Comet Ridge Limited
Annual Report 2015
73
Contents
Overview of Activities
2015 Annual Reserves Statement
Corporate Governance Overview Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Statement of Profit or Loss & Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
Corporate Directory
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Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities
Exploration and appraisal for gas resources and reserves in eastern Australia was the primary focus for Comet Ridge Limited during the year.
Comet Ridge has maintained its focus on the Mahalo block in ATP 1191 (ex ATP 337) which is operated by Santos QNT Pty Ltd. The Mahalo 7
horizontal well drilled in late 2014 and which intersects Mahalo 6 has performed exceptionally well from the relatively short lateral. In December 2015,
the company announced an increase in 2P and 3P reserves based on the increasing flow rates recorded from the vertical-horizontal well combination.
In the Galilee Basin, in early August 2015, Comet Ridge announced (refer ASX Announcement 5 August 2015) that it had received an independent
certification for Contingent Gas Resources at Albany, situated in the 100% held Galilee Basin permit ATP 744. The Certification follows an independent
review of the conventional Albany Structure by the certifier SRK Consulting (Australasia) Pty Ltd (“SRK”) of Brisbane, Australia.
Activities in Australia
Comet Ridge has interests in four permits in the Bowen and Galilee Basins in Queensland, and three in the Gunnedah Basin in New South Wales.
Comet Ridge Permits
ATP 743
ATP 744
ATP 1015 Farm-in Area
ATP 1191 Mahalo
PEL 6
PEL 427
PEL 428
Basin
Galilee
Galilee
Galilee
Bowen
Gunnedah
Gunnedah
Gunnedah
State
QLD
QLD
QLD
QLD
NSW
NSW
NSW
CSG Interest
100%
100%
20%
40%
29.55%
59.09%
68.42%
Area (km2)
3,195
4,296
873
911
5,162
5,764
6,018
The Mahalo Gas Project continues to be a primary focus for the company. Following a workover early in the year to replace a downhole pump,
dewatering operations were restarted on the vertical-horizontal well combination with gas rates quickly increasing. The positive trending gas rate led to
Comet Ridge receiving an increase in 2P and 3P reserves at Mahalo from MHA Petroleum Consultants of Denver, USA as announced in early
December 2015.
In May, Comet Ridge entered into a non-binding Memorandum of Understanding (MOU) with APA Group (APA) to work towards the transportation of
gas from Comet Ridge’s Galilee Basin permits to east coast gas markets.
Comet Ridge Limited I Annual Report 2016 1
Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities (continued)
The company presents its net Gas Reserves and Resources for each of its tenements in the table below.
Comet Ridge Limited – Net Recoverable Reserves and Resources
Reserve (PJ) 1
Contingent Resource (PJ)
3P
1C
2C
3C
Prospective
Resource (PJ) 2
Location
Project
Bowen Basin, QLD
Galilee Basin, QLD
Mahalo Gas Project
(ATP 1191)
Gunn Project Area5
(ATP 744)
Galilee Basin, QLD
Albany Structure
Gunnedah
Basin, NSW
(ATP 744)
PEL 6
PEL 427
PEL 428
West Coast, NZ4 PMP 50100
Total
COI
Interest
40%
100%
100%
29.55%
59.09%
68.42%
100%
1P3
-
-
-
-
-
-
2P
30
-
-
-
-
219
112
232
372
-
-
-
-
-
-
56
-
45
213
67
1,870
5975
153
417
-
-
562
2,492
89
541
169
-
3,390
3,089
30
219
Notes to Table:
Note: Gas Reserve and Resource numbers have been rounded to the nearest whole number.
1) COI’s net reserves have not been adjusted for fuel or shrinkage (estimated at approximately 3%) and have been calculated at the wellhead (which
is the reference point for the purposes of Listing Rule 5.26.5).
2) ASX Listing Rule 5.28.2 Statement relating to Prospective Resources: The estimated quantities of petroleum that may potentially be recovered by
the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of
discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity
of potentially moveable hydrocarbons.
1P Reserves have not been attributed to the Mahalo Gas Project under SPE 2007 PRM Guidelines as the field is not yet at development stage
with an approved development plan.
3)
4) As detailed in the September 2015 Quarterly Activities Report, Comet Ridge has lodged an application to surrender PMP 50100. The contingent
gas resource estimates for PMP 50100 provided were originally announced to the market on 26 September 2011.
5) Where the auditor has detailed Prospective Resources in a range, the mid-range case has been listed in the table.
6) The percentage interests recorded in the CSG Joint Ventures for the Gunnedah Basin permits listed include the percentage increase that has
occurred as a result of Energy Australia’s notice to withdraw from these Joint Ventures in December 2015. The transfers of these interests remain
subject to regulatory approval formalisation under the Joint Venture agreements.
ATP 1191 Mahalo Project
Comet Ridge’s ATP 1191 Mahalo asset is located in the Denison Trough, approximately 240km west of Gladstone in the southern Bowen Basin and
covers an area of 911 km2. The Project is located just 11 kilometres from an infrastructure connection to the Gladstone LNG market with significant gas
supply requirements. Comet Ridge has a 40% interest in Mahalo.
Comet Ridge Increases Independent Reserve Certification at Mahalo Gas Project
On 2 December 2015, the Company announced a material upgrade of its reserves at the Mahalo Block with a 2P Reserve increase of 36% and 3P
Reserve increase of 77%. As a result of the success of the Mahalo 7 horizontal well in providing significant gas flows, and also additional open source
well data, both 2P and 3P Reserves were increased by converting part of the significant Contingent Resources in the block to the higher category of
Reserves.
COI Net Equity Share
Mahalo Block ATP 1191
Category
2 December 2015
certification
27 August 2014
certification
Increase (PJ)
Increase (%)
Gas Reserve (PJ)
Gas Contingent Resource (PJ)
1P
-
-
-
-
2P
30
22
8
36%
3P
219
124
95
77%
1C
112
208
-96
-46%
2C
232
328
-96
-29%
3C
372
468
-96
-21%
2
Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities (continued)
The most significant part of this Reserves upgrade has been the conversion from the 1C Contingent Resource category, into the 3P Reserves category,
however some conversion of 3P to 2P Reserves has also been achieved. This upgrade in Reserves is an important step for Comet Ridge by converting
Contingent Resources to the higher category of Reserves in the Mahalo area. Our plan is to continue building 2P reserves as further production data
from Mahalo is collected and additional appraisal is undertaken. The Company is highly confident that, based on the high deliverability shown at the
Mahalo field to date and the continuous nature of the coals, that the Mahalo Block will develop into a valuable resource for COI shareholders.
Mahalo 7 Horizontal Well
Following mechanical issues with the Mahalo 6 downhole water pump in early 2015, a workover to replace this pump was completed by the Exploration
Operator in late July with the well subsequently returned to production in early August 2015.
Pump speed was initially kept low and constant such that a very gradual pressure drawdown was applied to the Mahalo 7 horizontal well section. After
several months, three small pump speed increases were applied to the Mahalo 6 well with a significant increase in gas rate achieved. At the same time,
the remaining vertical wells (Mahalo 3, 4 and 5) were shut in with downhole pressures monitored closely. Significant pressure responses were
measured in all three wells as the pressure in the Mahalo 6 / 7 combination decreased, suggesting a well-connected network of fractures linking the
horizontal well with the other Mahalo wells.
In early March, the Mahalo 6/7 Vertical-Horizontal well combination reached a gas flow rate of 426,000 scf/d (standard cubic feet per day). The
Company is very pleased with the rate achieved from Mahalo 7. This is a short horizontal proof of concept well and therefore is only contacting
approximately 360 metres of coal. A development horizontal well in this area should be much longer and in contact with significantly more coal with
proportionally higher gas rates. In addition to strong gas flow performance, relatively minor amounts of water are produced – down to around 12 bbl per
day, with the trend in water production reducing. This would indicate that water handling capital and operating cost expenditure in a development
scenario may be very low, further strengthening the Company’s view on the value of the asset.
Subsequent to the flow rate announced from Mahalo 7, the Mahalo 5 vertical well was brought on line at a slow pump speed, leading to a steady and
increasing flow from this well. This was followed a month later with the opening up of Mahalo 4 in late April which exhibited immediate gas flow with little
to no water. The total gas rate from the pilot scheme at Mahalo has stabilised at over 450,000 scf/d.
Late in the year, Comet Ridge undertook a significant amount of analysis work to examine the most efficient and cost effective way to move the northern
pilot schemes in the Mahalo block into production via available export pipeline capacity and field infrastructure. These studies focussed on utilising
existing infrastructure, wherever possible, to minimise capital spend and optimise the time required to initially bring the northern part of the Mahalo block
into production. A three step process was determined as the most effective strategy to achieve initial Mahalo production:
1.
2.
3.
Conversion of existing 3P reserves to 2P reserve category, targeting up to 550 PJ (gross to the Joint Venture) across the northern part of the
block (includes production enhancement at the Mira pilot and a single step-out corehole);
An initial production phase targeting 25 TJ/d of gas production from the northern part of the block, utilising existing facilities to minimise
capex spend and construction time; and
Expanding the initial production phase to a full field target of 100 to 200 TJ/d of gas production based around the well production rates
achieved from the initial production phase to guide full scale well positioning and plant design.
These studies indicate that the cost of production from the initial production phase should be very low given:
•
•
•
•
Strong gas flow rate from a very short horizontal well section;
Shallow reservoir;
Low water production rates; and
Proximity to existing infrastructure to transport Mahalo gas to the Gladstone LNG market.
As Mahalo has demonstrated its productive capacity, with low corresponding water rates, the Company believes that the asset will produce a significant
volume of gas that can be operated at a very low cost of production which can be fed into either the LNG schemes or into substantial domestic demand.
The fifth LNG train has commenced operating in Gladstone with a sixth and final train due to come on line late in 2016, requiring very significant gas
volumes to meet capacity. Mahalo is well placed to help meet this.
Comet Ridge Limited I Annual Report 2016 3
Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities (continued)
Galilee Basin Permits
Comet Ridge has a 100 per cent interest in two adjacent permits on the eastern flank of Queensland’s Galilee Basin, ATP 743 and ATP 744, with a
combined area of 7,491 km2. The area remains only lightly explored to date. In addition, the company has a 20% equity in the ATP 1015 Farm-in area
located adjacent to the Company’s 100% held Gunn Project Area in ATP 744. The Farm-in Area consists of two separate areas totalling approximately
873 km2.
In December 2015, Comet Ridge received approval of a Later Work Program (LWP) for ATP 743 for the period through to September 2019. Consistent
with government requirements, a relinquishment of the least prospective blocks were relinquished back to the Qld government, bringing the total area
relinquished to fifty percent, in line with the permit being half way through its 12 year term.
Late in the third quarter, Comet Ridge entered into an agreement with Queensland Energy Resources (QER) to acquire all of its interest in ATP 1015.
The effective date of the transfer will be 1 January 2016 once certain Conditions Precedent have been satisfied including conclusion of a due diligence
process, approval by the relevant Queensland Minister to transfer and approval of a Later Work Program. This will result in a cash payment (for
contribution towards future well abandonment) to Comet Ridge of approximately $250,000.
Initial Conventional Contingent Gas Resource Certification for Galilee Basin Permit ATP 744
In early August 2015, Comet Ridge announced that it had received an independent certification for Contingent Gas Resources in the 100% held Galilee
Basin permit ATP 744. The Certification follows an independent review by SRK Consulting (Australasia) Pty Ltd (“SRK”) of Brisbane, Australia. This
structure was initially identified and named after the Carmichael 1 well drilled in 1995 and has subsequently been renamed as “Albany”.
The Albany Structure is situated just north of the Gunn Project Area where Comet Ridge already holds a significant Contingent Resource Certification
for coal seam gas (CSG).
SRK attributed the Original Gas-In-Place (OGIP) and Contingent Resource (shown below in Table) to Comet Ridge’s net equity interest (being 100% in
ATP 744) using a combination of probabilistic and deterministic methods to prepare the estimates of Original Gas-In-Place and Contingent Resources
as at 5 August 2015.
COI Net Equity Share
Albany Structure ATP 744
Category
100%
OGIP (PJ)
Gas Contingent Resource (PJ)
1C
130
2C
334
3C
861
1C
56
2C
153
3C
417
Notes to Table:
Contingent Resource estimates have been prepared in accordance with the Society of Petroleum Engineers (“SPE”) 2007 Petroleum Resource
Management System (“PRMS”) Guidelines as well as the 2011 Guidelines for Application of the PRMS approved by the SPE.
Contingent Gas Resources are (100%) Unrisked Gross
The previous assessment of Contingent Resources attributed to ATP 744 was in Comet Ridge’s Gunn Project Area to the south of the Albany
Structure and details of these were released to the market on 25 November 2010.
NSAI, the author of the report attributing contingent resources in ATP 744 to Comet Ridge as at 25 November 2010 has consented to the reporting
of these resource figures in the context and manner in which they appear in this report.
With the large independently certified Gas Contingent Resource volumes that the Company has in the Eastern Galilee Basin, particularly in relation to
the Albany sandstone structure, discussions for third party funding for drilling and testing continues. Comet Ridge is keen to drill a second well using
latest technology, including a light weight mud system or air drilling, and testing gas sands immediately on penetration, which could allow a much more
significant gas flow result than was demonstrated in 1995 with the original Carmichael 1 well.
Eastern Galilee basin gas is relatively proximal to the very large LNG and industrial gas demand further east in the Bowen Basin and in Gladstone.
Given the size of the resource, Albany gas has the potential to be transported to the southeast via pipeline to connect into the expanding pipeline
network originating in the Surat Basin and feeding the Brisbane market.
To that end, Comet Ridge was pleased to announce in May that it had entered into a non-binding Memorandum of Understanding (MOU) with APA
Group (APA) to work towards the transportation of gas from Comet Ridge’s Galilee Basin permits to east coast gas markets. The MOU provides a
framework of cooperation between the parties to negotiate the commercial terms of a gas transportation agreement under which APA would build, own
and operate new gas pipelines and associated gas gathering and production infrastructure connecting Comet Ridge’s Galilee Basin gas projects to
APA’s existing Queensland gas pipeline network. Some preliminary work was completed late in the year including consideration of likely pipeline export
routes out of the basin and the most logical tie in points to existing infrastructure.
4
Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities (continued)
New South Wales’ Projects
Comet Ridge’s three contiguous licences (PEL 427, PEL 428 and PEL 6) are located in the northern Gunnedah Basin, immediately north and west of
Santos’ Narrabri CSG Project in the Bohena Trough, and cover a total area of approximately 17,000 km2. Comet Ridge currently holds between 29.55%
and 68.42% CSG interest across these licences and between 97.5% and 100% conventional oil and gas equity and is the conventional Operator.
Santos operates the CSG interest. The permits are strategically located as this area has the potential to mature into a major producing province, with
gas to flow south to Newcastle and Sydney to meet an important part of NSW’s gas needs.
Energy Australia notified the Joint Venture partners that it was electing to withdraw from PEL 6, PEL 427 and PEL 428. Withdrawal and assignment
was effective 20 February 2016 although this still remains subject to government consents and approvals. With this decision and subject to the
assignment of the interests, equity has been split in accordance with the joint venture agreement on a pro-rata basis with the adjustment to the Comet
Ridge equity position in these permits detailed below:
Permit
PEL 427
PEL 428
PEL 6
Previous Equity
(%)
50.0
60.0
22.5
Current Equity (%)
Post Assignment
59.09
68.42
29.55
Operationally, little has happened with these permits during the year. To comply with the NSW Governments Minimum Standards and Merit
Assessment Procedure introduced in July 2015, which applies to work programmes, updated renewal applications for PEL 6 and PEL 428 were
submitted in October 2015. In late April, a renewal application for PEL 427 was submitted to the NSW government by the CSG operator. The current
spend level on these permits is very low, in keeping with the delay that is occurring whilst the NSW government processes the permit renewal
applications.
Activities in New Zealand
Comet Ridge submitted an application to surrender its interest in PMP 50100. This is currently being processed by New Zealand Petroleum and
Minerals.
Activities in the USA
Denver based Comet Ridge Resources LLC (CRR) did not undertake any operational activity during the year. The primary focus has been the recovery
of bonds the company has had with various agencies and winding up of the various operational subsidiaries with the view to ultimately winding up CRR.
At the end of the year, this was nearing completion.
Health Safety and Environment
The past year has seen minimal field operations, and as such the HSSE Management System has undergone more administrative rather than activity
related reviews and amendments.
There were no Injuries, Health or Environmental incidents reported for the period 1 July 2015 through to 30 June 2016. Total Recordable Injury
Frequency Rate (TRIFR) and Lost Time Injury Frequency Rate (LTIFR) remain at ZERO.
During the year, a review of remote operations was undertaken. It was determined that a clearer identification of the risks posed to Comet Ridge
employees, especially those from head office that travel to site infrequently, was required. As a result of the review, there were opportunities to improve
the reporting, monitoring and planning around field trips. An action plan has been developed, and is steadily being worked through to identify solutions
and controls to the identified opportunities.
Comet Ridge continues the review and amendments of the policies and procedures to ensure they continue to meet legislative and Company
requirements. With regard to that, the New Zealand Health & Safety at Work Act 2015 came into force on the 4th of April 2016. The new Act very closely
aligns with the Australian equivalent, so modifying the NZ Safety Management Plan was a smooth process.
Community
Comet Ridge has a deep commitment, at all levels of the Company, to working with community stakeholders in the regions where we operate. This
commitment has ensured our external and stakeholder relationships have been, at all times, excellent.
Community engagement and respect for the communities within which we operate is a core value for Comet Ridge and is backstopped by Legislation
and Regulation. The Queensland ‘Land Access Code’, which has been developed in compliance with the relevant legislation and enshrined in
Regulation, is the main formal reference when it comes to landowner and community relations and interaction between landowners and the Oil and Gas
Industry. Comet Ridge has always acted consistent with the principals and guidelines set out in this Code of Practice. Further, Comet Ridge has gone
beyond what is required pursuant to the ‘Queensland Land Access Code’ in all aspects of our engagement with landowners and stakeholders.
