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Cooper Energy Limited
ABN 93 096 170 295
Reporting Period,
Terms and Abbreviations
Annual Report
This document has been prepared to
provide shareholders with an overview
of Cooper Energy Limited’s performance
for the 2013 financial year and its
outlook. The Annual Report is mailed
to shareholders who elect to receive a
copy and is available free of charge on
request (see Shareholder Information
printed in this Report).
The Annual Report and other
information about the company can
be accessed via the company’s website
at www.cooperenergy.com.au
Notice of Meeting
The 2013 Annual General Meeting
of Cooper Energy Limited will
be held on Thursday November 7,
commencing at 10.00 a.m.
in the Victoria Room, Ground Floor,
Hilton Adelaide, 233 Victoria Square,
Adelaide, South Australia.
A formal Notice of Meeting has been
mailed to shareholders. Additional
copies can be obtained from
the company’s registered office
or downloaded from its website at
www.cooperenergy.com.au
Abbreviations and terms
This Report uses terms and abbreviations
relevant to the company, its accounts
and the petroleum industry.
The terms “the company” and “Cooper
Energy” and “the Group” are used
in this report to refer to Cooper Energy
Limited and/or its subsidiaries. The
terms “2013”, FY13 or “2013 financial
year” refer to the 12 months ended
30 June 2013 unless otherwise stated.
References to “2012”, FY12 or other
years refer to the 12 months ended
30 June of that year.
Other abbreviations
bbls: barrels of oil
boe: barrels of oil equivalent
bopd: barrels of oil per day
E&D: exploration and development
FV: fair value
MM: million
MMbbl: million barrels of oil
MMboe: million barrels of oil equivalent
2P reserves: proved and possible
reserves
$: Australian dollars
P&A: plugged and abandoned
PSC: production sharing contract
KSO: Kerjasama Operasi, an Indonesian
joint operation
Front cover image:
wireline logs from the Cooper Basin
Corporate Directory
Directors
John C Conde Ao, Chairman
Hector M gordon
David p Maxwell
Jeffery W Schneider
laurence J Shervington
Alice J M Williams
Company Secretary
Alison n Evans
Registered Office and Business Address
level 10, 60 Waymouth Street
Adelaide, South Australia 5000
telephone: + 618 8100 4900
Facsimile: + 618 8100 4997
E-mail: customerservice@cooperenergy.com.au
Website: www.cooperenergy.com.au
Auditors
Ernst & young
121 King William Street
Adelaide, South Australia, 5000
Solicitors
Squire Sanders
level 21, 300 Murray Street
perth WA 6000
Bankers
Westpac Banking Corporation
level 18, 91 King William Street
Adelaide, South Australia, 5000
national Australia Bank limited
level 2, 22 King William Street
Adelaide, South Australia, 5000
Commonwealth Bank of Australia
level 8, 100 King William Street
Adelaide, South Australia, 5000
Citibank n.A.
2 park Street
Sydney, new South Wales 2000
Share Registry
Computershare Investor Services pty limited
level 2, reserve Bank Building
45 St georges terrace
perth, Western Australia 6000
Website: investorcentre.com/au
telephone:
Australia 1300 655 248
International +61 3 9415 4887
Facsimile: +61 3 9473 2500
Our Company
Cooper Energy is an ASX-listed exploration and production company
that produces approximately 500,000 barrels of oil per annum
and conducts exploration for oil and gas from a portfolio comprising
prospective acreage in the Cooper, Otway and Gippsland basins
Australia, South Sumatra, Indonesia and the Gulf of Hammamet, Tunisia.
The company has a commercial focus, with a strategy that requires:
• due care for health, safety, and the environment in which Cooper
Energy operates
• a focus on hydrocarbon resources and opportunities that possess
the strong economic fundamentals that permit superior total returns
for its shareholders and good commercial outcomes for customers
• concentration of effort and resources on those opportunities
where it has deep knowledge and expertise, principally being the
Australian basins and the commercialisation of gas.
Key figures:
Financial $ million 12 months ended 30 June 2013
Annual Revenue
Statutory net profit after tax
Underlying net profit after tax
Cash & Investments
Operations (million barrels)
Reserves (Proved & Probable)
Annual production
Share information
Shares on issue (million)
Market capitalisation ($ million)1
1As at 18 September 2013
53.4
1.3
12.7
68.1
2.16
0.49
329.1
133
1
AUSTRALIAINDONESIAOtway BasinGulf of HammametTUNISIACooper BasinTunis OfficeJakarta OfficeSouth SumatraAdelaide OfficeGippsland Basin
2013 Year in Brief
Financial results
– Sales revenue of $53.4 million down from
$59.6 million due to lower sale volumes and prices
– Statutory net profit after tax of $1.3 million
down from $8.4 million
– Significant non-operating items of $(11.4) million
– Underlying net profit after tax of $12.7 million
down from $14.0 million
– Cash and investments of $68.1 million
at balance date
Operations
– Production of 0.49 million barrels of oil down from
0.52 million barrels
– Proved and Probable Reserves of 2.16 million barrels
up from 1.88 million barrels
– 2 new oil field discoveries
Portfolio and corporate development
– New acreage added in Indonesia and Gippsland Basin
– Exploration portfolio increased to 110 MMboe
(risked basis)
– Decision to divest Tunisian acreage
– Establishment of $40 million finance facility, subject
to conditions precedent
2
Statutory Profit
$ million FY08 FY09 FY10 FY11 FY12 FY13
10
8
6
4
2
0
-2
-4
-6
-8
-10
8.4
1.2
1.3
6.4
-2.8
-10.3
EBITDA
$ million FY08 FY09 FY10 FY11 FY12 FY13
30
27.0
22.7
25
20
15
10
5
0
-5
15.7
8.0
5.2
-5.6
Production
MMbbl FY08 FY09 FY10 FY11 FY12 FY13
0.52
0.49
0.49
0.47
0.41
0.38
0.6
0.5
0.4
0.3
0.2
0.1
0
Proved and Probable Reserves
MMbbl FY08 FY09 FY10 FY11 FY12 FY13
2.47
2.00
1.91
1.88
2.16
1.44
2.5
2.0
1.5
1.0
0.5
0
12 months to 30 June
FY08
FY09
FY10
FY11
FY12
FY13
Key Performance Indicators
Operational
Wells drilled
Exploration wells drilled
Exploration success rate
number
number
percent
Cumulative exploration success rate
percent
Annual Production
MMbbl
Proved plus Probable recoverable oil
MMbbl
Financial
Oil sales revenue
Other revenue
EBITDAX
EBITDA
Profit before tax
Profit after tax
Cash & term deposits
Investments available for sale
Working capital
Accumulated profit
Cumulative franking credits
Shareholders equity
Earnings per share
Return on shareholders funds
Capital as at 30 June
Share price
Issued shares
Market capitalisation
Shareholders
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
cents
percent
$ per share
million
$ million
number
1 One well spudded in 2013, Hammamet West-3, is still to be tested
13
6
17%
21%
0.38
1.44
45.0
3.7
27.3
15.7
15.3
6.4
64.6
-
73.6
26.0
9.3
115.5
2.9
5.5%
0.465
252.3
117.3
7,345
7
5
60%
30%
0.49
1.91
41.6
4.2
25.7
5.2
5.0
-2.8
93.4
-
96.5
23.2
17.7
123.3
-1.0
-2.3%
0.45
291.9
131.4
7,596
4
4
0%
27%
0.47
2.00
40.0
4.3
21.3
8.0
7.2
1.2
92.5
-
95.4
24.4
25.7
125.1
0.4
1.0%
0.37
292.6
108.3
6,537
12
6
0%
23%
0.41
2.47
39.1
5.1
17.9
-5.6
-5.5
-10.3
72.4
-
79.5
14.1
31.4
114.9
-3.5
-0.1
0.36
292.6
105.3
5,573
10
6
50%
27%
0.52
1.88
59.6
4.7
28.8
27.0
21.0
8.4
61.5
13.2
53.4
22.5
37.0
136.9
2.8
6.1%
0.45
327.3
147.3
5,485
13
8
25%1
26%
0.49
2.16
53.4
2.3
24.2
22.7
18.3
1.3
47.9
20.2
51.7
23.8
39.0
137.2
0.4
0.7%
0.375
329.1
123.4
5,284
3
Chairman’s Report
John Conde AO
Dear Shareholder,
I am pleased to present your company’s 2013
Annual Report, the first since I joined the Cooper
Energy board of directors in February 2013.
First, and importantly, I record on behalf of
shareholders, our appreciation for the service
given to the company by my predecessor,
Laurie Shervington. Under his guidance, your
company has grown, navigated challenges and
uncertainty and emerged financially strong and
with a clear and focussed strategy for growth.
My appointment, and that of Alice
Williams announced subsequent to year-
end, has completed a board transition
process that has run parallel to the
company transition process commenced
in November 2011 as part of the
organisational changes implemented by
your board to improve the opportunities
for our strategic development.
The company’s focus on shareholder
return, balancing risk and reward, is
reflected in its strategic focus on Australia
as its principal source of growth and
the decision during the year to divest
its Tunisian assets at an appropriately
opportune time.
Giving effect to this decision will require
careful consideration; the acreage
held by Cooper Energy offshore Tunisia
is considerable and includes some
valuable exploration and development
opportunities. Your board is resolved that
your company’s capital and resources
be applied such that shareholders are
able to realise the optimal sustainable
total return from their investment. There
is further discussion on the divestment
of the Tunisian portfolio in the Managing
Director’s report.
Cooper Energy’s focus on opportunities
in the Australian energy sector has
come at a time of great change and
opportunity for exploration and production
companies. Our strong financial position
and management capabilities mean your
company is well placed to benefit from
these changes and opportunities while
carefully managing the risks inherent in
our industry.
Reserves have been increased, and
production is expected to rise to record
levels in 2014. In addition to the strong
underlying performance of the Cooper
Basin, the Australian portfolio has been
developed further, with encouraging
results in the Otway Basin licences and
conditional agreement to participate in
two offshore Gippsland Basin permits.
Both of these regions offer advantages for
gas development, being located adjacent
to existing gas infrastructure and coming
at a time when new gas supplies are
being actively sought.
The company’s work in 2013 has
expanded the inventory of prospects and
leads, and the quantum of contingent
resources, within its acreage. This has
positioned Cooper Energy to offer its
shareholders exposure to a range of value
uplift opportunities in the coming years
through developments in the eastern
Australian oil and gas sector, Indonesian
oil and gas and the monetisation of its
Tunisian exploration acreage.
The Company has retained focus on
its core permits and the key to financial
strength: its Cooper Basin acreage
and production assets. Cooper Basin
4
exploration continues to yield new
discoveries, gross margins remain high
and development work supports a
positive production outlook.
I thank those employees in Perth who, as
a result of the move, have either ceased
or are about to cease their service with
the company.
Cooper Energy’s task is to translate its
strong position and opportunities into an
appropriate performance and return to
its shareholders.
The statutory profit for the year of
$1.3 million after tax includes a net
$(11.4) million for significant non-
operational items, the major element
of which was $(11.0) million relating to
deferred tax in respect of the Petroleum
Resource Rent Tax. The underlying
profit after tax, exclusive of these items,
of $12.7 million is more representative
of the company’s performance during
the year. In comparison, Cooper
Energy recorded an underlying profit
of $14.0 million in the previous year.
The balance sheet remains strong,
with cash and investments of
$68.1 million at balance date. Financial
resources available to the company
were supplemented subsequent to year-
end with the addition of bank finance
facilities, consistent with our corporate
development and strategy.
Board
Ms Alice Williams has been appointed
to the board, pending election by
shareholders at the forthcoming Annual
General Meeting. Ms Williams brings
extensive experience as a senior executive
and non-executive director with skills
in accounting, financial analysis and
management and as an advisor to major
Australian and international corporations
and government.
Your board is committed to ensuring that
Cooper Energy discharges its corporate
governance and continuous disclosure
obligations fully and unequivocally.
The company’s corporate governance
framework and practices are detailed in
the Corporate Governance Statement
commencing on page 41 of this report
and on the company web site.
Management
The Cooper Energy transition process
has seen the company relocate its
corporate office from Perth to Adelaide.
This relocation has been achieved without
significant disruption, which is a credit
to the staff involved in both locations.
I am pleased to report that the company
has established a team in Adelaide which
brings the strong technical capabilities
and sound record of experienced delivery
that are appropriate for its strategy and
opportunities. On behalf of shareholders
I thank them for their efforts in 2013
and extend our encouragement for a
successful 2014.
John Conde AO
Chairman
Laurie Shervington
Laurie Shervington was first appointed a non-executive director of the
company in October 2003 and was appointed Chairman in November 2004.
He stepped down from the role in February 2013, marking the completion
of the succession process he announced to shareholders at the 2011 Annual
General Meeting. Under his leadership, Cooper Energy grew from small
beginnings in the Cooper Basin; pursued exploration opportunities in Australia
and internationally; and built a high margin production foundation.
Over the last two years Laurie has guided Cooper Energy through a period of
significant change as it moves the strategy and focus to be consistent with
the company’s strengths. At all times through this process Laurie has ensured
that good governance and shareholder interests have been key inputs to any
decisions taken by the board.
Laurie Shervington will not stand for re-election as a director at the 2013
Annual General Meeting. On behalf of all shareholders, the board and
management thank Laurie for his invaluable contribution to Cooper Energy.
5
Managing Director’s Report
David Maxwell
In last year’s report, my first as Managing
Director of your company, I outlined how
Cooper Energy’s strategy was changing. Under
this strategy, your company would leverage
and align its core strengths and management
capabilities so that shareholder returns could
be sustainably improved as Cooper Energy
increased participation in opportunities in the
Australian energy market.
This year, I can report that Cooper Energy
has nearly completed the process of
re-orientation and restructuring required
to implement this change. Moreover,
the Company is now implementing the
initiatives under this strategy that seek
to add new business, earnings and
shareholder value to Cooper Energy.
Your company enters the 2014 financial
year in a sound position and possessing
financial and hydrocarbon resources,
acreage and technical capabilities with
the potential to generate significant growth
in the short to medium term:
– reserves have been increased by 15%
to 2.16 million barrels;
– the balance sheet remains strong with
net cash of $47.9 million, supported by
investments of $20.2 million;
– overhead costs have been reduced
through the relocation of the corporate
office to Adelaide. The relocation has
also enabled the company to assemble
a small team of professional technical
staff with deep knowledge and
experience in Cooper Energy’s areas
of focus;
– production is expected to increase by
10% or more on the 2013 level;
– the risked prospects and leads inventory
has been materially upgraded; and
– the company can look forward to
evaluating and pursuing exploration
and corporate opportunities that hold
the potential to significantly expand
its involvement in the Australian
energy market.
As the Chairman has noted, the strategy
being pursued by the board and
management is directed to the delivery
of sustained and attractive total return
for shareholders over time. This starts
with building the right foundation assets
and assembling management with the
appropriate skills – both of which were
advanced in 2013.
Shareholder value is one of two
governing objectives for the Cooper
Energy strategy – the other being health,
safety, environment and community
(HSEC) – which I think of as “care”.
In the past year we had one reportable
safety incident and no reportable
environmental incidents. Importantly,
under the guidance of the Executive
Director – Exploration and Production
(Hector Gordon) we have updated our
HSEC systems and procedures to better
measure our performance and pursue
continual improvement as our business
grows. It is pleasing to report that the
Indonesian operations recorded 1 million
man hours during the year without
a lost time injury. This is a significant
achievement for a developing team.
Financial results
Statutory profit after tax of $1.3 million
for the 2013 financial year compares
with $8.4 million in the previous year.
Both results were impacted by significant
non-operating items and, exclusive
of these items, the company recorded
an underlying net profit after tax of
$12.7 million in 2013 which compares
with $14.0 million in the previous year.
6
In essence, the movement in underlying
profit is attributable to the deferment of
some Cooper Basin oil production due to
transportation issues in the first half, a
lower average oil price and reduced
interest income in 2013. Detailed
discussion and analysis of the financial
results, including reconciliation between
statutory and underlying profit is included
in the Operating and Financial Review that
commences from page 22 of this report.
Production
Total production for 2013 was 0.49 million
barrels, a level only exceeded by the
company in 2012 when 0.52 million
barrels were produced. The movement is
largely due to disruption to the Tantanna
to Moomba oil pipeline in the Cooper
Basin in June 2012. Oil production was
transported by truck until the new
Lycium to Moomba pipeline commenced
operations in December 2012. Not-
withstanding the transport disruptions,
production trended positively over the
course of the year and finished with strong
output levels from both the Cooper Basin
and Indonesian operations.
Exploration and development
The 2013 exploration program achieved
its objectives overall. Proved and Probable
Reserves added through drilling and
evaluation more than replaced production
for the year. The Cooper Basin portfolio,
principally PEL 92, continued to return
high success rates with new oil field
discoveries at Windmill and Rincon
North and valuable additions from
development drilling.
Since early 2012 Cooper Energy has
expanded its efforts in Australia outside
the Cooper Basin and this has resulted in
some new opportunities – particularly in
the Otway Basin and the Gippsland Basin.
In the Otway Basin, Sawpit-2 provided
strong encouragement for further
investigation of the unconventional
gas potential which is well located with
respect to gas transport infrastructure
and available markets. Further evaluation
and drilling of the Otway Basin
opportunities is planned for 2014.
In Indonesia, analysis has reinforced the
potential for increased oil production
and reserves. The first such activity was
the workover of an old well (Tangai-1)
which resulted in an immediate
doubling of production and delivered
a promising result.
In Tunisia, Hammamet West-3 spudded
in April, and is preparing to test after very
encouraging results to date. Progress was
slowed by the hydrocarbons encountered,
which while frustrating, has favourable
implications for the well and the value of
our Tunisian portfolio.
Further detail on the year’s exploration
and development, production and
reserves is contained under the Production
and Reserves and Review of Operations
sections that commence on page 10.
Portfolio management
Portfolio review, development and
optimisation is an essential and on-going
discipline for Cooper Energy as it seeks to
increase the value of the exploration and
production portfolio over time.
The company has structured its portfolio
management to address two broad
objectives:
1) alignment with the corporate strategy
that is focussed on opportunities in
Australia and Indonesia that possess
strong technical and commercial
fundamentals and are consistent with
the Cooper Energy capabilities; and
2) reinvigoration of the prospects and
leads inventory.
Consistent with this approach, since
early 2012 the company has divested
its interests in Romania; exited most of
the Poland permits; announced the plan
to divest its Tunisian acreage following
completion of the Hammamet West-3
exploration well; ceased evaluation
of other international opportunities; and
increased efforts to grow in Australia.
The Tunisian portfolio in particular
includes a number of valuable
opportunities and the company’s
approach and decision making with
regard to its Tunisian portfolio is illustrative
of the capital-prudent and disciplined
strategy shareholders can expect from
Cooper Energy.
The promising results from Hammamet
West-3 to date in recovering hydrocarbons
is believed to have upgraded the
prospectivity and value of the Tunisian
acreage considerably. However, the
Tunisian interests are likely to attract
more value recognition in a company
which is focussed on international
exploration and development and listed
in markets which have a deeper and
better understanding of the North Africa
oil and gas opportunities. There is clear
logic in the company obtaining the best
value it can for its interest and applying its
resources to those opportunities that lie
within those areas where Cooper Energy
possesses a deep skill base and from
which shareholders can expect better
value recognition.
The company has identified the Gippsland
and Otway basins as being regions with
strategic significance in the emerging
Australian gas market. The completion
of the acquisition of Somerton Energy
in July 2012 has given Cooper Energy
a cornerstone position in the Otway
Basin which includes a well-located
unconventional gas play which will be
tested further in the 2014 year.
The company has also built its exposure
to the Gippsland Basin during the past
year with the acquisition of a 19.9%
interest in Bass Strait Oil Company
and subsequent agreement to acquire
substantial interests in two offshore
permits Vic/P41 and Vic/P68 – subject
to certain approvals. The permits contain
a number of sizeable gas prospects
which will be further analysed by Cooper
Energy before any commitment to
participate in further exploration activity
in these permits.
In Indonesia, the prospects and leads
inventory has been upgraded through
data analysis and the addition of the
Merangin III PSC, a permit considered
highly prospective for oil and gas which is
adjacent to producing oil and gas fields.
As a result of the year’s work, Cooper
Energy now has a number of significant
targets in Indonesia. Further work will be
undertaken on these opportunities and
the best targets prioritised before farm-in
partners are sought ahead of material
drilling expenditure commitments over the
coming two years.
Balance sheet and finance
A strong balance sheet and cash flow
have long been features of Cooper
Energy. As at 30 June the company held
cash and investments of $68.1 million,
and no debt. Additional funding resources
have been added subsequent to year-
end by the execution of corporate
loan facilities with Westpac Banking
Corporation for up to $40 million, subject
to conditions precedent.
7
Managing Director’s Report
The 2014 exploration program will
address the ongoing requirement to
replace oil reserves through drilling
in the Cooper Basin and in Indonesia as
well as investigating the opportunities
selected in the company’s strategy for
the Australian energy market. In this
respect, the plans for drilling one or more
deep wells targeting the unconventional
potential of the Otway Basin Casterton
Formation and the acquisition or
processing of seismic in the Otway and
Gippsland basins are significant.
The eastern Australian energy market is
developing as anticipated when the new
strategy was outlined in late 2011. This is
creating opportunity for new sources of
supply and new players who can present
competitive offerings. Armed with our
deep technical and commercial expertise,
Cooper Energy is executing its portfolio
management, exploration program and
investments so that our shareholders
can be the beneficiaries. Our plan is to
continue this approach with an open mind
and pursue opportunities where we can
make a difference and our shareholders
benefit. I look forward to reporting further
on our progress.
David Maxwell
Managing Director
Human Resources
At 30 June the company employed 23
full-time equivalent employees in Australia.
This was supplemented by 35 persons
in Indonesia and Tunisia. While the
relocation of the Company’s head office
from Perth to Adelaide has delivered cost
and other advantages from being in closer
proximity to assets, joint venture partners
and customers, it has meant that some
employees have ceased or will shortly
cease their service with the company.
I record my acknowledgement and
appreciation of their contribution to the
company and their support through the
transition phase.
The company has assembled a small,
deeply experienced team in its new
corporate office during the year and I
thank them all for their efforts and support
as we settle into our new environment.
2014 outlook
The work done, and investments
made, during 2013 have Cooper
Energy positioned to lift production and
significantly increase capital expenditure
as opportunities in the Cooper, Otway
and Gippsland basins and in Indonesia
are tested and evaluated.
In comparison with the previous year, oil
production from the Cooper Basin will
benefit from a year’s operation free from
the pipeline interruption that affected
2013. Oil production from Indonesia is
expected to rise through output added
by the restoration of operations at Tangai.
The company has issued guidance that
2014 production is expected to be in the
range of 0.54 to 0.58 million barrels of oil.
8
Otway Basin drillling
Sawpit 2, PEL 495
9
Production and Reserves
Production
Cooper Energy’s oil production for the year totalled 0.49 MMbbl, 95% of which was
derived from the company’s Cooper Basin tenements. This is a 6% decrease on
the previous year, primarily as a result of disruptions to crude export from PEL 92
(Cooper Basin) arising from failure of third party infrastructure in June 2012.
Production MMbbl
Cooper Basin, Australia
South Sumatra, Indonesia
Total
Reserves & Resources
Reserves
FY12
0.50
0.02
0.52
FY13
0.46
0.03
0.49
Cooper Energy’s Proved and Probable Reserves as at 30 June 2013 are assessed
to be 2.16 million barrels of oil. This is an increase of 0.27 MMbbl from 30 June 2012,
driven by new discoveries at Windmill and Rincon North and upward revisions of
ultimate recovery from the Butlers, Parsons and Bunian (Indonesia) fields.
Petroleum Reserves as at 30 June 2013 MMbbl
Proved
Proved & Probable
Proved, Probable
& Possible
Cooper Basin
Indonesia
Total
0.95
0.06
1.02
1.80
0.35
2.16
Proved & Probable Reserves MMbbl
Australia
Indonesia
Reserves at 30 June 2012
FY13 Production
Reserve added through
exploration and revisions
Reserves at 30 June 2013
1.79
(0.46)
0.48
1.80
0.09
(0.03)
0.29
0.35
Note: Totals may not reflect arithmetic addition, due to rounding.
Contingent Resources
Contingent Resources as at 30 June 2013 MMboe
Cooper Basin
Tunisia (Tazerka)
1C
0.00
5.15
2C
0.00
5.74
2.89
0.64
3.53
Total
1.88
(0.49)
0.77
2.16
3C
0.03
6.41
10
Prospective Resources
Rincon, PEL 92 Cooper Basin
Cooper Energy assesses Prospective Resources within its conventional exploration
portfolio of 110 MMboe as at 30 June 2013, on a risked basis, net to Cooper Energy.
This does not include any resources associated with unconventional plays within
the company’s tenements.
This evaluation has been carried out using probabilistic estimation methods and
incorporates the company’s assessment of the risk of discovery and the risk of
subsequent development. The methodology employed is in accordance with the
SPE Petroleum Resources Management System 2007 (SPE-PRMS).
Risked Prospective Resources as at 30 June 2013 MMboe
Australia
Indonesia
Tunisia
Total
Best Estimate
4
44
62
110
Cautionary Statement
1. These estimated quantities of petroleum that may be potentially recovered
by the application of future development projects relate to undiscovered
accumulations.
2. These estimates have both an associated risk of discovery and a risk of
development.
3. Further exploration, appraisal and evaluation is required to confirm the
existence of a significant quantity of potentially moveable hydrocarbons.
Competent Persons Statement
This information on Cooper Energy’s petroleum resources has been prepared by
Mr Hector Gordon who is a full-time employee of Cooper Energy, holds a Bachelor of
Science (Hons), is a member of the American Association of Petroleum Geologists
and the Society of Petroleum Engineers and is qualified in accordance with ASX
listing rule 5.11 and has consented to the inclusion of this information in the form and
context in which it appears.
The methodology employed is in accordance with the SPE Petroleum Resources
Management System 2007 (SPE-PRMS).
11
Review of Operations
Hector Gordon
Overview
Cooper Energy’s operations primarily comprise:
• Oil production in the Cooper Basin (onshore
Australia) and the South Sumatra Basin
(onshore Indonesia)
• Oil and gas exploration onshore in the Cooper,
Otway, South Sumatra Basins and offshore
in the Pelagian Basin, Tunisia.
Cooper Energy’s oil production for 2013
totalled 0.49 MMbbl, 95% of which was
derived from 9 oil fields in the company’s
Cooper Basin tenements.
Cooper Energy participated in the drilling
of 13 wells during FY13, comprising
8 exploration wells and 5 appraisal/
development wells. The exploration
program resulted in the discovery of
two new oil fields, Windmill and Rincon
North, in PEL 92. Four of the appraisal/
development wells were successful, with
success of the fifth well to be confirmed
by further testing.
