WA-521-P, WA-155-P, AC/P62 and AC/P63 permits. With consideration of AASB 6, with no
substantive expenditure planned on these permits and the unlikely ability to achieve value on these
permits through a development or farm-out, the Company has performed an impairment assessment
and formed the view that capitalised exploration expenditure relating to above permits are impaired and
should be written off.
13.
JOINT OPERATIONS
The Group has the following interests in joint operations:
Joint operation
Western Australia
WA-435-P, WA-437-P, Roebuck Basin
WA-436-P, WA-438-P, Roebuck Basin
Principal activities
Ownership interest %
Exploration for hydrocarbons
Exploration for hydrocarbons
2022
20%
30%
2021
20%
30%
Carnarvon has accounted for its interest in the above Concessions as Joint Operations as the company
has joint control. Joint control is derived from the voting rights assigned by the Joint Operating
Agreements for each permit.
60 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
14.
INVESTMENT IN JOINT VENTURES
1) Investment in Carnarvon Petroleum Timor
On 9 June 2022, Carnarvon and Advance Energy signed a Termination and Settlement Deed. Under the
Deed, both parties agreed to terminate the Subscription Agreement and the Equity Holders Agreement
in relation to the incorporated joint venture in Carnarvon Petroleum Timor (CPT). In accordance with the
settlement, Carnarvon received a payment of US$100,000(A$145,195) from Advance Energy, which is
offset against the share of loss in CPT.
Prior to the termination date of 9 June 2022, the arrangement was classified as a Joint Venture. Prior
to this date, Carnarvon recognised its interest in the Joint Venture using the equity method. As such,
Carnarvon accounted for its 50% share of loss for the period up to the termination date. Following the
termination date, Carnarvon gained control of CPT.
The identifiable assets and liabilities, as at 9 June 2022, of CPT are as follows:
Cash at bank
Total assets
Trade and other payables
Total liabilities
Net assets
As indicated above, the fair value of net assets of CPT at 9 June 2022 is nil.
Reconciliation of interest in CPT:
$000
146
146
146
146
-
9 June 2022
$000
26,199
11,755
(30,121)1
(7,833)2
30 June 2021
$000
25,798
478
(77)
-
-
26,199
Investment in joint venture beginning balance
Additional investment in joint venture
Share of loss for the period (50%)
Impairment of Investment in joint venture
Investment in joint venture closing balance
1
2
The Company’s share of the joint venture losses for the period were $36,071,000, however the share
of losses for the period was capped at $30,121,000 which brought the Company’s investment in the
joint venture to nil.
The Company performed an impairment assessment at 31 December 2021 and, following the
completion of the Buffalo-10 well which failed to encounter a quantity of hydrocarbons that could be
produced commercially, impaired the carrying value of its investment in the joint venture to nil at this
date.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 61
NOTES TO THE FINANCIAL
STATEMENTS
14.
INVESTMENT IN JOINT VENTURES (CONT’D)
Summarised financial information of CPT:
Summarised statement of profit or loss of CPT for the period from 1 July 2021 to 9 June 2022:
Administrative expenses
Employee benefits
Foreign exchange loss
Exploration expenditure write-off
Income tax benefit on the reversal of deferred tax liability
9 June 2022
$000
(1,026)
(105)
(65)
(81,078)
10,129
30 June 2021
$000
(112)
(41)
(2)
-
-
Loss for the period
(72,142)
(155)
Group’s share of loss for the period (50%)
(36,071)
(77)
2) Investment in FutureEnergy
In October 2021, Carnarvon formed a Joint venture with Frontier Impact Group under the name
FutureEnergy Australia Pty Ltd (“FEA”) to produce renewable diesel in Western Australia. With 50% equity
in the joint venture, Carnarvon invested A$2,592,000 into FEA on 21st October 2021 to fund the FEED
activities to enable a final investment decision for the project.
The Group’s interest in FEA is to be accounted for as a joint venture using the equity method.
Reconciliation of interest in FEA:
Investment in joint venture beginning balance
Share of loss for the period (50%)
Investment in joint venture closing balance
30 June 2022
$000
2,592
(513)
2,079
62 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
14.
INVESTMENT IN JOINT VENTURES (CONT’D)
Summarised financial information of FEA:
Summarised statement of financial position of FEA at 30 June 2022:
Current assets
Cash and cash equivalents
Non-current assets
Current liabilities
Trade and other payables
Equity
Group’s share in equity (50%)
Group’s carrying amount of the investment
30 June 2022
$000
1,629
2,591
62
4,158
2,079
2,079
Summarised statement of profit or loss of FEA for the period from 1 October 2021 to 30 June 2022:
Administrative expenses
Employee benefits
Loss for the period
Group’s share of loss for the period (50%)
15.
TRADE AND OTHER PAYABLES
Current
Trade payables
Director fees payable
Non-trade payables and accrued expenses
30 June 2022
$000
(539)
(486)
(1,025)
(513)
Consolidated
2022
$000
2,234
90
207
2,531
2021
$000
995
116
199
1,310
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in
Note 25.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 63
NOTES TO THE FINANCIAL
STATEMENTS
16.
CAPITAL AND RESERVES
Contributed equity
Balance at beginning of financial year
Issued for cash
Balance at end of financial year
Issued capital
Balance at beginning of financial year
Exercise of employee shares
Exercise of options
Proceeds from capital raise
Balance at end of financial year
Consolidated
2022
2021
Number of shares
1,565,379,917
234,806,987
1,800,186,904
1,564,379,917
1,000,000
1,565,379,917
2022
$000
246,268
634
-
67,194
314,096
2021
$000
245,856
262
150
-
246,268
Ordinary shares have the right to one vote per share at meetings of Carnarvon, to receive dividends as
declared and, in the event of a winding-up of Carnarvon, to participate in the proceeds from the sale of
all surplus assets in proportion to the number of, and amounts paid up on, shares held.
Reserve shares (plan shares)
Balance at beginning of financial year
Employee Share Plan issued
Employee Share Plan repaid
Balance at end of financial year
Reserve shares (plan shares)
Balance at beginning of financial year
Employee Share Plan issued
Employee Share Plan repaid
Balance at end of financial year
2022
2021
Number of shares
52,504,005
-
(10,434,606)
42,069,399
57,392,934
-
(4,888,929)
52,504,005
2022
$000
(7,638)
-
763
(6,875)
2021
$000
(7,820)
-
182
(7,638)
Translation reserve
Movements in the translation reserve are set out in the Statement of Changes in Equity on page 51.