Comet Ridge Limited I Annual Report 2016 5
Comet Ridge Limited – Annual Report 30 June 2016
Overview of Activities (continued)
The company believes that co-existence and mutual respect are the cornerstones of community relations. The company has built on the strong
relationships developed over previous years and continues to enjoy excellent relationships with landowners, Local Government, the wider community
and all relevant stakeholders.
As with previous years, this past year has been no different in terms of contact with key landowners. This contact has, in the main, been in the form of
personal visitations, which strengthens and reinforces our relationship with these landowners and maintains an active point of contact should any
concerns or issues arise. .
In terms of Local Government engagement, the company continues to maintain close contact with relevant officials and elected representatives,
particularly within Barcaldine Regional Council. Contact with Local Government, whilst not a regulatory imperative, affords an excellent opportunity to
communicate with local communities at a broad level, permitting the company to articulate forward plans and hear local concerns and issues.
Comet Ridge has maintained its membership of the Galilee Basin Operators Forum (GBOF). Through membership of APPEA, the company interacts
with other regional explorers through the Explorers Leadership Group (ELG) and, more widely with Government representatives and such agencies as
the Queensland Gasfields Commission. Comet Ridge maintains excellent relationships with the relevant Queensland Government Departments,
including the Department of Natural Resources and Mines and the Department of Environment and Heritage Protection.
Over previous years the company has maintained a relationship with RAPAD (the Central West Remote Area Planning and Development Board),
MITEZ (Mt Isa to Townsville Economic Zone) and AgForce.
Cultural Heritage
Comet Ridge is legislatively required to protect and secure indigenous cultural heritage when conducting in-field activities and takes responsibilities in
these matters with the utmost seriousness. Protecting, preserving and respecting Indigenous culture, Aboriginal peoples’ deep connection to the land
and ensuring artefacts and items of cultural significance are secured, are very important to the company and will remain so.
Protocols with Indigenous Claimant Groups are well established and, where appropriate, engagement with these groups is undertaken as proscribed.
The company has a ‘duty-of-care’ responsibility with respect to Cultural Heritage matters and, as a minimum, engages with specialist archaeological
consultants before any field work involving land clearing is undertaken.
This high-level commitment has been the company’s standard practice and will continue to be so into the future.
6
Comet Ridge Limited – Annual Report 30 June 2016
2016 Annual Reserves Statement
Following on from the initial reserve booking at Mahalo in August 2014, the year saw Comet Ridge Limited increase its 2P and 3P reserve at Mahalo as
announced on 2 December 2015. The reserves upgrade followed an independent certification of that data associated with the Mahalo Gas Project ATP
1191 by MHA Petroleum Consultants, LLC Inc (MHA) of Denver, USA.
In addition, the company also realised its first sandstone resource booking at the Albany Structure in the Galilee Basin as announced on 5 August 2015.
The allocation of gas resources followed an independent review of the conventional Albany Structure by the certifier SRK Consulting (Australasia) Pty
Ltd (SRK) of Brisbane, Australia.
The Company net Gas Reserves and Resources on a combined basis as well as for each of its individual tenements as at 30 June 2016 are as follows:
Comet Ridge Limited – Net Recoverable Reserves and Resources
Reserve (PJ)
Contingent (PJ)
1P
1P
2P
*2P
3P
3P
1C
1C
2C
**2C
3C
3C
30/6/15 30/6/16 30/6/15 30/6/16 30/6/15 30/6/16 30/6/15 30/6/16 30/6/15 30/6/16 30/6/15 30/6/16
Bowen Basin,
QLD
Galilee Basin,
QLD
Mahalo Gas
Project
(ATP 1191)
Gunn Project
Area 6
(ATP 744)
Galilee Basin,
QLD
Albany Structure
(ATP 744)
Gunnedah
PEL 6
Basin, NSW4
PEL 427
PEL 428
PMP 50100
West Coast,
NZ5
Total
40%
100%
100%
29.55%
59.09%
68.42%
100%
-
-
-
-
-
-
ASX Listing Rules Annual Report Requirements
*Listing Rule 5.39.1:
-
-
-
-
-
-
22
*30
124
219
208
112
328
**232
468
372
-
-
-
-
22
-
-
-
-
-
-
-
-
-
-
-
-
*30
124
219
-
-
-
-
67
**67
1870
1870
56
-
-
-
**153
-
417
-
474
562
45
253
45
213
89
484
89
169
169
**541
2981
3390
All 2P petroleum reserves recorded in the table are undeveloped and are attributable to unconventional gas.
100% of all 2P petroleum reserves are located in the Bowen Basin.
*Listing Rule 5.39.2:
The proportion of total 2P petroleum reserves that are unconventional is 100%. There are no 1P reserves recorded for the Company in any of its
tenements.
Listing Rule 5.39.3:
The table records a reconciliation of the 2P and 3P petroleum reserves as at 30 June 2016 as against the previous year and discloses that the
net 2P petroleum reserves increased 36% and 3P petroleum reserves increased 77% from the 2015 year to the 2016 year, due to the reserves
increase at Mahalo ATP 1191 (ex ATP 337) located in the Bowen Basin announced to the market on 2 December 2015.
Governance Arrangements and Internal Controls Listing Rule 5.39.5:
Comet Ridge has obtained all of its gas reserves and resources reported as at 30 June 2016 from external independent consultants who are
qualified petroleum reserves and resource evaluators as prescribed by the ASX Listing Rules.
Comet Ridge estimates and reports its petroleum reserves and resources in accordance with the definitions and guidelines of the Petroleum
Resources Management System 2007, published by the Society of Petroleum Engineers (SPE PRMS).
To ensure the integrity and reliability of data used in the reserves estimation process, the raw data is reviewed by senior reservoir and geological
staff at Comet Ridge before being provided to the independent reserve certifiers. Comet Ridge has not and does not currently intend to conduct
internal reviews of petroleum reserves preferring to appoint independent external experts prior to reporting any updated estimates of reserves or
resources so as to ensure an independent and rigorous review of its data.
Comet Ridge reviews and updates its gas reserves and resources position on an annual basis to ensure that if there is any new data that might
affect the reserves or resources estimates of the Company steps can be taken to ensure that the estimates are adjusted accordingly.
Comet Ridge Limited I Annual Report 2016 7
Comet Ridge Limited – Annual Report 30 June 2016
2016 Annual Reserves Statement (continued)
** Listing Rule 5.40.1:
All 2C contingent resources recorded in the table are undeveloped. 66% of the reported 2C contingent resource is attributable to
unconventional gas with the remainder attributable to conventional sandstone reservoir.
The geographical areas where the 2C contingent resources are located appear in the far left column of the table.
Listing Rule 5.40.2:
The table records a reconciliation of the 2C and 3C contingent resources as at 30 June 2016 as against the previous year and discloses that
the net 2C and 3C contingent resources increased from the 2015 year to the 2016 year.
2C Contingent resources increased during the period by 10.5% as a result of the Conventional Contingent Gas Resource Certification
announced on 5 August 2015 at the Albany Structure in ATP 744. Offset against the resource certification of the Albany conventional
upgrade, there was a decrease in 3C at Mahalo ATP1191. 3C Contingent resources increased overall during the period by 12% as a result
of the Conventional Contingent Gas Resource Certification announced on 5 August 2015 and increased equity in the NSW Gunnedah basin,
although offset by an overall decrease in 3C at Mahalo.
Listing Rule 5.44:
The estimates of Reserves and Contingent Resources appearing in the 2016 Annual Reserves Statement for Comet Ridge Limited and its
subsidiaries are based on, and fairly represent, information and supporting documentation determined by the various qualified petroleum
reserves and resource evaluators listed below.
The Contingent Resource for the Albany Structure ATP 744 are taken from an independent report by Dr Bruce McConachie of SRK
Consulting (Australasia) Pty Ltd, an independent petroleum reserve and resource evaluation company. The Contingent Resources
information has been issued with the prior written consent of Dr McConachie in the form and context in which they appear in this Annual
Reserves Statement for 2016. His qualifications and experience meet the requirements to act as a qualified petroleum reserves and resource
evaluator as defined under the ASX Listing Rule 5.42 to report petroleum reserves in accordance with the Society of Petroleum Engineers
(“SPE”) 2007 Petroleum Resource Management System (“PRMS”) Guidelines as well as the 2011 Guidelines for Application.
The unconventional Contingent Resource estimates for ATP 744 and PMP 50100 in the 2016 Annual Reserves Statement were determined
by Mr John Hattner of Netherland, Sewell and Associates Inc. in accordance with Petroleum Resource Management System guidelines. Mr
Hattner is a full-time employee of NSAI, and is considered to be a qualified person as defined under the ASX Listing Rule 5.42 and has given
his consent to the use of the resource figures in the form and context in which they appear in the Annual Reserves Statement.
The estimate of Reserves and Contingent Resources for Mahalo, as part of ATP 1191 provided in the Reserves Statement was determined
by and under the supervision of Mr Timothy L. Hower of MHA Petroleum Consultants LLC in accordance with Petroleum Resource
Management System guidelines. Mr Hower is a full-time employee of MHA, and is a qualified petroleum reserves and resource evaluator as
defined under the ASX Listing Rule 5.42. Mr Hower is a Licensed Professional Engineer in the States of Colorado and Wyoming as well as
being a member of The Society of Petroleum Engineers. Mr Hower has consented to the publication of the Reserve and Contingent
Resource estimates for Mahalo in the form and context in which they appear in this Annual Reserves Statement for 2016.
The Contingent Resource estimates for PEL 6, PEL 427 and PEL 428 were also determined by Mr Timothy L. Hower of MHA Petroleum
Consultants LLC. Mr Hower consented to the publication of the resource figures which appeared in the announcement of 7 March 2011
made by Eastern Star Gas Limited (ASX:ESG) and any reference and reliance on the resource figures for PEL 6, PEL 427 & PEL 428 in the
table is only a restatement of the information contained in the ESG announcement.
Notes to Net Recoverable Reserves and Resources Table:
1) Gas Reserve and Resource numbers have been rounded to the nearest whole number.
2) COI’s net reserves have not been adjusted for fuel or shrinkage (estimated at approximately 3%) and have been calculated at the wellhead (which
3)
is the reference point for the purposes of Listing Rule 5.26.5).
1P Reserves have not been attributed to the Mahalo Gas Project under SPE 2007 PRM Guidelines as the field is not yet at development stage
with an approved development plan.
4) The percentage interests recorded in the CSG Joint Ventures for the Gunnedah Basin permits listed include the percentage increase that has
occurred as a result of Energy Australia’s notice to withdraw from these Joint Ventures in December 2015. The transfers of these interests remain
subject to regulatory approval formalisation under the Joint Venture agreements.
5) As detailed in the September Quarterly Activities Report, Comet Ridge has lodged an application to surrender PMP 50100.
6) Where the auditor has detailed Prospective Resources in a range, the mid-range case has been listed in the table.
8
Comet Ridge Limited – Annual Report 30 June 2016
Corporate Governance Overview Statement
The Directors and management of Comet Ridge Limited (“Comet Ridge” or the “Company”) are committed to the creation of shareholder value and
recognise the need for high standards of corporate governance as integral to that objective.
The Board is pleased to report that during the year ending 30 June 2016 the Company’s corporate governance practices and policies have substantially
accorded with those outlined in the ASX Corporate Governance Council’s Principles and Recommendations (3rd Edition) (“ASX Recommendations” or
“ASX Guidelines”), except as outlined in the Company’s annual Corporate Governance Statement. Even where there is a deviation from the
recommendations the Company continues to review and update its policies and practices in order that these keep abreast of the growth of the
Company, the broadening of its activities, current legislation and good practice.
The ASX Corporate Governance Council’s (The Council) recommendations are not prescriptive but rather they are guidelines. If certain
recommendations are not appropriate for the Company given its circumstances, it may elect not to adopt that particular practice in limited
circumstances.
Where the Company’s Corporate Governance practices do not correlate with the practices recommended by the Council, the Company does not
consider that the practices are appropriate due to either the size of the Board or the management team or due to the current activities and operations
being carried on by and within the Company.
A copy of Comet Ridge’s full 2016 Corporate Governance Statement, which provides detailed information about governance and a copy of Comet
Ridge’s Appendix 4G which sets outs the Company’s compliance with the recommendations in the 3rd Edition of the ASX Recommendations is
available on the corporate governance section of the Company’s website at: : http://www.cometridge.com.au/About_Us_Governance.htm
Comet Ridge Limited I Annual Report 2016 9
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report
Your Directors present their report on Comet Ridge Limited (“Comet Ridge” or the “Company”) and the consolidated entity (the group) for the financial
year ended 30 June 2016. The Company was incorporated on 23 August 2003 and listed on the Australian Securities Exchange on 19 April 2004.
1.
Information on Directors
The following persons were the Directors of Comet Ridge Limited who held office for the whole of the year and up to the date of this Report.
James McKay B.Com, LLB, Non-executive Chairman (Director since April 2009)
Special Responsibilities
Chairman
Member of the Audit Committee
Member of the Remuneration Committee
Experience
James McKay brings to Comet Ridge a strong commercial background, with sound financial business management and legal expertise. He has been
involved in the establishment and development of a number of businesses.
James is a director of Walcot Capital, a private venture capital business specialising in energy investment. He was the former Chairman of CSG
explorer Sunshine Gas Limited having overseen its merger with Queensland Gas Company for in excess of $1billion in 2008 as well as being a past
president of the Australasian Cemeteries and Crematoria Association.
Interest in Shares and Options
35,926,583 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
Tor McCaul B.E. (Hons/Petroleum), B.Econ, MBA, Managing Director (Director since April 2009)
Special Responsibilities
Managing Director
Chairperson of the Risk Committee
Experience
Tor McCaul was appointed Managing Director of Comet Ridge in April 2009 when the Company merged with Chartwell Energy Limited. He previously
held the position of Chief Executive Officer of Chartwell having commenced with the Company in 2008. Prior to this Tor spent 11 years working in Asia
for British independent companies in a wide variety of technical, finance, commercial and management roles.
Tor has 29 year’s oil and gas experience. Following his graduation from UNSW in 1987, Tor spent the next nine years based in Brisbane working for
operating companies such as LASMO plc and MIM Petroleum in technical roles on projects in Queensland, New Zealand and Papua New Guinea
before moving to Asia.
He is a member of the Society of Petroleum Engineers and has served on the executive committee, including as Chairman, for the Queensland section.
Tor is a past member of the UNSW Centre for Petroleum Engineering Advisory Committee and is a past President of the Queensland Petroleum
Exploration Association (QUPEX).
Interest in Shares and Options
5,080,369 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
10
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
1.
Information on Directors (continued)
Chris Pieters B.Sc (Hons) B.Bus, Executive Director (Director since April 2009)
Acted as Commercial Director from June 2013 to February 2014 for a short-term project. Appointed Executive Director 17 June 2015.
Special Responsibilities
Member of the Remuneration Committee
Member of the Audit Committee
Member of the Risk Committee
Experience
Chris Pieters is the Managing Director and co-founder of Walcot Capital, a private venture capital business specialising in energy investment, and the
former Managing Director of Tlou Energy Limited, when it was a private unlisted public company with CSG exploration interests in Southern Africa.
Previously he was Chief Commercial Officer at Sunshine Gas Limited prior to its merger with the Queensland Gas Company in 2008. Chris also held
other technical and business development roles at Sunshine Gas.
He is a member of the Petroleum Exploration Society of Australia.
Interest in Shares and Options
1,050,000 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Tlou Energy Limited (appointed 23 July 2009 and resigned 11 March 2015)
Gillian Swaby B.Bus, FAICD, FCIS, Non-executive Director (Director since January 2004)
Special Responsibilities
Chairperson of the Audit Committee
Chairperson of the Remuneration Committee
Experience
Gillian Swaby has been involved in financial and corporate administration for listed companies, as both Director and Company Secretary covering a
broad range of industry sectors, for over 30 years. Ms Swaby has extensive experience in the area of corporate governance, corporate and financial
management and board practice.
Gillian is past Chair of the Western Australian Council of Chartered Secretaries of Australia, a former Director on their National Board and a lecturer for
the Securities Institute of Australia. Ms Swaby is the principal of a corporate consulting company and was a member of the Paladin Energy Ltd Board for
a period of 10 years. In August 2015, she stepped down from her role at Paladin as Company Secretary and EGM-Corporate Services. She also serves
on the board of ASX listed Deep Yellow Limited, the Australia-Africa Minerals and Energy Group and is a member of the West Australian Division
Council of the Australian Institute of Company Directors.
Interest in Shares and Options
Nil
Directorships Held in Other Listed Entities in Last 3 Years
Non-executive Director Deep Yellow Limited
Comet Ridge Limited I Annual Report 2016 11
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
2. Principal Activities
The principal activities of the group during the financial year were to carry out coal seam gas (CSG) exploration and appraisal. The group has tenement
interests and a suite of prospective projects in Australia and New Zealand and an investment in a limited liability company based in the United States.
There have been no significant changes in the nature of the group's principal activities during the financial year.
3. Review of Operations and Financial Position
The loss after tax of the group for the financial year ended 30 June 2016 amounted to $3.7 million (2015: loss of $18.57 million).
4. Significant Affairs
The following significant changes in the state of affairs of the group occurred during the financial year ended 30 June 2016:
(a) Gunnedah permit interest
During the year, Energy Australia notified the Joint Venture partners that it was electing to withdraw from PEL 6, PEL 427 and PEL 428. Withdrawal
and assignment was effective 20 February 2016 although this still remains subject to government consents and approvals. With this decision and
subject to the assignment of the interests, equity has been split in accordance with the joint venture agreement on a pro-rata basis with the adjustment
to the Comet Ridge equity position in these permits detailed below:
Permit
PEL 427
PEL 428
PEL 6
Previous Equity
(%)
50.0
60.0
22.5
Current Equity (%)
Post Assignment
59.09
68.42
29.55
(b) Galilee permits renewed
In March 2016, Comet Ridge entered into an agreement with Queensland Energy Resources (QER) to acquire all of its interest in ATP 1015. The
effective date of the transfer will be 1 January 2016 once certain Conditions Precedent have been satisfied including conclusion of a due diligence
process, approval by the relevant Queensland Minister to transfer and approval of a Later Work Program. This will result in a cash payment (for
contribution towards future well abandonment) to Comet Ridge of approximately $250,000.