Hammamet West-3 (offshore Tunisia) was
in progress at 30 June 2013.
Hector Gordon
Executive Director,
Exploration and Production
FY13 Drilling
Type
Area
Tenement
Exploration
Cooper Basin
PEL 92
PEL 92
PEL 92
PEL 92
PEL 92
PEL 92
Otway Basin
PEL 495
Well
Windmill-1
Tinah-1
Result
Oil Discovery
P&A
Rincon North-1
Oil Discovery
Wyomi-1
Sharples-1
Mills-1
Sawpit-2
P&A
P&A
P&A
P&A
Appraisal
Tunisia
Cooper Basin
Development
Cooper Basin
Bargou
PEL 92
PEL 92
PPL 220
PPL 220
PPL 207
Hammamet West-3
In progress at 30 June 2013
Butlers-5
Butlers-6
Callawonga-6
Callawonga-7
Worrior-8
Oil Well
Oil Well
Oil Well
Oil Well
Cased for further evaluation
12
Cooper Basin
Cooper Energy holds interests in five
exploration licenses and five production
licences in the South Australian Cooper
Basin. The company’s activities are
primarily focussed in PEL 92 on the
western flank of the basin, which provided
approximately 89% of Cooper Energy’s
FY13 total production. Oil exploration is
also being undertaken in the company’s
tenements along the northern flank of
the basin (PELs 90k, 100 & 110). Cooper
Energy’s share of oil production from its
Cooper Basin tenements during FY13
totalled 0.46 MMbbl, 7% below that
achieved in the previous year.
The reduction was primarily a result of oil
production from PEL 92 being restricted
during the first half of FY13 following the
closure of the Tantanna-Moomba pipeline
in June 2012.
Commencement of transport utilising
the newly constructed Lycium-Moomba
pipeline in December 2012, allowed oil
production to rise, reaching an average
of 1,567 bopd (net to Cooper) in the
June quarter of FY13.
The company participated in the drilling
of six oil exploration wells in the Cooper
Basin during the year, all in PEL 92.
Two of these wells were successful,
yielding new field oil discoveries at
Windmill and Rincon North.
Five oil appraisal/development wells were
drilled in the Cooper Basin, four of which
have been completed as oil producers.
Worrior-8 (PEL 93) has been cased for
further testing and evaluation scheduled
to occur in FY14.
Over 1,800 square kilometres of 3D
seismic was acquired in PELs 90k,
92, 100, and 110 with the objective of
delineating oil and gas prospects for
drilling in subsequent years.
139°20'
139°20'
139°20'
139°20'
139°40'
139°40'
139°40'
139°40'
-27°40'
-27°40'
-27°40'
-27°40'
-28°00'
-28°00'
-28°00'
-28°00'
Rincon North-1
Rincon North-1
Rincon North-1
Rincon North-1
Rincon
Wyomi-1
Rincon
Rincon
Rincon
Wyomi-1
Wyomi-1
Wyomi-1
Sharples-1
Sharples-1
Sharples-1
Sharples-1
Tinah-1
Callawonga-7 & 8
Tinah-1
Tinah-1
Tinah-1
k
e
e
r
k
k
k
e
e
e
e
e
e
r
r
r
er C
er C
er C
er C
p
o
o
C
p
p
p
o
o
o
o
o
o
C
C
C
Callawonga
Callawonga-7 & 8
Callawonga-7 & 8
Callawonga-7 & 8
PEL 92 (25%)
PEL 92 (25%)
PEL 92 (25%)
PEL 92 (25%)
Callawonga
Callawonga
Callawonga
Parsons
Windmill-1
Sellicks
Sellicks
Sellicks
Windmill-1
Windmill-1
Windmill-1
Silver Sands
Elliston
Christies
Elliston
Elliston
Elliston
Christies
Christies
Christies
Butlers-5 & 6
Silver Sands
Silver Sands
Silver Sands
Parsons
Parsons
Parsons
Perlubie
Butlers
Perlubie
Perlubie
Perlubie
Germein
Butlers
Butlers
Butlers
Germein
Germein
Germein
Caseolus 3D
seismic survey
Caseolus 3D
Caseolus 3D
Caseolus 3D
seismic survey
seismic survey
seismic survey
Sellicks
E
P
R B
R B
R B
O
E
E
E
O
P
P
P
C
A
R B
SI N
SI N
SI N
A
A
A
O
O
O
O
O
O
C
C
C
Irus 3D
seismic survey
Irus 3D
Irus 3D
Irus 3D
seismic survey
seismic survey
seismic survey
Butlers-5 & 6
Butlers-5 & 6
Butlers-5 & 6
Mills-1
Mills-1
Mills-1
Mills-1
Lycium Hub
Lycium Hub
Lycium Hub
Lycium Hub
SI N
-27°40'
-27°40'
-27°40'
-27°40'
-28°00'
-28°00'
-28°00'
-28°00'
Plan area
Plan area
Plan area
Plan area
TAS
TAS
TAS
TAS
139°30'
139°30'
139°30'
139°30'
139°40'
139°40'
139°40'
139°40'
0
0
0
0
139°20'
139°20'
139°20'
139°20'
139°50'
139°50'
139°50'
139°50'
10
10
10
10
kilometres
kilometres
kilometres
kilometres
20
20
20
20
PEL 93 (30%)
(
(
(
PEL 93 (30%)
PEL 93 (30%)
PEL 93 (30%)
(
139°40'
139°40'
139°40'
139°40'
Cooper 24
Cooper 24
Cooper 24
Cooper 24
140°20'
140°20'
140°20'
140°20'
140°40'
140°40'
140°40'
140°40'
0
0
0
0
10
10
10
10
kilometres
kilometres
kilometres
kilometres
20
20
20
20
-28°20'
-28°20'
-28°20'
-28°20'
0
0
0
0
10
20
10
10
10
kilometres
kilometres
kilometres
kilometres
20
20
20
-28°20'
-28°20'
-28°20'
-28°20'
Worrior
Worrior
Worrior
Worrior
Worrior-8
Worrior-8
Worrior-8
Worrior-8
PEL 93 (30%)
PEL 93 (30%)
PEL 93 (30%)
PEL 93 (30%)
-28°30'
-28°30'
-28°30'
-28°30'
See inset
SI N
See inset
See inset
See inset
SI N
SI N
SI N
A
R B
A
A
A
R B
R B
R B
E
-28°30'
-28°30'
-28°30'
-28°30'
P
E
E
E
P
P
P
O
O
O
O
O
O
O
O
C
C
C
C
PEL 110 (20%)
PEL 110 (20%)
PEL 110 (20%)
PEL 110 (20%)
-27°00'
-27°00'
-27°00'
-27°00'
PEL 100 (19.17%)
PEL 100 (19.17%)
PEL 100 (19.17%)
PEL 100 (19.17%)
Dundinna
Dundinna
Dundinna
Dundinna
3D seismic
3D seismic
3D seismic
3D seismic
survey
survey
survey
survey
-27°00'
-27°00'
-27°00'
-27°00'
Kiwi
Kiwi
Kiwi
Kiwi
Keleary
Keleary
Keleary
Keleary
Tarragon
Tarragon
Tarragon
Tarragon
Cleansweep
Cleansweep
Cleansweep
Cleansweep
Telopea
Telopea
Telopea
Telopea
Worrior-8
Worrior-8
Worrior-8
Worrior-8
-28°40'
-28°40'
-28°40'
-28°40'
PPL 207
PPL 207
PPL 207
PPL 207
Inset
Inset
Inset
Inset
139°30'
139°30'
139°30'
139°30'
1 kilometre
1 kilometre
1 kilometre
1 kilometre
139°40'
139°40'
139°40'
139°40'
139°50'
139°50'
139°50'
139°50'
Cooper 25
Cooper 25
Cooper 25
Cooper 25
140°20'
140°20'
140°20'
140°20'
-28°40'
-28°40'
-28°40'
-28°40'
Cooper Energy tenement
Cooper Energy tenement
Cooper Energy tenement
Cooper Energy tenement
Oil field
Oil field
Oil field
Oil field
Gas field
Gas field
Gas field
Gas field
Gas Pipeline
Gas Pipeline
Gas Pipeline
Gas Pipeline
Oil pipeline
Oil pipeline
Oil pipeline
Oil pipeline
3D seismic survey
3D seismic survey
3D seismic survey
3D seismic survey
aquired in 2013
aquired in 2013
aquired in 2013
aquired in 2013
Oil well
Oil well
Oil well
Oil well
Plugged and abandoned well
Plugged and abandoned well
Plugged and abandoned well
Plugged and abandoned well
PEL 90K (25%)
PEL 90K (25%)
PEL 90K (25%)
PEL 90K (25%)
140°40'
140°40'
140°40'
140°40'
Cooper 26
Cooper 26
Cooper 26
Cooper 26
13
Review of Operations
Otway Basin
Cooper Energy holds interests in six
exploration licences in the onshore
Otway Basin covering a total area of
8,350 square kilometres. The company’s
primary focus in this region is exploration
for unconventional oil and gas plays
associated with the Casterton and Sawpit
Formations, primarily within the Penola
and Robe Troughs.
During the year, one well, Sawpit-2,
was drilled in PEL 495, within the
South Australian portion of the Penola
Trough. This well tested a conventional
oil target in the Sawpit Sandstone and
also obtained conventional core from
shales in the Sawpit and Casterton
Formations. No significant hydrocarbons
were encountered in the conventional
target and the well was plugged and
abandoned. Data obtained from the cores
was encouraging and will be utilised to
assess unconventional potential and
assist with the location of one or more
deep wells specifically addressing the
unconventional play, planned for drilling
during FY14.
Agreements were finalised with Native
Title claimants during the year over the
areas covered by PEP 150 and PEP 171 in
western Victoria. These tenements were
granted subsequent to year-end.
Kingston SE
SOUTH AUS TRALIA
Naracoorte
VICTORIA
PEL 495 (65%)
ROBE TROUGH
Robe
PEL 186 (33%)
ST CLAIR TROUGH
Beachport
Sawpit-2
Penola
PEP 171* (25%)
Plan area
Ararat
Ararat
TAS
Katnook
Millicent
P
E
N
O
L
A
T
R
O
U
G
ARDONAC
HIE
T
Hamilton
PEL 150* (20%)
R
O
U
G
H
Portland
Warrnambool
PEP 168 (50%)
Cobden
East
Wing 1
Otway 12
H
Mount Gambier
Cooper Energy tenement
PEL 151 (75%)
Gas field
Gas Pipeline
Depositional trough
Plugged and
abandoned well
*Granted subsequent to year-end
0
20
40
kilometres
14
Gippsland Basin
Subsequent to year-end, Cooper Energy
executed conditional farm-in agreements
under which it may acquire a 50%
interest in VIC/P68 and 25.8% interest
in VIC P/41, both located in the offshore
Gippsland Basin. The permits contain a
number of sizeable gas prospects which
are considered to be well located for
development and supply into the eastern
Australian energy market.
VICTORIA
VICTORIA
VICTORIA
Orbost
Orbost
Orbost
Lakes Entrance
Lakes Entrance
Lakes Entrance
Moby
Moby
Moby
Baleen
Baleen
Baleen
VIC/P68 (50%)
VIC/P68 (50%)
VIC/P68 (50%)
Judith
Judith
Judith
Leatherjacket
Leatherjacket
Leatherjacket
Sole
Sole
Sole
Kipper
Kipper
Kipper
Flounder
Flounder
Flounder
Gummy
Gummy
Gummy
VIC/P41 (25.8%)
VIC/P41 (25.8%)
VIC/P41 (25.8%)
Tuna
Tuna
Tuna
Marlin
Marlin
Marlin
Snapper
Snapper
Snapper
Fortescue
Fortescue
Fortescue
Kingfish
Kingfish
Kingfish
Cooper Energy tenement
Cooper Energy tenement
Cooper Energy tenement
Gas field
Gas field
Gas field
Oil field
Oil field
Oil field
Gas pipeline
Gas pipeline
Gas pipeline
Oil pipeline
Oil pipeline
Oil pipeline
Highway
Highway
Highway
Road
Road
Road
Pipelaying
PEL 92 Cooper Basin
0
0
0
20
20
20
40
40
40
kilometres
kilometres
kilometres
Gippsland 05
Gippsland 05
Gippsland 05
Plan area
Plan area
Plan area
15
Review of Operations
The block is immediately adjacent to the
Suban Field, which has reported Original
Gas in Place in excess of 6 TCF. Pre-bid
assessment of the block undertaken by
the company identified a wide inventory
of both shallow oil and deeper gas
prospects and leads. In accordance with
prudent risk management, Cooper Energy
will consider a farm-out of a portion of
its interest prior to any significant capital
expenditure.
The committed work program for the
Merangin III PSC consists of seismic
acquisition and one well at a total cost of
US$9.7 million over the initial 3 years.
Indonesia
Cooper Energy holds interests and
operates three tenements in the onshore
South Sumatra Basin.
Sukananti KSO (55% interest and
Operator)
The Sukananti KSO contains two
producing wells, Bunian-1 and Tangai-1.
Cooper Energy’s share of production
from the KSO during the year totalled
0.025 MMbbl, an increase of 56%
on the previous year, resulting from
improved performance from Bunian-1
and the commencement of production
from Tangai-1. The Tangai-1 production
resulted from a successful workover of
the well carried out in June 2013, which
recorded initial gross oil production in
excess of 300 bopd.
Reprocessing and reinterpretation of
3D seismic in the Sukananti KSO was
undertaken during the year. This work
resulted in an increase in 2P reserves in
the Bunian field of 0.28 MMbbl, net to
the company. It is planned to drill up to
3 appraisal/development wells in the
KSO during FY14.
Sumbagsel PSC (100% interest
and Operator)
The Sumbagsel PSC lies on the eastern
flank of the South Sumatra basin and
contains a wide inventory of both
shallow oil and deeper gas prospects
and leads. All seismic in the PSC was
reinterpreted during FY13 and, as a result,
the prospects and leads inventory was
substantially upgraded.
Acquisition of 265 km of 2D seismic will
be undertaken in FY14 which is expected
to lead to the drilling of at least one
exploration well in the 2014 calendar year.
Merangin III PSC (100% interest
and Operator)
In March 2013 Cooper Energy was
advised that it was the successful bidder
for the “Merangin III” block within the
central portion of the South Sumatra
Basin. The PSC over the block was
subsequently executed in May 2013.
Cooper Energy considers that the
Merangin III PSC is highly prospective
for both oil and gas and adds significant
opportunities to its exploration portfolio.
103° 00' E
104° 00' E
Kaliberau
JAVA
SEA
Tanjung
Tanjung
Miring
Miring
Barat
Barat
104°22'
104°22'
INDONESIA
INDONESIA
Bunian
Bunian
Meruap
Piano
Gambang
Suban
Tampi
Merangin III PSC (100%)
3° 00' S
INDONESIA
Palembang
Sumbagsel PSC (100%)
Sungai
Gerong
Plaju
Refinery
-3°35'
-3°35'
0
0
Tangai
Tangai
-3°35'
-3°35'
kilometres
kilometres
2
2
Sukananti KSO (55%)
Sukananti KSO (55%)
104°22'
104°22'
Indonesia 22
Indonesia 22
Cooper Energy tenement
Cooper Energy tenement
Oil field
Oil field
Gas field
Gas field
Pipeline
Pipeline
Oil pipeline
Oil pipeline
Well
Well
0
25
50
kilometres
Sukananti KSO (55%)
4° 00' S
103° 00' E
104° 00' E
Indonesia 21
16
Tunisia
Cooper Energy holds interests and
operates three tenements in the Pelagian
Basin, offshore Tunisia. These blocks
surround existing producing fields and
undeveloped resources (including Tazerka)
and contain an extensive inventory of
exploration prospects and leads.
The results of Hammamet West-3 to date
(discussed below) have materially
enhanced the value of the Tunisia portfolio.
Bargou Permit (30% interest and
Operator)
During the year the company commenced
the drilling of Hammamet West-3 with the
objective of confirming oil productivity
from the naturally fractured Abiod
Formation reservoir, through drilling and
testing a highly deviated wellbore. Two
previous vertical wells have been drilled
on the Hammamet West structure, which
recovered oil and indicated the likely
presence of a significant oil column.
However, the vertical wells did not
penetrate any significant open fractures.
Hammamet West-3 spudded on 4 April
2013 and was in progress at 30 June 2013.
Subsequent to year-end, a 432m
horizontal sidetrack section was drilled to
a total measured depth of 3,443m. Major
gas and oil influxes and major drilling
mud losses were experienced during the
drilling of the near horizontal well section,
indicating that the well had penetrated
open hydrocarbon bearing fractures within
the Abiod Formation. Testing of the well
commenced in August and had not been
completed as at the date of this report.
Cooper Energy’s contribution to the well
is being fully funded up to a gross amount
in excess of US$26.6 million by Dragon
Oil (paying 75% of $26.6 million to earn
55%) and Jacka Resources (paying 30%
of $27.2 million to earn 15%).
Hammamet Permit (Cooper 35%)
242 kilometres of two dimensional seismic
was acquired during the year to support
the maturing of prospects for drilling.
Nabuel Permit (Cooper 85% and
operator)
The 3D seismic data received in late 2012
was reprocessed with the aim of maturing
prospects for drilling in 2014 -15.
10°E
10°E
37°N
37°N
Tunis
Tunis
11°E
11°E
12°E
12°E
13°E
13°E
Cooper Energy tenement
Cooper Energy tenement
Bargou Permit (30%)
Bargou Permit (30%)
Hammamet Permit (35%)
Hammamet Permit (35%)
37°N
37°N
Hammamet West-3
Hammamet West-3
Maamoura
Maamoura
Zelfa
Zelfa
36°N
36°N
TUNI SIA
TUNI SIA
Baraka
Baraka
Sousse
Sousse
Monastir
Monastir
Pantelleria Island (Italy)
Pantelleria Island (Italy)
Zibibbo
Zibibbo
Tazerka
Tazerka
Birsa
Birsa
Yasmin
Yasmin
Nabeul 3D
Nabeul 3D
survey
survey
Cosmos
Cosmos
Oudna
Oudna
Nabeul Permit (85%)
Nabeul Permit (85%)
Halk El Menzel
Halk El Menzel
L
L
A
A
G
G
U
U
T
T
R
R
O
O
P
P
FRANCE
FRANCE
ITALY
ITALY
36°N
36°N
SPAIN
SPAIN
MEDITERRANEAN SEA
MEDITERRANEAN SEA
Map area
Map area
0
0
25
25
50
50
kilometres
kilometres
MOROCCO
MOROCCO
ALGERIA
ALGERIA
TUNISIA
TUNISIA
LIBYA
LIBYA
10°E
10°E
11°E
11°E
12°E
12°E
13°E
13°E
Tunisia 30
Tunisia 30
Oil field
Oil field
Gas field
Gas field
Gas Pipeline
Gas Pipeline
Well
Well
3D seismic survey
3D seismic survey
17
Portfolio
Cooper Energy Exploration and
Production Tenements
Region: Australia
Cooper Basin
State
Tenement
Interest
Location
Area (km2)
Operator
Activities
South Australia
PPL 204 (Sellicks)
PPL 205 (Christies / Silver Sands)
PPL 207 (Worrior)
PPL 220 (Callawonga)
PPL 224 (Parsons)
PEL 90 (Kiwi sub-block)
PEL 92
PEL 93
PEL 100
PEL 110
Otway Basin
State
Tenement
South Australia
PEL 186
Victoria
Gippsland Basin
State
Victoria
PEL 495
PEP 150 1
PEP 151
PEP 168
PEP 1711
Tenement
VIC/P412
VIC/P68 2
25%
25%
30%
25%
25%
25%
25%
30%
19.17%
20%
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
2.0
4.3
6.4
5.5
1.8
Beach Energy
Production
Beach Energy
Production
Senex Energy
Production
Beach Energy
Production
Beach Energy
Production
145
Senex Energy
Exploration
1,896.5
Beach Energy
Exploration
621.8
296.5
727.5
Senex Energy
Exploration
Senex Energy
Exploration
Senex Energy
Exploration
Interest
Location
Area (km2)
Operator
Activities
Onshore
Onshore
Onshore
Onshore
Onshore
Onshore
709.1
793.3
3,212
859
795
Cooper Energy
Exploration
Beach Energy
Exploration
Beach Energy
Exploration
Bridgeport Energy
Exploration
Beach Energy
Exploration
1,974
Beach Energy
Exploration
Location
Area (km2)
Operator
Offshore
538.9
Activities
Exploration
Exploration
Bass Strait
Oil Company
Bass Strait
Oil Company
50%
Offshore
1,080.9
33%
65%
20%
75%
50%
25%
Interest
25.8%
1 Granted subsequent to year-end.
2 Cooper Energy is to earn this interest under a conditional farm-in agreement which is yet to be completed.
3 On 22 August 2012, a controlled subsidiary withdrew from Licence Blocks 433, 434, 435 & 455 in Contracts MUA 1 & MUA 3.
18
Region: Indonesia
South Sumatra Basin
Tenement
Sukananti KSO
Sumbagsel PSC
Merangin III PSC
Region: Tunisia
Gulf of Hammamet
Tenement
Bargou
Hammamet
Nabeul
Region: Poland
Southern Carpathians
Tenement
MUA2 (414, 415)3
Interest
55%
100%
100%
Interest
30%
35%
85%
Location
Onshore
Onshore
Onshore
Location
Offshore
Offshore
Area (km2)
Operator
18.3
1,753
1,488
Cooper Energy
Cooper Energy
Cooper Energy
Activities
Exploration
Exploration
Exploration
Area (km2)
Operator
4,616
4,676
Cooper Energy
Storm Ventures
International
Activities
Exploration
Exploration
Offshore
3,352
Cooper Energy
Exploration
Interest
40%
Location
Onshore
Area (km2)
Operator
Activities
559
RWE Dea AG
Exploration
19
Board of Directors
Board of Directors from left: Hector Gordon, Executive Director Exploration and
Production; Alice Williams, Non-executive Director; John Conde AO, Chairman;
Jeff Schneider, Non-executive Director; David Maxwell, Managing Director;
Alison Evans, Company Secretary and General Counsel. Absent: Laurie Shervington
A summary of directors’ experience and qualifications is provided on page 26.
20
Cooper Energy Limited and
its controlled entities
Financial Report
For the year ended 30 June 2013
ABN 93 096 170 295
Operating and Financial Review
Directors’ Statutory Report
Corporate Governance Statement
Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consoldiated Statement of Cash Flows
Notes to Financial Statements
1. Corporate Information
2. Summary Significant Accounting Policies
3. Segment Reporting
4. Revenues and Expenses
5.
Income Tax
6. Earnings Per Share
7. Cash and Cash Equivalents and Term Deposits
8. Trade and Other Receivables (Current)
9. Materials (Current)
10. Prepayments (Current)
11. Exploration Assets held for Sale (Current)
12. Available for Sale Investment (Non-Current)
13. Oil Properties (Non-Current)
14. Exploration and Evaluation (Non-Current)
15. Trade and Other Payables (Current)
16. Provisions (Non-Current)
17. Business Combinations
18. Contributed Equity and Reserves
19. Financial Risk Management Objectives & Policies
20. Commitments and Contingencies
21. Interest in Joint Venture Assets
22. Related Parties
23. Share Based Payment Plans
24. Deed of Cross Guarantee
25. Auditor’s Remuneration
26. Parent Entity Information
27. Events after the Reporting Period
Directors’ Declaration
Independent Audit Report
Auditor’s Independence Declaration
Securities Exchange and Shareholder Information
Corporate Directory Inside back cover
22
26
41
51
52
53
54
55
56
56
56
67
70
71
73
74
75
75
75
75
76
76
77
77
78
78
80
81
84
85
87
91
93
95
95
96
97
98
100
101
21
Operating and Financial Review
For the year ended 30 June 2013
Operations
Cooper Energy is a petroleum exploration and production company which generates revenue from the discovery, development and sale of hydrocarbons.
The Company generates positive financial returns from these activities by concentrating its resources and efforts on opportunities to supply the Australian
energy market and oil and gas exploration production activities in the South Sumatra Basin, Indonesia.
Cooper Energy currently produces oil from the Cooper Basin, Australia and the South Sumatra Basin, Indonesia. The Cooper Basin accounted for
95% of the company’s oil production in FY13 of 0.49 MMbbl. This was a 6% decrease on the previous year (FY12 0.52 MMbbls) which is attributable to
oil transportation interruptions in the Cooper Basin that occurred principally in the first half of FY13.
Proved and probable reserves at 30 June 2013 are 2.16 MMbbls, 15% higher than the previous year-end figure of 1.88 MMbbl. The increase is attributable
to new field discoveries and upwards revisions of ultimate recovery from existing fields. The proved and probable reserves are located in the Cooper Basin
(83% of total) and Indonesia (17% of total).
Cooper Energy has interests in petroleum exploration tenements in the Cooper Basin and Otway Basin in Australia, the South Sumatra Basin in Indonesia
and the Pelagian Basin offshore Tunisia. Cooper Energy also has a 19.9% interest in Bass Strait Oil Limited, which has exploration tenements in the
Gippsland Basin and Otway Basin, Australia. During the year, the Company announced its intention to divest the Tunisian portfolio after the drilling of
Hammamet West-3, an exploration well which spudded in April 2013 and is still in progress at the time of this report.
Cooper Energy participated in the drilling of 13 wells during the year: 8 exploration wells; 2 appraisal wells; and 3 development wells. In the Cooper Basin
this program resulted in 2 new oil field discoveries (Windmill and Rincon North); 4 successful oil appraisal/development wells; and 1 well cased and
suspended for further evaluation. Sawpit-2 was drilled in the Otway Basin to assess further the potential of unconventional plays in the Penola Trough and
provided encouraging results.
Financial Performance
Financial Performance
Production volume
Sales volume
Average oil price
Sales revenue
Other revenue
Net profit after income tax (NPAT)
Underlying NPAT
Underlying EBITDA*
Underlying EBITDA Margin
MMbbl
MMbbl
$/bbl
$MM
$MM
$MM
$MM
$MM
%
FY13
0.488
0.475
112.3
53.4
2.3
1.3
12.7
22.7
42.6
FY12
0.517
0.517
115.3
59.6
4.7
8.4
14.0
27.0
45.4
Change
-0.029
-0.042
-2.9
-6.2
-2.3
-7.1
-1.3
-4.3
-2.8
%
-6%
-8%
-3%
-10%
-50%
-84%
-9%
16%
-6%
* Earnings before interest, tax, depreciation and amortisation
Calculation of underlying NPAT by adjusting for items unrelated to the ongoing operating performance is considered to enable meaningful comparison of results
between periods. Underlying NPAT and underlying EBITDA are not defined measures under International Financial Reporting Standards and are not audited.
