Comet Ridge
ANNUAL
REPORT
2022
CONTENTS
Overview of Activities
Chairman and Managing Director Letter to Shareholders
2022 Annual Reserves Statement
Corporate Governance Overview Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
Corporate Directory
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Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Overview of Activities
Highlights
• Mahalo North (ATP 2048) dual-lateral pilot production test undertaken during the financial year has delivered a world-class
result for a single pilot well, achieving gas flow of >1.7 million cubic feet per day (MMcfd).
•
•
•
•
•
The pilot testing results confirm very high productivity in the evaluation area and extension of the Mahalo Gas Project high
productivity fairway northwest into the Mahalo North block.
Transformative acquisition of APLNG’s 30% interest in the Mahalo Gas Project (for $12.0 million of upfront consideration and
$8.0 million of deferred consideration) completed on 28 June 2022.
The acquisition increases Comet Ridge’s 2P reserves in the Mahalo Gas Project at 30 June 2022 by 75% to 186 Petajoules (PJ),
based on a 70% equity interest.
Continuing Mahalo JV partner, Santos QNT Pty Limited (STO) is commercially engaged in the acquisition, providing a loan of
$13.15 million to Comet Ridge to fund the upfront consideration paid to APLNG.
Santos has a firm option until 28 December 2022 to acquire a 12.86% interest in the Mahalo Gas Project from Comet Ridge at
proportional deal value, which is $5.14 million of upfront consideration and $3.43 million of deferred consideration. Santos
provided a notice to exercise this option on 23 September 2022.
Operations
• Mahalo North drilling program and production test
undertaken during the financial year has produced a
world-class result for a single pilot well (Figure 1).
•
•
•
•
The successful pilot test results will be used by Comet
Ridge to generate an initial gas reserves certification for
Mahalo North.
Geological modelling has been progressed for the
Mahalo East (ATP 2061) block based on the extensive
data available from historical petroleum wells, coal bore
drilling and seismic activities, which is expected to result
in a contingent gas resource booking prior to the
commencement of upcoming drilling activities.
Plans were advanced during the financial year for initial
appraisal drilling at Mahalo East, commencing with a
core hole drilling program over the coming months.
An extensive technical assessment was undertaken
during the financial year to support six Potential
(PCA) applications and permit
Commercial Area
renewals in the Galilee Basin permits. These were
awarded by the Queensland Department of Resources to
Comet Ridge on 9 September 2022 for a term of 15 years
for the six PCA areas and 12 years for the underlying
permits, ATP 743 and ATP744.
Corporate
Figure 1 – Mahalo North 1 flare
•
•
•
Underlying loss after tax of $8.63 million (2021: $6.96 million), including $3.64 million of non-cash expenses.
Cash balance of $7.42 million at 30 June 2022 and with the placement of $24.0 million completed on 14 September 2022,
boosts proforma cash at 30 June 2022 to $30.2 million (after costs of the placement).
Gas sales agreement (GSA) negotiations with CleanCo Queensland Limited were extended to 31 December 2022 and have been
materially progressed by the parties. Once completed, this will be Comet Ridge’s inaugural GSA for supply of gas into the
domestic gas market to support the current and expected ongoing east coast gas supply shortfall.
Comet Ridge Limited I Annual Report 2022 1
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Project Overview
Comet Ridge has highly prospective, large footprint gas assets in two Queensland basins (Figure 2 and Table 1):
1. Key focus area in the southern Bowen Basin, Queensland
– comprising the significantly appraised Mahalo Gas Project
and three 100% held blocks to the north (all collectively
referred to by Comet Ridge as the Mahalo Gas Hub area).
The Mahalo Gas Hub is close to infrastructure connected to
the east coast gas market and Gladstone LNG facilities. It is
being targeted by Comet Ridge for near-term production,
including a stand-alone Mahalo North development, and an
integrated hub development with a modular plant located
at the Mahalo Gas Project.
2. Medium term focus area in the Galilee Basin, Queensland
– three permits that cover a large area in the eastern part
of the basin and are prospective for both CSG and
conventional gas (Deeps). The prospectivity of this material
gas province has now been secured with long term tenure
via ATP renewal and six PCA awards to enable exploration
activities to recommence over time.
3. Lower priority focus area in Gunnedah Basin, NSW – one
permit located in the northern part of the basin that is a
lower priority for the Company given the apparent lack of
support from the NSW Government to promote gas
development for the benefit of manufacturing, job creation
and for use as a transition fuel in partnership with
renewables.
Figure 2 – Comet Ridge’s East Coast Gas Permits
Comet Ridge Permits
State
CSG Interest
Conventional
Interest
Area (km2)
Mahalo Gas Hub, southern Bowen Basin
Mahalo Gas Project (PL 1082, PL 1083, PCA 302,
PCA 303, PCA 304)
Mahalo North (ATP 2048)
Mahalo East (ATP 2061)
Mahalo Far East (ATP 2063)
Galilee Basin
ATP 743, PCA 319 3
ATP 744, PCA 320, 321, and 322 4
ATP 1015, PCA 323 and 324 5
Gunnedah Basin
PEL 427 6
QLD
QLD
QLD
QLD
QLD
QLD
QLD
70%2
100%
100%
100%
100%
100%
100%
n/a 1
n/a
n/a
100%
70%
70%
70%
989 2
450
97
338
1,007
3,182
2,194
NSW
59.09%
100%
900
Table 1 – Summary of Comet Ridge Permits at 30 June 2022
1
2
3
4
Comet Ridge has rights for gas down to the level of the lower Mantuan coals.
Increased to 70% equity and 989 km2 after the transaction with APLNG was completed on 28 June 2022.
ATP 743 was renewed on 9 September 2022 for 12 years and PCA 319 awarded for 15 years.
ATP 744 was renewed on 9 September 2022 for 12 years and PCAs 320 to 322 awarded for 15 years.
5 ATP 1015 will be subject to renewal application. PCAs 323 and 324 awarded on 9 September 2022 for 15 years.
6
PEL 427 was renewed on 12 May 2022 for a smaller area of 12 blocks out of 57 blocks requested.
2 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
1.
Mahalo Gas Hub, Bowen Basin, QLD
Mahalo Gas Project (PL 1082, PL 1083, PCA 302, PCA 303, PCA 304)
Overview - Comet Ridge’s Mahalo Gas Project is located in the Denison Trough, approximately 240km west of Gladstone in the southern
Bowen Basin, covering an area of 989km2. The project is located 65km to the north of infrastructure connecting to the east coast gas
market and Gladstone LNG export terminals (see Figure 3). The initial focus for development of the project will be in the two Petroleum
Lease areas (PL 1082 and PL 1083, Figure 4) that were awarded to the Mahalo joint venture participants in June 2020, and have been
heavily appraised to date, with strong flow rates achieved and reserves independently certified.
Figure 3 – Regional location of the Mahalo Gas Hub area showing proximity to pipeline infrastructure and
Gladstone domestic and LNG markets
Acquisition of APLNG interest completed – Comet Ridge recently completed the acquisition of Australia Pacific LNG Pty Limited’s (APLNG)
30% interest in the Mahalo Gas Project, taking Comet Ridge’s interest from 40% to 70% (Acquisition). As at 30 June 2022, the Mahalo
Gas Project is a joint venture between Comet Ridge (70%) and Santos QNT Pty Limited (Santos) (30%).
Comet Ridge completed the APLNG Acquisition on 28 June 2022 with an upfront payment of $12.0 million (less a $1 million deposit),
funded via a $13.15 million loan from Santos. Comet Ridge must also pay APLNG $8 million of post-completion payments in four annual
payments of $2 million (or earlier upon a trigger event). Post completion, Santos has a firm option (to 28 December 2022) to acquire an
additional 12.86% interest in the Mahalo Gas Project from Comet Ridge. Santos gave notice to Comet Ridge on 23 September 2022 to
exercise its firm option (for proportional acquisition value), resulting in Comet Ridge’s interest in Mahalo decreasing to 57.14% and the
loan repayable to Santos decreasing to $8.0 million (plus interest accrued at a rate of 5.125% per annum). Comet Ridge repaid the net
loan amount of $8.1 million on 28 September 2022.
The strategic rationale for Comet Ridge increasing its equity interest in the Mahalo Gas Project is:
•
•
A material increase in Comet Ridge gas reserves at a compelling price of $0.25/GJ.
Creation of a streamlined joint venture between Comet Ridge and Santos, with a common focus on finalising development
plans for the Mahalo Gas Project, and the broader expanded Mahalo Gas Hub, to achieve significant scale.
• Maintain continuity of operator - Santos has been Exploration Operator to this point and will continue as Development
Operator.
•
Enables the development of Mahalo using a similar low cost ‘modular’ plant design that Santos has successfully implemented
at the nearby Arcadia Project, currently producing in excess of 100 TJ/day.
Comet Ridge Limited I Annual Report 2022 3
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Gas Reserves and Resources - Comet Ridge’s net equity share of the Mahalo Gas Project gas reserves and contingent gas resources as at
30 June 2022 following completion of the Acquisition is shown in Table 2 below.
Comet Ridge Limited
Mahalo Gas Project
Pre-Acquisition (COI 40% interest)
Increase from Acquisition
Post-Acquisition (COI 70% interest)
Percentage increase
Gas Reserves (PJ)
Contingent Gas Resources (PJ)
1P
0
0
0
-
2P
106
80
186
75%
3P
183
138
321
75%
1C
53
81
134
153%
2C
89
132
221
3C
154
206
360
148%
138%
Table 2 – Comet Ridge’s share of Mahalo Gas Project gas reserves and contingent resources at 30 June 2022
Figure 4 – Map of Mahalo Gas Project PL areas (PL 1082 and 1083 as at 30 June 2022) within the Mahalo Gas Hub
and location of CSG and conventional wells drilled to date
4 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Mahalo North – ATP 2048
Overview – This large 450km2 block is highly prospective, given its location directly north of, and contiguous with, the Mahalo Gas Project.
The block was formally awarded to Comet Ridge as 100% equity holder by the Queensland Government on 29 April 2020, following the
approval of the Environmental Authority by the Department of Environment and Science, and execution of a Native Title agreement over
the block. Gas produced from Mahalo North is subject to domestic supply conditions, meaning that it cannot be supplied other than to
the Australian domestic market, unless there is an offsetting domestic sales volume from another project via a swap arrangement.
Appraisal and production testing - Comet Ridge completed an
initial drilling program at Mahalo North in late 2021 comprising
a vertical well (Mahalo North 1 – cored and completed for
production testing) and a dual lateral well (Mahalo North 2 –
intersecting the Mahalo North 1 vertical well).
Mahalo North 1 was production tested for a period of
approximately eight months with very positive results achieved.
The Mahalo North 1 pilot well achieved a gas flow in excess of
1.7 MMcfd, which is the highest recorded flow rate from a pilot
well in the Mahalo Gas Hub area. The pilot well test has
provided valuable technical information and, along with two
earlier very successful Mahalo Gas Project pilot wells at Mira 6
and Mahalo 7, has again demonstrated the productive capacity
of the Mahalo Gas Hub over a wide area, this time inside Comet
Ridge’s 100% held Mahalo North block (ATP 2048).
Figure 5 – Cutaway diagram of the Mahalo North 1 and
Mahalo North 2 pilot well
Development planning - This pilot test has provided high-quality data needed to finalise development planning. Most importantly,
Mahalo North 1 well confirmed that a single pilot test can successfully drain a large area of reservoir. Several development wells
together (with enhanced dewatering) are likely to produce much higher gas flow rates than a single pilot well working alone. The
ultimate volume of gas that can be accessed by Mahalo North 1 is a significant factor in understanding the development economics.
The Company’s focus for Mahalo North will now turn to finalising the necessary work to support a Petroleum Lease application,
including gas reserves certification and the documentation of completed environmental field work.
Mahalo East – ATP 2061
Overview - The 97km2 block is also highly prospective, given its location directly north-east of, and contiguous with, the Mahalo Gas
Project. The block was formally awarded to Comet Ridge as 100% equity holder by the Queensland Government on 28 September
2020, soon after the Company won a competitive tender process. Gas produced from Mahalo East is subject to domestic supply
conditions, meaning that it cannot be supplied other than to the Australian domestic market, unless there is an offsetting domestic
sales volume from another project via a swap arrangement.
Subsurface analysis – Whilst the amount of well and seismic data in this block is less than is available for Mahalo North, there is still
significant drilling data which confirms the extension of the high-quality fairway (Figure 6) from the Mahalo PL areas towards the
northeast, with good coal development and a number of high-quality drilling locations for appraisal and development. The Company
is planning an initial Contingent Gas Resource booking for this block prior to the end of 2022 based on the geological modelling of
the available data.
Appraisal activities - Comet Ridge’s forward plan for Mahalo East is to drill a number of core holes to analyse gas content and
permeability data to confirm the high productivity fairway extends northeast from the PL areas in the Mahalo Gas Project, into the
Mahalo East block (Figure 6). Following the core hole drilling, Comet Ridge may select a location for an intersecting single or dual
lateral well for production testing. If successful, this would lead to an initial gas reserve certification in the Mahalo East block.
Comet Ridge Limited I Annual Report 2022 5
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Figure 6 – Map showing the location of the development area in the high productivity fairway for the Mahalo Gas Hub,
comprising PL 1082 (Humboldt) and PL 1083 (Mahalo), ATP 2048 (Mahalo North) and ATP 2061 (Mahalo East)
Mahalo Far East – ATP 2063
Overview – This very large 338km2 block was formally awarded to Comet Ridge on a 100% equity basis on 10 May 2021. Mahalo Far
East contains coals that are generally deeper and have notably higher natural gas content than the main Mahalo high productivity
fairway, adding significant additional gas in place volume to Comet Ridge’s portfolio in the Mahalo Gas Hub area. This block also
contains conventional (sandstone) gas potential underneath the coals, for which Comet Ridge also holds 100% equity.
Comet Ridge may drill a core hole in this block as part of the Mahalo East drilling project. This may be followed with project funding
options to advance exploration and appraisal activities in this block, given its size and multi-target plays. Mahalo Far East has less
existing data available compared to the other Mahalo Gas Hub blocks and subsequently is not expected to be part of the initial
development plan for Mahalo, but could potentially feed in a very large volume of gas following the initial Mahalo Gas Hub
development.
2.
Galilee Basin Permits
Historically, Comet Ridge has held 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 the
sandstones or “Deeps” (from a depth of approximately 2,500 metres) in the Albany structure and also CSG or “Shallows” in the Gunn
Project Area (from a depth down to approximately 1,000 metres).
6 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Comet Ridge Limited
Contingent Gas Resources (PJ)
Galilee Basin Permits (COI net interests)
CSG, Gunn Project Area (COI 100%)
Conventional, Albany Structure (COI 70%)
Total
1C
0
39
39
2C
67
107
174
3C
1,870
292
2,162
Table 3 – Comet Ridge’s share of Galilee Basin permits contingent gas resources as at 30 June 2022
In November 2017, Comet Ridge and Vintage Energy Limited (Vintage) signed a Joint Venture Agreement, where Vintage earned a
30% interest in the Galilee Deeps Joint Venture (GDJV) by funding the Albany 1 well and additional 2D seismic aimed at the deeper
sandstone reservoirs sections. The Albany 1 well flowed 230,000 cubic feet of gas per day and confirmed these deeper sandstones
could indeed be productive. The GDJV participants have identified up to 20 sandstone leads and prospects in this deeper section of
the basin for future appraisal.
During the financial year, Comet Ridge and Vintage Energy
carried out a technical review to determine the parts of
ATP 743, 744 and 1015 that are considered to be the most
commercially prospective. The joint venture participants
identified six separate areas, totalling approximately
4700 km2, for tenure to be secured under Potential
Commercial Area (PCA) applications.
The PCAs are numbered PCA 319 to 324 (Figure 7) and have
been awarded to Comet Ridge for a term of 15 years ending
9 September 2037. Two of the underlying permits, ATP 743
and 744 have also been renewed for a further term of 12
years, ending 3 September 2033 and 31 October 2033
respectively.
The tenure on ATP 1015 is current until November 2022 and
an application for tenure renewal is currently being finalised.
Even though the permit will soon be subject to permit
renewal, two PCAs (PCA 323 and 324) have been awarded in
this permit area as noted above.
