A.B.N. 47 106 092 577
Annual Report
for the year ended 30 June 2019
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Overview of Activities ..................................................................................................................................................................................... 1
2019 Annual Reserves Statement ................................................................................................................................................................. 8
Corporate Governance Overview Statement ............................................................................................................................................... 10
Directors’ Report .......................................................................................................................................................................................... 11
Auditor's Independence Declaration…………………………………………………………………………………………………………………. 24
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................................................ 25
Consolidated Statement of Financial Position ............................................................................................................................................. 26
Consolidated Statement of Changes in Equity ............................................................................................................................................ 27
Consolidated Statement of Cash Flows ....................................................................................................................................................... 28
Notes to the Financial Statements ............................................................................................................................................................... 29
Directors’ Declaration .................................................................................................................................................................................. 55
Independent Auditor’s Report ...................................................................................................................................................................... 56
Additional Information .................................................................................................................................................................................. 62
Corporate Directory ..................................................................................................................................................................................... 64
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Overview of Activities
Following a successful 2019, Comet Ridge Limited is very well placed to take advantage of the tight east coast gas market. Comet Ridge’s goal is that
by the end of the 2020 financial year to have Mahalo and Albany projects progressing for development, as well as Galilee coal seam gas and possibly
Gunnedah significantly progressed along the appraisal pathway.
Highlights
Key developments for the 2019 financial year include:
✓ Mahalo
o
o
o
o
o
The Mira 6/2 horizontal - vertical well combination was concluded during July 2018 reaching a maximum gas rate of 1.4 mmscf/d,
exceeding expectations whilst peaking at a water rate of only 150 bwpd.
Successfully drilled the final five well evaluation programme, including three vertical wells, two of which were intercepted by lateral
wells, including Mahalo’s first dual lateral well, Struan 3.
Production testing of the three wells from the evaluation programme.
Agreement by the Mahalo Joint Venture to June 2020 for Final Investment Decision (FID).
Initial Development Plan (IDP) for the Mahalo Gas Project progressing with the JV agreeing a number of key elements.
✓ Galilee Permits
o
o
o
o
o
o
✓ Gunnedah
o
✓ Corporate
Albany 1 well drilled into the top 13m interval of the Lake Galilee Sandstone (before technical problems) and flowed from this section
of the target reservoir a stable gas flow rate of 230,000 scf/d.
Vintage Energy Limited (Vintage) earnt their 15% interest in the Galilee “Deeps” Joint Venture (GDJV) by funding its contribution to
the Albany 1 well. Vintage has elected to fund Stage 2 of the GDJV programme and, on funding 50% of the first $10m, will earn
their next 15% interest in the GDJV, bringing their total interest to 30%.
Early in 2019 the 336km Koburra 2D seismic programme was completed including processing and an additional 896km of existing
2D seismic. From this initial interpretation of the data, regional structural trends have been identified, firming up a number of existing
leads and adding four new leads.
Confirmation of four-way dip closure on the Lake Galilee structure, elevating it to a drill ready target.
In June 2019, Ensign Drilling Rig 932 started mobilising to Albany 2 well.
Comet Ridge renewed its MOU with APA Group to progress a detailed work programme on the Galilee-Moranbah Pipeline.
Santos has submitted the Narrabri Gas Project development application to the New South Wales Government for assessment. If
Santos is successful with its development application, that could potentially re-open the Gunnedah acreage for appraisal. Comet
Ridge continues to be in a position to watch and follow.
o
o
o
o
No recordable health, safety or environment incidents were recorded.
In June 2019, Comet Ridge successfully renegotiated the Stanwell Agreement, resulting in the Final Option Date being extended
to 30 September 2022, and the removal of Stanwell’s option to elect either a Gas Sales Agreement (GSA) or a cash settlement, in
favour of a negotiated market priced GSA, for fixed volumes between 20 to 30 PJ, subject to the final development of the Mahalo
Gas Project.
On 14 September 2018, Comet Ridge successfully raised $17.4m via a placement at $0.34 with institutional investors.
Comet Ridge made several key staff appointments during the year:
▪
▪
▪
Martin Riley, veteran of the Queensland CSG industry, joined the Board, with Michael Dart stepping down due to work
commitments;
Ashley Edgar, General Manager – Exploration and Subsurface; and
Tony Papinczak, General Manager – Development.
Figure 1 – Flare from Albany 1, which flowed 230,000 scf/d over a 13m interval in the Lake Galilee Sandstone
Comet Ridge Limited I Annual Report 2019
1
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Permit Interest
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 is in the process of surrendering its 100% interest in PMP 50100 in New Zealand. This is currently being processed by New Zealand Petroleum
and Minerals.
Figure 2 – Map of East Coast Australia detailing Comet Ridge’s Permits
Comet Ridge
Permits
ATP 743
ATP 744
ATP 1015
ATP 1191 Mahalo
PEL 6
PEL 427
PEL 428
Basin
State
CSG Interest
Sandstone Interest
Area (km2)
Galilee
Galilee
Galilee
Bowen
Gunnedah
Gunnedah
Gunnedah
QLD
QLD
QLD
QLD
NSW
NSW
NSW
100%
100%
100%
40%
29.55%
59.09%
68.42%
85%1
85%1
85%1
n/a2
97.5%
100%
100%
3,195
4,296
2,194
911
5,162
5,764
6,018
Table 1 – Summary of Comet Ridge Permits as at 30 June 2019
1 Comet Ridge has entered into a Joint Venture with Vintage. Vintage has the right to earn up to 30% interest in the sandstone “Deeps” and is continuing to earn their
remaining 15% interest at 30 June 2019.
2 Comet Ridge has farm-in rights for sandstone targets down to the level of the lower Mantuan coals.
Mahalo Project – ATP 1191
Comet Ridge’s ATP 1191 Mahalo Project is located in the Denison Trough, approximately 240km west of Gladstone in the southern Bowen Basin and
covers an area of 911km2. The project is located just 14km (to the east) or 65km (to the north) from infrastructure connecting it to the East Coast market
and Gladstone LNG export terminals. Comet Ridge has a 40% interest in Mahalo, with both Santos QNT Pty Ltd (Santos) and APLNG Pty Ltd (APLNG)
holding 30% each. Origin is the upstream operator for APLNG.
2
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Figure 3 – Map showing the location of PLA 1082 Humboldt and PLA 1083 Mahalo, which cover the Initial Development Area
Evaluation Drilling – During the year, Comet Ridge as Exploration Agent for Santos, planned and successfully drilled a five well appraisal drilling
programme in the Mahalo Gas Project, within budget and with zero injuries and zero environmental incidents. The five well programme included three
vertical wells and two lateral wells, including Mahalo’s first dual lateral well at Struan 3.
Production Testing – The wells drilled in the evaluation programme were specifically positioned to test the shallower and deeper limits of the field to
help define the initial development area. From this drilling programme we have now defined the development area and we have confirmed key reservoir
parameters ahead of development planning.
Initial Development Plan (IDP) – Towards the end of the financial year, the Mahalo Joint Venture reached agreement on a number of elements of the
IDP, namely:
• The initial development will be a series of mostly dual lateral wells, intersecting with vertical production wells;
•
Initial development will target the Castor and Pollux Seams in the northern part of the field in the shallower coal sections. The Aries and Orion
Seams will not be targeted in the IDP;
• The modular gas plant (water treatment, dehydration and flare) is likely to be sized for 80 TJ/d gas capacity. Given the modular design, the plant
could be expanded beyond 80 TJ/d at a later time;
• A modular compression concept will be implemented. Installed compression is expected to be initially 40 to 60 TJ/d with room for expansion;
• The approximate 65km pipeline connection to the two available export pipelines to the south would be sized with a capacity up to 120 TJ/d; and
• The joint venture has agreed to a final investment decision (FID) date of June 2020.
Comet Ridge’s field development planning work, conducted during the latter part of 2017, considered a large vertical well development over a large part
of the Mahalo Block. This included approximately 200 producing wells and an initial offtake rate of 50 to 60 TJ/d. The production well count in the latest
IDP is approximately half of what was originally contemplated by Comet Ridge in 2017. Optimisation of the IDP will continue within the Mahalo Joint
Venture over the coming months, leading to FID in June 2020, and given the modular approach to the development, it is Comet Ridge’s view that first gas
to market should be achieved before the end of 2021.
Galilee Basin Permits
Comet Ridge has a large acreage position of 9,685km2 in the eastern part of the Galilee Basin. This acreage contains (gross) 2,287 PJ of 3C Contingent
Resources, which have been independently certified at two stratigraphic levels. These comprise sandstone or “Deeps” (from a depth of approximately
2500m) in the Albany structure and also coal seam gas (CSG) or “Shallows” in the Gunn project area (from a depth to approximately 1000m). In November
2017, Comet Ridge and Vintage Energy Limited (“Vintage”) signed a Joint Venture Agreement, which sees Vintage earn up to a 30% interest in the Galilee
“Deeps” Joint Venture (GDJV).
Comet Ridge Limited I Annual Report 2019 3
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Figure 4 – Galilee ATP 743, ATP 744 and ATP 1015 showing seismic leads and conventional (sandstone) wells drilled to date
Albany Drilling - The Albany drilling programme has book-ended the financial year. At the start of the year, Albany 1 achieved a stabilised gas flow rate
of 230,000 scf/d across a 13m interval in the Lake Galilee Sandstone Reservoir. Due to technical limitations of the drilling rig, the well was suspended. At
the end of the financial year, the GDJV mobilised Ensign Drilling Rig 932 which spudded the Albany 2 well in July 2019.
Koburra 2D Seismic – During the year, the GDJV acquired 336km of 2D seismic, designed to identify regional structural trends and mature existing
prospects towards drillable status. During June 2019, the 336km Koburra seismic was processed, along with 896km of existing 2D seismic data that had
been acquired between 1980 and 2011.
The processed seismic has confirmed regional structural trends, firmed up a number of existing leads and identified an additional four new leads. The
seismic also confirmed four-way dip closure on the Lake Galilee prospect. The Lake Galilee structure was first drilled in the 1960s with the well flowing
gas at low rates and recovering minor amounts of oil on test. Comet Ridge has now determined from the seismic interpretation that the Lake Galilee 1
well was drilled on the edge of the structural close, giving significant up-dip potential.
Vintage Earn-in – Under the GDJV, Vintage have met the conditions required to earn its initial 15% interest in the GDJV. Vintage has elected to continue
with the earn-in arrangement and, through funding its equity interest in the Koburra 2D seismic programme and the drilling of Albany 2 and Albany 1
sidetrack, will earn a further 15% interest, bringing its total interest in the GDJV to 30%.
Galilee Moranbah Pipeline – Comet Ridge renewed its MOU with APA to undertake a detailed work programme, inclusive of ground surveys, local
stakeholder engagement, initial environmental studies and applying for a Petroleum Survey Licence. The proposed pipeline would connect the Galilee
Basin to the North Queensland Gas Pipeline, which connects Moranbah to Townsville and services several large industrial clients and a growing market.
4
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
New South Wales Permits
Comet Ridge’s three contiguous licences (PEL 427, PEL 428 and PEL 6) cover a total area of approximately 17,000km2 and are located in the northern
Gunnedah Basin, immediately north and west of Santos’ Narrabri CSG Project in the Bohena Trough. 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. Comet Ridge is the conventional operator
whilst Santos operates the CSG interest. The permits are strategically located as this area has the potential to mature into a major producing province.
Operationally, little has happened with these permits during the year. The Company continues to await approval of the renewals for PEL 6, PEL 427 and
PEL 428. For this reason, Comet Ridge continues to expense any exploration expenditure in relation to these tenements and no value is included in
Exploration and Evaluation Assets relating to the Gunnedah Basin.
Comet Ridge is keeping a watching brief on the Santos Narrabri Gas Project which is contiguous to Comet Ridge’s interest. Santos is currently working
with the NSW government to obtain the necessary approvals.
Figure 5 – Comet Ridge’s NSW assets, contiguous to Santos Narrabri Gas Project
International Activities
During the 2016 financial year, Comet Ridge submitted an application to surrender its interest in PMP50100 in New Zealand. This is currently being
processed by New Zealand Petroleum and Minerals.
During the 2019 financial year, Comet Ridge undertook a programme to plug and abandon (make permanently safe) all the wells in its New Zealand
acreage as part of the process to surrender PMP50100. At 30 June 2019, all wells except for Murcott 1, have been successfully plugged and abandoned
(made safe by cementing the reservoir section and permanently isolating from surface).
Comet Ridge Limited I Annual Report 2019 5
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Health, Safety and Environment
Comet Ridge has experienced a significant increase in activity across a number of projects in comparison to the previous year.