The translation reserve comprises all foreign exchange differences arising from the translation of the
financial statements of foreign operations where their functional currency is different to the presentation
currency of the reporting entity.
Share based payments reserve
Movements in the share-based payments reserve are set out in the Statements of Changes in Equity on
page 51. This reserve represents the fair value of shares and rights issued under the previous Employee
Share Plan and current Employee Share Incentive Plan respectively.
64 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
17.
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
(a) Cash flows from operating activities
(Loss)/profit for the year
Adjustments for:
Depreciation
Share based payment
Fair Value Movement of financial asset
Foreign exchange movement
Exploration expenditure write-off
Gain on disposal of subsidiary
Share of loss on Joint Venture
Impairment of Investment in joint ventures
Consolidated
2022
$000
2021
$000
(53,753)
17,136
67
627
525
(3,824)
10,724
-
30,633
7,833
53
302
1,030
-
(23,635)
(78)
-
Operating loss before changes in working capital and provisions:
(7,168)
(5,192)
Changes in assets and liabilities:
(Increase) in other receivables
Decrease in other assets
Increase in trade and other payables
Decrease/(Increase) in provisions and employee benefits
Derecognition of other payables from subsidiary disposal
Net cash flows used in operating activities
(b) Reconciliation of cash and cash equivalents
Cash at bank and at call
Cash on deposit
(322)
544
1,221
105
-
(5,620)
(71)
85
363
(2)
(40)
(4,857)
16,124
96,300
112,424
31,443
66,993
98,436
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is
disclosed in Note 25.
Restricted cash of $218,000 relating to security deposits for corporate credit cards and rental of the
Company’s head office is included under other receivables (2021: $218,000 consolidated), see Note 7.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 65
NOTES TO THE FINANCIAL
STATEMENTS
18.
CAPITAL AND OTHER COMMITMENTS
(a) Exploration expenditure commitments
Due to the nature of the Group’s operations in exploring and evaluating areas of interest it is necessary
to incur expenditure in order to retain the Group’s present permit interests. Expenditure commitments
on exploration permits can be reduced by selective relinquishment of exploration tenure, by the
renegotiation of expenditure commitments, or by farming out portions of the Group’s equity. Failure
to meet Joint Operation cash requirements may result in a reduction in equity in that particular Joint
Operation.
Exploration expenditure commitments forecast but not provided for in the financial statements are as
follows:
Less than one year
Between one and five years
(b) Capital expenditure commitments
Data licence commitments
(c) Leases
Lease information for the current reporting period is outlined in Note 11.
Consolidated
2022
$000
348
-
348
2021
$000
250
-
250
584
560
19.
CONTINGENCIES
In accordance with normal petroleum industry practice, the Group has entered into joint operations
and farm-in agreements with other parties for the purpose of exploring and developing its petroleum
permit interests. If a party to a joint operation defaults and does not contribute its share of joint operation
obligations, then the other joint operators are liable to meet those obligations. In this event, the interest
in the permit held by the defaulting party may be redistributed to the remaining joint operators.
66 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
20.
EMPLOYEE BENEFITS
(a) Employee benefits charged to P&L
Salary and wages (including super)
Staff costs allocated to projects
Short term cash bonus
Share based payment expense
Total Employee benefits
(b) Employee benefits liabilities
Current:
Liability for annual leave and long service leave
Non-Current:
Provision for long service leave
Total Employee benefits
Consolidated
2022
$000
4,569
(2,697)
99
626
2021
$000
4,464
(3,745)
302
-
2,597
1,021
Consolidated
2022
$000
2021
$000
569
604
132
701
202
806
Employee Share Plan
Under the terms of the Carnarvon’s previous Employee Share Plan (“ESP”), as approved by shareholders,
Carnarvon may, in its absolute discretion, make an offer of ordinary fully paid shares in Carnarvon to any
Eligible Person, to be funded by a limited recourse interest free loan granted by the Company.
The issue price is determined by the directors and is not to be less than the weighted average market
price of the Carnarvon’s shares on the five trading days prior to the date of offer. Eligible Persons use the
above-mentioned loan to acquire plan shares.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 67
NOTES TO THE FINANCIAL
STATEMENTS
20.
EMPLOYEE BENEFITS (CONT’D)
The following table illustrates the number and weighted average exercise prices (WAEP) of, and
movements in plan shares during the year:
Number 2022 WAEP 2022
Number 2021 WAEP 2021
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at end of year
Exercisable at end of year
52,504,005
-
-
10,434,606
-
42,069,399
42,069,399
0.27
-
-
0.13
-
0.30
0.30
57,392,934
-
-
4,888,929
-
52,504,005
52,504,005
0.25
-
-
0.09
-
0.27
0.27
Shares previously granted under the ESP are accounted for as “in-substance” options due to the limited
recourse nature of the loan between the employees and Carnarvon to finance the purchase of ordinary
shares. There were no ESP shares issued during the period.
Employee share Incentive plan
The following table illustrates the balance and valuation of performance rights using Monte Carlo
Simulation model as at 30 June 2022:
Held
at 1
July
2021
-
-
-
-
Grant
date
01/07/
2021
01/07/
2021
12/11/
2021
12/11/
2021
Instrument
Performance
rights-LTIP
Performance
rights-STIP
Performance
rights-LTIP
Performance
rights-STIP
Total
Share
price at
grant
date
0.26
Vesting
period
3 years
Exercise
price
-
Share
price
volatility
Risk
free
rate
50% 0.1%
Dividend
yield
0%
Rights
Granted
2,716,560
Rights
Forfeited
-
Fair
value
at grant
date
0.19
Held at 30
June 2022
(unvested)
2,716,560
0.26
1 year
0.33
3 years
0.33
1 year
-
-
-
50% 0.1%
0%
403,110
50% 0.1%
0%
2,179,724
50% 0.1%
0%
544,931
-
-
-
0.26
403,110
0.24
2,179,724
0.33
544,931
5,844,325
5,844,325
Under the terms of the Employee Share Incentive Plan (Plan) which was last approved by shareholders
of the Company on 11 November 2020, performance rights can be granted to eligible employees for no
consideration. Entitlements under these awards vest as soon as the associated vesting conditions have
been met. Awards can be settled in cash at the absolute discretion of the Company. Awards under the
Plan carry dividends and voting rights.
