Cue Energy Resources Limited
Annual Report
2019
About Us
Cue Energy Resources is an oil and gas production and exploration
company with production assets in Indonesia and New Zealand and
exploration assets in Australia and Indonesia. Offices are located in
Melbourne, Australia and Jakarta, Indonesia.
Contents
Joint Operations
Chairman’s Overview
CEO Report and Overview of Operations and Finances
Reserves and Resources Summary
Sustainability
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flow
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
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Cover Image: Paus Biru-1 gas discovery testing, Sampang PSC. December 2018.
1
Cue Energy Resources LimitedAnnual Report 2019 Joint Operations
INDONESIA
Mahato PSC
Interests
Texcal (Operator)
Central Sumatra Energy
Bow Energy
Cue
Mahakam Hilir PSC
Interests
Cue (Operator)
Sampang PSC
Interests
51%
11.5%
25%
12.50%
100%
*
Ophir Indonesia (Sampang) (Operator)
45%
Singapore Petroleum Company
Cue
40%
15%
AUSTRALIA
Carnarvon Basin Permits
Interests
WA-359-P
BP (Operator)
Cue
Beach Energy
New Zealand Oil & Gas
WA-389-P
Cue (Operator)
WA-409-P
Cue
BP (Operator)
42.5%
21.5%
21%
15%
100%
20%
80%
2 Cue Energy Resources Limited
Annual Report 2018/19
NEW ZEALAND
Maari and Manaia Oil Fields
Interests
PMP 38160
OMV (Operator)
Horizon Oil
Cue
69%
26%
5%
* A Medco Energi Company
SECTION HEADINGNEW ZEALANDINDONESIAAUSTRALIAHead OfficeMelbourneCue JakartaOffice
Chairman’s Overview
Alastair McGregor
Dear Shareholders,
I am pleased to report a number of important developments for the company during the last year.
The most significant achievement was the finalisation of agreements to farmout and drill the Ironbark-1 exploration well
in WA-359-P. Cue has maintained a 21.5% participating interest in the exploration asset alongside our new joint venture
partners BP, Beach Energy and New Zealand Oil & Gas.
Finalising the Ironbark joint venture was a multi-year process, culminating with the farmin by New Zealand Oil & Gas, who
acquired 15% participating interest and agreed to fund 2.85% of Cue’s well costs. The New Zealand Oil & Gas farmin
agreement allowed us to finalise previous agreements with BP, who held a 42.5% option and Beach Energy, who signed a
farmin agreement with Cue for 21% participating interest in November 2017. Through these agreements, we have achieved
full funding for the well.
NOPTA has approved the transfers of title and formal legal completion of the agreements occurred in June 2019. BP has
taken over as operator of WA-359-P and detailed Ironbark-1 well planning is well underway. The Ocean Apex drilling rig is
contracted to drill the well, which is currently scheduled for late 2020.
Cue’s share of Ironbark-1 is fully funded through a combination of cost carries from our JV partners and our own cash,
approximately $11.5 million of which has been placed in escrow and earmarked to meet our obligations to the joint venture.
The Paus Biru-1 exploration well in the Sampang PSC, Indonesia resulted in a gas discovery in December 2018 . We are
obviously very pleased with this result as the gas is easily commercialisable through existing infrastucture and is set to provide
a new source of revenue in the coming years. The operator is currently preparing a plan of development which will provide a
timeline and budget for the project.
The Maari field in New Zealand and Sampang PSC, Indonesia, continue to provide stable revenue sources and positive
cashflow to the company.
Cue ends the financial year 2019 in a financially strong position. We reported an after tax profit of $8.5 million on an operating
revenue of $25.7 million and increased our cash balance by $9.2 million to $26.2 million. As previously mentioned, $11.5
million of this cash is reserved for funding Cue’s share of the Ironbark-1 well.
Although the funding for the Ironbark-1 well is confirmed, we will be prudent in fiscal management until the well is drilled and
outcomes confirmed. If Ironbark is a success, the follow up targets in WA-389-P and WA-409-P will be de-risked and there
may be the opportunity for further wells in these permits.
During the year, Mr Koh Ban Heng resigned as a director. Mr Koh was a director of Cue since 2015 and the Board thanks
him for his contibution to the Company. In addition I would also like to take this opportunity to thank our staff in Australia and
Indonesia for all their contributions, through what has been a year of positive developments for the Company.
Moving to the planning stage for the Ironbark-1 well represents a significant achievement for the company. We are looking
forward to keeping you updated on our progress as we move towards drilling the prospect.
Sincerely
___________________________
Alastair McGregor
Non-Executive Chairman
24 October 2019
3
Cue Energy Resources LimitedAnnual Report 2019
Chairman’s Overview
4 Cue Energy Resources Limited
Annual Report 2018/19
SECTION HEADING CEO Report and Overview
of Operations and Finances
Matthew Boyall
2019 was an exciting year for Cue, where we were successful in farming out
WA-359-P and confirming the drilling of the Ironbark prospect, discovering
gas with the Paus Biru-1 well and maintaining a strong cashflow position
from our production assets.
The Ironbark-1 well in exploration permit WA-359-P is fully funded
and scheduled to be drilled in late 2020 by the Ocean Apex drilling
rig. We are pleased to have BP Developments Australia Pty Ltd (BP) as
Operator and Beach Energy Limited (Beach) and New Zealand Oil &
Gas as technically and financially strong partners. The prospect size
and proximity to infrastructure of Ironbark means that, if successful,
it has the potential to significantly change the value of Cue.
In the Sampang PSC, Cue announced a gas discovery from the
Paus Biru-1 exploration well in December 2018. The well was tested
and flowed gas at 13.8mmcfd. Planning is currently underway and
development of the Paus Biru field will provide both a new revenue
source and extend the life of the existing Oyong and Wortel field.
Oil production from the Maari and Manaia fields was above
expectations for the year, after successful field operations in late
2018 resulted in a 18% increase in average daily production for the
second half of the year.
Oyong and Wortel fields continued to be strong contributors to
Cue’s cash flow in their first full year of production as gas only fields,
with steady production and significantly reduced costs.
Financials
Cue’s strong financial results for the 2019 financial year included
cashflow from operations of $12.8 million and profit after tax of $8.5
million. Net cash flow for the year was $9.2m (including $0.8 million
effects from foreign exchange rate changes), increasing cash holdings
to $26.2 million. $11.5 million of this is held in escrow to fund Cue’s
expected, uncarried share of the Ironbark-1 exploration well.
Revenue of $25.7 million was a 4.8% increase over the previous
year. 58% of Cue’s revenue was from Oyong and Wortel fixed price
gas contracts in Indonesia and 42% from Maari oil sales, which are
undertaken against the Brent benchmark price plus a premium.
Production expenses were down by 27% overall, with Sampang PSC
costs down by 60% against the previous year due to removal of high
cost oil production infrastructure.
Administration costs were in line with 2019 and Cue continues to
focus on managing costs.
Cue has no debt.
Production
MAARI AND MANAIA FIELDS - NEW ZEALAND PMP 38160
Maari and Manaia fields performed strongly in the second half of
the year with a daily oil production rate of approximately 7500 bopd
at the end of the year; 18% higher than the daily average over the
whole year (6350 bopd). Total production was approximately 11%
lower than the previous year.
The growth in production rates during the second half was a result of a
higher capacity Electric Submersible Pump (ESP) installed in the MR6a
well, conversion of the MR5 well to a water injector, with increased
water injection rates and ongoing efforts to optimise all wells.
The ESP in production well MR6a was replaced in December 2018 with
a higher capacity downhole pump to allow the lifting of larger fluid
volumes. Post ESP replacement, the well increased oil production by
more than 30%. The joint venture has approved a further project to be
completed in H1 FY20 to replace other components of the ESP and
further increase the fluid lifting capacity from the well.
The MR5 production well was converted from a production well to a
water injection well in the first quarter of the year to provide pressure
support for the Maari Moki reservoir. Along with the other existing
water injection well, MR1, 20,000 to 25,000 barrels of water are now
being injected into the Maari field, with ongoing optimisation.
The MR3a well was offline from April 2018 to the end of the year due
to ESP failure. Prior to April, the well was producing approximately
450 bopd. The joint venture has approved a workover to replace
the ESP and downhole sand screens which may have contributed to
the pump failure. The workover was completed during August 2019.
5
Cue Energy Resources LimitedAnnual Report 2019 CEO Report and Overview of Operations
Production (Cont’)
NEW ZEALAND (CONT’)
INDONESIA
PMP 38160 (Cont’)
The most significant planned increase, expected to be in the
vicinity of 2000 bopd, should come from the t the installation of
CEO REPORT AND OVERVIEW OF OPERATIONS
compression on the Maari WHP to lower the production pressure of
the wells. Preliminary work has been undertaken during the year, with
the final installation expected to be completed by March 2018.
A number of sidetrack drilling opportunities are also being investigate
by the operator to target unproduced reservoirs in existing well
bores. These operations can be undertaken using the WHP workover
Production
unit and coiled tubing. The target wells for this drilling are likely to be
finalised during the first quarter of 2018.
MAARI AND MANAIA FIELDS - NEW ZEALAND PMP 38160
The Joint Venture partners are reviewing a preliminary proposal to
develop the Moki reservoir at the Manaia field, approximately
6 km from Maari, where the Manaia-2 well was drilled in 2013. The
Further field optimisation and infill drilling opportunities are being
proposal has passed the first stage of the Operator’s tollgate process
and could include an appraisal well within 18-24 months and a
reviewed by the joint venture to maintain or increase production rates.
further standalone or integrated development. Cue will carefully
During the year, Cue received an insurance settlement of $1.1
review this project as preliminary studies progress.
million relating to the FPSO Raroa water injection line which was
repaired in 2017.
Sampang PSC
The Oyong and Wortel fields continued to provide stable revenue
and be operated in a safe and reliable manner. In times of lower oil
price, fixed, high price gas production from these established, well
managed fields provides sustainable cashflow.
During FY2017, Oyong production averaged 120 bopd and 4mmcf/d
of gas net to Cue. Wortel field production averaged 5 mmcf/d net.
High cost oil production from Oyong ceased in June 2017 as part
of the conversion to gas only production. The project is expected to
be completed by December 2017. Operating costs are expected to
halve due to gas production requiring significantly fewer production
facilities. Installation of a new compressor at the Grati processing
plant will also allow gas to be produced at lower reservoir pressures,
adding to recoverable reserves and making the field economic well
SAMPANG PSC LOCATION MAP – INDONESIA
past 2020.