Reconciliation to Underlying NPAT
Net profit after income tax (NPAT)
Adjusted for:
Impairment of exploration assets held for sale
PRRT derecognised / (recognised)
Underlying NPAT
Reconciliation to Underlying EBITDA
Underlying NPAT
Add back:
Interest revenue
Income tax expense
Depreciation
Amortisation
Underlying EBITDA
22
$MM
$MM
$MM
$MM
$MM
$MM
$MM
$MM
$MM
$MM
FY13
1.3
0.4
11.0
12.7
12.7
-2.0
5.6
0.3
6.1
22.7
FY12
8.4
17.9
-12.2
14.0
14.0
-3.7
7.0
0.2
9.5
27.0
Change
-7.1
-17.5
-23.3
-1.3
-1.3
1.7
-1.4
0.1
-3.4
-4.3
%
-84%
-98%
-190%
-9%
-9%
-47%
-20%
44%
-36%
-16%
Reported NPAT for the period was $1.3 million, a $7.1 million decrease on the previous corresponding period (pcp) mainly due to PRRT accounting
$(23.3) million partially offset by lower impairment of exploration assets held for sale of $17.5 million and lower underlying NPAT $(1.3) million.
In comparing underlying NPAT for the period to the pcp the key drivers of the 9% decrease were:
• lower sales revenue, $(6.2) million, due mainly to lower oil volumes and a lower average oil price;
• lower other revenue, $(2.3) million with lower interest revenue from lower cash balances and interest rates;
• lower production expenses, $0.8 million, and lower income tax expense $1.4 million associated with the lower profit before tax;
• lower amortisation, $3.4 million, due to lower production and changes in the application of accounting policies and estimates to align the Company with
industry practice;
• lower administration and other costs, $1.6 million, mainly due to lower consulting expenditure primarily related to the Somerton Energy acquisition in
FY12 and lower international business development and travel expenditure partially offset by additional premises costs and other expenditure following
the acquisition of Somerton Energy and re location of the Head Office to Adelaide.
Financial Position
Total Assets
Total Liabilities
Total Equity
Total Assets
$MM
$MM
$MM
FY13
162.1
24.8
137.2
FY12
161.0
24.1
136.9
Change
1.0
0.8
0.3
%
1%
3%
0%
Total assets increased by $1.1 million from $161.0 million to $162.1 million.
Cash, deposits and investments available for sale at fair value decreased by $6.6 million from $74.7 million to $68.1 million with cash flow from operations
$12.4 million offset by cash flows from investing and financing activities $26.0 million.
$ million
45.2
31.5
Invest (at FV)
Cash deposits
12.2
61.5
3.4
2.2
73.9
17.2
Cash from Operations
+$12.4M
20.2
Invest (at FV)
0.3
47.9
Cash deposits
9.1
Investing
and Financing
-$26.0M
June 12 Receipts Payments
Tax
Interset Operating
E & D
Investment
FX
June13
23
Operating and Financial Review
For the year ended 30 June 2013
Investments available for sale at fair value increased $7.0 million from $13.2 million to $20.2 million due to net purchases during the period partially offset
by unrealised fair value adjustments of $2.4 million.
Exploration and evaluation (including held for sale) increased $12.1 million from $42.6 million to $54.7 million for the exploration and evaluation activities
detailed in the Operations section of this report. In summary, the increase is accounted for on a regional basis by: Australia, $4.6 million; Indonesia,
$3.8 million; Tunisia, $3.6 million; and Poland $0.1, million.
Trade and other receivables increased $7.5 million from $12.0 million to $19.5 million mainly due to the timing of sales revenue receipts being unfavourable
in FY13 (below three year average) and favourable in FY12 (above three year average).
Deferred tax assets decreased $12.2 million from $12.2 million to $nil due to PRRT de-recognition following the Cooper Basin participants, including the
Company, being granted a combination certificate for the PRRT (essentially deeming PEL 92 and PEL 93 to be a single project) and updated estimates
using the look-back method to determine the starting base (previously the market value method was used).
Total Liabilities
Total liabilities increased by $0.8 million from $24.1 million to $24.8 million.
Trade and other payables decreased $0.5 million from $12.3 million to $11.8 million mainly due to timing of payments to suppliers.
Income tax payable decreased $3.7 million from $3.7 million to $nil with the FY12 final instalment paid and FY13 having an income tax loss mainly due
to the upfront deductibility of exploration expenditure including deductions arising from the acquisition of Somerton Energy.
Deferred tax liabilities increased $4.9 million from $4.2 million to $9.1 million due to timing differences including the upfront deductibility of exploration
expenditure partially offset by a deferred tax asset booked in respect of the FY13 income tax loss.
Total Equity
Total equity has increased by $0.3 million from $136.9 million to $137.2 million. In comparing equity for the year to the previous year, the key
movements were:
• higher contributed equity, ($0.7 million) mainly due to finalisation of the Somerton acquisition and vesting of performance rights held by employees
made redundant;
• lower reserves, ($1.8 million) mainly due to the unrealised fair value adjustment on investments available for sale partially offset by share based
payments (performance rights); and
• higher retained profits, ($1.3 million) due to NPAT for the year.
Business Strategies and Prospects
The Company focuses its resources and effort on opportunities to supply the Australian energy market and oil and gas exploration in its existing acreage
in the South Sumatra Basin, Indonesia.
Within the areas of interest, the Company will focus on those opportunities which satisfy fundamental commercial and technical merit criteria whilst
taking due care for safety, the environment and community. Cooper Energy seeks to generate and add value through the application of its deep knowledge
and expertise in Australian basins and gas commercialisation, and concentrating its efforts on the opportunities where its knowledge and expertise can
be best applied.
The Company’s oil production on the western flank of the Cooper Basin generates high margin cash flow which is being reinvested to replace and
grow production and reserves. The re-investment is in the Cooper Basin; the Otway Basin and the Gippsland Basin; and corporate opportunities.
The Otway Basin and Gippsland Basin interests in particular are considered to be well located for available gas market opportunities should reserves of
sufficient size be established.
In Indonesia, the focus is on adding further value to the existing South Sumatra acreage through exploration, development and production.
24
Operating and Financial Review
For the year ended 30 June 2013
2014 Outlook and Prospects
Cooper Energy anticipates increasing oil production in FY14 and has guided to a total production for the FY14 year of 0.54 MMbbl to 0.58 MMbbl, which
represents an increase of 10% - 18% on that recorded in FY13.
Exploration planned for the year provides opportunities for reserve and resource additions through drilling and identification of new prospects and leads for
future drilling through acquisition and processing of two-dimensional and three-dimensional seismic data.
The FY14 exploration program includes opportunities which could add material value for the Company including: drilling at least one deep unconventional
well in the Otway Basin; ongoing exploration in the Cooper Basin where success rates are high; and exploration drilling in South Sumatra, Indonesia.
In addition Hammamet West-3 (Tunisia), which is still in progress, could add material value.
The divestment of the Tunisia portfolio is proposed to follow the drilling of Hammamet West-3. It is likely the divestment will not be concluded until early 2014
and the timing of the divestment will be dependent upon the results of Hammamet West-3 and the structure of the divestment.
Cooper Energy will continue to evaluate acquisition opportunities which fit with the Company’s skill and knowledge base and are projected to add value
for shareholders.
Funding and Capital Management
When managing funding and capital, the Company’s objective is to ensure the entity continues as a going concern whilst maintaining an optimal return
to shareholders. As at 30 June 2013 the Company had cash, deposits and investments available for sale of $68.1 million. The Company is in the process
of finalising conditions precedent for $40 million in bank facilities and divesting the Tunisian exploration assets with a carrying value of $23.8 million.
The Company has no current plans to issue equity except as performance rights held by employees meet vesting conditions.
Risk Management
The Company manages risks in accordance with its risk management policy with the objective to ensure all risks inherent in oil and gas exploration activities
are identified, measured and then managed or kept as low as reasonably practicable. The management team perform risk assessments on a regular basis
(including projects by internal auditors) and a summary is reported to the Audit Committee.
Key risks which may materially impact the execution and achievement of the business strategies and prospects for Cooper Energy in future financial years are
risks inherent in the oil and gas industry including technical, economic, commercial, operational and political risks. These risks should not be taken to be a
complete or exhaustive list of risks. Many of the risks are outside the control of the Company and its officers.
Appropriate policies and procedures are continually being developed and updated to help manage these risks.
25
Directors’ Statutory Report
For the year ended 30 June 2013
The Directors present their report together with the consolidated
financial report of the Group, being Cooper Energy Limited (the “parent
entity” or “Cooper Energy” or “Company”) and its controlled entities, for
the financial year ended 30 June 2013, and the independent auditor’s
report thereon.
1. Directors
The Directors of the parent entity at any time during or since the end of the financial year are:
Mr John C.Conde AO
B.Sc. B.E(Hons), MBA
Chairman
Independent Non-Executive Director
Appointed 25 February 2013
Mr David P. Maxwell
M.Tech, FAICD
Managing Director
Appointed 12 October 2011
Experience and expertise
Mr Conde has extensive experience in business and commerce and in chairing high profile business, arts and
sporting organisations.
Previous positions include, a Director of BHP Billiton, Chairman of Pacific Power (the Electricity Commission
of NSW), Chairman of Events NSW, President of the National Heart Foundation and Chairman of the Pymble
Ladies’ College Council.
Current and other directorships in the last 3 years
Mr Conde is currently Chairman of Bupa Australia (since 2008), the Sydney Symphony (since 2007) and
Destination NSW (since 2011). He is President of the Commonwealth Remuneration Tribunal (since 2003) and a
director of Dexus Property Group ASX: DXS (since 2009). He is Deputy Chairman of Whitehaven Coal Limited
ASX: WHC (since 2007) and a Director of The McGrath Foundation (since 2012) and AFC Asian Cup (2015)
(since 2012).
Mr Conde is a former Chairman of Ausgrid (formerly EnergyAustralia) (1988-2012)
Special Responsibilities
Mr Conde is a member of the Remuneration and Nomination Committee and the Audit Committee.
Experience and expertise
Mr Maxwell is a leading oil and gas industry executive with more than 25 years in senior executive roles with
companies such as BG Group, Woodside Petroleum Limited and Santos Limited. Mr Maxwell has very
successfully led many large commercial, marketing and business development projects.
As Senior Vice President at QGC - a BG Group business – Mr Maxwell was responsible for all commercial,
exploration, business development, strategy and marketing activities. He led BG Group’s entry into Australia, its
involvement in the alliance with Queensland Gas Company Limited and its subsequent takeover by BG Group.
Mr Maxwell has served on a number of industry association boards, government advisory groups and public
company boards. He was a member of the Australia Federal Government Energy White Paper Reference Group
in 2011.
Current and other directorships in the last 3 years
Mr Maxwell is a director of Somerton Energy Pty Ltd formerly Somerton Energy Ltd, a listed company until the
takeover by Cooper Energy in 2012.
Special Responsibilities
Mr Maxwell is responsible for the day to day leadership of Cooper Energy. He is the leader of the management
team and his particular responsibilities include strategy and business development.
26
Mr Laurence J. Shervington
LLB, SA FIN, MAICD
Independent Non-Executive Director
Appointed 01 October 2003
Former Chairman
(November 2004 – February 2013)
Mr Jeffrey W. SCHNEIDER
B.Com
Independent Non-Executive Director
Appointed 12 October 2011.
Mr Hector M. Gordon
B.Sc. (Hons). FAICD
Executive Director
Appointed 26 June 2012
Ms Alice J.M. Williams
B.Com, FAICD, FCPA, CFA
Independent Non-Executive Director
Appointed 28 August 2013
Experience and expertise
Mr Shervington is a respected and experienced corporate lawyer with more than 40 years’ involvement in
business and legal landscapes. His corporate expertise includes capital raising, reconstruction, mergers and
acquisitions, directors’ duties, corporate governance, due diligence, risk management and ASIC licensing and
investigations.
Current and other directorships in the last 3 years
Mr Shervington is the chair of the Broome Port Authority (March 2011) and a director of the College of Law
Western Australia Pty Ltd (since January 2008). Mr Shervington is a director of Leedal Pty Ltd, an Aboriginal-
directed company with extensive business interests in Fitzroy Crossing in the Kimberley region of Western
Australia (since June 2008).
Special Responsibilities
Member of the Corporate Governance; Remuneration and Nomination and Audit Committees.
Experience and expertise
Mr Schneider has over 30 years of experience in senior management roles in the oil and gas industry, including
24 years with Woodside Petroleum Limited. He has extensive corporate governance and board experience as
both a non-executive director and chairman in resources companies.
Current and other directorships in the last 3 years
Mr Schneider is a non-executive director of Comet Ridge Limited ASX: COI (since 2003). Mr Schneider was
formerly the Chairman of Strike Energy Limited ASX: STX (2004 – 2010) and a director of Green Rock Energy
Limited ASX: GRK (2010 - 2013).
Special Responsibilities
Chairman of the Audit and the Remuneration and Nomination Committees and member of the Corporate
Governance Committee.
Experience and expertise
Mr Gordon is a very successful geologist with over 35 years’ experience in the petroleum industry. Mr Gordon
was previously Managing Director Somerton Energy until it was acquired by Cooper Energy in 2012. Previously
he was an Executive Director with Beach Energy Limited where he was employed for more than 16 years.
In this time Beach Energy experienced significant growth and Mr Gordon held a number of roles including
Exploration Manager, Chief Operating Officer and, ultimately, Chief Executive Officer.
Mr Gordon’s previous employers also include Santos Limited, AGL Petroleum, TMOC Resources, Esso Australia
and Delhi Petroleum Pty Ltd.
Current and other directorships in the last 3 years
Mr Gordon is a director of Somerton Energy Pty Ltd formerly Somerton Energy Ltd, a listed company until the
takeover by Cooper Energy in 2012. He is a former director of ERO Mining Limited (2011-2013).
Special Responsibilities
Mr Gordon is responsible for the day to day management of the Cooper Energy exploration and production
activities. As a Qualified Petroleum Reserves and Resources Evaluator he also reviews and approves the
reserves statements made by the Company.
Experience and expertise
Ms Williams has over 25 years of senior management and Board level experience in corporate, investment
banking and Government sectors.
Ms Williams has been a consultant to major Australian and international corporations as a corporate advisor on
strategic and financial assignments. Ms Williams has also been engaged by Federal and State based
Government organisations to undertake reviews of competition policy and regulation. Prior appointments
include Director of Airservices Australia, Telstra Sale Company, V/Line Passenger Corporation, State Trustees
and Western Health.
Current and other directorships in the last 3 years
Ms Williams is a non-executive Director of Djerriwarrh Investments Ltd ASX: DJW (since 2010), Equity Trustees
Ltd ASX: EQT (since 2007), Victorian Funds Management Corporation, Guild Group, Defence Health and Port of
Melbourne Corporation. Ms Williams is also a Council member of the Cancer Council of Victoria.
27
Directors’ Statutory Report
For the year ended 30 June 2013
2. Company Secretary
Ms Alison Evans B.A., LLB was appointed to the position of Company Secretary and Legal Counsel on 25 February 2013. Ms Evans is an experienced
company secretary and corporate legal counsel with extensive knowledge of corporate and commercial law in the resources and energy sectors. Ms Evans
has held Company Secretary and Legal Counsel roles in a number of minerals and energy companies including Centrex Metals, GTL Energy and AGL.
Ms Evans’ public company experience is supported by her work at leading corporate law firms.
Mr Ian E. Gregory, B.Bus., FCIS, FFIN, MAICD, resigned as Company Secretary on 28 February 2013.
3. Directors’ Meetings
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the parent
entity during the financial year are:
Director
Board Meetings
Audit Committee Meetings
Remuneration and Nomination
Committee Meetings
Mr J.C. Conde1
Mr L.J. Shervington
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
A = Number of meetings attended.
A
2
7
7
7
7
B
2
7
7
7
7
A
-
3
-
4
-
B
-
4
-
4
-
A
-
1
-
1
-
B
-
1
-
1
-
B = Number of meetings held during the time the Director held office, or was a member of the committee, during the year
1 Appointed 25 February 2013
The Board has also established a Corporate Governance Committee. Given the size of the Board for the major part of the reporting period, no Corporate
Governance Committee meetings were held and matters that would ordinarily be dealt with by the Corporate Governance Committee were dealt with by the
full Board in Board meetings.
4. Corporate Governance Statement
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Cooper Energy Limited support the principles of
corporate governance. The Company’s Statement on Corporate Governance is set out in full on page 41 of the Annual Report.
5. Remuneration Report (Audited)
5.1 Introduction
The Directors of the Company have prepared this remuneration report to outline the overall remuneration strategy, policies and practices, which were applied
by the Company for the twelve months to 30 June 2013 and the application of the Company’s Performance Rights plan that was last approved by the
shareholders on 9 November 2012. The report has been prepared in accordance with Section 300A of the Corporations Act 2001 (Cth) (“Corporations Act”)
and has been audited in accordance with section 308(3C) of the Corporations Act.
The Company received 98.43% of “yes” votes on its remuneration report for the 2012 financial year. The Company did not receive any specific feedback
from shareholders at the 2012 Annual General Meeting on its remuneration practices.
28
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.2 Key Terms
Throughout this remuneration report, the following terms have the meaning indicated below:
Directors: the Managing Director, Executive Director and the Non-executive Directors.
Executives: the Managing Director, Executive Director Exploration and Production and senior managers who report to those roles, including KMP.
Executive Directors: any Directors who are also Executives. For this report, the Executive Directors are the Managing Director (Mr David Maxwell) and the
Executive Director Exploration and Production (Mr Hector Gordon).
Base Salary: fixed annual remuneration or base salary (including superannuation).
KPI: key performance indicators determined by the Board.
KMP: key management personnel those persons having authority and responsibility for planning, directing and controlling the major activities of the
consolidated entity.
LTIP: long term incentive plan which aims to provide an incentive to deliver successful future Company shareholder value and performance.
STIP: short term incentive plan which aims to provide a reward for successful individual and Company performance in the past year.
5.3 Key Management Personnel
For the purposes of this report, Key Management Personnel (KMP) of the group are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the parent entity and the group, directly or indirectly, including any Director (whether Executive or otherwise)
of the parent entity.
The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key management
personnel for the entire period.
Executive Directors
Mr D.P. Maxwell (Managing Director)
Mr H.M. Gordon (Executive Director- Production and Exploration)
Non-Executive Directors
Mr J. C.Conde AO (Chairman)1
Mr L.J. Shervington
Mr J.W. Schneider
1 Appointed 25 February 2013
Executives
Mr J. de Ross (Chief Financial Officer)1
Mr A. D. Thomas (Exploration Manager)
Ms A.M. Evans (Company Secretary and Legal Counsel)2
1 Appointed 27 September 2012
2 Appointed 25 February 2013
Key Management Personnel who ceased employment during the year
Mr S.K. Twartz (Exploration Manager)3
Mr S.F. Blenkinsop (Legal and Commercial Manager)4
Mr J. Ballie (Chief Financial Officer)5
Mr A. Warton (Development Manager)5
3 Ceased 31 July 2012
4 Ceased 5 July 2012
5 Ceased 31 December 2012
Except as noted, the named persons held their current positions for the whole of the financial year and since the end of the financial year.
29
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.4 Remuneration Policy and Framework
The Company’s remuneration policy is designed to ensure that the level and form of compensation achieves certain objectives, including:
(a) Attracting, motivating and retaining highly skilled Directors and employees to pursue and deliver the Company’s strategy and goals;
(b) Delivery of value-adding outcomes for the Company;
(c) Fair and reasonable reward for past individual and Company performance; and
(d) Providing incentive to deliver future individual and Company performance.
Remuneration consists of base salary, superannuation, short term incentives and long term incentives.
Remuneration is determined by reference to market conditions and performance. In addition to the year-end annual review of remuneration, the
Board obtained and used independent resource industry remuneration data to determine market remuneration rates in relation to the oil and gas industry
in Australia.
5.5 Governance
The Remuneration and Nomination Committee
The Remuneration and Nomination Committee’s role is to review and recommend remuneration for Non-executive Directors, the Executive Directors and
Executives. The Remuneration and Nomination Committee is also responsible for the review of remuneration policies and practices.
The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration of Directors and Executives on at
least an annual basis by reference to relevant employment market conditions and third party remuneration benchmark reports. The overall objective is to
ensure shareholders benefit from the retention of a high quality Board and Executive team which is remunerated consistent with industry practises.
The ASX Listing Rules and the Constitution require that the maximum aggregate amount of remuneration to be allocated among the Non-executive Directors
be approved by shareholders at the annual general meeting. The Remuneration and Nomination Committee takes account of the time demands made on
Directors and such factors as fees paid to Non-executive Directors in comparable Australian companies in proposing the maximum amount of compensation
for approval by the shareholders and also in determining the allocation of the compensation. The latest determination was at the parent entity’s Annual
General Meeting held on 9 November 2012, when shareholders approved an aggregate remuneration of up to $450,000 per year.
From 17 April 2013, the Remuneration and Nomination Committee has consisted of three Non-executive Directors after Mr Conde, Non-executive Chairman
joined the Board in February 2013. For the balance of the year, the Remuneration and Nomination Committee was made up of two Non-executive Directors.
The Committee meets formally at least once a year and may have informal meetings during the year. The Managing Director attends meetings by invitation.
Remuneration arrangements for Directors and Executives are reviewed by the Remuneration and Nomination Committee and recommended to the
Board for approval. The Remuneration and Nomination Committee considers external information and may engage independent advisers to establish
market benchmarks.
Remuneration arrangements are determined in conjunction with the annual review of the performance of Directors, Executives and employees of the
Company. Performance of the Directors of the Company, including the Managing Director, are evaluated by the Board and may be assisted by the
Remuneration and Nomination Committee. The Managing Director reviews the performance of Executives with the Remuneration and Nomination Committee.
These evaluations take into account criteria such as the achievement toward the Company’s performance benchmarks and the achievement of individual
performance objectives.
External Advisors and Remuneration Advice
The Remuneration Committee engaged the services of Strategic Human Resources Pty Ltd (“SHR”) to benchmark salaries for all staff. This involved
the review and application of remuneration data sourced from National Rewards Group Inc. and Godfrey Remuneration Group Pty Limited.
The Remuneration Committee also engaged Godfrey Remuneration Group (“GRG”) to benchmark the Company’s Non-executive Director remuneration
practices against market practice of a selected group of ASX listed Companies.
The Board is satisfied that all recommendations made by SHR and GRG were made free from undue influence by any KMP to whom the
recommendations related.
Fees payable to SHR for services to 30 June 2013 totalled $6,253.50 and Godfrey Remuneration Group Pty Ltd $11,495. Annual membership fees
payable to National Rewards Group were $5,500.
30
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.6 Remuneration Structure
The Executive remuneration structure in place for the financial year was applied to all employees of the Company, including Executives.
The Company’s remuneration structure has three elements set out below:
(a) Base Salary;
(b) STIP (Short Term Incentive Plan); and
(c) LTIP (Long Term Incentive Plan).
Base Salary
Employees are paid Base Salaries which are competitive in the markets in which the Company operates. Individual Base Salary is set each year based on job
description, competitive salary information sourced by the Company and overall competence in fulfilling the requirements of the particular role.
Base Salary is paid in cash and is not at risk other than by termination.
Short Term Incentive Plan (STIP)
Each year the Company issues a scorecard establishing targets to measure the Company’s short term performance over the financial year. The targets focus
on the core elements needed to successfully deliver the Cooper Energy strategy and plan and shareholder returns for all staff. Company performance against
the scorecard is reported monthly to all staff and the scorecard is used as a key input into the performance based remuneration.
The scorecard is based on those key business deliverables that will in combination drive the value of the enterprise. The Managing Director develops the draft
scorecard for review by the Remuneration and Nomination Committee and Board consideration and approval. The scorecard is approved by the Board no later
than 30 September of each year.
For each item in the scorecard a base or threshold level is described as well as a target, stretch target and super stretch target.
• Base or threshold is not going backwards against performance in the previous year and is the minimum acceptable for that year.
• Target is solid steady growth or improvement.
• Stretch is doing better than target and consistent with leading peers.
• Super stretch is leading peers or best in class when compared to others.
Each item in the scorecard is assigned a weighting.
Average weighted performance of the total scorecard is the sum of the performance assessed for each item multiplied by the weighting for each item.
The maximum STIP payment at the various organisational levels is as follows:
• For the Managing Director the maximum STIP is 100% of Base Pay;
• For the Executive Director the maximum STIP is 75% of Base Pay;
• For Executives (e.g. direct reports to the Managing Director or the Executive Director the maximum STIP is 50% of Base Pay;
• For all other staff the guideline maximum STIP is 25% of Base Pay.
The level of “at risk” remuneration is at the discretion of the Board and will be reviewed annually by the Board.
• For the Managing Director the portion of the maximum STIP to be paid is based entirely on company performance as assessed by the Board having close
regard to the Company scorecard performance.
• For the other Executives (including the Executive Director) the portion of the maximum STIP to be paid is based largely on company performance however
individual performance as assessed by the Board will also be taken into account.
Individual performance ratings are determined in staff performance reviews which are undertaken each year by 31 August.
In the event that corporate activity occurs such that the company is merged or taken over then the scorecard will be re-set at the discretion of the Board.
Employees must have been with the Company for 3 months to qualify for any STIP. If the staff member is with the Company for 3 months but less than the full
year the STIP is pro-rated according to the period of time the employee has been with the Company.
If an employee leaves the Company during a year (other than for retirement or due to redundancy) no STIP is payable. If the staff member retires or is made
redundant then the STIP is pro-rated in accordance with the portion of the year worked.
Notwithstanding these guidelines the final STIP to be paid to each staff member will be at the discretion of the Board.
31
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.6 Remuneration Structure continued
In the financial year 2013 the scorecard KPIs and their relative weightings were as follows:
STIP Key Performance Indicators
Quantitative and Financial
Reserves & Exploration Portfolio
Production
Cost Management
Non-Financial Measures
Safety and environmental performance
Strategy and plan implementation
Relationships with investors, partners and the Board
%
25
25
15
15
10
10
Irrespective of the scorecard outcome payment of any STIP is entirely at the discretion of the Board.
Long Term Incentive Plan (LTIP)
The Company believes that encouraging its employees to become shareholders is the best way of aligning their interests with those of its shareholders.
LTIP awards are made in the form of performance rights which will have a vesting timeframe of three years. The number of performance rights that vest will
be based on the Company’s performance over the same three years. For each performance right that vests, the employee will receive one share at no cost to
the employee.