Performance rights awarded under the STIP are granted for a 12-month period. The vesting condition
requires the employee to remain employed by the Company until 30 June 2022.
Performance rights awarded under the LTIP are granted for a 3 year period. The vesting conditions are
based on Carnarvon’s Total Shareholder Return (TSR) (1) in absolute terms and (2) relative to the returns
of a group of companies considered alternative investments to Carnarvon.
The participants must also be employed by the Company over the vesting period and as at the vesting
date.
68 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
20.
EMPLOYEE BENEFITS (CONT’D)
The vesting schedule of 50% of the LTIP performance rights will be subject to relative TSR testing is as
follows:
Relative TSR Performance
Less than 50th percentile
Between 50th and 75th percentile
75th percentile or better
Level of vesting
Zero
Pro rata between 50% and 100%
100%
Peer Group: 88 Energy, Buru Energy, Central Petroleum, Cooper Energy, Elixir Energy, Empire Energy,
Galilee Energy, Helios Energy, Horizon Oil, Karoon Energy, Strike Energy, Warrego Energy.
The vesting schedule of 50% of the LTIP performance rights will be subject to absolute TSR testing is as
follows:
Absolute TSR Performance
10% per annum return
Between 10% and 20% per annum
Above 20% per annum
% of performance rights that will vest
33%
Pro rata between 33% and 100%
100%
There is an expiration date of 10 years and an exercise period of 90 days from the vesting dates for both
STIP and LTIP performance rights.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and
movements in, share options during the year:
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
Number 2022
-
-
-
-
-
-
-
WAEP 2022
-
-
-
-
-
-
-
Number 2021
1,000,000
-
-
1,000,000
-
-
-
WAEP 2021
0.15
-
-
0.15
-
-
-
The weighted average remaining contractual life for the share options outstanding as at 30 June 2022
was zero. (2021: 0).
The fair value of share options issued is measured by reference to their fair value using the Black-
Scholes model, as set out below:
The expected life of the share options is based on historical data and current expectations and is not
necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption
that the historical volatility over a period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 69
NOTES TO THE FINANCIAL
STATEMENTS
21.
RELATED PARTY DISCLOSURES
Ultimate parent
Carnarvon Energy Limited is the ultimate parent company.
During the reporting period there have been transactions between Carnarvon and its controlled entities
and joint arrangements. Carnarvon provided technical, accounting and administrative services to
Carnarvon Petroleum Timor Unipessoal Lda for which it charged fees of $1,170,000 (2021: $876,000). The
Company provided accounting and administrative services to its other controlled entities for which it did
not charge a management fee.
The carrying value of loans to controlled entities was $3,099,000 as at 30 June 2022 (2021: $3,221,000).
This amount is unsecured, interest-free and is only repayable out of the after-tax profits and has been
recorded at a fair value of nil in the Group’s statement of financial position as it is only repayable out of
after-tax profits of CPT noting that Buffalo project drilling results was uncommercial.
Other related party balances and transactions
At 30 June 2022, an amount of $ 90,000 (2021: $116,250) is included in Carnarvon and consolidated
trade and other payables for outstanding director fees and expenses.
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Key management personnel compensation included in employee benefits expense, directors’
emoluments, share based payments and administration expenses are as follows:
Short term benefits
Post employment benefits
Share based payments
Long term benefits
Consolidated
2022
$000
1,924
66
825
101
2,916
2021
$000
2,145
97
-
(19)
2,223
Information regarding individual directors and executives’ compensation and some equity instruments
disclosures, as permitted by Corporations Regulation 2M.3.03, are provided in the Remuneration Report
section of the directors’ report as set out on pages 31 to 43.
Apart from the details disclosed in this note, no director has entered into a material contract with the
Company or the Group since the end of the previous financial year and there were no material contracts
involving directors’ interests existing at year end.
70 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)
(b) Other key management personnel transactions
Amounts payable to key management personnel or their related parties at reporting date in respect of
outstanding director fees and expenses are as follows:
Current
Director’s fee payable
Consolidated
2022
$000
90
2021
$000
116
(c) Ordinary shares held by key management personnel
The movement during the reporting period in the number of ordinary shares in Carnarvon Energy Limited
held, directly, indirectly or beneficially, by each key management person, including their related parties, is
as follows:
Net
acquired/
(sold)
Award under
Employee
Share Plan
Received
on exercise
of options
Held at
30 June 2022
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
Executives
PP Huizenga
TO Naude
2021
Directors
PJ Leonhardt
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
Executives
PP Huizenga
TO Naude
1
Held at
1 July 2021
1,425,938
15,938,797
964,232
305,221
304,774
-
-
-
-
270,000
12,076,196
4,074,357
-
(55,000)
Held at
1 July 2020
17,750,000
925,938
15,938,797
464,232
267,701
-
-
-
-
37,520
304,774
12,076,196
4,074,357
-
-
Net
acquired/
(sold)
Award under
Employee
Share Plan
Received
on exercise
of options
Held at
30 June 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,425,938
15,938,797
964,232
305,221
574,774
12,076,196
4,019,357
-
-
-
-
-
-
-
-
-
500,000
-
500,000
-
-
17,750,0001
1,425,938
15,938,797
964,232
305,221
304,774
-
-
12,076,196
4,074,357
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 71
This balance reflects the shares held by PJ Leonhardt on the date he retired as Director of
11 November 2020.
NOTES TO THE FINANCIAL
STATEMENTS
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)
(d) Plan shares held by key management personnel
Included in the above are plan shares held by key management personnel. The balance and movement
during the reporting period in the number of plan shares directly, indirectly or beneficially, by each key
management person, including their related parties, is as follows:
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
Executives
PP Huizenga
TO Naude
2021
Directors
PJ Leonhardt
WA Foster
AC Cook
P Moore
SG Ryan
D Bakker
Executives
PP Huizenga
TO Naude
Held at
1 July 2021
Granted as
compensation
Employee Share
Plan cancellations
Exercised
Held at
30 June 2022
-
12,945,592
-
-
-
11,976,196
3,992,512
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at
1 July 2020
Granted as
compensation
Employee Share
Plan cancellations
3,000,000
-
12,945,592
-
-
-
11,976,196
3,992,512
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
3,000,000
-
-
-
-
-
-
12,945,592
-
-
-
11,976,196
3,992,512
Held at
30 June 2021
-
-
12,945,592
-
-
-
-
-
11,976,196
3,992,512
(e) Options over equity instruments held by key management personnel
There were no options on issue that were still to vest at the end of the reporting period.