(c) Decision to relinquish NZ permit
In order to focus on its Australian exploration permits, the group has decided to cease operations in New Zealand and has applied to relinquish its
remaining permit PMP 50100. The full amount of the group’s restoration and rehabilitation obligations has been recognised in the consolidated financial
statements.
5. Dividends Paid or Recommended
The Directors recommend that no dividend be paid or declared at this point in time. No amounts have been paid or declared by way of dividend during
the financial year.
6.
After Balance Date Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the
Group, the results of those operations or the state of affairs of the Group in future financial years other than:
The Company has commenced an equity raising of up to approximately A$2.0 million comprising:
A placement of 20 million new shares to raise $1.0 million; and
A 1 for 25 non-renounceable entitlement offer via the issue of up to approximately 21 million shares to raise up to approximately A$1.0 million.
With respect to the placement, at the date of this report, the Company has entered into placement subscription agreements with a small number of
sophisticated investors for the issue of 20 million new shares an issue price of $0.05 per share. It is expected that the placement proceeds of $1.0
million will be received by 7 October 2016.
The Entitlement Offer which was announced on 30 September 2016, will be formally offered to eligible shareholders who are registered as a holder of
shares in Comet Ridge as at the record date being 7:00pm (AEDT) on Friday 7 October 2016 and is expected to be completed by Tuesday 8 November
2016.
The proceeds of the Equity Raising, along with existing cash, will be applied to the ongoing working capital requirements of the Company.
12
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
7.
Future Developments and Expected Results
The group proposes to continue its exploration programmes and investment activities.
Further information on the operations of the group and likely future developments are set out in the Overview of Activities.
8.
Environmental Regulations
The group's operations are subject to environmental regulation under the laws of Australia, New Zealand and USA where it undertakes its exploration,
development and production activities. It is the group’s policy to engage appropriately experienced contractors and consultants to advise on and ensure
compliance with its environmental performance obligations.
There have been no reports of breaches of any environmental regulations or obligations in the financial year and as at the date of this report.
9.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2016 has been received and is attached to this report.
10. Meetings of Directors
The number of meetings of the Company's Board of Directors and of each Board committee held during the financial year ended 30 June 2016 and the
number of meetings attended by each director were:
Board
Audit
Committee
Remuneration Committee
Risk
Committee
Number
eligible to
attend
Number
attended
Number eligible
to attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
8
J McKay
8
T McCaul
8
G Swaby
C Pieters
8
* = Not a member of the relevant committee
8
8
8
8
Remuneration Report – Audited
3
*
3
3
3
*
3
3
1
*
1
1
1
*
1
1
*
3
*
3
*
3
*
2
This report outlines the remuneration arrangements in place for the Non-executive Directors, Executive Directors and other Key Management Personnel
of the Company.
Remuneration Committee
The Board has established a Remuneration Committee which provides advice and specific recommendations on the remuneration packages and other
terms of employment for Executive Directors, other senior executives; and Non-executive Directors including:
the level of Non-executive Director fees;
the amount and nature of remuneration arrangements for Executive Directors and other executives; and
the type and nature of incentive arrangements including key performance targets effecting the remuneration of the executive team.
The objective of the Remuneration Committee is to ensure that the remuneration policies and arrangements are fair and competitive and aligned with
the long term interest of the Company.
The level of remuneration and other terms and conditions of employment for Executive Directors and Company executives are reviewed annually
having regard to performance and relevant comparative information, and are approved by the Board after the Remuneration Committee has sought
independent professional advice, as required. In this respect, consideration is given to normal commercial rates of remuneration for similar levels of
responsibility.
The Corporate Governance Statement provides further information on the role of this Committee.
Non-executive Director Remuneration
The Board's policy is to remunerate Non-executive Directors at market rates for time, commitment and responsibilities. The Remuneration Committee
determines payments to the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. No advice was sought during the 2016 financial year.
The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at the Annual General
Meeting. The latest determination was at the Annual General Meeting held on 11 November 2009 when shareholders approved an aggregate
remuneration of AU$500,000 per year.
Comet Ridge Limited I Annual Report 2016 13
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Non-executive Director Remuneration (continued)
Fees for Non-executive Directors are not linked to the performance of the group, however, to align Directors’ interests with shareholder interests, the
Directors are encouraged to hold shares in the Company. There is no minimum holding prescribed in the Constitution.
Non-executive Directors’ fees (inclusive of superannuation) have been paid on the following basis:
Director fees
Base Fees
Chair
Other Non-executive Directors
Additional Fees
Chair of Audit Committee
Chairs of Remuneration and Risk Committees
Members of committees
Executive Remuneration Policy
2016
$
96,000
60,000
10,000
5,000
3,000
2015
$
96,000
60,000
10,000
5,000
3,000
The objective of the executive remuneration policy is to ensure that the group's remuneration arrangements are competitive and reasonable, enabling it
to attract and retain the right calibre of staff and to align the remuneration of executive Directors and other executives with shareholder and business
objectives. Executive remuneration arrangements comprise a fixed remuneration component and may also include specific long-term incentives based
on key performance areas affecting the group's financial and/or operational results as follows:
(a) a base salary (which is based on factors such as length of service, qualifications and experience), superannuation, fringe benefits and
performance incentives;
(b) short-term performance incentives in the form of cash bonuses which are paid only when predetermined key performance indicators have been
met;
(c) executives engaged through professional service entities are paid fees based on an agreed market based hourly rate for the services provided
(d)
and may also be entitled to short term performance based incentives; and
long-term performance based incentives comprising Performance Rights which are designed to align the remuneration of executives with the
business objectives of the Company and its shareholders.
The Remuneration Committee reviews executive remuneration arrangements annually by reference to the group’s performance, executive performance
and comparable information from industry sectors.
Executive and Non-executive Directors and other employed executives receive the superannuation guarantee contribution required by the
Commonwealth Government. For the year ended 30 June 2016 the rate was 9.50% up to a maximum contribution of $19,308. Executive and Non-
executive Directors and other employed executives do not receive any other retirement benefits, however, some individuals may choose to sacrifice part
of their salary to increase payments towards superannuation.
All remuneration paid is valued at either cost or the fair value to the Company and expensed.
Share Trading Policy
Shares issued under any of the group's employee equity plans are subject to, and conditional upon, compliance with the group's Securities Trading
Policy. Executives are prohibited from limiting risk attached to those instruments by use of derivatives or other means.
Key Management Personnel
Key Management Personnel comprise all of the Directors of the Company.
James McKay
Tor McCaul
Gillian Swaby
Non-executive Chairman
Managing Director
Non-executive Director
Christopher Pieters
Executive Director
There are no other Key Management Personnel of the group.
14
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Details of Remuneration
Details of remuneration of each of the Key Management Personnel of the group during the financial year are set out in the following table:
Benefits and Payments
Year Ended 30 June 2016
Short-term Benefits
& Fees
Benefits and Payments
Year Ended 30 June 2015
Short-term Benefits
& Fees
Salary & Fees
$
Cash
Bonus
$
90,411 -
361,217 -
66,667 -
105,024 -
Post
Employment
Super-
annuation
$
8,589
19,065
6,333
5,774
Long -term Benefits
Share-based
Payments
LSL
$
-
11,936
-
-
Total Cash
Remuneration
$
99,000
392,218
73,000
110,798
Performance
Rights
$
-
19,861
-
9,972
Total
$
99,000
412,079
73,000
120,770
623,319 -
39,761
11,936
675,016
29,833
704,849
Salary & Fees
$
Cash
Bonus
$
90,411 -
361,217 -
24,733 -
65,525 -
81,724 -
61,340 -
Post
Employment
Super-
annuation
$
8,589
18,783
2,350
6,225
5,726
5,827
Long -term Benefits
Total Cash
Remuneration
$
LSL
$
-
99,000
9,775 389,775
27,083
71,750
87,450
67,167
-
-
-
-
Share-based
Payments
Performance
Rights
$
-
-
-
-
-
-
Total
$
99,000
389,775
27,083
71,750
87,450
67,167
Directors
J McKay
T McCaul
G Swaby
C Pieters
Total Key Management
Personnel
Directors
J McKay
T McCaul
J Schneider
G Swaby
C Pieters
A Gilby
Total Key Management
Personnel
684,950 -
47,500
9,775 742,225
-
742,225
The remuneration report for the 2015 financial year was passed with 97% of those voting, voting in favour. No specific feedback on its remuneration
practices was received at the AGM or has been received at any time throughout the year.
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Executive Director
Tor McCaul
C Pieters
Fixed Remuneration
2015
2016
100%
100%
100%
100%
At Risk
Short Term Incentives
2015
2016
0.0%
0.0%
0.0%
0.0%
At Risk
Long Term Incentives
2015
2016
0.0%
4.82%
0.0%
8.26%
Long term incentives are provided by way of Performance Rights and the percentages disclosed above are based on the value of the Performance
Rights expensed during the year.
Comparison of Key Management Personnel Remuneration to Company Performance
The table below shows the total remuneration cost of the Key Management Personnel, earnings per ordinary share (EPS), dividends paid or declared,
and the closing price of ordinary shares on ASX at year end for the current year and previous four years.
Total remuneration ($'s)
EPS (loss) cents
Dividends paid
Share price at year end (cents)
704,849
(0.70)
-
6.00
742,225
(3.68)
-
6.00
885,369
(3.00)
-
15.00
1,027,777
(1.78)
-
22.00
595,384
1.12
-
10.50
Comet Ridge Limited I Annual Report 2016 15
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Service Agreements
Remuneration and other terms of employment for the Managing Director and the Commercial Director are formalised in employment contracts. The
contracts provide for the provision of performance related bonuses and participation in the Comet Ridge Employee Performance Rights Plan. Other
major provisions of the employment agreements are set out below.
Tor McCaul
Managing Director (Appointed 16 April 2009)
Term of Agreement:
No fixed term
Base Salary:
$380,000 per annum (inclusive of superannuation)
Termination Benefit:
Termination Notice:
Three (3) months base salary is to be paid in lieu of notice of termination. Twelve (12) months is payable if services are
terminated due to change of control event. Subject to Board discretion, a further six (6) months can be paid in addition.
The Company or Mr McCaul may terminate the Agreement at any time providing each other a minimum of three (3)
months’ notice. No termination benefit is required if terminated for cause.
Chris Pieters
Executive Director (appointed Commercial Director 17 June 2015)
Term of Agreement:
Four months with options for parties to extend as needed
Remuneration:
Services provided as a consultant at $1,500 per day
Termination Benefit:
No termination benefits payable
Termination Notice:
Either party may terminate the Agreement with a minimum of fourteen days’ notice
Share-based Compensation
Long term incentives are provided to certain employees through the Comet Ridge Share Incentive Option Plan (up to date of the 2010 AGM) and the
Comet Ridge Limited Employee Performance Share Rights Plan as approved by shareholders at the 2010 Annual General Meeting.
Options
No options over shares in Comet Ridge Limited have been granted under the Comet Ridge Share Incentive Option Plan in the current year to Key
Management Personnel.
Performance Rights
The terms and conditions of each grant of Performance Rights affecting remuneration in the current or a future period with respect to key management
personnel are as follows:
Grant Date No. of Rights
T McCaul
10-Jul-15
10-Jul-15
10-Jul-15
10-Jul-15
167,000
167,000
166,000
500,000
1,000,000
C Pieters
10-Jul-15
500,000
1,500,000
Vesting
Date
Expiry Date
Fair Value
Service Period
From To
Performance Condition
Vested %
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
6 cents
6 cents
6 cents
6 cents
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16 75PJ 2P Reserves hurdle
31-Dec-16 100PJ 2P Reserves hurdle
31-Dec-16 125PJ 2P Reserves hurdle
31-Dec-16 Gas flow rate 500mfcd
31-Dec-16
31-Dec-16
6 cents
1-Jul-15
31-Dec-16 Gas flow rate 500mfcd
0%
0%
0%
0%
0%
Performance Rights are issued for no consideration and no amount is payable on vesting.
16
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
11. Remuneration Report – Audited (continued)
Performance Rights (continued)
The movements in the current year of the number of Performance Rights granted to Key Management Personnel are as follows:
Grant Date
Vesting Date
Number at
Beginning of Year
Granted as
Remuneration
During the Year
Number of Rights
Vested
Number of
Rights Lapsed
Number at End
of Year
T McCaul
27-Nov-14
10-Jul-15
10-Jul-15
10-Jul-15
10-Jul-15
C Pieters
10-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
500,000
-
-
-
-
500,000
-
167,000
167,000
166,000
500,000
1,000,000
-
-
-
-
-
-
(500,000)
-
-
-
-
(500,000)
-
167,000
167,000
166,000
500,000
1,000,000
-
500,000
500,000
1,500,000
-
-
-
(500,000)
500,000
1,500,000
The terms and conditions of Performance Rights granted in prior years are as follows:
Grant Date
T McCaul
27-Nov-14
No. of Rights
Vesting Date
Expiry Date
Fair Value Performance Condition
% Vested
500,000
01-Jul-15
01-Jul-15
12.0 cents Reserves hurdle
0%
The movements in the prior year of the number of Performance Rights granted to Key Management Personnel are as follows:
Grant Date
T McCaul
27-Nov-14
Vesting Date
Balance at
Beginning of Year
Granted as
Remuneration
During the Year
Number of Rights
Vested
Number of
Rights Lapsed
Balance at
End of Year
1-Jul-15
-
500,000
-
-
500,000
There were no other transactions with directors during the year.
Key Management Personnel Shareholdings
The number of ordinary shares in the Company held by each of the Key Management Personnel of the group is as follows:
30 June 2016
J McKay
T McCaul
G Swaby
C Pieters
Total Directors
30 June 2015
J McKay
T McCaul
J Schneider
G Swaby
C Pieters
A Gilby
Total Directors
Balance at beginning of
the year
35,926,583
5,130,287
-
1,050,000
42,106,870
Balance at beginning of
the year
33,889,551
4,210,000
4,248,416
-
1,050,000
24,215,848
67,613,815
Shares purchased
-
-
-
-
-
Shares purchased
2,037,032
920,287
294,861
-
-
111,111
3,363,291
Other
Movements #
-
(49,918)
-
-
(49,918)
Other
Movements #
-
-
-
-
-
-
-
Balance at end of the
year
35,926,583
5,080,369
-
1,050,000
42,056,952
Balance at end of the
year
35,926,583
5,130,287
4,543,277
-
1,050,000
24,326,959
70,977,106
# Shares excluded from balance because the holders are no longer classified as associates.
END OF AUDITED REMUNERATION REPORT
Comet Ridge Limited I Annual Report 2016 17
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
12. Options and Performance Rights
Options
There were no options for ordinary shares in Comet Ridge Limited on issue at 30 June 2016.
Performance Rights
Movements in the number of Performance Rights on issue and the number of ordinary shares issued during the year ended 30 June 2016 as a result of
Performance Rights vesting during the year are as follows:
Grant Date
Vesting Date
No. of Rights 30
June 2015
Granted during the
year
Vested During the
year
Expired During the
year
No. of Rights 30
June 2016
1-Jul-13
1-Oct-14
27-Nov-14
10-Jul-15
10-Jul-15
18-Jan-16
18-Jan-16
1-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
50,000
1,910,000
500,000
-
-
-
-
2,460,000
-
-
-
500,000
1,000,000
1,260,000
1,260,000
4,020,000
(50,000)
-
-
-
-
-
-
(50,000)
-
(1,910,000)
(500,000)
-
-
-
-
(2,410,000)
-
-
-
500,000
1,000,000
1,260,000
1,260,000
4,020,000
Since the end of the year, up to the date of this report no Performance Rights have been issued.
13.
Insurance of Directors and Officers
The Company has entered into agreements with Directors to indemnify them against any claims and related expenses that may arise in their capacity
as Directors and officers of the Company or a related body corporate, except where the liability arises out of conduct involving a lack of good faith and
subject to the provisions of the Corporations Act 2001.
During the financial year, the Company paid premiums for Directors’ and Officers’ liability Insurance. The contract prohibits disclosure of the details of
the nature of the liabilities covered or the premium paid.
The Company has not during or since the end of the financial period indemnified or agreed to indemnify an Auditor of the Company.
14. Proceedings on behalf of Company
No person has applied for leave of Court under section 237 of the Corporations Act 2001 to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
15. Company Secretary
Mr Stephen Rodgers was appointed Company Secretary on 16 April 2009 and continues in office at the date of this report. He is a lawyer with more
than 20 years’ experience and holds a Bachelor of Laws degree from Queensland University of Technology.
After practising law with several firms in Brisbane over a 12 year period he then operated his own specialist commercial and property law practice for 7
years. Mr Rodgers then joined the successful team at Sunshine Gas Limited, where he was the in-house Legal and Commercial Counsel; a broad role
which also included assisting the Company Secretary with many of the facets of that position. During this period, Mr Rodgers gained invaluable
experience in the operation and running of an ASX200 coal seam gas company as well as being instrumental member of the team which led the
takeover negotiations and implementation of QGC’s friendly acquisition of that Company.
Since the merger of Comet Ridge with Chartwell Energy Limited in April 2009, Mr Rodgers has been the Company Secretary of Comet Ridge Limited a
position which he continues to hold. He also holds the position of Company Secretary of Galilee Energy Limited, an ASX listed CSG Exploration
Company operating in Australia and the USA. Mr Rodgers brings to Comet Ridge strong legal and commercial experience with a particular emphasis on
the coal seam gas industry
16. Rounding of Amounts to Nearest Thousand Dollars
Pursuant to Legislative Instrument 2016/191 issued by the Australian Securities & Investments Commission, amounts in the Directors’ Report and the
financial report have been rounded off to the nearest thousand dollars unless otherwise indicated.
18
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Report (continued)
17. Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience
with the Company and/or the group are important.
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of
the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are
satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants.
Details of the amounts paid or payable to the auditor for audit services provided during the year are set out in the financial statements.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-
related audit firms:
Audit services
- Auditing or reviewing the financial statements
Non-audit services
- Tax consulting and compliance services
This report is made in accordance with a resolution of the Board of Directors.