Java
Drilling at the Paus near field exploration prospect is in the final
stages of review by the Joint Venture and a decision is expected
during the 2018 fiscal year. The well would target the Mundu
reservoir which provides the gas production at Oyong.
TARANAKI PENINSULA LOCATION MAP – NEW ZEALAND
TARANAKI PENINSULA LOCATION MAP – NEW ZEALAND
New Zealand
Tui
Taranaki
Peninsula
Taranaki
Peninsula
Madura Island
Cue is optimistic about the future production from the Sampang PSC.
We have increased our estimate of Wortel 2P gas reserves by 36% this
year, based on the continued high performance of the reservoir and
plan to undertake independent analysis of Oyong field reserves after
Maleo
Wortel
the current gas conversion project is complete and the wells have
stabilised in gas only mode.
Peluang
East Java
Oyong
Jeruk
Maui
Tui
Maui
10km
SAMPANG PSC LOCATION MAP – INDONESIA
Grati Onshore
Gas Facilities
Java
30km
New Zealand
PMP 38160
Maari
Maari
Manaia
Manaia
PMP 38160
10km
Madura Island
from a drill stem test (DST) over a 29 metre interval between 576
and 605 meters Measured Depth. Technical analysis following the
discovery is ongoing in preparation for a Plan of Development to
East Java
be submitted to the Government of Indonesia. The preliminary
development plan is for a single well development with a pipeline
to the existing Oyong infrastructure.
Peluang
Oyong
Wortel
Maleo
Jeruk
LEGEND
LEGEND
LEGEND
LEGEND
Cue Permit
Gas Field
Prospect
Cue Permit
Oil Field
Gas Field
Prospect
Cue Permit
Oil Field
Gas Field
Cue Permit
Oil Field
Gas Field
Gas Condensate Field
Gas Discovery
SEG Unitisation
Gas Line
Liquids Line
Onshore Gas
SAMPANG PSC
Gas production from the Oyong and Wortel fields has been
consistent in the fields’ first full year with a gas only production
system. Production averaged 2.4 mmcfd at Wortel and 1.5 mmcfd
Cue Energy Resources Limited
6
from Oyong net to Cue over the year.
Annual Report 2016/17
Production expenses were reduced by 60% against the previous
year due to the removal of high cost oil infrastructure. The Oyong
and Wortel fields now both operate with unmanned well head
platforms, connected by pipeline to the joint venture operated
Grati onshore gas plant. The gas is sold on long term, fixed price
contracts to the adjacent Indonesia Power plant.
On 7 Dec 2018, Cue announced the Paus Biru-1 exploration well
in the Sampang PSC as a gas discovery. A maximum flow test of
13.8 mmcfd was achieved through a 120/64” choke over 5 hours
6
Cue supported Paus Biru as an exploration opportunity for a
number of years and worked in close partnership with the Operator
and joint venture during drilling.
Grati Onshore
Gas Facilities
30km
A project to increase compression at the Grati gas plant has been
approved by the joint venture and is expected to be completed
in Q3 FY20. The effect of these works will be to lower the intake
pressure of the onshore compressor and improve recovery from the
fields in future years.
The joint venture is reviewing a number of exploration opportunities
in the PSC, some of which are of significant resource size. The most
technically advanced is the Wortel East prospect, where, if approved
by the joint venture, a drilling rig in the area during FY20 may
provide the opportunity to drill an exploration well in the prospect.
On 6 September 2018, Ophir Energy announced the completion
of the acquisition of Santos’ Asian assets, making Ophir Energy the
new parent company of Santos (Sampang) Pty Ltd, the PSC operator.
Ophir Energy was subsequently taken over by Medco Energi Global
Pte Ltd, an Indonesian exploration and production company.
Cue Energy Resources LimitedAnnual Report 2019 CEO REPORT AND OVERVIEW OF OPERATIONS
Exploration
AUSTRALIA
WA-359-P
The Ironbark-1 well is planned to be drilled in late 2020 by the
Ocean Apex rig with BP as Operator. With its very large prospective
gas volume, Ironbark has the potential to dramatically change the
value of Cue if successful.
Ironbark is a Deep Mungaroo Triassic gas prospect, which is located
50km from the Northwest Shelf LNG infrastructure at North Rankin,
making it geographically and commercially well positioned to
provide backfill to the existing LNG plants along the Western
Australia coastline. The Ironbark-1 well is expected to drill to 5500
metres and will be the first test of the Ironbark prospect.
A number of activities occurred during the year which resulted in
the transfer of Cue’s participating interest (PI) to BP, Beach and New
Zealand Oil & Gas and retention of 21.5% by Cue.
In October 2018, Cue executed a farmout agreement with New Zealand
Oil & Gas for a 15% PI in WA-359-P. This agreement was in addition to
existing farmout and option agreements which were in place with BP
and Beach. The New Zealand Oil & Gas agreement was approved at a
General Meeting of Cue shareholders on 8 January 2019.
WA-409-P
Exploration Permit WA-409-P is adjacent to WA-359-P and contains
a portion of the greater Ironbark structure and the independent NE
Ironbark prospect.
In October 2018, Cue granted New Zealand Oil & Gas an option to
acquire 5.56% equity in WA-409-P. This agreement was approved at
a General Meeting of Cue shareholders on 8 January 2019.
If exercised, this option includes a free carry to Cue for 5.56% of the
cost of drilling a well in WA-409-P and a 10% royalty to Cue on all future
revenue from New Zealand Oil & Gas’ 5.56% equity in the Permit.
The current option expiry dates for the New Zealand Oil & Gas and Beach
WA-409-P options have been extended temporarily until September
2019 while the terms of any further extensions are discussed.
Subsequent to the year end, BP, as operator, submitted an
application to the National Offshore Petroleum Titles Administrator
(NOPTA) to undertake further technical studies before being
required to commit to an exploration well within the permit. The
application has been approved, deferring the well commitment
currently in permit year 4 to permit year 5, with a drilling decision
not required until October 2021.
CARNARVON BASIN LOCATION MAP – AUSTRALIA
Australia
WA-389-P
Also in October 2018, Cue, BP, Beach and New Zealand Oil & Gas
executed a Co-ordination Agreement, which committed the parties
to work together, with BP undertaking the role of the Operator,
to progress the planning of the well, while completion conditions
under the existing option and farmout agreements were satisfied.
LEGEND
Cue Permit
Gas Field
Ironbark Prospect
Deep Mungaroo Leads
WA-389-P
WA-389-P
WA-359-P
WA-409-P
WA-359-P
North West Shelf
Angel
A rig contract was signed with Diamond Offshore in Feb 2019 for the
Ocean Apex semi-submersible drilling rig to drill the Ironbark-1 well.
A 2 year suspension and extension was received in April 2019 and
the permit is now due to expire in April 2021.
Completion of all agreements between Cue, BP, Beach and
New Zealand Oil & Gas was achieved on 7 June 2019, resulting
in the formation of the WA-359-P Joint Venture. Cue received
approximately A$1.8 million on completion and is now being funded
by BP, Beach and New Zealand Oil & Gas for approximately US$11
million of Ironbark well costs. A further US$8 million of cash reserves
has been escrowed by Cue to fund the un-carried portion of its
expected participating interest cost for the well
The Ironbark-1 wellsite survey has been completed and the well
Environment Plan is currently being prepared.
Wheatstone
Pluto
NWS LNG
Pluto LNG
N
25km
WA-389-P
WA-389-P contains the Blue Gum prospect, a Deep Mungaroo structure
which Cue believes is part of the greater Ironbark structure. During
the year, further work was undertaken to confirm the understanding of
the Blue Gum and other prospects within the permit.
7
Cue Energy Resources LimitedAnnual Report 2019 CEO REPORT AND OVERVIEW OF OPERATIONS
Exploration
AUSTRALIA
WA-389-P
Subsequent to the year end, Cue submitted an application to NOPTA
to replace the permit year 5 exploration well commitment with seismic
reprocessing over the Blue Gum prospect to assist with uncertainties
in the current mapping. A 6 month extension of the permit was also
applied for. This application was approved and the permit now expires
in April 2021 with no well required during the current term.
The ownership structure of the other partners in the PSC changed
during the year, including that of the PSC Operator, Texcal Mahato
EP Ltd. These changes provided funding to the parties and a
renewed exploration focus. A 23 month extension of the exploration
period was granted by the Indonesian government to June 2021 as
a replacement for lost time due to previous land permitting delays.
INDONESIA
Mahakam Hilir PSC
Cue is continuing with efforts to find a partner to participate in the
Naga Utara 4 Appraisal well and Mahakam Hilir PSC.
The Naga-Utara 4 well opportunity is to test the previously drilled
Sambutan-8 well where log analysis shows potential for 100m gross
interval of gas pay. The proposed well location is adjacent to the
producing Sambutan gas field and close to existing infrastructure
for rapid commercialisation.
During the year, the Naga Selatan-2 well, which was drilled in 2016
was permanently plugged and abandoned safely.
The exploration phase of the PSC is due to expire in May 2020.
MAHAKAM HILIR PSC LOCATION MAP – INDONESIA
Pelarang Samarinda
Sambutan
Kalimantan
Scale: 5km
Mahakam Hilir
PSC
In Q4 FY19, a Joint Venture operating agreement was agreed and
signed by the partners, facilitating the commencement of well
planning activities the PB-1 well, which is expected to be drilled
mid-November. Well site civil works have been completed and
drilling rig mobilisation is currently underway.
The PB prospect is in the southern section of the Mahato PSC and is
in the same petroleum system as the giant Minas and Duri oilfields.
A second well is expected to be drilled before the end of the year,
either as a follow up of PB-1 or targeting another exploration.
MAHATO PSC LOCATION MAP – INDONESIA
Bangko
Balam South
Sumatra
Mahato
PSC
Duri
Sanga Sanga
LEGEND
Petapahan
Cue Permit
Major Oil Fields
Libo SE
Kotabatak
Minas
40km
LEGEND
Cue Permit
Oil Field
Gas Field
Pamaguan
Nangka
MAHATO PSC
Good progress was made during the year on the Mahato PSC, which
is located in the highly prospective Central Sumatra Basin but has
been previously delayed by partner funding issues.
8
*Map does not include July 2018 relinquishment area, which is still pending approval.
CORPORATE
Cue Energy Resources Ltd and Cue Resources Inc. were named as
defendants, along with a number of other companies, in litigation
pending in Texas, USA in relation to the Pine Mills oilfield. On March
27, 2019 the court dismissed the claims against Cue in their entirety.
On April 26, 2019, the plaintiff filed an amended lawsuit against Cue
and the other defendants. Cue has filed a motion to dismiss, which
is now pending in U.S. court.