Figure 7 – Galilee permits showing the recently awarded PCAs
within the three permit blocks
3.
New South Wales Permits
The NSW Government published its Future of Gas Statement on 21 July 2021. In this Statement, the NSW Government on one hand
seems to support a gas industry for manufacturing, but at the same time has undertaken to restrict gas activity outside the Narrabri Gas
Project area. The Company is extremely disappointed that the apparent intent of The Future of Gas Statement is to extinguish entire
permit areas, over and above statutory obligations, with no indication of any regard for the investment made by Comet Ridge in these
permits over the past 10 years (including annual fees charged by the NSW Government). Comet Ridge believes the Statement is a
backward step for investment and job creation in regional NSW, particularly considering the half century of demonstrated economic and
social benefit that natural gas has provided to regional areas, just across the border in Queensland.
Comet Ridge now has one remaining NSW exploration licence (PEL 427), which was renewed by the NSW Government on 12 May 2022
for a period of six years. The approved area was reduced to 12 blocks over an area of 900km2 located in the northern Gunnedah Basin,
immediately north of Santos’ Narrabri CSG Project in the Bohena Trough.
Comet Ridge holds a 59.1% CSG equity interest and 100% conventional equity interest in PEL 427. Comet Ridge is the conventional
operator whilst Santos operates the CSG interest.
During the 2022 financial year, Comet Ridge also applied for renewal of PEL 6, however this was declined by the NSW Government on
27 April 2022.
Comet Ridge Limited I Annual Report 2022 7
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
The reduction in the number of blocks renewed in PEL 427 and the non-renewal of the entire PEL 6 permit has resulted in a loss of 208 PJ
of 3C Contingent Resource and these have been removed from the Company’s statement of reserves and contingent resources as at
30 June 2022. This results in a remaining 3C Contingent Resource for PEL 427 of 281 PJ at 30 June 2022, a 42% decrease.
International Activities
Comet Ridge submitted an application to surrender its interest in PMP 50100 in New Zealand a number of years ago. This application
remains with New Zealand Petroleum and Minerals for processing.
During the 2019 financial year, Comet Ridge undertook a program to plug and abandon (make permanently safe) all the wells in its New
Zealand acreage as part of the process to surrender PMP 50100. As of 30 June 2022, all wells except Murcott 1 (awaiting site access
approval), have been successfully made safe.
Health, Safety and Environment
The commencement of field operations in the Mahalo North block during the 2022 financial year has seen a focus on the process for
managing contractor movements in the field to support the drilling of the core hole and lateral wells and the subsequent production test.
The total operational hours worked in 2022 has increased significantly from the previous year to a total of 38,959 hours (up from 18,900
hours). There were no safety or environmental incidents recorded during the financial year to 30 June 2022.
Mahalo North field operations were supported by the risk management approach used in planning for the operations. This included the
Company’s Risk Committee systematically identifying the strategic level risks associated with the Mahalo North drilling campaign and
subsequent production test. These risks and appropriate mitigations were incorporated into the work program for Mahalo North.
The primary focus of the business moving forward is to ensure that the next phase of production testing and operations is conducted in
accordance with the HSE management system and that operations conducted comply with regulatory requirements and approvals.
Community
Comet Ridge takes its corporate social responsibility very seriously. This is reflected in a deep commitment, at all levels of the Company,
to working with community stakeholders in the regions where it operates. This commitment has ensured external and stakeholder
relationships continue to be extremely positive. Due to COVID-19, Comet Ridge has intentionally reduced direct face to face contact with
key landholders and community representatives where practical.
During late 2021, and throughout 2022 Comet Ridge has:
• Maintained its financial membership of the Leucaena Society, to allow knowledge gathering and networking in anticipation of
future gas field development.
Commenced land access negotiations with key landholders in the Mahalo East and Far East lease areas.
Attended and contributed to a number of government and industry organised workshops.
Sponsored the local Wild Horse Cutting event in Rolleston, Qld and supported other local fundraising activities.
Hosted a number of field trips with Qld Government representatives.
•
•
•
•
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 gas Industry. Comet Ridge has always acted consistently with the principles and guidelines set out in this
Code of Practice.
Comet Ridge 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, which includes a recent presentation of Comet Ridge’s current and future activities
to the local council and mayor.
In terms of local government engagement, the Company continues to maintain contact with relevant officials and elected
representatives, in the local government areas (LGAs) that Comet Ridge operates in. Contact with local government 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. The Company uses local contractors and businesses in its operations as a priority.
Through membership of APPEA, the Company interacts with other regional explorers and more widely with government representatives
and directly with other agencies such as the Queensland Gas Fields Commission. Comet Ridge maintains strong relationships with the
8 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
relevant Queensland Government departments, including the Department of Resources (DoR) 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, Indigenous
peoples’ deep connection to the land and ensuring artefacts and items of cultural significance are secured, are all very important to the
Company. An example of this was the successful completion of a Right to Negotiate (RTN) with a local Native Title Group in the Mahalo
Far East region, which was a requirement for the awarding of ATP 2063.
Sustainability
Comet Ridge believes sustainable business is good business. Our Company’s purpose is to provide long-term energy and manufacturing
security for Queensland and Australia, which is fundamental for our society’s wellbeing. The approach to environmental, social and
governance (ESG) issues across the natural gas industry is an evolving, critical component of a company’s social licence to operate.
Companies with a strong ESG program and performance benefit significantly and directly when it comes to stakeholder engagement and
investor decision making. Comet Ridge is actively engaging, independently and through APPEA, to develop its own ESG program.
We also understand that the world must use its resources wisely and that we are transitioning to produce fewer greenhouse emissions.
Gas has an important role to play in this transition, as it burns much more cleanly than other fossil fuels, and with fewer associated
emissions.
Natural gas is also used extensively beyond simply generating electricity and supporting renewable energy growth into our electricity
grid, or at times when renewables are not operating. Gas is used as a critical input to the manufacture of many thousands of products
that we use every day to make our lives better. Natural gas is a key input for ammonia-based fertilisers which are very important in
maximising crop yields to help feed the planet’s growing population. Synthetic fibres like nylons are hydrocarbon (natural gas and oil)
based, so many of us wear the products of natural gas around with us every day. Plastics in our cars, houses, phones, keyboards and
computers are also products from natural gas. It takes natural gas to build the many components needed for a solar panel or a wind farm.
Indeed, it is hard to contemplate a world without the many products that natural gas provides.
Our goal is to operate efficiently and responsibly, with the support of our stakeholders. We want our communities, employees and
shareholders to all enjoy the benefits of Comet Ridge developing Queensland’s gas resources.
Comet Ridge Limited I Annual Report 2022 9
This has been a very busy operational period for the Company,
Your Company is in a great position. We have proven assets in
and we are pleased to report that were able to execute these
the right location, along with some exciting growth opportunities
activities safely, with no environmental issues or concerns. On
that we can integrate into our Mahalo Gas Hub development. We
behalf of the Board, we thank our staff and contractors who
are excited about the opportunity to soon deliver a maiden
worked so diligently to execute this operation safely, maintaining
certified gas reserve in the first of our 100% held blocks at
our schedule and to the highest environmental and safety
Mahalo North, appraise the Mahalo East project, and convert
standards.
market interest into gas sales that will underpin the Company.
Another major milestone for the Company this year was
We would like to thank our people, including our fellow directors,
announcing then completing the acquisition of APLNG’s 30%
our staff and contractors for coming together to deliver a highly
share of the Mahalo Gas Project (Mahalo). This deal occurred at
successful year for Comet Ridge. We also would like to thank our
compelling metrics ($0.25/GJ of 2P reserves acquired) using the
local communities, who have supported and helped us along the
$13 million of loan funds secured through Santos. The acquisition
way. Finally, thanks to our shareholders, some of whom are new
of the APLNG interest translates to a 75% increase in Comet
to the Company after our recent placement and some who have
Ridge’s 2P reserves and a 148% increase in 2C contingent
been with us for a long time. With your support, we are in a
resources as at 30 June 2022. Comet Ridge’s 70% share of
strong financial position and can execute our plan to become a
Mahalo’s combined 2P + 2C reserves as at 30 June 2022 is a very
new supplier of natural gas into a tightening east coast market.
James McKay
Chairman
Tor McCaul
Managing Director
material 407 PJ.
We now hold a very strong position in the Mahalo Gas Hub high
quality fairway, which gives us material gas reserves and
resources with multiple development options, proximity to
critical infrastructure and potential operational synergies with
our joint venture partner Santos.
The market for gas remains extremely buoyant, and we are
confident that this will continue to be the case for the long term.
Global energy security is a key issue for governments the world
over – and equally so on Australia’s eastern seaboard, where
demand continues to grow. As coal fired power investment
declines, gas is experiencing strong demand as a baseload
electricity generation fuel, as a partner fuel to provide stability to
grids alongside renewables, and for manufacturing industries. In
recent decades there has never been more need for gas
resources to be developed to maintain Australia’s living standards
and provide the impetus for economic growth. Decarbonisation
will not occur in any real time frame, without significant support
from natural gas.
With this in mind, we are pleased to report that we are working
closely with CleanCo Queensland Limited to execute our
inaugural gas sales agreement for Mahalo Hub gas. We have had
a long and positive relationship with CleanCo (and predecessor
Stanwell) and look forward to delivering gas from Mahalo Hub.
The recent performance of the Mahalo North flow test has
provided the market with assurance that Comet Ridge can be a
reliable supplier of commercial gas volumes from Queensland,
and we have experienced significant interest from the market
since the well began to indicate its gas flow potential.
Chairman and Managing Director
Letter to Shareholders
Dear Shareholder
We are pleased to present to you our Annual
Report for the 2022 Financial Year, which has
been a year of very significant achievements for
Comet Ridge.
Most recent was the successful execution of the pilot well drilling
and subsequent flow test at Mahalo North, our 100 percent held
development block adjacent to the Mahalo Gas Project. The
Mahalo North 1 pilot well, spudded in October 2021, achieved a
gas flow rate that exceeded 1.7 MMcfd, in a production test that
ran through to August 2022. This is the highest recorded flow
rate from a pilot well in the Mahalo Gas Hub area. We believe
there is more potential in this well, but we took the decision to
wind down the production test and save that gas for the east
coast market. We were able to gather more valuable data about
the Mahalo fairway from this test, which points positively
towards expanding our production footprint in the area.
It has also provided us with the information we need to prepare
an independently certified reserves statement for Mahalo North,
which is an important step as we move towards commercialising
the asset.
Further towards the east, we took steps to grow and develop our
potential in the Mahalo fairway, with geological work on the
Mahalo East and Far East blocks undertaken, in preparation for
future drilling activities. We now have a detailed three-
dimensional geological model of the entire fairway area, to aid us
in making the right development decisions as we move forward.
10 Comet Ridge Limited I Annual Report 2022
This has been a very busy operational period for the Company,
and we are pleased to report that we were able to execute these
activities safely, with no environmental issues or concerns. On
behalf of the Board, we thank our staff and contractors who
worked so diligently to execute this operation safely, maintaining
our schedule and to the highest environmental and safety
standards.
Your Company is in a great position. We have proven assets in
the right location, along with some exciting growth opportunities
that we can integrate into our Mahalo Gas Hub development. We
are excited about the opportunity to soon deliver a maiden
certified gas reserve in the first of our 100% held blocks at
Mahalo North, appraise the Mahalo East project, and convert
market interest into gas sales that will underpin the Company.
We would like to thank our people, including our fellow directors,
our staff and contractors for coming together to deliver a highly
successful year for Comet Ridge. We also would like to thank our
local communities, who have supported and helped us along the
way. Finally, thanks to our shareholders, some of whom are new
to the Company after our recent placement and some who have
been with us for a long time. With your support, we are in a
strong financial position and can execute our plan to become a
new supplier of natural gas into a tightening east coast market.
James McKay
Chairman
Tor McCaul
Managing Director
Another major milestone for the Company this year was
announcing then completing the acquisition of APLNG’s 30%
share of the Mahalo Gas Project. This deal occurred at
compelling metrics ($0.25/GJ of 2P reserves acquired) using the
$13 million of loan funds secured through Santos. The acquisition
of the APLNG interest translates to a 75% increase in Comet
Ridge’s 2P reserves and a 148% increase in 2C contingent
resources as at 30 June 2022. Comet Ridge’s 70% share of the
Mahalo Gas Project’s combined 2P + 2C reserves as at 30 June
2022 is a very material 407 PJ.
We now hold a very strong position in the Mahalo Gas Hub high
quality fairway, which gives us material gas reserves and
resources with multiple development options, proximity to
critical infrastructure and potential operational synergies with
our joint venture partner Santos.
The market for gas remains extremely buoyant, and we are
confident that this will continue to be the case for the long term.
Global energy security is a key issue for governments the world
over – and equally so on Australia’s eastern seaboard, where
demand continues to grow. As coal fired power investment
declines, gas is experiencing strong demand as a baseload
electricity generation fuel, as a partner fuel to provide stability to
grids alongside renewables, and for manufacturing industries. In
recent decades there has never been more need for gas
resources to be developed to maintain Australia’s living standards
and provide the impetus for economic growth. Decarbonisation
will not occur in any real time frame, without significant support
from natural gas.
With this in mind, we are pleased to report that we are working
closely with CleanCo Queensland Limited to execute our
inaugural gas sales agreement for Mahalo Hub gas. We have had
a long and positive relationship with CleanCo (and predecessor
Stanwell) and look forward to delivering gas from Mahalo Hub.
The recent performance of the Mahalo North flow test has
provided the market with assurance that Comet Ridge can be a
reliable supplier of commercial gas volumes from Queensland,
and we have experienced significant interest from the market
since the well began to indicate its gas flow potential.
Comet Ridge Limited I Annual Report 2022 11
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
2022 Annual Reserves Statement
Comet Ridge is pleased to present its Annual Reserves Statement for the period ending 30 June 2022:
Comet Ridge Limited – Net Recoverable Reserves and Resources 1
Reserves (PJ)1
Contingent Resources (PJ)1
1P
1P
2P
*2P
3P
3P
1C
1C
2C
**2C
3C
3C
30-6-21 30-6-22 30-6-21 30-6-22 30-6-21 30-6-22 30-6-21 30-6-22 30-6-21 30-6-22 30-6-21 30-6-22
70%3
*-
*-
*106
*186
183
321
53
134
**89
**221
154
360
100%
70%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
**67
**67
1,870
1,870
39
39
**107 **107
292
292
-
-
-
-
4892
2812
Southern Bowen
Basin, QLD
Galilee Basin,
QLD
Galilee Basin,
QLD
Mahalo Gas
Project
(ATP 1191) +
Gunn Project
Area
(ATP 744)
Albany
Structure
(ATP 744)
Gunnedah Basin,
NSW
PEL 427
59.09%
Total
Table 4 – Comet Ridge Limited – Reserves and Resources Annual Statement
1 Movements in Net Recoverable Reserves and Resources are explained below in responses to Listing Rule 5.39.3 and 5.40.2
+ Subsequent to the booking of the Reserves and Resources for ATP 1191, the Authority to Prospect and the area that it covered has
**263 **395
2,805 2,8032
*106
*186
321
173
183
92
*-
*-
been converted on application to PL 1082 and PL 1083 along with PCAs 302, 303, and 304.
2 Renewal of PEL 6 was declined by NSW Government (effective 27 April 2022), whilst PEL 427 was renewed on 12 May 2022 for a smaller
area than applied for. This results in the decrease of the 3C Contingent Resources figures for the Gunnedah Basin Permits from 489PJ
to 281PJ which is a 42% decrease for that permit.
3 Comet Ridge held a 70% interest in the Mahalo Gas Project at 30 June 2022. Subsequent to year end, Santos provided a notice to
exercise its option to acquire a 12.86% option interest, which upon completion, will reduce Comet Ridge’s net interest to 57.14% with
a corresponding proportional decrease in Reserves and Contingent Resources for the Mahalo Gas Project.
ASX Listing Rules Annual Report Requirements
* Listing Rule 5.39.1:
• All 2P Petroleum Reserves recorded in Table 4 at 30 June 2022 are undeveloped and are attributable to unconventional gas.
•
• No 1P Petroleum Reserves were recorded for the period ending 30 June 2022 – Please refer to ASX Announcement “Mahalo
100% of the 2P Petroleum Reserves are located in the southern Bowen Basin.