Consolidated
June 2016
$
June 2015
$
92,769
105,000
-
3,300
Tor McCaul
Managing Director
Brisbane, Queensland, 30 September 2016
Comet Ridge Limited I Annual Report 2016 19
PRIVATE AND CONFIDENTIAL
The Directors
Comet Ridge Limited
283 Elizabeth Street
Brisbane, QLD, 4000
Auditor’s Independence Declaration
As lead auditor for the audit of Comet Ridge Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have
been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Comet Ridge Limited and the entities it controlled during the period.
PITCHER PARTNERS
N BATTERS
Partner
Brisbane, Queensland
30 September 2016
20
Comet Ridge Limited – Full Year Statutory Accounts 30 June 2016
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2016
Revenue and other income
Interest received
Research & development tax offset
Other income
Expenses
Employee benefit's expense
Contractors' & consultancy costs
Exploration restoration and rehabilitation
Exploration and evaluation expenditure written off
Professional fees
Corporate expenses
Fair value movement of financial liability at fair value
Occupancy costs
Finance costs
Other expenses
Depreciation
Impairment - exploration and evaluation expenditure
LOSS BEFORE INCOME TAX
Income tax credit
LOSS FOR THE YEAR
Other Comprehensive Loss, Net of Income Tax
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations
TOTAL OTHER COMPREHENSIVE LOSS, NET OF INCOME TAX
TOTAL COMPREHENSIVE LOSS
Loss attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interests
LOSS PER SHARE
Basic loss per share
Diluted loss per share
Consolidated
June 2016
$000's
June 2015
$000's
Note
4
4
4
4
3
4
4
3
5
40
145
-
572
36
55
(632)
(861)
(388)
(560)
-
(43)
-
(1,267)
(128)
(297)
(116)
(221)
(1,706)
(1,486)
(203)
(160)
(43)
-
(231)
(279)
(22)
(26)
(315)
(15,542)
(3,708)
(19,970)
-
1,401
(3,708)
(18,569)
(37)
(20)
(37)
(20)
(3,745)
(18,589)
(3,708)
(18,569)
-
-
(3,708)
(18,569)
(3,745)
(18,589)
-
-
(3,745)
(18,589)
Cents
Cents
(0.70)
(3.68)
(0.70)
(3.68)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
Comet Ridge Limited I Annual Report 2016 21
Comet Ridge Limited – Full Year Statutory Accounts 30 June 2016
Statement of Financial Position
as at 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
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
Financial liability at fair value
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
Consolidated
June 2016
$000's
June 2015
$000's
6
6
7
7
7
3
6
7
3
7
5
8
8
1,625
5,827
147
111
76
76
457
416
2,305
6,430
62
78
41,243
39,551
41,305
39,629
43,610
46,059
412
1,050
659
545
1,071
1,595
13,270
11,564
241
183
-
-
13,511
11,747
14,582
13,342
29,028
32,717
92,022
92,099
1,417
2,644
(64,411)
(62,026)
29,028
32,717
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
22
Comet Ridge Limited – Full Year Statutory Accounts 30 June 2016
Statement of Changes in Equity
for the year ended 30 June 2016
Consolidated
Balance at 1 July 2014
Loss for the period
Other comprehensive loss for the period
Total comprehensive loss for the period
Transactions with owners in their capacity
as owners
Contributed
Equity
$000's
Foreign
Currency
Translation
Reserve
$000's
Share Based
Payments
Reserve
$000's
Accumulated
Losses
$000's
Total
$000's
83,482
1,418
1,303
(43,457)
42,746
-
-
-
(18,569)
(18,569)
-
(20)
-
-
(20)
-
(20)
-
(18,569)
(18,589)
Contributions of equity net of transaction costs
8,555
-
-
-
8,555
Shares issued on vesting of performance rights
Share based payments
62
-
-
-
(62)
5
-
-
-
5
Balance at 30 June 2015
92,099
1,398
1,246
(62,026)
32,717
8,617
-
(57)
-
8,560
Balance at 1 July 2015
Loss for the period
Other comprehensive loss for the period
Total comprehensive loss for the period
Transactions with owners in their capacity
as owners
92,099
1,398
1,246
(62,026)
32,717
-
-
-
(3,708)
(3,708)
-
(37)
-
-
(37)
-
(37)
-
(3,708)
(3,745)
Shares issued on vesting of performance rights
36
-
(36)
-
-
Share based payments
Transfers
-
-
56
-
56
(113)
-
(1,210)
1,323
-
(77)
-
(1,190)
1,323
56
Balance at 30 June 2016
92,022
1,361
56
(64,411)
29,028
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Comet Ridge Limited I Annual Report 2016 23
Comet Ridge Limited – Full Year Statutory Accounts 30 June 2016
Statement of Cash Flows
for the year ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Research & development tax offset received
Other receipts
Payments to suppliers and employees
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Payment for property, plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue costs
NET CASH FROM FINANCING ACTIVITIES
Net (decrease)/increase in cash held
Cash at the beginning of the year
Effects of exchange rate changes on cash
CASH AT THE END OF THE YEAR
Note
June 2016
June 2015
Consolidated
$000's
$000's
58
-
-
(1,705)
(1,647)
136
572
54
(2,104)
(1,342)
(2,552)
(6)
(2,558)
(6,188)
(10)
(6,198)
-
-
-
(4,205)
5,827
3
1,625
9,106
(551)
8,555
1,015
4,814
(2)
5,827
6
6
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
24
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Notes to the Financial Statements
Note 1 General information
These financial statements include the consolidated financial statements and Notes of Comet Ridge Limited (the Company) and its controlled entities
(Comet Ridge or “the group”). Comet Ridge Limited is a for-profit entity for the purpose of preparing the financial statements. Disclosures with respect to
the parent entity are included in Note 14. The financial statements were approved for issue by the Directors on 30 September 2016.
Comet Ridge Limited is a public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business
is:
Level 3, 283 Elizabeth Street
BRISBANE QLD 4000
Note 2 Basis of preparation
Compliance with Accounting Standards
a.
These financial statements are a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (including
the Australian Accounting Interpretations and other authoritive pronouncements of the Australian Accounting Standards Board) and the Corporations Act
2001. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
Historical cost convention
b.
The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at
fair value of selected non‑ current assets, financial assets and financial liabilities.
Going concern
c.
The consolidated financial statements have been prepared on a going concern basis which contemplates that the group will continue to meet its
commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of
business.
The ability of the group to execute its currently planned exploration and evaluation activities requires the group to raise additional capital within the next
12 months or to sell or sell down its interest in an existing asset or pre-sell gas from one of its assets. Because of the nature of its operations, the
Directors recognise that there is a need on an ongoing basis for the group to regularly raise additional cash funds to fund future exploration activity and
meet other necessary corporate expenditure. Accordingly, when necessary, the group investigates various options for raising additional funds which
may include but is not limited to an issue of shares, a farm-out of an interest in one or more exploration tenements or the sale of exploration assets
where increased value has been created through previous exploration activity.
At the date of this financial report, the Directors have completed arrangements for a share placement and are in the process of finalising a non-
renounceable share rights issue to be offered to shareholders in early October 2016. These initiatives are expected to raise up to approximately $2
million. In addition, the Company has progressed the option of future Galilee Basin gas sales with a number of interested parties. The Directors
reasonably expect that a number of these agreements will be finalised over the next few months and will provide sufficient additional funds. However,
while they are well progressed, at the date of this report, none of the fund raising options has been completed and no guarantee can be given that a
successful outcome will eventuate. As a result, the Directors have concluded that the current circumstances may cast significant doubt regarding the
groups’ and the Company's ability to continue as a going concern and therefore the group and Company may be unable to realise their assets and
discharge their liabilities in the normal course of business. Nevertheless, after taking into account the progress that has been made on the various
funding options available, the Directors have a reasonable expectation that the group and the Company will be successful with its future fund raising
initiatives and, as a result, will have adequate resources to fund its future operational requirements and for these reasons they continue to adopt the
going concern basis in preparing the financial report.
The financial report does not include adjustments relating to the recoverability or classification of recorded assets amounts or to the amounts or
classification of liabilities that might be necessary should the group not be able to continue as a going concern.
Rounding of amounts
d.
The Group is of a kind referred to in Legislative Instrument 2016/191 issued by the Australian Securities & Investments Commission, relating to the
“rounding” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with the Legislative Instrument to the
nearest one thousand dollars, or in certain cases, to the nearest dollar.
Comet Ridge Limited I Annual Report 2016 25
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement
when applying the group's accounting policies. These estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the
circumstances.
The critical estimates and judgements applied in the preparation of the financial statements are as follows:
Exploration and Evaluation Assets
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest
basis. Costs incurred before the group has obtained the legal rights to explore an area are expensed in the profit or loss.
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest. The balance and movements in of exploration and evaluation
expenditure during the year are as follows:
Exploration and evaluation expenditure
Exploration and evaluation expenditure
Less provision for impairment
Movements in exploration and evaluation phase
Balance at the beginning of year
Exploration and evaluation expenditure during the year
Impairment expense
Exploration and evaluation expenditure written off
Balance at the end of year
Consolidated
June 2016
June 2015
$000's
72,169
(30,926)
41,243
$000's
70,063
(30,512)
39,551
Consolidated
June 2016
June 2015
$000's
39,551
2,007
(315)
-
41,243
$000's
52,774
3,586
(15,542)
(1,267)
39,551
Further information regarding the activity in each area of interest is shown in Note 10 - Segment Information.
Exploration and evaluation assets are only recognised if the rights to the area of interest are current and either:
i.
ii.
the expenditures are expected to be recouped through successful development and exploitation of the area of interest or by its sale; or
activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability and
facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the
area of interest.
Once the technical feasibility and commercial viability of the area of interest are demonstrable, exploration and evaluation assets attributable to that area
of interest are first tested for impairment and then reclassified from exploration and evaluation assets to property and development assets within
property, plant and equipment.
Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration and evaluation activity that gives rise to the
need for restoration. Accordingly, these costs will be recognised gradually over the life of the project as the activities occur.
26
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Exploration expenditure
In order to maintain an interest in the exploration tenements in which it is involved, the group is required to meet certain conditions imposed by the
various statutory authorities granting the exploration tenements or that are imposed by the joint venture agreements entered into by the group. These
conditions include minimum expenditure commitments. The timing and amount of minimum exploration expenditure obligations of the group may vary
significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the relevant area of interest.
The group's minimum expenditure obligations, which are not provided for in the financial statements are as follows:
Minimum expenditure requirements
- not later than 12 months
- between 12 months and 5 years
Recoverability of exploration and evaluation expenditure
June 2016
$000's
273
5,470
5,743
June 2015
$000's
335
4,808
5,143
The group assesses the recoverability of the carrying value of capitalised exploration and evaluation assets at each reporting date (or during the year
should the need arise). In completing this assessment, regard is given to the group's intentions with respect to proposed future exploration and
development plans for individual areas, to the success or otherwise of activities undertaken in individual areas, to the likely success of future planned
exploration activities, and to any potential plans for divestment of individual areas. Any required impairment of capitalised exploration and evaluation
expenditure is completed based on the results of the assessment. Furthermore, for various areas of interest, exploration and evaluation activities may
not have reached a stage to allow a reasonable assessment to be made regarding the existence of economically recoverable reserves. Accordingly,
exploration and evaluation assets may be subject to further impairment in the future.
The oil price and its relationship to the gas price are seen as a significant impairment trigger. At balance date, while the international oil price has
increased from the level at 30 June 2015 it is still at a level that could indicate that the carrying value of the exploration and evaluation assets may not
be fully recovered through development or sale. As a result, in order to assess the fair value of these assets for impairment the following have been
performed:
a “value in use” calculation has been undertaken for the Mahalo Gas Project at 30 June 2016, and
the assumptions underlying the 30 June 2015 valuation for permit ATP 744P have been reviewed in order to determine whether it is reasonable to
continue to use that valuation as an estimate the asset’s a fair value.
The “value–in-use” method calculates a net present value (NPV) based on management’s estimated cash flows for each individual permit. The
assumptions underlying the cash flows include management’s estimates of the following:
recoverable reserves
field development plans
pipeline tariff
production life
additional exploration costs
field operating costs
short and long term gas prices
discount rate
The future cash-flows are adjusted for risks specific to the asset and discounted using a pre-tax discount rate of 14.25% (2015: 14.25%). The discount
rate is derived from the Company’s estimated post-tax weighted average cost of capital. The calculation of value in use is sensitive to changes in the
short and long term gas price and the estimate of recoverable reserves. It is estimated that while changes in the gas price would impact the value in use
calculation; an analysis using a range of prices from $6.00GJ to $8.00GJ did not alter the impairment decision. Also, with respect to the Mahalo Gas
Project, a 40% reduction in the rate of recovery of the amount of recoverable reserves did not change the impairment decision.
The review of the ATP744P valuation concluded that there was no material change in the assumptions underlying the valuation other than there was a
substantial increase in the amount of the contingent resource available.
No value-in-use calculation was undertaken for the Gunnedah Basin permits as these assets have been fully impaired because of the current
uncertainty around the CSG industry in NSW which has created significant limitations on the Company’s ability to undertake any exploration or
development activity.
Comet Ridge Limited I Annual Report 2016 27
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Recoverability of exploration and evaluation expenditure (continued)
Based on the value-in-use calculations and other considerations an impairment expense was recognised with respect to exploration and evaluation
assets amounting to $315,000 (2015: $15.54 million). This impairment relates to the following permit areas:
Permit
ATP 743P *
ATP 744P *
PEL 427
PEL 428
PEL6
PMP 50100
Total
Consolidated
June 2016
$000’s
-
-
100
73
31
111
315
June 2015
$000’s
4,314
8,105
974
1,472
677
-
15,542
Note * While the value-in-use calculation undertaken for the year ended 30 June 2015 with respect to for the Galilee Basin permits ATP 743 and ATP
744P did not indicate impairment, the Directors decided to impair the asset by the amount of the valuation uplift that was applied to the permit at the time
of the Comet Ridge/Chartwell merger in 2009. The impairment was taken up in order to recognise the relatively underexplored nature of these permits
and to match the carried value to the actual expenditure incurred to date in the permit.
Interest in joint operations
The group’s exploration activities are often conducted through joint arrangements. Joint arrangements are classified as joint operations or joint ventures
depending on the contractual rights and obligations that each investor has, rather than the legal structure of the joint arrangement.
In accordance with AASB 11 Joint Arrangements, all of the groups’ interests in joint arrangements are classified as joint operations. A joint operation
involves joint control of the assets contributed or acquired for the purpose of the joint operation. Each party may take their share of the output of the joint
operation and each bears its share of the expenses incurred. The interests of the group in joint operations are brought to account by recognising the
group’s share of jointly controlled assets, liabilities, revenue and expenses.
The carrying amount of exploration and evaluation expenditure includes the group's interest in the exploration and evaluation expenditure of a number of
joint operations. The amount of exploration and evaluation expenditure employed in the joint operations is as follows:
30 June 2016
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Share of joint venture net assets
ATP1015P
20.0%
$000's
ATP1191
40.0%
$000's
PEL427
59.1%
$000's
PEL428
68.4%
$000's
PEL6
29.6%
$000's
Total
$000's
-
-
-
155
-
155
-
-
-
-
-
-
1
-
1
156
-
156
6,257
6,257
6,257
17,194
17,194
17,349
518
518
518
464
464
464
311
311
312
24,744
24,744
24,900
-
-
6,257
108
108
17,241
(1)
(1)
519
(14)
(14)
478
(1)
(1)
313
92
92
24,808
28
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Interest in joint operations (continued)
30 June 2015
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Share of joint venture net assets
ATP1015P
20%
$000's
-
-
-
ATP1191
40%
$000's
173
-
173
PEL427
50%
$000's
5
-
5
PEL428
60.0%
$000's
7
-
7
6,127
6,127
6,127
2
2
16,871
16,871
17,044
99
99
6,125
16,945
379
379
384
3
3
381
342
342
349
3
3
346
PEL6
22.5%
$000's
3
1
4
212
212
216
1
1
Total
$000's
188
1
189
23,931
23,931
24,120
108
108
215
24,012
For all joint operations other than ATP1015P, the principal place of business is c/- Santos Limited, Level 22, 32 Turbot Street, Brisbane QLD 4000. The
principal place of business for ATP1015P is Comet Ridge’s principal place of business.
The group's minimum expenditure obligations with respect to its interests in joint operations which are included in the above are as follows:
Minimum expenditure requirements
● not later than 12 months
● between 12 months and 5 years
Consolidated
June 2016
June 2015
$000's
38
5,455
5,493
$000's
3,107
245
3,352
The commitments shown above include the amounts with respect to the group's interest in joint operations (refer Note 3).
Financial liability at fair value
On 18 March 2014, the Group repurchased the 5% interest in the Mahalo Gas Project which was originally sold to Stanwell Corporation Limited (SCL)
under the September 2011 Sale and Purchase Option Agreement. The liability to Stanwell Corporation Limited arising from the renegotiated agreement
is recognised as a “financial liability at fair value through profit and loss”.
Non-current
Financial liability at fair value - Stanwell Corporation Limited
Balance at the beginning of the year
Movement in fair value of financial liability at fair value
Balance at the end of the year
Consolidated
June 2016
June 2015
$000's
13,270
$000's
11,564
Consolidated
June 2016
June 2015
$000's
11,564
1,706
$000's
10,078
1,486
13,270
11,564
Comet Ridge Limited I Annual Report 2016 29
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Financial liability at fair value (continued)
In accordance with the Renegotiated Mahalo Option Agreement the nature of the consideration payable by Comet Ridge is at the option of SCL and is
either by way of:
1. A discount under the Gas Supply Agreement (Option A) (GSA). Under this option, the consideration is paid by Comet Ridge foregoing a portion of
its future revenue from the Mahalo Gas Project over the life of the Gas Supply Agreement. The revenue foregone by Comet Ridge is the $15m
discount expressed in 1 July 2013 dollar terms and indexed by CPI up to the date the Gas Supply Agreement is signed; or
2. A cash payment of $20m indexed by CPI from 1 July 2015. This is the amount which will be payable if SCL decides not to exercise Option A or an
acceptable gas supply agreement cannot be agreed.