This expansion has included an increase in the selection, review and pre-qualification of a number of major contractors. This in turn has required several
project specific risk assessments be undertaken, the development of project specific safety, emergency and environmental plans, review and updating of
a number of Health Safety and Environment Management System (HSEMS) procedures, and onsite review and collaboration with main and third-party
contractors, in often remote and difficult working environments.
During the year, more than 85,000 working hours were reported across operations including Mahalo, New Zealand and Galilee (Seismic and Albany
drilling), with many thousands of kilometres driven on remote unsealed outback roads. The Company is very pleased to report that no recordable health,
safety or environmental (HSE) incidents were reported in the period 1 July 2018 through to 30 June 2019.
In line with the increase in field related operations, Comet Ridge continues to focus on improving its HSES performance. A review of the HSEMS is
currently underway. A new Crisis and Emergency Management Plan has been written and adopted, the Contractor Management Plan has been reviewed
as part of the process for the update of the HSEMS, and the Fitness for Work Procedure has been reviewed with particular focus of employees and
contractors who are required to work in remote areas.
The regulatory framework in Queensland has gone through several changes during the financial year. The Financial Assurance process, has been updated
to the Estimated Rehabilitation Cost and there has also been changes to existing regulations and policies, for example;
•
•
•
•
Environmental Protection Regulation 2019
Environmental Protection (Air) Policy 2019
Environmental Protection (Noise) Policy 2019
Environmental Protection (Water and Wetland Biodiversity) Policy 2019
The coming year sees more field and operational activities which will further necessitate the enhancement of our HSES performance, the review and
selection of key contractors, and the critical activities of monitoring and reviewing HSES performance. The philosophy of Zero Incidents remains the goal
and is what drives the safety and environmental culture inside Comet Ridge, from the board and senior management to office staff and field operators.
Community
Comet Ridge has a deep commitment, at all levels of the Company, to working with community stakeholders in the regions where it operates. This
commitment has ensured its external and stakeholder relationships have been extremely positive at all times.
During 2018-2019 Comet Ridge has:
•
•
•
•
•
Joined Toowoomba Surat Basin Enterprise Business Group (TSBE), and have attended a number of events, providing opportunities to network.
Donated to a number of rural health initiatives including a sporting club, a rural men’s mental health project and a project that encourages
outings for disabled rural children.
Became a financial member of the Leuceana Society, to allow knowledge gathering and networking in anticipation of future gas field
development.
Converted an old gas well to a landholder water supply bore in the Galilee Basin, instead of simply plugging and abandoning (making safe)
the well.
During the previous year Comet Ridge representatives have attended and contributed to a number of Government and Industry organised
workshops, including but not limited to;
Stakeholder engagement forum in Dalby organised by the Australian Petroleum Production and Exploration Association (APPEA);
Independent Expert Scientific Community (IESC) forum in Sydney;
o
o
o Department of Environment and Science (DES) financial assurance workshop; and
o Central Highlands Development Corporation (CHDC) ‘Industry and Innovation’ workshop in Emerald, Qld.
Community engagement and respect for the communities, where the Company operates, is a core value for Comet Ridge and is supported by legislation
and regulation. The Queensland ‘Land Access Code’, which has been developed in compliance with the relevant legislation and is enshrined in regulation,
is the main formal reference when it comes to landowner and community relations and interaction between landholders and the oil and gas Industry.
Comet Ridge has always acted consistently with the principles and guidelines set out in this Code of Practice.
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.
With the increased role as Agent for the Exploration Operator at Mahalo (March 2017 to March 2019) the Company’s focus has now increased from being
around the eastern Galilee Basin, to the Mahalo area in the southern Bowen Basin. Our landowner contact has, in the main, been in the form of personal
visits, which strengthens and reinforces relationships with these landholders and maintains an active point of contact should any concerns or issues arise.
6
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
In terms of Local Government engagement, the Company continues to maintain contact with relevant officials and elected representatives, in the relevant
Local Government area. 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, understand local businesses and hear local concerns and issues.
Through membership of APPEA, the Company interacts with other regional explorers through the Explorers Leadership Group (ELG) and, more widely
with Government representatives and other agencies such as the Queensland Gasfields Commission. Comet Ridge maintains strong relationships with
the relevant Queensland Government Departments, including the Department of Natural Resources, Mines and Energy (DNRME) and the Department of
Environment and Science (DES).
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. An example of this was during the 2018/2019
Koburra seismic acquisition programme in the Galilee Basin, Comet Ridge engaged and worked closely with two local Indigenous groups to undertake
ground survey/clearances prior to seismic activity.
Figure 6 – Flare at Mira Pilot Scheme, Mahalo Gas Project
Comet Ridge Limited I Annual Report 2019 7
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
2019 Annual Reserves Statement
Comet Ridge is pleased to present its Annual Reserves Statement for the period ending 30 June 2019:
Table 2 – Comet Ridge Limited – Reserves and Resources Annual Statement
Comet Ridge Limited – Net Recoverable Reserves and Resources
Reserves (PJ)1
Contingent Resources (PJ)1
1P3
1P3
2P
*2P
3P
3P
1C
1C
2C
**2C
3C
3C
30-6-18 30-6-19 30-6-18 30-6-19 30-6-18 30-6-19 30-6-18 30-6-19 30-6-18 30-6-19 30-6-18 30-6-19
Mahalo Gas
Project
(ATP 1191)
Gunn Project
Area
(ATP 744)
Albany Structure
(ATP 744)
PEL 6
PEL 427
PEL 428
Bowen Basin,
QLD
Galilee Basin,
QLD
Galilee Basin,
QLD
Gunnedah
Basin, NSW
Total2
40%
*18
*18
*172
*172
374
374
224
224
**385
**385
389
389
100%
85%
29.55%
59.09%
68.42%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
**67
**67
1,870
1,870
56
48
**153
**130
417
354
-
-
-
-
562
562
18
18
*172
*172
374
374
280
272
**605
**582
3,238
3,175
ASX Listing Rules Annual Report Requirements
*Listing Rule 5.39.1:
• All 1P and 2P petroleum reserves recorded in the table are undeveloped and are attributable to unconventional gas.
• 100% of the 1P and 2P petroleum reserves are located in the Bowen Basin.
*Listing Rule 5.39.2:
• The proportion of total 1P and 2P petroleum reserves that are unconventional is 100%. There are both 1P and 2P reserves recorded for the
Company which are located in the Company’s Bowen Basin Mahalo Gas Project area.
Listing Rule 5.39.3:
• The table records a reconciliation of the 1P, 2P and 3P petroleum reserves as at 30 June 2019 as against the previous year and discloses that the
petroleum reserves (1P, 2P and 3P) remained unchanged.
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 2019 from external independent consultants who are
qualified petroleum Reserves and Resources 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 engineering 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 a regular 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.
** Listing Rule 5.40.1:
•
•
All 2C contingent resources at 30 June 2019 are undeveloped. Approximately 75% of the reported 2C Contingent Resource is attributable to
unconventional gas with the remainder attributable to a sandstone reservoir referred to in the Table as the Albany Structure.
The geographical areas where the 2C Contingent Resources are located appear in the far left column of the Table.
8
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Listing Rule 5.40.2:
•
The table records a reconciliation of the 2C and 3C Contingent Resources as at 30 June 2019, against the previous year and discloses that
the net 1C, 2C and 3C Contingent Resources decreased during the period by 15% due to Vintage Energy Limited earning a 15% in the Albany
Structure as part of its farmin with Comet Ridge to earn a 30% interest. (Refer to ASX:VEN Announcement 26 November 2018). Overall the
Contingent Resources for the permit has not decreased with the variation being due to a commercial transaction and not a review of the
resources. Apart from the decrease in Comets interest in the Contingent Resources booking for the Albany Structure in ATP 744 there were
no other changes to the 1C, 2C and 3C Contingent Resources from those recorded as at 30 June 2018.
Listing Rule 5.44:
•
•
•
•
•
The estimates of Reserves and Contingent Resources appearing in the 2019 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 in 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
in the form and context in which they appear herein has been issued with the previous consent of Dr McConachie in the form and context in
which they appear in this Annual Reserves Statement for 2019. 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 (CSG) Contingent Resource estimates for ATP 744 in the 2019 Annual Reserves Statement were determined by Mr John
Hattner of Netherland, Sewell and Associates Inc. (NSAI) 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 the Mahalo Gas Project, 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 previously 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 2019.
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) Comet Ridge’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).
3) 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 were
registered during the period with confirmation being received from the NSW Depart of Planning and Environment Resources & Geoscience on 5
November 2018.
Comet Ridge Limited I Annual Report 2019 9
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Corporate Governance Overview Statement
The Directors and management of Comet Ridge 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 2019 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.
During the reporting period the ASX released its 4th edition of the Corporate Governance Principles and Recommendations (Principles) in February 2019.
The Company has begun steps to adopt the updated 4th Edition of the ASX Recommendations and intends to report against that version for the year end
June 2020.
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 recommended 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 2019 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/corporate-governance/
Figure 7 – Photo of Ensign Drilling Rig 932 located at Albany 2
10
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
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 2019. 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 or part of the year and up to the date of this Report.
James McKay B.Com, LLB, Non-executive Chairman (Director since 16 April 2009)
Special Responsibilities
Chairman
Member of the Audit Committee
Member of the Remuneration Committee
Experience
James McKay is Executive Chairman and co-founder of Walcot Capital, a venture capital business specialising in early stage commodity
investments. Walcot Capital has established a number of large and successful resource projects including Tlou Energy Limited, an ASX and AIM listed
southern Africa focused coal seam gas company, and ERPM a South African based gold company that purchased the historic East Rand Proprietary
Mine with a 51M oz reserve.
James is the former Chairman of successful coal seam gas company Sunshine Gas Limited, having overseen that company’s growth to join the ranks of
Australia’s Top 150 and a top ten Queensland company with a market capitalisation over $1 billion, prior to its merger with Queensland Gas Company.
Mr McKay is also a director and shareholder of Centenary Memorial Gardens Pty Ltd, a major Brisbane cemetery and crematorium. He is a past president
of the Australasian Cemeteries and Crematoria Association, having served on its board for over 8 years.
James McKay has a strong commercial background, with sound finance, investment markets, business management and legal expertise. He holds
degrees in commerce and law.
Interest in Shares and Options
37,295,470 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Birimian Limited (resigned 13 November 2018)
Tor McCaul B.E. (Hons/Petroleum), B.Econ, MBA, Managing Director (Director since 16 April 2009)
Special Responsibilities
Managing Director
Member 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 (Chartwell). He
previously held the position of Chief Executive Officer of Chartwell having commenced with the Company in 2008. Tor has over 30 years’ experience in
the oil and gas industry. He graduated in Petroleum Engineering from UNSW in 1987 and spent the next 9 years based in Brisbane working with operating
companies in technical roles on projects in Queensland, New Zealand and PNG, which included a secondment to Chevron Niugini.
He spent the following 11 years in Asia (Karachi, Jakarta, Chennai and Delhi) in technical, finance, commercial and management roles. At VICO Indonesia
(a BP-ENI JV) he was their LNG Contract Manager on the 23 million-tonne-per-annum Bontang LNG project. In India, he was Cairn plc’s Head of
Commercial for the Indian business. Mr McCaul is currently a Director of the Australian Petroleum Production and Exploration Association and has
previously been the Chairman for the Queensland Section of the Society of Petroleum Engineers and was the 2013 Queensland Petroleum Exploration
Association (QUPEX) President.
During the financial year, Mr McCaul was elected to the APPEA Board and is the Chair of the APPEA Exploration Committee.
Interest in Shares and Options
6,343,159 ordinary shares
3,500,000 Performance Rights
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
Comet Ridge Limited I Annual Report 2019 11
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Chris Pieters B.Sc (Hons), B.Bus, Executive Director (Director since 16 April 2009)
Appointed Executive Director 17 June 2015.
Special Responsibilities
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 early stage commodity
investments, 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. Mr Pieters 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
1,217,000 ordinary shares
375,000 Performance Rights
Directorships Held in Other Listed Entities in Last 3 Years
Nil
Gillian Swaby B.Bus, FAICD, FCIS, MAusIMM, Non-executive Director (Director since 9 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 for over 30 years, as both Director and Company Secretary
covering a broad range of industry sectors. Ms Swaby has extensive experience in the area of corporate governance, corporate and financial management
and board practice.
Gillian is a 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. Gillian is also 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
Deep Yellow Limited
Birimian Limited (Resigned 13 November 2018)
12
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Martin Riley B.E. (Hons I/Chem), Non-executive Director (Director since 13 March 2019)
Special Responsibilities
Member of the Remuneration Committee
Member of the Audit Committee
Chairperson of the Risk Committee
Experience
Martin Riley holds first-class honours degree from Sydney University in Chemical Engineering and has almost 35 years’ experience in the upstream oil
and gas industry in a variety of roles. Martin was influential in the commercial inception and development of the Coal Seam Gas (CSG) industry in
Queensland in the 1990s with Origin Energy. Martin has held a number of sub-surface technical roles, and senior executive positions within the industry,
across both CSG and conventional assets, through exploration, development and production.