72 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
22.
KEY MANAGEMENT PERSONNEL DISCLOSURES (CONT’D)
(f) Performance rights - LTIP held by key management personnel
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
Other Executives
PP Huizenga
TO Naude
Total
Held at
1 July 2021 Granted Exercised
Held at
30 June 2022
Vested and
exercisable at
30 June 2022
Vested and
unexercisable at
30 June 2022
-
-
-
-
-
-
-
-
2,179,724
-
-
1,001,092
585,468
3,766,284
-
-
-
-
-
-
-
-
2,179,724
-
-
1,001,092
585,468
3,766,284
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance rights- STIP held by key management personnel
Held at
1 July 2021 Granted Exercised
Held at
30 June 2022
Vested and
exercisable at
30 June 2022
Vested and
unexercisable at
30 June 2022
-
-
-
-
-
-
-
-
544,931
-
-
255,279
147,831
948,041
-
-
-
-
-
-
-
-
544,931
-
-
255,279
147,831
948,041
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2022
Directors
WA Foster
AC Cook
P Moore
SG Ryan
Executives
PP Huizenga
TO Naude
Total
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 73
NOTES TO THE FINANCIAL
STATEMENTS
23.
CONSOLIDATED ENTITIES AND JOINT VENTURE
Name
Company
Carnarvon Energy Ltd
Controlled entities
Carnarvon Thailand Ltd
Lassoc Pty Ltd1
SRL Exploration Pty Ltd1
Timor-Leste Petroleum Pty Ltd
Dorado Petroleum Pty Ltd
Carnarvon Bedout 1 Pty Ltd
Carnarvon Petroleum Timor Unip LDA
Carnarvon Future Energy Pty Ltd2
FutureEnergy Australia Pty Ltd2
1 Entities were deregistered during the period.
2 Entities were registered during the period.
Country of Incorporation
2022
2021
Ownership interest
Australia
British Virgin Islands
Australia
Australia
Australia
Australia
Australia
Timor-Leste
Australia
Australia
100%
-
-
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
50%
-
-
24.
SUBSEQUENT EVENTS
On 1 July 2022, the Company awarded 4,528,782 performance rights to KMP (other than the CEO) and
other employees under the company’s performance rights plan.
On 18 July 2022, the Company cancelled and settled in cash 948,041 vested performance rights relating
to the FY21 short term incentive plan, following the exercise of the performance rights on 5 July 2022.
On 15 August 2022, the regulator consented to the surrender of the WA-521-P permit by the Company.
Other than above, there is no other matters or circumstance which have arisen since 30 June 2022 that
in the opinion of the directors has significantly affected, or may significantly affect in future financial years:
(i) The Group’s operations; or
(ii) The results of those operations; or
(iii) The Group’s state of affairs
74 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
25.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit
risk and liquidity risk. This note presents qualitative and quantitative information about the Group’s
exposure to each of the above risks, their objectives, policies and procedures for managing risk, and
the management of capital. The Board of Directors has overall responsibility for the establishment and
oversight of the risk management framework.
The Group’s overall risk management approach focuses on the unpredictability of financial markets and
seeks to minimize the potential adverse effects on the financial performance of the Group. The Group
does not currently use derivative financial instruments to hedge financial risk exposures and therefore it
is exposed to daily movements in the international oil prices, exchange rates, and interest rates.
The Group uses various methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate, foreign exchange, and commodity price
risk and ageing analysis for credit risk.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor, and market
confidence and to sustain future development of the business. Given the stage of the Group’s
development there are no formal targets set for return on capital. There were no changes to the Group’s
approach to capital management during the year. Neither the Company nor any of its controlled entities
are subject to externally imposed capital requirements.
(a) Interest rate risk
The significance and management of the risks to the Group is dependent on a number of factors
including:
Interest rates (current and forward) and the currencies that are held;
Level of cash and liquid investments and their term;
•
•
• Maturity dates of investments;
•
Proportion of investments that are fixed rate or floating rate.
The Group manages the risk by maintaining an appropriate mix between fixed and floating rate
investments.
At the reporting date, the effective interest rates of variable rate interest bearing financial instruments of
the Group were as follows.
Carrying amount (A$000)
Financial assets – cash and cash equivalents
Weighted average interest rate (%)
Financial assets – cash and cash equivalents
All other financial assets and liabilities are non-interest bearing.
Consolidated
2022
2021
112,424
98,436
0.95%
0.21%
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 75
NOTES TO THE FINANCIAL
STATEMENTS
25.
FINANCIAL RISK MANAGEMENT (CONT’D)
Sensitivity analysis
An increase in 100 basis points from the weighted average year-end interest rates at 30 June would
have increased equity and profit and loss by the amounts shown below. This analysis assumes that all
other variables remain constant. The analysis was performed on 25 basis points for 2021:
30 June 2022
30 June 2021
Consolidated
Equity
$000
Profit and loss
$000
1,126
246
1,126
246
A decrease in 100 basis points from the weighted average year-end interest rates at 30 June would have
decreased equity and profit and loss by the amounts shown below. This analysis assumes that all other
variables remain constant. The analysis was performed on 25 basis points for 2021:
30 June 2022
30 June 2021
Consolidated
Equity
$000
Profit and loss
$000
(1,126)
(246)
(1,126)
(246)
(b) Credit risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a
financial loss to the Group and arises principally from the Group’s receivables from customers and cash
deposits.
The Group’s receivables are deposits. There were no receivables at 30 June 2022 or 30 June 2021 that
were past due.
Cash transactions are limited to financial institutions considered to have a suitable credit rating.
Exposure to credit risk is monitored on an ongoing basis. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the statement of financial position.
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The
Group’s maximum exposure to credit risk at the reporting date was:
Carrying amount:
Cash and cash equivalents
Other receivables
Consolidated
2022
$000
2021
$000
112,424
674
113,098
98,436
351
98,787
All cash held by the Group is deposited with investment grade banks and any expected credit loss is
immaterial.
76 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
25.
FINANCIAL RISK MANAGEMENT (CONT’D)
The aging of the Group’s other receivables at reporting date was:
Not past due
Gross 2022
$000
674
674
Impairment 2022
$000
-
-
Gross 2021
$000
351
351
Impairment 2021
$000
-
-
The Group trades only with recognised creditworthy third parties and the exposure to credit risk as at
balance date is not significant. The Group believes that no impairment allowance is necessary in respect
of other receivables.