Cue Energy Resources LimitedAnnual Report 2019 Reserves and
Resources
2P Reserves at Maari have remained consistent with 30 June 2018 after accounting for 2019 production, due to an upward revision based
on enhanced performance from the MR6a well following changeout of the ESP, improved flow optimisation arising from Muti-Phase Flow
Meter data and conversion of the MR5 well to water injection. An increase in the 2P reserves at Oyong is due to the availability of additional
production data since the conversion of the field to gas only operations and a more detailed analysis confirming the expected ultimate
recoveries.
NET TO CUE ENERGY RESOURCES LIMITED AS AT 30 JUNE 2019
RESERVES
PROVED (1P)
PROVED & PROBABLE (2P)
DEVELOPED
UNDEVELOPED
DEVELOPED
UNDEVELOPED
FIELD (LICENCE)
NEW ZEALAND
Maari
INDONESIA (1)
Oyong
Wortel
Total Reserves (2)
CUE
INTEREST
OIL &
CONDEN-
SATE
MMBBL
OIL &
CONDEN-
SATE
MMBBL
GAS
BCF
OIL &
CONDEN-
SATE
MMBBL
GAS
BCF
OIL &
CONDEN-
SATE
MMBBL
GAS
BCF
5%
0.31
-
15%
15%
-
0.01
0.30
1.08
1.40
2.48
-
-
0.000
0.000
-
0.65
-
0.26
1.26
1.52
-
0.02
0.67
2.48
2.99
5.47
-
-
0.00
0.00
CONTINGENT RESOURCES (3)
FIELD (LICENCE)
INDONESIA
Jeruk (Sampang PSC)
Total Contingent Resources (4)
CUE
INTEREST
8%
OIL & CONDENSATE
MMBBL
1.24
1.24
GAS
BCF
-
0.60
1.12
1.72
GAS
BCF
-
0
(1) Cue Indonesian Reserves are net of Indonesian Government share of production
(2) Reserves for all fields are based on an independent technical review conducted by New Zealand Oil & Gas Limited (NZOG) and calculated using NZOG’s technical
recoverable quantities and Cue’s cost and oil price assumptions. Deterministic methods were used for reserves
(3) Contingent resources are quantities of petroleum estimated to be potentially recoverable through development of known accumulations but which are not currently
considered to be commercially recoverable due to one or more contingencies. The term 2C refers to a best estimate scenario of contingent resources. A ‘best estimate’ is the
most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that
the quantities actually recovered will equal or exceed the best estimate
(4) Paus Biru Gas Discovery resource has not been included as a Contingent Resource due to ongoing analysis by the Opertor as part of the Plan of Development process.
9
Cue Energy Resources LimitedAnnual Report 2019 RESERVES AND RESOURCES
GOVERNANCE ARRANGEMENTS
AND INTERNAL CONTROLS
Cue estimates and reports its petroleum reserves and resources in
accordance with the definitions and guidelines of the Petroleum
Resources Management System 2007 (SPE-PRMS), published by the
Society of Petroleum Engineers (SPE).
All estimates of petroleum reserves reported by Cue are prepared
by, or under the supervision of, a qualified petroleum reserves and
resources evaluator.
Cue has engaged the services of New Zealand Oil & Gas Limited (NZOG)
to independently assess the Maari, Oyong and Wortel reserves.
Cue reviews and updates its oil and reserves position on an
annual basis, or as frequently as required by the magnitude of the
petroleum reserves and changes indicated by new data and reports
the updated estimates as of 30 June each year as a minimum.
QUALIFIED PETROLEUM RESERVES
AND RESOURCES EVALUATOR STATEMENT
The reserves assessment has been completed and approved by
Daniel Leeman and is based on, and fairly represents, information
and supporting documentation reviewed. Daniel has 9 years of
experience within the petroleum industry. Daniel has a MENG in
Mechanical Engineering with a diploma in Business Management,
a MSc in Petroleum Engineering and is a certified professional
Engineer with the Institute of Professional Engineers New Zealand.
Daniel is also an active member of the Society of Petroleum
Engineers, Association of International Petroleum Negotiators and
the Royal Society of New Zealand.
Reserves are quantities of petroleum anticipated to be commercially
recoverable from known accumulations from a given date forward;
that are judged to be discovered, recoverable, commercial and
remaining. Probable (2P) reserves have a 50 per cent chance or
better of being technically and economically producible. Proven
(1P) reserves are those with a 90 per cent chance or higher and
Possible (3P) are those with a 10 per cent chance or lower of being
technically and economically producible. Developed reserves
are expected to be recovered from existing wells and facilities.
Undeveloped reserves are quantities expected to be recovered
through future investments (e.g. new wells, compressors, and other
facilities). Total reserves are the sum of developed and undeveloped
reserves at a given level of certainty. Oil and gas reserves reported
in this statement are as at 30 June 2019.
All reserves and resources reported refer to hydrocarbon volumes
post-processing and immediately prior to point of sale. The
volumes refer to standard conditions, defined as 14.7psia and 60°F.
All reserves reported are net of equity and government take, where
summation has been applied it has been conducted arithmetically,
so some numbers presented in tables may not add due to rounding.
Daniel is currently an employee of New Zealand Oil & Gas Limited
whom, at the time of this report, are a related party to Cue Energy.
Daniel has been retained under a services contract by Cue Energy
Resources Ltd (Cue) to prepare an independent report on the
current status of the entity’s reserves. As of the 17th January 2017
NZOG held an equity of 50.04% of Cue.
10
Cue Energy Resources LimitedAnnual Report 2019 RESERVES AND RESOURCES
TABLE 1: OIL AND CONDENSATE RESERVES AND RESOURCES RECONCILIATION WITH 30 JUNE 2018
1P Proved Oil and Condensate Reserves (MMBBL)
FIELD (LICENCE)
INDONESIA
Oyong (Sampang PSC)
Wortel (1) (Sampang PSC)
NEW ZEALAND
Maari (2) (PMP 38160)
Total Proved Oil and Condensate Reserves
CUE INTEREST
30 JUNE 2018
RESERVES
PRODUCTION
DISCOVERIES/
EXTENSIONS/
REVISIONS
ACQUISITIONS/
DIVESTMENTS
30 JUNE 2019
RESERVES
15%
15%
5%
0.00
0.01
0.31
0.32
0.00
-0.003
-0.12
-0.12
0.00
0.01
0.11
0.11
-
-
-
0.00
0.00
0.01
0.30
0.31
2P Proved & Probable Oil and Condensate Reserves (MMBBL)
CUE INTEREST
30 JUNE 2018
RESERVES
PRODUCTION
DISCOVERIES/
EXTENSIONS/
REVISIONS
ACQUISITIONS/
DIVESTMENTS
30 JUNE 2019
RESERVES
FIELD (LICENCE)
INDONESIA
Oyong (Sampang PSC)
Wortel (1) (Sampang PSC)
NEW ZEALAND
Maari (2) (PMP 38160)
Total Proved & Probable Oil and Condensate Reserves
2C Contingent Oil and Condensate Resources (MMBBL)
FIELD (LICENCE)
INDONESIA
Jeruk (Sampang PSC)
Total Contingent Oil and Condensate Resources
15%
15%
5%
0.00
0.03
0.67
0.70
0.00
-0.003
-0.12
-0.12
0.00
0.00
0.10
0.09
0.00
0.00
0.00
0.00
0.00
0.02
0.65
0.67
30 JUNE 2018
CONTINGENT
RESOURCES
PRODUCTION
DISCOVERIES/
EXTENSIONS/
REVISIONS
ACQUISITIONS/
DIVESTMENTS
30 JUNE 2019
CONTINGENT
RESOURCES
CUE INTEREST
8%
1.24
1.24
-
-
-
0
-
-
1.24
1.24
11
Cue Energy Resources LimitedAnnual Report 2019 RESERVES AND RESOURCES
TABLE 2: GAS RESERVES AND RESOURCES RECONCILIATION WITH 30 JUNE 2018
1P Proved Gas Reserves (BCF)
FIELD (LICENCE)
INDONESIA
Oyong (1) (Sampang PSC)
Wortel (1) (Sampang PSC)
Total Proved Gas Reserves
CUE INTEREST
30 JUNE 2018
RESERVES
PRODUCTION
DISCOVERIES/
EXTENSIONS/
REVISIONS
ACQUISITIONS/
DIVESTMENTS
30 JUNE 2019
RESERVES
0.15
0.15
1.11
2.90
4.01
-0.56
-0.88
-1.44
0.79
0.64
1.43
-
-
-
1.34
2.66
4.00
2P Proved & Probable Gas Reserves (BCF)
FIELD (LICENCE)
INDONESIA
Oyong (1) (Sampang PSC)
Wortel (1) (Sampang PSC)
Total Proved & Probable Gas Reserves
CUE INTEREST
30 JUNE 2018
RESERVES
PRODUCTION
DISCOVERIES/
EXTENSIONS/
REVISIONS
ACQUISITIONS/
DIVESTMENTS
30 JUNE 2019
RESERVES
0.15
0.15
1.72
4.80
6.52
-0.56
-0.88
-1.44
1.92
0.19
2.11
-
-
-
3.08
4.11
7.19
12
Cue Energy Resources LimitedAnnual Report 2019 Sustainability
Health Safety
and Environment
Cue operates under an HSE Policy approved by the
Board of Directors.
We are committed to achieving and maintaining good
health, safety and environmental performance, which
we consider critical to the success of our business.
We support and challenge our Joint Venture partners
in our shared HSE goal and take an active role in
oversight of our non-operated projects through audits
and reviews. During the year, we were closely involved
in reviewing and providing feedback on the Operator’s
HSE activities during the drilling of the Paus Biru -1 well.
The Health, Safety, Security, Sustainability and
Operational Risk (HSSSOR) committee of the Board of
Directors meets regularly to review the company’s HSE
activities.
There were no lost time incidents at any of Cue’s
operated or non-operated projects during the year.
Climate Change
Cue recognises that the management of risks associated with
climate change is a priority for our generation and will be for
those to come. We expect significant policy action is likely to
be implemented to reduce carbon emissions, including both
domestic policy initiatives, and increasing global cooperation.
Cue considers these risks and expected policy responses as part
of the risk management of our business.
The transition to low carbon forms of energy will take decades,
while low carbon technologies evolve as realistic, sufficient and
efficient alternatives. While the world needs to meet its energy
requirements during this transition, Cue is playing our part in
responsibly minimising carbon impact.
Natural gas is a cost effective alternative to replace higher emissions
fuels and complement renewable electricity generation, providing
significant emissions reductions and air quality benefits.