Interest in Shares and Options
Nil.
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
Michael Dart B.Com, FINSIA, Non-executive Director (14 October 2016 until his resignation on 13 March 2019)
Special Responsibilities
Member of the Remuneration Committee
Member of the Audit Committee
Chairperson of the Risk Committee
Experience
Mike Dart is a director of Dart Capital Partners, a private venture capital investment fund, which is active in various sectors including oil and gas, additive
and advanced manufacturing (3D printing) and other disruptive innovative businesses across the manufacturing, science and technology fields. Mike
holds the role of Finance Director and CEO with two portfolio companies and was previously the Managing Director of a leading gas and infrastructure
services contracting business that provided a suite of pipeline and underground tunnelling solutions. Prior to that, Mr Dart worked for Ernst & Young,
focussing exclusively on M&A with particular oil and gas expertise.
Mike holds a Bachelor of Commerce and a Graduate Diploma of Applied Finance and Investment and brings to Comet Ridge over 20 years’ commercial
experience working in M&A and finance, innovation, commercialisation and venture capital across the business cycle.
Interest in Shares and Options
Nil.
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
2. Company Secretary
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 over 30 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 an instrumental member of the team which led the takeover
negotiations and implementation of QGC’s friendly acquisition of that Company.
He also holds the position of Company Secretary of Galilee Energy Limited and Blue Energy Limited, both ASX listed CSG exploration companies
operating in Australia. Mr Rodgers brings to Comet Ridge strong legal and commercial experience with a particular emphasis on the coal seam gas
industry.
3. Principal Activities
The principal activities of the Group during the financial year were to carry out oil and gas exploration activities. The Group has tenement interests and a
number of prospective projects in eastern Australia.
There have been no significant changes in the nature of the Group's principal activities during the financial year.
Comet Ridge Limited I Annual Report 2019 13
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
4. Operating and Financial Review
The loss after tax of the Group for the financial year ended 30 June 2019 amounted to $4.0 million (2018: loss of $2.2 million).
During the financial year, the Group capitalised exploration expenditure of $7.2 million (2018 $3.2 million) on the Mahalo Gas Project and $6.2 million
(2018 $1.3 million) on the Galilee Deeps Joint Venture.
At 30 June 2019, the Group had $12.998 million in cash on hand and net current assets of $11,597 million.
Comet Ridge has future exploration commitments for its Galilee and Mahalo projects which will be funded as required when they fall due. Also, if Comet
Ridge were to enter into commercial discussions regarding a gas sales agreement with Stanwell, and an agreement not come to fruition, a cash payment
would arise, which is not presently funded. Note 2 (d) Going Concern, and the independent auditor’s report both acknowledge the existence of these
matters and the material uncertainty that exists as a consequence. If Comet Ridge was not able to secure or raise funds to meet these payments, that
may cast significant doubt about the Group’s ability to continue as a going concern. However, in both instances the amount of the payments are
substantially less than the current market value of Comet Ridge and the Board is confident of being able to source funding at the necessary time.
Further information on the operations of the Group and likely developments are set out in the Overview of Activities and Significant Affairs outlined below.
5. Significant Affairs
The following significant changes in the state of affairs of the Group occurred during the financial year ended 30 June 2019:
(a)
Stabilised gas flowrate from Albany 1
In July 2018, Comet Ridge recorded a stabilised gas flowrate of 230,000 scf/d across a 13m interval in the Lake Galilee Sandstone Reservoir at the
Albany 1 well. This was the first measured flowrate for the Galilee basin and there remains a further 100+m of sandstone target still to be tested.
(b) Five well evaluation programme at the Mahalo Gas Project
As exploration agent for Santos, Comet Ridge planned and successfully drilled a five well programme, including three verticals, of which two were
intersected by lateral wells. The programme was delivered within budget, with zero injuries and zero environmental incidents.
(c)
Vintage Energy Limited (Vintage) earn 15% interest
On funding their interest in the Albany 1 well, Vintage earnt a 15% interest in the Galilee “Deeps” Joint Venture (GDJV), across ATP 743, 744 and 1015.
Comet Ridge and Vintage have both formally committed to Stage 2 of the farm-in which will see Vintage earn their next 15% interest by funding 50% of
the first $10 million spend on the 336km Koburra 2D seismic programme, the drilling of Albany 2 and the side track of Albany 1. Subsequent to year end,
Vintage completed the requirements to earn the remaining 15% interest in the GDJV (refer to Note 29 – Post balance date events).
(d)
Stanwell Agreement
On 17 June 2019, the Company reached an agreement with Stanwell which has amended the 2014 Deed of Option and has extended the Final Option
Date under the Deed to 30 September 2022. The current agreement has removed Stanwell’s option to elect either a Gas Sales Agreement (GSA) or a
cash settlement and has moved to a negotiation process for a market priced GSA, for a fixed gas volume of between 20 to 30 PJ, depending on the final
development of the Mahalo Gas Project. Should a GSA not be negotiated the agreement retains the obligation to settle in cash.
(e) Capital raising
During the year, the Company undertook an equity raising via a placement with institutional shareholders. Comet Ridge raised a total of $17.4 million
(before costs) to fund its ongoing activities at Mahalo and the GDJV.
6. Dividends Paid or Recommended
The Directors recommend that no dividend be paid or declared. No amounts have been paid or declared by way of dividend during the financial year.
7. Post Balance Date Events
On 2 September 2019 it was announced that Vintage had met the conditions to earn a further 15% interest in the Galilee Deeps Joint Venture, bringing
their total interest in the GDJV to 30%. As a consequence of Vintage earning a further 15% interest in the GDJV, Comet Ridge has reduced its interest
in the Contingent Resources of the Albany structure to reflect its 70% interest in the GDJV. The total Contingent Resources for the Albany structure have
not changed.
Petroleum Lease Applications (PLA) 1082 Humboldt and 1083 Mahalo were lodged with the Department of Natural Resources, Mines and Energy
(DNRME) on 12 September 2019. The PLAs cover the expected Initial Development Area for the Mahalo gas Project. It is expected the Potential
Commercial Area (PCA) applications will be lodged shortly to secure the remainder of ATP 1191.
Other than the above 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.
14
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
8. Principal Risks
Risk Management Framework
Comet Ridge established the Risk Committee to provide advice and assistance to the Board in developing policy and assessing risks of the business.
The Comet Ridge risk management procedure is based on the Australian Standard AS/NZS ISO 31000:2018 as having prominence in guiding the
facilitation and management of risk within the Company. Comet Ridge recognises that effective risk management is a fundamental consideration in the
decision-making process within the Company. The process of identifying, assessing and managing material business risks is designed to manage risks,
mitigate risks to an acceptable level and, where appropriate, accept risk to generate returns. The Comet Ridge risk management framework is reviewed
annually, in which an analytical review is undertaken of all the Company's operational, corporate, legal, regulatory and financial risk exposures.
The Comet Ridge risk management procedure incorporates an enterprise level view of risk, an understanding of risk management options and the use of
consistently developed risk information. This is a continuous process and provides the foundation for the execution of business management activities.
The use of common language around risk identification, management and reporting across field and office-based teams enables us to focus on the key
risks to achieve organisational goals.
The Comet Ridge risk management procedure defines oversight responsibilities for the Board to enable effective risk identification, assessment and
management across the business.
Material Risks at 30 June 2019
The material business risks for Comet Ridge at 30 June 2019 are outlined in this section. These risks may materialise independently, concurrently or in
combination. The active management of these risks through our risk management framework is imperative to Comet Ridge meeting strategic objectives
and delivering shareholder value. This summary is neither an exhaustive list of risks that may affect Comet Ridge, nor are the risks listed in order of
importance.
Operational Risks
Risk
Cause
Impact
Mitigations
Risk
Cause
Impact
Mitigations
Risk
Cause
Impact
Mitigations
Joint Venture arrangements – Comet Ridge is in several joint ventures for most of the assets it owns and, as such, is
dependent on technical and commercial alignment with our Joint Venture partners.
Misalignment between Joint Venture partners can lead to inefficient utilisation of available capital and may impact approaches
to prioritisation of exploration or development opportunities.
Delayed approvals of development plans may impact on the timing of Comet Ridge’s growth.
We work closely with our Joint Venture partners to achieve mutually beneficial outcomes.
Exploration and development – Our growth is dependent on our ability to successfully discover, develop and deliver new
resources and reserves.
Exploration and drilling activities are highly uncertain and dependent on capital funding and the acquisition and analysis of
data.
Comet Ridge’s ability to deliver our strategy may be impacted by the success of our exploration and development efforts.
To ensure the highest possibility of success and therefore confidence of investors, we seek to employ the most technically
capable staff, who analyse our existing acreage for drilling prospects by applying best-in-class technologies and process for
exploration and development. Comet Ridge seeks partnering and farm-in opportunities to diversify risk.
Access to infrastructure – Comet Ridge’s growth strategy is largely dependent on access to infrastructure owned by third
parties.
We rely on third parties to process, transport and market the product Comet Ridge is seeking to produce.
Comet Ridge’s growth may be impacted by the failure to obtain access to appropriate supporting facilities.
We seek to work closely with suppliers of infrastructure to mitigate the risk of not obtaining access and we continue to explore
alternative routes to market to diversify risk where possible.
Strategic Financial Risks
Risk
Cause
Impact
Mitigations
Access to Funding – Comet Ridge’s ability to fund operations and future growth.
Volatility or uncertainty in capital markets could restrict the willingness of investors to provide additional capital
Comet Ridge’s growth aspirations require the investment of significant capital to generate returns.
We have prudent expenditure management and forecasting with a Board approved budget. We actively seek partnering
opportunities to help fund key activities on a project by project basis.
Comet Ridge Limited I Annual Report 2019 15
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Safety, environmental and sustainability risks
Risk
Cause
Impact
Mitigations
Political Risks
Risk
Cause
Impact
Mitigations
Health and safety – There is a risk of harm to employees, contractors and communities near our operations, particularly in
remote locations, from exploration activities.
Our activities are subject to operating hazards which could result in harm to our people or our communities.
In addition to injury or negative effects to the health or wellbeing of affected people, impacts may include reputational damage
and fines.
The identification, effective control and overall management of health and safety risks are the highest priority for Comet Ridge.
We have developed detailed health and safety management plans, as well as rigorous processes to ensure we operate at the
highest standards of safety management.
Significant regulatory change – A change in government or policy and / or unexpected changes to legislation and regulation
may significantly impact Comet Ridge financially and operationally.
Changes in legislation, regulations and / or policy can result from changes in Government or from changes by Government or
external pressures.
Changes in legislation, regulation and / or policy may impact on exploration and development of our product. In turn, such
changes would impact on sustainable returns for investors, through profit erosion and loss of company value. Retrospective
or unexpected regulatory changes potentially impact the longer-term viability of projects.
We actively monitor regulatory and political developments and constructively engage with government, regulators and industry
bodies.
9.
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 is set out in the Overview of Activities.
10. Environmental Regulations
The Group's operations are subject to environmental regulation under the federal and state laws of Australia, 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.
11. Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2019 has been received and is attached to this report as required under section 307c
of the Corporations Act 2001.
12. 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 2019 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
4
4
J McKay
T McCaul
G Swaby
C Pieters
M Dart**
M Riley**
* = Not a member of the relevant committee
**= On the 13 March 2019, Michael Dart resigned as a director and Martin Riley was appointed. Martin assumed the role as Chair of the Risk Committee and member
of the Audit and Remuneration Committees.
10
10
9
10
7
3
10
10
10
10
7
3
*
4
*
4
*
*
3
*
1
2
*
4
*
4
*
*
3
*
1
2
1
2
1
2
*
2
*
2
*
3
*
3
3
3
16
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
13. Remuneration Report – Audited
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 Non-executive Directors, Executive Directors and other senior executives, 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.
In framing the Remuneration Report, the Remuneration Committee has reflected on the performance in 2019 and noted that 2019 has delivered some
very positive results for the Company. Our lead asset, Mahalo, has moved through evaluation and is now on the development path, with FID now planned
for June 2020. Significant results have been achieved in the Galilee with the first measured gas flow of 230,000 scf/d from 13m of Albany 1 sandstone
reservoir, and we acquired 336km of 2D seismic, which identified new leads and confirmed closure on the Lake Galilee structure. We have ended the
financial year with a rig mobilising to drill Albany 2 and side-track Albany 1.