The number of performance rights to be granted annually to each employee is calculated by the following formula:
Organisational Level Benchmark × Individual’s Base Salary ÷ Share Price
Five maximum LTIP organisational level benchmarks have been established as percentages on individual base salary. These five levels reflect the increased
involvement of each level in pursuing and achieving the Company’s goals. These benchmarks are set out in the following table:
Organisational Level
Organisational Level Benchmark
Managing Director
Executive Director
Executives
Senior Technical
Professional, Technical and Administration
120%
95%
70%
50%
30%
The share price calculation will use the 30 day volume-weighted average share price (VWAP) of the Company’s shares immediately prior to the award date.
The Board has established a guideline that the total number of performance rights to be issued in each tranche is capped at 2% of the fully paid issued
capital of the Company while the total number of performance rights on issue may not exceed 5% of the issued capital of the Company. In the event
that the potential number of performance rights to be issued exceeds these caps then all potential awardees will receive a pro-rata reduced number of
performance rights.
Each tranche of performance rights issued is divided into three portions and each portion is made up of two parcels for testing. Each portion is tested within
12, 24 and 36 months of the issue date of the performance rights.
Testing of each parcel is as follows:-
• 25% of the performance rights against the Company’s absolute total shareholder return (ATSR) over the testing period.
• 75% of the performance rights against the Company’s absolute total shareholder return (ATSR) compared to the relative total shareholder return (RTSR)
over the testing period.
The ATSR is the absolute shareholder return calculated as the percentage difference between the relevant testing date VWAP and the award date.
The RTSR means the Company’s ATSR measured against the peer group of 8 companies ATSR between the relevant testing date and the award date.
32
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.6 Remuneration Structure continued
The ATSR and RTSR performance hurdles required to achieve vesting levels are as follows:
Assess 25% of Rights measured against ATSR
over the performance period
Assess 75% of Rights measured against relative percentile
ranking of RTSR over the performance period
ATSR
Below 5%
Equal to 5%
Equal to 15%
Greater than 25%
Number of Performance
Rights to be exercised
RTSR
No rights exercisable
25% of the rights
50% of the rights
100% of the rights
Below 50%
Equal to 50%
Greater than 75%
Greater than 50% but below
or equal to 75%
Number of Performance
Rights to be exercised
No rights exercisable
50% of the rights
100% of the rights
Pro rata 50% to 100%
ATSR and RTSR are used rather than earnings per share (EPS) because in the Board’s view, the EPS would shift the key focus away from the Company’s
long-term business objectives which includes successful exploration.
Rights that do not qualify for vesting in any one year can be carried forward to the following year for testing of vesting eligibility.
Vesting characteristics of the performance rights are as follows:
• Performance measurement period is annually tested over a three year period, which is consistent with the typical time cycle for an exploration program
and the Company’s strategic emphasis on exploration and growing the reserves base;
• Performance is based on differences in ATSR and RTSR as measured from the commencement date to the end of the assessment period. The ATSR
and RTSR use 30-day VWAP of the Company’s shares immediately prior to the relevant testing date;
• RTSR will be assessed against a peer group of like companies determined by the Board before the start of each assessment period or as soon as
practical thereafter;
• The peer group for the performance rights issued in October 2012 and May 2013 comprises Beach Energy Limited; Senex Energy Limited; Drillsearch
Energy Limited; Tap Oil Limited; Cue Energy Resources Limited; Central Petroleum Limited, AWE Limited and Icon Energy Limited.
Accounting for Performance Rights on shares granted to Executives and employees
The values of the performance rights are recognised as Share Based Payments in the statement of comprehensive income and amortised over the
vesting period.
Performance Rights were issued in October 2012 and for those employees who were employed during the year and after the October issue date, May 2013.
The Performance Rights were granted for no consideration and the employee received no cash benefit at the time of receiving the rights. The cash
benefit will be received by the employee following the sale of the resultant shares, which can only be achieved after the rights have been vested and the
shares are issued.
Performance Rights were valued by an independent consultant who applied the Monte Carlo Simulation model to determine the probability of the absolute
return performance hurdles and the relative return performance hurdles being achieved. Performance Rights are valued at the closing market price on the
date they are granted and no adjustment is made for subsequent movements in share price during any vesting period.
5.7 Executive Directors’ Remuneration
Mr David Maxwell – Managing Director
Mr Maxwell commenced as Managing Director on 12 October 2011 under contract of employment of that date. The term of the Managing Director’s executive
employment agreement expires 10 October 2014.
Pursuant to shareholder approval obtained at the 2012 Annual General Meeting, Mr Maxwell was eligible to receive a maximum of 1,317,992 Performance
Rights that were subsequently granted on 5 December 2012.
The remuneration details for Mr Maxwell for the year to 30 June 2013 are set out in the table on page 37.
Mr Hector Gordon – Executive Director Exploration and Production
Mr Gordon commenced as Executive Director Exploration and Production on 26 June 2012 under contract of employment for a period of three years expiring
on 24 June 2015.
33
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.7 Executive Directors’ Remuneration continued
Pursuant to shareholder approval obtained at the 2012 Annual General Meeting, Mr Gordon was eligible to receive a maximum of 728,731 Performance
Rights that were subsequently granted on 5 December 2012.
The remuneration details for Mr Gordon for the year to 30 June 2013 are set out in the table on page 37.
Service agreements terms
The service agreements set out the Executive Directors’ entitlement to Base Salary, STIP and LTIP. See Section 5.4 of this report for more detail concerning
these elements of remuneration.
The base salary of the Executive Directors is reviewed annually at the Board’s discretion. Either the Company or Executive Director may terminate this
contract by providing six months’ written notice or payment in lieu of notice. The Company may also terminate the contracts immediately for cause.
The Company also entered into deeds of indemnity insurance and access with each of the Executive Directors under which the Company will maintain an
appropriate level of Directors’ and Officers’ indemnity insurance and provide access to Company records.
5.8 Executive’s Remuneration
The remuneration details for Executives who are KMP for the year to 30 June 2013 are set out in the tables on page 38.
The Company has entered into service agreements with the Executives. The term of the service agreements continue until termination. Either the Company or
Executive may terminate the contract by providing between two and three months’ notice or payment in lieu of notice. The Company may also terminate the
contracts immediately for cause.
5.9 Non-Executive Directors’ Remuneration
In line with Corporate Governance principles, Non-Executive Directors of the Company are remunerated solely by way of fees and statutory superannuation.
The annual fee is set to reflect current market levels based on the time, responsibilities and commitments associated with the proper discharge of their duties
as members of the Board.
The maximum total pool of available fees was set by shareholders in General Meeting held on 9 November 2012 when shareholders approved an aggregate
remuneration of up to $450,000 per year (increased from $325,000 set in 2006).
Other than statutory superannuation, Non-executive Directors of the Company are not entitled to any retirement benefits upon retirement from office.
The Company has entered into arrangements with Non-executive Directors Mr Conde (Chairman), Mr Shervington, Mr Schneider and Ms Williams whereby
those persons are appointed as Non-executive Directors of the Company. Mr Conde was appointed Non-executive Chairman on 25 February 2013, replacing
Mr Shervington as Chairman. Mr Shervington has indicated that he will retire as a Director of the Company at the 2013 Annual General Meeting.
The term of the appointments is determined in accordance with the Company’s Constitution and is subject to the provisions of the Constitution dealing with
retirement, re-election and removal of Non-executive Directors of the Company. In this regard the Constitution provides that all Non-executive Directors of the
Company are subject to re-election by shareholders by rotation every three years during the term of their employment.
The terms of engagement provide that the Company will maintain an appropriate level of Directors’ and Officers’ insurance and access to Company records in
accordance with the terms of deeds of indemnity, insurance and access entered into between the Company and each of the Non-executive Directors.
The remuneration payable by the Company to Non-executive Directors is shown in the table on page 37.
34
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.10 Elements of Remuneration related to Performance
The Corporations Act 2001 requires disclosure of the Company’s remuneration policy to contain a discussion of the Company’s earnings and performance and
the effect of the Company’s performance on shareholder wealth in the reporting period and the four previous financial years. The table below provides a five
year financial summary to 30 June 2013.
30 June 2013
30 June 2012
30 June 2011 30 June 2010
30 June 2009
30 June 2008
Net Profit/(loss) after tax
$’000
1,318
8,381
(10,349)
1,247
(2,816)
6,406
EPS Basic
EPS Diluted1
Year-end share price
Shares on issue
Market Capitalisation
cents
cents
$
million
$MM
0.4
0.4
0.38
329.1
125.1
2.8
2.8
0.45
327.3
147.3
(3.5)
(3.5)
0.36
292.6
105.3
0.4
0.4
0.37
292.6
111.2
(1.0)
(1.0)
0.45
291.9
131.4
3.0
2.9
0.47
252.3
118.6
1 No dividends were paid during any of the financial years.
Short Term Incentive Plan’s relation to performance
For the 12 months to 30 June 2013, the Company’s performance was measured against Company KPIs which were set out in a scorecard. The KPIs were
designed to reflect the Company’s strategy, business plan and budget. The areas covered by the scorecard are set out in the table on page 32. For an oil
and gas exploration and production company such as Cooper Energy, oil and gas reserves and production are at the heart of the business and are therefore
the key measures. Unless either production or reserves performance is above the threshold, no STIP payment will be made. Other key items included in the
scorecard each year are safety and environmental performance, delivery of company strategy, cost management and business conduct and relationships.
The Board assigns an overall performance rating against target levels which determines the key management personnel and employee STIP award for the
period ending the 30 June 2013.
Long Term Incentive Plan’s relation to performance
The LTIP aligns the rewards received by the participants in the LTIP with the longer term performance of the Company relative to its peers. Participants also
have the opportunity to grow the long-term value of their LTIP by delivering results for the Company that increase the share price.
Company’s performance
For the year to 30 June 2013, the Company met or exceeded a number of its KPIs but did not meet others.
STIP Key Performance Indicators
Quantitative and Financial
Reserves
Exploration Portfolio
Production
Cost Management
Non-Financial Measures
Safety and environmental performance
Strategy and plan implementation
Relationships with investors, partners and the Board
Performance
Exceeded threshold
Exceeded super stretch
Below threshold
Met target
Met target
Met target
Met target
This performance will be assessed by the Board and the score, in conjunction with individual performance reviews will form the basis of STIP payable in
October 2013.
During the year the Performance Rights granted on each date were tested using the measures described in section 5.6 above. In summary, 87.475% of
tranche one portion one of the Performance Rights offered and accepted were achieved and will vest subject to vesting requirements.
35
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.11 Detailed Remuneration Information
The elements of remuneration shown in the Performance Rights column are directly related to the performance of the Company total shareholder return.
The elements of remuneration shown in the remaining columns are not performance related. The performance conditions used in the determination of
performance-based remuneration for Executive Directors and Executives of the Company are explained in detail in the discussion on remuneration policy in
this remuneration report.
The value of performance rights shown in the tables below are the accounting costs accrued in the financial year for grants in the financial year. No KMP of
the Company received a cash benefit from rights having been received. No cash benefit is received by KMP of the Company until the sale of the resultant
shares, which cannot be done until the rights have vested and the shares issued. No cash bonus awards were forfeited because the person did not meet the
relevant service or performance conditions.
Other Elements of Executive Director and Executive Remuneration
Remuneration packages contain the following key elements:
(a) Short term employee benefits – salary/fees, bonuses.
(b) Post-employment benefits – including superannuation and redundancy packages.
Value of options that expired during the year
No options were issued or forfeited during the year.
Analysis of Movement in Performance Rights Granted
Number of
Performance Rights
granted during
reporting period
Fair value of
Performance Rights
granted during
reporting period
Number of
Performance Rights
vested during the
reporting period
Number of
Performance Rights
vested to date
Percentage of
Performance Rights
vested to date
1,317,992
728,731
698,412
399,059*
153,782*
$294,261
$83,440
$82,386
$45,692
$1,064
-
-
-
-
-
-
-
-
-
-
0%
0%
0%
0%
0%
Director
Mr D. Maxwell
Mr H. Gordon
KMP
Mr A. Thomas
Mr J. de Ross
Ms A. Evans
*Mr De Ross’s employment commenced on 27 September 2012 and therefore the grant of Performance Rights was prorated for the period of the year for
which he was employed by the Company. Ms Evans’ employment commenced on 25 February 2013 and therefore the grant of Performance Rights was
prorated for the period of the year for which she was employed by the Company.
Value of Performance Rights Granted – Basis of Calculation
The value of performance rights at the grant date is calculated as the fair value of the rights at grant date, using the Monte Carlo Simulation model, multiplied
by the number of rights granted.
The fair value of performance rights is set out in note 23 of the financial statements.
36
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.11 Detailed Remuneration Information continued
Table 1: 2012 and 2013 Directors’ remuneration
Benefits
Short-term Long-term
Post
Employment
Share Based
Payment (a)
Salary &
Fees
STIP
Long
Service
Leave
Super-
annuation
LTIP
Performance
Rights
Termination
Payments
Total
% Total in
Performance
Rights
$
-
-
-
-
-
-
Directors
Mr J.C. Conde AO (b)
$
48,929
2013
2012
Mr L.J. Shervington
2013
104,189
2012
100,417
Mr J.W. Schneider (c) 2013
Mr D.P. Maxwell (d)
Mr H.M. Gordon (e)
Mr G.G. Hancock (g)
Mr C.R. Porter (h)
Mr S.H. Abbott (i)
Mr M.T. Scott (j)
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
89,514
53,833
613,529
187,348
390,102
430,522
-
-
73,022
-
22,667
-
22,667
-
12,370
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
29,971
-
-
-
-
-
56,457
-
$
4,403
9,377
9,225
8,056
5,319
16,470
11,174
16,470
-
-
7,888
-
2,040
-
2,040
-
4,167
54,776
41,853
$
-
-
-
-
-
294,261
143,351
83,440
-
-
-
-
-
-
-
-
-
377,701
143,351
$
-
-
-
-
-
-
-
-
-
-
$
53,332
113,566
109,642
97,570
59,152
1,111,608
544,627
530,432
-
-
105,249
216,130
-
-
-
-
-
-
24,707
-
24,707
-
297,701
370,695
-
1,906,508
402,950
1,349,660
Total
2013
1,286,683
187,348
2012
675,078
-
86,428
(a) The basis for computing the value of the performance rights is included in this report and also set out in Note 23
of the Annual Financial Statements.
(b) Mr J.C. Conde was appointed as Chairman on 25 February 2013.
(c) Mr J.W. Schneider was appointed as a Non-Executive Director on 12 October 2011.
(d) Mr D.P. Maxwell was appointed as Managing Director on 12 October 2011.
(e) Mr H.M. Gordon was appointed as an Executive Director on 26 June 2012.
(f) Mr N. Fearis was appointed as Alternative Director on 4 November 2011 and resigned 19 March 2012.
Mr Fearis did not receive any remuneration.
(g) Mr G.G. Hancock resigned on 12 October 2011
(h) Mr C.R. Porter resigned on 12 October 2011.
(i) Mr S.H. Abbott resigned on 12 October 2011.
(j) Mr M.T. Scott was Managing Director until 15 June 2011and was appointed the Chief Operations Officer
effective from that date until his resignation on 31 August 2011.
$
-
-
-
-
-
-
26.5%
26.3%
15.7%
-
-
-
-
-
-
-
-
-
-
-
37
Directors’ Statutory Report
For the year ended 30 June 2013
5. Remuneration Report (Audited) continued
5.11 Detailed Remuneration Information continued
Table 2: 2012 and 2013 Executive’s remuneration
Benefits
Short-term Long-term
Post
Employment
Share Based
Payment (a)
Salary &
Fees
STIP
Long
Service
Leave
Super-
annuation
Performance
Rights
Termination
Payments
Total
% Total in
Performance
Rights
Executives
Mr A. Thomas (b)
Mr J. de Ross (c)
Ms A. Evans (d)
Mr S.K. Twartz (e)
Mr J.A. Baillie (f)
Mr S.F. Blenkinsop
Mr A. Warton (f)
$
341,030
-
$
-
-
232,897
22,750
-
46,260
-
97,845
438,164
187,343
245,733
79,364
-
-
-
93,294
25,404
91,412
24,250
-
314,941
19,500
223,357
102,850
339,432
17,500
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$
-
-
-
-
-
-
-
-
36,470
-
-
-
-
-
Total
2013
1,208,096
310,306
36,470
2012
1,338,270
86,654
-
$
16,470
-
12,352
-
4,163
-
1,372
15,775
8,235
15,775
2,745
15,775
8,235
15,775
53,572
63,100
$
82,386
-
45,692
-
1,064
-
-
$
-
-
-
-
-
-
$
439,886
-
313,691
-
51,487
-
158,480
350,991
63,737
-
543,080
-
249,385
572,845
39,581
-
46,092
-
-
-
325,339
82,109
396,308
-
163,995
498,437
49,505
129,142
198,915
-
422,212
571,860
2,309,446
-
1,686,939
$
18.7%
-
14.6%
-
2.1%
-
-
11.7%
-
12.2%
-
11.7%
-
11.7%
-
-
(a) The basis for computing the value of the performance rights is included in this report and also set out in Note 23
of the Annual Financial Statements.
(b) Mr A. Thomas was appointed as Exploration Manager and commenced employment on 1 July 2012.
(c) Mr J. de Ross was appointed as Chief Finance Officer and commenced employment on 27 September 2012.
(d) Ms A. Evans was appointed as Company Secretary and Legal Counsel on a 0.6 full time equivalent and commenced employment
on 21 February 2013.
(e) Mr S.K. Twartz was made redundant on 31 July 2012.
(f) Mr J.A. Baillie and Mr A. Warton were made redundant on 31 December 2012. Mr Blenkinsop resigned on 5 July 2012.
38
Directors’ Statutory Report
For the year ended 30 June 2013
6. Principal Activities
The Group is an upstream oil and gas exploration and production Company whose primary purpose is to secure, find, develop, produce and sell
hydrocarbons. These activities are undertaken either solely or via unincorporated joint ventures. There was no significant change in the nature of these
activities during the year.
7. Operating and Financial Review
Information on the operations and financial position of Cooper Energy and its business strategies and prospects is set out in the Operating and
Financial Review.
8. Dividends
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of dividends since the end of the previous
financial year, or to the date of this report.
9.Environmental Regulation
The Group is a party of various exploration and development licences or permits. In most cases, the contracts specify the environmental regulations
applicable to oil and gas operations in the respective jurisdiction. The Group aims to ensure that it complies with the identified regulatory requirements in
each jurisdiction in which it operates. There have been no significant known breaches of the environmental obligations of the Group’s licences.
10. Likely Developments
Other than disclosed elsewhere in the Annual Report, further information about likely developments in the operations of the Group and the expected results
of those operations in future financial years has not been included in this report because disclosure of the information would likely result in unreasonable
prejudice to the consolidated entity.
11. Directors’ Interests
The relevant interest of each Director in ordinary shares and options over shares issued by the parent entity as notified by the Directors to the Australian
Stock Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this reports is as follows:
Mr D.P. Maxwell
Mr J Conde AO
Mr J.W. Schneider
Mr H.M. Gordon
Mr L.J. Shervington
Ms A. Williams
Cooper Energy Limited
Ordinary Shares
Performance Rights
1,013,190
-
300,000
176,608
405,933
-
2,965,704
-
-
728,731
-
-
12. Share Options And Performance Rights
At the date of this report, there are no unissued ordinary shares of the parent entity under option.
At the date of this report, there have been 8,561,370 performance rights granted to employees under the Employee Performance Rights Plan.
13. Events After Financial Reporting Date
Refer to Note 27 of the Notes to the Financial Statements.
14. Proceedings On Behalf Of The Company
No person has applied to the Court under section 237 of the Corporations Act for leave to bring proceedings on behalf of the Company, or to 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 part of the proceedings.
No proceedings have been brought or intervened in on behalf of Cooper Energy Limited with leave of the Court under section 237 of the Corporations Act.
39
Directors’ Statutory Report
For the year ended 30 June 2013
15. Indemnification And Insurance Of Directors And Officers
15.1 Indemnification
The parent entity has agreed to indemnify the current Directors and past Directors of the parent entity and of the subsidiaries, where applicable, against
all liabilities (subject to certain limited exclusions) to persons (other than the Group or a related body corporate) which arise out of the performance of
their normal duties as a Director or Executive Director unless the liability relates to conduct involving a lack of good faith. The parent entity has agreed to
indemnify the Directors and Executive Directors against all costs and expenses incurred in defending an action that falls within the scope of the indemnity
and any resulting payments.
15.2 Insurance premiums
During the financial year, the parent entity has paid insurance premiums in respect of Directors’ and Officers’ liability and legal insurance contracts for
current and former Directors and Officers including senior employees of the Parent entity.
The insurance premium relates to costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their
outcome and other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper use of information
or position to gain a personal advantage.
The insurance policy outlined above does not contain details of premiums paid in respect of individual Directors, Officers and senior employees of the
parent entity.
16. Auditor’s Independence Declaration
The auditor’s independence declaration is set out on page 100 and forms part of the Directors’ report for the financial year ended 30 June 2013.
17. Non-Audit Services
The amounts paid to the auditor of the Group, Ernst & Young and its related practices for non-audit services provided during the year was $nil
(2012: $20,000).
18. Rounding
The Group is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report
have been rounded to the nearest thousand dollars, unless otherwise stated.
This report is made in accordance with a resolution of the Directors.
Mr John C Conde AO
Chairman
Mr David P. Maxwell
Managing Director
Dated at Adelaide 28 August 2013
40
Corporate Governance Statement
For the year ended 30 June 2013
This statement reports on Cooper Energy’s (“Company”)
key governance framework, principles and practices as
at 28 August 2013. These principles and practices are
reviewed regularly and revised as appropriate to reflect
changes in law and best practice in corporate governance.
ASX corporate governance principles and recommendations
Cooper Energy, as a listed entity, must comply with the Corporations Act 2001 (Cth) (“Corporations
Act”), the ASX Limited (“ASX”) Listing Rules (“ASX Listing Rules”) and other Australian laws.
ASX Listing Rule 4.10.3 requires ASX listed companies to report on the extent to which they have
followed the Corporate Governance Principles and Recommendations (“ASX Principles”) released by
the ASX Corporate Governance Council. The ASX Principles require the Board to consider carefully
the development and adoption of appropriate corporate governance policies and practices founded
on the ASX Principles.
Compliance with ASX corporate governance principles and recommendations
Details of the Company’s compliance with the ASX Principles are set out in this report.
For further information on the Company’s Corporate Governance Policies please refer to Cooper
Energy’s website www.cooperenergy.com.au under Corporate Governance.
41
Corporate Governance Statement
For the year ended 30 June 2013
ASX Principles Compliance
1.
Lay solid foundations for management and oversight
1.1 Companies should establish the functions reserved to the Board and those delegated to senior executives
Comply
and disclose those functions.
Board role and responsibilities
The Board of Directors is accountable to shareholders for the performance of Cooper Energy and is responsible for the corporate governance practices of the
Company. The Board’s principal objective is to maintain and build the Company’s capacity to generate value for shareholders taking into account the interests
of its employees, customers, suppliers, lenders and the wider community while ensuring that the Company’s overall activities are properly managed. Cooper
Energy’s corporate governance practices provide the structure which enables this objective to be pursued, whilst ensuring that the business and affairs of the
Company are conducted ethically and in accordance with the Company’s constitution and relevant law.
The roles and responsibilities of the Board are set out in the Board Charter. The Board Charter defines in detail the matters that are reserved for the
Board and its committees, and those that the Board has delegated to management. The central role of the Board is to oversee and approve the
Company’s strategic direction, to select and appoint a Managing Director (“MD”), to oversee the Company’s management and business activities and report
to shareholders.
In addition to matters expressly required by law to be approved by the Board, the following powers are reserved to the Board for decision:
• strategy – providing strategic oversight and approving strategic plans and initiatives;
• Board performance and composition – evaluating the performance of non-executive directors, and determining the size and composition of the Board as
well as recommending to shareholders the appointment and removal of directors;
• leadership selection – evaluating the performance of, and selection of, the MD;
• corporate responsibility – considering the social, safety, ethical and environmental impacts of the Company’s activities, and setting policy and monitoring
compliance with safety, corporate and social policies and practices;
• financial performance – approving the Company’s annual operating plans and budget, monitoring management, financial and operational performance;
• financial reports to shareholders – approving annual and half-year reports and disclosures to the market that contain, or relate to, financial projections,
statements as to future financial performance or changes to the policy or strategy of the Company; and
• establishing procedures – ensuring that the Board is in a position to exercise its power and to discharge its responsibilities as set out in the Board Charter.
The Board delegates responsibility for day-to-day management of Cooper Energy to the MD who is accountable to the Board.
When appropriate, the Board may use a committee of directors to support the Board in matters that require more intensive review. The full Board is
responsible for compliance and risk management issues (with assistance from the Audit Committee) and the Company has a Risk Management Policy.
The Board Charter is available in the corporate governance section of Cooper Energy’s website.
Board meetings
The Board schedule is to meet formally six times a year, and additionally, from time to time, to deal with specific matters that require attention between
scheduled meetings. Meeting agendas are established by the Chairman in conjunction with the MD and Company Secretary to ensure adequate coverage of
financial, strategic and major risk areas throughout the year. Typically, regular Board meetings include consideration of a broad range of matters, including
financial performance reviews, risk assessment, capital management, prospective acquisitions and delegated authorities. Any director may request additional
matters be added to the agenda.
Where required, members of senior management attend meetings of the Board by invitation, and sessions may be held for non-executive directors to meet
without management present.
Copies of Board papers are circulated in advance of the meetings in either electronic or hard copy form. Directors are entitled to request additional
information where they consider the information is necessary to support informed decision making.
Board committees and membership
The Board has currently three standing committees to assist in the discharge of its responsibilities. These are the:
• Audit Committee;
• Remuneration and Nomination Committee; and
• Corporate Governance Committee.
The charters of all Board committees detailing the roles and duties of each are available in the corporate governance section of Cooper Energy’s website.
42
Corporate Governance Statement
For the year ended 30 June 2013
All Board committee charters are reviewed at least annually.
Committee members are chosen for the skills, experience and other qualities they bring to the committees. The executive management attends, by invitation,
Board committee meetings.
All papers considered by the standing committees are available on request to directors who are not on that committee.
Following each committee meeting, generally at the next Board meeting, the Board is given a verbal update by the Chair of each committee. In addition,
minutes of all committee meetings are provided to all directors.
The Company Secretary provides secretariat services for each committee.
Professional advice, access to information and other resources
All directors have unrestricted access to Company records and information and receive detailed financial and operational reports from the Managing Director
during the year that enables them to carry out their duties.
The directors collectively, and each director individually, have the right to seek independent professional advice at Cooper Energy’s expense to assist them
to carry out their responsibilities. While prior approval of the Chairman is required, it may not be unreasonably withheld and, in its absence, approval by the
Board may be sought.