In Indonesia, Cue supplies gas from the Oyong and Wortel fields
to fuel Indonesia Power’s power plant at Grati, which supplies
electricity to East Java, replacing coal-fired generation in the
energy system.
Our Ironbark gas prospect in Western Australia, if successful, could
provide a significant source of lower-emission fuel for many years
when converted to LNG and utilised to reduce the greenhouse gas
emissions of Australia’s trading partners.
In New Zealand, Cue is a participant in the New Zealand Emissions
Trading Scheme and we meet our ETS obligations relating to
emissions from our share of the Maari production emissions. The
Maari Joint Venture is reviewing opportunities for future emissions
reductions.
13
Cue Energy Resources LimitedAnnual Report 2019 SUSTAINABILITY
Supporting Communities
Cue aims to support local communities in the areas that we operate
or participate in operations.
During the year, through our Jakarta office and East Kalimantan
operations site, we contributed cash donations, including to help
support victims in Central Sulawesi after the September 2018
earthquake and tsunami and donated excess material, including
mattresses, bedding, kitchen equipment and air conditioners to
a local orphanage, school and community health centre in the
Samarinda area of East Kalimantan.
Cue Donation of equipment to a local Community Health centre
We encourage and support our partner’s involvement in local communities. OMV New Zealand is
active in the Taranaki community with projects including working with iwi and youth groups,
Cue Donation of equipment to a local Community Health centre
providing house insulation and heating for families in need and providing funding to the Taranaki Air
Ambulance. Santos and Ophir Energy, as Operators of the Sampang PSC during the year, were active
in the local communities of Madura Island.
Cue Donation of mattresses and kitchen equipment to the Al-Hayat orphanage.
We encourage and support our partner’s involvement in local communities. OMV New Zealand is active in the Taranaki community with
projects including working with iwi and youth groups, providing house insulation and heating for families in need and providing funding to
the Taranaki Air Ambulance. Santos and Ophir Energy Sampang, as Operators of the Sampang PSC during the year, were active in the local
communities of Madura Island.
Cue Donation of mattresses and kitchen equipment to the Al-Hayat orphanage.
Deleted:
Supporting small industry around the Sampang PSC
14
Supporting small industry around the Sampang PSC
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Corporate Directory
30 June 2019
Directors
Alastair McGregor (Non-Executive Chairman)
Andrew Jefferies (Non-Executive Director)
Peter Hood (Non-Executive Director)
Rebecca DeLaet (Non-Executive Director)
Richard Malcolm (Non-Executive Director)
Rod Ritchie (Non-Executive Director)
Samuel Kellner (Non-Executive Director)
Chief Executive Officer
Matthew Boyall
Chief Financial Officer and Company Secretary
Melanie Leydin
Registered office
Principal place of business
Share register
Auditor
Level 3, 10-16 Queen Street
Melbourne, VIC 3000
Australia
Telephone: +61 3 8610 4000
Fax: +61 3 9614 2142
Level 3, 10-16 Queen Street
Melbourne, VIC 3000
Australia
Telephone: +61 3 8610 4000
Fax: +61 3 9614 2142
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford, VIC 3067
Australia
Telephone: +61 3 9415 2500
Fax: +61 3 9473 2500
BDO East Coast Partnership
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne, VIC 3000
Australia
Stock exchange listing
Cue Energy Resources Limited securities are listed on the
Australian Securities Exchange.
(ASX code: CUE)
Website
www.cuenrg.com.au
15
Cue Energy Resources LimitedAnnual Report 2019
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the ‘consolidated entity’ or the ‘Group’) consisting of Cue Energy Resources Limited (referred to hereafter as the
‘company’, ‘parent entity’ or ‘Cue’) and the entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The names of Directors of the Company in office during the year and up to the date of this report were:
Alastair McGregor
Andrew Jefferies
Peter Hood
Rebecca DeLaet
Richard Malcolm
Rod Ritchie
Samuel Kellner
Koh Ban Heng (resigned on 30 October 2018)
Chief Executive Officer
Matthew Boyall
Chief Financial Officer/Company Secretary
Melanie Leydin
Principal activities
The principal activities of the group are petroleum exploration, development and production.
Corporate governance statement
Details of the Company’s corporate governance practices are included in the Corporate Governance Statement set out
on the Company’s website. This URL on the website is located at: http://www.cuenrg.com.au/irm/content/corporate-
directory.aspx?RID=295
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Financial performance
The profit for the consolidated entity after providing for income tax amounted to $8.55 million (30 June 2018: $7.74 million).
The net assets of the consolidated entity increased by $8.14 million to $41.41 million for the year ended 30 June 2019
(30 June 2018: $33.27 million). Working capital, being current assets less current liabilities, was $26.28 million (30 June
2018: $16.62 million).
The consolidated entity achieved positive cashflow from operating activities of $12.82 million for the year ended 30
June 2019. The consolidated entity ended the year with a cash balance of $26.19 million, including cash and cash
equivalents of $14.67 million and $11.52 million restricted cash in an escrow account designated for Ironbark drilling.
The consolidated entity has no debt.
Refer to the CEO Report and Overview of Operations and Finances.
Significant changes in the state of affairs
During the financial year, the consolidated entity, through its 100% owned subsidiary, Cue Exploration Pty Ltd announced
a number of agreements and approvals relating to Exploration Permits WA-359-P and WA-409-P. These included:
● A 15% farmout of WA-359-P to New Zealand Oil & Gas
● A 5.56% Option over WA-409-P granted to New Zealand Oil & Gas
●
A Co-ordination Agreement between Cue, BP Developments Australia Pty Ltd (BP), Beach Energy Limited (Beach)
and New Zealand Oil & Gas which allowed the parties to begin work on detailed planning of the Ironbark-1 well prior
to formal completion
Both transactions with New Zealand Oil & Gas were approved by Cue shareholders at a general meeting held on 8
January 2019.
16
Cue Energy Resources LimitedAnnual Report 2019Cue Energy Resources Limited Directors’ Report 30 June 2019
The agreements noted above were in addition to previously announced option and farm-in agreements with BP and Beach.
On 7 June 2019, the consolidated entity announced completion of all WA-359-P agreements, resulting in the transfer
of interests in Exploration Permit WA-359-P to BP, Beach and New Zealand Oil & Gas and the transfer of operatorship
to BP. Cue will retain 21.5% interest in the Permit and be partially funded by the other parties for the drilling of the
Ironbark-1 exploration well, scheduled for late 2020.
During the financial year, the consolidated entity announced a gas discovery from the Paus Biru-1 Exploration well in
the Sampang PSC. A plan of development is being prepared where commercialisation will occur through the existing
Oyong facilities.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 29 July 2019, the consolidated entity issued 4,277,888 unlisted options to eligible employees for services rendered
from 1 July 2018, exercisable at $0.07 (7 cents). The options will vest on 1 July 2021 and expire on 1 July 2023.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years.
Likely developments and expected results of operations
The following activities may affect the expected results of operations:
● Farming down or funding alternatives for the Mahakam Hilir PSC, Indonesia
● Actively seeking to acquire additional production
● Progress on Paus Biru-1 plan of development
Environmental regulation
Within the last year there have been zero incidents, zero lost time injuries and zero significant spills within Cue Energy
Resources Limited. Among the joint operations there have been a number of incidents that have been reported and
investigated by all the relevant parties. The increased reporting is showing a growth in the reporting culture and an
openness to share learnings in order to reduce risk not only within Cue Energy Resources Limited but within the industry.
Cue Energy Resources Limited continues to monitor the progress and close out of these incidents and work with the
joint venture operation partners and operators to improve overall health and safety and minimise any impact on the
environment.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Interests in shares:
Alastair McGregor
Non-Executive Chairman
BEng, MSc
Alastair has been actively involved in the oil and gas sector since 2003. He is
currently chief executive of O.G. Energy, which holds Ofer Global’s broader energy
interests, and Oil & Gas Limited, a company that holds directly or indirectly oil
& gas exploration and production interests onshore and offshore. He leads the
O.G. Energy Senior Management Committee, driving the strategy for Ofer Global’s
energy activities. Alastair is also a director of New Zealand Oil & Gas Limited. In
addition, Alastair is chief executive of Omni Offshore Terminals Limited, a leading
provider of floating, production, storage and offloading (FSO and FPSO) solutions
to the offshore oil and gas industry. Omni’s operations have spanned the globe
from New Zealand, Australia, South East Asia, Middle East and South America.
Prior to entering the oil and gas industry Alastair spent 12 years as a banker with
Citigroup and Salomon Smith Barney. Alastair holds a BEng from Imperial College,
London and an MSc from Cranfield University in the UK.
New Zealand Oil & Gas Limited
O.G. Energy Holdings Ltd.
O.G. Oil & Gas Limited
None
None
17
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited Directors’ Report 30 June 2019
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
18
Andrew Jefferies
Non-Executive Director
BE Hons (Mechanical), MBA, MSc in petroleum engineering, GAICD,
Certified Petroleum Engineer
Mr. Jefferies is managing director of New Zealand Oil & Gas Limited. He started
his career with Shell in Australia after graduating with a BE Hons (Mechanical)
from the University of Sydney in 1991, an MBA in technology management
from Deakin University in Australia, and an MSc in petroleum engineering from
Heriot - Watt University in Scotland. Andrew is also a graduate of the Australian
Institute of Company Directors (GAICD), and a Certified Petroleum Engineer
with the Society of Petroleum Engineers. He has worked in oil and gas in
Australia, Germany, the United Kingdom, Thailand and Holland.
NZOG Offshore Limited
New Zealand Oil & Gas Limited
Tuatara Energy Limited
None
Member, Audit and Risk Committee
Member, Remuneration and Nomination Committee
Member, Health Safety Security Sustainability and Operational Risk Committee
8,000 fully paid ordinary shares
None
Peter Hood
Non-Executive Director
Mr. Hood is a professional chemical engineer with 45 years’ experience in the
development of projects in the resources and chemical industries. He began
his career with WMC Ltd and then was chief executive officer of Coogee
Chemicals Pty Ltd and Coogee Resources Ltd from 1998 to 2009. He is a
graduate of the Harvard Business School Advanced Management Programme
and is currently Chairman of Matrix Composites and Engineering Ltd and a
Non-Executive Director of GR Engineering Ltd. He has been Vice-Chairman
of the Australian Petroleum Production and Exploration Association Limited
(APPEA), Chairman of the APPEA Health Safety and Operations Committee,
and is a past President of the Western Australian and Australian Chambers of
Commerce and Industry.
De Grey Mining Ltd
GR Engineering Ltd
Matrix Composites and Engineering Ltd
None
Member, Audit and Risk Committee
80,000 fully paid ordinary shares
Rebecca DeLaet
Non-Executive Director
M.Fin, B.Science
Ms. DeLaet has worked for the Ofer Global group of companies since 1990.