At this stage of the Group’s development, the Remuneration Committee is focused on long term value generation for shareholders and therefore consider
Long Term Incentives (LTIs) based on achieving specific milestones, to be the preferred method of incentivising Executive Directors and Senior
Executives. With the LTIs selected, the Committee has focused on ensuring Executive Directors and Senior Executives’ long-term performance aligns
with long term value for shareholders. In 2019, Comet Ridge assessment of LTIs, identified that some would not be achieved, resulting in a small decrease
in executive remuneration in the current financial year in the Remuneration table below.
The Corporate Governance Statement provides further information on the role of this Committee.
Key Management Personnel
For 2019, the Key Management Personnel (KMP) for Comet Ridge comprised:
James McKay
Tor McCaul
Gillian Swaby
Non-executive Chairman
Managing Director
Non-executive Director
Christopher Pieters
Executive Director
Martin Riley
Michael Dart
Non-executive Director (appointed 13 March 2019)
Non-executive Director (resigned 13 March 2019)
There has been a significant increase in capability to the executive team with the recruiting a full time CFO, a GM – Subsurface and a GM – Development.
However, at this stage on the Group’s development, it is the view of the Committee that the Board remain as the KMP’s for the organisation. As the
Company moves closer to development and ultimately production, the Committee intends to review its position on those personnel who could be
considered as KMPs.
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.
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 $500,000 per year.
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.
During the 2019 financial year the Committee engaged with BDO on a Board Remuneration report, which compared Comet Ridge’s current fees against
comparative companies in the same industry. The Committee discussed the report and recommended the increase from the lower end of the scale
provided. This was the first increase since 2009.
Comet Ridge Limited I Annual Report 2019 17
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Non-executive Directors’ fees (inclusive of superannuation) have been paid on the following basis:
Director fees
Base Fees
Chair1
Other Non-executive Directors1
Additional Fees
Chair of Audit Committee
Chairs of Remuneration and Risk Committees
Members of committees
1 Changes to the Base Fees was effective from 1 December 2018.
Executive Remuneration Framework
2019
$
156,000
81,000
10,000
5,000
3,000
2018
$
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 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 and/or daily rate for the services
(d)
provided 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 2019 the rate was 9.5% up to a maximum contribution of $20,531. 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.
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.
18
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
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 2019
Short-term Benefits
& Fees
Post
Employment
Long-term
Benefits
Directors
J McKay
T McCaul
G Swaby
C Pieters
M Dart
M Riley
Salary & Fees
$
Cash
Bonus
$
122,784 -
379,951 -
87,250 -
-
199,339
70,796 -
-
24,519
$
Long Service
Leave
Total Cash
Remuneration
$
Super-
annuation
$
-
11,664
10,869 411,351
20,531
-
-
6,540
-
2,063 -
-
2,329
134,448 -
(3,006)
87,250 -
205,879
72,859 -
-
26,848
(379)
Total
$
134,448
408,345
87,250
205,500
72,859
26,848
Total Key Management
Personnel
884,639 -
43,127
10,869
938,635
1(3,385)
935,250
1 The Company reassessed the likelihood of non-market vesting conditions attached to the performance rights being satisfied. It was determined that it is no longer probable that these awards will
vest. As a result, the expense associated with these rights has been reversed.
Share-based
Payments
Performance
Rights
$
Benefits and Payments
Year Ended 30 June 2018
Short-term Benefits
& Fees
Post
Employment
Salary & Fees
$
Cash
Bonus
$
Super-
annuation
$
Long-term
Benefits
Long Service
Leave
$
Total Cash
Remuneration
$
Share-based
Payments
Performance
Rights
$
93,101 -
378,081 -
79,455 -
190,176
65,637 -
245,000
8,845 -
6,020
20,049
-
-
5,812 -
6,236 -
101,946 -
137,591
404,150
79,455 -
240,988
5,320
71,873 -
Directors
J McKay
T McCaul
G Swaby
C Pieters
M Dart
Total
$
101,946
541,741
79,455
246,308
71,873
Total Key Management
Personnel
40,942
2 C. Peters remuneration for 2018 has been restated to include a cash bonus of $45,000 relating to performance in the 2018 financial year. Refer ASX announcement 1 June 2018 for further
details.
806,450
45,000
898,412
142,911
6,020
1,041,323
The relative proportions of actual remuneration recognised are as follows:
Executive Director
T McCaul
C Pieters
Fixed Remuneration
2018
2019
74.60%
100.0%
97.36%
100.0%
At Risk
Short Term Incentives
2018
2019
0.0%
0.0%
0.0%
0.0%
At Risk
Long Term Incentives
2018
2019
25.40%
0.0%
2.64%
0.0%
Long term incentives are provided by way of performance rights and the percentages disclosed above are based on the value of the performance rights
expensed during the year.
No performance rights were scheduled to mature during the financial year, hence fixed remuneration for 2019 was 100% of remuneration for the Executive
Directors.
Comet Ridge Limited I Annual Report 2019 19
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Comparison of Key Management Personnel Remuneration to Company Performance
The table below shows the total remuneration cost of the Key Management Personnel, earnings per ordinary share (EPS), dividends paid or declared,
and the closing price of ordinary shares on the ASX at year end for the current year and previous four years.
Relation to performance
Total remuneration ($)
EPS (loss) cents
Dividends paid
Share price at year end (cents)
Service Agreements
2019
935,250
(0.56)
-
26
2018
1,041,323
(0.34)
-
36
2017
711,635
(0.64)
-
13
2016
703,083
(0.70)
2015
742,225
(3.68)
-
6
-
6
Remuneration and other terms of employment for the Managing Director and the Executive 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
Term of Agreement:
Base Salary:
Termination Benefit:
Termination Notice:
Chris Pieters
Term of Agreement:
Remuneration:
Termination Benefit:
Termination Notice:
KPI’s:
Managing Director (Appointed 16 April 2009)
No fixed term
$400,000 per annum (inclusive of superannuation)
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.
Executive Director (appointed 17 June 2015)
Four months with options for parties to extend as needed
Services provided as a consultant at $1,500 per day
No termination benefits payable
Either party may terminate the Agreement with a minimum of fourteen days’ notice
A bonus of $50,000 for each KPI achieved listed below :
•
•
•
•
•
Agreement for the commercial offtake of more than 50% of the gas from Mahalo
FID Mahalo
Agreement for the commercial offtake of more than 50% of the gas from Galilee
FID Galilee Basin; and
Farmout of the Shallow Coals in the Galilee.
I
In the event that the position was to become redundant or other factors prevented Mr Pieters from achieving those KPIs
within the allowed time, which were outside of his control, they could be treated as having been satisfied and able to be
paid.
Performance rights for Mr McCaul and Mr Pieters will be awarded on achievement of certain milestones as outlined in the Performance Rights table on
page 21.
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 Annual General
Meeting) and the Comet Ridge Limited Employee Performance Share Rights Plan as approved by shareholders for the purposes of ASX Listing Rule 7.2
Exception 9 most recently at the 2017 Annual General Meeting. Share-based Compensation is equity-settled.
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. There are currently no options on issue.
20
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Performance Rights
The terms and conditions of each grant of performance rights during the year affecting remuneration in the current or a future period with respect to Key
Management Personnel are shown in the table below. In addition to the performance condition, Key Management Personnel must satisfy a service
condition of continuous employment with the Company up to and including the date when the performance conditions are achieved. Performance rights
are issued for no consideration and no amount is payable on vesting.
Grant Date
No. of Rights
Expiry
Date
Vesting
Date
Fair Value
at Grant
date
Cents
Performance Condition
Vested
%
T McCaul
1-Dec-16
1-Dec-16
1-Dec-16
23-Nov-17
23-Nov-17
C Pieters
1-Dec-16
1-Dec-16
1-Dec-16
500,000
500,000
500,000
1,000,000
1,000,000
3,500,000
125,000
125,000
125,000
375,000
3,875,000
31-Dec-19
31-Dec-19
31-Dec-19
31-Jan-20
31-Jan-21
31-Dec-19
31-Dec-19
31-Dec-19
31-Jan-20
31-Jan-21
7.00
7.00
7.00
26.50
26.50
150pj 2p Reserves hurdle
225pj 2p Reserves hurdle
300pj 2p Reserves Hurdle
Mahalo JV resolving to proceed to development
Resolution to proceed to development for Albany
31-Dec-19
31-Dec-19
31-Dec-19
31-Dec-19
31-Dec-19
31-Dec-19
7.00
7.00
7.00
150pj 2p Reserves hurdle
225pj 2p Reserves hurdle
300pj 2p Reserves Hurdle
0%
0%
0%
0%
0%
0%
0%
0%
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
1-Dec-16
1-Dec-16
1-Dec-16
23-Nov-17
23-Nov-17
C Pieters
1-Dec-16
1-Dec-16
1-Dec-16
31-Dec-19
31-Dec-19
31-Dec-19
31-Jan-20
31-Jan-21
31-Dec-19
31-Dec-19
31-Dec-19
500,000
500,000
500,000
1,000,000
1,000,000
3,500,000
-
-
-
-
-
-
- - 500,000
- - 500,000
- - 500,000
- - 1,000,000
- - 1,000,000
- 3,500,000
-
125,000
125,000
125,000
375,000
3,875,000
- - 125,000
-
- - 125,000
-
-
- - 125,000
- - - 375,000
- - - 3,875,000
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 2019
Balance at beginning of the
year
Shares purchased
Other
Movements
Balance at end of the year
J McKay
T McCaul
G Swaby
C Pieters
M Dart
M Riley
Total
37,295,470
6,343,159
-
1,217,000
-
-
-
-
-
-
-
44,855,629
-
-
-
-
-
-
-
-
-
37,295,470
6,343,159
-
1,217,000
-
-
44,855,629
Comet Ridge Limited I Annual Report 2019 21
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
30 June 2018
Balance at beginning of the
year
Shares purchased
Other
Movements
Balance at end of the year
J McKay
T McCaul
G Swaby
C Pieters
M Dart
Total
37,273,130
5,283,585
-
1,092,000
-
43,648,715
22,340
59,574
-
-
-
81,914
-
1,000,000
-
125,000
-
1,125,000
37,295,470
6,343,159
-
1,217,000
-
44,855,629
END OF AUDITED REMUNERATION REPORT
14. Options and Performance Rights
Options
There were no options for ordinary shares in Comet Ridge on issue at 30 June 2019.
Performance Rights
Movements in the number of performance rights on issue and the number of ordinary shares issued during the year ended 30 June 2019 as a result of
performance rights vesting during the year are as follows:
Grant Date
Expiry Date
1-Dec-16
23-Nov-17
23-Nov-17
20-May-18
20-May-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-19
31-Jan-20
31-Jan-21
31-Jan-20
31-Jan-21
31-Dec-19
31-Jan-20
31-Jan-21
Share Price at
Grant Date
(cents)
7.00
26.50
26.50
36.50
36.50
32.50
32.50
32.50
No. of Rights
30 June 2018
Granted
during the
year
Vested during
the year
Expired during
the year
No. of Rights
30 June 2019
1,875,000
1,000,000
1,000,000
250,000
250,000
-
-
-
-
-
-
400,000
-
-
-
-
-
-
-
-
-
-
-
-
1,875,000
1,000,000
1,000,000
250,000
250,000
400,000
-
-
350,000
350,000
-
-
-
-
350,000
350,000
4,375,000
1,100,000
-
-
5,475,000
Since the end of the financial year and up to the date of this report no performance rights have been issued.
15.
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.
16. 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.
17. Rounding of Amounts to Nearest Thousand Dollars
Pursuant to Legislative Instrument 2016/191 issued by the Australian Securities & Investments Commission, amounts in the Financial Report have been
rounded off to the nearest thousand dollars unless otherwise indicated.
22
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
18. 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 Group expenditure to the auditor for non-audit services, is as follows:
PricewaterhouseCoopers Australia
Non-audit services
Consolidated
June 2019
$
June 2018
$
6,000
-
The Board of Directors will continuously consider the position and, in accordance with advice received from the Audit Committee, ensure 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 (where applicable) by the auditor, does not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
•
all non-audit services will be reviewed to ensure they do not impact the impartiality and objectivity of the auditor; and
none of the services (where applicable) 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 Note 5 Auditors’ Remuneration on Page 33
of the financial statements.
This report is made in accordance with a resolution of the Board of Directors.
Tor McCaul
Managing Director
Brisbane, Queensland, 23 September 2019
Comet Ridge Limited I Annual Report 2019 23
Auditor’s Independence Declaration
As lead auditor for the audit of Comet Ridge Limited for the year ended 30 June 2019, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
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.