Fair value measurement
At 18 March 2014, the date of the renegotiated agreement, the fair value of the SCL liability was estimated for recognition and measurement and for
disclosure purposes. Refer to Note 11 for further details of the process undertaken to value the financial liability
Of the two options available, it was originally considered reasonable to assume that SCL will choose the option that provides the greatest benefit. If the
Mahalo field proves up with significant reserves, SCL would be expected to proceed with Option A. If the field proves up with low gas volumes then SCL
would be expected to opt for Option B. Obviously, there is a midway point where SCL will be ambivalent as to whether it chooses Option A or Option B.
As a result, at 30 June 2016 it is necessary to consider whether there has been any technical or economic changes since the last reporting date that
would now cause SCL to choose Option B rather than Option A. If necessary, the liability to SCL will be amended so that at the anticipated date of the
GSA the full liability for the consideration payable to SCL will be recognised.
The initial accounting treatment was based on the expectation that SCL was interested in securing future gas supplies and, provided the Mahalo/Mira
field was able to supply the agreed gas quantities it would proceed with Option A. This conclusion was based on the exploration results from the Mahalo
and Mira pilot operations which, while not conclusive, indicated that the Mahalo/Mira field had the potential for a significant gas resource.
The two critical assumptions that could potentially change the initial conclusion are:
1.
The potential of the Mahalo/Mira Gas Project to supply the agreed quantities of gas; and
2. Gas price under the Gas Pricing Mechanism compared to the current market gas price.
The results of exploration and development activity undertaken during the year have not changed the initial opinion on the potential of the field. During
the last quarter of the financial year, the Mahalo Pilot Scheme maintained a strong production rate of approximately 465,000 scf/d from one relatively
short 360 metre horizontal well and two vertical wells on line. On the basis of these promising results, have been undertaken to examine the most
efficient way to into production.
These studies are showing that the initial cost of production should be very low given the:
Strong gas flow from a very short horizontal section;
Shallow reservoir
Low water production rates; and
Proximity to existing infrastructure to transport gas.
With respect to the Gas Pricing Mechanism, the gas price under the GSA is calculated on an ex-field basis using a formula which reflects the Oil Linked
Gas Price (OLP), the field cost to produce plus a rate of return referred to as the Field Cost Plus Return (FCR) and with a specified Floor and Ceiling
Price range.
30
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Financial liability at fair value (continued)
The pricing mechanism will operate as follows:
1.
If the price of oil is low (i.e. below the Floor Price of USD96.75/bbl), the gas price will be calculated based on the field cost to produce plus a rate of
return (FCR);
2.
If the oil price is high (i.e. above USD134/bbl) then the ceiling gas price will be a specified maximum currently estimated at Au$9.51 per GJ;
3.
If the oil price lies between the prices mentioned in (a) and (b) above, the contracted gas price will be 50% based on OLP and 50% based on FCR;
and
4. With respect to both (a) and (b) above a discount calculated at the date of the Gas Supply Agreement will apply and will reduce the gas price
calculated above on a $/GJ basis over the life of the GSA.
During the financial year, the oil price has recovered from the levels at 30 June 2015. However, at 30 June 2016 the oil price was still below the GSA
floor price. As a result, if the gas price for the GSA was determined at balance date it would be based on field cost to produce plus a rate of return. The
conservative estimate of the FCR break-even gas price determined by the development studies (“value in use” calculations) at June 2016 is in the range
$3.82/GJ to $4.51/GJ. This is below the current market price of approximately $6.00/GJ to $6.50/GJ. The FCR price would also be reduced by the SCL
discount hence it is still reasonable to assume that Option A would still be attractive to Stanwell.
As a result, at 30 June 2016, it was determined that the initial assumptions used to recognise the SCL liability were still appropriate. Based on these
inputs, the increase in the fair value of the SCL liability during the financial year was $1.706 million and a corresponding amount is recognised as an
expense in the profit and loss.
Valuation techniques and process used to determine fair values
The fair value of the SCL liability is based on the anticipated discounted cash flows arising from the renegotiated Mahalo Option Agreement. The SCL
liability is classified as level 3 in the fair value hierarchy due to the use of unobservable inputs. The inputs used in the calculation of the fair value of the
Financial Liability at Fair Value are as follows:
1
2
3
4
5
The most likely outcome under the Mahalo Option Agreement is SCL will opt for the Gas Sale Agreement as a result the $15m discount will be the
basis for determining the liability calculations.
The agreement term for the initial calculations will be the maximum four years.
The CPI rate used to index the $15m gas supply discount from 1 August 2014 will be 3% pa based on upper level of RBA target for inflation.
The fair value of the 5% Mahalo Gas Project interest re-acquired will be the net present value (NPV) of the SCL liability discounted at a pre-tax
rate based on Comet Ridge’s cost of capital.
The Comet Ridge’s cost of capital is 14.75% per annum (refer WACC calculation below). The pre-tax discount rate is also 14.75% per annum as
the cost of debt is nil.
The calculation of the SCL liability is as follows:
Calculations
18-Mar-14
18-Mar-15
18-Mar-16
18-Mar-17
18-Mar-18
18-Mar-18
Starting Balance
Annual Indexation Movement
Ending Balance
$000's
$000's
$000's
$000's
$000's
$000's
Indexed liability to SCL
(15,000)
(450)
(464)
(477)
Projected cash flow SCL liability
-
-
-
-
(492)
(16,883)
(16,883)
NPV of SCL liability
Fair value exploration assets acquired
Total fair value movements
(9,737)
9,737
7,146
Comet Ridge Limited I Annual Report 2016 31
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 3 Material balances - critical accounting estimates and judgements (continued)
Financial liability at fair value (continued)
The relationships between the unobservable inputs and the fair value of the financial liability at fair value are as follows:
Unobservable input
Relationship to fair value
Likely outcome
Agreement term
CPI rate
Pre-tax discount rate
If SCL opts for Option B the financial liability at fair value will increase.
If the Final Investment Decision (FID) is reached earlier than the 4 year limit the carrying amount of the financial
liability at fair value will increase while the estimated total fair value movements over the new term will reduce.
If the 3% pa CPI rate reduces/increases to a low of 2% pa or a high of 4% pa the indexed liability will reduce/
increase by approximately 3.9% or $650,000.
If the 14.75% pa pre-tax discount rate reduces/increases by 2.25% pa i.e. to a low of 12.5% pa and or a high of
17.0% pa the NPV of the indexed liability will increase/reduce by approximately 8.0% or $750,000 with a resulting
reduction/increase in the total fair value movement to be expensed over the term of the agreement.
Financial Guarantee Contract
One of the terms of the renegotiated Mahalo Option Agreement is that the parent entity (Comet Ridge Limited) guarantees the indexed $20m
consideration payable by Comet Ridge Mahalo Pty Ltd (CRM) under Option B. In accordance with AASB 139 Financial Instruments, Recognition and
Measurement, at each balance date to the extent that a liability/asset exists, Comet Ridge Limited will need to recognise a Financial Guarantee Contract
liability and CRM will record a Financial Guarantee Contract asset.
Comet Ridge Limited’s exposure to a financial guarantee liability arises from the risk that at any point in time the fair value of CRM's interest in the
Mahalo Gas Project is less than the indexed liability. In order to determine the fair value of CRM’s interest in the Mahalo Gas Project, CRM has
developed a valuation methodology that takes into account the estimated cash flows from the development of the Mahalo Gas Project for eight years
commencing from June 2018. Using a range of gas prices from $6.00GJ to $10.00GJ, the valuation provides a range of NPVs for Comet Ridge’s 40%
interest in the Mahalo Gas Project significantly above the value of the financial guarantee i.e. $20 million. As a result, based on these valuations, at
30 June 2016 CRM’s Financial Guarantee Asset would have a zero value as the underlying asset supporting the financial guarantee is significantly
above the value of the guarantee. As a result, Comet Ridge Limited’s financial guarantee liability at 30 June 2016 is also nil.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and
subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the
amount initially recognised less any cumulative amortisation.
Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted
for as contributions and recognised as part of the cost of the investment.
32
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 4 Revenue and expenditure
Revenue
(a) Research & development tax offset
Consolidated
June 2016
$000's
-
June 2015
$000's
572
During the 2015 year Comet Ridge received a Research and Development tax offset from the Australian Taxation Office. The research and
development tax offset grant application was made in the 2014 financial year for the radial drilling test at the Mahalo Gas Project.
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates
allowed.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable the future economic benefits will flow to the entity
and specific criteria have been met for each of the group's activities as described below. The group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each Operation.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.
Dividend revenue is recognised when the right to receive a dividend has been established.
Government grants that compensate the Group for expenses incurred e.g. Research and Development are recognised as revenue when received.
All revenue is stated net of the amount of goods and services tax (GST).
Other income
(b) Other income
Other income includes the following specific items:
Sale of inventory
Foreign exchange gains (net)
Total other income
Expenses
Loss before income tax includes the following specific expenses:
(a) Employee benefits' expense
Other employee benefits' expense
Share based payments' expense
Defined contribution superannuation expense
(b) Contractor and consultants costs
Contractors' fees
Consulting fees
Consolidated
June 2016
$000's
June 2015
$000's
36
-
36
54
1
55
Consolidated
June 2016
$000's
June 2015
$000's
(488)
(56)
(88)
(632)
(760)
(5)
(96)
(861)
(388)
-
(388)
(557)
(3)
(560)
(c) Movement in fair value of financial liability at fair value
Fair value movement of financial liability at fair value through profit and loss
(1,706)
(1,486)
Comet Ridge Limited I Annual Report 2016 33
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 4 Revenue and Expenditure (continued)
Expenses (continued)
(d) Occupancy costs
Rental expense relating to operating leases - minimum lease rentals
Other occupancy costs
(e) Other expenses include the following specific items:
Other administration and office costs
Foreign exchange losses (net)
Note 5
Income tax
Tax expense
(a) Recognised in the Statement of Profit and Loss and Other Comprehensive Income
Current tax
Deferred tax expense relating to the origination and reversal of temporary differences
Income tax expense
Deferred income tax credit included in income tax expense comprises:
Decrease in deferred tax asset
Decrease in deferred tax liability
(b) Numerical reconciliation of income tax expense to prima facie tax on accounting profit
Loss before income tax
Tax benefit at the Australian tax rate of 30% (2015:30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share options expensed
Research and development tax offset received
Other non-deductible items
Previously unrecognised tax losses used to reduce deferred tax expense
Capital & tax losses not recognised in deferred tax assets
Income tax expense
Consolidated
June 2016
$000's
June 2015
$000's
(182)
(21)
(203)
(143)
(17)
(160)
(229)
(2)
(231)
(279)
-
(279)
Consolidated
June 2016
$000's
June 2015
$000's
-
-
-
-
1,401
1,401
-
-
-
1,430
(29)
1,401
(3,708)
(19,970)
1,112
5,991
(17)
-
(4)
-
(1,091)
-
(1)
171
(14)
(380)
(4,366)
1,401
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in
respect of these items because it is not probable that future taxable profit will be available against which the group can utilise the benefits from the
deferred tax assets.
(c) Franking credits
Consolidated
June 2016
$000's
June 2015
$000's
Franking credits available for subsequent financial years based on a tax rate of 30% (2015: 30%)
-
-
34
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 5
Income tax (continued)
Tax expense (continued)
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(i)
(ii)
(iii)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivable at the reporting date.
The income tax expense (revenue) for the year is the tax payable on the current year's taxable income based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the year in the countries where
the Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to (recovered from) the relevant tax authorities.
Deferred taxes
Deferred tax liability
The balance of deferred tax liability comprises:
Deferred tax assets
Tax losses
Capital costs deductible over 5 years
Provisions
Deferred tax liabilities
Exploration and evaluation expenditure
Accrued interest
Net deferred tax asset
Deferred tax asset not recognised
Deferred tax asset recognised in accounts
Movements in deferred tax liability
Opening balance
Deferred tax (credited) to profit or loss
Closing balance
Consolidated
June 2016
$000's
June 2015
$000's
-
-
21,889
211
1,257
23,357
20,251
316
741
21,308
(10,745)
(1)
(10,746)
12,611
(12,611)
-
(9,195)
(6)
(9,201)
12,107
(12,107)
-
-
-
-
1,401
(1,401)
-
Deferred income tax is provided in full, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Comet Ridge Limited I Annual Report 2016 35
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 5
Income tax (continued)
Deferred taxes (continued)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses. Deferred tax assets have not been recognised with respect to the following items:
Australian temporary differences and tax losses
Off-shore tax losses
Consolidated
June 2016
$000's
16,129
25,903
June 2015
$000's
14,904
25,451
42,032
40,355
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign
operations where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right of offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is recognised in other comprehensive income or directly in equity, respectively.
Note 6 Other financial assets and liabilities
Cash and cash equivalents
Cash at bank and on hand
Consolidated
June 2016
$000's
1,625
June 2015
$000's
5,827
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the Statement of Financial
Position.
36
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 6 Other financial assets and liabilities (continued)
Cash and cash equivalents (continued)
(a)
Reconciliation of cash flow from operations
Loss for the year
Depreciation
Impairment - exploration and evaluation expenditure
Exploration and evaluation expenditure written off
Provision for rehabilitation capitalised
Share-based payments
Net exchange differences
Changes in assets and liabilities net of effects of purchase or disposal of subsidiaries
Decrease in inventories
Decrease in trade and other receivables
(Increase)/Decrease in prepayments and deposits paid
(Decrease)/Increase in trade payables and accruals
Increase in financial liability at fair value
Increase in provisions
Decrease in deferred tax liability
Consolidated
June 2016
$000's
(3,708)
22
315
-
(88)
56
(1)
-
64
(41)
(107)
1,706
135
-
(1,647)
June 2015
$000's
(18,569)
26
15,542
1,309
-
5
(39)
23
156
49
39
1,486
32
(1,401)
(1,342)
(b)
Non-cash financing and investing activities
There were no investing and financing transactions undertaken during the current year that did not require the use of cash or cash equivalents
other than shares issued with respect to Performance Rights vesting during the year amounting to $36,000 (2015: $62,000).
Trade and other receivables
Current
Other receivables
Consolidated
June 2016
$000's
June 2015
$000's
147
111
Other receivables mainly comprise GST refunds. The carrying amount of other receivables is assumed to approximate their fair values due to their short
term nature.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is
not expected more than 12 months after reporting date.
Comet Ridge Limited I Annual Report 2016 37
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 6 Other financial assets and liabilities (continued)
Trade and other receivables (continued)
Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount
directly. An allowance account (provision for impairment of receivables) is used when there is objective evidence that the group will not be able to collect
all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of
the impairment allowance is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss as part of other expenses. When a trade receivable for which an impairment allowance
has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit or loss.
Trade and other payables
Current
Trade payables
Consolidated
June 2016
$000's
412
June 2015
$000's
1,050
Trade payables includes $92,000 (2015: $108,000) representing the group’s share of joint operation liabilities (refer Note 3).
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months from reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest rate method.
Note 7 Other non-financial assets and liabilities
Inventories
Consumables - at cost
Consolidated
June 2016
$000's
76
June 2015
$000's
76
Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the specific identification basis.
Other Assets
Prepayments
Restricted cash
Consolidated
June 2016
$000's
54
403
457
June 2015
$000's
13
403
416
Restricted cash
Restricted cash represents funds held on term deposit which support guarantees provided by the group's bankers to the States of Queensland
and New South Wales in respect of the group's exploration permits and environmental guarantees and to the landlord of the Brisbane office
premises to support the group's obligations under the lease. Refer Note 13.
38
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 7 Other non-financial assets and liabilities (continued)
Property, Plant and Equipment
Plant and equipment at cost
Accumulated depreciation
Movements in carrying amounts of property, plant and equipment
Balance at the beginning of year
Additions
Depreciation
Foreign exchange movements
Balance at the end of year
Consolidated
June 2016
$000's
159
(97)
62
78
6
(22)
-
62
June 2015
$000's
170
(92)
78
96
10
(26)
(2)
78
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The depreciable amount of all plant and equipment is calculated on a straight-line basis over the asset's useful life to the group commencing from the
time the asset is held ready for use. The depreciation rates used are:
Class of fixed asset
Plant and Equipment
10% - 33%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement
of Comprehensive Income.
Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of
economic benefits will result and that outflow can be reliably measured.
Current
Employee benefits
Restoration & rehabilitation
Non-current
Employee benefits
Restoration & rehabilitation
Movements in carrying amounts of restoration and rehabilitation
Balance at the beginning of the year
Additions capitalised to exploration and evaluation expenditure
Foreign exchange movements
Balance at the end of the year
Consolidated
June 2016
$000's
91
568
659
75
166
241
900
Consolidated
June 2016
$000's
566
131
37
734
June 2015
$000's
102
443
545
60
123
183
728
June 2015
$000's
588
-
(22)
566
Comet Ridge Limited I Annual Report 2016 39
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 8
Equity
Contributed equity
Ordinary shares - fully paid
Movements in ordinary shares
Balance at the beginning of the year
Share placement (59,259,250 shares @ 13.5 cents)
Share purchase plan (8,192,551 shares @ 13.5 cents)
Performance rights movements during the year
Share issue costs
Balance at the end of the year
Ordinary shares are classified as equity.
Consolidated
June 2016
June 2015
$000's
92,022
$000's
92,099
June 2016
June 2015
Number of Shares
June 2016
$000's
526,200,547
-
-
50,000
-
526,250,547
458,598,746
59,259,250
8,192,551
150,000
-
526,200,547
92,099
-
-
(77)
-
92,022
June 2015
$000's
83,482
8,000
1,106
62
(551)
92,099
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll, each share is entitled to one vote.
Reserves
Foreign currency translation
Share-based payments
The movements in the share-based payments' reserve during the year are as follows:
Balance at the beginning of the year
Shares issued on vesting of performance rights
Share-based payments during the year
Transfer to accumulated loss
Balance at the end of the year
Consolidated
June 2016
$000's
1,361
56
1,417
June 2015
$000's
1,398
1,246
2,644
Consolidated
June 2016
$000's
1,246
(36)
56
(1,210)
56
June 2015
$000's
1,303
(62)
5
-
1,246
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
Share-based Payments Reserve
The option reserve is used to record the expense associated with options granted to employees under equity-settled share-based payment
arrangements. It is also used to record fair value of options granted for other goods and services as well as acquisition of other assets.