Reserves and Resources Revision” 30 October 2020 for details.
* Listing Rule 5.39.2:
•
The proportion of 2P Petroleum Reserves that are unconventional is 100%. There are only 2P Reserves recorded for the Company
which are located in the Company’s southern Bowen Basin Mahalo Gas Project area (PL 1082 and PL 1083 along with PCAs 302,
303, and 304).
Listing Rule 5.39.3:
•
Table 4 records a comparison of the 2P and 3P Petroleum Reserves at 30 June 2022 as against the previous year and discloses that
the Petroleum Reserves (2P and 3P) have changed by 75% as a result of Comet Ridge increasing its interest in the Mahalo Gas
Project from 40% to 70%.
Listing Rule 5.39.4:
•
•
Comet Ridge first reported certified Petroleum Reserves for the Mahalo Gas Project on 27 August 2014 and these Reserves have
remained undeveloped for greater than 5 years since the date initially reported.
The Mahalo Joint Venture has yet to reach a Final Investment Decision on the Mahalo Gas Project, which needs the approval of all
Joint Venture participants. Lateral well drilling was undertaken by Comet Ridge, as agent for the exploration operator (Santos),
during 2017 and 2018, to demonstrate and confirm the most likely development well style. During the first half of 2020, both
Federal and State environmental approvals were received for the Mahalo Gas Project and then on 30 June 2020 the Petroleum
Leases (PLs) were awarded by the Queensland Government. This allows the Mahalo Joint Venture to now finalise the development
concept and proceed to make a Final Investment Decision (FID).
12 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
•
•
Comet Ridge announced on 3 August 2021 a funded acquisition of APLNG’s 30% interest in the Mahalo Joint Venture which will
allow the unlocking of the Mahalo Gas Project by providing a pathway to project development with Comet Ridge appointed
appraisal operator (as agent) to drive the project towards a Final Investment Decision, with Santos to then carry out the
development as development operator.
Concurrent with this, Comet Ridge now holds a large 100% operated acreage position immediately adjacent to the Mahalo Gas
Project to the north and is appraising these areas to certify further gas reserves and resources and to develop these in a similar
fashion, making use of infrastructure that will be available to the Mahalo Gas Project following FID.
Governance Arrangements and Internal Controls Listing Rule 5.39.5:
•
•
•
•
Comet Ridge has obtained all of its gas Reserves and Resources estimates reported at 30 June 2022 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 2018, 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 2022 are undeveloped. Approximately 73% of the reported 2C Contingent Resource is
attributable to unconventional gas with the remainder attributable to a sandstone reservoir referred to in Table 4 as the Albany
Structure.
The geographical areas where the 2C Contingent Resources are located appear in the far-left column of Table 4.
•
Listing Rule 5.40.2:
•
Table 4 records a comparison of the 1C, 2C and 3C Contingent Resources at 30 June 2022, against the previous year and discloses
that:
o the net 1C, 2C and 3C Contingent Resources for the Albany Structure remained unchanged during the period.
o the net 1C, 2C and 3C Contingent Resources for the Mahalo Gas Project have changed following the acquisition of APLNG’s 30%
interest in the Mahalo Joint Venture (completed on 28 June 2022) the details of which can be found in the Company’s ASX
announcement of 3 August 2021.
o The net 3C Contingent Resources of 208 PJ for PEL 6 and parts of PEL 427 have been removed as PEL 6 was not renewed
(effective on 27 April 2022) and only part of PEL 427 was renewed (effective on 12 May 2022).
o There were no other changes to the 1C, 2C and 3C Contingent Resources from those recorded as at 30 June 2022.
Listing Rule 5.44:
•
•
•
The estimates of Reserves and Contingent Resources appearing in the 2022 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 Resources 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 2022. 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”) 2018 Petroleum Resource
Management System (“PRMS”) Guidelines as well as the 2011 Guidelines for Application of the Petroleum Resources Management
System
The unconventional (CSG) Contingent Resource estimates for ATP 744 in the Annual Reserves Statement for 2022 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.
Comet Ridge Limited I Annual Report 2022 13
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
•
•
The estimate of Reserves and Contingent Resources for the Mahalo Gas Project, as part of ATP 1191+ provided in the Annual
Reserves Statement for 2022 was determined by and under the supervision of Mr Timothy L. Hower of MHA Petroleum Consultants
LLC (now part of the Sproule Group) in accordance with Petroleum Resource Management System guidelines. Mr Hower is a full-
time employee of Sproule 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 2021.
The Contingent Resource estimates for PEL 427 were also determined by Mr Timothy L. Hower of Sproule. 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 427 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).
14 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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 2022 the Company’s corporate governance practices and policies have
substantially accorded with those outlined in the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (4th Edition) (ASX Recommendations or ASX Guidelines), except as outlined in the Company’s annual Corporate
Governance Statement. Even where there is a deviation from the recommendations the Company continues to review and update its
policies and practices in order that these keep abreast of the growth of the Company, the broadening of its activities, current legislation
and good practice.
The ASX Corporate Governance Council’s (the Council) recommendations are not prescriptive but rather they are guidelines. If certain
recommendations are not appropriate for the Company given its circumstances, it may elect not to adopt that particular practice in
limited circumstances.
Where the Company’s Corporate Governance practices do not correlate with the practices recommended by the Council, the Company
does not consider that the 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 2022 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 ASX Recommendations, is available on the corporate
governance section of the Company’s website at:
http://www.cometridge.com.au/corporate-governance/
Comet Ridge Limited I Annual Report 2022 15
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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 2022. 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 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 eight 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
38,076,275 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil
Tor McCaul B.E (Hons/Petroleum), B.Econ, MBA, Managing Director (Director since 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 that 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
nine 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 (APPEA) 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.
Interest in Shares and Options
6,751,053 ordinary shares
4,330,000 performance rights
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
16 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Chris Pieters B.Sc (Hons), B.Bus, Executive Director (Director since 16 April 2009)
Appointed Executive Director 17 June 2015.
Special Responsibilities
Nil
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
1,576,178 ordinary shares
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
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 and Panoramic Resources Ltd. Gillian is also
a member of the West Australian Division Council of the Australian Institute of Company Directors.
Interest in Shares and Options
295,372 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Deep Yellow Limited
Panoramic Resources Ltd
Martin Riley B.E (Hons 1/Chem), Non-executive Director (Director since 13 March 2019)
Special Responsibilities
Chairperson of the Risk Committee
Member of the Remuneration Committee
Member of the Audit Committee
Experience
Martin Riley holds a first-class honours degree from Sydney University in Chemical Engineering and has 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
850,895 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
Nil.
Comet Ridge Limited I Annual Report 2022 17
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Shaun Scott B.A (Rec Admin), B.Bus (Accountancy), ACA, Non-executive Director (Director since 16 October 2019)
Special Responsibilities
Chairperson of the Remuneration Committee
Member of the Audit Committee
Experience
Shaun Scott is an experienced independent non-executive director on both public and private boards. As an executive, Mr Scott was CEO
of Arrow Energy Limited and was instrumental in taking this business from a $20 million coal seam gas explorer to a significant gas and
energy producer and leader in the development of the Queensland LNG industry, until Arrow’s $3.5 billion acquisition by Shell and Petro-
China in 2010. At the Board level, Shaun has operated as Chairman and non-executive director of a number of publicly listed companies
and chaired numerous Board sub-committees. Mr Scott has specific expertise and experience in business strategy, negotiations, financial
and risk management, executive remuneration, governance and safety leadership.
He is a member of the Chartered Accountants Australia and New Zealand.
Interest in Shares and Options
1,038,074 ordinary shares
Directorships Held in Other Listed Entities in Last 3 Years
IGas Energy PLC (Non-executive Director of Australian subsidiaries) (resigned February 2020)
Noble Helium Limited (Non-executive Chairman), joined 25 January 2022
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 seven 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, as well as ASX listed HSC Technology Group Ltd, a medical technology company. 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.
4. Operating and Financial Review
The loss after tax of the Group for the financial year ended 30 June 2022 amounted to $8.63 million (2021: loss of $6.96 million), including
fair value adjustments (non-cash items) of $3.64 million relating to the CleanCo financial liability and PURE Asset Management warrants.
During the financial year, the Group capitalised exploration expenditure of $20.5 million (2021: $0.4 million) on the Mahalo Gas Project
which includes the acquisition of APLNG’s 30% interest, $8.0 million (2021: $0.7 million) on Mahalo North, $0.4 million (2021: $0.3 million)
combined on Mahalo East and Far East and $0.3 million (2021: $0.3 million) on the Galilee Deeps Joint Venture.
At 30 June 2022, the Group had $7.42 million in cash on hand and net current liabilities of $39.9 million (which includes the CleanCo
financial liability, PURE warrant financial liability and the Santos loan disclosed as current obligations).
Comet Ridge has future exploration commitments for the Mahalo Gas Project, 100% owned Mahalo northern projects and Galilee Basin
permits which will be funded as required when they fall due. These commitments will be funded via existing cash and the proceeds of a
placement completed on 15 September 2022 ($24.0 million, before costs).
Also, if Comet Ridge’s commercial discussions regarding a gas sales agreement with CleanCo do not result in an agreement being
executed, 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
18 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
to secure funding to meet this payment (if it was required to do so), that may cast significant doubt about the Group’s ability to continue
as a going concern.
Comet Ridge is actively pursuing a number of potential funding transactions to progress the appraisal and development of the Company’s
projects including project sell-down, farm-out and gas prepay arrangements. 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 2022:
(a)
Acquisition of APLNG’s 30% interest in the Mahalo Gas Project
On 3 August 2021, Comet Ridge announced it had executed a binding agreement with Australia Pacific LNG Pty Ltd (APLNG) to acquire
their 30% interest in the Mahalo Gas Project for total consideration of $20 million. The acquisition was completed on 28 June 2022 with
the initial payment of $12 million (less a $1 million deposit) paid to APLNG (funded via a loan from Santos QNT Pty Limited). A further $8
million of deferred consideration is payable in four annual instalments of $2 million each unless a post completion trigger event occurs
requiring earlier payment (refer to Note 17 for further details). The acquisition significantly increases Comet Ridge gas reserves and
contingent resources, on favourable deal metrics, and provides the Mahalo Gas Project joint venture the alignment required to move the
project to development on a time and cost-efficient basis.
(b)
Loan Agreement and Option Deed with Santos QNT Pty Limited
On 3 August 2021, Comet Ridge also announced it had executed binding agreements with Santos QNT Pty Limited to provide loan funding
of $13.15 million to fund the initial consideration (and stamp duty costs) payable by Comet Ridge to APLNG for the acquisition noted in
(a) above in exchange for Santos receiving options to acquire increased equity in certain Mahalo permits. The loan was fully drawn down
on 28 June 2022 to fund the initial portion of the APLNG consideration. The loan is repayable within 30 days of the earlier of Santos
exercising its firm option per (a) below or 28 December 2022.
Under the arrangements, Santos has until 28 December 2022 to:
(i) Exercise a firm option to acquire an additional 12.86% in the Mahalo Gas Project from Comet Ridge at proportional acquisition
value. Santos gave Comet Ridge a notice to exercise its option on 23 September 2022, reducing the loan amount payable by
Comet Ridge to Santos from $13.15 million to $8.01 million (plus interest accrued at a rate of 5.125% per annum); and
(ii) Negotiate a non-firm arrangement, on terms to be agreed, to purchase from Comet Ridge, an additional 7.14% in Mahalo Gas
Project (equalising Santos and Comet Ridge interest at 50% each) and 50% interests in Mahalo North (ATP 2048) and Mahalo
East (ATP 2061). This is subject to the firm option in (a) above being exercised by Santos.
Comet Ridge completed an equity raising prior to the Santos loan repayment date, triggering an early repayment to Santos of the net
loan amount of $8.0 million (plus accrued interest). This net loan amount of $8.1 million was paid by Comet Ridge to Santos on 28
September 2022.
(c)
Loan Agreement and Warrant Deed with PURE Asset Management
Comet Ridge announced on 3 August 2021, a binding agreement with PURE Asset Management Pty Ltd (PURE) to provide Comet Ridge
access to a term loan facility for up to $10 million. The facility is provided in two tranches of $6.5 million (Tranche 1) and $3.5 million
(Tranche 2) respectively. The Tranche 1 loan was drawn on 17 September 2021 following execution of a facility agreement on 9
September 2021. The loan agreement with PURE also contains attached warrant shares. Comet Ridge issued the first tranche of warrant
shares to PURE on 12 August 2021, being 39,393,939 warrant shares exercisable at $0.165 per share for a period of 48 months from the
utilisation of the Tranche 1 loan. The Tranche 2 loan was drawn on 31 March 2022 and the second tranche of warrant shares were issued
to PURE on 31 March 2022, being 26,515,152 warrant shares exercisable at $0.132 per share for a period of 48 months from the utilisation
of the Tranche 1 loan.
(d) Negotiation of a gas sales agreement with CleanCo
Comet Ridge issued a notice to CleanCo Queensland Limited (CleanCo) on 21 September 2021 to commence gas sale agreement
negotiations. The negotiation period has been extended to 31 December 2022. To date, a term sheet has been agreed by the parties,
who are now seeking their respective executive committee approvals to then move to a fully termed GSA for respective board approval.
Comet Ridge Limited I Annual Report 2022 19
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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
(a)
Completion of placement on new shares
Comet Ridge announced on 8 September 2022, a placement to institutional and sophisticated investors to raise $24.0 million (before
costs). The placement comprised the issue of 137,142,858 new shares at an issue price of $0.175 per share. The placement shares were
allotted to investors on 15 September 2022. Part of the proceeds of the placement were used to repay the net loan amount to Santos,
being $8.1 million (including accrued interest) on 28 September 2022.
(b)
Renewal of Galilee Basin permits and award of Potential Commercial Area (PCA) applications
On 12 September 2022, Comet Ridge announced its applications for renewal of the most prospective areas of ATP 743 and 744 had been
awarded by the Queensland Department of Resources (DoR) for a further period of 12 years ending 3 September 2033 and 31 October
2033 respectively. The permit renewals were accompanied by PCA applications over six highly prospective areas within the Galilee Basin
permits. These PCAs, numbered PCA 319 to 324, have also been awarded to Comet Ridge by DoR for a term of 15 years ending 9
September 2037.
(c)
Notice received from Santos to increase Mahalo Gas Project equity
On 23 September 2022, Comet Ridge received a notice from Santos to purchase their 12.86% option interest in the Mahalo Gas Project
from Comet Ridge. Subsequent to the receipt of the exercise notice, on 26 September 2022, the parties executed the Sale Agreement to
give effect to the transfer of the 12.86% option interest.
The effect of this option exercise on Comet Ridge is described below:
•
•
•
•
The $13.15 million loan owing to Santos is reduced by $5.14 million to $8.01 million with Comet Ridge repaying the net amount
plus accrued interest of $0.1 million on 28 September 2022;
Santos assumes liability for its pro-rata share of the $8 million deferred consideration payable to APLNG, being $3.43 million.
The first $2 million tranche of deferred consideration is payable to APLNG on 28 June 2023 with Comet Ridge’s share of that
tranche now reduced to $1.14 million;
Comet Ridge’s interest in the Mahalo Gas Project will reduce from 70% to 57.14%, with a corresponding decrease in Comet
Ridge’s net share of independently certified Gas Reserves and Contingent Resources; and
Comet Ridge retains a very material net interest of 332 Petajoules of 2P Gas Reserves + 2C Contingent Gas Resources in the
Mahalo Gas Project. There is no impact from this option exercise on Comet Ridge’s 100% owned northern Mahalo Hub blocks
where the Company expects to book initial reserves following the recent successful pilot testing program at Mahalo North.
(d)
Performance Rights
On 28 September 2022, Comet Ridge issued 13,195,782 ordinary shares as a result of vesting of the same number of Performance Rights,
including 2,260,000 ordinary shares issued to Tor McCaul, Managing Director. In addition, Comet Ridge announced on the same date,
the lapse of 30,469 Performance Rights due to the vesting condition for a parcel of rights not being fully satisfied.
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
20 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
office-based teams enables management, the employees and contractors who work for the company 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 2022
The material business risks for Comet Ridge at 30 June 2022 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
Joint Venture arrangements – Comet Ridge is in several joint ventures for some 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.