The constitution sets out rules dealing with the indemnification of and insurance cover for directors and former directors of Cooper Energy. Any such
arrangements are undertaken in accordance with limitations imposed by law.
Conflicts of interest
Directors are required to disclose any actual or potential conflict or material personal interests on appointment as a director and are required to keep these
disclosures up to date.
In the event that there is, or may be, a conflict between the personal or other interests of a director, then the director with an actual or potential conflict of
interest in relation to a matter before the Board withdraws from the meeting for the period the matter is considered and takes no part in the discussion or
decision making process. Board papers regarding the relevant matter may also be withheld from the conflicted director.
Corporate responsibility and sustainability
Cooper Energy aims to produce positive outcomes for all stakeholders in managing its business and to maximise financial, social and environmental value
from its activities.
In practise this means having a commitment to transparency, fair dealing, responsible treatment of employees and partners and positive links into
the community.
Sustainable and responsible business practices within Cooper Energy are viewed as an important long term driver of performance and shareholder value.
Through such practices the Company seeks to reduce operational and reputation risk and enhance operational efficiency while contributing to a more
sustainable society.
The Company accepts that the responsibilities of the Board and management, which flow from this approach, go beyond strict legal and financial obligations.
In particular, the Cooper Energy Board seeks to take a practical and broad view of directors’ fiduciary duties, in line with stakeholders’ expectations.
1.2 Companies should disclose the process for evaluating the performance of senior executives.
Comply
The performance of the MD is reviewed annually by the Board and the Remuneration and Nomination Committee, which links the nature and amount of
directors’ and officers’ emoluments to the consolidated entity’s financial and operational performance. Remuneration of the MD is determined in accordance
with Cooper Energy’s executive compensation program, which is administered by the Remuneration and Nomination Committee.
Details of Cooper Energy’s remuneration practice relating to key management personnel and senior employees are set out in full in the Directors’ Statutory
Report on pages 26 to 40.
1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1.
Comply
43
Corporate Governance Statement
For the year ended 30 June 2013
2.
Structure the Board to add value
2.1 A majority of the Board should be independent directors.
Comply since 25 February 2013
Board composition and expertise
The Board has an expansive range of relevant industry experience, commercial, legal, technical and other skills and expertise to meet its objectives.
The current Board composition and details on each of the director’s backgrounds including experience, knowledge and skills are set out on pages 26 to 27
of the Directors’ Statutory Report.
The Board considers that the executive and non-executive directors collectively bring the range of skills, knowledge and experience necessary to direct
the company.
In assessing the composition of the Board, the directors have regard to the following policies:
• the Chairman should be non-executive and independent;
• the role of the Chairman and MD should not be filled by the same person;
• the MD should be a full-time employee of the company;
• the majority of the Board should comprise directors who are both non-executive and independent; and
• the Board should represent a broad range of qualifications, experience and expertise considered of benefit to the company.
Director independence
The criteria for assessing the independence of each director is included in Cooper Energy’s Board Charter. Broadly, directors of Cooper Energy are considered
to be independent when they are independent of management and free from any business or other relationship that could materially interfere
with – or could reasonably be perceived to interfere with – the independent exercise of their judgement.
The Board has considered the associations of each of the non-executive directors in office at the date of the Directors’ Statutory Report and considers
that all non-executive directors are considered independent.
The following directors of Cooper Energy are considered to be independent:
Name
Mr J.C. Conde AO
Mr L.J. Shervington
Mr J.W. Schneider
Ms A.J.M. Williams
Position
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Since Mr Conde’s appointment on 25 February 2013, the Board has comprised of a majority of directors who meet the test of independence under
Recommendation 2.
2.2 The chair should be an independent director.
Comply
The Board elects one of the independent non-executive directors to be Chairman. The Chairman is responsible for leadership of the Board, for the efficient
organisation and conduct of the Board’s function and for the promotion of relations between Board members and between Board and management that are
open, cordial and conducive to productive co-operation.
2.3 The roles of chair and Managing Director should not exercised by the same individual.
Comply
As stated in 2.1 above the Company has a policy that the role of the Chairman and Managing Director should not be filled
by the same person.
2.4 The Board should establish a nomination committee.
Comply
The Company has a Remuneration and Nomination Committee which makes recommendations for nominations for appointment to the Board. The Board
selects the most suitable candidates taking into account the diversity of experience among the existing directors and a range of criteria such as the
candidate’s background, experience, professional skills, personal qualities and availability to commit themselves to Board activities. An important quality
sought in candidates is demonstrated experience in corporate decision-making at senior executive level.
44
Corporate Governance Statement
For the year ended 30 June 2013
Directors are appointed by shareholders at the AGM. If candidates are appointed by the Board between AGMs or to fill a casual vacancy, they stand for
election, in accordance with the constitution, at the next AGM of shareholders.
In addition, nominations may be proposed by shareholders under the constitution for vote at the AGM. These nominations must be received in time to be
submitted with notice of the AGM and inclusion in the proxy forms for voting by shareholders not able to attend the AGM.
The present membership of the Committee is:
• Mr J.W. Schneider (Chairman)
• Mr L.J. Shervington
• Mr J.C. Conde
These directors are independent and non-executive members of the Board.
The Committee met once formally during the financial year. The directors and MD may attend Committee meetings by invitation. Given the size of the Board
(4 Directors) until the appointment of Mr Conde to the Remuneration and Nomination Committee on 17 April 2013, the full Board considered matters of
appointment of directors at regular Board meetings.
Since 17 April 2013, the Company the Committee has had three members as recommended in the ASX Principles.
Terms of appointment, induction training and continuing education
All new directors will be provided with a formal letter of appointment setting out the key terms and conditions of the appointment, including duties, rights and
responsibilities, the time commitment envisaged and the Board’s expectations regarding their involvement with committee work.
An induction is provided to all new directors. It includes comprehensive meetings with the MD, key executives and management, and information on key
corporate and Board policies.
All directors are expected to maintain the skills required to discharge their obligations to the Company. Directors are encouraged to undertake continuing
professional education and where this involves industry seminars and approved education courses, this is paid for by the Company where appropriate.
Directors’ retirement and re-election
Cooper Energy’s constitution states that at each annual general meeting (“AGM”) one third of its directors (excluding the Managing Director and any director
appointed to fill a casual vacancy) and any director who has held office for three or more years since their last election must retire.
Any director appointed to fill a casual vacancy since the date of the previous AGM must submit themselves to shareholders for election at the next AGM.
Directors who retire as required may offer themselves for re-election by shareholders at the next AGM. Re-appointment of directors retiring by rotation or
filling a casual vacancy is not automatic.
Both Mr Conde’s and Ms Williams’ appointment will be put to the shareholders vote at the upcoming AGM.
Board succession planning
The Board in conjunction with the Remuneration and Nomination Committee reviews the size and composition of the Board and the mix of existing and
desired competencies across members from time to time. Criteria considered by the directors when evaluating prospective candidates are contained in the
Board’s Charter. The Board may engage with external search providers where appropriate.
2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and
Comply
individual directors.
An annual Board self-assessment review is conducted which includes a review of the performance of the directors and Chairman.
The Chairman of the Board is responsible for determining the process for evaluating Board performance.
2.6 Companies should provide the information indicated in the Guide to reporting on Principle 2.
Comply
3.
Promote ethical and responsible decision-making
3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:
Comply
• the practices necessary to maintain confidence in the company’s integrity; and
• the practices necessary to take into account their legal obligations and the reasonable expectations
of their stakeholders
• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
45
Corporate Governance Statement
For the year ended 30 June 2013
The Company has a Corporate Governance Committee which has the responsibility to assist the Board to meet its oversight responsibilities in relation to
the Company’s Corporate Governance practices and policies, including but not limited to:
• ensuring that directors and staff understand and have complied with the Company’s Corporate Governance Policies, and
• ensuring that the Company’s Corporate Governance Policies are current and reflect current best practice.
The directors and MD may attend Committee meetings by invitation.
The present membership of the Committee is:
• Mr L.J. Shervington (Chairman)
• Mr J.W. Schneider
These directors are independent and non-executive members of the Board.
Given the size of the Board during the year, the full Board considered matters of Corporate Governance in regular Board meetings.
Health and safety
The Board has approved a Health and Safety Policy consistent with the Company’s commitment to ensuring the highest standards of occupational health and
safety management. The health, safety and wellbeing of Cooper Energy’s people, contractors, suppliers and visitors are key values for the Company.
Codes of conduct
Cooper Energy has established a Code of Conduct to guide executives, management and staff in carrying out their duties and responsibilities. The Code
is subject to ongoing review to ensure that Cooper Energy’s standards of behaviour and corporate culture reflect best practice in corporate governance.
The Code is based on the following key principles:
• acting with honesty and integrity
• abiding by laws and regulations
• respecting confidentiality and handling information in a proper manner
• maintaining the highest standards of professional behaviour
• avoiding conflicts of interest
• striving to be a good corporate citizen and to achieve community respect.
Cooper Energy also has a number of specific policies that underpin the Code of Conduct and elaborate on various legal and ethical issues. These policies
are designed to foster and maintain ethical business conduct within Cooper Energy, and govern such things as workplace and human resources practices,
handling of confidential information, insider trading, risk management and legal compliance.
In addition, the Board has guidelines dealing with disclosure of interests by directors in participating and voting at Board meetings where any such interests
are discussed. In accordance with the Corporations Act, any director with a material personal interest in a matter being considered by the Board must not be
present when the matter is being considered, and may not vote on the matter. In some circumstances Board papers regarding the matter are not provided to
the conflicted director.
Compliance with the Code of Conduct by directors and employees will also assist the Company in effectively managing its operating risks and meeting its
legal and compliance obligations, as well as enhancing Cooper Energy’s corporate reputation.
A copy of the Code of Conduct is available in the corporate governance section of the Company’s website.
Whistleblower policy
The Board has approved a Whistleblower Policy which documents the Company’s commitment to maintaining an open working environment in which
employees are able to report instances of unsafe work practices, unethical, unlawful or undesirable conduct without fear of intimidation or reprisal.
A copy of the Whistleblower Policy is available in the corporate governance section of Cooper Energy’s website.
3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that
policy. The policy should include requirements for the board to establish measurable objectives for achieving
gender diversity and for the board to assess annually both the objectives and progress in achieving them.
Departs from
recommendations
The Company’s policy regarding equal employment opportunity & diversity is set out on the Company’s website. The Company’s Equal Employment
Opportunity & Diversity Policy does not include measureable objectives given the size and stage of development of the Company.
46
Corporate Governance Statement
For the year ended 30 June 2013
3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity
set by the board in accordance with the diversity policy and progress towards achieving them.
Departs from
recommendations
Given the size of the Company the Directors do not consider it appropriate to set measurable objectives in relation to diversity. Notwithstanding this the
Company strives to provide the best possible opportunities for current and prospective employees of all backgrounds in such a manner that best adds to
overall shareholder value and which reflects the values, principles and spirit of the Company’s Equal Employment Opportunity & Diversity Policy.
3.4 Companies should disclose in each annual report the proportion of women employees in the whole
Comply
organisation, women in senior executive positions and women on the board.
For the 2013 financial year, the Company had a total of 24 women employees out of a total of 58 employees, 5 women employees out of a total of 14
employees in senior executive positions and no women on the Board. Since the end of the financial year, 1 woman has been appointed
to the Board.
3.5
Companies should provide the information indicated in the Guide to reporting on
Principle 3.
4.
Safeguard integrity in financial reporting
4.1 The Board should establish an audit committee.
Comply
Comply
The Company has an Audit Committee which has overseen throughout the year all matters concerning compliance, internal control, accounting policies
and financial reporting including reviewing the half-year and annual financial statements. The Audit Committee assists the Board with regards to oversight
of the Company’s risk management by gaining assurance that all major identified risks are being adequately managed. The Audit Committee also monitors
the relationship with the external auditor and makes recommendations to the Board on the appointment and removal of the external auditor, the terms of
engagement, and the scope and quality of the audit. The Committee also reviews the adequacy and effectiveness of management’s control of financial
risk in relation to operational activities, financial reporting and legal and regulatory compliance.
The external auditors, directors, MD and Chief Financial Officer may attend Committee meetings by invitation.
The Committee met four times during the financial year.
4.2 The audit committee should be structured so that it:
• consists of only non-executive directors;
• consists of a majority of independent directors;
• is chaired by an independent chair, who is not chair of the Board; and
• has at least three members.
The present membership of the Audit Committee is:
• Mr J.W. Schneider (Chairman)
• Mr L.J. Shervington
• Mr J.C. Conde
Comply since 17 April 2013
These directors are independent and non-executive members of the Board.
Since the appointment of Mr Conde to the Committee on 17 April 2013, the Company has had three members as recommended.
4.3 The audit committee should have a formal charter.
Comply
The Audit Committee has a Charter which is available in the corporate governance section of Cooper Energy’s website.
47
Corporate Governance Statement
For the year ended 30 June 2013
Approach to audit and governance
The Board is committed to the basic principles that:
• Cooper Energy’s financial reports represent a true and fair view;
• Cooper Energy’s accounting practices are comprehensive, relevant and comply with applicable accounting standards, policies and regulations; and
• the external auditor is independent and serves shareholders’ interests.
External auditor relationship
The Company’s independent external auditor is EY.
The Board monitors EY’s rotation requirements of the audit partner, currently at least every five years, and the requirement which prohibits the reinvolvement
of a previous audit partner in the audit service of Cooper Energy for two years following their rotation.
The Board also ensures receipt of the auditor’s Declaration of Independence for the half year and annual financial statements.
Attendance of auditor at the AGM
Cooper Energy’s external auditor attends the AGM and is available to answer questions from shareholders on:
• the conduct of the audit;
• the preparation and content of the auditor’s report;
• the accounting policies adopted by Cooper Energy in relation to the preparation of the financial statements; and
• the independence of the auditor in relation to the conduct of the audit.
4.4 Companies should provide the information indicated in the Guide to reporting on Principle 4.
Comply
5. Make timely and balanced disclosure
5.1 Companies should establish written policies designed to ensure compliance and
Comply
ASX Listing Rule disclosure requirements and to ensure accountability at senior executive level for that
compliance and disclose those policies or a summary of those policies.
The Board replaced its previous Continuous Disclosure Policy by adoption of the current Continuous Disclosure and Market Communications Policy on
17 April 2013. The Continuous Disclosure and Market Communications Policy outlines the disclosure obligations of the Company as required by ASIC,
the Corporations Act and the ASX Listing Rules. The Company is committed to:
• complying with the general and continuous disclosure principles contained in the ASX Listing Rules and the Corporations Act;
• preventing the selective or inadvertent disclosure of material price sensitive information;
• ensuring that shareholders and the market are provided with full and timely information about its activities; and
• ensuring that all market participants have equal opportunity to receive externally available information issued by the Company.
A copy of the Continuous Disclosure and Market Communications Policy Policy is available in the corporate governance section of the Company’s website.
5.2 Companies should provide the information indicated in the Guide to reporting on Principle 5.
Comply
6.
Respect the rights of shareholders
6.1 Companies should design a communications policy for promoting effective communication with
Comply
shareholders and encouraging their participation at general meetings and disclose their policy or a summary
of that policy.
The Company has always regarded communication with shareholders as important and the Board has established and adopted a Shareholder Communication
Policy to ensure that shareholders are provided with current, relevant information and are empowered through effective communication.
Cooper Energy is committed to giving all investors comprehensive, timely and equal access to information about its activities. Similarly, prospective new
investors are entitled to be able to make informed investment decisions when considering the purchase of shares in Cooper Energy.
A wide range of communication approaches are employed by the Company and publication of all relevant information is posted on the ASX announcements
platform and Cooper Energy’s website.
48
Corporate Governance Statement
For the year ended 30 June 2013
Cooper Energy’s Board encourages investors to access the ASX announcements platform, use Cooper Energy’s website, contact the Board or MD via the
website email portal or by telephone, attend the AGM and keep up to date with media articles on the Company.
A copy of the Shareholder Communication Policy is available in the corporate governance section of the Company’s website.
6.2 Companies should provide the information indicated in the Guide to reporting on Principle 6.
Comply
7.
Recognise and manage risk
7.1 Companies should establish policies for the oversight and management of material business risks and
Comply
disclose a summary of those policies.
Cooper Energy’s Board functions well and has undertaken its responsibilities with due care, focus and diligence and continues to apply high standards of
corporate and financial governance to the Company. To ensure that directors are fully informed and have the opportunity to dissect, understand and challenge
operational and administration activities, risk and financial management and corporate governance are items on every Board meeting agenda.
Working with the Managing Director and the Executive Director, the Board also ensures that the Company’s planning and approval processes, the application
of strategy and the management of the risks inherent to the oil and gas industry are addressed appropriately in the Company’s day-to-day work activities.
The Board and senior executives are responsible for overseeing the implementation of the Company’s Risk Management Policy.
7.2 The Board should require management to design and implement the risk management and internal control
system to manage the company’s material business risks and report to it on whether those risks are being
managed effectively. The board should disclose that management has reported to it as to the effectiveness
of the company’s management of its material business risks.
Comply
The Company’s approach to risk management is based on the identification, assessment, monitoring and management of material risks that the Board
and management believe that the Company may encounter. Once the risks have been identified, the risks are then quantified in terms of their severity, the
probability of occurring and the potential impact or damage they may have if they do occur. The analysis is undertaken using a Frequency Probability Matrix,
which is a well accepted oil industry risk management technique. Once the risks have been identified the Company can then decide on whether to avoid,
manage, insure or transfer these risks.
The executive management team is responsible for implementation of the Board approved risk management strategy and developing and enhancing the
Company’s policies, processes and procedures.
In general there are a large number of risks inherent in the oil and gas industry and they can broadly be classed under the following categories:
• Technical
• Economic
• Commercial
• Operational
• Political
7.3 The Board should disclose whether it has received assurance from the Managing Director (or equivalent)
Comply
and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A
of the Corporations Act is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
The Board receives regular reports about the financial condition and operational results of Cooper Energy and its controlled entities.
The MD and Chief Financial Officer provide a formal statement to the Board confirming that the Company’s annual financial reports present a true and fair
view, in all material respects, and the group’s financial condition and operational results have been prepared in accordance with the Corporations Act and
relevant accounting standards.
The statement also confirms that the integrity of the Company’s financial statements and notes to the financial statements, is founded on a sound system of
risk management and internal compliance and control which implements the policies approved by the Board, and that the Company’s risk management and
internal compliance and control systems, to the extent they relate to financial reporting, are operating efficiently and effectively in all material respects.
49
Corporate Governance Statement
For the year ended 30 June 2013
7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7.
Comply
8.
Remunerate fairly and responsibly
8.1 The Board should establish a remuneration committee.
Comply
The Remuneration and Nomination Committee reviews remuneration policies and practices, approves the reward levels for the executive management
group, approves merit recognition arrangements, such as cash bonuses and the issue of staff options/performance rights, and makes recommendations
to the Board on the remuneration of the directors, including the Managing Director. When appropriate, the Committee consults independent remuneration
consultants to ensure that Cooper Energy’s remuneration practices are consistent with market practice. The Committee also assists in the appointment
of non-executive directors to the Board.
The directors and Managing Director and Executive Director may attend Committee meetings by invitation.
Refer to 2.4 above for further information on the Remuneration and Nomination Committee.
8.2 The remuneration committee should be structured so that it:
Comply since 17 April 2013
• consists of a majority of independent directors;
• is chaired by an independent chair; and
• has at least three members.
The present membership of the Committee is:
• Mr J.W. Schneider (Chairman)
• Mr L.J. Shervington
• Mr J.C. Conde
These directors are independent and non-executive members of the Board.
The Committee met once during the financial year. The Managing Director and Executive Director may attend Committee meetings by invitation.
Since 17 April 2013, the Company has had three members as recommended.
Refer to 2.4 above for further information on the Remuneration and Nomination Committee.
8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of
Comply
executive directors and senior executives.
The total of directors’ fees available to directors is fixed by the shareholders in General Meeting. Payments in the current year were within the limit
of $450,000.
The Remuneration and Nomination Committee determines the scale of fees for individual directors, taking account of the responsibilities inherent in the
stewardship of Cooper Energy and the demands made of directors in the discharge of their responsibilities. The Committee may take independent external
advice to ensure remuneration accords with market practice via peer review.
The Remuneration and Nomination Committee links the nature and amount of directors’ and officers’ emoluments to the consolidated entity’s financial
and operational performance. Remuneration of the Managing Director and Executive Director is determined in accordance with Cooper Energy’s executive
compensation program, which is administered by the Remuneration and Nomination Committee.
There is no scheme for retirement benefits, other than statutory superannuation to directors.
Details of Cooper Energy’s remuneration practice relating to directors’ fees and other entitlements paid to non-executive directors, directors, key management
personnel and senior employees are set out in full in the Directors’ Statutory Report on pages 28 to 38.
8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8.
Comply
Directors are prohibited from entering into transactions which limit the risk of participating in unvested entitlements under any equity based
remuneration scheme.
50
Financial Statements
For the year ended 30 June 2013
51
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2013
Continuing Operations
Revenue from oil sales
Cost of sales
Gross profit
Other revenue
Exploration and evaluation expenditure written off
Administration and other expenses
Profit/(Loss) before tax
Taxes
Income tax expense
Petroleum Resource Rent Tax
Total tax (expense)/credit
Consolidated
2013
$000
2012
$000
Notes
4
4
4
4
5
5
5
53,397
(23,541)
29,856
2,343
(1,493)
(12,403)
18,303
(5,569)
(11,019)
(16,588)
59,606
(27,684)
31,922
4,667
(1,732)
(13,851)
21,006
(6,978)
12,233
5,255
Net profit after tax from continuing operations
1,715
26,261
Discontinued operations
Impairment of exploration assets held for sale after income tax
Total profit for the period attributable to members
Other comprehensive income/(expenditure)
Items that may be reclassified subsequently to profit or loss
Fair value movements on available for sale investments
Income tax effect
Other comprehensive expenditure for the period net of tax
11
(397)
1,318
(17,880)
8,381
(2,377)
(1,995)
-
-
(2,377)
(1,995)
Total comprehensive (loss)/income for the period attributable to members
(1,059)
6,386
Basic earnings/(loss) per share from continuing operations
Diluted earnings/(loss) per share from continuing operations
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
cents
cents
6
6
0.5
0.5
0.4
0.4
8.9
8.9
2.8
2.8
52
Consolidated Statement of Financial Position
As at 30 June 2013
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Materials
Prepayments
Exploration assets classified as held for sale
Total Current Assets
Non-Current Assets
Available for sale financial assets
Term deposits at banks
Oil properties
Exploration and evaluation
Deferred tax asset
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Income tax payable
Exploration liabilities classified as held for sale
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained profits
Total Equity
The above Statement of Financial Position should be read in conjunction with the accompanying notes
Consolidated
2013
$000
2012
$000
Notes
7
8
9
10
11
12
7
13
14
5
43,154
19,457
204
757
63,572
23,809
87,381
20,182
4,766
18,880
30,846
-
74,674
59,010
11,973
189
197
71,369
33
71,402
13,203
2,451
19,188
42,546
12,233
89,621
162,055
161,023
15
11,845
11
5
16
18
18
18
-
11,845
573
12,418
9,102
3,325
12,427
12,332
3,706
16,038
-
16,038
4,150
3,890
8,040
24,845
24,078
137,210
136,945
114,570
113,877
(1,138)
23,778
137,210
608
22,460
136,945
53
Consolidated Statement of Changes in Equity
For the year ended 30 June 2013
Balance at 1 July 2012
Profit for the period
Other comprehensive income/(expenditure)
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share based payments
Transferred to Issued Capital
Shares issued
Balance at 30 June 2013
Balance at 1 July 2011
Profit for the period
Other comprehensive income/(expenditure)
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Share based payments
Shares issued
Balance at 30 June 2012
Issued Capital
Reserves
$’000
$’000
113,877
-
-
-
-
106
587
608
-
(2,377)
(2,377)
737
(106)
-
Retained
Earnings
$’000
22,460
1,318
-
1,318
Total Equity
$’000
136,945
1,318
(2,377)
(1,059)
-
-
737
-
587
114,570
(1,138)
23,778
137,210
98,657
-
-
-
-
15,220
113,877
2,127
-
(1,995)
(1,995)
476
-
608
14,079
8,381
-
8,381
-
-
22,460
114,863
8,381
(1,995)
6,386
476
15,220
136,945
The above Statement of Financial Position should be read in conjunction with the accompanying notes
54
Consolidated Statement of Cash Flows
For the year ended 30 June 2013
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Income tax paid
Interest received – other entities
Net cash from operating activities
Cash Flows from Investing Activities
Transfers of/(Placements on) term deposits
Payment for available for sale financial assets
Receipts from sale of financial assets
Payments for exploration and evaluation
Investments in oil properties
Cash outflow associated with the acquisition of controlled entities
Net cash flows (used) in investing activities
Cash Flows from Financing Activities
Payment for shares
Net cash flow from financing activities
Net (decrease)/increase in cash held
Net foreign exchange differences
Cash and Cash Equivalents At 1 July
Cash and Cash Equivalents At 30 June
The above Statement of Financial Position should be read in conjunction with the accompanying notes
Consolidated
2013
$000
2012
$000
Notes
45,197
(31,491)
(3,413)
2,161
12,454
(2,315)
(10,172)
1,161
(10,978)
(6,201)
-
(28,505)
(85)
(85)
(16,136)
280
59,010
43,154
7
12
17
7
58,079
(19,625)
(4,168)
4,798
39,084
15,552
(15,198)
-
(18,489)
(11,175)
(2,531)
(31,841)
-
-
7,243
(124)
51,891
59,010
55
Notes to the Financial Statement
For the year ended 30 June 2013
1. Corporate Information
The consolidated financial report of Cooper Energy Limited (the parent entity) for the year ended 30 June 2013 was authorised for issue in accordance with a
resolution of the Directors on 28 August 2013.
Cooper Energy Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities
Exchange.
The nature of the operations and principal activities of the Group are described in note 6 of the Directors Report.
2. Summary of Significant Accounting Policies
a) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.
The financial report has also been prepared on a historical cost basis, except for available for sale financial assets which have been measured at fair value.
Cooper Energy Limited is a for profit company.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the
option available to the Group under ASIC Class Order 98/0100. The Group is an entity to which the class order applies.
Significant event and transaction
In June 2013, Cooper Basin participants including the Company were granted a combination certificate for Petroleum Resource Rent Tax (PRRT). As it
relates to the Company, this combination certificate permits the transfer of allowable expenditure between the Company’s Cooper Basin projects essentially
deeming PEL 92 and PEL 93 to be a single project for PPRT purposes. In addition the Company has adopted the look-back approach in determining the PRRT
starting base for the combined Cooper Basin project. Consequently the Company has updated its modelling and accounting estimates relating to PRRT as
summarised in note 2 ab) Changes in accounting estimates.