40
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 8
Equity (continued)
Options and Performance Rights
At 30 June 2016 and 30 June 2015 there were no options for ordinary shares in Comet Ridge Limited on issue.
At 30 June 2016, the following Performance Rights for ordinary shares in Comet Ridge Limited were on issue:
Grant Date
Vesting Date
1-Jul-13
1-Oct-14
27-Nov-14
10-Jul-15
10-Jul-15
18-Jan-16
18-Jan-16
1-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
Expiry
Date
7-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
No. of Rights 30
June 2016
No. of Rights 30
June 2015
-
-
-
500,000
1,000,000
1,260,000
1,260,000
4,020,000
50,000
1,910,000
500,000
-
-
-
-
2,460,000
Note 9
Share-based payments
Share-based payments
The share-based payments’ expense included in the financial statements with respect to Performance Rights issued during the year and already issued
in prior years is as follows:
Statement of comprehensive income
Share based payments expense included in employee benefits' expense
The types of share-based payment plans are described below.
June 2016
June 2015
$000's
$000's
56
5
Employee Share Options
Options are granted either under the Company's Employee Share Incentive Option Plan or on terms determined by the directors or otherwise approved
by the Company at a general meeting. The options are granted for no consideration. Options are usually granted for a three to four year period and
entitlements to the options are vested on a time basis and/or on specific performance based criteria such as share price increases or reserves
certification. Options granted either under the plan or otherwise as described above carry no dividend or voting rights. When exercisable, each option is
convertible to one ordinary share.
The amount assessed as fair value at the grant date is allocated equally over the period from grant date to vesting date. Fair values at grant date are
determined using the Black-Scholes method of valuation that takes into account the exercise price, the terms of the option, the vesting and market
related criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and the risk of the underlying share and the risk
free interest rate for the term of the option.
There were no employee share options on issue at the beginning of the year and none were granted during the year ended 30 June 2016.
Employee Performance Share Rights
Employee Performance Rights are provided to certain employees via the Comet Ridge Limited Employee Performance Share Rights Plan as approved
by shareholders at the 2010 Annual General Meeting. Performance Rights are granted on terms determined by the directors.
Performance Rights, which have a maximum term of seven years, are issued for no consideration and provide an equity-based reward for employees
that is linked with the success of performance conditions determined when the Performance Rights are granted. The performance criteria are
determined on a case by case basis by the Board. These performance criteria are likely to be matters such as length of employment, successful
operational results and/or direct increase in shareholder value linked to the share price of the Company or reserve targets.
Comet Ridge Limited I Annual Report 2016 41
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 9
Share-based payments (continued)
Employee Performance Share Rights (continued)
The fair value of Performance Rights at grant date that are issued subject only to a service condition is determined by reference to the quoted price of
the Company's shares on the ASX. The fair value of Performance Rights at grant date issued subject to a market condition e.g. Volume Weighted
Average Share Price (VWAP) is determined using generally accepted valuation techniques including Black-Scholes option pricing model and Monte
Carlo simulation that take into account the term of the performance right, the impact of dilution, the share price at grant date, the expected price volatility
of the underlying share, the expected dividend yield and the risk free rate for the term of the performance right and an appropriate probability weighting
to factor the likelihood of the satisfaction of non-vesting conditions.
The maximum number of Performance Rights issued is determined by aggregating the number of Performance Rights on issue with the number of
shares issued during the previous five years under the plan or any other employee incentive scheme, cannot exceed 5% of the total number of shares
on issue.
The following table shows the number and movements of Performance Rights during the 2016 year:
Grant Date
Expiry Date
1-Jul-13
1-Oct-14
27-Nov-14
10-Jul-15
10-Jul-15
18-Jan-16
18-Jan-16
7-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
Share Price at
Grant Date
(cents)
19.00
14.00
12.00
6.00
6.00
9.00
9.00
No. of Rights
30 June 2015
Granted During
the Year
Vested During
the Year
Expired During
the Year
No. of Rights
30 June 2016
50,000
1,910,000
500,000
-
-
-
-
-
-
-
500,000
1,000,000
1,260,000
1,260,000
(50,000)
-
-
-
-
-
-
-
(1,910,000)
(500,000)
-
-
-
-
-
-
-
500,000
1,000,000
1,260,000
1,260,000
2,460,000
4,020,000
(50,000)
(2,410,000)
4,020,000
The following table shows the number and movements of Performance Rights during the 2015 year:
Grant Date
Expiry Date
1-Jul-12
1-Jul-13
1-Jul-13
1-Oct-14
27-Nov-14
30-Jun-16
7-Jul-14
7-Jul-15
1-Jul-15
1-Jul-15
Share Price at
Grant Date
(cents)
11.00
19.00
19.00
14.00
12.00
No. of Rights 30
June 2015
Granted During
the Year
Vested During
the Year
Expired During
the Year
No. of Rights
30 June 2016
100,000
50,000
50,000
-
-
(100,000)
(50,000)
-
-
-
-
-
50,000
1,910,000
500,000
-
-
-
-
1,910,000
500,000
200,000
2,410,000
(150,000)
-
2,460,000
All performance rights granted during the year vest subject to a performance condition in addition to the employee/contractor satisfying a service
condition relating to the completion of a specified period of employment/engagement. The performance rights granted during the year are subject to the
following conditions:
Grant Date No. of Rights Vesting Date Expiry Date Fair Value
Service Period
Performance Condition
10-Jul-15
10-Jul-15
10-Jul-15
10-Jul-15
18-Jan-16
18-Jan-16
18-Jan-16
18-Jan-16
167,000
167,000
166,000
1,000,000
420,000
420,000
420,000
1,260,000
4,020,000
From To
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
31-Dec-17
31-Dec-17
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
31-Dec-17
31-Dec-17
6 cents
6 cents
6 cents
6 cents
9 cents
9 cents
9 cents
9 cents
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
1-Jul-15
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-16
31-Dec-17
31-Dec-17
31-Dec-17
31-Dec-17
75PJ 2P Reserves hurdle
100PJ 2P Reserves hurdle
125PJ 2P Reserves hurdle
Gas flow rate 500mfcd
75PJ 2P Reserves hurdle
100PJ 2P Reserves hurdle
125PJ 2P Reserves hurdle
Gas flow rate 500mfcd
42
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 9
Share-based payments (continued)
Employee Performance Share Rights (continued)
All performance rights granted during the 2015 year vest subject to a performance condition in addition to the employee/contractor satisfying a service
condition relating to the completion of a specified period of employment/engagement. The vesting of performance rights granted during the year is
conditional upon the Group booking 2P reserves. The number of performance rights that ultimately vest will be on a percentage basis of a total 2P
reserve target of 75PJ with a threshold of 37.5PJ to be reached before any performance rights vest.
Ordinary shares were issued for all Performance Rights that vested during the 2016 and 2015 years.
The fair value of Performance Rights is measured at grant date and is determined using a binomial or Black-Scholes pricing model that takes into
account the term of the performance right, the underlying 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 performance right.
Where the Performance Rights are granted subject only to service conditions, in accordance with the relevant accounting standard, it is assumed that
the service condition will be met and the Comet Ridge Limited share price at grant date is used to determine the fair value of the Performance Rights
issued. Where the Performance Rights are granted subject to a market condition in addition to the service condition, the pricing model also takes into
account the probability that the market condition will be satisfied/not satisfied during the term of the Performance Rights e.g. “monte carlo” simulation
technique.
Note 10 Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of
Directors.
Identification of reportable segments
The principal operating activities of the group are the exploration and evaluation of its tenements for oil and gas reserves. The group has identified its
operating segments based on the geographic location of its respective areas of interest (tenements). The internal reports used by the Board of Directors
(chief operating decision makers) in assessing performance and determining the allocations of resources are prepared on the same basis.
Reportable segments disclosed are based on aggregating operating activities where those activities are considered to have similar economic
characteristics and meet the other aggregation criteria of AASB 8 Operating Segments. Other than exploration and evaluation costs written off and
impairment losses and stand-by costs in relation to exploration and evaluation expenditure, income and expenditure as per the Statement of
Comprehensive Income consist of incidental revenue including interest and corporate overhead expenditure which are not allocated to the group's
operating segments.
In addition, only exploration and evaluation expenditure assets are allocated to the group's operation segments. All other assets and liabilities relate to
corporate activities and are not allocated to operating segments.
Unless otherwise stated, all amounts reported to the Board of Directors as the chief decision makers with respect to operating segments are determined
in accordance with accounting policies that are consistent with those adopted in the annual financial statements of the group.
Activity by segment
At 30 June 2016, the group had the following interests in coal seam gas assets:
Comet Ridge Permits
ATP 743P
ATP 744P
ATP 1015P Farm-in area
ATP 1191P Mahalo
PEL 6
PEL 427
PEL 428
PMP 50100
Location
Galilee Basin
Galilee Basin
Galilee Basin
Bowen Basin
Gunnedah
Gunnedah
Gunnedah
West Coast
State/Country
QLD
QLD
QLD
QLD
NSW
NSW
NSW
NZ South Island
CSG Interest
100%
100%
20%
40%
29.55%
59.09%
68.42%
100%
Area (km2)
3,994
4,296
873
911
5,162
5,764
6,018
140
Comet Ridge Limited I Annual Report 2016 43
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 10 Segment information (continued)
Segment performance
The following tables show the revenue and profit information regarding the group’s operating segments.
30 June 2016
Segment revenue
Exploration and evaluation expenditure impaired
Segment result before tax
Reconciliation of segment result to Group loss
before tax
Interest revenue
Other income
Employee benefits expense
Contractors and consultants costs
Professional fees
Corporate expenses
Occupancy costs
Fair value movement of financial liability at fair value
Finance charges
Other expenses
Depreciation and amortisation expense
Loss before tax
Queensland
Galilee
$000's
-
-
-
Bowen
$000's
-
-
-
New Zealand New South Wales
South Island
$000's
-
Gunnedah
$000's
-
(100)
(100)
(215)
(215)
Total
$000's
-
(315)
(315)
40
36
(632)
(388)
(128)
(116)
(203)
(1,706)
(43)
(231)
(22)
(3,708)
Total
Queensland
Galilee
Bowen
New Zealand New South Wales
South Island
Gunnedah
30 June 2015
Total segment revenue
$000's
-
$000's
-
$000's
-
$000's
-
$000's
-
Impairment - exploration expenditure
Exploration and evaluation costs written off
Exploration permit restoration and rehabilitation
Total segment expense
Segment result before tax
(12,563)
-
-
(12,563)
(12,563)
-
(1,267)
-
(1,267)
(1,267)
-
-
(43)
(43)
(43)
(2,979)
-
-
(2,979)
(2,979)
(15,542)
(1,267)
(43)
(16,852)
(16,852)
Reconciliation of segment result to group loss
before tax
Interest revenue
Research & development tax offset
Other income
Employee benefits’ expense
Contractors’ and consultants’ costs
Depreciation and amortisation expense
Fair value movement of financial liability at fair value
Professional fees
Corporate expenses
Occupancy costs
Other expenses
Loss before tax
145
572
55
(861)
(560)
(26)
(1,486)
(297)
(221)
(160)
(279)
(19,970)
44
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 10 Segment information (continued)
Segment performance (continued)
Segment assets and liabilities
The following tables show the segment assets of the group’s operating segments.
30 June 2016
Segment assets
Segment liabilities
Reconciliation of segment assets to group assets
Unallocated assets
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total group net assets
Segment asset movement for the year
Balance at 1 July 2015
Exploration and evaluation expenditure
Restoration and rehabilitation expense
Impairment expense
Balance at 30 June 2016
30 June 2015
Segment assets
Segment liabilities
Reconciliation of segment assets to group assets
Unallocated assets
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total group net assets
Segment asset movement for the year
Balance at 1 July 2014
Exploration and evaluation expenditure
Exploration stand-by costs and other write-offs
Impairment - exploration expenditure
Queensland
Galilee
$000's
21,246
-
Bowen
$000's
19,997
(13,270)
New Zealand
South Island
$000's
-
-
New South
Wales
Gunnedah
$000's
-
-
Total
$000's
41,243
(13,270)
21,246
6,727
-
-
27,973
2,305
62
(1,071)
(241)
29,028
20,425
821
-
-
19,126
871
-
-
-
111
-
(111)
-
204
-
(204)
39,551
2,007
-
(315)
821
21,246
871
-
-
19,997
-
-
1,692
41,243
Queensland
Galilee
$000's
Bowen
$000's
New Zealand
South Island
$000's
New South
Wales
Gunnedah
$000's
Total
$000's
20,425
19,126
(11,564)
-
-
39,551
(11,564)
20,425
7,562
-
-
27,987
6,430
78
(1,595)
(183)
32,717
32,321
523
-
(12,419)
17,675
2,718
(1,267)
-
-
-
-
-
2,778
345
-
(3,123)
52,774
3,586
(1,267)
(15,542)
(11,896)
1,451
-
(2,778)
(13,223)
Balance at 30 June 2015
20,425
19,126
-
-
39,551
Comet Ridge Limited I Annual Report 2016 45
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 11 Risk management
Overview
The group's principal financial instruments comprise receivables, payables, available for sale financial assets, cash, term deposits and financial liabilities
at fair value. The main risks arising from the group's financial assets and liabilities are interest rate risk, price risk, foreign currency risk, credit risk and
liquidity risk. This note presents information about the group's exposure to each of the above risks, its objectives, policies and processes for measuring
and managing risk.
Key risks are monitored and reviewed as circumstances change (e.g. acquisition of new entity or project) and policies are created or revised as required.
The overall objective of the group's financial risk management policy is to support the delivery of the group's financial targets whilst protecting future
financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows, the group does not enter into
derivative transactions to mitigate the financial risks. In addition, the group's policy is that no trading in financial instruments shall be undertaken for the
purpose of making speculative gains. As the group's operations change, the Directors will review this policy.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees
policies for managing the group's financial risks as summarised below. The group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Restricted cash
Financial Liabilities
Trade and other payables
Financial liability at fair value - Stanwell Corporation Limited
Interest rate risk
Consolidated
June 2016
$000's
1,625
147
403
2,175
412
13,270
13,682
June 2015
$000's
5,827
111
403
6,341
1,050
11,564
12,614
Exposure to interest rate risk arises on cash and term deposits recognised at reporting date whereby a future change in interest rates will affect future
cash flows or the fair value of fixed rate financial instruments.
A forward business cash requirement estimate is made, identifying cash requirements for the following period (generally up to one year) and interest
rate term deposit information is obtained from a variety of banks over a variety of periods (usually one month up to six month term deposits) accordingly.
The funds to invest are then scheduled in an optimised fashion to maximise interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is considered reasonable given the current market conditions. A 1% movement in interest
rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2015.
2016 - Consolidated
Cash and cash equivalents and restricted cash
2015 - Consolidated
Cash and cash equivalents and restricted cash
Profit or Loss
Equity
1% increase
$000's
20
1% decrease
$000's
(20)
1% increase
$000's
20
1% decrease
$000's
(20)
62
(62)
62
(62)
46
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 11 Risk management (continued)
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to
ensure, as far as possible, that the group will always have sufficient liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The group manages liquidity risk by maintaining adequate
reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. This is
based on the undiscounted cash flows of the financial liabilities based on the earliest date on which they are required to be paid.
The following table details the remaining contractual maturity for non-derivative financial liabilities.
Consolidated - 30 June 2016
Trade and other payables
<1 year
$000's
412
>3 years
$000's
-
Total
Contractual
Cash Flows
$000's
412
Carrying
Amount
$000's
412
Financial liability at fair value - Stanwell Corporation Limited
-
16,883
16,883
13,270
Consolidated - 30 June 2015
Trade and other payables
412
16,883
17,295
13,682
1,050
-
1,050
1,050
Financial liability at fair value - Stanwell Corporation Limited
-
16,883
16,883
11,564
1,050
16,883
17,933
12,614
Foreign exchange risk
As a result of activities overseas, the group's Statement of Financial Position can be affected by movements in exchange rates. The group also has
transactional currency exposures. Such exposures arise from transactions denominated in currencies other than the functional currency of the group.
The group's exposure to foreign currency risk primarily arises from the group's operations overseas, namely in the USA and New Zealand.
The group currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The group’s policy is to generally
convert its local currency to US or NZ dollars at the time of transaction. The group, has on rare occasions, taken the opportunity to move Australian
dollars into foreign currency (ahead of a planned requirement for those foreign funds) when exchange rate movements have moved significantly in
favour of the Australian dollar, and management considers that the currency movement is extremely likely to move back in subsequent weeks or
months. Therefore, the opportunity has been taken to lock in currency at a favourable rate to the group. This practice is expected to be the exception,
rather than the normal practice.
The group’s exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
USD
$000's
-
-
NZD
$000's
25
1
-
(30)
Comet Ridge Limited I Annual Report 2016 47
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 11 Risk management (continued)
Foreign exchange risk (continued)
Based on financial instruments held at 30 June 2016, had the Australian dollar strengthened/weakened by 10% the group’s profit or loss and equity
would be impacted as follows:
2016
NZ dollar
2015
NZ dollar
Credit risk
Profit or Loss
Equity
10%
Increase
$000's
-
10%
Decrease
$000's
-
10%
Increase
$000's
-
10%
Decrease
$000's
-
(3)
3
(3)
3
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This
arises principally from cash and cash equivalents, restricted cash, and trade and other receivables. The group exposure and the credit ratings of its
counterparties are continuously monitored by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised in the table above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of advances to joint operations and GST refunds due. Where possible the group trades with recognised,
creditworthy third parties. The receivable balances are monitored on an ongoing basis. The group’s exposure to bad debts is not significant. At 30 June
2016 $nil, (2015: $nil) of the group's receivables were past due. The group has no other significant concentration of credit risk.
Cash and cash equivalents, restricted cash and term deposits
The group has a significant concentration of credit risk with respect to cash deposits with banks. However, significant cash deposits are invested across
three to four banks to mitigate credit risk exposure to a particular bank. AAA rated banks are mostly used and non AAA banks are utilised where
commercially attractive returns are available.
Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
The group is exposed to commodity price risk. Commodity prices can be volatile and are influenced by factors beyond the group's control. As the group
is currently engaged in exploration, no sales of commodities are forecast for the next 12 months, and accordingly, no hedging or derivative transactions
have been used to manage commodity price risk.