Michael Shewan
Partner
PricewaterhouseCoopers
Brisbane
23 September 2019
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
24
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2019
Other income
Interest received
Other income
Expenses
Employee benefits’ expense
Contractors' & consultancy costs
Exploration and evaluation expenditure written off
Restoration and rehabilitation expense
Professional fees
Corporate expenses
Fair value movement of financial liability at fair value
Occupancy costs
Finance costs
Other expenses
Depreciation
LOSS BEFORE INCOME TAX
Income tax expense/(benefit)
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
Total Comprehensive Loss attributable to:
Owners of the parent
LOSS PER SHARE
Basic loss per share
Diluted loss per share
Consolidated
Note
June 2019
$000's
June 2018
$000's
339
-
(1,406)
(490)
(155)
(12)
(253)
(599)
(603)
(184)
(72)
(516)
(50)
(4,001)
-
(4,001)
(11)
(11)
(4,012)
176
119
(1,348)
(245)
(132)
(300)
(184)
(276)
432
(102)
(75)
(268)
(15)
(2,218)
-
(2,218)
(101)
(101)
(2,319)
(4,001)
(2,218)
(4,012)
(2,319)
Cents
(0.56)
Cents
(0.34)
(0.56)
(0.34)
4
4
4
16
4
6
7
7
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying
notes.
Comet Ridge Limited I Annual Report 2019 25
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Consolidated Statement of Financial Position
as at 30 June 2019
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
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
Note
June 2019
$000's
June 2018
$000's
8
9
10
11
12,998
481
11,547
609
57
1,304
79
458
14,840
12,693
12
13
150
63,142
49
49,739
63,292
49,788
78,132
62,481
14
15
2,802
441
759
1,005
3,243
1,764
16
15
17,191
1,523
16,588
607
18,714
17,195
21,957
18,959
56,175
43,522
17
18
129,110
112,440
1,313
(74,248)
1,329
(70,247)
56,175
43,522
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
26
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Consolidated Statement of Changes in Equity
for the year ended 30 June 2019
Balance at 1 July 2017
Loss for the period
Other comprehensive loss for the period
Total comprehensive loss for the period
Transactions with owners in their capacity as
owners
Contributions of equity net of transaction costs
Shares issued on vesting of performance rights
Share-based payments
Contributed
Equity
$000's
99,377
-
-
-
Foreign
Currency
Translation
Reserve
$000's
1,360
-
(101)
(101)
Share-Based
Payments
Reserve
$000's
80
-
-
-
Accumulated
Losses
$000's
(68,029)
(2,218)
-
(2,218)
Total
$000's
32,788
(2,218)
(101)
(2,319)
12,473
590
-
13,063
-
-
-
-
-
(590)
580
(10)
-
-
-
-
12,473
-
580
13,053
Balance at 30 June 2018
112,440
1,259
70
(70,247)
43,522
Balance at 1 July 2018
Loss for the period
Other comprehensive loss for the period
Total comprehensive loss for the period
112,440
-
-
-
1,259
-
(11)
(11)
70
-
-
-
(70,247)
(4,001)
-
(4,001)
43,522
(4,001)
(11)
(4,012)
Transactions with owners in their capacity as
owners
Contributions of equity net of transaction costs
Shares issued on vesting of performance rights
Share-based payments
16,670
-
-
-
-
16,670
-
-
-
-
(5)
(5)
-
-
-
-
Balance at 30 June 2019
129,110
1,248
65
(74,248)
16,670
-
(5)
16,665
56,175
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Comet Ridge Limited I Annual Report 2019 27
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Consolidated
Note
June 2019
$000's
June 2018
$000's
308
(2,695)
173
(1,845)
NET CASH USED IN OPERATING ACTIVITIES
19
(2,387)
(1,672)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Movements in restricted cash
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 increase in cash held
Cash at the beginning of the year
CASH AT THE END OF THE YEAR
(12,652)
(27)
(5,220)
(62)
(153)
(11)
(12,832)
(5,293)
17,417
(747)
13,109
(636)
16,670
12,473
1,451
5,508
11,547
6,039
8
12,998
11,547
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
28
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
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 or Comet Ridge) and its
controlled entities (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 28. The financial statements were approved for issue by the Directors on 18 September 2019.
Comet Ridge Limited is a public company limited by shares, incorporated and domiciled in Australia.
Note 2
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below or in the relevant notes. These policies have
been consistently applied to all of the years presented unless otherwise stated.
Compliance with Accounting Standards
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standard Board (IASB)
Historical cost convention
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 financial assets and financial liabilities.
Going concern
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.
At 30 June 2019, the Group had $12.998 million in cash on hand and net current assets of $11,597 million.
Through interaction with the Department of Natural Resources, Mines and Energy and our joint venture partners, there are a number of commitments to
continue to progress the Mahalo Gas Project and Galilee Deeps Joint Venture. These commitments are made over various timeframes, with funding raised
as appropriate to meet these commitments. Exploration commitments at 30 June 2019 for the next 12 months totalled $7.766 million as disclosed in Note
23.
By entering into the 2019 Agreement with Stanwell, refer Note 16 for further details, Comet Ridge can at its election initiate negotiations on a GSA up to
the 29 September 2021. If Comet Ridge does not initiate negotiations, then Stanwell can initiate negotiations before the 8 October 2021. If neither party
commences negotiations or the negotiations commence but a GSA cannot be agreed, then the cash payment of $20 million, indexed for CPI, would be
required within 30 days. If negotiations do not commence, then the earliest date at which the cash payment is due is 8 November 2021.
The ability of the Group to continue as a going concern will depend upon a number of matters including the successful raising in the future of necessary
funding through debt, equity or farm-out, or the successful exploration and subsequent exploitation of the Group’s tenements to meet these commitments
as they arise.
The exploration commitments and the existence of the Stanwell Arrangement creates a material uncertainty that may cast significant doubt on the ability
of the Group to continue as a going concern in the absence of being successful in relation to one of the above financing strategies. In the absence of this
the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts different from those
stated in the financial statements. No adjustments for such circumstances have been made in the financial statements.
At the date of this financial report, the Directors have a reasonable expectation that the Group 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.
Rounding of amounts
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 statements. Amounts in the financial statements have been rounded off in accordance with the Legislative Instrument
to the nearest one thousand dollars, unless otherwise indicated.
Comet Ridge Limited I Annual Report 2019 29
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 2
Summary of other significant accounting policies (continued)
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.
Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
New accounting standards and interpretations for application in future periods
The new Australian Accounting Standards and Interpretations either adopted or issued but not yet adopted for the 30 June 2019 annual reporting period
are set out below. The Group’s assessment of the impact of these new Standards and Interpretations, most relevant to the Group, are as follows:
New accounting standards
The Group has adopted all the mandatory new and amended Accounting Standards issued that are relevant to its operations and effective from 1 July
2018 for the reporting period.
The new accounting standard adopted by the Group effective 1 July 2018 are:
•
•
AASB 15 Revenue from Contracts with Customers
AASB 9 Financial Instruments
As the Company is in the exploration and evaluation phase and currently does not generate revenue there is no impact of the new revenue standard.
The adoption of AASB 9 also has not impacted the financial statements, noting that the Stanwell Liability has historically been classified as a financial
liability measured at fair value through profit and loss and continues to be measured on that basis under AASB 9.
There was no material impact on the financial report as a result of the adoption of these standards.
Accounting standards issued but not yet adopted
AASB 16 Leases was issued in February 2016 and became effective for financial years beginning on or after 1 January 2019. It will result in almost all
leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset
(the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
Comet ridge will adopt the new leasing standard on 1 July 2019.
The Group does not have any existing finance leases and has operating lease commitments totalling $104,000 as at reporting date. Leases to explore for
oil, natural gas and similar non-regenerative resources are specifically excluded from AASB 16.
To date, the Group has focussed on the provisions of the standard that will most impact the financial results and continues to assess the extent these
commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit or loss and classification
of cash flows.
On initial application, the Group intends to make the election under the new standard to measure lease liability at the present value of the remaining lease
payments, discounted using the Group’s incremental borrowing rate at the date of initial application and to record a right-of-use asset equal to the lease
liability.
30
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
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.
Management has identified the following critical estimates and judgements applied in the preparation of the financial statements.
•
•
•
•
Going concern – Note 1
Exploration and Evaluation assets – Note 13
Rehabilitation Provisions – Note 15
Financial liability at fair value – Note 16
Details of the nature of assumptions and conditions can be found in the relevant notes to the financial statements.
Note 4
Other income and expenditure
Other income
Other income includes the following specific items:
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 (Refer to Note 21)
Defined contribution superannuation expense
(b) Occupancy costs
Rental expense relating to operating leases
Other occupancy costs
Accounting Policies
Other income
Consolidated
June 2019
$000's
June 2018
$000's
-
-
119
119
Consolidated
June 2019
$000's
June 2018
$000's
(1,249)
5
(162)
(1,406)
(678)
(580)
(90)
(1,348)
(167)
(17)
(184)
(86)
(16)
(102)
Interest income 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.
All other income is stated net of the amount of goods and services tax (GST).
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual 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.
Comet Ridge Limited I Annual Report 2019 31
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 4
Other income and expenditure (continued)
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.
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 Profit or Loss and Other 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..
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 Profit or Loss and Other 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 Profit or Loss and Other Comprehensive Income, as part of the gain
or loss on sale where applicable.
32
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 5
Auditors’ remuneration
During the year the following fees were paid or payable for services provided by the auditor of the Group:
PricewaterhouseCoopers Australia
Auditing or reviewing the financial statements
Other assurance services
Pitcher Partners Australia
Auditing or reviewing the financial statements
Note 6
Income tax
(a) Recognised in the Statement of Profit and Loss and Other Comprehensive Income
Current tax
Deferred tax expense
Income tax expense
Consolidated
June 2019
$
100,000
6,000
106,000
-
-
June 2018
$
-
-
-
102,000
102,000
106,000
102,000
Consolidated
June 2019
$000's
June 2018
$000's
-
-
-
-
-
-
(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% (2018: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share options expensed
Other non-deductible items
Current year tax losses not recognised in deferred tax assets
Income tax expense
(4,001)
(2,218)
1,200
665
1
(4)
(1,197)
-
(174)
(11)
(480)
-
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
Franking credits available for subsequent financial years based on a tax rate of 30% (2018: 30%)
- -
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.
Comet Ridge Limited I Annual Report 2019 33
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 6
Income tax (continued)
The income tax expense/(benefit) 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.
Accounting Policies
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.
Deferred tax asset
The balance of deferred tax asset 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 asset
Opening balance
Deferred tax (credited) to profit or loss
Closing balance
Accounting Policies
Consolidated
June 2019
$000's
June 2018
$000's
- -
23,757 17,614
117 260
1,900 1,706
25,774 19,580
(14,130) (9,377)
(11) (1)
(14,141) (9,378)
11,633 10,202
(11,633) (10,202)
-
-
-
-
-
-
-
-
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.
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:
Consolidated
June 2019
June 2018
$000's
$000's
11,445 9,976
188 226
11,633 10,202
Australian temporary differences and tax losses
Offshore tax losses
34
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 6
Income tax (continued)
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.
Tax consolidation
Comet Ridge Limited and its wholly owned Australian subsidiaries (Chartwell Energy Limited, Comet Ridge Mahalo Pty Ltd, Comet Ridge Gunnedah Pty
Ltd, Davidson Prospecting Pty Ltd, Comet Ridge Denison Trough 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.
Note 7
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
Weighted average number of ordinary shares used in calculating diluted earnings per share
(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 21.
Accounting Policies
June 2019
$000's
June 2018
$000's
4,001
4,001
Number
715,070,064
-
715,070,064
2,218
2,218
Number
653,505,312
-
653,505,312
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.
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.
Comet Ridge Limited I Annual Report 2019 35
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 8
Cash and cash equivalents
Cash at bank and on hand
Consolidated
June 2019
$000's
June 2018
$000's
12,998 11,547
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. Interest earned on accounts range from 0.00% - 2.14%.
Note 9
Trade and other receivables
Current
Trade receivables
Other receivables
Consolidated
June 2019
$000's
June 2018
$000's
67 15
414 594
481 609
Other receivables mainly comprise joint venture receivables - 61% (2018: 70%) and GST refunds - 23% (2018: 25%). The carrying amount of trade
debtors and other receivables is assumed to approximate their fair values due to their short-term nature.
Accounting Policy
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 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.
Impairment of trade receivables
The Group considers an allowance for expected credit losses (ECLs) for trade debtors. The Group applies a simplified approach in calculating ECLs. The
Group bases its ECL assessment on its historical credit loss experience, adjusted for factors specific to the debtors and the economic environment
including, but not limited to, financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and delinquency
in payments. In 2019 and 2018 all of the Group’s trade receivables and other current receivables which the Group measures at amortised cost are short-
term (i.e. expected settlement within 12 months) and the Group has credit assessment and risk management policies in place. As a result, the expected
credit losses on trade receivables was not considered material.
Other debtors
These amounts generally arise from transactions outside the usual operating activities of the Group. They do not contain impaired assets and are not past
due. Based on the credit history and future economic forecasts, it is expected that these other balances will be received when due.