Prior to focusing exclusively on O.G. Energy activities in 2019, Rebecca spent
the previous ten years overseeing Ofer Global’s finance activities, including debt
and equity financing, treasury operations and risk management. Ms. DeLaet
was responsible for the initial structuring and capitalisation of Omni Offshore
Terminals’ assets in 1994, establishing an independent oil and gas arm for Ofer
Global. Since then, she has been responsible for all of the financing activities for
the Omni organisation. Ms DeLaet is a director of O.G. Energy, O.G. Oil & Gas
and New Zealand Oil & Gas, where she chairs the audit committee. As a member
of the O.G. Energy Senior Management Committee, she helps drive strategy
for Ofer Global’s energy activities. Ms. DeLaet has a Masters in Finance and
Bachelor of Science from the Wharton School at the University of Pennsylvania.
O.G. Energy Holdings Ltd.
O.G. Oil & Gas Limited
New Zealand Oil & Gas Limited
None
Chair, Audit and Risk Committee
None
Cue Energy Resources LimitedAnnual Report 2019Cue Energy Resources Limited Directors’ Report 30 June 2019
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Interests in shares:
Richard Malcolm
Non-Executive Director
Richard Malcolm is a professional geoscientist with 34 years of varied oil and
gas experience within seven international markets. He began his career as
a Petroleum Geologist with Woodside Petroleum in Perth exploring for oil
and gas on the Northwest Shelf. He spent ten years with Ampolex Limited
(Perth and Sydney) as a Senior Explorationist and then Exploration Manager
in Western Australia and Asset Manager in Northern & Eastern Australia.
Following Mobil’s takeover of Ampolex, Mr Malcolm was appointed manager of
Mobil’s assets in Papua New Guinea. Three years later he joined OMV, initially
as Exploration Manager for Australia & New Zealand and later as Exploration
& Reservoir Manager for OMV Libya, General Manager Norway and in 2006,
Managing Director of OMV UK. Between 2008 and 2013, Mr Malcolm was chief
executive of Gulfsands Petroleum plc, an AIM listed production, exploration
and development company with operations in Syria, Tunisia, Morocco, USA
and Colombia. He is currently a director of Larus Energy Limited.
Larus Energy Limited
Puravida Energy NL
Chairman, Remuneration and Nomination Committee
Member, Health Safety Security Sustainability and Operational Risk Committee
None
Rod Ritchie
Non-Executive Director
B.Sc
Mr. Ritchie is a director of New Zealand Oil & Gas Limited. Rod joined the
board of New Zealand Oil & Gas in 2013. He graduated with a BSc, University
of Tulsa. He has 38 years of experience as a line manager and a Health, Safety,
Security and Environment executive in the oil and gas industry – including
being the corporate senior vice president of HSSE at OMV based in Vienna.
He is a member of the Society of Petroleum Engineers.
New Zealand Oil & Gas Limited
None
Member, Remuneration and Nomination Committee
Chair, Health Safety Security Sustainability and Operational Risk Committee
None
Samuel Kellner
Non-Executive Director
BA, MBA
Mr. Kellner has held a variety of senior executive positions with Ofer Global
since joining the group in 1980. He has been deeply involved in all Ofer Global’s
business lines, with a particular emphasis on offshore oil and gas, shipping and
real estate, and has advised Ofer Global companies on investments with a
variety of investment managers, hedge funds and private equity funds. Most
recently, Mr. Kellner served as President of Global Holdings Management
Group (US) Inc. where he led North American real estate acquisition,
development and financing activities. Mr. Kellner serves as a director of O.G.
Energy, O.G. Oil & Gas and New Zealand Oil & Gas, where he is Chairman of
the Board of Directors. As a member of the O.G. Energy Senior Management
Committee, he helps drive strategy for Ofer Global’s energy activities. He
is also an Executive Director of the main holding companies for the Zodiac
Maritime Limited shipping group and Omni Offshore Terminals Limited, a
leading provider of floating, production, storage and offloading (FSO and
FPSO) solutions to the offshore oil and gas industry. Mr Kellner graduated
with a BA degree from Hebrew University in Jerusalem. He has an MBA from
the University of Toronto, and taught at the University of Toronto while working
toward a PhD in Applied Economics.
O.G. Energy Holdings Ltd.
O.G. Oil & Gas Limited
New Zealand Oil & Gas Limited
None
None
19
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited Directors’ Report 30 June 2019
Name:
Title:
Qualifications:
Experience and expertise:
Mr Koh Ban Heng
Non-Executive Director (resigned on 30 October 2018)
BSc (Hons), GDipBA
Mr Koh joined Singapore Petroleum Co Ltd (SPC) in March 1974 and held
several key positions in the company before being appointed CEO in August
2003. He retired as CEO on 30 June 2011 and subsequently served as
Senior Advisor from 1 July 2011 until 31 December 2014. Currently Mr Koh
is an independent director of Keppel Infrastructure Holdings Pte Ltd, a fully
owned subsidiary of Keppel Corporation, Independent Director and Non-
Executive Chairman of Keppel Infrastructure Fund Management Pte Ltd as
Trustee-Manager of Keppel Infrastructure Trust which is listed on SGX and an
independent director of Tipco Asphalt PLC, a listed company in Thailand. He
also serves as Advisor to Dialog Group Berhad of Malaysia.
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Melanie Leydin
Ms. Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the Institute
of Chartered Accountants and is a Registered Company Auditor. She graduated from Swinburne University in 1997,
became a Chartered Accountant in 1999 and since February 2000 has been the principal of Chartered accounting firm,
Leydin Freyer.
The practice provides outsourced company secretarial and accounting services to public and private companies
specialising in the resources, technology, bioscience and biotechnology sector.
Melanie has over 25 years’ experience in the accounting profession and has extensive experience in relation to public
company responsibilities, including ASX and ASIC compliance, control and implementation of corporate governance,
statutory financial reporting, reorganisation of Companies and shareholder relations.
Meetings of directors
The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during the
year ended 30 June 2019, and the number of meetings attended by each director were:
Full Board
Remuneration
and Nomination
Committee
Audit and Risk
Committee
Health Safety
Security
Sustainability
and Operational
Risk Committee
Attended Held
Attended Held
Attended Held
Attended Held
4
4
4
3
4
4
3
2
4
4
4
4
4
4
4
2
-
3
-
-
3
3
-
-
-
3
-
-
3
3
-
-
-
3
3
3
-
-
-
-
-
3
3
3
-
-
-
-
-
2
-
-
2
2
-
-
-
2
-
-
2
2
-
-
Alastair McGregor
Andrew Jefferies
Peter Hood
Rebecca DeLaet
Richard Malcolm
Rod Ritchie
Samuel Kellner
Koh Ban Heng*
20
Cue Energy Resources LimitedAnnual Report 2019Cue Energy Resources Limited Directors’ Report 30 June 2019
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
* Mr Koh Ban Heng resigned from the Board on 30 October 2018.
Remuneration report (audited)
This Remuneration Report which has been audited, and which forms part of the Directors’ Report, sets out information
about the remuneration of Cue Energy Resources Limited’s Directors and its senior management for the financial year
ended 30 June 2019, in accordance with the Corporations Act 2001 and its regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all directors.
The prescribed details for each person covered by this report are detailed below under the following headings:
(A) Director and executive details
(B) Remuneration policy
(C) Details of remuneration
(D) Equity based remuneration
(E) Relationship between remuneration policy and company performance
(A) Director and executive details
The following persons acted as Directors of the company during or since the end of the financial year:
● Alastair McGregor (Non-Executive Chairman)
● Andrew Jefferies (Non-Executive Director)
● Peter Hood (Non-Executive Director)
● Rebecca DeLaet (Non-Executive Director)
● Richard Malcolm (Non-Executive Director)
● Rod Ritchie (Non-Executive Director)
● Samuel Kellner (Non-Executive Director)
● Koh Ban Heng (Non-Executive Director) - resigned on 30 October 2018
Unless otherwise stated the persons named above held their current position for the whole of the financial year and since
the end of the financial year.
The term “Key Management Personnel” is used in this Remuneration Report to refer to the following persons:
● Matthew Boyall (Chief Executive Officer)
(B) Remuneration policy
The Board’s policy for remuneration of Executives and Directors is detailed below.
Remuneration packages are set at levels that are intended to attract and retain high calibre directors and employees and
align the interest of the Directors and Executives with those of the company’s shareholders. The Remuneration policy is
established and implemented solely by the Board.
Remuneration and other terms and conditions of employment are reviewed annually by the Board having regard to
performance and relevant employment market information. As well as a base salary, remuneration packages include
superannuation, termination entitlements and fringe benefits.
The Board is conscious of its responsibilities in relation to the performance of the Company. Directors and Executives
are encouraged to hold shares in the Company to align their interests with those of shareholders.
No remuneration or other benefits are paid to Directors or Executives by any subsidiary companies.
21
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited Directors’ Report 30 June 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
(C) Details of remuneration
The structure of Non-Executive Director and Executive remuneration is separate and distinct.
Non-Executive Directors
Remuneration of Non-Executive Directors is determined by the Board within the maximum amount approved by the
shareholders from time to time. The amount currently approved is $700,000, which was approved at the Annual General
Meeting held on 24 November 2011. The Company’s policy is to remunerate Non-Executive Directors at a fixed fee
based on their time involvement, commitment and responsibilities. Remuneration for Non-Executive Directors is not
linked to individual or company performance, however, to align Directors’ interests with shareholders’ interests, Non-
Executive Directors are encouraged to hold shares in the Company. The Board retains the discretion to award options
or performance rights to Non-Executive Directors based on the recommendation of the Board, which is always subject
to shareholder approval.
Alastair McGregor, Andrew Jefferies, Rebecca DeLaet and Samuel Kellner have elected not to be paid by the Company.
Executives
Executives receive a mixture of fixed and variable pay and a blend of short and long term incentives as appropriate.
Remuneration packages contain the following key elements:
● Fixed compensation component inclusive of base salary, superannuation, non-monetary benefits and consultancy fees
● Short term incentive programme
● Long term employee benefits
Fixed compensation
Fixed compensation consists of base salary (which is calculated on a total cost base and including any FBT charges
related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
The base salary is reflective of market rates for companies of similar size and industry which is reviewed annually to
ensure market competitiveness. During 2019, the Board reviewed the salaries paid to peer company executives in
determining the salary of the Company’s Key Management Personnel. This base salary is fixed remuneration and is not
subject to performance of the company. Base salary is reviewed annually and adjusted on 1 July each year. There is no
guaranteed base salary increase included in any executive’s contracts.