Impact
Delayed approvals of development plans may impact on the timing of Comet Ridge’s growth.
Mitigations
We ensure that our team works closely with our Joint Venture partners to achieve mutually beneficial outcomes.
Risk
Cause
Impact
Mitigations
Risk
Cause
Impact
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.
Mitigations
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.
Risk
Cause
Impact
Mitigation
Risk
Cause
Renewal of Tenure - All permits and tenure are subject to compliance with certain requirements, including but not
limited to meeting minimum exploration work commitments, lodgement of reports, payment of fees and compliance
with environmental conditions and legislation.
We rely on a number of external factors as well as internal to ensure that we are able to satisfy these conditions
which might not be able to be met on time or at all due to various factors some of which may be out of the control
of the Company.
Comet Ridge could lose title to or its interest in any of the permits or tenure to any of its assets if these requirements
are not met.
We have a very experienced team who are familiar with the regulatory environment and continue to monitor the
Company’s progress as against work commitments and reporting obligations. These commitments are continually
reviewed throughout the year not only by the operations team level but also are overseen by the Risk Committee
who reports directly to the Board who has the authority to secure further resources and funding to ensure
commitments are not missed.
Land Access – Land access is critical for the success of Comet Ridge’s exploration and development activities.
We rely on being able to negotiate with landholders and other stakeholders’ access and entry agreements onto
private and public lands over which Comet Ridge’s exploration and production tenures overlay.
Comet Ridge Limited I Annual Report 2022 21
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Impact
Mitigations
Comet Ridge’s exploration operations and profitability may be adversely impacted or delayed in the event of a
dispute with a landowner or user that delays or prevents the Company carrying out its projects and this could
materially adversely affect its financial position and performance.
We seek to work closely with landholders and other stakeholders and engage with them as early as possible to ensure
that they are kept appraised of our proposed activities and seek to develop working partnerships with these parties
where possible.
Strategic Financial Risks
Risk
Cause
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,
such as has been experienced with the advent of the COVID-19 pandemic.
Impact
Comet Ridge’s growth aspirations require the investment of significant capital to generate returns.
Mitigations
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.
Safety, Environmental and Sustainability Risks
Risk
Cause
Impact
Mitigation
Risk
Cause
Impact
Mitigations
Risk
Cause
Impact
Mitigations
Political Risks
Risk
Cause
Impact
Climate Change - Management of carbon emissions and increased regulatory obligations may lead to increasing
regulation and costs
There continues to be focus from governments, regulators, and investors in relation to how companies are managing
the impacts of climate change policy and expectations.
Comet Ridge’s growth may be impacted by increasing regulation and costs associated with climate change and the
management of carbon emissions.
Comet ridge actively monitors current and emerging areas of climate change risk and opportunities to ensure
appropriate action can be taken. Comet Ridge continuously focuses on improving its energy efficiency and emissions
management in delivering cost efficiencies
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.
Global Pandemic – The current worldwide pandemic, or any future pandemic, may have a material adverse impact
on the activities of the Company. To date the pandemic has not had a material adverse impact on the Company.
Local, national and international events of this nature are not within the control of the Company including impacts
of government and regulatory restrictions that have or may be implemented including as to travel, employment,
operational matters, imports or good/services.
To date the pandemic has not had a material adverse impact on the Company. There is a risk of harm to employees,
contractors and communities near our operations, particularly in remote locations, from exploration activities.
The Company has adopted best practice measures to deal with the effects of the pandemic and will implement
contingencies within all of its activities so as to ensure that any adverse effect that the pandemic may have is
minimised.
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.
Mitigations
We actively monitor regulatory and political developments and constructively engage with government, regulators
and industry bodies.
22 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
9.
Future Developments and Expected Results
The Group proposes to continue its exploration programs 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 2022 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
2022 and the number of meetings attended by each Director were:
Board
Audit
Committee
Remuneration
Committee
Risk
Committee
Number
attended
Number
eligible to
attend
7
7
7
7
7
7
J McKay
T McCaul
G Swaby
C Pieters
S Scott
M Riley
* Not a member of the relevant committee
7
7
7
6
7
7
Number
eligible to
attend
*
*
3
*
3
3
Number
attended
*
*
3
*
3
3
Number
eligible to
attend
2
*
*
*
2
2
Number
attended
Number
eligible to
attend
Number
attended
2
*
*
*
2
2
*
4
*
*
*
4
*
4
*
*
*
4
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.
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.
Comet Ridge Limited I Annual Report 2022 23
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
The Corporate Governance Statement provides further information on the role of this Committee.
Key Management Personnel
For 2022, the Key Management Personnel (KMP) for Comet Ridge comprised:
James McKay
Tor McCaul
Christopher Pieters
Gillian Swaby
Martin Riley
Shaun Scott
Non-executive Chairman
Managing Director
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Based on the Group’s current activities, it is the view of the Committee that the Board remain as the KMPs 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 effective from 1 December 2018. This was the first increase since 2009. No increases to Non-
Executive Directors fees have been made in 2022 apart from the increase in superannuation guarantee from 9.5% to 10% effective from
1 July 2021. The Non-executive Directors’ remuneration shown below is reported on a gross basis.
Non-executive Directors’ fees (inclusive of superannuation) have been paid on the following basis as at the end of each financial year:
Director fees
Base Fees
Chair
Other Non-executive Directors
Additional Fees
Chair of Audit Committee
Chairs of Remuneration and Risk Committees
Members of committees
Executive Remuneration Framework
2022
$
2021
$
156,712
81,370
156,000
81,000
10,046
5,023
3,014
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
(b)
and performance incentives;
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 provided and may also be entitled to short term performance-based incentives; and
24 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
(d)
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 2022 the rate was 10% up to a maximum contribution of $23,568. 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.
Details of Remuneration
Details of remuneration of each of the KMP of the Group during the financial year are set out in the following table:
Benefits and Payments
Year Ended 30 June 2022
Short-term Benefit
& Fees
Directors
J McKay
T McCaul
G Swaby
C Pieters
M Riley
S Scott
Salary, Fees
& Benefits
$
145,205
407,659
83,105
73,973
84,018
81,279
Settled in
Shares
$
-
-
-
-
-
-
Post-
Employment
Super-
annuation
$
14,521
23,568
8,310
7,397
8,402
8,128
Long-term
Benefits
Long Service
Leave
$
-
8,552
-
-
-
-
Total Fixed
Remuneration
$
159,726
439,780
91,415
81,370
92,420
89,407
Share-based
Payments
Performance
Rights
$
-
91,843
-
-
-
-
Total
$
159,726
531,623
91,415
81,370
92,420
89,407
Total KMP
875,239
-
70,326
8,552
954,118
91,843
1,045,961
Benefits and Payments
Year Ended 30 June 2021
Short-term Benefits
& Fees
Post-
Employment
Long-term
Benefits
Directors
J McKay
T McCaul
G Swaby
C Pieters
M Riley
S Scott
Salary, Fees
& Benefits
$
113,875
389,203
69,255
57,131
62,876
60,738
Settled in
Shares1
$
31,330
-
13,850
16,842
21,142
20,541
Super-
annuation
$
13,795
21,513
7,895
7,027
7,982
7,721
Long Service
Leave
$
-
8,240
-
-
-
-
Total Fixed
Remuneration
$
159,000
418,956
91,000
81,000
92,000
89,000
Share-based
Payments
Performance
Rights
$
-
31,692
-
-
-
-
Total
$
159,000
450,648
91,000
81,000
92,000
89,000
Total KMP
753,078
103,705
65,933
8,240
930,956
31,692
962,648
1
Net fees (after superannuation and PAYG obligations) were not paid in cash between 1 July 2020 and 31 October 2020, due to COVID-19 cash management
strategies, rather they have been settled in shares as per shareholder approval in the 2020 AGM.
The relative proportions of actual remuneration recognised are as follows:
Executive Director
T McCaul
C Pieters
Fixed Remuneration
2021
2022
93.0%
82.7%
100.0%
100.0%
At Risk
Short-term Incentives
2021
2022
0.0%
0.0%
0.0%
0.0%
At Risk
Long-term Incentives
2021
2022
7.0%
17.3%
0.0%
0.0%
Comet Ridge Limited I Annual Report 2022 25
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Long-term incentives are provided by way of Performance Rights and the percentages disclosed above are based on the value of the
Performance Rights expensed during the year.
Comparison of KMP Remuneration to Company Performance
The table below shows the total remuneration cost of the KMP, loss 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 ($)
Loss per share cents
Dividends paid
Share price at year end (cents)
2022
1,045,961
(1.02)
-
17.0
2021
962,648
(0.88)
-
6.2
2020
1,014,741
1(1.36)
-
9.2
2019
935,250
(0.56)
-
26.0
2018
1,041,323
(0.34)
-
36.0
1 The loss for 2020 includes a non-cash write-off of $5.48 million (0.69 cents) of capitalised exploration and evaluation expenditure for previously
drilled CSG wells in the Galilee Basin that lie outside of the prospective areas of the permits identified for long-term tenure renewal.
Service Agreements
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
Managing Director (Appointed 16 April 2009)
Term of Agreement:
No fixed term
Base Salary:
$451,874 per annum (inclusive of superannuation)
Termination Benefit:
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.
Termination Notice:
The Company or Mr McCaul may terminate the Agreement at any time providing each other a minimum of
three (3) months’ notice. No termination benefit is required if terminated for cause.
Chris Pieters
Executive Director (appointed 17 June 2015)
Term of Agreement:
Four months with options for parties to extend as needed
Remuneration:
Services provided as a consultant at $1,500 per day
Termination Benefit:
No termination benefits payable
Termination Notice:
Either party may terminate the Agreement with a minimum of fourteen days’ notice
KPIs:
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.
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.
Share-based Compensation
Long-term incentives are provided to certain employees through the Comet Ridge Limited Performance Rights Plan as approved by
shareholders for the purposes of ASX Listing Rule 7.2 Exception 9 most recently at the 2016 Annual General Meeting. Share-based
compensation is equity-settled.
Performance Rights
The terms and conditions of each grant of Performance Rights during the financial year affecting remuneration in the current or a future
period with respect to KMP are shown in the table below. In addition to the performance condition, KMP must satisfy a service condition
26 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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
Number of
Rights
Expiry
Date
Vesting
Date
Fair Value at
Grant date
(cents)
T McCaul
31-Dec-19 1
750,000
31-Dec-22
31-Dec-22
19.00
31-Dec-19 1
1,000,000
30-Jun-23
30-Jun-23
19.00
16-Nov-212
1,000,000
31-Aug-22
31-Aug-22
11.00
16-Nov-212
800,000
31-Aug-22
31-Aug-22
6.00
16-Nov-21
200,000
30-Jun-22
30-Jun-22
12.50
16-Nov-21
260,000
30-Jun-22
30-Jun-22
12.50
16-Nov-21
320,000
28-Dec-22
28-Dec-22
12.50
4,330,000
Performance Condition
Commercial gas production for 30 consecutive
days averaging 15Tj/d net
Commercial gas production for 30 consecutive
days averaging 20Tj/d net
Relative TSR against peer companies for period
1 August 2021 to 1 August 2022
Absolute TSR of share price for August 2021
compared to August 2022
Lost Time Injury Frequency Rate measured for
12 months ending 30 June 2022 and no
environmental incidents
Acquisition of APLNG’s 30% interest in Mahalo
Gas Project finalised
Value-adding project farm-in transaction
completed
Vested
%
0%
0%
0%
0%
100%
100%
0%
1
2
The expense associated with these rights has been reversed based on the Company determining that it is no longer probable that the performance
condition will be met by the vesting date.
Performance rights vested on 31 August 2022
The movements in the current year of the number of Performance Rights granted to KMP 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
31-Dec-19
31-Dec-19
31-Dec-19
16-Nov-21
31-Dec-21
31-Dec-22
30-Jun-23
31-Dec-22
750,000
750,000
1,000,000
-
2,500,000
-
-
-
2,580,000
2,580,000
-
-
-
-,
-
(750,000)
-
-
-
(750,000)
-
750,000
1,000,000
2,580,000
4,330,000
Key Management Personnel Shareholdings
The number of ordinary shares in the Company held by each of the KMP of the Group is as follows:
30 June 2022
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 Riley
S Scott
Total
38,076,275
6,501,053
295,372
1,576,178
850,895
1,038,074
48,337,847
-
250,000
-
-
-
-
250,000
-
-
-
-
-
-
-
38,076,275
6,751,053
295,372
1,576,178
850,895
1,038,074
48,587,847
Comet Ridge Limited I Annual Report 2022 27
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
30 June 2021
Balance at
beginning of the year
Shares
purchased
Other
Movements1
Balance at
end of the year
J McKay
T McCaul
G Swaby
C Pieters
M Riley
S Scott
Total
37,408,105
6,501,053
-
1,217,000
400,000
600,000
46,126,158
-
-
-
-
-
-
-
668,170
-
295,372
359,178
450,895
438,074
2,211,689
38,076,275
6,501,053
295,372
1,576,178
850,895
1,038,074
48,337,847
1 As consideration paid to Non-executive Directors who agreed to forgo a cash component of their monthly director and board committee fees with respect to
the period from 1 April 2020 to 31 October 2020, in exchange for the issue of fully paid ordinary shares in the Company.
END OF AUDITED REMUNERATION REPORT
14. Performance Rights
Movements in the number of Performance Rights on issue during the year ended 30 June 2022 as a result of new grants and expiring of
Performance Rights during the year are as follows:
Grant Date
Expiry Date
31-Dec-19
31-Dec-19
31-Dec-19
07-Aug-20
07-Aug-20
16-Nov-21
16-Dec-21
31-Dec-21
31-Dec-22
30-Jun-23
01-Jul-21
01-Jul-22
31-Dec-22
30-Jun-23
Share Price at
Grant Date
(cents)
19.0
19.0
19.0
7.9
7.9
12.5
10.0
No. of Rights
30 June 2021
Granted
during the
year
750,000
750,000
1,000,000
4,350,000
2,510,000
-
-
-
-
-
-
-
2,580,000
9,555,000
Vested during
the year
Expired during
the year
No. of Rights
30 June 2022
-
-
(750,000)
-
-
(4,350,000)
-
-
-
-
-
-
-
-
-
750,000
1,000,000
-
2,510,000
2,580,000
9,555,000
9,360,000
12,135,000
(4,350,000)
(750,000)
16,395,000
Since the end of the financial year and up to the date of this report no Performance Rights have been issued.
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.
15. 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.
16. 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.
17. Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the Company and/or the Group are important. The Group did not pay the auditor for any non-audit services.
28 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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.
This report is made in accordance with a resolution of the Board of Directors.
Tor McCaul
Managing Director
Brisbane, Queensland, 30 September 2022
Comet Ridge Limited I Annual Report 2022 29
Auditor’s Independence Declaration
As lead auditor for the audit of Comet Ridge Limited for the year ended 30 June 2022, 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
30 September 2022
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.
30 Comet Ridge Limited I Annual Report 2022
FINANCIAL
STATEMENTS
2022
Comet Ridge Limited I Annual Report 2022 31
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2022
Other income
Interest received
Gain on sale of property, plant and equipment
Expenses
Employee benefits’ expense
Contractors' & consultancy costs
Exploration and evaluation expenditure written-off
Professional fees
Corporate expenses
Fair value movement of financial liability at fair value
Occupancy costs
Finance costs
Other expenses
Depreciation
LOSS BEFORE INCOME TAX
Income tax expense/(benefit)
LOSS FOR THE YEAR
Other Comprehensive Income, Net of Income Tax
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations
TOTAL OTHER COMPREHENSIVE INCOME, 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 2022
$000's
June 2021
$000's
6
-
(1,966)
(427)
(384)
(297)
(242)
(3,637)
(77)
(1,117)
(422)
(71)
(8,634)
-
(8,634)
3
3
17
3
(1,364)
(399)
(765)
(184)
(193)
(3,456)
(141)
(15)
(398)
(65)
(6,960)
-
(6,960)
-
-
(8,631)
(6,960)
(8,634)
(6,960)
(8,631)
(6,960)
Cents
(1.02)
Cents
(0.88)
(1.02)
(0.88)
4
4
17
4
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.