(c) Currency risk
Currency risk arises from assets and liabilities that are denominated in a currency other than the
functional currencies of the entities within the Group, being the A$ and US$.
The Group does not currently use derivative financial instruments to hedge foreign currency risk and
therefore is exposed to daily movements in exchange rates. However, the Group intends to maintain
sufficient USD cash balances to meet its USD obligations.
The Group’s exposure to foreign currency risk at balance date was as follows, based on carrying
amounts.
30 June 2022
Cash and cash equivalents
Trade payables and accruals
Gross balance sheet exposure
30 June 2021
Cash and cash equivalents
Trade payables and accruals
Gross balance sheet exposure
USD
A$000
29,449
198
29,647
9,956
-
9,956
The following significant exchange rates applied during the year:
AUD to:
1 USD
Average rate
Reporting date spot rate
2022
1.3841
2021
1.337
2022
1.452
2021
1.332
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 77
NOTES TO THE FINANCIAL
STATEMENTS
25.
FINANCIAL RISK MANAGEMENT (CONT’D)
Sensitivity analysis
A 5% strengthening of the AUD against the USD for the 12 months to 30 June 2022 and 30 June 2021
would have decreased equity and pre-tax profit and loss by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain constant:
30 June 2022
USD
30 June 2021
USD
Consolidated
Equity
$000
Profit and loss
$000
(2,036)
(2,036)
(631)
(631)
A 5% weakening of the AUD against the USD for the 12 months to 30 June 2022 and 30 June 2021
would have increased equity and pre-tax profit and loss by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain constant:
30 June 2022
USD
30 June 2021
USD
Consolidated
Equity
$000
Profit and loss
$000
2,250
2,250
698
698
(e) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they
fall due. The Group’s approach to managing this risk is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due under a range of financial conditions. The Group’s
significant balance of cash and cash equivalents are considered to be adequately address this risk.
The Group currently does not have any available lines of credit.
The following are the contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of any netting agreements:
Carrying
amount
$000
Contractual
cash flows
$000
6 months
or less
$000
6 to 12
months
$000
30 June 2022
Non-derivative financial liabilities
Trade and other payables
30 June 2021
Non-derivative financial liabilities
Trade and other payables
78 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
2,234
2,234
2,234
1,111
1,111
1,111
-
-
26.
FAIR VALUE MEASUREMENT
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair
value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair
value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
30 June 2022
Assets
Other financial assets
Total assets
30 June 2021
Assets
Other financial assets
Total assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
557
557
Level 1
$’000
1,339
1,339
-
-
-
-
Level 2
$’000
Level 3
$’000
-
-
-
-
Total
$’000
557
557
Total
$’000
1,339
1,339
There were no transfers between levels during the financial year.
The carrying amounts of cash and cash equivalents, other receivables and trade and other payables
approximate their fair values due to their short-term nature.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 79
NOTES TO THE FINANCIAL
STATEMENTS
27.
PARENT INFORMATION
The following information has been extracted from the books and records of the parent and has been
prepared in accordance with the Australian accounting standards:
Statement of financial position
Current Assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued Capital
(Accumulated loss) /gain
Reserves
Total equity
2022
$000
2021
$000
113,139
159,878
273,017
1,457
573
2,030
314,096
(43,968)
859
270,987
99,515
159,657
259,172
1,914
846
2,760
246,268
10,674
(530)
256,412
Statement of comprehensive income
Total (loss)/ gain
(52,089)
19,677
Total comprehensive (loss)/gain
(52,089)
19,677
Parent Contingencies
In accordance with normal petroleum industry practice, Carnarvon has entered into joint arrangements
and farmin agreements with other parties for the purpose of exploring and developing its petroleum
permit interests. If a party to a joint operation defaults and does not contribute its share of joint
operation’s obligations, then the other joint operators may be liable to meet those obligations. In this
event, the interest in the permit held by the defaulting party may be redistributed to the remaining joint
operators.
(a) Exploration expenditure commitments
Due to the nature of Carnarvon’s operations in exploring and evaluating areas of interest it is necessary
to incur expenditure in order to retain Carnarvon’s present permit interests. Expenditure commitments
on exploration permits can be reduced by selective relinquishment of exploration tenure, by the
renegotiation of expenditure commitments, or by farming out portions of Carnarvon’s equity. Failure
to meet Joint Operation cash requirements may result in a reduction in equity in that particular Joint
Operation.
80 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
27.
PARENT INFORMATION (CONT’D)
Exploration expenditure commitments forecast but not provided for in the financial statements are as
follows:
Less than one year
Between one and five years
(b) Capital expenditure commitments
Data licence commitments
Parent
2022
$000
348
-
348
2021
$000
250
-
250
584
560
28.
CONTINGENT ASSETS AND LIABILITIES
There were no contingent assets and liabilities as at 30 June 2022 (2021: $0).
29.
BASIS OF PREPARATION OF THE FINANCIAL REPORT
(a) Statement of compliance
The financial report is a general purpose financial report prepared in accordance with Australian
Accounting Standards (“AASBs”), including Interpretations and other authoritative pronouncements of the
Australian Accounting Standards Board (“AASB”), and the Corporations Act 2001.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also
comply with International Financial Reporting Standards (“IFRSs”). Material accounting policies adopted in
the preparation of this financial report are presented below.
(b) Adoption of new and amended Accounting Standards
The accounting policies adopted are consistent with those of the previous financial year.
The consolidated entity has adopted all the new, revised or amended Accounting Standards and
Interpretations issued by the AASB that are mandatory for the current reporting period. Any new, revised
or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
(c) Basis of measurement
The financial report is prepared on a historical cost basis, except for financial assets which are measured
at fair value.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 81
NOTES TO THE FINANCIAL
STATEMENTS
29.
BASIS OF PREPARATION OF THE FINANCIAL REPORT (CONT’D)
(d) Functional currency
The functional currency of each of the group’s entities is measured using the currency of the primary
economic environment in which that entity operates (the “functional” currency). The consolidated
financial statements are presented in Australian dollars which is the Company’s functional and
presentation currency.
(e) Use of estimates and judgements
The preparation of the financial report requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and
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.
Exploration and evaluation expenditures
The application of the Company’s accounting policy for exploration and evaluation expenditure
requires judgement to determine whether it is likely that future economic benefits are likely, from future
either exploitation or sale, or whether activities have not reached a stage which permits a reasonable
assessment of the existence of reserves. This requires management to make certain estimates and
assumptions as to future events and circumstances, in particular, whether an economically viable
extraction operation can be established. Any such estimates and assumptions may change as new
information becomes available.