Cash bonuses
A cash bonus was paid during this financial year. Details are disclosed in remuneration table below.
Employment contracts
Remuneration and other terms of employment for key executive Matthew Boyall is formalised in a service agreement.
Details of the agreement is as follows:
Matthew Boyall
Title: Chief Executive Officer
Agreement effective 1 October 2018.
Details: Base salary of $360,000 per annum plus superannuation to be reviewed annually by the Board. Mr Boyall is also
entitled to short-term incentive up to 30% (2018: 20%) of his base salary at the discretion of the Board at the end of each
financial year dependent on the success of meeting key deliverables.
Compensation levels are reviewed each year to take into account cost of living changes, any change in the scope of the
role performed and any changes to meet the principles of the compensation policy.
Details of the nature and amount of each major element of remuneration of each Director of the Company and other Key
Management Personnel of the consolidated entity are:
22
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
Compensation of key management personnel – 2019
2019
Directors
Alastair McGregor*
Koh Ban Heng**
Andrew Jefferies*
Peter Hood
Rebecca DeLaet*
Richard Malcolm
Rod Ritchie
Samuel Kellner*
Other Key
Management
Personnel:
Matthew Boyall***
Cash
salary
and fees
$
-
12,534
-
44,698
-
41,077
42,459
-
$
-
-
-
-
-
-
-
-
345,000
485,768
112,200
112,200
Short-term benefits
Cash
bonuses
Non-
monetary
benefits
$
Consulting
fees
$
Post employment
Super-
Long
annuation
service
leave
$
$
Share-
based
payments
Equity-
settled
Total
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,151
-
3,902
-
-
-
-
-
-
-
-
-
-
-
12,534
-
46,849
-
44,979
42,459
-
16,638
16,638
20,531
26,584
10,307
10,307
504,676
651,497
Alastair McGregor, Andrew Jefferies, Rebecca DeLaet and Samuel Kellner have elected not to be paid by the Company.
*
** Koh Ban Heng resigned from the Board on 30 October 2018.
*** Matthew Boyall’s cash bonus consists of the following:
• $60,000 once-off discretionary bonus in recognition of the Ironbark farmout; and
•
$52,200 for achieving 72.5% weighting against 2018 key performance indicators (KPIs). The KPIs were measured against the actual results
for the calendar year ending 31 December 2018. Mr Boyall’s entitled up to a target of 20% of base salary.
23
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
Compensation of key management personnel - 2018
2018
Directors
*Alastair McGregor(i)
Koh Ban Heng
*Andrew Jefferies (i)
Peter Hood (i)
*Rebecca DeLaet (ii)
Richard Malcolm (i)
Rod Ritchie (i)
*Samuel Kellner (i)
Grant Worner (iii)
Melanie Leydin (iv)
Duncan Saville (v)
Other Key Management
Personnel:
Matthew Boyall
Short-term benefits
Cash salary
and fees
Cash
bonuses
$
$
Non-
monetary
benefits
$
Consulting
fees
$
-
47,500
-
13,151
-
12,010
13,151
-
60,976
7,400
17,018
-
-
-
-
-
-
-
-
-
-
-
300,000
471,206
25,774
25,774
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post employment
Super-
annuation
Long
service
leave
$
Total
$
$
-
-
-
-
-
1,141
-
-
-
-
-
-
47,500
-
13,151
-
13,151
13,151
-
60,976
7,400
17,018
-
-
-
-
-
-
-
-
-
-
-
6,798
6,798
20,049
21,190
352,621
524,968
*Alastair McGregor, Andrew Jefferies, Rebecca DeLaet and Samuel Kellner have elected not to be paid by the Company.
(i) Alastair McGregor, Andrew Jefferies, Peter Hood, Richard Malcolm, Rod Ritchie and Samuel Kellner were appointed on 23 February 2018.
(ii) Rebecca DeLaet was appointed on 11 April 2018.
(iii) Grant Worner resigned on 23 April 2018.
(iv) The balance disclosed represents the director fees paid to Melanie Leydin in her compacity as an Executive Director between 14 December 2017
and 23 February 2018. The Company also paid $108,000 for the year ended 30 June 2018 to Leydin Freyer Corp Pty Ltd (which Melanie is a Director)
in respect of Company Secretarial and Accounting services. This has not been disclosed in the remuneration table.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2019
2018
2019
2018
2019
2018
Fixed
remuneration
At risk - STI
At risk - LTI
Directors:
Koh Ban Heng
Peter Hood
Richard Malcolm
Rod Ritchie
Grant Worner
Melanie Leydin
Duncan Saville
100%
100%
100%
100%
-
-
-
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other Key Management Personnel:
Matthew Boyall
76%
93%
22%
7%
2%
-
-
-
-
-
-
-
-
24
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
(D) Equity based remuneration
Overview of share options and performance rights
The Board is currently reviewing policies going forward in relation to short and long term incentives.
Long term performance targets of the Company will be established every year and the future award of options or
performance rights may be made at the Board’s sole discretion.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of key management
personnel in this financial year or future reporting years are as follows:
Name
Grant date
Number
of options
granted
Vesting
date and
exercisable
date
Expiry date
Exercise
price
Fair value
per option at
grant date
Matthew Boyall
1,288,338
1 July 2018
1 July 2021
1 July 2023
$0.07
$0.024
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by key management personnel as part of compensation
during the year ended 30 June 2019 are set out below:
Name
Number of options granted
during 2019 financial year
Matthew Boyall
1,288,338
Values of options over ordinary shares granted, exercised and lapsed for key management personnel as part of
compensation during the year ended 30 June 2019 are set out below:
Name
Matthew Boyall
Value of
options
granted
during the
year
Value of
options
exercised
during the
year
Value of
options
lapsed
during the
year
Remuneration
consisting of
options for
the year
$
$
$
%
10,307
-
-
2%
(E) Relationship between remuneration policy and company performance
Company performance review
The tables below set out summary information about the company’s earnings and movements in shareholder wealth and
key management remuneration for the five years to 30 June 2019.
25
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
The earnings of the consolidated entity for the five years to 30 June 2019 are summarised below:
2019
$’000
2018
$’000
2017
$’000
Restated
2016
$’000
Production income from continuing operations
Profit/(Loss) before income tax expense from continuing
operations
Profit/(Loss) after income tax benefit/(expense)
Total Key Management Personnel Remuneration
25,730
12,856
8,549
651
24,547
35,000
45,412
5,058
(6,975)
(79,599)
7,739
(15,032)
(84,399)
525
2,264
2,419
2015
$’000
36,704
26,916
32,191
2,061
Share price at start of year (cents)
Share price at end of year (cents)
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
2019
2018
2017
2016
2015
5.70
8.30
1.22
1.22
5.50
5.70
1.11
1.11
8.10
5.50
(2.48)
(2.48)
7.60
8.10
(12.44)
(12.44)
12.00
7.60
5.86
5.86
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares*
Non-Executive Directors
Andrew Jefferies
Peter Hood
Other Key Management
Personnel
Matthew Boyall
Balance at
the start of
the year
Balance on
date of Board
appointment
Additions**
Disposals/
other
Balance at
the end of the
year
8,000
80,000
-
88,000
-
-
-
-
-
-
200,000
-
-
-
-
-
8,000
80,000
200,000
288,000
* Alastair McGregor, Koh Ban Heng, Rebecca DeLaet, Richard Malcolm, Rod Ritchie and Samuel Kellner do not hold any fully paid ordinary shares.
** Additions to shareholding were not related to remuneration.
NZOG Offshore Limited (a related entity to Alastair McGregor, Andrew Jefferies, Rebecca DeLaet, Rod Richie and
Samuel Kellner) holds 349,368,803 fully paid ordinary shares in Cue.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Cue Energy Resources Limited under option at the date of this report are as follows:
Grant date
01/07/2018
Expiry date
01/07/2023
Vesting date
01/07/2021
Exercise
price
Number under
option
$0.07
4,277,888
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the company or of any other body corporate.
26
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Report
30 June 2019
Directors’ insurance and indemnification of Directors and auditors
During the financial year, the company paid a premium in respect of a contract insuring the directors of the company, the
company secretary, and all executive officers against a liability incurred as a director, company secretary or executive officer
to the extent permitted by the Corporations Act 2001. In accordance with commercial practice, the insurance policy prohibits
disclosure of the terms of the policy, including the nature of the liability insured against and the amount of the premium.
The company has not otherwise, during or since the end of the financial year indemnified or agreed to indemnify the
auditor of the company or any related body corporate against a liability incurred as an officer or auditor.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 23 to the financial statement.
The Company may decide to employ the auditor on assignments additional to its statutory audit duties where the
auditor’s expertise and experience with the Company are important.
The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors
are satisfied that the provision of non-audit services by the auditor as set out below, did not compromise the audit
independence requirement, of the Corporations Act 2001, based on advice received from the Audit and Risk Committee,
for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
●
Rounding of amounts
The Company is a company of the kind referred to in ASIC Legislative Instrument 2016/191, and in accordance with the
Class Order amounts in the Directors’ Report and the Financial Report are rounded off to the nearest thousand dollars,
unless otherwise indicated.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors’ report.
Auditor
In accordance with the provisions of the Corporations Act 2001 the Company’s auditor, BDO East Coast Partnership,
continues in office.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Board
___________________________
Alastair McGregor
Non-Executive Chairman
21 August 2019
27
Cue Energy Resources LimitedAnnual Report 2019
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY DAVID GARVEY TO THE DIRECTORS OF CUE ENERGY RESOURCES
LIMITED
DECLARATION OF INDEPENDENCE BY DAVID GARVEY TO THE DIRECTORS OF CUE ENERGY RESOURCES
LIMITED
As lead auditor of Cue Energy Resources Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
relation to the audit; and
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
As lead auditor of Cue Energy Resources Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
2. No contraventions of any applicable code of professional conduct in relation to the audit.
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
This declaration is in respect of Cue Energy Resources Limited and the entities it controlled during the
2. No contraventions of any applicable code of professional conduct in relation to the audit.
period.
This declaration is in respect of Cue Energy Resources Limited and the entities it controlled during the
period.