32 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Consolidated Statement of Financial Position
as at 30 June 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Financial liability at fair value
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease 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 2022
$000's
June 2021
$000's
8
9
10
11
14
12
13
15
17
16
15
14
17
16
18
19
7,423
140
857
8,420
3,390
90
877
4,357
4
116
100,816
100,936
109,356
26
-
71,848
71,874
76,231
2,568
13,150
31,921
649
48,288
6,170
118
4,289
2,946
13,523
61,811
47,545
898
-
22,662
1,154
24,714
-
-
-
1,108
1,108
25,822
50,409
145,693
2,089
(100,237)
140,379
1,633
(91,603)
47,545
50,409
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Comet Ridge Limited I Annual Report 2022 33
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Foreign
Currency
Translation
Reserve
$000's
Contributed
Equity
$000's
Share-based
Payments
Reserve
$000's
Accumulated
Losses
$000's
Total
$000's
Balance at 1 July 2020
140,200
1,251
(50)
(84,643)
56,758
Loss for the period
Other comprehensive loss for the period
Total comprehensive loss for the period
-
-
-
-
-
-
-
-
-
(6,960)
-
(6,960)
(6,960)
-
(6,960)
Transactions with owners in their capacity as
owners
Shares issued to Directors net of transaction costs
Shares issued on vesting of Performance Rights
Share-based payments
179
-
-
179
-
-
-
-
-
-
432
432
-
-
-
-
179
-
432
611
Balance at 30 June 2021
140,379
1,251
382
(91,603)
50,409
Balance at 1 July 2021
Loss for the period
Other comprehensive income for the period
Total comprehensive loss for the period
140,379
-
-
-
1,251
-
3
3
382
-
-
-
(91,603)
(8,634)
-
(8,634)
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
4,970
344
-
5,314
-
-
-
-
Balance at 30 June 2022
145,693
1,254
-
(344)
797
453
835
-
-
-
-
(100,237)
50,409
(8,634)
3
(8,631)
4,970
-
797
5,767
47,545
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
34 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Consolidated Statement of Cash Flows
for the year ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Interest paid
Consolidated
Note
June 2022
$000's
June 2021
$000's
6
(2,685)
(680)
22
(2,006)
-
NET CASH USED IN OPERATING ACTIVITIES
20
(3,359)
(1,984)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Acquisition of APLNG’s 30% interest in Mahalo
Research and development tax offset received
Movements in restricted cash
Proceeds from sale of property, plant and equipment
Payment for property, plant and equipment
NET CASH (USED IN) / FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Borrowing costs
Proceeds from issue of shares
Share issue costs
Principal elements of lease payments
NET CASH FROM / (USED IN) FINANCING ACTIVITIES
Net increase/(decrease) in cash held
Cash at the beginning of the year
CASH AT THE END OF THE YEAR
(8,328)
(12,000)
-
-
-
(1)
(2,372)
-
3,254
(151)
10
(1)
(20,329)
740
23,150
(353)
5,319
(349)
(46)
27,721
4,033
3,390
7,423
-
-
(2)
-
(2)
(1,246)
4,636
3,390
8
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Comet Ridge Limited I Annual Report 2022 35
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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 29. The financial statements were approved for issue by
the Directors on 30 September 2022.
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 2022, the Group had $7.4 million in cash on hand and net current liabilities of $39.9 million, including the CleanCo Queensland
Limited (CleanCo) financial liability of $24.6 million, PURE warrant financial liability of $5.5 million and Santos QNT Pty Ltd (Santos) loan
of $13.2 million, all disclosed as current obligations.
On 12 September 2021, Comet Ridge sent a notice to CleanCo to commence gas sales agreement (GSA) negotiations and on 15 December
2021 the parties agreed to extend the GSA negotiation period to 30 June 2022. This date was further extended to 31 December 2022 on
21 June 2022. If, following the commencement of these GSA negotiations, a GSA cannot be negotiated by 31 December 2022 then a cash
payment of approximately $24.6 million based on current estimates ($20 million, indexed for CPI), would be due within 30 days (unless
extended). To date, a term sheet has been agreed by the parties, who are now seeking their respective executive committee approvals
to then move to a fully termed GSA for respective board approval.
On 28 June 2022, Comet Ridge completed the agreement with Australia Pacific LNG Pty Ltd (APLNG) to acquire their 30% interest in the
Mahalo Gas Project (refer to Note 25 for further details). Concurrent with the acquisition of the additional 30% interest in the Mahalo
Gas Project, Comet Ridge entered into loan and option agreements with Santos (refer to Note 15 for details of these arrangements).
Under these agreements, Santos provided short-term loan funding of $13.15 million to Comet Ridge. In exchange Santos gained a firm
option to acquire 12.86% of the 30% APLNG interest at the transaction value ($5.14 million of initial consideration and $3.43 million of
deferred consideration).
On 14 September 2022, Comet Ridge completed a placement to raise $22.8 million after costs (Placement). The Placement triggers an
early prepayment of part of the Santos loan, being $8.0 million (after deducting the $5.14 million option price) plus accrued interest of
$0.1 million. Comet Ridge repaid this amount ($8.1 million) to Santos on 28 September 2022.
On 23 September 2022, Santos gave a notice to Comet Ridge to exercise its firm option to acquire the 12.86% Mahalo Gas Project interest.
The exercise of this firm option by Santos and the loan prepayment noted above by Comet Ridge, reduces the Santos loan amount to nil.
Following completion of the APLNG acquisition and Santos firm option exercise, Comet Ridge and Santos must pay their proportional
share of the $8.0 million deferred consideration payable to APLNG (either in four annual instalments post completion of $2.0 million each
or earlier upon a trigger event occurring). Santos also has a non-firm arrangement to negotiate to acquire an additional 7.14% interest in
the Mahalo Gas Project from Comet Ridge and 50% interests in Mahalo North and Mahalo East on commercial terms to be agreed. These
commercial discussions are ongoing at the date of this financial report.
36 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 2
Summary of significant accounting policies (continued)
The Group has a number of commitments to continue to progress the Company’s Mahalo Gas Hub permits and Galilee Basin permits.
These commitments are made over various timeframes with exploration commitments required to be spent by 30 June 2023 amounting
to $3.3 million as disclosed in Note 24.
The ability of the Group to continue to adopt the going concern assumption will depend upon a number of matters including the successful
raising in the future of necessary funding through debt, equity, selldown or farm-out of assets, negotiating a GSA with CleanCo and/or
the successful exploration and subsequent exploitation of the Group’s tenements to meet these commitments as they arise.
The existence of the CleanCo Agreement and exploration commitments beyond the next 12 months, 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.
Comet Ridge continues to actively pursue a number of potential funding transactions to progress the appraisal and development of the
Company’s projects including selldown, farmout and gas prepay arrangements. At the date of this financial report, given the high demand
for natural gas on the east coast and high LNG and domestic gas pricing, and the significant acreage and equity position that the Company
has established in the Mahalo Gas Hub area, the Directors have a reasonable expectation that the Group will be successful with its future
funding 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.
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 2022 annual
reporting period are set out below.
New or amended accounting standards and Interpretations adopted
There are no new or amended accounting standards effective in the reporting period commencing 1 July 2021 that are relevant to the
Group’s operations.
Accounting standards issued but not yet adopted
There are no accounting standards that are not yet effective and that would be expected to have a material impact on the entity in the
current or future reporting year/periods and on foreseeable future transactions.
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.
Comet Ridge Limited I Annual Report 2022 37
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 3 Material balances – critical accounting estimates and judgements (continued)
•
•
•
•
•
Going concern – Note 2
Exploration and Evaluation assets – Note 12
Borrowings – Note 15
Rehabilitation provisions – Note 16
Financial liability at fair value – Note 17
Details of the nature of assumptions and conditions can be found in the relevant notes to the financial statements.
Note 4
Other expenditure
Expenses
Loss before income tax includes the following specific expenses:
(a) Employee benefits' expense
Employee benefits' expense
Share-based payments' expense (Refer to Note 22)
Defined contribution superannuation expense
(b) Occupancy costs
Rental expense relating to operating leases*
Other occupancy costs
* Operating lease relates to office premises lease of less than 12 months duration prior to negotiation
of current lease agreement (Refer to Note 14)
(c) Exploration and evaluation expenses
Exploration and evaluation asset write-off (Refer to Note 12)
Exploration and evaluation expense (Refer to Note 12)
(d) Financing costs
Interest expense on borrowings
Amortisation of fair value adjustment and establishment costs capitalised on Pure loan
Unwinding of discount on rehabilitation and restoration provision
Lease liability expense
Accounting Policies
Other income
Consolidated
June 2022
$000's
June 2021
$000's
(986)
(797)
(183)
(1,966)
(755)
(432)
(177)
(1,364)
(58)
(19)
(77)
(131)
(10)
(141)
(237)
(147)
(384)
(620)
(145)
(765)
(726)
(360)
(25)
(6)
(1,117)
-
-
(15)
-
(15)
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.
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.
38 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 4
Other expenditure (continued)
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:
o
o
o
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.
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
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 2022
$
June 2021
$
124,000
-
124,000
125,000
-
125,000
Consolidated
June 2022
$000's
June 2021
$000's
- -
- -
- -
Comet Ridge Limited I Annual Report 2022 39
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 6
Income tax (continued)
(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% (2021: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share options expensed
Government COVID-19 cashflow boost
Non-deductible accounting fair value
Other non-deductible items
Current year tax losses not recognised in deferred tax assets
Income tax expense
(8,634)
2,590
(6,960)
2,088
(239)
-
(511)
(110)
(1,730)
-
(129)
15
-
(13)
(1,961)
-
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.
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
Borrowing costs
Provisions
Leased assets
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
40 Comet Ridge Limited I Annual Report 2022
Consolidated
June 2022
$000's
June 2021
$000's
-
-
31,979
185
-
3,556
1
35,721
29,277
223
-
2,681
-
32,181
(20,181)
-
(20,181)
(17,132)
-
(17,132)
15,540
(15,540)
-
15,049
(15,049)
-
-
-
-
-
-
-
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 6
Income tax (continued)
Accounting Policies
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:
Australian temporary differences and tax losses
Offshore tax losses
Consolidated
June 2022
$000's
15,540
-
June 2021
$000's
14,720
329
15,540
15,049
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
Mahalo North Pty Ltd, Comet Ridge Mahalo East Pty Ltd, Comet Ridge Mahalo Far East Pty Ltd, Comet Ridge Gunnedah Pty Ltd, Davidson
Prospecting Pty Ltd, and Comet Ridge NZ Pty Ltd) have implemented the tax consolidation legislation and formed a tax consolidated group
from 1 July 2009. The members of the tax consolidated Group have entered into a tax funding agreement such that each member
recognises the assets, liabilities, expenses and revenues in relation to its own transactions, events and balances only. This means:
i.
ii.
iii.
the parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances;
the subsidiaries recognise all current and deferred tax amounts relating to its own transactions, events and balances; and
current tax liabilities and deferred tax assets arising with respect to losses in subsidiaries are transferred from the subsidiaries
to the parent entity as inter-company payables or receivables.
The tax consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the tax consolidated group
arising under the joint and several liability requirements of the tax consolidation system, in the event of default of the parent entity to
meet its payment obligations.
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
June 2022
$000's
June 2021
$000's
8,634
8,634
6,960
6,960
Comet Ridge Limited I Annual Report 2022 41
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 7
Earnings per share (continued)
(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
Number
860,034,445
Number
791,211,719
-
-
860,034,445
791,211,719
(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 22.
Accounting Policies
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.
Note 8
Cash and cash equivalents
Cash at bank and on hand
Consolidated
June 2022
$000's
7,423
June 2021
$000's
3,390
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with
original maturities of three months or less. Interest earned on accounts range from 0.00% - 1.35%.
Note 9
Trade and other receivables
Current
Trade receivables
Other receivables
Consolidated
June 2022
$000's
June 2021
$000's
15
125
140
53
37
90
Other receivables mainly comprise GST refunds - 85% (2021: 97%). 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 (ECL) 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 2022 and 2021 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 were not considered
material.
42 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 9
Trade and other receivables (continued)
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 Other assets
Prepayments
Restricted cash
Consolidated
June 2022
$000's
278
579
June 2021
$000's
298
579
857
877
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. Refer Note 24.
Prepayments
The prepaid expenses predominately relate to the prepayment for exploration equipment hire.
Note 11
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
Disposals
Depreciation
Balance at the end of year
Accounting Policy
Consolidated
June 2022
$000's
218
(214)
June 2021
$000's
217
(191)
4
26
26
1
-
(23)
4
97
1
(7)
(65)
26
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 range of useful life is:
Class of fixed asset
Plant and Equipment
3 to 10 years
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 12
Exploration and evaluation assets
Exploration and evaluation expenditure
Exploration and evaluation expenditure
Less provision for impairment
Consolidated
June 2022
$000's
125,521
(24,705)
100,816
June 2021
$000's
96,169
(24,321)
71,848
Comet Ridge Limited I Annual Report 2022 43
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 12
Exploration and evaluation assets (continued)
Movements in exploration and evaluation phase
Balance at the beginning of year
Acquisition of APLNG’s 30% interest in Mahalo Gas Project
Exploration and evaluation expenditure during the year
Research and development tax offset
Exploration and evaluation expenditure written-off
Restoration and rehabilitation asset
Balance at the end of year
Accounting Policy
June 2022
$000's
71,848
19,205
8,890
-
(384)
1,257
100,816
June 2021
$000's
72,738
-
1,885
(1,961)
(765)
(49)
71,848
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.
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.
ii.
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 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.
Research and development tax incentives
Research and development tax incentives received by the Group are deducted from the carrying amount of the exploration and evaluation
asset to which they relate in accordance with the capital approach as defined in AASB 120 Accounting for Government Grants and
Disclosure of Governance Assistance.
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 set out in Note 24.
Acquisition of APLNG’s 30% interest in Mahalo Gas Project
On 28 June 2022, Comet Ridge completed the acquisition of APLNG’s 30% interest in the Mahalo Gas Project for initial consideration of
$12 million and deferred consideration of $8 million. The deferred consideration is payable in 4 annual instalments of $2 million
commencing from June 2023. The acquisition has increased Comet Ridge’s interest in the Mahalo Gas Project from 40% to 70% at 30 June
2022, creating a streamlined joint venture with continuing Mahalo Gas Project partner, Santos QNT Pty Ltd (Santos).
44 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 12
Exploration and evaluation assets (continued)
The initial consideration payment of $12 million to APLNG and the associated stamp duty was funded via a loan provided by Santos in
exchange for Santos receiving a firm option to acquire an additional 12.86% equity interest in the Mahalo Gas Project. Refer to Note 15
for further details.
The Mahalo Gas Project acquisition costs capitalised to E&E assets are as follows:
Deposit paid to APLNG on 5 August 2021
Balance of up-front consideration paid on 28 June 2022
Stamp duty on acquisition transaction capitalised
Deferred consideration (present value of $8 million)
Total capitalised to Mahalo Gas Project E&E asset
June 2022
$000's
1,000
11,000
1,131
6,074
19,205
June 2021
$000’s
-
-
-
-
-
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.
In the second half of the 2020 financial year, the Mahalo Gas Project received Commonwealth and Queensland environmental approvals
and finally, Petroleum Leases (PL 1082 and PL 1083) for a term of 30 years. In addition, the remaining tenure of ATP 1191 has been
secured with the award of three Potential Commercial Areas (PCA 302, PCA 303 and PCA 304) for a term of 5 years. During the 2022
financial year, Comet Ridge completed a binding agreement with APLNG to acquire their 30% interest in the Mahalo Gas Project for $20
million along with associated option and loan arrangements with Santos. Consideration was given to this transaction in forming the view
that no impairment is required at 30 June 2022.