On 4 June 2013 Cooper Energy announced that it will commence a process for the divestment of its extensive Tunisian oil and gas acreage interests after the
completion of the Hammamet West-3 well. The decision is consistent with the strategy adopted by Cooper Energy in late 2011 to concentrate progressively
on Australia and assets consistent with the company’s core strength. Consistent with the AASB standards the Tunisia assets are now classified as exploration
assets classified as held for sale.
b) Statement of compliance
(i) Changes in accounting policy and disclosures.
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board.
The Accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended Australian Accounting Standard and AASB Interpretations as of 1 July 2012:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income
Adoption of this standard interpretation is described below:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income
This standard requires entities to group items presented in other comprehensive income on the basis of whether they might be reclassified subsequently
to profit or loss and those that will not. The adoption of this standard has resulted in changes to the presentation of its financial statements and has
no other impact.
56
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
b) Statement of compliance continued
(ii) Accounting standards and interpretations issued but not yet effective.
The accounting standards and interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group
and for which the Group has elected not to early adopt for the annual reporting period ending 30 June 2013, are outlined below:
AASB 10
Summary
Consolidated Financial Statement
AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated
and Separate Financial Statements dealing with the accounting for consolidated financial statement and
UIG-112 Consolidation – Special Purpose Entities.
The new control model broadens the situations when an entity is considered to be controlled by another entity
and includes new guidance for applying the model to specific situations, including when acting as a manager
may give control, the impact of potential voting rights and when holding less than a majority voting rights may
give control.
Consequential amendments were also made to this and other standards via AASB 2011-7, and AASB 2012-10.
Application Date of the Standard
1 January 2013
Application date for Group
1 July 2013
Impact on Group financial report
The Group’s current recognition of control does not change with the adoption of this accounting standard.
There will be no further requirement to recognise or de-recognise additional controlled entities.
AASB 11
Joint Arrangements
AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly-controlled Entities – Non-monetary
Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to define joint control and therefore the determination of
whether joint control exists may change. In addition it removes the option to account for jointly controlled entities
(JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature
of the rights and obligations arising from the arrangement. Joint operations that give the venturers
a right to the underlying assets and obligations themselves is accounted for by recognising the share of those
assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using
the equity method.
Consequential amendments were also made to this and other standards via AASB 2011-7, AASB 2010-10
and amendments to AASB 128.
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The Group has several joint arrangements currently in place. The joint arrangements are considered to be joint
operations under the new standard. As such the group will recognise its’ interest in the joint venture for assets,
liabilities, revenues from sale of output and expenses incurred. There will be no impact from the application of
this standard as the treatment is consistent with the Group’s current practice.
AASB 12
Summary
Disclosure of Interests in Other entities
AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates
and structured entities. New disclosures have been introduced about the judgments made by management to
determine whether control exists, and to require summarised information about joint arrangements, associates,
structured entities and subsidiaries with non-controlling interests.
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The Group will be required to provide more extensive and detailed disclosures in relation to its subsidiaries and
joint arrangements. These disclosures will enable users of the Groups consolidated financial statements to
further evaluate any restrictions on the ability of the group to use assets, the nature and change of any risks.
These disclosures will not have a financial impact upon the financial statements.
57
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
b) Statement of compliance continued
AASB 13
Summary
Fair Value Measurement
AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13
does not change when an entity is required to use fair value, but rather, provides guidance on how to determine
fair value when fair value is required or permitted. Application of this definition may result in different fair values
being determined for the relevant assets.
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes
information about the assumptions made and the qualitative impact of those assumptions on the fair value
determined.
Consequential amendments were also made to other standards via AASB 2011-8.
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The Group currently utilised fair value measures which are dependent upon the relevant asset. The Group
considers that there will be no change to the fair values however the Group will be required to increase its
disclosure around the assumptions made and the qualitative information used in generation of the fair value.
AASB 119
Summary
Employee Benefits
The revised standard changes the definition of short-term employee benefits. The distinction between
short-term and other long-term employee benefits is now based on whether the benefits are expected to be
settled wholly within 12 months after the reporting date.
Consequential amendments were also made to other standards via AASB 2011-10.
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The current distinction in the Group financial statements would not have changed had this standard been
adopted and it is unlikely that there will be any significant change in the 2014 financial year end accounts.
AASB 2012-5
Summary
Amendments to Australian Accounting Standards arising from Annual Improvements
2009-2011 Cycle
AASB 2012-5 makes amendments resulting from the 2009-2011 Annual Improvements Cycle. The standard
addresses a range of improvements, including the following:
Repeat application of AASB 1 is permitted (AASB 1)
Clarification of the comparative information requirements when an entity provides a third balance sheet (AASB
101 Presentation of Financial Statements).
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The impact of adoption in the financial report will be limited to disclosure and presentation.
58
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
b) Statement of compliance continued
AASB 2011-4
Summary
Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements (AASB 124)
This amendment deletes from AASB 124 individual key management personnel disclosure requirements for
disclosing entities that are not companies. It also removes the individual KMP disclosure requirements for all
disclosing entities in relation to equity holdings, loans and other related party transactions.
Application Date of the Standard
1 January 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The Group will no longer be required to disclose the equity holdings, loans and other related party transactions.
As a company, the Group will still need to disclose the key management personnel.
AASB 1053
Summary
Application of Tiers of Australian Accounting Standards
This standard establishes a differential financial reporting framework consisting of two tiers of reporting
requirements for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements
Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially
reduced disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in preparing general purpose financial statements:
(a) For-profit entities in the private sector that have public accountability (as defined in this standard)
(b) The Australian Government and State, Territory and Local governments
The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial
statements:
(a) For-profit private sector entities that do not have public accountability
(b) All not-for-profit private sector entities
(c) Public sector entities other than the Australian Government and State, Territory and Local governments.
Consequential amendments to other standards to implement the regime wither introduced by AASB 2010-2,
2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.
Application Date of the Standard
1 July 2013
Application Date for Group
1 July 2013
Impact on Group Financial report
The Group will be considered to be a Tier 1 company and will be required to apply the Tier 1 requirements in
preparing the general purpose financial statements. This standard has no impact upon the current requirements
of the Group.
59
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
b) Statement of compliance continued
AASB 9
Summary
Financial Instruments
AASB 9 includes requirements for the classification and measurement of financial assets. It was further
amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities.
These requirements improve and simplify the approach for classification and measurement of financial assets
compared with the requirements of AASB 139. The main changes are described below.
(a) Financial Assets that are debt instruments will be classified based on (1) the objective of the entity’s business
model for managing the financial assets; (2) the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive income. Dividends in respect of these
investments that are a return on investment can be recognised in profit or loss and there is no impairment
or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the gains and losses on them, on different bases.
(d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for
as follows:
• The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
• The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
Further amendments were made by AASB 2012-6 which amends the mandatory effective date to annual reporting
periods beginning on or after 1 January 2015. AASB 2012-6 also modifies the relief from restating prior periods by
amending AASB 7 to require additional disclosures on transition to AASB 9 in some circumstances.
Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB
2009-11 and superseded by AASB 2010-7 and 2010-10.
Application Date of the Standard
1 January 2015
Application Date for Group
1 July 2015
Impact on Group Financial report
The Group does not consider there to be any impact of the adoption of this standard however this will be
continued to be monitored in 2014 financial year.
c) Basis of consolidation
The consolidated financial statements are those of the consolidated entity, comprising Cooper Energy Limited (“the parent entity”) and its subsidiaries (“the Group”).
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments
are made to bring into line any dissimilar accounting policies that may exist. All inter-company balances and transactions, income and expenses and profit
and losses arising from intra-group transactions, have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is
transferred out of the Group.
d) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group
elects whether it measures the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with
the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously held equity interest in the acquiree is remeasured
to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value
of the contingent consideration that is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change
to other comprehensive income. If the contingent consideration is classified as equity it will not be remeasured. Subsequent settlement is accounted for within
equity. In instances where the contingent consideration does not fall within the scope of AASB 139, it is measured in accordance with the appropriate AASB.
60
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
d) Business combinations continued
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling
interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a
business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquire are assigned to those units.
Where goodwill forms part of the cash generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
e) Jointly controlled assets
The Group has an interest in joint ventures that are jointly controlled assets. A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control. A jointly controlled asset involves use of assets and other resources of the venturers rather than
establishment of a separate entity.
The Group’s interest in joint ventures which are unincorporated joint venture assets are accounted for by recognising its proportionate share in assets that it
controls and liabilities that it incurs from joint ventures.
In addition, expenses incurred by the Group and sale of the Group’s entitlement to production are recognised in the Group’s financial statements on a pro rata
basis to the Group’s interest.
f) Foreign currency
The functional and presentation currency of the Company is Australian Dollars.
Translation of foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at the exchange rates ruling at the date of
transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated at the rates of exchange ruling at that date.
Exchange differences in the consolidated financial statements are taken to the income statement.
Translation of the financial result of foreign operations
There is one entity within the Group that has a Euros functional currency. The assets and liabilities of this entity are translated into the presentation currency
of the Group at the rate of exchange ruling at the respective reporting date. The income statements are translated at the average exchange rates for the
reporting period, or at the exchange rates ruling at the date of transactions. Exchange differences arising on translation are taken to the foreign currency
translation reserve in equity.
g) Investments
Investments are classified as available-for-sale and are initially recognised at fair value plus any directly attributable transaction costs. The classification
depends on the purpose for which the investments were acquired. Designation will be re-evaluated at each financial year-end.
After initial recognition, investments are remeasured to fair value. Changes in the fair value of available-for-sale investments are recognised as a separate
component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the
cumulative change in fair value previously reported in equity is included in earnings.
For investments that are actively traded in organised financial markets, fair value is determined by reference to stock exchange quoted market bid prices at
the close of business on the Consolidated Statement of Financial Position date. Where investments are not actively traded, fair value is established by using
other market accepted valuation techniques.
h) Revenue and cost recognition
Revenue is recognised and measured at fair value of consideration received or receivable to the extent that it is probable that the economic benefits will flow
to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Revenues and costs from production sharing contracts
Revenue earned and production costs incurred from a production sharing contract are recognised when title to the product passes to the customer and is
based upon the Group’s share of sales and costs relating to oil production that are allocated to the Group under the contract.
Interest revenue
Interest revenue is recognised as interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial instrument) to the net carrying amount of the financial asset.
61
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
i) Depreciation and amortisation
Oil properties and other plant and equipment, other than freehold land, are depreciated to their residual values at rates based on the expected useful lives of
the assets concerned.
Oil properties are amortised on the Units of Production basis using the best estimate of proved and probable (2P) reserves. No amortisation is charged on
areas under development where production has not commenced.
Depreciation on property plant and equipment is calculated at between 7.5% and 37.5% per annum using the diminishing value method over their estimated
useful lives.
j) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the end of the reporting period. These benefits
included wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave. Liabilities are to be settled within twelve months of
the reporting date are recognised in respect of employees’ services up to the reporting date and are measured at the amount expected to be paid when the
liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
The general provisions for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national
government bonds with terms of maturity and currencies that match, as closely as possible, the estimated future cash outflows. Employees’ accumulated
long services leave is ascribed to individual employees at the rates payable as and when they become entitled to long service leave.
A provision for bonus is recognised and measured based upon the current wage and salary level and forms part of the employee short term incentive plan.
The basis for the bonus is set out in section 5 of the directors’ report.
k) Share based payments
The Group provides benefits to employees and Directors of the Group in the form of share-based payment transactions, whereby employees render services
in exchange for rights over shares (“equity-settled transactions”).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and are
recorded as an expense, with a corresponding increase in reserves, on a straight-line basis over the vesting period of the related instrument.
The fair value is determined using a binomial model that takes into account the exercise price, the term of the option, the vesting and performance criteria,
the impact of dilution, the non-tradable nature of the option, the share price at grant date, the expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option. The fair value of the options granted excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or
service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
1. the extent to which the vesting period has expired; and
2. the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of
fair value at grant date. The Consolidated Statement of Comprehensive Income charge or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense
is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employees as
measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted,
the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding rights is reflected as additional share dilution in the computation of diluted earnings per share.
l) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangements conveys a right to use the asset.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception
of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are recognised as an expense in profit or loss.
62
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
l) Leases continued
Capitalised lease assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that
the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term.
m) Management fees
Revenue is recognised when the Group’s right to receive payment is established or services are rendered.
n) Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Consolidated Statement of
Financial Position date.
Deferred income tax is provided on all temporary differences at the Consolidated Statement of Financial Position date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss: or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and
unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss: or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interest in joint ventures, in which case a deferred
tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be
accessible against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each Consolidated Statement of Financial Position date and reduced to the extent that it’s
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are assessed at each Consolidated Statement of Financial Position date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that were expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates and tax laws that have been enacted or substantively enacted at the Consolidated Statement of Financial Position date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exits to offset current tax assets against current tax liabilities and
the deferred tax asset and liabilities relate to the same taxable entity and the same taxation authority.
o) Other taxes
Goods and Services Taxes (“GST”)
Revenues, expenses and assets are recognised net of the amount of Goods and Services Taxes (“GST”) except:-
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Consolidated Statement of
Financial Position.
Cash flows are included in the Cash Flow Statement on a net basis and the net GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Petroleum Resource Rent Tax (PRRT)
For PRRT purposes, the impact of future augmentation on expenditure is included in the determination of future taxable profits when assessing the extent to
which a deferred tax asset can be recognised in the statement of financial position. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
63
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
p) Exploration and evaluation expenditure
Exploration and evaluation expenditure is accounted for in accordance with the area of interest method and is capitalised to the extent that:
i. the rights to tenure of the areas of interest are current and the Group controls the area of interest in which the expenditure has been incurred; and
ii. such costs are expected to be recouped through successful development and exploration of the area of interest, or alternatively by its sale; or
iii. exploration and evaluation activities in the area of interest have not at the reporting date:
a. reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves; and
b. active and significant operations in, or in relation to, the area of interest are continuing.
An area of interest refers to an individual geological area where the potential presence of an oil or a natural gas field is considered favourable or has been
proven to exist, and in most cases will comprise an individual prospective oil or gas field.
Exploration and evaluation expenditure which does not satisfy these criteria is written off. Specifically, costs carried forward in respect of an area of interest
that is abandoned or costs relating directly to the drilling of a dry well that is plugged and abandoned are written off in the year in which the decision to
abandon is made. If exploratory wells encounter shows of oil and gas, the well costs remain capitalised on the Consolidated Statement of Financial Position
as long as sufficient progress in assessing the reserves and the economic and operating viability of the project is being made. A regular review is undertaken
of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Where a discovered oil or gas field enters the development phase the accumulated exploration and evaluation expenditure is transferred to oil properties.
q) Oil properties
Oil properties are carried at cost including construction, installation of infrastructure such as roads and the cost of development of wells.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it 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 Consolidated Statement of Comprehensive Income during the financial period in which they are incurred.
r) Provision for restoration
The Group records the present value of its share of the estimated cost to restore operating locations. The nature of restoration activities includes the
obligations relating to the reclamation, waste site closure, plant closure, production facility removal and other costs associated with the restoration of the site.
A restoration provision is recognised after the construction of the facility and then reviewed on an annual basis.
When the liability is recorded the carrying amount of the production assets is increased by the asset retirement costs and depreciated over the producing life
of the asset. Over time, the liability is increased for the change in the present value based on a risk adjusted pre-tax discount rate appropriate to the risks
inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs.
Any changes in the estimate of the provision for restoration arising from the annual renewal is recorded by adjusting the carrying amount of the production
asset and then depreciated over the producing life of the asset. The liability is correspondingly adjusted for the change in the present value on the risk
adjusted pre-tax discount rate with the unwinding of the adjusted discount recorded as an accretion change within finance costs.
These estimated costs, whilst based on anticipated technological and legal requirements, assume no significant changes will occur in relevant State and
Federal legislation.
s) Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
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 Consolidated Statement of Comprehensive Income during the financial period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Consolidated Statement of Financial Position date. The carrying
values of property, plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or
changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of property, plant and equipment is the higher of fair
value less cost to sell and value in use. For an asset that does not generate largely independent cash flows, recoverable amount is determined for the cash
generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An asset’s or cash generating unit’s carrying amount is written down immediately to its recoverable amount if the asset’s or cash generating unit’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 are included in the statement of comprehensive income.
An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use. Any gains
or losses arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the net carrying amount of the asset) is
included in the statement of comprehensive income in the period the asset is de-recognised.
64
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
t) Impairment of non-current assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating units). In assessing value-in-use, the estimated future cash flows are discounted
to their present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset.
u) Cash and cash equivalents
Cash and short term deposits in the Consolidated Statement of Financial Position comprise cash at bank and short term deposits with an original maturity
of three months or less. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily
convertible to cash within 90 days from date of investment, net of outstanding bank overdrafts.
v) Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Financial difficulties of the
debtor, default payments or debts more than 90 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the
receivable carrying amount, compared to the present value of estimated future cash flows, discounted at the original effective interest rate. Bad debts are
written off when identified.
w) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
x) Provisions
General
Provisions are recognised when the Group has a legal or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of
past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the
amount of the obligation.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Restructuring Provisions
Restructuring provisions are recognised only when general recognition criteria for provisions are fulfilled. Additionally, the Group follows a detailed formal plan
about the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs and appropriate
timeline. The employees affected have a valid expectation that the restructuring is being carried out or the implementation has been initiated already.
y) Contributed equity
Issued and paid up capital is recognised as the fair value of the consideration received by the Group.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
z) Earnings per share
Basic earnings per share are calculated as net profit attributable to members divided by the weighted average number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable to members adjusted for the after tax effect of dilutive potential ordinary shares that have
been recognised as expenses during the period divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.
aa) Judgements in applying accounting policies and key sources of estimation uncertainty
(i) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which
have the most significant effect on the amounts recognised in the financial statements:
Determination of recoverable hydrocarbons
Estimates of recoverable hydrocarbons impact the asset impairment assessment, depreciation and amortisation rates and decommissioning and
restoration provisions.
Estimates of recoverable hydrocarbons are evaluated and reported by Competent Persons in accordance with the Company’s Hydrocarbon Guidelines
(www.cooperenergy.com.au/policies). A technical understanding of the geological and engineering processes enables the recoverable hydrocarbon estimates
to be determined by using forecasts of production, commodity prices, production costs, exchange rates, tax rates and discount rates.
Recoverable hydrocarbon estimates may change from time to time if any of the forecast assumptions are revised.
65
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
aa) Judgements in applying accounting policies and key sources of estimation uncertainty continued
Taxation
The Group’s accounting policy for taxation requires management’s judgment in relation to the types of arrangements considered to be a tax on income in
contrast to an operating cost.
Judgement is also made in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the Consolidated Statement of
Financial Position.
Deferred tax assets, including those arising from un-recouped tax losses, capital losses, and temporary differences arising from the Petroleum Resource
Rent Tax (Imposition – General) Act 2011, are recognised only where it is considered more likely than not they will be recovered, which is dependent on the
generation of sufficient future taxable profits.
Judgements are also required about the application of income tax legislation. These judgments and assumptions are subject to risk and uncertainty, hence
there is a possibility changes in circumstances will alter expectation, which may impact the amount of deferred tax assets and deferred tax liabilities
recognised on the Consolidated Statement of Financial Position and the amount of other tax losses and temporary differences not yet recognised.
In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a
corresponding credit or charge to the Consolidated Statement of Comprehensive Income.
Operating lease commitments
The Group has entered into a commercial property lease. The Group has determined that is does not retain any of the significant risks and rewards of
ownership of this property and has thus classified the lease as an operating lease.
(ii) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Recoverability of trade and other receivables
The future recoverability of part of trade receivables from the sale of hydrocarbons is dependent on the average spot price for oil and the currency exchange
rate for the Australian dollar to the United States Dollar at the date of export from Australia.
Factors that could impact on the future recoverability of the trade receivables are the movement in the daily spot Australian dollar to the United States Dollar
and the spot price for crude oil which are both publically quoted prices.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to
exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of oil reserves, future technological changes which could impact the cost of extraction,
future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in
the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable oil reserves. To the extent that it is determined in the future that this capitalised
expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made.
Impairment of oil properties
The future recoverability of capitalised oil property expenditure is dependent on a number of factors, including the level of oil reserves and future
technological changes which could impact the cost of extraction, future legal changes (including changes to environmental restoration obligations) and
changes to commodity prices.
To the extent that capitalised oil property expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in
which this determination is made.
Provisions for decommissioning and restoration costs
Decommissioning and restoration costs are a normal consequence of oil extraction and the majority of this expenditure is incurred at the end of a well’s life.
In determining an appropriate level of provision consideration is given to the expected future costs to be incurred, the timing of these expected future costs
(largely dependent on the life of the well), and the estimated future level of inflation.
The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many factors including changes to the relevant legal
requirements, the emergence of new restoration techniques or experience at other wells. The expected timing of expenditure can also change, for example in
response to changes in oil reserves or to production rates.
Changes to any of the estimates could result in significant changes to the level of provisioning required, which would in turn impact future financial results.
66
Notes to the Financial Statement
For the year ended 30 June 2013
2. Summary of Significant Accounting Policies continued
aa) Judgements in applying accounting policies and key sources of estimation uncertainty continued
Share-based payments transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they
are granted. The fair value is determined by an external valuer using a binominal model and applying the calculation criteria detailed in note 2 (k).
ab) Changes in accounting estimates
Change in denominator for amortisation of oil properties
The accounting estimate for amortisation of oil properties has been changed from 1 July 2012 to use proven and probable (2P) reserves as the denominator
for amortisation purposes under the Units of Production Methodology. The Group has used the estimate of proved developed producing (PDP) reserves in
prior years. During the year the Board and management of Cooper decided to change the reserves base for amortising oil properties from proved developed
reserves to proved and probable (2P) reserves to reflect management’s expected pattern of consumption of future economic benefits embodied in the asset
and also to better align Cooper’s accounting policy to that adopted by its peers. The impact of the change for the year ended 30 June 2013 is to reduce
the amortisation charge and increase the profit after tax by $10.0m and $7.0m respectively. In addition, the carrying value of oil properties at 30 June 2013
is $10.0m higher than it would have been had the change not been made.
Change in oil delivered but not invoiced
The Company’s estimate for oil delivered but not invoiced was updated to reflect additional information received during the year including shrinkage and
on-site use during the year of 19,874bbls resulting in a decrease in receivables and accrued sales revenue of $2.1m (net of transport costs).
Change in application of exploration and development expenditure policies
Previously, management determined PEL 92 to be one Area of Interest (“AOI”) for the purposes of categorising expenditure as either exploration and
evaluation or development. As PEL 92 is a producing licence, all costs associated with this licence were treated as development costs associated with oil
assets. This meant they were subject to amortisation under AASB 116 and impairment testing under AASB 136.
In the current year, management has refined its view of the applicable AOI’s for PEL 92, and in doing so have separated costs associated with the producing
parts of the licence, from those where the activities are of on exploration and evaluation nature. This has resulted in approximately $3.3m of costs in the
current year being capitalised as exploration and evaluation that would have otherwise been capitalised as development expenditure assets and also an
associated reduction in amortisation for the current year of $0.6m.
Change in PRRT estimates
In June 2013, the Cooper Basin participants including the Company were granted a combination certificate for Petroleum Resource Rent Tax (PRRT). This
combination certificate permits the transfer of allowable expenditure between the Company’s Cooper Basin projects essentially deeming PEL 92 and PEL 93
to be a single project for PPRT purposes. In addition, the Company has adopted the look-back method to determine the combined Cooper Basin starting base
(previously the market value method was used). As a result the Company has reversed the deferred tax asset $12.2m previously recognised on PEL 92. This
is due to the fact that the future expenditure and augmentation on the combined Cooper Basin is sufficient to cover forecast PRRT payable under the PRRT
regime without requiring the use of the starting base as a deduction. The deferred tax asset would not have been reversed had the change in estimate not
been made. This has resulted in an increase to income tax expense and a decrease to profit after tax of $12.2m for the year.
3. Segment Reporting
Identification of reportable segments and types of activities
The Group operates throughout the world and prepares reports internally and externally by continental geographical segments. Within each segment, the
costs of operations and income are prepared firstly by legal entity and then by joint venture. Revenue and outgoings are allocated by way of their natural
expense and income category. These reports are drawn up on a quarterly basis. Resources are allocated between each segment on an as needs basis.
Selective reporting is provided to the Board quarterly while the annual and bi –annual results are reported to the Board. The Managing Director is the chief
operating decision maker.
The following are the current geographical segments:
Australian Business Unit
Exploration and evaluation for oil and gas, development, production and sale of crude oil in a number of areas in the Cooper Basin located in South Australia.
Revenue is all derived from the sale of crude oil to a consortium of buyers made up of Santos Limited and its subsidiaries; Delhi Petroleum Pty Ltd and Origin
Energy Resources Limited. Interest income is earned from the placement of funds with various Australian Banks for periods of up to six months.
African Business Unit
Exploration and evaluation for oil and gas in the Bargou, Nabeul and Hammamet permit area off the coast of Tunisia. No income is derived from these units.
The Company has announced its intention to dispose of the equity interests in the Tunisian assets.
Asian Business Unit
The Asian business unit involved the production and sale of crude oil from the Tangai-Sukananti KSP. It is located on the island of Sumatra Indonesia.
Revenue is derived from the sale of crude oil to PT Pertamina EP.
European Business Unit
The Company has announced its intention to dispose of the equity interest in the MUA 1 and 2 in Poland.
67
Notes to the Financial Statement
For the year ended 30 June 2013
3. Segment Reporting continued
Other prospective opportunities outside of these geographical segments are also considered from time to time and, if they are secured, will then be attributed
to the continental geographical segment where they are located.
The current external customers by geographical location of production are the Australian Business Unit with two customers and the Indonesian Business Unit.
Accounting Policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally is the same as those contained in note 2 to the accounts and in the prior period.
The following table presents revenue and segment results for reportable segments for the years ended 30 June 2013 and 2012.