Capital risk management
When managing capital, management’s objective is to ensure the group continues as a going concern and to maintain a structure that ensures the
lowest cost of capital available and to ensure adequate capital is available for exploration and evaluation of tenements. In order to maintain or adjust the
capital structure, the group may seek to issue new shares.
Consistent with others in the industry, the group monitors capital on the basis of forecast exploration and exploration expenditure required to reach a
stage which permits a reasonable assessment of the existence or otherwise of an economically recoverable reserve. Total capital is calculated as
‘equity’ as shown in the statement of financial position.
There were no changes in the group's approach to capital management during the year. The group is not subject to externally imposed capital
requirements.
48
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 11 Risk management (continued)
Fair value measurement
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement and for disclosure purposes.
Fair value hierarchy
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level as determined by the following fair value
measurement hierarchy:
(a)
(b)
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
(c)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows the 'fair value measurement hierarchy' classification of the group's assets and liabilities measured and recognised at fair value
at 30 June 2016 (refer Note 3).
Financial Assets - Level 3
Consolidated
June 2016
$000's
June 2015
$000's
Available-for-sale financial asset - Investment in Comet Ridge Resources LLC
-
-
Financial Liabilities - Level 3
Financial liability at fair value - Stanwell Corporation Limited
13,270
11,564
Balance at the beginning of the year
Movement in financial liability at fair value
Balance at the end of the year
Available-for-sale Financials Assets
Consolidated
June 2016
$000's
11,564
1,706
June 2015
$000's
10,078
1,486
13,270
11,564
Comet Ridge USA Inc., a wholly owned subsidiary of Comet Ridge Limited, owns a 10.04% (2015: 10.04%) minority interest in Comet Ridge Resources,
LLC (“CRR”). CRR's operations include oil and gas exploration and evaluation and oil production in the state of Colorado, USA. A private equity firm
based in New York City, USA holds the majority interest at approximately 89.5% (2015: 89.5%).
CRR is not a controlled entity of Comet Ridge Limited because, even it though is exposed to, or has the rights to, variable returns from its involvement
with the entity; Comet Ridge Limited does not have the ability to affect those returns through its power to direct the activities of the entity so as to obtain
benefits from it. The group may retain its minority interest in CRR by contributing cash to CRR as and when requested to fund CRR’s ongoing
exploration and evaluation programme. Should the group not contribute, its interest will decline to no less than 7.2% under the arrangements with the
private equity fund.
Comet Ridge Limited I Annual Report 2016 49
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 11 Risk management (continued)
Fair value of available-for-sale financial assets
The group has classified its interest in CRR as an available-for-sale financial asset and, in accordance with AASB 139 Financial Instruments:
Recognition and Measurement, values the investment at fair value. The fair value measurement of the 'available-for-sale' financial asset is based on the
group's proportionate interest in the net assets of CRR discounted for minority interest and liquidity considerations. As the valuation technique for this
asset is based on significant unobservable inputs, the asset is included in level 3. This is considered the most reliable valuation method given:
the group has a minority equity interest in an unlisted company (CRR);
the nature of CRR’s activities, being oil and gas production and exploration;
the oil and gas reserves and resources interests of CRR are either carried at fair value or on a basis consistent with the group's accounting policy
for the recognition and measurement of exploration and evaluation expenditure; and
the continued contributions to CRR by Pine Brook.
Given that Comet Ridge holds a minority interest in CRR that is now around the 10% level, and also given that the CRR investment is not material to
Comet Ridge and Comet Ridge plans to not pay further cash calls (given the Comet Ridge’s eastern Australia gas focus) it was considered prudent to
fully impair the investment in CRR at 30 June 2014.
There have been no transfers between levels during the year.
Valuation techniques and process used to determine fair values
The fair value measurement of the investment in Comet Ridge Resources LLC (CRR) is based on the group's proportionate interest in the net assets of
CRR discounted for minority interest and liquidity considerations. As the valuation technique is based on significant unobservable inputs, the asset is
classified as a level 3 financial instrument.
Other fair value disclosures
The Directors consider that the carrying amount of trade receivables and payables recorded in the financial statements approximates their fair values
due to their short term nature.
Note 12 Group structure
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy
described in Note 15 (b):
Name of entity
Chartwell Energy Limited (accounting parent)
Comet Ridge Limited (legal parent)
Comet Ridge NZ Pty Ltd
Comet Ridge USA Inc.
Davidson Prospecting Pty Ltd
Comet Ridge Mahalo Pty Ltd
Comet Ridge Gunnedah Pty Ltd
Country of
Incorporation
Class of
Shares
Equity Holding
%
Australia
Australia
Australia
USA
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2016
100
100
100
100
100
100
100
2015
100
100
100
100
100
100
100
50
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 12 Group structure (continued)
Joint Arrangements
The group has interests in the following joint Arrangements:
ATP 1191P Mahalo
PEL427 Gunnedah
PEL428 Gunnedah
–
–
–
40%
59.09%
68.42%
PEL6 Gunnedah
ATP1015P Galilee
–
–
29.55%
20%
In accordance with AASB 11 Joint Arrangements, the accounting treatment adopted for these joint arrangements depends upon an assessment of the
rights and obligations of the parties to the arrangement that are established in each of the joint operating agreements (JOAs) or the farm-in agreement
as the case may be. The JOA or farm-in agreement sets out the voting rights of the parties to the agreement. The voting rights determine who has
control i.e. the power to direct the operating activities of the joint arrangement.
Based on the analysis of each JOA and farm-in agreement, the group has classified each of its joint arrangements as a “joint operation” in accordance
with the requirements of AASB 11 in that:
1.
2.
there is joint control because all decisions about the operating activities requires unanimous consent of all parties, or a group of parities considered
collectively; and
each party to the joint operation has rights to its respective interest in the assets and revenue of the arrangement, and obligations for its share of
the liabilities and expenditure.
As a result, the group recognises in its financial statements its share of the revenue, expenses, assets and liabilities of each of the joint operations in
which it has an interest.
Note 13
Items not recognised in the financial statements
Contingent Liabilities
The Directors are not aware of any contingent liabilities other than the Financial Guarantee Contract which is one of the terms of the renegotiated
Mahalo Option Agreement. Under the renegotiated agreement Comet Ridge Limited guarantees the indexed $20m consideration payable by Comet
Ridge Mahalo Pty Ltd (CRM) under Option B. Option B is be exercisable by Stanwell Corporation Limited (SCL) upon the earlier of FID for any
development of the Mahalo Gas Project permit area or on the 4th anniversary date of the execution of the new agreement.
If SCL elects to exercise Option B, it will receive a cash payment of A$20m at 1 July 2015 dollar terms which is to be escalated in accordance with CPI
on and from 1 August 2015 and annually thereafter (or part thereof) up to the date the Pay Agreement is signed (refer to Note 3 for a more detailed
explanation of the renegotiated Mahalo Option Agreement).
Commitments
Operating lease commitments
Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the
financial statements.
Payable - minimum lease payments
- not later than 12 months
- between 12 months and 5 years
June 2016
June 2015
$000's
83
201
284
$000's
209
-
209
Bank guarantees
Westpac Banking Corporation have provided bank guarantees totalling $403,000 (2015: $403,000) as follows:
$150,000 (2015: $150,000) to the State of Queensland in respect of the group's exploration permits and environmental guarantees;
$200,000 (2015 $200,000) to the State of NSW to support the group’s exploration permits and environmental guarantees; and
$53,000 (2015: $53,000) to the landlord of the Brisbane office premises to support the group's obligations under the lease.
The bank guarantees are secured by term deposits.
Comet Ridge Limited I Annual Report 2016 51
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 13
Items not recognised in the financial statements (continued)
Post Balance Date Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the
Group, the results of those operations or the state of affairs of the Group in future financial years other than:
The Company has commenced an equity raising of up to approximately A$2.0 million comprising:
A placement of 20 million new shares to raise $1.0 million; and
A 1 for 25 non-renounceable entitlement offer via the issue of up to approximately 21 million shares to raise up to approximately A$1.0 million.
With respect to the placement, at the date of this report, the Company has entered into placement subscription agreements with a small number of
sophisticated investors for the issue of 20 million new shares an issue price of $0.05 per share. It is expected that the placement proceeds of $1.0
million will be received by 7 October 2016.
The Entitlement Offer which was announced on 30 September 2016, will be formally offered to eligible shareholders who are registered as a holder of
shares in Comet Ridge as at the record date being 7:00pm (AEDT) on Friday 7 October 2016and is expected to be completed by Tuesday 8 November
2016.
The proceeds of the Equity Raising, along with existing cash, will be applied to the ongoing working capital requirements of the Company.
Note 14 Other information
Related Party Transactions
Parent entity and subsidiaries
The legal parent entity is Comet Ridge Limited. Details of controlled entities are set out in Note 12.
Key Management Personnel
There were no transactions with Key Management Personnel during the year.
Transactions with controlled entities
Transactions between Comet Ridge Limited and its subsidiaries during the year included:
loans advanced to/repayments from subsidiaries; and
investments in subsidiaries.
The loans and investments have been impaired as shown in the Parent Entity disclosures later in this note. The loans to subsidiaries are interest free,
repayable in cash at call and are unsecured.
Auditors' Remuneration
During the year the following fees were paid or payable for services provided by Pitcher Partners, the auditor of the group:
Audit services
- Auditing or reviewing the financial statements
Non-audit services
- Tax consulting and compliance services
Consolidated
June 2016
$
June 2015
$
92,769
105,000
-
3,300
52
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 14 Other information (continued)
Earnings per Share
(a) Reconciliation of earnings used in calculating basic and diluted earnings per share:
Loss for the year
Loss used in the calculation of the basic and dilutive earnings per share
(b) Weighted average number of ordinary shares used as the denominator
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for the calculation of diluted earnings per share:
Options/performance rights
Consolidated
June 2016
$000's
June 2015
$000's
3,708
18,569
3,708
18,569
Number
526,250,547
Number
504,721,818
-
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
526,250,547
504,721,818
(c) Options and performance rights are considered to be "potential ordinary shares" and have been
included in the determination of diluted earnings per share to the extent to which they are dilutive.
Details relating to options and performance rights are set out in Note 9.
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares
issued during the year
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares
issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
Key Management Personnel
Details of Key Management Personnel
Key Management Personnel comprise all of the Directors of the Company.
James McKay
Tor McCaul
Gillian Swaby
Christopher Pieters
Non-executive Chairman
Managing Director
Non-executive Director
Executive Director
Key Management Personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Consolidated
June 2016
$
623,319
39,761
41,769
June 2015
$
684,950
47,500
9,775
704,849
742,225
Comet Ridge Limited I Annual Report 2016 53
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 14 Other information (continued)
Parent Entity Disclosures
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Share based payments reserve
Accumulated losses
Total equity
Loss for the period
Other comprehensive income
Total comprehensive income
Bank guarantees
Bank guarantees are disclosed in Note 13.
Contingent Liabilities
The Directors are not aware of any contingent liabilities.
June 2016
$000's
2,108
29,335
31,443
June 2015
$000's
6,208
27,111
33,319
359
1,638
1,997
462
1,580
2,042
29,446
31,277
106,633
3,820
(81,007)
106,709
5,011
(80,443)
29,446
31,277
1,883
-
3,171
-
1,883
3,171
Loans to subsidiaries and investments in subsidiaries
The parent entity has recorded investments in subsidiaries at cost of $48.29 million (2015: $48.29 million) less provisions for impairment $48.29 million
(2015: $48.12 million). The parent entity has also loaned funds to its subsidiaries of net $25.69 million (2015: $24.02 million) primarily to undertake
exploration expenditure. The parent entity has impaired the carrying amount of the loans by $18.0 million (2015: $17.8 million). The impairment of the
investments and loans has been based on the underlying net assets of the subsidiaries. In future periods, as the underlying exploration and evaluation
activities progress on various tenements, and with changes in other market conditions, the carrying amounts of the investments and loans may need to
be reassessed in line with the net asset position of the subsidiaries or as otherwise appropriate.
Commitments
(a) Operating lease commitments
Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the
financial statements.
Payable - minimum lease payments
● not later than 12 months
● between 12 months and 5 years
June 2016
$000's
83
201
June 2015
$000's
209
-
284
209
54
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 14 Other information (continued)
Parent entity disclosures (continued)
(b) Exploration expenditure
In order to maintain an interest in the exploration tenements in which the parent is involved, the parent is committed to meet the conditions under the
agreements. The timing and amount of exploration expenditure and obligations of the parent are subject to the minimum work or expenditure
requirements of the permit conditions or farm-in agreements (where applicable) and may vary significantly from the forecast based on the results of the
work performed, which will determine the prospectivity of the relevant area of interest. The obligations are not provided for in the financial statements.
Minimum expenditure requirements
● not later than 12 months
● between 12 months and 5 years
June 2016
$000's
244
832
1,076
June 2015
$000's
335
4,808
5,143
Note 15 Summary of other significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently
applied to all of the years presented unless otherwise stated.
(a)
Income taxes
Tax consolidation
Comet Ridge Limited and its wholly owned Australian subsidiaries (Chartwell Energy Pty Ltd, Comet Ridge Mahalo Pty Ltd, Comet Ridge Gunnedah Pty
Ltd, Davidson Prospecting Pty Ltd and Comet Ridge NZ Pty Ltd) have implemented the tax consolidation legislation and formed a tax consolidated
group from 1 July 2009. The members of the tax consolidated group have entered into a tax funding agreement such that each member recognises the
assets, liabilities, expenses and revenues in relation to its own transactions, events and balances only. This means:
i.
ii.
iii.
the parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances;
the subsidiaries recognise all current and deferred tax amounts relating to its own transactions, events and balances; and
current tax liabilities and deferred tax assets arising with respect to losses in subsidiaries are transferred from the subsidiaries to the parent entity
as inter-company payables or receivables.
The tax consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the tax consolidated group arising under the
joint and several liability requirements of the tax consolidation system, in the event of default of the parent entity to meet its payment obligations.
(b) Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to,
or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the group.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Comet Ridge Limited I Annual Report 2016 55
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(b) Principles of consolidation (continued)
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. The financial
statements of subsidiaries are prepared for the same reporting period as the parent entity. Investments in subsidiaries are accounted for at cost in the
separate financial statements of Comet Ridge Limited.
Changes in ownership interests
The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A
change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their
relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity attributable to owners of the parent entity.
When the group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the
change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the
retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive
income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This means that any amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(c) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which
the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Comet Ridge Limited’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-
monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or
loss. Translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are included in the fair value
reserve in equity.
Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial
position;
income and expenses for each Statement of Comprehensive Income are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated as a separate component of
equity. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange
differences that have been accumulated in equity are recognised in the Statement of Comprehensive Income, as part of the gain or loss on sale where
applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at
the closing rate.
56
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(d)
Intangible assets
Goodwill
Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value attributed to the interest in the
net fair value of identifiable assets, liabilities and contingent liabilities at date of acquisition. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill on acquisition of associates is included in investment in associates. Goodwill is tested annually for impairment and carried at
cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity
sold.
Research and development
Research and development expenditure is recognised as an expense as incurred. Costs incurred on research and development projects (relating to the
design and testing of new or improved products or processes) are recognised as intangible assets when it is probable that the project will, after
considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The
expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of
overheads. Other developmental expenditures that do not meet these criteria are recognised as an expense when incurred. Research and development
costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised research and development costs are
recorded as intangible assets and amortised on a straight-line basis over the asset's useful life from the point at which the asset is ready for use.
(e)
Investments and other financial assets and liabilities
Classification and measurement
The group classifies its financial assets and liabilities in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available for sale financial assets and financial liabilities at fair value. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of
assets classified as held to maturity, re-evaluates this classification at the end of each reporting period.
Financial assets are initially measured at fair value plus transaction costs, except where the asset or liability is classified at fair value through profit or
loss, in which case transaction costs are expensed to profit or loss immediately.
Financial assets are subsequently measured at either fair value or amortised cost using the effective interest method, or cost.
Fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties. For listed investments, quoted prices
in an active market are used to determine fair value. For unlisted investments, valuation techniques are adopted to determine fair value including
reviewing publically available data from recent, comparable arm's length transactions or by reference to valuation and pricing models for similar financial
assets.
Amortised cost is calculated as:
i.
ii.
iii.
the amount at which the financial asset is measured at initial recognition less any principal repayments received;
minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the
effective interest method; and
less any reduction for impairment.
The effective interest method is used to allocate interest income over the relevant period and is equivalent to the rate that exactly discounts estimated
future cash receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset. Revisions to expected future net cash flows
will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.
The group’s financial assets comprise only non-derivative financial instruments consisting of equity securities, trade and other receivables, cash and
cash equivalents and term deposits.
(a) Financial assets at fair value through profit or loss
Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking,
derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.
Assets in this category are classified as current assets if they are expected to settle within 12 months; otherwise they are classified as non-current.
Comet Ridge Limited I Annual Report 2016 57
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(e)
Investments and other financial assets and liabilities (continued)
Classification and measurement (continued)
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
subsequently measured at amortised cost. They are included in current assets except those with maturities greater than 12 months after reporting
date which are classified as non-current.
(c) Held-to-maturity
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group's
intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity financial assets are included in
non-current assets except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets.
(d) Available-for-sale
Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are
subsequently measured at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. They are included
in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the
reporting period.
The group’s financial liabilities comprise the liability owed to Stanwell Corporation Limited arising from the renegotiated Mahalo Option Agreement which
is designated as a financial liability at fair value. The fair value of this liability is based on the anticipated discounted cash flows arising from the
renegotiated Mahalo Option Agreement. Future movements in the fair value of financial liability at fair value will be recognised in profit and loss.
The group does not designate any interests in subsidiaries, associates or joint ventures as being subject to the requirements of accounting standards
specifically applicable to financial instruments.
Recognition and de-recognition
Financial assets are recognised on trade-date - the date on which the group commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the
risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are
reclassified to profit or loss as gains or losses from investment securities.
Impairment
At the end of each reporting period, the group assesses whether there is objective evidence that a financial asset or group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment
as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments
classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets
are impaired.