Note 10
Inventories
Consumables - at cost
Accounting Policy
Consolidated
June 2019
$000's
June 2018
$000's
57 79
Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the specific identification basis.
36
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 11
Other assets
Prepayments
Restricted cash
Consolidated
June 2019
$000's
June 2018
$000's
832 13
472 445
1,304 458
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 to support the Group's
obligations under the lease. Refer Note 23.
Prepayments
The prepaid expenses predominately relate to the prepayment for demobilisation costs for the use of drilling rigs.
Note 12
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
Balance at the end of year
Accounting Policy
Consolidated
June 2019
$000's
261
(111)
June 2018
$000's
119
(70)
150
49
49
151
(50)
53
11
(15)
150
49
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 Profit or Loss and Other
Comprehensive Income.
Note 13
Exploration and evaluation assets
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
Exploration and evaluation expenditure written off
Restoration and rehabilitation asset
Balance at the end of year
Consolidated
June 2019
$000's
81,069
(17,927)
63,142
Restated
June 2018
$000's
67,510
(17,771)
49,739
June 2019
$000's
49,739
12,606
(155)
952
63,142
June 2018
$000's
45,284
4,814
(132)
(227)
49,739
Comet Ridge Limited I Annual Report 2019 37
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 13
Exploration and evaluation assets (continued)
*The 2018 opening balance was restated by $1.8m following revisiting the initial accounting treatment on signing of the 2018 Stanwell Agreement with a
corresponding increase in the Financial Liability at fair value (Stanwell arrangement). Refer to Note 16 for further details.
Accounting Policy
Cost
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.
Recognition
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.
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.
The timing and amount of restoration costs that are expected to be incurred are estimated, and the net present value is included as part of the cost of the
exploration and evaluation activity that gives rise to the need for restoration. A corresponding provision for restoration and rehabilitation is also recognised.
Finance charges arising from the unwinding of the liability are recognised as an expense in the profit or loss.
Critical accounting estimates and judgements
Exploration expenditure commitments
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
June 2019
June 2018
$000's
7,766
12,027
19,793
$000's
7,642
3,323
10,965
Recoverability of exploration and evaluation expenditure
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.
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.
38
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 13
Exploration and evaluation assets (continued)
In the last 12 months Mahalo has taken significant steps toward development, with APLNG taking on the development role and the JV working through
the initial development plan and associated approvals. No impairment indicators were identified at 30 June 2019 for ATP1191.
ATP743, ATP 744 and ATP1015 are still under evaluation and have not yet reached a stage to allow a reasonable assessment to be made regarding the
existence of economically recoverable reserves.
The Gunnedah Basin permits 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. During the 2019 financial year an impairment expense was
recognised with respect to exploration and evaluation assets for the Gunnedah Basin permits (PEL427, PEL428 and PEL6) amounting to $155,000 (2017:
$132,000).
Permit
PEL 427
PEL 428
PEL6
Total
Consolidated
June 2019
$000’s
June 2018
$000’s
63 79
46 14
46 39
155 132
The New Zealand permit PMP50100 is in the process of being surrendered and the carrying value of its exploration and evaluation assets has been written
off.
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. Comet Ridges share of the respective joint operations is as follows:
30 June 2019
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
GDJV
85.0%
$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
1,428
1,077
2,505
6,059
6,059
8,564
1,768
1,768
6,796
134
5
139
4
-
4
-
6
6
2 1,568
2 1,090
2,658
4
23,804
23,804
23,943
671
671
675
641
641
647
389
389
393
31,264
31,264
33,922
310
310
4
4
9
9
5
5
1,796
1,796
23,633
671
638
388
32,126
Comet Ridge Limited I Annual Report 2019 39
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 13
Exploration and evaluation assets (continued)
30 June 2018
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
ATP1191
40.0%
$000's
PEL427
59.1%
$000's
PEL428
68.4%
$000's
PEL6
29.6%
$000's
3 - -
3
5
-
Total
$000's
129
49
178
21,079
21,079
21,257
24
24
3
5
623
623
626
-
-
626
583
583
588
1
1
587
3
364
364
367
5
5
362
21,233
126
41
167
19,509
19,509
19,676
18
18
19,658
As at 30 June 2019, the principal place of business for PEL 6, 427 and 428 is c/- Santos Limited, Level 5, 60 Flinders Street, Adelaide SA 5000. For
ATP1191, the principal place of business is c/- Origin Energy, as upstream operator for APLNG, Level 24, 180 Ann Street, Brisbane QLD 4000.
As at 30 June 2018, the Company owned 100% of ATP743, ATP744 and ATP1015.
The Group has fully impaired its interest in the Gunnedah Basin Licences PEL 427, PEL 428 and PEL 6.
The Group's minimum expenditure obligations with respect to its interests in joint operations are as follows:
Consolidated
Minimum expenditure requirements
● not later than 12 months
● between 12 months and 5 years
Note 14
Trade and other payables
Trade and Other Payables
Current
Trade payables
June 2019
$000's
5,791
June 2018
$000's
5,071
203
4,953
10,744
5,274
Consolidated
June 2019
$000's
June 2018
$000's
2,802
759
Trade payables includes $1,793,000 (2018: $24,000) for the Group’s share of joint operation liabilities (refer Note 13).
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. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
short-term nature.
40
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 15
Provisions
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
Utilisation of provision
Unwind of discount - finance charges
Foreign exchange movements
Balance at the end of the year
Accounting Policy
Consolidated
June 2019
$000's
337
104
441
June 2018
$000's
233
772
1,005
22
1,501
1,523
57
550
607
1,964
1,612
June 2018
June 2019
$000's
$000's
1,322
1,043
952 227
(760) -
72
19
75
(23)
1,605
1,322
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.
Rehabilitation Provision
The Group records the present value of the estimated cost of legal and constructive obligations to restore disturbances in the period in which the
obligation arises. The nature of rehabilitation activities includes the abandonment of wells, removal of facilities and restoration of affected areas.
Typically, the obligation arises when the well is spudded (commences drilling) or the infrastructure is installed.
When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related asset. Over time, the liability is
increased for the change in the present value based on a risk adjusted pre-tax discount rate appropriate to the risks inherent in the liability. The unwinding
of the discount is recorded as an expense within finance costs.
The carrying amount capitalised is amortised over the useful life of the related asset. The assets’ useful lives are currently estimated at between one
and fifteen years (once production commences). Costs incurred which relate to an existing condition caused by past operations, and which do not give
rise to a future economic benefit, are expensed.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances.
Critical accounting estimates and judgements
The Group estimates the future rehabilitation costs of gas wells and associated infrastructure at the time of installation. In most instances, rehabilitation
of assets occurs many years into the future. This requires assumptions to be made on the rehabilitation date, the extent of rehabilitation activities
required, requirements of future environmental legislation, methodology and technologies used to determine the future rehabilitation cost.
The rehabilitation obligation is discounted to present value using a ten-year government bond discount rate as this is reflective of the risk free rate over
the period to rehabilitation of the assets. These estimates require significant management judgement and are subject to risk and uncertainty that may
be beyond the control of the Group; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact the
recoverable amount of assets and the value of rehabilitation obligations at each reporting date.
Comet Ridge Limited I Annual Report 2019 41
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 16
Financial liability at fair value
Non-current
Financial liability at fair value - Stanwell Corporation Limited
Movements in Financial liability at fair value
Balance at the beginning of the year
Movement in financial liability at fair value
Balance at the end of the year
Consolidated
June 2019
$000's
17,191
June 2019
$000's
16,588
603
17,191
Restated
June 2018
$000's
16,588
Restated
June 2018
$000's
17,020
(432)
16,588
The liability to SCL arising from the renegotiated agreements is recognised as a “financial liability at fair value through profit or loss”.
Critical accounting estimates and judgements
On 17 June 2019, Comet Ridge executed an agreement with Stanwell Corporation Limited (Stanwell), which amended the 2014 Deed of Option between
the parties, extending the Final Option Date under the Deed to 30 September 2022. The 2019 Agreement has removed Stanwell’s option to select either
a Gas Sales Agreement (GSA) or a cash settlement from the 2014 Agreement as well as terminating the 2018 Agreement. This option has now been
replaced with the ability for Comet Ridge Mahalo Pty Ltd (CML) to commence negotiations on a GSA by 29 September 2021, or if CML does not commence
negotiations, Stanwell may commence negotiations for a GSA by 8 October 2021.
If CML and Stanwell are unable to come to an agreement on a GSA or neither party commence negotiations for a GSA, then a cash settlement of $20
million, indexed for CPI from March 2014, would be triggered on or before 8 November 2021 (Payment Amount). Upon payment by Comet of the Payment
Amount, the obligations under the 2014 Agreement and the 2019 Agreement will have been fully discharged as between the parties. The 2019 Agreement
allows for CML and Stanwell to negotiate a market priced GSA and fixed gas volumes between 20 to 30 PJ, depending on the final development of the
Mahalo Gas Project.
Fair value measurement
Given the change in nature of the 2019 Agreement, Comet Ridge has revisited the assumptions of the transaction and in particular who is the potential
market participant and what they would seek as compensation for taking on the financial obligations now included in the 2019 Agreement.
In this instance, the liability is the obligation to either 1) provide a discount to the price that would be applied to a GSA to supply gas from the Mahalo
Project or 2) to provide cash consideration. The principal market and market participant could essentially include any producer or trader. It would be
expected that any market participant would take a conservative view on the liability and therefore want to be compensated for the present value of the
greatest liability.
In considering the options, Comet Ridge has determined that a cash settlement represents the maximum liability under the 2019 Agreement.
The impact of the change in methodology resulted in a $1.7 million expense to the profit and loss in 2019. This has been offset by the time extension
obtained under the 2019 Agreement, resulting in a net expense of $603,000 as shown in the Fair value movement expense.
Valuation techniques and process used to determine fair values
The fair value of the SCL liability is based on the anticipated financial liability arising from the 2019 Agreement. The SCL liability is classified as level 3 in
the fair value hierarchy due to the use of unobservable inputs (refer to Note 24 for further definitions of the fair value hierarchy). The inputs used in the
calculation of the fair value of the financial liability at fair value are as follows:
1.
2.
3.
The option with the greatest liability that a market participant would want to be compensated for is a cash settlement based on neither party
commencing negotiations representing the maximum liability under the 2019 Agreement. As a result the $20 million, indexed for CPI, will be the
basis for determining the liability.
The latest date for the cash payment under point 1 is 8 November 2021, giving a period of indexation of 7.7 years from March 2014.
The CPI rate used to index the $20 million cash payment from March 2014 is based on actual quarterly CPI rates from March 2014 to 30 June
2019 and forecast at 1.5% per annum for the remaining period to 8 November 2021.
4.
Comet Ridge’s cost of capital is 12%. The pre-tax discount rate applied is also 12%.
42
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 16
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
Agreement term
CPI rate
Pre-tax discount rate
If Comet Ridge begins negotiations with Stanwell that are unsuccessful, the cash payment would be payable earlier than 8
November 2021, and the carrying amount of the financial liability at fair value will increase.
If the 1.5% pa CPI rate reduces/increases to a low of 0.5% pa or a high of 2.5% pa the indexed liability will reduce by
approximately 2.3% or $387,000; or increase by approximately 3.3% or $571,000.
If the 12% pre-tax discount rate reduces/increases by 2% i.e. to a low of 10% and/or a high of 14% the NPV of the indexed
liability will increase by approximately 2% or $746,000 or decrease by approximately 2% or $703,000, with a resulting
reduction/increase in the total fair value movement to be expensed over the term of the agreement.
Parent Entity Guarantee
Comet Ridge Limited has provided a parent company financial guarantee Comet Ridge Mahalo Pty Ltd (CRM) in favour of Comet Ridge Mahalo's potential
$20m liability (indexed at CPI from 2014) to Stanwell Corporation.
The guarantee represents a contingent liability of the parent should CRM not be able to settle the obligation if and when it falls due.
Accounting Treatment from 2018 and restatement of opening balance
Under the 2014 Agreement, and the 2018 Amendment Agreement, Stanwell Corporation Limited (SCL) had an option to either:
1.
receive a discount under a Gas Supply Agreement (GSA) (Option A). 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 GSA. The revenue foregone by Comet Ridge is the $15 million discount indexed
by CPI up to the date the GSA is signed; or
receive a cash payment of $20 million indexed by CPI up to the date of payment. This amount is payable if SCL decides not to exercise Option A,
or an acceptable GSA cannot be agreed.
2.
The effect of the 2018 Agreement was to extend the option date to 30 September 2019.
On further review of the 2018 agreement and the initial booking of the 2014 Agreement, Comet Ridge has determined that the initial accounting for the
agreement did not correctly reflect the fair value at the time and as a result, at 31 December 2018, adjusted the opening balance for Financial Liability and
Exploration and Evaluation Asset by $1.8m.