Australian
Business
Unit
$’000
African
Business Unit
(disc. operation)
$’000
Asian
Business
Unit
$’000
European
Business Unit
(disc. operation)
Consolidated
$’000
$’000
50,977
2,343
53,320
(232)
(4,425)
(1,513)
(737)
(1,493)
18,861
23,630
130,638
68,538
16,336
(23,552)
(85)
(12,255)
-
-
-
-
-
-
-
-
-
574
23,613
-
(2,053)
(832)
-
(832)
2,420
-
2,420
(60)
(150)
-
-
-
-
-
-
-
-
-
-
-
(161)
(397)
641
7,608
6,136
(1,632)
(3,724)
-
(3,724)
-
196
-
(197)
(397)
-
(397)
53,397
2,343
55,740
(292)
(4,575)
(1,513)
(7379)
(1,493)
18,303
(16,588)
1,715
24,845
162,055
74,674
12,454
(28,505)
(85)
(17,208)
Geographical Segments
Year ended 30 June 2013
Revenue
Other revenue
Total consolidated revenue
Depreciation of property
Amortisation of:
- Development costs
- Exploration costs
Share based payments
Exploration costs written off
Segment result
Income tax
Net Profit
Segment liabilities
Segment assets
Non-Current Assets
Cash flow from:
- Operating activities
- Investing activities
- Financing
Capital Expenditure
68
Notes to the Financial Statement
For the year ended 30 June 2013
3. Segment Reporting continued
Geographical Segments
Australian
Business
Unit
$’000
African
Business Unit
(disc. operation)
$’000
Asian
Business
Unit
$’000
European
Business Unit
(disc. operation)
Consolidated
$’000
$’000
Year ended 30 June 2012
Revenue
Other revenue
Total consolidated revenue
Depreciation of property
Amortisation of:
- Development costs
- Exploration costs
Share based payments
Exploration costs written off
Segment result
Income tax
Net Profit
Segment liabilities
Segment assets
Non-Current Assets
Cash flow from:
- Operating activities
- Investing activities
- Financing
Capital Expenditure
58,234
4,667
62,901
(143)
(6,414)
(2,604)
(476)
(1,648)
21,684
23,516
136,728
66,878
41,018
(18,067)
-
(18,418)
-
-
-
-
-
-
-
(84)
(84)
196
20,625
20,154
(275)
(5,562)
-
(5,562)
Revenue from external customers by geographical location of production
Australia – two separate customers
Indonesia
Total revenue
Revenue from one customer amounted to $50,903,000 (2012:$58,234,000) arising from oil sales.
1,372
-
1,372
(60)
(504)
-
-
-
-
-
-
-
-
-
-
-
(966)
204
298
3,262
2,589
(1,319)
(3,833)
-
(3,833)
68
408
-
(340)
(4,379)
-
(4,379)
2013
$’000
50,977
2,420
53,397
59,606
4,667
64,273
(203)
(6,918)
(2,604)
(476)
(1,732)
21,006
5,255
26,261
24,078
161,023
89,621
39,084
(31,841)
-
(32,192)
2012
$’000
58,234
1,372
59,606
69
Notes to the Financial Statement
For the year ended 30 June 2013
4. Revenues and Expenses
Profit before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the performance of the entity:
Consolidated
2013
$’000
2012
$’000
53,397
53,397
59,606
59,606
1,960
3,687
346
37
778
202
2,343
4,667
(12,357)
(13,109)
(5,096)
(1,513)
(4,575)
(5,053)
(2,604)
(6,918)
(23,541)
(27,684)
(292)
(203)
(11,961)
(13,524)
(111)
(39)
(17)
(107)
(12,403)
(13,851)
(6,420)
(737)
(7,157)
(6,550)
(476)
(7,026)
(828)
(344)
Revenues from oil operations
Oil sales
Total revenue from oil sales
Other revenue
Interest revenue
Other income
Joint venture fees
Total other revenue
Cost of sales
Production expenses
Royalties
Amortisation of exploration costs in areas under production
Amortisation of development costs in areas of production
Total cost of sales
Administration and other expenses
Depreciation of property, plant and equipment
General administration (includes employee benefits and lease payments)
Realised and unrealised foreign currency translation (loss)/gain
Finance cost – accretion of rehabilitation cost
Total other expenses
Employee benefits expense
Director and employee benefits
Share based payments
Lease payments
Minimum lease payment – operating lease
70
Notes to the Financial Statement
For the year ended 30 June 2013
5. Income Tax
The major components of income tax expense are:
Consolidated Statement of Comprehensive Income
Current income tax
Current income tax charge
Adjustments in respect of prior year income tax
Deferred income tax
Origination and reversal of temporary differences
Income tax expense
Petroleum Resource Rent Tax - deferred tax
Total tax credit/(expenses)
Numerical reconciliation between tax expense and pre-tax net profit
Accounting profit/(loss) before tax from continuing operations
Income tax using the domestic corporation tax rate of 30% (2012: 30%)
Increase/(decrease) in income tax expense due to:
Non-deductible expenditure
Utilisation of capital losses
Adjustments in respect to current income tax of previous years
Non Australian taxation jurisdictional subsidiaries
Income tax expense
Tax Consolidation
Consolidated
2013
$’000
2012
$’000
-
297
297
(5,866)
(5,866)
(5,569)
(11,019)
(16,588)
18,303
(5,491)
(556)
104
297
77
(78)
(8,001)
173
(7,828)
850
850
(6,978)
12,233
5,255
21,006
(6,301)
(560)
-
173
(290)
(677)
(5,569)
(6,978)
The parent entity and its 100% owned Australian resident subsidiaries at the year-end formed a tax consolidated group effective from 1 April 2007. Cooper
Energy Limited is the head entity of the tax consolidated group that provides for the allocation of income tax liabilities between each other should the head
entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the
possibility of default is remote.
Subsequent to 30 June 2013 the Tax Consolidated Group entered into a Tax Sharing Agreement and Tax Funding Agreement. Refer to Note 27 Events after
the Reporting Period for further information.
Unrecognised temporary differences
At 30 June 2013, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries or joint ventures, as the Group
has no liability for additional taxation should unremitted earnings be remitted (2012 $ nil).
Franking Tax Credits
At 30 June 2013 the parent entity had franking tax credits of $38,963,577 (2012: $36,970,914). The fully franked dividend equivalent is $90,915,013
(2012 $82,954,620).
Income Tax Losses
(a) Revenue Losses
Cooper Energy Limited has recognised a Deferred Tax Asset of $3,530,550 (2012: $nil) for Australian income tax revenue losses of $11,768,501 on the
basis that it is probable that the carried forward revenue loss will be utilised against future assessable taxable profits.
(b) Capital Losses
Cooper Energy Limited has not recognised a Deferred Tax Asset for Australian income tax capital losses of $20,464,313 (2012: $20,810,695) on the basis
that it is not probable that the carried forward capital losses be utilised against future assessable capital profits.
71
Notes to the Financial Statement
For the year ended 30 June 2013
5. Income Tax continued
Income Tax Losses continued
Deferred income tax from corporate tax
Deferred income tax at the 30 June relates to the following:
Deferred tax liabilities
Trade and other receivables
Oil property
Exploration and evaluation
Unrealised currency translation gain
Deferred tax assets
Oil properties
Equity raising costs
Trade and other payables
Provision for employee entitlements
Provisions
Unrealised currency translation loss
Tax losses
Carry back losses – adjustment to deferred tax assets recognised
Deferred tax income (expense)
Deferred tax liability from corporate tax
Deferred income tax from petroleum resource rent tax
Deferred income tax 30 June relates to the following:
Deferred tax liabilities
Exploration and evaluation
Deferred tax assets
Oil properties
As represented on the Consolidated Statement of Financial Position,
deferred tax asset
As represented on the Consolidated Statement of Financial Position,
net deferred tax liability
72
Consolidated
Statement of
Financial Position
Consolidated
Statement of
Comprehensive
Income
2013
$’000
2012
$’000
2013
$’000
2012
$’000
(1,526)
(166)
(7,452)
(205)
-
(4)
(357)
5
8
-
3,831
-
(5,866)
(113)
335
80
-
(28)
(200)
438
(169)
716
(209)
-
850
1,214
-
(12,233)
12,233
(11,019)
12,233
3,616
2,264
7,886
197
2,090
2,363
195
-
13,963
4,648
-
19
-
315
996
-
3,831
5,161
(300)
-
-
467
134
1,102
10
-
1,713
-
9,102
2,935
-
-
-
-
-
1,214
1,214
12,233
12,233
12,233
9,102
4,150
Notes to the Financial Statement
For the year ended 30 June 2013
6. Earnings Per Share
Basic earnings per share amounts are calculated by dividing net profit/ (loss) for the year attributable to ordinary equity holders of the parent by the weighted
average of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the
dilutive potential options into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Net profit attributable to ordinary equity holders of the parent from continuing operations
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution:
Consolidated
2013
$’000
1,715
2012
$’000
26,261
2013
Thousands
2012
Thousands
338,056
294,972
Weighted average number of ordinary shares adjusted for the effect of dilution
338,056
294,972
Basic earnings/(loss) per share for the period (cents per share)
Diluted earnings/(loss) per share for the period (cents per share)
0.5
0.5
8.9
8.9
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting
date and the date of completion of these financial statements.
If the performance rights are vested in full, then 8,561,370 shares would be issued over the next three years.
73
Notes to the Financial Statement
For the year ended 30 June 2013
7. Cash and Cash Equivalents and Term Deposits
Current Assets
Cash at bank and in hand
Short term deposits at banks (i)
Non-Current Assets
Term deposits at bank (ii)
Consolidated
2013
$’000
6,154
37,000
43,154
2012
$’000
12,010
47,000
59,010
4,766
2,451
(i) Short term deposits at the banks are in Australian Dollars and are for periods of up to 90 days and earn interest at money market interest rates.
(ii) The non-current term deposits at bank are in United States Dollars and mature on: 15 May 2014 at a fixed interest rate of 1%; 18 August 2013 at a
fixed rate of 0.33%; and 4 November 2013 at a fixed rate of 0.19%. The term deposits have been pledged to the bank to underwrite performance
bonds issued by a wholly owned subsidiary. The carrying value of the term deposit approximates its fair value.
On 28 June 2013 the Company executed a bilateral facility agreement for bank facilities totalling $40 million with Westpac Banking Corporation.
Availability of the facilities is subject to satisfaction of certain conditions precedent. Refer to Note 27 Events after the Reporting Period for
further information.
Reconciliation of net profit after tax to net cash flows from operating activities
Net Profit for the Year
Adjustments for:
Amortisation of development costs in areas of production
Amortisation of exploration costs in areas under production
Depreciation of property, plant and equipment
Exploration and evaluation written off
Profit on sale of investments
Share based payments
Finance cost – accretion of rehabilitation cost
Unrealised foreign currency translation loss
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in deferred tax assets
(Decrease)/increase in deferred tax liabilities
(Decrease)/increase in trade and other payables
(Decrease)/increase in current tax liability
(Decrease)/increase in provisions
(Decrease)/Increase in held for sale assets
Net cash from operating activities
74
1,318
8,381
4,575
1,513
292
1,493
(346)
631
39
111
(7,484)
(15)
(560)
6,918
2,604
203
19,612
-
88
107
(50)
485
84
(125)
12,233
(12,233)
4,952
(487)
(3,706)
(565)
(1,540)
12,454
364
4,515
3,660
2,476
1,995
39,084
Notes to the Financial Statement
For the year ended 30 June 2013
8. Trade and other receivables (current)
Trade receivables (i)
Related party receivables (ii)
Related party receivables – Joint Ventures (iii)
Interest receivable
(i) Trade receivables are non-interest bearing and are generally on 30-90 days terms. There are no past due or
impaired receivables and none that have a history of past default.
(ii) All related party receivables are current within agreed terms of trade and do not exceed 180 days.
(iii) Related party receivables for joint ventures are for work to be undertaken in the near term and are within
contractual arrangements.
(iv) Due to the short-term nature of the trade and other receivables, the carrying value approximates fair value.
9. Materials (current)
Stores and materials
10. Prepayments (current)
Bank facility fee
Insurance
Consolidated
2013
$’000
17,623
614
1,050
170
2012
$’000
9,278
629
1,696
370
19,457
11,973
204
189
500
257
757
-
197
197
11. Exploration assets held for sale and discontinued operations
During the year the Board resolved to dispose of its exploration assets in Tunisia and in the prior year resolved to dispose of its exploration assets in Poland.
Management is in the process of obtaining expressions of interest from third parties for the Company’s equity holding in each of these exploration activities.
The losses from the exploration assets classified as held for sale are presented on a separate line in the Consolidated Statement of Comprehensive Income.
Exploration and evaluation
Impairment loss recognised on the re-measurement to fair value
Liabilities associated with assets held for sale
Net assets directly associated with disposal group
(Loss)/Profit for the year from discontinued operations
Impairment loss recognised on the re-measurement to fair value
(Loss)/Profit for the year from discontinued operations
Basis (loss)/earnings per share from discontinued operations (cents per share)
Diluted (loss)/earnings per share from discontinued operations (cents per share)
2013
$’000
23,809
-
(573)
23,236
(397)
-
(397)
(0.12)
(0.12)
2012
$’000
17,913
(17,880)
-
33
-
(17,880)
(17,880)
(6.1)
(6.1)
75
Notes to the Financial Statement
For the year ended 30 June 2013
12. Available for sale investments (non-current)
Shares at fair value
A reconciliation of the movement during the year is as follows:-
Opening balance
Purchases
Sale of investment
Impairment
Movement in available for sale investment reserve
Closing balance
13. Oil properties (non-current)
Consolidated
Year end 30 June 2013
Carrying amount at 1 July 2012
Additions
Depreciation
Carrying amount at 30 June 2013
As at 30 June 2013
Cost
Accumulated depreciation
Year end 30 June 2012
Carrying amount at 1 July 2011
Additions
Acquisition of Subsidiary
Depreciation
Carrying amount at 30 June 2012
As at 30 June 2012
Cost
Accumulated depreciation
76
2013
$’000
20,182
13,203
10,172
(816)
-
(2,377)
20,182
Plant
and
Equipment
Transferred
Exploration
and Evaluation Development
$’000
$’000
$’000
2012
$’000
13,203
-
15,198
-
-
(1,995)
13,203
Total
$’000
137
1,619
(292)
1,464
1,756
(292)
1,464
235
22
83
(203)
137
323
(186)
137
4,053
749
(1,513)
3,289
4,802
(1,513)
3,289
3,569
3,088
-
(2,604)
4,053
14,998
19,188
3,704
(4,575)
6,072
(6,380)
14,127
18,880
18,702
(4,575)
14,127
14,042
7,874
-
(6,918)
14,998
25,260
(6,380)
18,880
17,846
10,984
83
(9,725)
19,188
12,415
41,046
53,784
(8,362)
4,053
(26,048)
(34,596)
14,998
19,188
Notes to the Financial Statement
For the year ended 30 June 2013
14. Exploration and evaluation (non-current)
Regions of focus
Africa
Asia
Australia
European
Total exploration and evaluation
Reconciliations of the carrying amounts of capitalised exploration at the beginning and end of the
financial year are set out below:
Carrying amount at 1 July
Expenditure
Fair value of exploration acquired on the acquisition of Somerton Energy Limited
Transferred to oil properties
Unsuccessful exploration wells written off (i)
Exploration expenditure classified as held for sale
Carrying amount at 30 June
(i) Exploration write offs relate to exploration wells that were plugged and abandoned as dry holes, during the year.
(ii) Recoverability is dependent on the successful development and commercial exploration or sale of the respective
areas of interest.
15. Trade and other payables (current)
Trade payables (i)
Other payables (i)
Accruals
Related party payables – Joint Ventures (ii)
(i) Trade and other payables are non-interest bearing and are normally settled on 30-90 day terms
(ii) Related party payables are accrued expenditure incurred on joint ventures.
Consolidated
2013
$’000
2012
$’000
-
20,154
4,559
26,287
-
859
21,533
-
30,846
42,546
42,546
14,259
92
(749)
(1,493)
21,300
22,983
20,963
(3,088)
(1,732)
(23,809)
(17,880)
30,846
42,546
4,785
358
2,143
7,286
4,559
1,132
2,349
2,852
6,333
5,999
11,845
12,332
77
Notes to the Financial Statement
For the year ended 30 June 2013
16. Provisions (non-current)
Long service leave provision
Redundancy provision
Restoration provision
Movement in carrying amount of the restoration provision:
Carrying amount at 1 July
Additional provision
Increase through accretion
Carrying amount at 30 June
Consolidated
2013
$’000
4
-
3,321
3,325
3,240
42
39
3,321
2012
$’000
64
586
3,240
3,890
1,281
1,852
107
3,240
The Restoration Provision is the present value of the Group’s share of the estimated cost to restore operating locations. The nature of restoration activities
includes the obligations relating to the reclamation, waste site closure, plant closure, production facility removal and other costs associated with the
restoration of the site.
17. Business combinations
On 6 June 2012 Cooper Energy Limited (the Company) pursuant to an off market takeover offer dated 7 May 2012 acquired 92.74% of the shares in
Somerton Energy Limited (Somerton) and then invoked the Compulsory Acquisition provisions of the Corporations Act 2001 (Cth) to acquire 100% of the
share capital in Somerton in July 2012.
From the date of acquisition, Somerton contributed $20,093 of revenue and $320,242 of loss before tax to the Group. If the combination had taken place on
1July 2011, the Group’s revenue would have been increased by $491,826 and the net profit before tax from continuing operations would have decreased by
$1,998,411.
The purpose of the acquisition was to increase the Company’s Australian exploration interests including exploration tenements in the Otway Basin in South
Australia and Gippsland Basin in Victoria.
The consideration for the acquisition of Somerton comprised the following;
1) One Cooper Share for every 2.8 Somerton Shares (all shares alternative); or
2) One Cooper Share for every 4.73 Somerton Shares plus 9 cents for each Somerton share (shares and cash alternative).
Somerton shareholders who did not elect their preferred option received the all shares alternative as consideration.
78
Notes to the Financial Statement
For the year ended 30 June 2013
17. Business combinations continued
The Company has finalised and recognised the fair values and identifiable assets and liabilities of Somerton Energy Limited as follows;
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total current assets
Non-current assets
Available for sale financial assets
Term deposits at bank
Property, plant and equipment
Exploration and evaluation expenditure
Total non-current assets
Total Assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liability
Provisions
Total non-current liabilities
Total Liabilities
Total identifiable net assets at fair value
Acquisition-date fair-value of consideration transferred:
Shares issued at fair value
Cash Consideration
The cash outflow on acquisition is as follows:
Net Cash acquired with the subsidiary
Cash Paid
Transaction costs incurred in 2012 financial year attributable to acquisition of Somerton
Fair value at
acquisition date
$’000’s
Carrying
value
$’000’s
7,081
7,081
116
200
116
200
7,397
7,397
325
15
20
21,055
21,415
28,812
2,008
18
2,026
1,215
156
1,371
3,397
25,415
15,719
9,696
25,415
7,081
(9,696)
(2,615)
1,005
325
15
20
9,885
10,245
17,642
2,008
18
2,026
1,215
156
1,371
3,397
79
Notes to the Financial Statement
For the year ended 30 June 2013
18. Contributed equity and reserves
Share capital
Ordinary shares
Issued and fully paid
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value
shares. Accordingly, the Parent does not have authorised capital nor par value in respect of its issued shares
Fully paid ordinary shares carry one vote per share and carry the right to dividends
Movement in ordinary shares on issue
At 1 July 2012
Issuance of shares for Performance Rights
Issue of shares for the acquisition of Somerton Energy Ltd
At 30 June 2013
Share options
Consolidated
2013
$’000
2012
$’000
114,570
113,877
Thousands
$’000
327,329
113,877
406
1,365
106
587
329,100
114,570
The Group has a share based payment option scheme under which options to subscribe for the parent entity’s shares have been granted to key management
personnel and senior employees (refer note 23).
Reserves
Consolidation
reserve
$’000
Share
based
payment
reserve
$’000
Option
premium
reserve
$’000
Available
for sale
investment
reserve
$’000
(541)
2,643
-
-
-
476
(541)
3,119
-
-
-
-
(106)
737
25
-
-
25
-
-
-
-
(1,995)
-
(1,995)
(2,377)
-
-
Total
$’000
2,127
(1,995)
476
608
(2,377)
(106)
737
(541)
3,750
25
(4,372)
(1,138)
Consolidated
At 30 June 2011
Other comprehensive income
Share-based payments
At 30 June 2012
Other comprehensive income
Transferred to issued capital
Share-based payments
At 30 June 2013
Nature and purpose of reserves
Consolidation reserve
The reserve comprises the premium paid on acquisition of minority shareholdings in a controlled entity.
Share based payment reserve
This reserve is used to record the value of equity benefits provided to employees and Directors as part of their remuneration.
Option premium reserve
This reserve is used to accumulate amounts received from the issue of options. The reserve can be used to pay dividends or issue bonus shares.
Available for sale investment reserve
This reserve is used to capture the mark to market movement in the value of shares held in companies listed on a public exchange.
80
Notes to the Financial Statement
For the year ended 30 June 2013
18. Contributed equity and reserves continued
Retained earnings
Movement in retained earnings were as follows:
Balance1July
Net profit for the year
Balance at 30 June
Consolidated
2013
$’000
22,460
1,318
23,778
2012
$’000
14,079
8,381
22,460
19. Financial risk management objectives and policies
The Group’s principal financial instruments comprise cash and short term deposits, receivables, available for sale investments and payables.
The Group manages its exposure to key financial risks in accordance with its risk management policy with the objective to ensure that the financial risks
inherent in oil and gas exploration activities are identified and then managed or kept as low as reasonably practicable.
The main financial risks that arise in the normal course of business for the Group’s financial instruments are foreign currency risk, commodity price risk,
share price risk, credit risk, liquidity risk and interest rate risk. The Group uses different methods to measure and manage different types of risks to which
it is exposed. These include monitoring exposure to foreign exchange risk and assessments of market forecast for interest rates, foreign exchange and
commodity prices. Liquidity risk is monitored through the development of future rolling cash flow forecasts.
It is, and has been, throughout the period under review, the Board’s policy that no speculative trading in financial instruments be undertaken.
The primary responsibility for the identification and control of financial risks rests with the Managing Director and the Chief Financial Officer, under the
authority of the Board. The Board is apprised of these and other risks at Board meetings and agrees any policies that may be taken to manage any
of the risks identified below.
Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised , in respect of each financial instrument are disclosed in Note 2 to the financial statements.
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments recognised in the
financial statements.
Consolidated
Financial assets
Cash and cash equivalents
Term deposits
Available for sale investments
Trade and other receivables
Financial liabilities
Trade and other payables
Carrying amount
Fair value
2013
$’000
2012
$’000
2013
$’000
2012
$’000
43,154
4,766
20,182
19,457
59,010
2,451
13,203
11,973
43,154
4,766
20,182
19,457
59,010
2,451
13,203
11,973
11,845
12,332
11,845
12,332
The financial assets and liabilities of the Group are recognised in the consolidated statement of financial position in accordance with the accounting policies
set out in note 2.
The valuation technique for determining and disclosing the fair value of the available for sale investments is the quoted prices on a prescribed equity stock
exchange and hence is a level 1 fair value hierarchy.
The following summarises the significant methods and assumptions used in estimating the value of financial instruments:
Trade and other receivables
The carrying value is a reasonable approximation of their values due to the short-term nature of trade receivables.
81
Notes to the Financial Statement
For the year ended 30 June 2013
19. Financial risk management objectives and policies continued
Risk Exposure and Response.
Foreign currency risk
The Group has transactional currency exposure arising from all its sales which are denominated in United States dollars, whilst almost all its costs are
denominated in the Group’s functional currency of Australian dollars.
In addition the Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, to the United States Dollars,
Euro’s and Polish Zloty’s. Transaction exposures, where possible, are netted off across the Group to reduce volatility and provide a natural hedge.
The Group may from time to time have cash denominated in United States Dollars, Euro’s and Polish Zloty’s.
Currently the Group has no foreign exchange hedge programmes in place. The Chief Financial Officer manages the purchase of foreign currency to meet
expenditure requirements, which cannot be netted off against US Dollar receivables.
The financial instruments which are denominated in US Dollars are as follows:-
Financial assets
Cash
Term deposits at bank
Consolidated
2013
$’000
3,637
4,286
2012
$’000
317
2,429
Trade and other receivables (current and non-current)
18,076
10,812
Financial liabilities
Trade and other payables
641
561
The following table summarises the sensitivity of financial instruments held at the year end, to movements in the exchange rates for the Australian dollar to
the foreign currency, with all other variables held constant.
Impact on after
tax profit
2013
$’000
(2,351)
2,818
2012
$’000
(1,505)
1,955
Impact on other
comprehensive
income
2013
$’000
-
-
2012
$’000
-
-
If the Australian dollar were higher at the balance date by 10% (2012: 13%)
If the Australian dollar were lower at the balance date by 10% (2012: 13%)
If the Australian dollar were higher at the balance date by 10%
If the Australian dollar were lower at the balance date by 10%
82
Notes to the Financial Statement
For the year ended 30 June 2013
19. Financial risk management objectives and policies continued
Commodity Price risk
Commodity price risk arises from the sale of oil denominated in US dollars. The Group does not sell forward any of its oil and has no financial instruments at
report date that relates to commodity prices. The Group has provisional sales at 30 June 2013 of $12,034,000 (2012: $6,597,000).
If the Brent Average price per bbl were higher at the balance date by 10%
If the Brent Average price per bbl were lower at the balance date by 10%
Impact on after
tax profit
2013
$’000
1,203
(1,203)
2012
$’000
659
(659)
Credit risk
Credit risk arises from the financial assets of the Group which comprise cash and cash equivalents and trade and other receivables. The Group’s exposure
to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at
balance date is addressed in each applicable note.
The Group trades only with recognised creditworthy third parties. The Group has had no exposure to bad debts.
The Group has a concentration of credit risk with trade receivables due from three entities which have traded with the Group since 2003.
Cash and cash equivalents and term deposits are held at three financial institutions that have a Standard & Poors AA credit rating. Trade receivables are
settled on 30 to 90 day terms.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The liquidity position of the Group is managed
to ensure sufficient liquid funds are available to meet all financial commitments in a timely and cost-effective manner. The Managing Director and Chief
Financial Officer review the liquidity position on a weekly basis including cash flow forecasts to determine the forecast liquidity position and maintain
appropriate liquidity levels.
Trade and other payables amounting to $11,845,000 (2012: $12,332,000) are payable within normal terms of 30 to 90 days.
Interest rate risk
The Group has no borrowings at 30 June 2013 (2012: $ nil) nor has the Group drawn and repaid any loans from a financial institution during the
reporting period.
The Group has interest bearing deposits of $41,766,000 (2012: $49,451,000).
The group has $40 million (2012: $nil) in undrawn credit facilities with a financial institution, subject to the conditions outlined in Note 27.
If the interest rate were 1% rate higher at the balance date
If the interest rate were 1% rate lower at the balance date
Impact on after
tax profit
2013
$’000
80
(80)
2012
$’000
550
(550)
Any fluctuation of the interest rate either up or down will have no impact on the principal amount of the cash on term deposit at the banks. The Group does
not invest in financial instruments that are traded on any secondary market.