If, after expenditure is capitalised, information becomes available suggesting that the recovery of the
expenditure is unlikely, the relevant capitalised amount is written off in profit or loss in the period when
the new information becomes available.
Key judgement – functional currency
The determination of the functional currency of the Company’s controlled entities requires consideration
of a number of factors. These factors include the currencies that primarily influence their sales and costs
and the economic environment in which the entities operate.
Key judgement – joint control
The determination of whether the Company has joint control, in relation to a joint arrangement, requires
consideration of contractual arrangements. The Company must determine if there is a contractually
agreed sharing of control, which only exists when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
(f) Rounding Off
The Company is an entity of the kind referred to in the Australian Securities and Investments Commission
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016. As
a result, amounts in the financial report and directors’ report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
82 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in the
consolidated financial report. The accounting policies have been applied consistently by all entities in
the Group.
(a) Basis of consolidation
Controlled entities
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries
as at 30 June 2022. Control is achieved when the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its power over
the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
•
•
•
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has power over an
investee, including:
•
•
•
The contractual arrangement(s) with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the date the Group gains control until the
date the Group ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group
and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised at fair value.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 83
NOTES TO THE FINANCIAL
STATEMENTS
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Joint Operations
The Group’s share of the assets including its share of any assets held jointly, liabilities including its share
of any liabilities incurred jointly, revenue from the sale of its share of the output arising from the joint
operation and share of revenue from the sale of output by the joint operation and expenses, including
its share of any expenses incurred jointly, have been included in the appropriate line items of the
consolidated financial statements. Details of the Group’s interests are provided in Note 13.
Joint Ventures
The Group’s investments in joint ventures are accounted for using the equity method. Details of the
Group’s interests in joint ventures are provided in Note 14.
(b) Income tax
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the reporting date in the countries where the Group operates
and generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the
statement of profit or loss. Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
•
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss
In respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint arrangements, when the timing of the reversal of the temporary differences can
be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of
unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences, and the
carry forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial
•
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss
In respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint arrangements, deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting
date and are recognised to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
84 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in
equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
recognition at that date, are recognised subsequently if new information about facts and circumstances
change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed
goodwill) if it was incurred during the measurement period or recognised in profit or loss.
Tax consolidation
Carnarvon Energy Limited and its wholly-owned Australian-resident controlled entities formed a tax-
consolidated group with effect from 1 July 2003 and are therefore taxed as a single entity from that date.
Carnarvon Energy Limited is the head entity of the tax-consolidated group.
(c) Property, plant and equipment
Recognition and measurement
All property, plant and equipment is stated at cost less accumulated depreciation and impairment losses.
The cost of an item also includes the initial estimate of the costs of dismantling and removing an item
and restoring the site on which it is located. Such amounts are determined based on current costs.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred.
Impairment
The carrying amount of property, plant and equipment is reviewed at each balance date to determine
whether there are any objective indicators of impairment that may indicate the carrying values may not
be recoverable in whole or in part.
Where an asset does not generate cash flows that are largely independent it is assigned to a cash
generating unit and the recoverable amount test applied to the cash generating unit as a whole.
If the carrying value of the asset is determined to be in excess of its recoverable amount, the asset or
cash generating unit is written down to its recoverable amount.
Depreciation
Depreciation on property, plant and equipment is calculated on a straight-line basis over expected
useful life to the economic entity commencing from the time the asset is held ready for use. The major
depreciation rates used for all classes of depreciable assets are:
Property, plant and equipment:
10% to 33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at least annually.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in the income statement.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 85
NOTES TO THE FINANCIAL
STATEMENTS
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Exploration and evaluation
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the extent that the Group’s rights of tenure to the area
are current and that the costs are expected to be recouped through the successful development of the
area, or where activities in the area have not yet reached a stage that permits reasonable assessment of
the existence of economically recoverable reserves.
Each area of interest is assessed for impairment to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. Impairment testing is carried out in accordance with Note
30(e).
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in
which the decision to abandon the area is made.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of
interest are demonstrable, exploration and evaluation costs attributable to that area of interest are first
tested for impairment and then reclassified from exploration and evaluation to oil and gas assets.
The Company does not record any expenditure made by the farmee on its account. It also does not
recognise any gain or loss on its exploration and evaluation farm-out arrangements but redesignates any
costs previously capitalised in relation to the whole interest as relating to the partial interest retained.
Any cash consideration received directly from the farmee is credited against costs previously capitalised
in relation to the whole interest with any excess accounted for by the farmor as a gain on disposal.
(e) Recoverable amount of non-financial assets and impairment testing
Assets that are subject to depreciation are reviewed annually to determine whether there is any
indication of impairment. Where such an indicator exists, a formal assessment of recoverable amount is
then made. Where this is less than carrying amount, the asset is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or cash generating unit. In
estimating value in use, a pre-tax discount rate is used which reflects the current market assessments of
the time value of money and the risks specific to the asset. Any resulting impairment loss is recognised
immediately in the income statement.
For the purposes of impairment testing assets are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or groups of assets.
(f) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can
be reliably measured. Provisions are determined by discounting the expected future cash flows at a
pre-tax discount rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
86 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(g) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. The Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument
level.
The Group’s business model for managing financial assets refers to how it manages its financial assets
in order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
•
•
•
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and
losses upon
derecognition (equity instruments)
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if
both of the following conditions are met:
•
•
The financial asset is held within a business model with the objective to hold financial assets in order
to collect contractual cash flows and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes other receivables.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 87
NOTES TO THE FINANCIAL
STATEMENTS
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial
assets designated upon initial recognition at fair value through profit or loss, or financial assets
mandatorily required to be measured at fair value. Financial assets are classified as held for trading
if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as held for trading unless they are designated as
effective hedging instruments. Financial assets with cash flows that are not solely payments of principal
and interest are classified and measured at fair value through profit or loss, irrespective of the business
model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value
through OCI, as described above, debt instruments may be designated at fair value through profit or loss
on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair
value with net changes in fair value recognised in the statement of profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial
position) when:
•
•
The rights to receive cash flows from the asset have expired or
The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-
through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards
of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and the maximum amount of consideration that the
Group could be required to repay.