Note 17
Equity
Ordinary shares - fully paid
Movements in ordinary shares
Balance at the beginning of the period
Performance rights
Share placement @ 23.5 cents per share
Entitlement issue @ 23.5 cents per share
Share placement @ 34 cents per share
Share issue costs
Balance at the end of the year
Accounting Policy
Consolidated
June 2019
June 2018
$000's
129,110
$000's
112,440
June 2019
Number of Shares
676,650,986
-
-
-
51,225,437
-
727,876,423
June 2018
Number of Shares
617,742,154
3,125,000
42,638,299
13,145,533
-
-
676,650,986
June 2019
$000's
112,440
-
-
-
17,417
(747)
129,110
June 2018
$000's
99,377
590
10,020
3,089
-
(636)
112,440
Ordinary shares are classified as equity. 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.
Comet Ridge Limited I Annual Report 2019 43
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 18
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
Balance at the end of the year
Accounting Policy
Consolidated
June 2019
$000's
1,248
65
1,313
June 2018
$000's
1,259
70
1,329
June 2019
$000's
70
-
June 2018
$000's
80
(590)
(5) 580
70
65
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
Share-based Payments Reserve
The Share-Based Payments Reserve is used to record the expense associated with options and performance rights 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.
Note 19
Consolidated Statement of Cashflows reconciliation
Consolidated
(a) Reconciliation of cash flow from operations
Loss for the year
Depreciation
Impairment - exploration and evaluation expenditure
Exploration and evaluation expenditure written off
Share-based payments
Net exchange differences
Movement in financial liability at fair value
Changes in assets and liabilities
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in inventories
Decrease/(Increase) in prepayments and deposits paid
Increase in trade payables and accruals
Increase in provisions
June 2019
$000's
(4,001)
50
155
-
(5)
(11)
603
340
22
13
96
351
(2,387)
June 2018
$000's
(2,218)
15
132
300
580
(119)
(432)
(176)
(4)
(2)
117
135
(1,672)
(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 $nil (2018: $590,000).
Note 20
Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating
decision makers, who are responsible for allocating resources and assessing performance of the operating segments, are 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 internal reports used by
the Board of Directors (chief operating decision makers) in assessing performance and determining the allocations of resources is cash flow reporting of
exploration and evaluation activities as one segment.
44
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 21
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
Consolidated
June 2019
$000's
June 2018
$000's
(5) 580
Annual assessment of the performance rights likelihood of meeting vesting conditions was performed and as a result it is now being considered unlikely
that some of the performance metrics will be met. This resulted in the reversal of those expenses.
The types of share-based payment plans are described below.
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.
Accounting Policy
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 option pricing method 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 2019.
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 over the expected vesting period.
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.
Employee performance 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 and refreshed at the 2016 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.
The fair value of performance rights is determined at grant date. The value of performance rights that are issued subject only to non-market conditions
such as a service condition or subject to a service condition and a performance condition e.g. reserves certification, 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. Total
Shareholder Return performance 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.
Comet Ridge Limited I Annual Report 2019 45
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 21
Share-based payments (continued)
Performance rights may only be issued if the number of shares underlying the performance rights, when aggregated with the number of performance
rights on issue and the number of shares issued during the previous five years under the plan or any other employee incentive scheme, do not exceed
5% of the total number of shares on issue.
The following table shows the number and movements of performance rights during the 2019 year:
Grant Date
Expiry Date
1-Dec-16
23-Nov-17
23-Nov-17
20-May-18
20-May-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-19
31-Jan-20
31-Jan-21
31-Jan-20
31-Jan-21
31-Dec-19
31-Jan-20
31-Jan-21
Share Price at
Grant Date
(cents)
7.00
26.50
26.50
36.50
36.50
23.50
32.50
32.50
No. of Rights
30 June 2018
1,875,000
1,000,000
1,000,000
250,000
250,000
-
-
-
Granted
During the
Year
Vested During
the Year
Expired During
the Year
No. of Rights
30 June 2019
-
-
-
-
-
400,000
350,000
350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,875,000
1,000,000
1,000,000
250,000
250,000
400,000
350,000
350,000
4,375,000
1,100,000
-
-
5,475,000
At 30 June 2019, all performance rights were subject to non-market vesting conditions. There were no performance rights that had vested which had
not yet been exercised.
The following table shows the number and movements of performance rights during the 2018 year:
Grant Date
Expiry Date
18-Jan-16
18-Jan-16
1-Dec-16
23-Nov-17
23-Nov-17
23-Nov-17
19-Feb-18
19-Feb-18
20-May-18
20-May-18
31-Dec-17
31-Dec-17
31-Dec-19
31-Jan-21
31-Jan-20
31-Jan-21
31-Jan-20
31-Jan-20
31-Jan-20
31-Jan-21
Share Price at
Grant Date
(cents)
9.00
9.00
7.00
17.43
26.50
26.50
23.50
23.50
36.50
36.50
No. of Rights
30 June 2017
1,260,000
1,260,000
2,500,000
-
-
-
-
-
-
-
Granted
During the
Year
-
-
-
500,000
1,000,000
1,000,000
800,000
1,200,000
250,000
250,000
Vested During
the Year
Expired During
the Year
No. of Rights
30 June 2018
-
-
(625,000)
(500,000)
-
-
(800,000)
(1,200,000)
-
-
(1,260,000)
(1,260,000)
-
-
-
-
-
-
-
-
-
-
1,875,000
-
1,000,000
1,000,000
-
-
250,000
250,000
5,020,000
5,000,000
(3,125,000) (2,520,000)
4,375,000
Note 22
Contingent liabilities
There are no contingent liabilities of the Group as at 30 June 2019.
46
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 23
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
Consolidated
June 2019
$000's
June 2018
$000's
90
14
104
98
8
106
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
Consolidated
June 2019
$000's
7,766
12,027
19,793
June 2018
$000's
2,571
3,121
5,692
The increase in commitments has predominately arisen from the later work programmes on ATP 743, ATP 744 and ATP 1015.
Bank guarantees
Westpac Banking Corporation have provided bank guarantees totalling $472,000 (2018: $445,000) as follows:
•
•
•
$239,000 (2018: $212,000) to the State of Queensland - Group's exploration permits and environmental guarantees;
$200,000 (2018 $200,000) to the State of NSW - Group’s exploration permits and environmental guarantees; and
$33,000 (2018: $33,000) 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.
Accounting Policy
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 lessor) are charged to profit or loss on a straight line basis over the period of the lease.
Comet Ridge Limited I Annual Report 2019 47
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 24
Risk management
Overview
The Group's principal financial instruments comprise receivables, payables, 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 which are carried at amortised cost unless otherwise stated:
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
Consolidated
June 2019
$000's
June 2018
$000's
12,998 11,547
481 609
472 445
13,951 12,601
2,802 759
17,191 16,588
19,993 17,347
Interest rate risk
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 whilst preserving liquidity.
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 2017.
2019 – Consolidated
Cash and cash equivalents and restricted cash
2018 – Consolidated
Cash and cash equivalents and restricted cash
Profit or Loss
Equity
1% increase
$000's
135
1% decrease
$000's
(135)
1% increase
$000's
135
1% decrease
$000's
(135)
120
(120)
120
(120)
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 resources to meet its obligations when due.
48
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 24
Risk Management (continued)
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. With respect to the liability to Stanwell
Corporation Limited (SCL) arising from the Renegotiated Mahalo Option Agreement, the Group will manage this liquidity risk by negotiating a Gas Supply
Agreement (GSA) with SCL. In the event a GSA is not negotiated then a cash payment of $20m escalated by CPI until the date of payment will be required
and has been disclosed in the below table.
The following table details the remaining contractual maturity for non-derivative financial liabilities.
Consolidated - 30 June 2019
Trade and other payables
Financial liability at fair value - Stanwell Corporation Limited
Consolidated - 30 June 2018
Trade and other payables
Financial liability at fair value - Stanwell Corporation Limited
<1 year
$000's
2,802
-
1 to 3 years
$000's
-
22,460
Total
Contractual
Cash Flows
$000's
2,802
22,460
Carrying
Amount
$000's
2,802
17,191
2,802
22,460
25,262
19,993
759
- 759
- 17,669 17,669
759
16,588
759
17,669 18,428
17,347
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 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 NZ dollars at the time of transaction.
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
2019
NZD
$000's
1
1
2018
NZD
$000's
17
1
(12)
(12)
Based on financial instruments held at 30 June 2019 and 30 June 2018, had the Australian dollar strengthened/weakened by 10% there would be an
immaterial impact on the Group’s profit or loss and equity.
Credit risk
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 charges to joint operations. 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 2019 $nil, (2018: $nil) of
the Group's receivables were past due. The Group has no other significant concentration of credit risk.
Comet Ridge Limited I Annual Report 2019 49
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 24
Risk management (continued)
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 evaluation 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.
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)
c)
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
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 2019 (refer Note 16).
Financial Liabilities - Level 3
Consolidated
June 2019
$000's
June 2018
$000's
Financial liability at fair value - Stanwell Corporation Limited
17,191
16,588
Balance at the beginning of the year
Movement in financial liability at fair value
Balance at the end of the year
16,588
603
17,020
(432)
17,191
16,588
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.
50
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 25
Group structure
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of entity
Chartwell Energy Pty Ltd
Comet Ridge Limited
Comet Ridge NZ Pty Ltd
Davidson Prospecting Pty Ltd
Comet Ridge Mahalo Pty Ltd
Comet Ridge Gunnedah Pty Ltd
Comet Ridge Galilee Pty Ltd
Comet Ridge Denison Trough Pty Ltd
Accounting Policies
Country of
Incorporation
Class of
Shares
Equity Holding
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2019
100
100
100
100
100
100
100
100
2018
100
100
100
100
100
100
100
100
Subsidiaries
Subsidiaries are all 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.
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.
Joint arrangements
The Group has interests in the following Joint Arrangements:
ATP 1191 Mahalo
ATP 743 Galilee
ATP 744 Galilee
ATP 1015 Galilee
PEL427 Gunnedah
PEL428 Gunnedah
PEL6 Gunnedah
–
–
–
–
–
–
–
40.00%
85.00%
85.00%
85.00%
59.09%
68.42%
29.55%
Comet Ridge Limited I Annual Report 2019 51
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 25
Group structure (continued)
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 parties 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 26
Related party transactions
Parent entity
The legal parent entity is Comet Ridge Limited. Details of controlled entities are set out in Note 25.
Key Management Personnel
There were no transactions with Key Management Personnel during the year, other than those disclosed in the remuneration section of the Directors’
Report.
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 section of this note. The loans to subsidiaries are interest free,
repayable in cash at call and are unsecured.
Loans to subsidiaries and investments in subsidiaries
The parent entity has recorded investments in subsidiaries at cost of $44.25 million (2018: $44.25 million) less provisions for impairment $44.08 million
(2018: $44.08 million).
The parent entity has also loaned funds to its subsidiaries of net $25.65 million (2018: $18.82 million) primarily to undertake exploration expenditure. The
parent entity has impaired the carrying amount of the loans by $8.33 million (2018: $7.67 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.
52
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 27
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
Martin Riley
Michael Dart
Non-executive Chairman
Managing Director
Non-executive Director
Executive Director
Non-executive Director (appointed 13 March 2019)
Non-executive Director (resigned 13 March 2019)
Consolidated
June 2019
$
884,639
43,127
10,869
June 2018
$
851,450
40,942
6,020
(3,385) 142,911
1,041,323
935,250
June 2019
$000's
14,688
48,603
63,291
2,809
2,181
4,990
58,301
143,720
3,829
(89,248)
58,301
4,048
-
4,048
June 2018
$000's
12,497
36,138
48,635
954
1,997
2,951
45,684
127,051
3,833
(85,200)
45,684
2,567
-
2,567
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
Note 28
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
Contingent liabilities are disclosed in Note 13.
Parent Entity Guarantee
Comet Ridge Limited has provided a parent company financial guarantee for Comet Ridge Mahalo Pty Ltd (CRM) in favour of Comet Ridge Mahalo's
potential $20m liability (indexed at CPI from 2014) to Stanwell Corporation.
The guarantee represents a contingent liability of the parent should CRM not be able to settle the obligation if and when it falls due.
Comet Ridge Limited I Annual Report 2019 53
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Notes to the Financial Statements (continued)
Note 29
Post balance date events
On 2 September 2019 it was announced that Vintage Energy Limited (Vintage) had met the conditions to earn a further 15% interest in the Galilee
Deeps Joint Venture, bringing their total interest to 30%. As a consequence of Vintage earning a further 15% interest in the GDJV, Comet Ridge has
reduced its interest in the Contingent Resources of the Albany structure to reflect its 70% interest in the GDJV. The total Contingent Resources for the
Albany structure have not changed.