83
Notes to the Financial Statement
For the year ended 30 June 2013
19. Financial risk management objectives and policies continued
Share price risk
Share price risk arises from the movement of share prices on a prescribed stock exchange. The Group has available for sale investments the fair value of
which fluctuates as a result of movement in the share price.
Impact on available for
sale investment reserve
Impact on profit
before tax
2013
$’000
2012
$’000
2013
$’000
2012
$’000
If the share price were 10% higher at the balance date
1,958
1,285
-
-
If the share price were 10% lower at the balance date
-
(1,958)
(1,285)
Capital Management risk
When managing capital, Management’s objective is to ensure the entity continues as a going concern as well as maintain optimal return to shareholders.
Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity commensurate with the business risk.
Capital includes equity attributable to the equity holders of the parent.
As the equity market is constantly changing, management may issue new shares to provide for future exploration or development activities. Management has
no current plans to issue further shares.
20. Commitments and contingencies
Operating lease commitments under non-cancellable office lease not provided for in the
financial statements and payable:
Within one year
After one year but not more than five years
After more than five years
Total minimum lease payments
Consolidated
2013
$’000
312
2,058
-
2,370
2012
$’000
358
1,580
-
1,938
The Parent entity leases a suite of offices in Adelaide from which it conducts its operations. The lease is for five years with an option to renew after that date.
The Parent entity leases a suite of offices in Perth which will be cancelled after October 2013. The lease commitment on the Perth offices is until July 2017,
accordingly, a payable has been recognised for the early release on this lease commitment.
Exploration capital commitments not provided in the financial statements and payable:
Within one year
After one year but not more than five years
After more than five years
Total minimum lease payments
32,057
39,161
-
46,429
53,011
-
71,218
99,440
As at 30 June 2013 the Parent entity has cash backed bank guarantees for $4,454,000 (2012 $1,309,000). These guarantees are in relation to
performance bonds on exploration permits, security on the Company’s MasterCard facilities and guarantees on office leases.
84
Notes to the Financial Statement
For the year ended 30 June 2013
21. Interest in joint venture assets
The group has interests in a number of joint ventures which are involved in the exploration and/or production of oil in Australia, Tunisia, Indonesia and Poland.
The Group has the following interests in joint ventures in the following major areas:
a) Joint Ventures in which Cooper Energy Limited is the operator/manager
Australia
PEL 186
PEP151
Indonesia
Sukananti KSO
Sumbagsel PSC
Merangin III PSC
Tunisia
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration and production
Oil and gas exploration
Oil and gas exploration
Bargou Exploration Permit
Oil and gas exploration
Nabeul Exploration Permit
Oil and gas exploration
b) Joint Ventures in which Cooper Energy Limited is not the operator/manager
Australia
PEL 90
PEL 92
PEL 93
PEL 100
PEL 110
PEL 150
PEL 168
PEL 171
PEL 495
Tunisia
Oil and gas exploration
Oil and gas exploration and production
Oil and gas exploration and production
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Oil and gas exploration
Hammamet Exploration Permit
Oil and gas exploration
Poland
MUA 1& 2
Oil and gas exploration
Ownership Interest
2013
2012
33.33%
33.33%
75%
75%
55%
100%
100%
30%
85%
25%
25%
30%
55%
100%
-
30%
85%
25%
25%
30%
19.167%
19.167%
20%
20%
50%
25%
65%
20%
20%
50%
25%
65%
35%
35%
40%
40%
85
Notes to the Financial Statement
For the year ended 30 June 2013
21. Interest in joint venture assets continued
The Groups’ ongoing funding obligation to each Joint Venture is no greater than the ownership interest in that joint venture. The share of assets, liabilities and
expenses of the joint venture which are included in the financial statements, are as follows:-
Consolidated
2013
$’000
2012
$’000
1,295
1,811
204
54
149
1,580
189
98
3,364
2,016
18,880
30,846
49,726
19,188
42,546
61,734
2,072
2,072
814
814
51,018
62,936
53,397
12,357
5,096
1,513
4,575
1,493
59,606
13,109
5,053
2,604
6,918
1,732
ASSETS
Current Assets
Cash at bank
Trade and other receivables
Materials
Prepayments
Total Current Assets
Non-Current Assets
Oil properties
Exploration and evaluation
Total Non-Current Assets
LIABILITIES
Trade and other payables
Total Current Liabilities
NET ASSETS
Revenue
Production expenses
Royalties
Amortisation of exploration areas under production
Amortisation of development costs in areas of production
Exploration and development write offs
Refer to note 20 for details of joint venture contingencies.
86
Notes to the Financial Statement
For the year ended 30 June 2013
22. Related parties
The Group has a related party relationship with its subsidiaries, joint ventures (see note 21) and with its key management personnel (refer to disclosure for
key management personnel below).
Key management personnel disclosures
The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key management
personnel for the entire period.
Non-Executive Directors
Mr J Conde AO (Chairman from 25 February 2013)
Mr L.J. Shervington (Chairman to 25 February 2013)
Executive Directors
Mr D.P. Maxwell
Mr H.M. Gordon
Mr J.W. Schneider
Executives at year end
Mr J. de Ross (Chief Financial Officer)
Mr A. Thomas (Exploration Manager)
Ms A. Evans (Legal and Company Secretary)
Key Management Personnel who resigned during the year
Mr J.A. Baillie (Chief Financial Officer)
Mr S.K. Twartz (Exploration Manager)
Mr A.A. Warton (Development Manager)
Mr S.F. Blenkinsop (Legal and Commercial Manager)
The key management personnel compensation included in General Administration (see note 4) are as follows:
Short-term benefits
Long-term benefits
Post-employment benefits
Performance Rights
Early Termination payments
Total
Consolidated
2013
$
2012
$
2,992,433
2,100,002
36,470
108,348
506,843
571,860
86,428
104,953
342,266
402,950
4,215,954
3,036,599
Individual Directors’ and Executives’ compensation disclosures
Information regarding individual Directors’ and Executives’ compensation and some equity instruments disclosures is provided in the Remuneration Report
section of the Directors’ report on pages 28 to 38.
Apart from the details disclosed in this note, no Director has entered into a material contract with the parent entity or the Group since the end of the previous
financial year and there were no material contracts involving Directors’ interest existing at year-end.
87
Notes to the Financial Statement
For the year ended 30 June 2013
22. Related parties continued
Options over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Cooper Energy Limited held, directly, indirectly or beneficially, by
each key management person, including their related parties, is a follows:
Held at
1 July
2012
Granted
Expired /
lapsed at
maturity or
termination
Held at
30 June
2013
Vested
during
the year
Vested and
exercisable
-
-
Held at
1 July
2011
3,000,000
600,000
5,000,000
-
-
-
-
-
-
-
-
-
-
Expired /
lapsed at
maturity or
termination
Granted
Held at
30 June
2012
Vested
during
the year
Vested and
exercisable
-
-
-
3,000,000
600,000
5,000,000
-
-
-
-
-
-
-
-
-
Directors
None held
Executives
None held
Directors
Mr G.G. Hancock
Executives
Mr J.A. Baillie
Mr M.T. Scott
Performance rights
The movement during the reporting period in the number of performance rights granted but not exercisable over ordinary shares in Cooper Energy Limited
held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July
2012
Granted
Forfeited on
termination
Vested
during
the year
Exercisable
Held at
30 June
2013
1,647,713
1,317,992
728,731
698,412
399,059
153,782
-
-
-
-
732,605
569,021
529,788
454,952
-
-
-
-
-
732,605
403,104
529,788
322,296
-
-
-
-
-
-
165,917
-
132,656
-
-
-
-
-
-
-
-
-
2,965,705
728,731
698,412
399,059
153,782
-
-
-
-
Directors
Mr D. Maxwell
Mr H. Gordon
Executives
Mr A. Thomas
Mr J. de Ross
Ms A. Evans
Mr S. Twartz
Mr A. Warton
Mr S.F. Blenkinsop
Mr J.A. Baillie
88
Notes to the Financial Statement
For the year ended 30 June 2013
22. Related parties continued
Performance rights continued
Held at
1 July
2011
Granted
Forfeited on
termination
Vested
during
the year
Exercisable
-
-
-
-
-
1,647,713
732,605
569,021
529,788
454,952
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at
30 June
2012
1,647,713
732,605
569,021
529,788
454,952
Directors
Mr D.P. Maxwell
Executives
Mr S. Twartz
Mr A. Warton
Mr S.F. Blenkinsop
Mr J.A, Baillie
Movement in shares
The movement during the reporting period in the number of ordinary shares in Cooper Energy Limited held, directly, indirectly or beneficially, by each key
management person, including their related parties, is as follows:
Received on
exercise
of options
Purchases
Held at
30 June
2013
Sales
Directors
Mr J Conde AO
Mr L. J. Shervington
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
Executives
Mr S.F. Blenkinsop
Directors
Mr L. J. Shervington
Mr C.R Porter
Mr G.G. Hancock
Mr S.H. Abbott
Mr D.P. Maxwell
Mr J.W. Schneider
Mr H.M. Gordon
Executives
Mr M.T. Scott
Mr S.F. Blenkinsop
Held at
1 July
2012
-
405,933
935,527
300,000
176,608
2,933
Held at
1 July
2011
405,933
525,933
2,600,001
60,000
-
-
77,663
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Received on
exercise of
options
Purchases
Sales
-
-
-
-
-
-
-
935,527
300,000
176,608
751,500
160,933
-
-
-
-
-
-
-
-
-
-
-
-
405,933
1,013,190
300,000
176,608
Resigned
Held at
30 June
2012
405,933
Resigned
Resigned
Resigned
935,527
300,000
176,608
Resigned
-
-
-
-
-
-
-
-
158,000
2,933
89
Notes to the Financial Statement
For the year ended 30 June 2013
22. Related parties continued
Subsidiaries
The Group financial statements include the financial statements of Cooper Energy Limited and the subsidiaries listed in the following table.
Name
Cooper Energy Sukananti Limited
Cooper Energy Sumbagsel Limited
Cooper Energy Merangin III Limited
CE Tunisia Bargou Ltd
CE Hammamet Ltd
CE Nabeul Ltd
Cooper Energy (Seruway) Pty Ltd
Worrior (PPL 207) Pty Ltd
CE Poland Pty Ltd
Somerton Energy Limited
Essential Petroleum Exploration Pty Ltd
CE Poland Coopertief UA
CE Polska sp z.o.o.
Joint Venture
Country of
incorporation
British Virgin Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
Australia
Australia
Australia
Australia
Australia
Netherlands
Poland
Equity interest
2013
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99%
100%
2012
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.7%
100%
99%
100%
During the reporting period, the Group provided geological and technical services to joint ventures it manages at a cost of $1,772,000 (2012: $202,000).
At the end of the financial period, $614,000 was outstanding for these services (2012: $nil).
An impairment assessment is undertaken each financial year by examining the financial position of the related party and their investment in the respective
joint venture’s which are prospecting for hydrocarbons to determine whether there is objective evidence that a related party receivable is impaired. When
such objective evidence exists, the Group recognises an allowance for the impairment loss.
90
Notes to the Financial Statement
For the year ended 30 June 2013
23. Share based payment plans
On 16 December 2011 shareholders of the parent entity approved the establishment of an Employee Performance Rights Plan whereby the Board can,
subject to certain conditions, issue performance rights to employees to acquire shares in the parent entity.
The first issue under the plan was made on 20 January 2012. During the financial year further issues were made in July 2012, August 2012, December 2012
and May 2013. The performance rights were issued for no consideration. The right extends to the holder the right to be vested with shares in the parent entity.
Vesting of the performance rights will be in three equal tranches over the term of the right to be determined in the fourth calendar quartile of each year.
The vesting test is two parts. Up to 25% of the eligible rights to vest are determined from the absolute total shareholder return of the parent entity’s share
price against its own share price at the date of the grant of the right. If the return is less than 5% no rights will vest. If the return is between 5% and 25% the
rights that will vest will be between 6.25% and 12.5% of the eligible rights. If the return is greater than 25% up to 25% of the eligible rights will vest.
The second part is for the remaining 75% of the eligible rights to vest and is determined from the absolute total shareholder return of the parent entity’s share
price against a weighted basket of absolute total shareholder returns of peer companies listed on the Australian Stock Exchange. If the return is less than
50% of peer companies no rights will vest. If the return is between 50% and 75% rights the eligible rights that will vest will be between 37.5% and 56.25%.
If the return is greater than 75% up to 75% of the eligible rights will vest.
Rights that do not qualify for vesting in any one year can be carried forward to the following year for testing of vesting eligibility.
There are no participating rights or entitlements inherent in the rights and holders will not be entitled to participate in new issues of capital offered to
shareholders during the period of the rights. All rights are settled by physical delivery of shares.
Information with respect to the number of performance rights granted to employees is as follows:
Granted in the year ended
Number of rights granted
Average share price
at commencement
date of grant (cents)
Average contractual
life of rights at grant
date in years
1 July 2012
2 August 2012
10 December 2012
31 May 2013
597,583
252,980
5,172,342
267,607
$0.365
$0.437
$0.574
$0.471
3
3
3
3
The number and weighted average exercise prices of performance rights held by employees is as follows:
Balance at beginning of year
- granted
- vested
- expired and not exercised
- forfeited following employee resignation
Balance at end of year
Exercisable at end of year
During the financial year, 405,667 rights were vested (2012: nil).
Number
of rights
2013
5,855,831
Number
of rights
2012
-
6,290,512
5,855,831
(405,667)
-
(3,179,306)
-
-
-
8,561,370
5,855,831
nil
nil
91
Notes to the Financial Statement
For the year ended 30 June 2013
23. Share based payment plans continued
The fair value of services received in return for the performance rights granted are measured by reference to the fair value of performance rights granted.
The estimate of the fair value of the services received is measured based on the Black-Scholes methodology to produce a Monte-Carlo simulation model that
allows for the incorporation of market based performance hurdles that must be met before the shares vest to the holder.
1 July 2012
26.1 cents
36.5 cents
3.27%
40%
0%
2 August 2012
40.6 cents
48.5 cents
2.65%
42%
0%
10 December 2012
45.8 cents
58.5 cents
2.64%
43%
0%
31 May 2013
24.9 cents
38 cents
2.59%
44%
0%
Fair value assumptions
Fair value at measurement date
Share price
Risk free interest rate
Expected volatility
Dividend Yield
Fair value assumptions
Fair value at measurement date
Share price
Risk free interest rate
Expected volatility
Dividend Yield
Fair value assumptions
Fair value at measurement date
Share price
Risk free interest rate
Expected volatility
Dividend Yield
Fair value assumptions
Fair value at measurement date
Share price
Risk free interest rate
Expected volatility
Dividend Yield
92
Notes to the Financial Statement
For the year ended 30 June 2013
24. Deed of cross guarantee
The parent entity and each of the Australian Subsidiaries (the Closed Group) entered into a Deed of Cross Guarantee on 28 June 2013. The effect of
the Deed is that the Parent has guaranteed to pay the deficiency in the event of winding up of any of the Australian Subsidiaries under certain provision of the
Corporations Act 2001. The Australian Subsidiaries have also given a similar guarantee in the event that the Parent is wound up. The statement
of comprehensive income and statement of financial position of the Closed Group are as follows:
Closed Group Statement of Comprehensive Income
Continuing Operations
Revenue from oil sales
Cost of sales
Gross profit
Other revenue
Exploration and evaluation expenditure written off
Administration and other expenses
Profit before income tax
Taxes
Income tax expense
Petroleum Resource Rent Tax
Total income tax (expenses)
Net profit after tax from continuing operations
Retained profits at the beginning of the period
Retained profits at the end of the period
Closed Group
2013
$’000
2012
$’000
50,976
(22,067)
28,909
2,343
(1,493)
(11,714)
18,045
(5,569)
(11,019)
(16,588)
1,457
23,373
24,830
-
-
-
-
-
-
-
-
-
-
-
-
-
93
Notes to the Financial Statement
For the year ended 30 June 2013
24. Deed of cross guarantee continued
Closed Group Statement of Financial Position
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Materials
Prepayments
Total Current Assets
Non-Current Assets
Available for sale financial assets
Loans to subsidiaries
Term deposits at banks
Oil properties
Exploration and evaluation
Deferred tax asset
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income tax payable
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profits
TOTAL EQUITY
94
Closed Group
2013
$’000
2012
$’000
43,154
18,216
-
731
62,101
20,182
31,796
4,766
17,303
26,287
-
100,334
162,435
11,203
-
11,203
9,102
3,326
12,428
23,631
138,804
114,570
(596)
24,830
138,804
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statement
For the year ended 30 June 2013
25. Auditors remuneration
The auditor of Cooper Energy Limited is Ernst & Young
Amounts received or due and receivable by Ernst & Young Australia for:
Auditing and review of financial reports of the entity and the consolidated group
Other services – due diligence
Amounts received or due and receivable by related practices of Ernst & Young Australia for:
Auditing and review of financial reports of an entity in the consolidated group
26. Parent entity information
Information relating to Cooper Energy Limited
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Issued capital
Retained profits
Option premium reserve
Unrealised (loss)/gain on available for sale financial assets
Share based payment reserve
Total shareholders’ equity
Profit/(loss) of the parent entity
Total comprehensive income/(loss) of the parent entity
Commitments and Contingencies
Operating lease commitments under non-cancellable office lease not provided for in the financial statements
and payable:
Within one year
After one year but not more than five years
After more than five years
Total minimum lease payments
Consolidated
2013
$
2012
$
184,427
243,500
-
20,000
184,427
263,500
-
-
184,427
263,500
Parent Entity
2013
$’000
2012
$’000
60,804
64,472
161,140
160,598
9,773
22,030
15,223
21,878
114,570
113,877
24,144
23,694
25
(3,381)
3,752
25
(1,995)
3,119
139,110
138,720
451
(2,930)
9,143
7,148
312
2,058
-
2,370
358
1,580
-
1,938
95
Notes to the Financial Statement
For the year ended 30 June 2013
27. Events after the reporting period
On 28 June 2013 the Company executed a bilateral facility agreement for bank facilities totalling $40 million with Westpac Banking Corporation.
Subsequent to 30 June 2013 the Company has satisfied all conditions precedent for Tranche A Facilities of $10m and these are available for use.
Remaining conditions precedent to the first drawdown under Tranche B Facilities of $30m relate to finalisation of security arrangements.
The Company resigned as operator on PEP 151 on 15 August 2013 with no change in equity interests.
On 22 August 2013 the Tax Consolidated Group entered into a Tax Sharing Agreement and Tax Funding Agreement. There is no accounting impact
upon the Consolidated Group.
Ms. Alice Williams was appointed to the Board of Directors on 28 August 2013.
96
Directors’ Declaration
In accordance with a resolution of the Directors of Cooper Energy Limited, I state that:
In the opinion of the Directors:
(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2b;
(c) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable;
(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations
Act 2001 for the financial year ended 30 June 2013; and
(e) at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in Note 24 will be able to meet
any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.
Signed is accordance with a resolution of the Directors.
Mr John C. Conde AO
Chairman
28 August 2013
Mr David P. Maxwell
Director
97
98
99
100
Securities Exchange and Shareholder Information
as at 31 August 2013
Listing
The company’s shares are quoted on the Australian Securities Exchange under the code of “COE”.
Number of Shareholders
There were 5,377 shareholders. All issued shares carry voting rights. On a show of hands every member at a meeting of shareholders shall have one vote
and upon a poll each share shall have one vote.
Distribution of Shareholding (at 31 August 2013)
Size of Shareholding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Unquoted Options on Issue
Nil
Unquoted Performance Rights
Number of holders
1,131
1,528
905
1,627
186
5,377
Number of Shares
346,203
4,417,478
7,497,430
51,077,741
265,761,070
329,099,922
% of issued capital
0.11
1.34
2.28
15.52
80.75
100.00
Number of Holders of Performance Rights
24
Total Performance Rights
8,561,370
Unmarketable Parcels
There were 1,178 members, representing 396,181 shares, holding less than a marketable parcel of 1,124 shares in the company.
Twenty Largest Shareholders
Name
J P Morgan Nominees Australia Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Beach Energy Limited
Zero Nominees Pty Ltd
Cairnglen Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Cairnglen Investments Pty Ltd
BNP Paribas Noms Pty Ltd
Kavel Pty Ltd
Token Nominees Pty Ltd
Kellyvale Nominees Pty Ltd
Mirrabooka Investments Limited
Celtic Trust Company Ltd
Bresrim Nominees Pty Ltd
Rank
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Totals: Top 20 holders of Ordinary Fully Paid Shares (Total)
Substantial Shareholder
Units
45,236,815
38,302,501
33,184,945
25,631,431
16,934,470
8,692,163
6,152,565
5,354,646
5,092,469
3,071,721
2,974,233
2,768,482
2,651,050
2,571,303
2,500,000
2,258,525
2,225,000
2,165,728
2,151,992
1,610,970
211,531,009
% of Issued Capital
13.75
11.64
10.08
7.79
5.15
2.64
1.87
1.63
1.55
0.93
0.90
0.84
0.81
0.78
0.76
0.69
0.68
0.66
0.65
0.49
64.28
The following were substantial holders in the company, as disclosed in substantial holding notices given to the Company as required by section
671B of the Corporations Act.
Name of entity
Beach Energy Limited
Paradice Investment Management Pty Ltd
National Australia Bank Limited
Kinetic Investment Partners Limited
Commonwealth Bank of Australia
Acorn Capital
Number of securities in which substantial shareholder
has a relevant interest as at date of last notice
31,270,694
26,763434
21,265,532
20,924,029
16,581,995
8,987,550
Voting power
as at date of last notice
9.57%
9.141%
6.470%
7.15%
5.04%
6.56%
101
Shareholder Information
Share Registry
Annual Report mailing list
Shareholders who wish to vary their
annual report mailing arrangements
should advise Computershare in
writing. Electronic versions of the report
are available to all via the company’s
website. Annual Reports will be
mailed to all shareholders who have
elected to be placed on the mailing list
for this document. Report election
forms can be downloaded from the
Computershare website.
Forms for download
All forms relating to amendment of
holding details and holder instructions
to the company are available for
download from the Computershare.
Investor information
Information about the company is
available from a number of sources:
• Website: www.cooperenergy.com.au
• E-news: Shareholders can nominate
to receive company information
electronically. This service is hosted
by Computershare and can be
accessed via Computershare’s website
• Publications: the annual report is the
major printed source of company
information. Other publications include
the Half-yearly report, company press
releases, investor packs, presentations
and Open Briefings. All publications
can be obtained either through the
company’s website or by contacting
the company
• Telephone or email enquiry:
to Don Murchland, Investor Relations
+61 439 300 932;
donm@cooperenergy.com.au
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
Perth, Western Australia 6000
Website: investorcentre.com/au
Telephone:
Australia 1300 655 248
International +61 3 9415 4887
Facsimile: +61 3 9473 2500
Enquiries and share registry
address
Shareholders with enquiries about their
shareholdings should contact the
company’s share registry, Computershare
Investor Services Pty Ltd, via the
telephone contact above.
Online shareholder information
Shareholders can obtain information
about their holdings or view their
account instructions online, as well
as download forms to update their
holder details. For identification and
security purposes, you will need
to know your Holder Identification
Number (HIN/SRN), Surname/Company
Name and Post/Country Code to
access. This service is accessible via
the Computershare website.
Change of address
Shareholders who have changed their
address should advise Computershare
in writing. Written notification can be
mailed or faxed to Computershare at the
address given above and must include
both old and new addresses and the
security holder reference number (SRN)
of the holding.
Change of address forms are available
for download from the Computershare
website. Alternatively, holders can amend
their details on-line via the Computershare
website. Shareholders who have broker
sponsored holdings should contact their
broker to update these details.
102
Cooper Energy Limited
ABN 93 096 170 295
Reporting Period,
Terms and Abbreviations
Annual Report
This document has been prepared to
provide shareholders with an overview
of Cooper Energy Limited’s performance
for the 2013 financial year and its
outlook. The Annual Report is mailed
to shareholders who elect to receive a
copy and is available free of charge on
request (see Shareholder Information
printed in this Report).
The Annual Report and other
information about the company can
be accessed via the company’s website
at www.cooperenergy.com.au
Notice of Meeting
The 2013 Annual General Meeting
of Cooper Energy Limited will
be held on Thursday November 7,
commencing at 10.00 a.m.
in the Victoria Room, Ground Floor,
Hilton Adelaide, 233 Victoria Square,
Adelaide, South Australia.
A formal Notice of Meeting has been
mailed to shareholders. Additional
copies can be obtained from
the company’s registered office
or downloaded from its website at
www.cooperenergy.com.au
Abbreviations and terms
This Report uses terms and abbreviations
relevant to the company, its accounts
and the petroleum industry.
The terms “the company” and “Cooper
Energy” and “the Group” are used
in this report to refer to Cooper Energy
Limited and/or its subsidiaries. The
terms “2013”, FY13 or “2013 financial
year” refer to the 12 months ended
30 June 2013 unless otherwise stated.
References to “2012”, FY12 or other
years refer to the 12 months ended
30 June of that year.
Other abbreviations
bbls: barrels of oil
boe: barrels of oil equivalent
bopd: barrels of oil per day
E&D: exploration and development
FV: fair value
MM: million
MMbbl: million barrels of oil
MMboe: million barrels of oil equivalent
2P reserves: proved and possible
reserves
$: Australian dollars
P&A: plugged and abandoned
PSC: production sharing contract
KSO: Kerjasama Operasi, an Indonesian
joint operation
Front cover image:
wireline logs from the Cooper Basin
Corporate Directory
Directors
John C Conde Ao, Chairman
Hector M gordon
David p Maxwell
Jeffery W Schneider
laurence J Shervington
Alice J M Williams
Company Secretary
Alison n Evans
Registered Office and Business Address
level 10, 60 Waymouth Street
Adelaide, South Australia 5000
telephone: + 618 8100 4900
Facsimile: + 618 8100 4997
E-mail: customerservice@cooperenergy.com.au
Website: www.cooperenergy.com.au
Auditors
Ernst & young
121 King William Street
Adelaide, South Australia, 5000
Solicitors
Squire Sanders
level 21, 300 Murray Street
perth WA 6000
Bankers
Westpac Banking Corporation
level 18, 91 King William Street
Adelaide, South Australia, 5000
national Australia Bank limited
level 2, 22 King William Street
Adelaide, South Australia, 5000
Commonwealth Bank of Australia
level 8, 100 King William Street
Adelaide, South Australia, 5000
Citibank n.A.
2 park Street
Sydney, new South Wales 2000
Share Registry
Computershare Investor Services pty limited
level 2, reserve Bank Building
45 St georges terrace
perth, Western Australia 6000
Website: investorcentre.com/au
telephone:
Australia 1300 655 248
International +61 3 9415 4887
Facsimile: +61 3 9473 2500