88 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Impairment of financial assets
Expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss will be
recognised through an allowance. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group expects to receive, discounted
at an approximation of the original effective interest rate. The expected cash flows will include cash flows
from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default
events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default
(a lifetime ECL).
The Group considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when internal or
external information indicates that the Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the Group. A financial asset is written off
when there is no reasonable expectation of recovering the contractual cash flows.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
The Group’s financial liabilities include trade and other payables.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit or loss.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 89
NOTES TO THE FINANCIAL
STATEMENTS
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Segment reporting
The Group reports one segment, oil and gas exploration, development and production, to the chief
operating decision maker, being the board of Carnarvon Energy Limited, in assessing performance and
determining the allocation of resources. The segment operations and results are the same as those
reported in the Group financial statements.
Unless otherwise stated, all amounts reported to the chief operating decision maker are determined
in accordance with accounting policies that are consistent to those adopted in the annual financial
statements of the Group.
From management purposes, the Group has identified only one reportable segment, being offshore
exploration activities undertaken in Australia. This segment includes activities associated with the
determination and assessment of the existence of commercial resources, from the Group’s permits in this
geographic location.
(i) Foreign currency
Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary
economic environment in which that entity operates (the “functional” currency). The consolidated
financial statements are presented in Australian dollars which is the Company’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing
at the date of the transaction. Foreign currency monetary assets and liabilities are translated at the
exchange rate at balance date. Non-monetary items measured at historical cost continue to be carried at
the exchange rate at the date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in the income
statement, except where deferred in equity as a qualifying cash flow or net investment hedge.
Foreign operations
The financial performance and position of foreign operations whose functional currency is different from
the Group’s presentation currency are translated as follows:
•
•
assets and liabilities are translated at exchange rates prevailing at balance date
income and expenses are translated at average exchange rates for the period
Exchange differences arising on translation of foreign operations are transferred directly to the
group’s foreign currency translation reserve as a separate component of equity. These differences are
recognised in the income statement upon disposal of the foreign operation.
(j) Share capital
Incremental costs directly attributable to an equity transaction are shown as a deduction from equity, net
of any recognised income tax benefit.
90 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(k) Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits.
Share based payments
Share based compensation has been provided to eligible persons via the Carnarvon current Employee
Share Plan (“ESIP”), by the award of performance rights. Share based compensation has also been
provided under the former Employee Share Plan (“ESP”), financed by means of interest-free limited
recourse loans. Under AASB 2 “Share-based Payments”, the both ESIP and ESP shares are deemed to
be equity settled, share-based remuneration.
The fair values of the performance rights granted under the ESIP are recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at the grant date
and recognised over the period during which the employee becomes unconditionally entitled to the
performance rights.
Under the ESP, for limited recourse loans and share options issued to eligible persons, the Group is
required to recognise within the income statement a remuneration expense measured at the fair value of
the shares inherent in the issue to the eligible person, with a corresponding increase to a share-based
payments reserve in equity. The fair value is measured at grant date and recognised when the eligible
person become unconditionally entitled to the shares, effectively on grant. A loan receivable is not
recognised in respect of plan shares issued.
The fair value at grant date under the Former and Current ESP is determined using pricing models that
factors in the share price at grant date, the expected price volatility of the underlying share, the expected
dividend yield, and the risk free rate for the assumed term of the plan. With respect to plan shares under
the Former ESP, upon repayment of the ESP loans, the balance of the share-based payments reserve
relating to the loan repaid is transferred to issued capital.
(l) Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) for its ordinary shares.
Basic EPS is calculated by dividing the profit attributable to equity holders of the Company by the
weighted number of shares outstanding during the period.
Diluted EPS 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 potential ordinary shares,
which comprise share options issued.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 91
NOTES TO THE FINANCIAL
STATEMENTS
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and deposits held at call with banks.
(n) Goods and services tax
Revenues, 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 Australian Tax Office. 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 in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
(o) Finance income and expenses
Interest revenue on funds invested is recognised as it accrues, using the effective interest rate method.
Finance expenses comprise interest expense on borrowings and the unwinding of the discount on
provisions.
(p) Investment in joint ventures
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those
necessary to determine control over subsidiaries. The Group’s investment in its joint venture is
accounted for using the equity method.
Under the equity method, the investment in a joint venture is initially recognised at cost.
The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net
assets of the joint venture since the acquisition date.
92 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
30.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(q) New Accounting Standards for Application in Future Periods
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting
period ended 30 June 2022. The consolidated entity’s assessment of the impact of these new or
amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out
below:
Reference
Title
Summary
Impact
on the
Company
Application
date of
standard
Application
date for
Group
1 January
2022
1 July 2022
1 January
2022
1 July 2022
There is
no material
impact
on the
Company.
There is
no material
impact
on the
Company.
1 January
2023
1 July 2023
The
Company
is still
assessing
the impact.
AASB 2020-3
Amendments
to IAS 37
Costs of
Fulfilling a
Contract
AASB 2020-3
Amendments
to IAS16
Property,
Plant and
Equipment:
Proceeds
before
Intended Use
AASB 2021-5
Amendments
to Australian
Accounting
Standards
Deferred Tax
related to
Assets and
Liabilities
arising from
a Single
Transaction
The amendments to AASB 137
Provisions, Contingent Liabilities and
Contingent Assets specify that the
‘cost of fulfilling’ an onerous contract
comprises the ‘costs that relate directly
to the contract’. Costs that relate directly
to a contract can either be incremental
costs of fulfilling that contract and an
allocation of other costs that relate
directly to fulfilling contracts.
The amendment prohibits entities from
deducting from the cost of an item of
property, plant and equipment (PP&E),
any proceeds of the sale of items
produced while bringing that asset to
the location and condition necessary
for it to be capable of operating in the
manner intended by management.
Instead, an entity recognises the
proceeds from selling such items, and
the costs of producing those items, in
profit or loss.
The amendments clarify that where
payments that settle a liability are
deductible for tax purposes, it is a
matter of judgement (having considered
the applicable tax law) whether such
deductions are attributable for tax
purposes to the liability recognised in
the financial statements (and interest
expense) or to the related asset
component (and interest expense). This
judgement is important in determining
whether any temporary differences exist
on initial recognition of the asset and
liability.