(i) Assets carried at the amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest
rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment
has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is
recognised in profit or loss.
Impairment testing of trade receivables is described in Note 6.
58
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(e)
Investments and other financial assets and liabilities (continued)
Impairment (continued)
(ii) Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from
equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively related to
an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.
(f)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more
frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that
suffered impairment are reviewed for possible reversal of impairment at each reporting date.
(g) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Comprehensive Income over
the period of the borrowings using the effective interest method.
The fair value of the liability portion of a Convertible Note is determined using a market interest rate for an equivalent non-convertible Note. This amount
is recorded as a liability on an amortised cost basis until extinguished on conversion or redemption of the Note. The remainder of the proceeds is
allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after
the Statement of Financial Position date.
(h) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled wholly within 12
months after the end of the reporting period in which the employees render the related service are recognised in respect of employees’ services up to
the end of the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is
recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period 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 corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least
twelve months after the reporting date, regardless of when actual settlement is expected to occur.
Superannuation
The group makes contributions to defined contribution superannuation funds. Contributions are recognised as an expense as they become payable.
Comet Ridge Limited I Annual Report 2016 59
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(h) Employee benefits (continued)
Share-based payments
Share-based compensation benefits are provided to employees under the Comet Ridge Share Incentive Option Plan, the Comet Ridge Limited
Employee Performance Share Rights Plan or under terms and conditions as determined by the Directors.
The fair value of options granted is recognised as an employee benefits expense with a corresponding increase in equity. The total amount expensed is
determined by reference to the fair value of the options granted, which includes any market performance conditions but excludes the impact of any non-
market performance vesting conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over
the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises
its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to
original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(i) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax
Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are
disclosed as operating cash flows.
(j) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare
for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(k) Business combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition
date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred including the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those
amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of
exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair
value with changes in fair value recognised in profit or loss.
Where the business combination comprises a reverse acquisition, the acquirer is the entity whose equity interests have been acquired (the legal
subsidiary) and the issuing entity is the acquiree (the legal parent). The legal subsidiary is the acquirer if it has the power to govern the financial and
operating policies of the legal parent so as to obtain benefits from its activities.
60
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(k) Business combinations (continued)
In a reverse acquisition, the cost of the business combination is deemed to have been incurred by the legal subsidiary (i.e. the acquirer for accounting
purposes) in the form of equity instruments issued to the owners of the legal parent (i.e. the acquiree for accounting purposes). If the published price of
the equity instruments of the legal subsidiary is used to determine the cost of the combination, a calculation is made to determine the number of equity
instruments the legal subsidiary would have had to issue to provide the same percentage ownership interest of the combined entity to the owners of the
legal parent as they have in the combined entity as a result of the reverse acquisition. The fair value of the number of equity instruments so calculated is
used as the cost of the combination.
If the fair value of the equity instruments of the legal subsidiary is not otherwise clearly evident, the total fair value of all the issued equity instruments of
the legal parent before the business combination is used as the basis for determining the cost of the combination.
Consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent, but represent a continuation of
the financial statements of the legal subsidiary (i.e. the acquirer for accounting purposes).
Reverse acquisition accounting determines the allocation of the cost of the business combination as at the acquisition date but does not apply to
transactions after the combination.
(l) Leases
Leases are classified at commencement as either finance leases or operating leases.
Finance leases
Leases of property, plant and equipment where substantially all the risks and rewards of ownership are transferred to the group are classified as finance
leases. Finance leases are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, the present value of the
minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each
lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period at the interest rate
implicit in the lease. Leased assets are depreciated on a straight line basis over the asset's estimated useful life or over the shorter of the asset's useful
life and the lease term where there is no reasonable certainty that the group will obtain ownership at the end the lease term.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are not transferred to the group are classified as operating leases. Operating
lease payments (net of any incentives received from the leasor) are charged to profit or loss on a straight line basis over the period of the lease.
(m) Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
(n) New accounting standards and interpretations for application in future periods
A number of Australian Accounting Standards and Interpretations have been issued or amended but are not yet mandatory for the 30 June 2016 annual
reporting period and have not been early adopted by the group for the preparation of these financial statements. The group’s assessment of the impact
of these new or amended Standards and Interpretations, most relevant to the group, are set out below:
AASB 2014-3 Amendments to Australian Accounting Standards - Accounting for Acquisitions of Interests in Joint Operations (applicable to
annual reporting periods beginning on or after 1 January 2016)
This Standard which amends to AASB 11 Joint Arrangements deals with accounting for acquisitions of interests in joint operations. Prior to these
amendments, a joint operator was required to account for what belongs to them i.e. its share of assets, liabilities, revenue and expenditure shared or
incurred jointly. The effect of the amendments is to require an entity that acquires an interest or increases its interest in a joint operation to consider the
principles of AASB 3 Business Combinations and determine whether the interest acquired constitutes a “business”. If the activities and assets acquired
constitute a business, the acquisition will then be accounted for in accordance with AASB 3.
Comet Ridge Limited I Annual Report 2016 61
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(n) New accounting standards and interpretations for application in future periods (continued)
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture (applicable to annual reporting periods beginning on or after 1 January 2018 as deferred by AASB 2015-10: Amendments to
Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128)
This Standard amends AASB 10: Consolidated Financial Statements and clarifies the accounting treatment where a parent loses control over a
subsidiary that is not a “business” as defined by AASB 3 to an associate or joint venture and requires that:
a gain or loss (including any amounts in other comprehensive income) be recognised only to the extent of the unrelated investor’s interest in that
associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint venture; and
any gain or loss arising from remeasuring the remaining investment in the former subsidiary at fair value also be recognised only to the extent of
the unrelated investor’s interest in the associate or joint venture. The remaining gain or loss should be eliminated against the carrying amount of
the remaining investment.
The application of AASB 2014-10 will result in a change of accounting policies for transactions between an investor and its associate or joint venture
where the sale or contribution of assets results in a loss of control of a subsidiary that is a business in accordance with AASB 3. Previously, in these
circumstances, any gains or losses were only recognised to the extent of the unrelated investor’s interest. The accounting will now depend on whether
the sold/contributed assets constitute a business or an asset. If the activities and assets acquired/sold constitute a business, the acquisition/sale will
then be accounted for in accordance with AASB 3.
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements (effective from 1 January
2016)
AASB 2014-9 – These amendments to AASB 127, ASSB 1 and AASB 128 allow entities to use the equity method of accounting for investments in
subsidiaries joint ventures and associates in their separate financial statements. Accounting standards are applied consistently across the Group as a
result, it is not intended that a different accounting treatment will be adopted for the separate financial statements of subsidiaries.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contributions of Assets between an Investor and its Associate or
Joint Venture (effective from 1 January 2016)
AASB 2014-10 – These amendments clarify the accounting treatment for sales or contributions of assets between an investor and its associates or joint
ventures. They confirm that the accounting depends on whether the contributed assets constitute a business or an asset. If the activities and assets
acquired/sold constitute a business, the acquisition/sale will then be accounted for in accordance with AASB 3.
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle
(effective from 1 January 2016)
AASB 2015-1 – These amendments introduce minor changes to various AASBs.
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB101 (effective from 1 January
2016)
AASB 2015-2 – These amendments to AASB 101 clarify a number of presentation issues and highlight that preparers are permitted to tailor the format
and presentation of the financial statements to their circumstances and the needs of the users.
AASB 9 Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after
1 January 2018)
This standard provides guidance on the classification and measurement of financial assets and financial liabilities. The standard is not applicable until 1
January 2018 but is available for early adoption. AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they
relate to equity investments that are not held for trading. Upon realisation the accumulated changes in fair value are not recycled to profit or loss.
Currently, in accordance with AASB 139 Financial Instruments: Recognition and Measurement, a gain or loss on an available-for-sale financial asset is
recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses until the financial asset is
derecognised. At that time, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss
as a reclassification adjustment.
62
Comet Ridge Limited – Annual Report 30 June 2016
Notes to the Financial Statements (continued)
Note 15 Summary of other significant accounting policies (continued)
(n) New accounting standards and interpretations for application in future periods (continued)
AASB 9 Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after
1 January 2018) (continued)
Changes in the fair value of other financial assets carried at fair value are reported in profit or loss. There will be no impact on the group’s accounting for
financial liabilities, as the new requirements only affect the accounting for financial liabilities that relate to equity investments. The repurchase of the 5%
interest in the Mahalo Joint Arrangement is taken up in exploration and evaluation expenditure which is considered to be a trading asset. As a result,
movements in the fair value of the associated Financial Liability at Fair Value – Stanwell Corporation Limited will continue to be designated at fair value
through profit or loss.
The de-recognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The
full impact of this standard is yet to be fully assessed, but adoption of this standard from 1 January 2018 is not expected to have a material impact on
the group. The group has not yet decided when to adopt AASB 9.
AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018 as deferred
by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15)
This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognised. With some exceptions e.g.
leases and insurance contracts, AASB 15 applies to all contracts with customers. The core principle is that an entity should recognise revenue when the
various performance obligations included in the contract are satisfied. This means that revenue will be recognised when control of the goods or services
is transferred rather than on the transfer of risks and rewards as is currently the case under IAS 18 Revenue. It is not expected that there will be any
impact on the group.
Other than as noted above, the adoption of the various Australian Accounting Standards and Interpretations and IFRSs on issue but not yet effective will
not impact the Group’s accounting policies. However, the pronouncements may result in changes to information currently disclosed in the financial
statements. The Group does not intend to adopt any of these pronouncements before their effective dates.
AASB 16 Leases (applicable to annual reporting period, beginning on or after 1 January 2019)
AASB 16 eliminates the operating and finance lease classifications for lessees currently accounted for under AASB 117 Leases. It instead requires an
entity to bring most leases onto its statement of financial position in a similar way to how existing finance leases are treated under AASB 117. An entity
will be required to recognise a lease liability and a right of use asset in its statement of financial position for most leases.
There are some optional exemptions for leases with a period of 12 months or less, low value leases and leases of exploration and mineral tenements.
Comet Ridge Limited I Annual Report 2016 63
Comet Ridge Limited – Annual Report 30 June 2016
Directors’ Declaration
In the Directors’ opinion:
1)
the attached financial statements and Notes are in accordance with the Corporations Act 2001, including:
(a)
(b)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
and
giving a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the
consolidated entity.
2) As stated in Note 1, the financial statements also comply with International Financial Reporting Standards.
3) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act
2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Tor McCaul
Managing Director
Brisbane, Queensland, 30 September 2016
64
Independent Auditor’s Report to the Members of Comet Ridge Limited
Report on the Financial Report
We have audited the accompanying financial report of Comet Ridge Limited, which comprises the statement of financial position as at 30 June 2016, the
statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity
comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state,
in accordance with Accounting Standard AASB101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing
Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Comet Ridge Limited I Annual Report 2016 65
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
a)
the financial report of Comet Ridge Limited is 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 2016 and of its performance for the year ended on that
date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b)
the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1(c) in the financial report which states that the consolidated entity’s ability to execute its
planned exploration and evaluation activity and meet other necessary corporate expenditure is dependent on the consolidated entity’s ability to raise
additional funds. The matters set forth in Note1 (c) indicate the existence of a material uncertainty that may cast significant doubt about the consolidated
entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the
normal course of business and at the amounts stated in the financial report.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 19 of the directors’ report for the year ended 30 June 2016. The directors of the
company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Opinion
In our opinion the Remuneration Report of Comet Ridge Limited for the year ended 30 June 2016 complies with Section 300A of the Corporations Act
2001.
PITCHER PARTNERS
N BATTERS
Partner
Brisbane, Queensland
30 September 2016
66
Comet Ridge Limited – Annual Report 30 June 2016
Additional Information
The additional information set out below was applicable at 2 September 2016:
1.
Number of Equity Holders
Ordinary Share Capital
526,250,547 fully paid ordinary shares are held by 1,737 individual shareholders.
2.
Voting Rights
In accordance with the Company's constitution, on a show of hands every shareholder present in person or by a proxy, attorney or representative of a
shareholder has one vote and on a poll every shareholder present in person or by a proxy, attorney or representative has in respect of fully paid
shares, one vote for every share held. No class of option holder has a right to vote, however the shares issued upon exercise of options will rank pari
passu with the then existing issued fully paid ordinary shares.
3.
Distribution of Shareholdings
Holdings
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
- maximum
No. of Holders
97
211
202
767
460
1,737
Units
4,138
690,056
1,644,111
31,763,930
492,148,312
526,250,547
Percentage
of Issued Capital*
0.000%
0.130%
0.310%
6.040%
93.520%
100.000%
Percentages have been rounded to the nearest 1/1000 decimal place.
The numbers of shareholders holding less than a marketable parcel (being 6,945 units or less) were:
372 Holders (1,077,323 Shares)
4.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders:
Name
HSBC Custody Nominees (Australia) Limited
Waterford Atlantic Pty Ltd & McKay Super Pty Ltd
Number of
Shares Held
51,500,000
33,889,551
Percentage
of Issued Capital
9.868%
6.827%
The above shareholdings are disclosed pursuant to section 671B (3) of the Corporations Act 2001 but the relevant interests shown do not necessarily
represent the beneficial interest in the share capital of the Company or the parties concerned.
5.
Unquoted Securities
Unlisted Share Rights: The Company has 4,020,000 share rights on issue, issued in accordance with the Share Rights Plan last approved by
shareholders at the Company’s AGM on 21 November 2013. The number of beneficial holders of share rights totals 9.
Comet Ridge Limited I Annual Report 2016 67
Comet Ridge Limited – Annual Report 30 June 2016
Additional Information (continued)
6.
The 20 Largest Holders of Ordinary Shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
McKay Super Pty Ltd
Gilby Resources Pty Ltd
Villiers Queensland Pty Ltd
Waterford Atlantic Pty Ltd
Norfolk Enchants Pty Ltd
Brixia Investments Ltd
PG Consolidated Pty Ltd
Kabila Investments Pty Ltd
Sixth Erra Pty Ltd
Christopher John Blamey & Ann Margaret Blamey
Citicorp Nominees Pty Limited
Gilby Super Pty Ltd
Dynamic Supplies Investments Pty Ltd
Mr Paul Geoffrey Fudge
Tor Raymond McCaul
Naughton Super Pty Ltd
Kenneth Street Investments Pty Limited
Crownace Pty Ltd
20.
TOTAL
7.
Restricted Securities
There were no restricted securities issued or held during the reporting period.
8.
Interest in Petroleum Tenements
Number of Ordinary
Fully Paid Shares
Held
Percentage of
Issued Capital
%
66,692,073
30,642,397
19,452,681
18,813,945
16,987,782
16,343,348
14,982,400
14,814,814
13,425,000
11,705,745
10,330,064
10,000,000
8,921,769
5,126,764
5,000,000
5,000,000
4,905,601
4,500,000
4,247,222
4,021,000
12.67%
5.82%
3.70%
3.58%
3.23%
3.11%
2.85%
2.82%
2.55%
2.22%
1.96%
1.90%
1.70%
0.97%
0.95%
0.95%
0.93%
0.86%
0.81%
0.76%
288,150,430
54.76%
Authority to Prospect (ATP), Joint Venture, Petroleum Exploration Lease (PEL), Petroleum Mining Permit (PMP) Interests
ATP / PEL / PMP
Location
ATP1191 Mahalo Farmin Area
Bowen Basin
**PEL427
**PEL428
**PEL 6
ATP743
ATP744
ATP1015 Farm-in Area
Gunnedah Basin
Gunnedah Basin
Gunnedah Basin
Galilee Basin
Galilee Basin
Galilee Basin
PMP50100
South Island, New Zealand
*Interest %
40%
100% Conventional
+59.09% CSG
100% Conventional
+68.42% CSG
100% Conventional
+29.55% CSG
100%
100%
20%
100%
Operator
Santos QNT Pty Ltd
Comet Ridge Limited (Conventional)
Santos NSW (Betel) Pty Ltd (CSG)
Comet Ridge Limited (Conventional)
Santos NSW (Betel) Pty Ltd (CSG)
Comet Ridge Limited (Conventional)
Santos NSW (Betel) Pty Ltd (CSG)
Comet Ridge Limited
Comet Ridge Limited
Comet Ridge Limited
Comet Ridge NZ Pty Ltd
The interest is held either by Comet Ridge Limited or one of its wholly owned subsidiaries.
*
** The Petroleum Exploration Permits located in the Gunnedah Basin are divided into CSG and Conventional Joint Ventures. The percentages
+
recorded show the interests that Comet Ridge (or a wholly owned subsidiary) holds in these in these respective joint ventures.
The percentage interests recorded in the CSG Joint Ventures for the Gunnedah Basin permits listed include the percentage increase that has
occurred as a result of Energy Australia’s notice to withdraw from these Joint Ventures in December 2015. The transfers of these interests remain
subject to regulatory approval formalisation under the Joint Venture agreements.
68
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22
23
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69
Corporate Directory
Comet Ridge Limited
Directors
James McKay
Non-executive Chairman
Tor McCaul
Managing Director
Gillian Swaby
Non-executive Director
Chris Pieters
Executive Director
Stephen Rodgers
Company Secretary
Registered Office
Level 3
283 Elizabeth Street
Brisbane Queensland 4000
Telephone: +61 7 3221 3661
Facsimile:
+61 7 3221 3668
Email:
info@cometridge.com.au
Share Registry
Computershare Registry Services Pty Ltd
117 Victoria Street
West End Queensland 4101
+61 7 3237 2100
Telephone:
+61 7 3229 9860
Facsimile:
Auditors
Pitcher Partners
345 Queen Street
BRISBANE, QLD 4000
Telephone: +61 7 3222 8444
Chartered Accountants
Securities Exchange Listing
Australian Securities Exchange Ltd
Home Exchange: Brisbane
Front cover: Mahalo Flare 2016
Back cover: Mahalo Arial shot looking Southeast 2016
ASX Code: COI
www.cometridge.com.au
Annual Report 2015
73
Comet Ridge Limited I Annual Report 2016 69 Comet Ridge Limited
Level 3
283 Elizabeth Street
Brisbane QLD 4000
Telephone: +61 7 3221 3661
Facsimile:
+61 7 3221 3668
www.cometridge.com.au