The Company was awarded ATP 2048 (Mahalo North project) in April 2020. The Mahalo North project contains a north-west extension
of the same coal reservoirs as the Mahalo Gas Project. Capitalised exploration and evaluation expenditure at 30 June 2022 totals $9.49
million, relating to office-based geological and geophysical interpretation and analysis and the costs of the 2022 financial year appraisal
drilling and production testing. The Company was also awarded two new Mahalo extension blocks in the 2021 financial year. The first
block was ATP 2061 (Mahalo East project), awarded in September 2020, which contains a north-east extension of the same coal reservoirs
as the Mahalo Gas Project. Capitalised exploration and evaluation expenditure at 30 June 2022 totals $0.37 million, relating to office-
based geological and geophysical interpretation and analysis. The second block was ATP 2063 (Mahalo Far East project), awarded in May
2021. Mahalo Far East contains coals that are generally deeper and have notably higher gas content than the main Mahalo high production
fairway, adding a significant additional gas-in-place volume to Comet Ridge’s portfolio. Capitalised exploration and evaluation
expenditure at 30 June 2022 totals $0.33 million, relating to native title negotiations and office-based geological and geophysical
interpretation and analysis. Each of Mahalo North, Mahalo East and Mahalo Far East have not yet reached a stage to allow a reasonable
assessment to be made regarding the existence of economically recoverable reserves.
ATP 743, ATP 744 and ATP 1015 are still under evaluation for both “Shallow” CSG and Conventional “Deeps” and have not yet reached a
stage to allow a reasonable assessment to be made regarding the existence of economically recoverable reserves. The Company has
secured the long-term tenure on these permits via the award of Potential Commercial Areas (PCAs) and renewal of ATP 743 and ATP 744
by the Queensland Department of Resources. As part of the PCA award process within the Galilee permits, Comet Ridge has relinquished
acreage where Contingent Resources do not exist. Comet Ridge has reviewed the carrying value of capitalised exploration and evaluation
expenditure in the Galilee permits at 30 June 2022 and has written-off $0.24 million (2021: $0.62 million) of capitalised seismic costs in
relinquished areas of ATP 743.
Comet Ridge Limited I Annual Report 2022 45
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 12
Exploration and evaluation assets (continued)
The write-off by permit is as follows:
Permit
ATP 743
ATP 744
ATP 1015
Total
Consolidated
June 2022
$000’s
237
-
-
237
June 2021
$000’s
620
-
-
620
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 2022 financial
year an amount of $147,000 (2021: $145,000) of exploration and evaluation expenditure was written-off for the Gunnedah Basin permits
(PEL 427, PEL 428 and PEL 6). The Company relinquished its interests in PEL 428 in May 2021, had its renewal application for PEL 6
declined in April 2022 and had PEL 427 renewed in May 2022 for only 12 of 57 blocks.
Permit
PEL 427
PEL 428
PEL 6
Total
Consolidated
June 2022
$000’s
75
28
44
147
June 2021
$000’s
53
57
35
145
The New Zealand permit PMP 50100 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 Group’s 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 Ridge’s share of the respective joint operations is as follows:
30 June 2022
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
GDJV Mahalo JV
70.0%
70.0%
$000's
$000's
PEL 427
59.1%
$000's
PEL 428
68.4%
$000's
PEL 6
29.6%
$000's
24
(1)
23
19,331
19,331
19,354
251
251
-
-
-
44,512
44,512
44,512
106
106
-
-
-
799
799
799
15
15
784
1
-
1
752
752
753
7
7
746
Total
$000's
25
(1)
24
65,842
65,842
65,866
388
388
-
-
-
448
448
448
9
9
439
65,478
Share of joint venture net assets
19,103
44,406
46 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 12
Exploration and evaluation assets (continued)
30 June 2021
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
GDJV Mahalo JV
40.0%
70.0%
$000's
$000's
PEL 427
59.1%
$000's
PEL 428
68.4%
$000's
PEL 6
29.6%
$000's
-
6
6
7
-
7
4
-
4
-
-
-
Total
$000's
175
6
181
25,306
25,306
25,312
753
753
760
728
728
732
430
430
430
46,423
46,423
46,604
-
-
15 10
15 10
5
5
297
297
164
-
164
19,206
19,206
19,370
267
267
Share of joint venture net assets
19,103
25,312
745
722
425
46,307
As at 30 June 2022, the principal place of business for PEL 427 is c/- Santos Limited, Level 5, 60 Flinders Street, Adelaide SA 5000. For ATP
1191, the principal place of business is c/- Santos Limited, Level 5, 60 Flinders Street, Adelaide SA 5000. For GDJV, the principal place of
business is c/- Comet Ridge Ltd, Level 3, 410 Queen Street, Brisbane QLD 4000.
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:
Minimum expenditure requirements
● not later than 12 months
● between 12 months and 5 years
Note 13
Trade and other payables
Current
Trade payables
Payroll tax and other statutory liabilities
Other payables
Consolidated
June 2022
$000's
610
158
June 2021
$000's
425
200
768
625
Consolidated
June 2022
$000's
1,242
June 2021
$000's
708
143
1,183
2,568
190
-
898
Trade payables includes $257,000 (2021: $143,000) for the Group’s share of joint operation liabilities (refer Note 12). Other payables
include the $1.13 million stamp duty payable on the acquisition of APLNG’s 30% interest in Mahalo Gas Project.
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.
Comet Ridge Limited I Annual Report 2022 47
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Leases
Note 14
Group as a lessee
(a) Amounts recognised in the Statement of Financial Position
Right-of-use assets
Office premises
Less: Accumulated depreciation
Lease Liabilities
Initial measurement of lease liability
Repayments
Accretion of interest
(b) Amounts recognised in the Statement of Profit or Loss
Depreciation on right-of-use assets
Consolidated
June 2022
$000's
164
(48)
116
164
(52)
6
118
June 2021
$000's
-
-
-
-
-
-
-
Consolidated
June 2022
$000's
48
June 2021
$000's
-
Interest expense (included in finance cost)
6
-
Comet Ridge leases a commercial office which has an end date of 7 July 2023. The lease does not include an option of renewal and Comet
Ridge is restricted from subleasing the property without the owner’s approval. The lease contains variable lease payments, which are
further discussed below.
Accounting Policy
Leases are recognised as a right-of-use asset and a corresponding liability at the commencement date of the lease. Contracts may contain
both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components
based on their relative stand-alone prices. However, for leases of office premises for which the Group is a lessee, it has elected not to
separate lease and non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. These lease arrangements
do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be
used a security for borrowing purposes.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on these assets are expenses to profit or loss as incurred.
Right-of-use asset
The right-of-use asset is measured at cost, comprising of the initial amount of the lease liability, any initial direct costs incurred, any lease
payments made at or before the commencement date net of any lease incentives received and restoration costs.
Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Where the
Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Lease liability
The lease liability is initially measured at the present value of lease payments to be made over the lease term, discounted using the
interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the Group’s
incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset
in of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease liabilities include the net present value of fixed payments less any lease incentives received, variable lease payments that depend
on an index or rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated termination penalties.
After the commencement date, the amount of lease liabilities is increased by the interest cost and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
48 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 14
Leases (continued)
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the
lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is
reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Note 15
Borrowings
Current
Loan payable to Santos QNT Pty Ltd (a)
Non-current
Loan payable to PURE Asset Management Pty Ltd (b)
(a)
Santos loan
Consolidated
June 2022
$000's
June 2021
$000's
13,150
-
6,170
19,320
-
-
On 28 June 2022, Comet Ridge accessed $13.15 million of debt funding from Santos QNT Pty Ltd (Santos) to fully fund the upfront
acquisition of APLNG’s 30% interest in the Mahalo Gas Project and associated costs. In exchange for receiving the funding, Comet Ridge
has provided Santos with the following rights to acquire various interests in the Mahalo Gas Hub area:
o
Firm Option - Santos has a six-month option (expiring 28 December 2022) to acquire an additional 12.86% interest in the
Mahalo Gas Project from Comet Ridge. Santos gave notice to exercise this option on 23 September 2022, reducing Comet
Ridge’s interest in the Mahalo Gas Project to 57.14% and the loan repayable to Santos to $8.0 million (plus interest accrued
at 5.125% per annum).
o Non-firm arrangements - Santos may acquire an additional 7.14% interest in the Mahalo Gas Project (equalising Santos and
Comet Ridge interest at 50% each) and also acquire 50% interests in the Mahalo North (ATP 2048) and Mahalo East (ATP
2061) on commercial terms to be agreed.
Facility terms and security
Lender:
Structure:
Interest:
Term:
Repayment
Security:
Santos QNT Pty Ltd
Term loan
5.125% per annum. Interest is accrued and paid on loan repayment date
The earlier of:
a)
b)
the date that is 30 days after the exercise of the Option by Santos; or
the date of expiry of the Option (28 December 2022).
Non-amortising bullet repayment. Given Comet Ridge completed an equity raise prior to the repayment date,
proceeds from that equity raise were applied towards repayment of the loan, less the Firm Option amount.
First ranking general security over all present and future right, title and interest in the Mahalo Gas Project
permits, the Lowesby Cutout Shallows and the PL 1083 West Shallow.
(b) PURE Asset Management loan
During the year, Comet Ridge entered into a facility agreement with PURE Asset Management Pty Ltd (PURE) to provide the Group access
to a term loan facility for $10 million provided in two tranches of $6.5 million and $3.5 million respectively. The facility provides funding
to progress appraisal activities for the Mahalo Gas Hub area and other corporate activities. As at 30 June 2022, both tranches have been
drawn with a maturity date of September 2025.
On drawdown of the respective tranches, Comet Ridge issued warrant shares that entitle PURE to acquire one Comet Ridge share per
warrant at the exercise prices outlined in the facility terms below. The warrants are exercisable by PURE at any point in time prior to the
maturity date of the loan facilities. The fair value of the warrants has been deducted from the gross proceeds of the loan on the date of
drawdown reflecting the fair value of the loan on that date as set out in the table below.
Comet Ridge Limited I Annual Report 2022 49
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 15
Borrowings (continued)
PURE loan payable
Loan establishment costs capitalised
Fair value of warrants at issue date separately recognised
Interest charge on financial liability
Fair value of loan payable
Consolidated
June 2022
$000's
10,000
(353)
(3,833)
356
6,170
June 2021
$000's
-
-
-
-
-
The warrants are separately recognised as a financial liability at fair value through the income statement as disclosed in Note 17. In line
with the accounting policy, the difference between the face value of the loan (repayment amount) and determined fair value is recognised
in the profit and loss over the loan period utilising the effective interest rate method.
Should PURE exercise all of their warrants on issue (65,909,091 warrants), Comet Ridge would receive $10 million of cash which can be
used to repay the loan amount.
Facility terms and security
Lender:
Structure:
Interest:
Term:
Repayment:
Warrants:
PURE Asset Management Pty Ltd
Term loan with detached warrants
Prior to Mahalo Gas Project FID: 12%
Post Mahalo Gas Project FID: 10%
Interest-only payment in quarterly instalments
48 months from utilisation
Non-amortising bullet repayment
Voluntary repayment(s) subject to cascading fees
39,393,939 warrant shares issued on 12 August 2021 with an exercise price of 16.5 cents per warrant share
26,515,152 warrant shares issued on 31 March 2022 with an exercise price of 13.2 cents per warrant share
Financial Covenant: Minimum $1.5 million cash balance
Security:
First ranking general security over all present and after-acquired property of the Company and subsidiaries,
excluding the Mahalo Gas Project
Accounting Policy
Borrowings are interest bearing and are initially recognised at fair value, net of transaction costs incurred. Subsequent to initial
recognition, borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit
or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or
finance costs.
Note 16
Provisions
Current
Employee benefits
Restoration & rehabilitation
Non-current
Employee benefits
Restoration & rehabilitation
50 Comet Ridge Limited I Annual Report 2022
Consolidated
June 2022
$000's
550
99
649
June 2021
$000's
484
670
1,154
20
2,926
2,946
3,595
33
1,075
1,108
2,262
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 16
Provisions (continued)
Movements in carrying amounts of restoration and rehabilitation
Balance at the beginning of the year
Additions/(Reductions) capitalised to exploration and evaluation expenditure
Unwind of discount - finance charges
Balance at the end of the year
Accounting Policy
June 2022
$000's
1,745
1,255
25
June 2021
$000's
1,779
(49)
15
3,025
1,745
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.
Where the underlying cost to rehabilitate has increased, this is capitalised to the asset and amortised over the remaining life of the
asset once in production.
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.
Note 17
Financial liability at fair value
Current
CleanCo Queensland Limited – financial liability
PURE Asset Management – warrant shares
APLNG - deferred consideration
Non-current
APLNG - deferred consideration
Consolidated
June 2022
$000's
June 2021
$000's
24,594
5,538
1,789
31,921
4,289
4,289
36,210
22,662
-
-
22,662
-
-
22,662
Comet Ridge Limited I Annual Report 2022 51
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 17
Financial liability at fair value (continued)
Movements in financial liability at fair value
Balance at the beginning of the year
Additions to financial liability at fair value
Movement in financial liability at fair value
Balance at the end of the year
Accounting Policy
Consolidated
June 2022
June 2021
$000's
22,662
9,911
3,637
36,210
$000's
19,206
-
3,456
22,662
Financial liabilities measured at fair value in the consolidated statement of financial position are grouped into three levels of a fair value
hierarchy. The three levels are defined based on the observability of significant inputs to the measurement as follows:
•
•
•
Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical liabilities;
Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for a similar liability, either directly or indirectly; and
Level 3: fair value measurements are those derived from valuation techniques that include inputs for the liability that are not
based on observable market date (unobservable inputs).
Critical accounting estimates and judgements
CleanCo liability
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 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 was 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.
Stanwell transferred its rights to CleanCo under the Government Owned Corporations (Generator Restructure-CleanCo) Regulation 2019.
On 21 September 2021, Comet Ridge issued a notice to CleanCo to commence GSA negotiations and on 15 December 2021 both parties
agreed to extend the negotiation period to 30 June 2022. On 21 June 2022, both parties agreed to further extend the negotiation period
to 31 December 2022. The 2019 Agreement provides for CML and CleanCo to negotiate a market priced GSA and fixed gas volumes,
conditional on the development of the Mahalo Gas Project.
If CML and CleanCo are unable to come to an agreement on a GSA by 31 December 2022, then a cash settlement of approximately $24.6
million based on current estimates ($20 million indexed for CPI from March 2014), would be triggered on or before 30 January 2023
(Payment Amount), unless extended. Upon payment by Comet Ridge of the Payment Amount, if required to do so, the obligations under
the 2014 Agreement and the 2019 Agreement will have been fully discharged between the parties.
Fair value measurement
Given the change in nature of the 2019 Agreement, Comet Ridge revisited the assumptions of the transaction in preparation of the 2019
Annual Report 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.
If CML and CleanCo are unable to come to an agreement on a GSA by 31 December 2022, then a cash settlement would be triggered on
or before 30 January 2023. In considering the above, Comet Ridge has determined that a cash settlement continues to represent the
maximum liability under the 2019 Agreement.
The liability to CleanCo Queensland Limited (CleanCo) arising from the renegotiated agreements is recognised as a “financial liability at
fair value through profit or loss”. An expense of $1,932,011 has been recorded in the 2022 financial year.
52 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 17
Financial liability at fair value (continued)
Valuation techniques and process used to determine fair values at 30 June 2022
The fair value of the CleanCo liability is based on the anticipated financial liability arising from the 2019 Agreement. The CleanCo liability
is classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs (refer to Note 25 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. 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.
2. The earliest date for the cash payment under point 1 is 30 January 2023, giving a period of indexation of 8.9 years from March
2014.
3. 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 2022 and forecast at 1.22% per quarter for the remaining period to 30 January 2023.
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
If Comet Ridge’s negotiations with CleanCo are unsuccessful by the extended GSA negotiation period of 31
December 2022, the cash payment would be payable no earlier than 30 January 2023.
CPI rate
If the 1.22% per quarter forecast CPI rate reduces/increases to a low of 0.72% per quarter or a high of 1.72%
per quarter, the indexed liability will reduce or increase by approximately 1.1% or $273,113 respectively.
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 $20 million liability (indexed at CPI from 2014) to CleanCo Queensland Limited.
The guarantee represents a contingent liability of the parent should CRM not be able to settle the obligation if and when it falls due.