David Garvey
Partner
David Garvey
Partner
BDO East Coast Partnership
Melbourne, 21 August 2019
BDO East Coast Partnership
Melbourne, 21 August 2019
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
19
19
28
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Production revenue from continuing operations
Production costs
Gross profit from production
Other income
Net foreign currency exchange gain
Expenses
Exploration and evaluation expenditure
Administration expenses
Share-based payments
Profit before income tax (expense)/ benefit
Income tax (expense)/benefit
Profit after income tax (expense)/benefit for the year attributable to
the owners of Cue Energy Resources Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners
of Cue Energy Resources Limited
Note
Consolidated
2019
$’000
2018
$’000
5
6
9
8
32
10
25,730
(12,081)
13,649
3,058
785
(2,176)
(2,426)
(34)
12,856
(4,307)
8,549
24,547
(16,526)
8,021
432
475
(1,509)
(2,361)
-
5,058
2,681
7,739
(444)
(444)
(340)
(340)
8,105
7,399
Cents
Cents
Basic earnings per share
Diluted earnings per share
31
31
1.22
1.22
1.11
1.11
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
29
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited
Statement of financial position
For the year ended 30 June 2019
Assets
Current assets
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Production properties
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
Consolidated
2019
$’000
2018
$’000
11
11
12
13
14
10
15
10
16
17
18
20
14,671
11,523
5,297
1,003
32,494
21
3,401
24,547
3,002
30,971
16,983
-
7,593
519
25,095
24
-
26,814
2,733
29,571
63,465
54,666
1,907
4,227
81
6,215
3,456
4,946
69
8,471
3,947
11,894
15,841
3,052
9,873
12,925
22,056
21,396
41,409
33,270
152,416
152,416
(750)
(340)
(110,257)
(118,806)
41,409
33,270
The above statement of financial position should be read in conjunction with the accompanying notes
30
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited
Statement of changes in equity
As at 30 June 2019
Consolidated
Balance at 1 July 2017
Contributed
Equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Total
Equity
$’000
152,416
-
(126,545)
25,871
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
Balance at 30 June 2018
152,416
-
(340)
(340)
(340)
7,739
-
7,739
7,739
(340)
7,399
(118,806)
33,270
Consolidated
Balance at 1 July 2018
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments (note 32)
Contributed
Equity
$’000
Reserves
$’000
Accumulated
Losses
$’000
Total
equity
$’000
152,416
-
-
-
-
(340)
-
(444)
(444)
(118,806)
33,270
8,549
-
8,549
8,549
(444)
8,105
34
-
34
Balance at 30 June 2019
152,416
(750)
(110,257)
41,409
The above statement of changes in equity should be read in conjunction with the accompanying notes
31
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Insurance refunds received
Interest received
Payments to suppliers (inclusive of GST)
Payments for exploration and evaluation expenditure (Opex)
Income tax paid
Royalties paid
Reimbursement of Ironbark past costs
Net cash from operating activities
Cash flows from investing activities
Payments with respect to production properties
Payments for plant and equipment
Payments for exploration and evaluation (Capex)
Net cash used in investing activities
Cash flows from financing activities
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Note
Consolidated
2019
$’000
2018
$’000
30
13
28,154
1,070
368
(10,114)
(3,127)
(4,593)
(715)
1,780
25,682
-
172
(13,666)
(1,832)
(2,972)
(552)
-
12,823
6,832
(1,042)
(7)
(3,401)
(2,766)
-
-
(4,450)
(2,766)
-
-
8,373
16,983
838
4,066
12,420
497
Cash and cash equivalents at the end of the financial year, inclusive of
restricted balances
11
26,194
16,983
The above statement of cash flows should be read in conjunction with the accompanying notes
32
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 1. General information
The financial statements cover Cue Energy Resources Limited as a consolidated entity consisting of Cue Energy
Resources Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented
in Australian dollars, which is Cue Energy Resources Limited’s functional and presentation currency.
Cue Energy Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia,
whose shares are publicly traded on the Australian Securities Exchange.
A description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 21 August 2019. The
directors have the power to amend and reissue the financial statements.
Note 2. Summary of significant accounting policies
Cue Energy Resources Limited is a for-profit Public Company listed on the Australian Securities Exchange, incorporated
and domiciled in Australia. The financial statements are presented in Australian Dollars, which is the parent entity’s
functional currency. The financial report was authorised for issue by the Directors on the date the Directors’ Declaration
was signed.
(a) Operations and principal activities
Operations comprise petroleum exploration, development and production activities
(b) Statement of compliance
The financial report is a general purpose financial report presented in Australian dollars which has been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
(“AASB”) and the Corporations Act 2001, as appropriate for for-profit oriented entities. International Financial Reporting
Standards (“IFRSs”) form the basis of Australian Accounting Standards adopted by the AASB. The financial reports of the
consolidated entity also comply with IFRS and interpretations adopted by the International Accounting Standards Board.
The accounting policies set out below have been applied consistently to all periods presented in this report.
(c) Basis of preparation
The financial report has been prepared on a going concern basis using the historical cost convention.
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in note 26.
(d) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Cue Energy Resources Limited
(‘’company’’ or ‘’parent entity’’) as at 30 June 2019 and the results of all subsidiaries for the year then ended. Cue Energy
Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all those entities over which the Group has control. The consolidated entity controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns
through its power to direct the activities of the entity. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another 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.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
33
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 2. Summary of significant accounting policies (continued)
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly
in equity attributable to the parent.
Non-controlling interest is the results in equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the consolidated
entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results
in a deficit balance.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Cue Energy Resources Limited.
(e) Cash and cash equivalents
For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand
and which are used in the cash management function on a day-to-day basis, net of outstanding bank overdrafts.
(f) Inventories
Inventories consist of hydrocarbon stock. Inventories are valued at the lower of cost and net realisable value. Cost
is determined on a weighted average basis and includes direct costs and an appropriate portion of fixed production
overheads where applicable.
(g) Property, plant and equipment
Class of Fixed Asset
Office and computer equipment 20-40%
Depreciation Rate
Property, plant and equipment is carried at historical cost less accumulated depreciation and accumulated impairment
losses. Depreciation is calculated on a diminishing value basis so as to allocate the cost of each item of equipment over
its expected economic life. The economic life of equipment has due regard to physical life limitations and to present
assessments of economic recovery. Estimates of remaining useful lives are made on a regular basis for all assets, with
annual reassessment for major items. Gains and losses on disposal of property, plant and equipment are taken into
account in determining the operating results for the year.
(h) Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based on
both the business model within which such assets are held and the contractual cash flow characteristics of the financial
asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, it’s carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity’s assessment at the end of each reporting period as to whether the financial
instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
34
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 2. Summary of significant accounting policies (continued)
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it
is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value
of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
(i) Rounding
The amounts contained in this financial report have been rounded to the nearest $1,000 (where rounding is applicable)
under the option available to the Company under ASIC Corporations (Rounding in Financials and Directors Reports)
instrument 2016/191. The Company is an entity to which the Class Order applies.
(j) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
(k) Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
(l) Foreign currency
Functional and presentation currency
The Group’s relevant functional currency is the currency of the primary economic environment in which it operates. The
consolidated financial statements are presented in Australian dollars, as this is the Group’s presentation currency.
Transactions and balances
Transactions in foreign currencies of entities within the consolidated entity are translated into functional currency at the
rate of exchange ruling at the date of the transaction. Non-monetary items measured at historical cost continue to be
carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at
the exchange rate at the date when fair values were determined.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under
foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using
the spot rate at the end of financial year.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the
exchange difference is recognised in profit or loss.
35
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 2. Summary of significant accounting policies (continued)
Foreign operations
The results and financial position of Cue’s foreign operations are translated into its presentation currency using the
following procedures:
(a)
(b)
assets and liabilities for each statement of financial position presented (i.e. including comparatives) shall be
translated at the closing rate at the date of that statement of financial position;
income and expenses for each statement presenting profit or loss and other comprehensive income (i.e. including
comparatives) shall be translated at exchange rates at the month end; and
(c) all resulting exchange differences shall be recognised in other comprehensive income.
(m) New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. AASB 9 replaces the provisions of AASB 139 that relate
to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial
instruments, impairment of financial assets and hedge accounting.
The adoption of AASB 9 Financial Instruments resulted in changes in accounting policies. There were no changes to
the classification of financial instruments in the financial statements. The new accounting policies are set out below. In
accordance with the transitional provisions in AASB 9 (7.2.15) and (7.2.26), comparative figures have not been restated.
There is no impact on the groups opening retained earnings as at 1 July 2018.
(i) Trade Receivables
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. They are generally
due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised initially at
the amount of consideration that is unconditional unless they contain significant financing components, when they are
recognised at fair value.
The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures
them subsequently at amortised cost using the effective interest method. Details about the group’s impairment policies
and the calculation of the loss allowance are provided in (ii) below.
(ii) Allowance for expected credit loss
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
(iii) Trade and other payables
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and
other payables are considered to be the same as their fair values, due to their short-term nature.
36
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 2. Summary of significant accounting policies (continued)
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. It has elected to adopt AASB 15 using the cumulative
effect method, with any adjustment required when transitioning to the new standard being recognised on the 1 July
2018 (date of initial application) in retained earnings. Comparative figures have not been restated. There are no material
changes in the Group’s revenue recognition which means there have been no adjustments made to the opening retained
earnings balance.
The accounting policies for revenue recognition are as follows:
Production revenue
The consolidated entity generates production revenue from its interest in producing crude oil and gas fields. Revenue
from oil production is recognised at a point in time when crude oil is delivered to the buyer. Revenue from gas production
is recognised during the month when gas is delivered to the buyer.
(n) New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019.
The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the consolidated entity, are set out below:
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 ‘Leases’ and for lessees will eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position, measured at the present value
of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases
of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a ‘right-of-use’ asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher
when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in
profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases.
The consolidated entity will adopt this standard from 1 July 2019. The standard will affect primarily the accounting for
the consolidated entity’s operating leases. As at reporting date, the consolidated entity has non-cancellable operating
leases commitments of $0.2 million (refer to note 25). Management has assessed the impact of the standard and the
expected impacts are as follows:
● Increase in assets and liabilities amounting to $172,306 and $176,862 respectively.
● Increase in the loss position on the consolidated statement of comprehensive income in the amount of $4,555.
● It is not expected that there will be any net impact on the consolidated statement of cash flows.
Note 3. Critical accounting estimates and judgements
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgement about carrying values of assets and liabilities that are not readily apparent from other sources.
37
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 3. Critical accounting estimates and judgements (continued)
Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity
in the consolidated entity, and the estimates and underlying assumptions are reviewed on an ongoing basis.
The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
values of assets and liabilities within the next financial year are discussed below.
(i) Recovery of deferred tax assets
Deferred tax assets resulting from unused tax losses are only recognised if management considers it is probable that
future tax profits will be available to utilise the unused tax losses (refer to note 10).