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 93
DIRECTORS’ DECLARATION
(1)
In the opinion of the directors of Carnarvon Energy Limited:
(a)
the financial statements and notes of the Group set out on pages 49 to 93 are in accordance with the
Corporations Act 2001 (Cth), including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
performance for the year ended on that date; and
(ii) Complying with Accounting Standards and the Corporations Regulations 2001; and
(b) The financial statements and notes comply with International Financial Reporting Standards as set out in
Note 30; and
(c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors by the
chief executive officer and chief financial officer in accordance with section 295A of the Corporations Act
2001 for the financial year ended 30 June 2022.
Signed in accordance with a resolution of the directors.
William A Foster
Chairman
Perth, 31 August 2022
94 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
INDEPENDENT
AUDIT REPORT
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Carnarvon Energy
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Carnarvon Energy Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated income statement and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated statement of financial position of the Group as at
30 June 2022 and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 are independent of the Group in accordance with the auditor
independence requirements of 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 (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For the matter below, our description of how our audit addressed
the matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:LT:CARNARVON:012
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 95
INDEPENDENT
AUDIT REPORT
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to this matter. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matter below, provide the basis for our audit opinion on the accompanying
financial report.
1. Carrying value of capitalised exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
As disclosed in Note 12 to the financial report,
the Group held capitalised exploration and
evaluation expenditure of $157,263,000 as at
30 June 2022.
Under AASB 6 Exploration for and Evaluation of
Mineral Resources, the recoverability of
exploration and evaluation assets is subject to
the Group’s ability and intention to continue to
explore and evaluate such assets. The carrying
value may also be impacted by the results of
exploration and evaluation work indicating that
the reserves may not be commercially viable for
extraction. This creates a risk that the amounts
stated in the financial report may not be
recoverable, and therefore this was considered to
be a key audit matter.
Our audit procedures included the following:
•
•
•
•
•
We considered the Group’s right to explore in the
relevant exploration area which included
obtaining and assessing supporting
documentation such as license agreements.
We considered the Group’s intention to carry out
significant exploration and evaluation activity in
the relevant exploration area which included an
assessment of the Group's future cash flow
forecasts and enquiries of management and the
Board of Directors as to the intentions and
strategy of the Group.
We assessed management’s assertion that
activities have not yet progressed to a point that
a determination of the existence of economically
recoverable reserves can be made, through
discussion with management, review of company
announcements and review of minutes of
directors’ meetings.
We assessed the directors’ review of the carrying
value of exploration and expenditure, ensuring
there was consideration of the effect of potential
indicators of impairment.
We assessed the adequacy of the financial
report disclosures contained in Note 12 of the
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
96 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon. We obtained the chairman’s review, managing director’s review,
operating and financial review and the director’s report that are to be included in the annual report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express 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
and, in doing so, 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 97
INDEPENDENT
AUDIT REPORT
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 31 to 43 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Carnarvon Energy Limited for the year ended 30 June
2022, complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
98 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
T S Hammond
Partner
Perth
31 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 99
ADDITIONAL SHAREHOLDER
INFORMATION
Additional information required by the ASX Limited (“ASX”) Listing Rules and not disclosed elsewhere in this
report is set out below.
a)
Shareholdings as at 29 August 2022
Substantial shareholders
Name of Shareholder
Collins St Asset Management ATF Collins St Value Fund
Number of Shares
123,503,973
Date of Notice
18 August 2022
Unmarketable Parcels
Minimum $500.00 parcel at $0.16 per unit
Minimum Parcel Size
3,125
Holders
2,183
Units
3,493,683
Voting Rights
The voting rights attaching to Ordinary Shares are governed by the Constitution. On a show of hands every
person present who is a member or representative of a member shall have one vote and on a poll, every
member present in person or by proxy or by attorney or duly authorised representative shall have one vote
for each share held. No options have any voting rights.
Twenty Largest Shareholders
Name of Shareholder
Sandhurst Trustees Ltd
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Marford Group Pty Ltd
Nero Resource Fund Pty Ltd
Havannah Investments Pty Ltd
Brixia Investments Ltd
Prettejohn Projects Pty Ltd
Mr Philip Paul Huizenga
Mr Adrian Caldwell Cook Ms Belinda Michelle Honey
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Treasury Services Group Pty Ltd
Pullington Investments Pty Ltd
Mr Edward Patrick Jacobson
47 Eton Pty Ltd
Jacobson Geophysical Services Pty Ltd
Number of Shares
123,503,973
115,862,189
115,853,618
61,693,898
31,060,802
29,393,928
28,094,181
23,000,000
21,242,562
16,710,037
13,261,000
12,500,000
11,876,196
11,520,592
10,595,414
10,000,000
9,752,590
9,522,482
9,100,000
8,754,068
673,297,530
% held
6.86
6.44
6.44
3.43
1.73
1.63
1.56
1.28
1.18
0.93
0.74
0.69
0.66
0.64
0.59
0.56
0.54
0.53
0.51
0.49
37.40
100 CARNARVON ENERGY LIMITED 2022 ANNUAL REPORT
Distribution of equity security holders
Size of Holding
1
1,001
5,001
10,001
100,001
to
to
to
to
and over
1,000
5,000
10,000
100,000
b) Option holdings as at 30 August 2022
There are no current option holdings.
c) On-market buyback
There is no current on-market buyback.
d)
Schedule of permits
Number of
shareholders
638
2,625
1,976
5,618
1,946
12,803
Number of
fully paid shares
233,396
7,931,884
16,288,654
222,799,324
1,552,933,646
1,800,186,904
PERMIT
WA-435-P,
WA-437-P
WA-436-P,
WA-438-P
WA-64-L
TL-SO-T
19-14 PSC
WA-155-P
WA-521-P
WA-523-P
AC-P62
AC-P63
EP509
TP29
BASIN/COUNTRY
Roebuck / Australia
Roebuck / Australia
Roebuck / Australia
Bonaparte /
Timor-Leste
Carnarvon / Australia
Roebuck / Australia
Bonaparte / Australia
Bonaparte / Australia
Bonaparte / Australia
Carnarvon / Australia
Carnarvon / Australia
JOINT VENTURE PARTNERS
Carnarvon
Santos Limited
Carnarvon
Santos Limited
Carnarvon
Santos Limited
Carnarvon
EQUITY %
20%
80%
30%
70%
20%
80%
100%
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
100%
100%
100%
100%
100%
100%
100%
OPERATOR
Santos Limited
Santos Limited
Santos Limited
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
Carnarvon
2022 ANNUAL REPORT CARNARVON ENERGY LIMITED 101
www.carnarvon.com.au