Deferred consideration – APLNG
On 28 June 2022, Comet Ridge acquired Australia Pacific LNG Pty Ltd’s (APLNG) 30% interest in the Mahalo Gas Project for a total
consideration of $20 million payable in staged payments. Comet Ridge paid a $1 million deposit on 5th August 2021 and the upfront
payment balance of $11 million was paid to APLNG on 28 June 2022. The remaining $8 million of deferred consideration is payable in
four annual instalments of $2 million each commencing from June 2023, unless a post completion trigger event occurs requiring earlier
payment. The trigger events that require earlier repayment are any of the following:
a) a final investment decision is made for development of gas from the Mahalo Gas Project;
b) gas production from the Mahalo Gas Project equalling or exceeding 10 Terajoules per day,
c)
d) Comet Ridge disposing of more than a 15% interest in the Mahalo Gas Project; or
e) Comet Ridge is subject to an insolvency event.
a change in control of the Group;
Fair value measurement
The fair value of the deferred consideration is initially recognised as the present value of the $8 million payable in 4 equal annual
instalments and has been capitalised to the Mahalo Gas Project exploration and evaluation asset. For subsequent measurements, the
unwinding of the discount applied will be expensed to profit and loss.
The APLNG liability is classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs (refer to Note 25 for further
definitions of the fair value hierarchy). The inputs used in the calculation of the financial liability at fair value are as follows:
1. The agreed cash settlement of $8 million payable in $2 million instalment over 4 years commencing June 2023.
2. The pre-tax discount rate applied being 12%
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
Risk-adjusted discount
rate
The discount rate used is adjusted for the Group’s own credit risk. A change in the discount rate by 200 basis
points would increase/decrease the fair value by $265,034 and $247,273 respectively
Comet Ridge Limited I Annual Report 2022 53
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 17
Financial liability at fair value (continued)
Warrant shares – PURE Asset Management Pty Ltd
On 9 September 2021, Comet Ridge executed a binding agreement with PURE Asset Management Pty Ltd (PURE) to provide Comet Ridge
access to a secured term loan facility of up to $10 million. As at 30 June 2022, the facility has been fully drawn in two tranches of $6.5
million and $3.5 million respectively.
The loan agreement with PURE also contains detached warrant shares, with Comet Ridge issuing a total of 65,909,091 warrant shares in
two tranches (as per below) exercisable for a period of 48 months from utilisation of the Tranche 1 loan on 17 September 2021.
•
•
Tranche 1: 39,393,939 warrant shares issued on 12 August 2021 exercisable at $0.165 per share
Tranche 2: 26,515,152 warrant shares issued on 31 March 2022 exercisable at $0.132 per share
Fair value measurement
The fair value of the warrant share financial liability is calculated using a Black-Scholes valuation methodology. The key inputs into the
fair value calculation are:
a) Exercise price of each tranche of warrants;
b) Expected volatility (expressed in percentage terms) of the Company’s share price, reflecting the assumption that historical
volatility is indicative of future trends (which may not necessarily be the actual outcome);
c)
Share price of the Company on each warrant issuance date (noting that no allowance has been made for discounting the share
price to reflect the issue price of an alternate equity raising if the warrants had not been issued); and
d) Expected term of the warrants (expressed in years).
The warrant share financial liability has been classified as Level 3 in the fair value hierarchy and is recognised as a “financial liability at fair
value through profit or loss”. An expense of $1,704,546 has been recorded in the 2022 financial year.
Note 18
Equity
Ordinary shares - fully paid
Movements in ordinary shares
Consolidated
June 2022
$000's
June 2021
$000's
145,693
140,379
June 2022
June 2021
Number of Shares Number of Shares
June 2022
$000's
June 2021
$000's
Balance at the beginning of the period
Directors’ fees paid in equity @ 8.5 cents per share
Share placement @ 8.25 cents per share
Performance rights vested
Share issue costs
Balance at the end of the year
791,211,719
-
64,472,726
4,350,000
-
860,034,445
789,000,030
2,211,689
-
791,211,719
140,379
-
5,319
344
(349)
145,693
140,200
181
-
-
(2)
140,379
Accounting Policy
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.
54 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 19
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 2022
$000's
1,254
835
2,089
June 2022
$000's
382
(344)
797
835
June 2021
$000's
1,251
382
1,633
June 2021
$000's
(50)
-
432
382
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 20
Consolidated Statement of Cashflows reconciliation
Consolidated
(a) Reconciliation of cash flow from operations
Loss for the year
Depreciation
Exploration and evaluation assets written-off
Share-based payments
Discount unwinding on rehabilitation provision and fair value liabilities
Net exchange differences
Movement in financial liability at fair value
Changes in assets and liabilities
(Increase)/Decrease in trade and other receivables
Decrease in inventories
Decrease in prepayments and deposits paid
Increase in property, plant and equipment
Decrease in trade payables and accruals
Increase in provisions
June 2022
$000's
(8,634)
71
384
797
385
3
3,637
(43)
-
19
-
(28)
50
June 2021
$000's
(6,960)
65
765
613
15
-
3,456
24
4
26
(3)
(36)
47
(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.
(3,359)
(1,984)
Note 21
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.
Comet Ridge Limited I Annual Report 2022 55
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 22
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 2022
$000's
June 2021
$000's
797
432
Annual assessment of the likelihood of Performance Rights 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.
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.
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.
56 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 22
Share-based payments (continued)
The following table shows the number and movements of Performance Rights during the 2022 year:
Grant Date
31-Dec-19
31-Dec-19
31-Dec-19
07-Aug-20
07-Aug-20
16-Nov-21
16-Dec-21
Expiry Date
31-Dec-21
31-Dec-22
30-Jun-23
01-Jul-21
01-Jul-22
31-Dec-22
31-Dec-23
Share Price at
Grant Date
(cents)
19.0
19.0
19.0
7.9
7.9
12.5
10.0
No. of Rights
30 June 2021
750,000
750,000
1,000,000
4,350,000
2,510,000
-
-
Granted
During the
Year
-
-
-
-
-
2,580,000
9,555,000
Vested During
the Year
-
-
-
(4,350,000)
-
-
-
Expired During
the Year
(750,000)
-
-
-
-
-
-
No. of Rights
30 June 2022
-
750,000
1,000,000
-
2,510,000
2,580,000
9,555,000
9,360,000
12,135,000
(4,350,000)
(750,000)
16,395,000
At 30 June 2022, Performance Rights were subject to market and non-market vesting conditions.
The following table shows the number and movements of Performance Rights during the 2021 year:
Grant Date
23-Nov-17
20-May-18
31-Dec-18
31-Dec-19
31-Dec-19
31-Dec-19
07-Aug-20
07-Aug-20
Expiry Date
31-Jan-21
31-Jan-21
31-Jan-21
31-Dec-21
31-Dec-22
30-Jun-23
01-Jul-21
01-Jul-22
Share Price at
Grant Date
(cents)
26.5
36.5
32.5
19.0
19.0
19.0
7.9
7.9
No. of Rights
30 June 2020
1,000,000
250,000
350,000
750,000
750,000
1,000,000
-
-
Granted
During the
Year
-
-
-
-
-
-
5,220,000
2,510,000
Vested During
the Year
-
-
-
-
-
-
-
-
Expired During
the Year
(1,000,000)
(250,000)
(350,000)
-
-
-
(870,000)
-
No. of Rights
30 June 2021
-
-
-
750,000
750,000
1,000,000
4,350,000
2,510,000
4,100,000
7,730,000
-
(2,470,000)
9,360,000
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.
Note 23
Contingent liabilities
There are no contingent liabilities of the Group as at 30 June 2022.
Note 24
Commitments
Lease commitments
Commitments for minimum lease payments for non-cancellable 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 2022
$000's
2
-
2
June 2021
$000's
73
2
75
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
Comet Ridge Limited I Annual Report 2022 57
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 24
Commitments (continued)
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 2022
$000's
3,327
16,413
19,740
June 2021
$000's
7,949
15,225
23,174
Bank guarantees
Westpac Banking Corporation have provided bank guarantees totalling $579,000 (2021: $579,000) as follows:
• $379,000 (2021: $379,000) to the State of Queensland - Group's exploration permits and environmental guarantees; and
• $200,000 (2021: $200,000) to the State of NSW - Group’s exploration permits and environmental guarantees.
The bank guarantees are secured by term deposits.
Note 25
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
Lease liabilities
Warrant shares
Deferred consideration
Borrowings
Financial liability at fair value – CleanCo Queensland Limited
58 Comet Ridge Limited I Annual Report 2022
Consolidated
June 2022
$000's
7,423
140
579
June 2021
$000's
3,390
90
579
8,142
4,059
2,568
116
5,538
6,078
19,320
24,594
58,214
898
-
-
-
-
22,662
23,560
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 25
Risk management (continued)
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. Borrowings are fixed rate borrowings and not exposed to
fluctuations in interest rates.
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.
2022 – Consolidated
Cash and cash equivalents and restricted cash
2021 – Consolidated
Cash and cash equivalents and restricted cash
Profit or Loss
Equity
1% increase
$000's
80
1% decrease
$000's
(80)
1% increase
$000's
80
1% decrease
$000's
(80)
40
(40)
40
(40)
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.
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 CleanCo arising from the Renegotiated Mahalo Option Agreement, the Group will manage this
liquidity risk by negotiating a Gas Supply Agreement (GSA) with CleanCo. In the event a GSA is not negotiated then a cash payment of
$20 million 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 2022
Trade and other payables
Lease liabilities
Borrowings
Deferred consideration – APLNG
Financial liability at fair value – CleanCo Queensland
Limited
Consolidated - 30 June 2021
Trade and other payables
Financial liability at fair value – CleanCo Queensland
Limited
Between
1 to 3 years
$000's
-
-
2,403
4,000
Between
3 to 5 years
$000's
-
10,302
2,000
Total
Contractual
Cash Flows
$000's
2,568
116
27,061
8,000
Carrying
Amount
$000's
2,568
116
19,320
6,078
-
-
24,594
24,594
6,403
12,302
62,339
52,676
<1 year
$000's
2,568
116
14,356
2,000
24,594
43,634
898
-
22,662
23,560
-
-
-
-
-
898
898
22,662
22,662
23,560
23,560
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.
Comet Ridge Limited I Annual Report 2022 59
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 25
Risk management (continued)
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
2022
NZD
$000's
4
-
2021
NZD
$000's
3
-
(11)
(12)
Based on financial instruments held at 30 June 2022 and 30 June 2021, 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 2022 $nil, (2021: $nil) of the Group's receivables were past due. The Group has no other significant concentration
of credit risk.
Cash and cash equivalents, restricted cash and term deposits
The Group has a significant concentration of credit risk with respect to cash deposits with banks. 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:
60 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 25
Risk management (continued)
a)
b)
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices); and
c)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows the 'fair value measurement hierarchy' classification of the Group's assets and liabilities measured and
recognised at fair value at 30 June 2022 (refer Note 17).
Financial Liabilities - Level 3
CleanCo Queensland Limited
APLNG deferred consideration
PURE warrant shares
Balance at the beginning of the year
Movement in financial liability at fair value
Balance at the end of the year
Consolidated
June 2022
$000's
24,594
6,078
5,538
36,210
22,662
13,548
36,210
June 2021
$000's
22,662
-
-
22,662
19,206
3,456
22,662
Other fair value disclosures
The Directors consider that the carrying amount of trade receivables and payables recorded in the financial statements approximates
their fair values due to their short-term nature.
Note 26 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 Mahalo North Pty Ltd
Comet Ridge Mahalo East Pty Ltd
Comet Ridge Mahalo Far East Pty Ltd
Accounting Policies
Country of
Incorporation
Class of
Shares
Equity Holding
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2022
100
100
100
100
100
100
100
100
100
100
2021
100
100
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.
Comet Ridge Limited I Annual Report 2022 61
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 26 Group structure (continued)
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity. Investments in subsidiaries are
accounted for at cost in the separate financial statements of Comet Ridge Limited.
Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the parent
entity.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts
previously recognised in Other Comprehensive Income in respect of that entity are accounted for as if the Group had directly disposed of
the related assets or liabilities. This means that any amounts previously recognised in Other Comprehensive Income are reclassified to
profit or loss.
If the ownership interest in a jointly controlled entity or an associate is reduced but joint control or significant influence is retained, only
a proportionate share of the amounts previously recognised in Other Comprehensive Income are reclassified to profit or loss where
appropriate.
Joint arrangements
The Group has interests in the following Joint Arrangements:
ATP 1191 Mahalo
ATP 743 Galilee
ATP 744 Galilee
ATP 1015 Galilee
PEL 427 Gunnedah
–
–
–
–
–
70.00% 1
70.00%-
70.00%
70.00%
59.09%
1 interest increased from 40% to 70% on completion of APLNG’s 30% interest acquisition
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 27
Related party transactions
Parent entity
The legal parent entity is Comet Ridge Limited. Details of controlled entities are set out in Note 26.
Key Management Personnel
There were no transactions with KMP during the year, other than those disclosed in Note 28.
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.
62 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 27
Related party transactions (continued)
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 (2021: $44.25 million) less provisions for impairment
$44.08 million (2021: $44.08 million).
The parent entity has also loaned funds to its subsidiaries of net $38.06 million (2021: $30.97 million) primarily to undertake exploration
expenditure. The parent entity has impaired the carrying amount of the loans by $18.16 million (2021: $16.06 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.
Note 28
Key Management Personnel
Details of Key Management Personnel
Key Management Personnel comprise all of the Directors of the Company.
James McKay
Tor McCaul
Christopher Pieters
Gillian Swaby
Martin Riley
Shaun Scott
Non-executive Chairman
Managing Director
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
Note 29
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
Consolidated
June 2022
$
875,239
70,326
8,552
91,843
1,045,961
June 2021
$
856,783
65,933
8,240
31,692
962,648
June 2022
$000's
8,261
55,256
63,517
June 2021
$000's
4,254
50,155
54,409
13,057
2,454
15,511
48,006
1,738
1,826
3,564
50,845
160,302
4,597
(116,893)
154,989
4,144
(108,288)
48,006
50,845
8,605
-
8,605
7,314
-
7,314
Comet Ridge Limited I Annual Report 2022 63
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Note 29
Parent entity disclosures (continued)
Bank guarantees
Bank guarantees are disclosed in Note 24.
Contingent liabilities
Contingent liabilities are disclosed in Note 23.
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 $20 million liability (indexed at CPI from 2014) to CleanCo.
The guarantee represents a contingent liability of the parent should CRM not be able to settle the obligation if and when it falls due.
Note 30
Post balance date events
(a)
Completion of placement on new shares
Comet Ridge announced on 8 September 2022, a placement to institutional and sophisticated investors to raise $24.0 million (before
costs). The placement comprised the issue of 137,142,858 new shares at an issue price of $0.175 per share. The placement shares were
allotted to investors on 15 September 2022. Part of the proceeds of the placement were used to repay the net loan amount to Santos,
being $8.1 million (including accrued interest) paid on 28 September 2022.
(b)
Renewal of Galilee Basin permits and award of Potential Commercial Area (PCA) applications
On 12 September 2022, Comet Ridge announced its applications for renewal of the most prospective areas of ATP 743 and 744 had been
awarded by the Queensland Department of Resources (DoR) for a further period of 12 years ending 3 September 2033 and 31 October
2033 respectively. The permit renewals were accompanied by PCA applications over six highly prospective areas within the Galilee Basin
permits. These PCAs, numbered PCA 319 to 324, have also been awarded to Comet Ridge by DoR for a term of 15 years ending 9
September 2037.
(c)
Notice received from Santos to increase Mahalo Gas Project equity
On 26 September 2022, Comet Ridge announced it had received a notice from Santos to purchase their 12.86% option interest in the
Mahalo Gas Project from Comet Ridge. Subsequent to the receipt of the exercise notice, on 26 September 2022, the parties executed the
Sale Agreement to give effect to the transfer of the 12.86% option interest.
The effect of this option exercise on Comet Ridge is described below:
•
•
•
•
The $13.15 million loan owing to Santos is reduced by $5.14 million to $8.01 million with Comet Ridge repaying the net amount
plus accrued interest of $0.1 million on 28 September 2022;
Santos assumes liability for its pro-rata share of the $8 million deferred consideration payable to APLNG, being $3.43 million.
The first $2 million tranche of deferred consideration is payable to APLNG on 28 June 2023 with Comet Ridge’s share of that
tranche now reduced to $1.14 million;
Comet Ridge’s interest in the Mahalo Gas Project will reduce from 70% to 57.14%, with a corresponding decrease in Comet
Ridge’s net share of independently certified Gas Reserves and Contingent Resources; and
Comet Ridge retains a very material net interest of 332 Petajoules of 2P Gas Reserves + 2C Contingent Gas Resources in the
Mahalo Gas Project. There is no impact from this option exercise on Comet Ridge’s 100% owned northern Mahalo Hub blocks
where the Company expects to book initial reserves following the recent successful pilot testing program at Mahalo North.