Petroleum Lease Applications (PLA) 1082 Humboldt and 1083 Mahalo were lodge with the Department of Natural Resources, Mines and Energy (DNRME)
on 12 September 2019. The PLAs cover the expected Initial Development Area for the Mahalo gas Project. It is expected the Potential Commercial Area
(PCA) applications will be lodged shortly to secure the remainder of ATP1191.
Other than the above 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.
54
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
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 2019 and of the performance for the year ended on that date of the
consolidated entity.
2) As stated in Note 2, 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, 23 September 2019
Comet Ridge Limited I Annual Report 2019 55
Independent auditor’s report
To the members of Comet Ridge Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Comet Ridge Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2019 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated statement of financial position as at 30 June 2019
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
56
Material uncertainty related to going concern
We draw attention to Note 2(d) in the financial report, which indicates that the Group has ongoing
commitments to continue its normal business operations, including the progression of its Mahalo Gas
Project and Galilee Deeps Joint Venture exploration activities. In addition, under an agreement with
Stanwell Corporation Limited, contract terms exist whereby a cash payment of $20,000,000
(escalated by CPI from March 2014) may become payable.
The ability of the Group to continue to as a going concern depends upon a number of matters including
the successful raising of funding through debt, equity or farm-out of the Group’s tenements to meet
these commitments as they arise. These conditions, along with other matters set forth in Note 2(d),
indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
For the purpose of our audit we used overall Group
materiality of $780,000, which represents
approximately 1% of the Group’s total assets.
We applied this threshold, together with
Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
qualitative considerations, to determine the scope
of our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose Group total assets because, in our view,
it is the benchmark against which the performance
The accounting processes are structured around
the Group finance function at the Group’s head
office in Brisbane. We have performed our audit
procedures primarily at the Group's Brisbane
office.
57
of the Group is most commonly measured whilst in
the exploration phase. We utilised a 1% threshold
based on our professional judgement, noting it is
within the range of commonly acceptable
thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit Committee.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Carrying Value of the Exploration and
Evaluation Assets
Refer to note 13, Exploration and Evaluation
expenditure
Exploration and Evaluation assets represent
the
Mahalo and Galilee Deeps Joint Ventures (JVs), and
the Gunnedah and Galilee Basin tenements, and have a
carrying value of $63,142,000 at 30 June 2019.
Exploration and Evaluation expenditure capitalised in
the year totalled $12,606,000.
The
following procedures, amongst others, were
performed in relation to the recoverability of the
Exploration and Evaluation Assets:
Considered the Group’s accounting position paper
on the ability to continue to capitalise exploration
and evaluation assets;
Agreed the licence expiry date of the respective
tenements
the Department of Natural
Resources, Mines and Energy (DNRME) website
to identify assets where the Group’s right to
explore had expired;
to
In addition, all expenditure in relation to the Gunnedah
Basin ($155,000) and New Zealand tenements ($nil)
has been fully impaired during the year.
Compared
the minimum exploration spend
commitments per the licence to actual exploration
spend incurred;
We considered the Carrying Value of the Exploration
and Evaluation Assets to be a key audit matter given
the significance of the Exploration and Evaluation
Asset balance to the financial statements and
judgements regarding future exploration plans and
tenure status, in determining whether the assets should
continue to be capitalised.
Sighted applications for renewal or Petroleum
Lease applications where they had been lodged
with the DNMRE;
Assessed the FY20 budget to determine
if
exploration spend had been included for the
respective tenements to demonstrate continued
exploration activity; and
Discussed likely developments and future plans
for the respective tenements with Management.
58
Key audit matter
How our audit addressed the key audit matter
Completeness of the rehabilitation provision
Refer to note 15, Provisions
The rehabilitation provision represents the estimated
present value of rehabilitating current environmental
and
disturbances
associated
infrastructure) on
tenements. The
rehabilitation provision recognised at 30 June 2019
totalled $1,605,000 (2018: $1,320,000).
the Group’s
(wells,
tanks,
We considered this a key audit matter given the
estimation of the rehabilitation provision involves
significant judgment by the Group on the required
rehabilitation activities, cost of rehabilitation activities,
timing of rehabilitation, and inflation and discount
factors.
following procedures, amongst others, were
The
performed in relation to the rehabilitation provision:
Considered whether the accounting policy was
consistent with the requirements of Australian
Accounting Standards;
Agreed the estimated timing of rehabilitation
aligns to the end of the tenement licence date or
earlier if relevant for the respective tenements;
Considered the reasonableness of estimated cost of
recent
rehabilitation with
rehabilitation activity undertaken by the Group;
reference
to
Considered the appropriateness of the inflation
rate and discount rate with reference to Australian
Government bond rates and Reserve Bank of
Australia inflation targets;
Evaluated if all exploration wells included on the
DNMRE website relating to the Group’s Australian
tenements had been included in the rehabilitation
provision;
Tested
the mathematical accuracy of
recalculating
by
the
the
rehabilitation model
provision; and
Assessed the disclosures included in the financial
report.
Valuation of the Stanwell Corporation Limited
Financial Liability
Refer to note 16, Financial liability at fair value
The
following procedures, amongst others, were
performed in relation to the valuation of the Stanwell
Corporation Financial Liability:
The Stanwell Arrangement originated in 2014 and
reflects the Group’s obligation to settle the acquisition
of Stanwell’s 5% interest in the Mahalo Gas Project.
The arrangement has been renegotiated and amended
twice during the 2019 financial year.
The 2018 Deed of Amendment (“2018 Agreement”)
extended the maturity date of the Deed of Option
Mahalo Joint Venture
to
September 2019, which formed the basis of the
accounting adopted at the 31 December 2018 half year.
(“2014 Agreement”)
On 19 June 2019 Comet Ridge Limited and Stanwell
Corporation Limited agreed a further amendment to
the 2014 Agreement, 2019 Deed of Amendment (“2019
Agreement”).
59
Considered the Group’s technical accounting
position paper and key assumptions therein;
Reviewed the 2014 Agreement, 2018 Agreement
and 2019 Agreement to obtain an understanding
of the arrangements;
Considered the reasonableness of the timing of
any potential cash outflow with reference to the
conditions in the 2019 Agreement;
Consulted with PwC Valuation specialists in
relation to estimating the fair value of the
Stanwell Arrangement, in particular with respect
to the appropriate discount rate to be applied;
Considered the forecast inflation rates over the
Stanwell
timeframe
remaining
the
of
Key audit matter
How our audit addressed the key audit matter
Arrangement;
In estimating the fair value of the financial liability
under
the Group have made
judgements regarding the determination of the fair
value including:
the Arrangement,
Tested
the mathematical accuracy of
the
calculations of the financial liability through
recalculation of the liability; and
the timing of any cash payment to Stanwell
Corporate Limited;
the discount rate to be applied; and
forecast inflation rates.
Assessed the disclosures included in the financial
report regarding the key assumptions estimation
of the liability and the events which have occurred
throughout FY19.
Given these judgements made in determining the fair
value of the liability, the complexities of the Stanwell
Arrangement and the significance of the Arrangement
to the financial statements, we consider the accounting
for the Stanwell Arrangement to be a key audit matter.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
60
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 17 to 22 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the remuneration report of Comet Ridge Limited for the year ended 30 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Michael Shewan
Partner
Brisbane
23 September 2019
61
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Additional Information
The additional information set out below was applicable at 5 September 2019:
1.
Number of Equity Holders
Ordinary Share Capital
727,876,423 fully paid ordinary shares are held by 2,162 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
160
281
224
905
592
2,162
Units
7,308
852,969
1,865,671
39,088,832
686,061,643
727,876,423
Percentage
of Issued Capital*
0.000%
0.120%
0.260%
5.370%
94.250%
100.000%
Percentages have been rounded to the nearest 1/1000 decimal place.
The numbers of shareholders holding less than a marketable parcel (being 1,924 units or less) were:
209 Holders (84,074 Shares)
4.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders:
Name
HSBC Custody Nominees (Australia) Limited
McKay Super Pty Ltd & Waterford Atlantic Pty Ltd & Affiliates
Number of
Shares Held
51,500,000
37,295,470
Percentage
of Issued Capital
7.07%
5.12%
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 performance rights: The Company has 5,475,000 Performance rights on issue, issued in accordance with the Employee Performance
Share Rights Plan last approved by shareholders at the Company’s AGM on 24 November 2016. The number of beneficial holders of
performance rights totals 5.
62
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Additional Information (continued)
6.
The 20 Largest Holders of Ordinary Shares
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NORFOLK ENCHANTS PTY LTD
BRIXIA INVESTMENTS LTD
GILBY RESOURCES PTY LTD
SIXTH ERRA PTY LTD
KABILA INVESTMENTS PTY LTD
1.
2.
3.
4. MCKAY SUPER PTY LTD
5.
6.
7.
8.
9.
10. WATERFORD ATLANTIC PTY LTD
11. PG CONSOLIDATED PTY LTD
12. VILLIERS QUEENSLAND PTY LTD
13. MR CHRISTOPHER JOHN BLAMEY + MRS ANNE MARGARET BLAMEY
14. NATIONAL NOMINEES LIMITED
15. BIAN GROUP PTY LIMITED
16. MR PAUL GEOFFREY FUDGE
17. AVANTEOS INVESTMENTS LIMITED <1823205 SUPERANNUATION A/C>
18. BNP PARIBAS NOMS PTY LTD
19. NAUGHTON SUPER PTY LTD
20. BRAZIL FARMING PTY LTD
TOTAL
7.
Restricted Securities
Number of Ordinary
Fully Paid Shares
Held
66,370,975
54,363,114
25,638,053
20,253,128
20,000,000
18,534,201
18,000,000
16,961,236
16,811,721
13,697,082
13,463,297
11,977,227
11,038,297
11,028,341
10,154,120
9,444,109
7,754,440
6,923,679
6,700,000
6,459,062
365,572,082
Percentage of
Issued Capital
%
9.12%
7.47%
3.52%
2.78%
2.75%
2.55%
2.47%
2.33%
2.31%
1.88%
1.85%
1.65%
1.52%
1.52%
1.40%
1.30%
1.07%
0.95%
0.92%
0.89%
50.25%
There were no restricted securities issued or held during the reporting period.
8.
Interest in Petroleum Tenements - Authority to Prospect (ATP), Petroleum Exploration Lease (PEL), Petroleum Mining Permit (PMP)
Interests
ATP / PEL / PMP
Location
ATP1191 Mahalo
Bowen Basin
PEL427 2
PEL428 2
PEL 6 2
ATP743 3
ATP744 3
ATP1015 3
Gunnedah Basin
Gunnedah Basin
Gunnedah Basin
Galilee Basin
Galilee Basin
Galilee Basin
Interest1
40%
100% Conventional
59.09% CSG
100% Conventional
68.42% CSG
97.5% Conventional
29.55% CSG
70% Conventional
100% CSG
70% Conventional
100% CSG
70% Conventional
100% CSG
PMP501004
1
South Island, New Zealand
100% CSG
The interest is held either by Comet Ridge Limited or one of its wholly owned subsidiaries
Operator
Origin Energy, as upstream operator for APLNG
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
2
The Petroleum Exploration Permits located in the Gunnedah Basin are divided into Conventional oil and gas equity and CSG Joint Ventures. The percentages recorded show the
interests that Comet Ridge (or a wholly owned subsidiary) holds in these respective permits.
3 The Authorities to Prospect (ATPs) located in the Galilee Basin have nee divided by way of a farmin to Vintage Energy Limited into the Conventional (Deeps) and Unconventional
(Shallows) joint ventures. The percentages recorded show the interests that Comet Ridge (or a wholly owned subsidiary) holds in these respective ATP’s.
4
As previously announced PMP 50100 has been relinquished by the Company. There is currently one outstanding well that requires final abandonment works to be completed to satisfy
the NZPM’s requirements.
Comet Ridge Limited I Annual Report 2019 63
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2019
Corporate Directory
Directors
James McKay - Non-executive Chairman
Tor McCaul - Managing Director
Gillian Swaby - Non-executive Director
Christopher Pieters - Executive Director
Martin Riley - Non-executive Director
Company Secretary - Stephen Rodgers
Registered Office
Level 3
410 Queen Street
Brisbane Queensland 4000
Telephone: +61 7 3221 3661
Facsimile: +61 7 3221 3668
Website: www.cometridge.com.au
Email: info@cometridge.com.au
Share Registry
Computershare Registry Services Pty Ltd
Level 1
200 Mary Street
Brisbane Queensland 4000
Telephone: +61 7 3237 2100
Facsimile: +61 7 3229 9860
Auditors
PricewaterhouseCoopers
480 Queen Street
Brisbane Queensland 4000
Telephone: +61 7 3257 5000
Securities Exchange Listing
Australian Securities Exchange Ltd
Home Exchange: Brisbane
ASX Code: COI
64