(d)
Performance Rights
On 28 September 2022, Comet Ridge issued 13,195,782 ordinary shares as a result of vesting of the same number of Performance Rights,
including 2,260,000 ordinary shares issued to Tor McCaul, Managing Director. In addition, Comet Ridge announced on the same date, the
lapse of 30,469 Performance Rights due to the vesting condition for a parcel not being fully satisfied.
64 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
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 2022 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, 30 September 2022
Comet Ridge Limited I Annual Report 2022 65
Your Company is in
a great position. We
have proven assets
in the right location,
along with some
exciting growth
opportunities that
we can integrate
into our Mahalo
Gas Hub
development.
66 Comet Ridge Limited I Annual Report 2022
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 2022 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 2022
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 significant accounting policies and other
explanatory information
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 & 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
Liability limited by a scheme approved under Professional Standards Legislation.
67
Material uncertainty related to going concern
We draw attention to Note 2(d) in the financial report, which describes that under an agreement with
CleanCo Queensland Limited (CleanCo), contract terms exist whereby a cash payment of approximately
$24.6 million may become payable. In addition, the Group will require additional funding for its ongoing
commitments to continue its normal business operations, including the progression of its Mahalo Gas
Hub permits and Galilee permits.
The ability of the Group to continue as a going concern depends upon a number of matters, including
successfully raising necessary funding through debt, equity, selldown 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 $1,096,000, which
represents approximately 1% of the Group’s total
assets.
● Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
● We applied this threshold, together with
●
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.
The Group undertakes exploration and
evaluation activities for gas in respect to its
tenements located in Queensland and New
South Wales.
68 Comet Ridge Limited I Annual Report 2022
●
The accounting processes are structured around
the Groups finance function at the Group’s head
office in Brisbane.
● We chose Group total assets because, in our
view, it is the benchmark against which the
performance 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 matter(s) 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 Exploration and Evaluation
assets
Refer to note 12, $100.8 million
The following procedures, amongst others, were
performed in relation to the carrying value of the
E&E assets:
Exploration and Evaluation (E&E) assets represent
the Mahalo and Galilee Deeps Joint Ventures (JVs),
Mahalo North, Mahalo East, Mahalo Far East and the
Gunnedah and Galilee Basin tenements.
E&E assets totalling $237k relating to certain Galilee
Basin exploration in areas that were relinquished
during the year have been written-off.
All expenditure in relation to the Gunnedah
Basin ($147k) has been written-off during the year.
On 28 June 2022, the Group completed the
acquisition of Australia Pacific LNG Pty Ltd’s
(APLNG) 30% interest in the Mahalo Gas Project
resulting in a $19.2 million increase in E&E assets.
We considered the carrying value of the E&E assets
to be a key audit matter given the significance of the
E&E asset balance to the financial statements and
judgements regarding future exploration plans in
determining whether the assets should continue to be
capitalised.
● Considered the Group’s accounting position
paper on the ability to continue to capitalise E&E
assets for each area of interest.
● Agreed the licence expiry date of the respective
tenements to the official tenement documentation
provided by the Queensland Department of
Resources, to confirm currency of tenure and the
Group’s right to explore.
● Assessed the Group’s financial year 2023 budget
to determine if exploration expenditure had been
included for the respective tenements to
demonstrate continued exploration activity.
● Discussed likely developments and future plans
for the respective tenements with Management.
● Evaluated the reasonableness of disclosures
included in the financial report against the
requirements of Australian Accounting
Standards.
Comet Ridge Limited I Annual Report 2022 69
Key audit matter
How our audit addressed the key audit matter
Valuation of CleanCo financial liability
Refer to note 17, $24.6 million
The CleanCo arrangement originated in 2014 and
reflects the Group’s obligation to settle the acquisition
of a 5% interest in the Mahalo Gas Project.
The following procedures, amongst others, were
performed in relation to the valuation and
presentation of the CleanCo financial liability:
On 21 June 2022, the Group and CleanCo agreed to
extend the Gas Sale Agreement (GSA) negotiating
period to 31 December 2022 under the terms of the
arrangement.
In estimating the fair value of the financial liability
under the arrangement, the Group have made
judgements including the:
•
•
•
timing of any cash payments under the
arrangement
discount rate to be applied
forecast inflation rates.
Given the magnitude of the liability and judgements
made in determining the fair value of the liability, the
complexities of the CleanCo arrangement, and the
significance of the arrangement to the financial report,
we consider the accounting for the CleanCo
arrangement to be a key audit matter.
● Read the relevant terms of the CleanCo
agreements, to develop an understanding of the
arrangement.
●
Agreed the extension of the GSA negotiating
period to 31 December 2022 to the Negotiation
Notice agreed between CleanCo and the Group.
● Considered the reasonableness of the timing of
any potential cash outflow with reference to the
conditions in the agreements.
● Considered the reasonableness of the forecast
inflation rates over the remaining timeframe of
the arrangement.
● Tested the mathematical accuracy of the
calculations of the financial liability through
recalculation.
● Evaluated the reasonableness of disclosures
included in the financial report against the
requirements of Australian Accounting
Standards.
Acquisition of APLNG’s 30% interest in the
Mahalo Gas Project
Refer to note 12 and 15
On 28 June 2022, the Group completed the
acquisition of APLNG’s 30% interest in the Mahalo
Gas Project (MGP) for $20.0 million, comprising
$12.0 million initial consideration and $8.0 million
deferred consideration payable in four equal
instalments over four years.
On completion of the transaction the Group’s interest
in the MGP increased to 70%.
Concurrent with the acquisition, Comet Ridge entered
into loan and option agreements with Santos QNT Pty
Ltd (Santos).
The following procedures, amongst others, were
performed in relation to the acquisition of APLNG’s
30% interest in the Mahalo Gas Project:
● Read the relevant terms of the APLNG sale
agreement and Santos loan and options
agreements to develop an understanding of the
arrangements.
●
Assessed whether the arrangements impacted on
the joint control of the MGP and the Group’s
accounting for its interest in the MGP in
accordance with Australian Accounting
Standards.
70 Comet Ridge Limited I Annual Report 2022
Key audit matter
How our audit addressed the key audit matter
We considered the Acquisition of APLNG’s 30%
interest in the MGP and associated financing
arrangements with Santos to be a key audit matter
given the significance of the transaction to the
financial report and judgement in determining the:
●
●
●
appropriate accounting treatment for the
Santos options and loan
impact on the assessment of joint control of
the MGP
fair value of the deferred consideration.
●
●
●
Agreed the purchase price and deferred
consideration payable to the APLNG Sale and
Purchase Agreement.
Assessed whether the Group accounted for the
Santos loan and options in accordance with
Australian Accounting Standards and agreed the
relevant terms of the Santos loan and options to
the Santos Loan and Option Agreements.
Agreed the drawdown of funds from the Santos
Loan and payment to APLNG to the Group’s bank
statements.
● With the assistance of PwC valuation experts,
assessed whether the discount rate applied to
determine the fair value of the deferred
consideration was reflective of a market rate.
●
Tested the mathematical accuracy of the
calculations for the present value of the deferred
consideration.
● Evaluated the reasonableness of the relevant
disclosures included in the financial report against
the requirements of Australian Accounting
Standards.
PURE Asset Management Financing Facility
including the valuation of warrants issued
Refer to note 15 and 17
The Group executed a binding agreement with PURE
Asset Management Pty Ltd (PURE) on 9 September
2021, to provide a term loan facility of up to $10
million.
The following procedures, amongst others, were
performed in relation to the PURE Financing Facility
and the valuation of the PURE Warrants:
The agreement contains attached warrants, with
Comet Ridge granting Pure 65,909,091 warrant
shares, entitling PURE to 1 ordinary share in Comet
Ridge for each warrant, should PURE exercise the
warrants and pay Comet Ridge the exercise price.
We considered the accounting for the PURE loan and
warrants to be a key audit matter given the judgement
involved in:
● Read the relevant terms of the PURE Financing
Facility and warrant agreements to develop an
understanding of the arrangements.
●
Assessed whether the PURE warrants should be
accounted for as a financial liability or equity
instrument and recognised separately to the loan
in accordance with Australian Accounting
Standards.
Comet Ridge Limited I Annual Report 2022 71
Key audit matter
How our audit addressed the key audit matter
●
●
determining whether the warrants are
accounted for as a separate financial liability
or equity instrument to the loan
determining the fair value of the warrants
and the loan.
●
●
Agreed the number of warrants, exercise price
and relevant terms of the warrants issued to the
PURE warrant agreements.
Agreed the face value of the loan and relevant
terms of the loan to the PURE Financing Facility
Agreement.
● With the assistance of PwC valuations experts,
assessed:
o
o
the fair value of the warrants utilising a
Black Scholes valuation methodology
the impact of the warrants fair value on
the fair value of the loan.
●
Evaluated the reasonableness of the relevant
disclosures included in the financial report against
the requirements of Australian Accounting
Standards.
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 2022, 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.
72 Comet Ridge Limited I Annual Report 2022
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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 23 to 28 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Comet Ridge Limited for the year ended 30 June 2022
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
30 September 2022
Comet Ridge Limited I Annual Report 2022 73
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
Additional Information
The additional information set out below was applicable at 15 September 2022:
1.
Number of Equity Holders
Ordinary Share Capital
997,177,303 fully paid ordinary shares are held by 3,445 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
184
426
484
1,480
871
3,445
Units
9,567
1,464,253
3,899,561
60,699,444
931,104,478
997,177,303
Percentage
of Issued Capital*
0.001%
0.147%
0.391%
6.087%
93.374%
100.000%
*
Percentages have been rounded to the nearest 1/1000 decimal place.
The numbers of shareholders holding less than a marketable parcel (being 2,778 units or less) were:
317 Holders (286,942 Shares)
4.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders:
Name
Awal Bank BSC
Number of
Shares Held
51,500,000
Percentage
of Issued Capital
5.16%
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 16,395,000 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 10.
Unlisted Warrant Shares:
The Company has 39,393,939 warrant shares on issue, exercisable at $0.165 per share. These have been issued to PURE Asset
Management Pty Ltd in connection with utilisation of the Tranche 1 loan of $6.5 million. The warrant shares have a term of 48
months from the utilisation date of the Tranche 1 loan.
The Company has 26,515,152 warrant shares on issue, exercisable at $0.132 per share. These have been issued to PURE Asset
Management Pty Ltd in connection with the utilisation of the Tranche 2 loan of $3.5 million. The Tranche 2 warrant shares have a
term of 48 months from the utilisation date of the Tranche 1 loan drawn down on 17 September 2021.
74 Comet Ridge Limited I Annual Report 2022
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
6.
The 20 Largest Holders of Ordinary Shares
1.
2.
3.
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
4. MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
5. MCKAY SUPER PTY LTD
6.
7.
8.
BRIXIA INVESTMENTS LTD
SIXTH ERRA PTY ALTD
GILBY RESOURCES PTY LTD
9. MR JOHN NAUGHTON
10. BRAZIL FARMING PTY LTD
11.
JETAN PTY LTD
12. WATERFORD ATLANTIC PTY LTD
13. POWER INDUSTRIES PTY LTD
14. MICHAEL JOYCE PTY LTD
15. KABILA INVESTMENTS PTY LTD
16. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17. MR CHRISTOPHER JOHN BLAMEY + MRS ANNE MARGARET BLAMEY
18. UBS NOMINEES PTY LTD
19. NAUGHTON SUPER PTY LTD
20.
JAF SUPER PTY LTD
TOTAL
Number of
Ordinary Fully Paid
Shares Held
94,430,404
37,153,603
30,184,849
22,331,815
20,253,129
19,355,501
18,039,150
17,150,000
16,100,000
15,996,394
15,947,226
14,523,146
13,463,297
12,000,000
11,663,318
11,593,252
10,450,000
8,920,693
8,700,000
8,500,000
406,755,777
Percentage of
Issued Capital
%
9.47%
3.73%
3.03%
2.24%
2.03%
1.94%
1.81%
1.72%
1.61%
1.60%
1.60%
1.46%
1.35%
1.20%
1.17%
1.16%
1.05%
0.89%
0.87%
0.85%
40.79%
7.
Restricted Securities
There were no restricted securities issued or held during the reporting period.
8.
Interest in Petroleum Tenements - Authority to Prospect (ATP), Petroleum Lease (PL), Petroleum Commercial Area (PCA),
Petroleum Exploration Lease (PEL), Petroleum Mining Permit (PMP) Interests
ATP / PL / PCA /
PEL / PMP
Location
Interest1
Operator
PL 1082 Mahalo 2
Bowen Basin
PL 1083 Mahalo 2
Bowen Basin
PCA 302 Mahalo 2
Bowen Basin
PCA 303 Mahalo 2
Bowen Basin
PCA 304 Mahalo 2
Bowen Basin
ATP 2048
ATP 2061
ATP 2063
ATP 743 3
Bowen Basin
Bowen Basin
Bowen Basin
Galilee Basin
ATP 744 3
Galilee Basin
ATP 1015 3
Galilee Basin
PEL 427 4
Gunnedah Basin
70%
70%
70%
70%
70%
100%
100%
100%
70% Conventional
100% CSG
70% Conventional
100% CSG
70% Conventional
100% CSG
100% Conventional
59.09% CSG
Santos QNT Pty Ltd
Santos QNT Pty Ltd
Santos QNT Pty Ltd
Santos QNT Pty Ltd
Santos QNT Pty Ltd
Comet Ridge Mahalo North Pty Ltd
Comet Ridge Mahalo East Pty Ltd
Comet Ridge Mahalo Far East Pty Ltd
Comet Ridge Limited
Comet Ridge Limited
Comet Ridge Limited
Comet Ridge Limited (Conventional)
Santos NSW (Betel) Pty Ltd (CSG)
PMP 50100 5
South Island, New Zealand 100% CSG
Comet Ridge NZ Pty Ltd
Comet Ridge Limited I Annual Report 2022 75
Comet Ridge Limited – Annual Report for the Year Ended 30 June 2022
1
2
3
4
5
The interest is held either by Comet Ridge Limited or one of its wholly owned subsidiaries
Formally part of the ATP 1191 Mahalo Permit has been converted to Petroleum Leases (PLs) 1082 and 1083 with the remaining area covered by Petroleum
Commercial Area (PCA) applications 302, 303 and 304. On 28 June 2022, Comet Ridge acquired the 30% interest of APLNG (one the original Mahalo JV participants),
which has increased Comet Ridge’s interest on completion to 70% and removed Origin Energy as operator.
The Authorities to Prospect (ATPs) located in the Galilee Basin have been divided by way of a farm-in 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
ATPs. The Queensland Government has granted since 30 June 2022 6 PCAs numbered 319 to 324 totalling approximately 4700 km2 for 15 years as well as renewing
the underlying ATP 743 and ATP 744 for a further 12 years. ATP 1015 is currently subject to permit renewal.
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. PEL 427 was renewed in May 2022. The approved area was
reduced to 12 blocks over an area of 900km2.
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.
76 Comet Ridge Limited I Annual Report 2022
CORPORATE DIRECTORY
Directors
James McKay – Non-execu ve Chairman
Tor McCaul – Managing Director
Christopher Pieters – Execu ve Director
Gillian Swaby – Non-execu ve Director
Mar n Riley – Non-execu ve Director
Shaun Sco – Non-execu ve Director
Company Secretary – Stephen Rodgers
Registered Office
Comet Ridge Limited
ABN 47 106 092 577
Level 3
410 Queen Street
Brisbane, Queensland, 4000
Telephone: +61 7 3221 3661
Website: www.cometridge.com.au
Email: info@cometridge.com.au
Share Registry
Computershare Investor 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
Securi es Exchange Lis ng
Australian Securi es Exchange Ltd
Home Exchange: Brisbane
ASX Code: COI
Comet Ridge Limited I Annual Report 2022 77
Comet Ridge
A
T
W
E
Level 3
410 Queen Street
Brisbane QLD 4000
+61 7 3221 3661
www.cometridge.com.au
info@cometridge.com.au