(ii) Impairment of production properties
Production properties impairment testing requires an estimation of the value-in-use of the cash generating units to which
deferred costs have been allocated. The value-in-use calculation requires the entity to estimate the future cash flows
expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. Other
assumptions used in the calculations which could have an impact on future years includes USD rates, available reserves
and oil and gas prices.
(iii) Useful life of production properties
As detailed at note 15 production properties are amortised on a unit-of-production basis, with separate calculations being
made for each resource. Estimates of reserve quantities are a critical estimate impacting amortisation of production
property assets.
(iv) Estimates of reserve quantities
The estimated quantities of Proven and Probable hydrocarbon reserves reported by the Company are integral to the
calculation of the amortisation expense relating to Production Property Assets, and to the assessment of possible
impairment of these assets. Estimated reserve quantities are based upon interpretations of geological and geophysical
models and assessments of the technical feasibility and commercial viability of producing the reserves. These
assessments require assumptions to be made regarding future development and production costs, commodity prices,
exchange rates and fiscal regimes. The estimates of reserves may change from period to period as the economic
assumptions used to estimate the reserves can change from period to period, and as additional geological data is
generated during the course of operations. Reserves estimates are prepared in accordance with the Company’s policies
and procedures for reserves estimation which conform to guidelines prepared by the Society of Petroleum Engineers.
(v) Restoration provisions
Provisions for future environmental restoration are recognised where there is a present obligation as a result of
exploration, development, production, transportation or storage activities having been undertaken, and it is probable
that an outflow of economic benefits will be required to settle the obligation. The estimated future obligations include the
costs of removing facilities, abandoning wells and restoring the affected areas.
Note 4. Financial reporting by segments
Segment Information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that
are regularly reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers
(“CODM”)) in assessing performance and in determining the allocation of resources.
The CODM assesses the performance of the operating segments based upon a measure of earnings before interest
expense, tax, depreciation and amortisation. The accounting policies adopted for internal reporting to the CODM are
consistent with those adopted in the Group financial statements.
At reporting date, the Group operates in three principle geographic segments: Australia, New Zealand and Indonesia.
These segments are based on the internal reports that are reviewed and used by the Board of Directors (who are
identified as the Chief Operating Decision Makers (CODM)) in assessment performance and in determining the allocation
of resources.
38
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 4. Financial reporting by segments (continued)
Information regarding the Group’s reportable segments is presented below:
2019
Revenue
Revenue from continuing operations
Production expenses (excluding amortisation)
Gross profit (excluding amortisation)
Other revenue
Depreciation
Amortisation
Exploration and evaluation expenditure
Other expenditure
Share-based payments
Foreign exchange movement
Australia
$’000
NZ
$’000
Indonesia
$’000
Total
$’000
-
-
-
1,986
(10)
-
(1,133)
(2,416)
(34)
858
10,836
(5,343)
5,493
1,070
-
(2,986)
-
-
-
(496)
14,894
(2,386)
12,508
2
-
(1,366)
(1,043)
-
-
423
25,730
(7,729)
18,001
3,058
(10)
(4,352)
(2,176)
(2,416)
(34)
785
Profit/(loss) before income tax expense
(749)
3,081
10,524
12,856
2018
Revenue
Revenue from continuing operations
Production expenses (excluding amortisation)
Gross profit (excluding amortisation)
Other revenue
Depreciation
Amortisation
Exploration and evaluation expenditure
Other expenditure
Foreign exchange movement
Australia
$’000
NZ
$’000
Indonesia
$’000
Total
$’000
-
-
431
(14)
-
(336)
(2,347)
519
10,616
(5,058)
5,558
-
-
(3,836)
-
-
(312)
13,931
(6,038)
7,893
1
-
(1,594)
(1,173)
-
268
24,547
(11,096)
13,451
432
(14)
(5,430)
(1,509)
(2,347)
475
Profit/(loss) before income tax expense
(1,747)
1,410
5,395
5,058
39
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 4. Financial reporting by segments (continued)
TOTAL SEGMENT ASSETS
Current Assets
Non-current Assets
Total 30 June 2019 Assets
Current Assets
Non-current Assets
Total 30 June 2018 Assets
TOTAL SEGMENT LIABILITIES
Current Liabilities
Non-current Liabilities
Total 30 June 2019 Liabilities
Current Liabilities
Non-current Liabilities
Total 30 June 2018 Liabilities
Australia
$’000
NZ
$’000
Indonesia
$’000
Total
$’000
23,822
21
23,843
17,027
24
17,051
218
101
319
353
41
394
1,487
20,906
22,393
2,414
22,538
24,952
905
10,722
11,627
1,392
9,760
11,152
7,185
10,044
17,229
5,654
7,009
12,663
5,092
5,018
10,110
6,725
3,124
9,849
32,494
30,971
63,465
25,095
29,571
54,666
6,215
15,841
22,056
8,471
12,925
21,396
Major customers
The Group has a number of customers to whom it provides both oil and gas products. The Group supplies a single
external customer in the gas segment who accounts for 100% of external gas revenue (2018: 100%).
Note 5. Production costs
Production costs
Amortisation of production properties
Consolidated
2019
$’000
2018
$’000
(7,729)
(4,352)
(11,096)
(5,430)
(12,081)
(16,526)
40
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 6. Other income
Interest from cash and cash equivalents
Maari insurance refund
Other income
Reimbursement of Ironbark back costs
Accounting policy for other income
Consolidated
2019
$’000
2018
$’000
381
1,070
65
1,542
3,058
173
-
259
-
432
Other income is recognised in profit or loss at the fair value of the consideration received or receivable, net of GST, when the
significant risks and rewards of ownership have been transferred to the buyer or when the service has been performed.
The gain or loss arising on disposal of a non-current asset is recognised at the date control of the asset passes to the buyer.
The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal
and the net proceeds on disposal.
Accounting policy for interest income
Interest revenue is recognised as interest accrues using the effective interest method. This is a method calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
assets to the net carrying amount of the financial asset.
Note 7. Impairment - Production
At 30 June 2019 the Group reassessed the carrying amount of its oil and gas assets, Production Properties (refer note
15), for indicators of impairment such as changes in future prices, future costs and reserves. As a result, the recoverable
amounts of cash-generating units were formally reassessed. There was no impairment over the production assets for
the year ended 30 June 2019.
Estimates of recoverable amounts are based on the assets’ value-in-use, determined by discounting each asset’s
estimated future cash flows at asset specific discount rates. The pre-tax discount rates applied were 14.3% (2018:
14.3%) equivalent to post-tax discount rates of 10% (2018:10%) depending on the nature of the risks specific to each
asset.
Where an asset does not generate cash flows that are largely independent from other assets or groups of assets, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
Accounting policy for Impairment
The carrying amounts of the consolidated entity’s assets are reviewed at each reporting date to determine whether there
is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds the
recoverable amount. Impairment losses are recognised in profit or loss, unless an asset has previously been revalued,
in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess
recognised through profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the
assets in the unit (group of units) on a pro rata basis.
41
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 8. Administration expenses
Depreciation of property, plant and equipment
Employee expenses
Superannuation contribution expense
Operating lease expenses
Other expenses
Business development expenses
Total administration expenses
Note 9. Exploration and evaluation expenditure
Exploration Costs Expensed
Sampang PSC
Mahakam Hilir PSC
Mahato PSC
WA-359-P
WA-389-P
WA-409-P
Total exploration and evaluation expenditure
Consolidated
2019
$’000
2018
$’000
10
1,329
67
147
759
114
2,426
14
1,224
100
341
564
118
2,361
Consolidated
2019
$’000
2018
$’000
28
806
209
899
148
86
2,176
147
821
205
206
60
70
1,509
Accounting policy for exploration and evaluation project expenditure
AASB 6 Exploration for and Evaluation of Mineral Resources allows the Group to either capitalise or expense the
exploration and evaluation expenditure incurred. During the financial year the consolidated entity reviewed its criteria
under its successful efforts method of accounting. The costs of a successful exploration well are capitalised and carried
forward as exploration and evaluation assets pending the evaluation of the success of the well. If a well does not result
in a successful discovery, the previously capitalised costs are immediately expensed.
42
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 10. Income tax expense/(benefit)
Income tax expense/(benefit)
Current tax
Adjustment recognised for current tax in prior periods
Deferred tax – origination and reversal of temporary differences(i)
Aggregate income tax expense/(benefit)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Unrealised foreign exchange movements
Unrecognised temporary differences
Unrecognised tax losses
Recognition of deferred tax (assets)/liabilities (ii)
Difference in overseas tax rates
Share-based payments
Adjustment recognised for current tax in prior periods
Income tax expense/(benefit)
(i) Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Increase/(decrease) in deferred tax liabilities (note 16)
Deferred tax – origination and reversal of temporary differences
Consolidated
2019
$’000
2018
$’000
3,678
3
626
4,307
12,856
3,857
(186)
(930)
672
1,495
(614)
10
4,304
3
4,307
(269)
895
626
2,970
(2,571)
(3,080)
(2,681)
5,058
1,517
(168)
(1,200)
1,794
(2,733)
680
-
(110)
(2,571)
(2,681)
(2,733)
(347)
(3,080)
(ii) During the current year, the consolidated entity capitalised Paus Biru-1 exploration well drilling costs pending the
determination of the success of the well. As a result, a deferred tax liability of $1.5 million was recognised in the financial
statements.
During the prior year there was a change in New Zealand tax laws which now allow a refundable credit for activities to
restore certain sites to their original condition. The deferred tax asset of $2.7 million relating to the Maari restoration
provision, which was previously not recognised in the financial statements, had been recognised as at 30 June 2018.
Current tax liabilities
Consolidated
2019
$’000
2018
$’000
4,227
4,946
Cue has an ongoing Indonesian Tax matter relating to a notice of amended assessment which is being disputed by Cue
Kalimantan Pte Ltd on behalf of SPC E&P Pte Ltd. Cue is indemnified by SPC for any losses arising from this disputed
notice of assessment and has recognised a liability and receivable on the balance sheet.
43
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 10. Income tax expense/(benefit) (continued)
Deferred tax assets recognised
Restoration provision - Maari
Deferred tax not recognised
Deferred tax not recognised comprises temporary differences attributable to:
Employee provisions
Tax losses
Less deferred tax liabilities not recognised - Production properties
Less deferred tax liabilities not recognised - Inventories
Net deferred tax not recognised
Consolidated
2019
$’000
2018
$’000
3,002
2,733
Consolidated
2019
$’000
2018
$’000
55
34,079
(1,570)
(281)
32,283
33
34,333
(901)
(156)
33,309
The above net potential tax benefit has not been recognised in the statement of financial position as the recovery of this
benefit is uncertain.
Accounting policy for Income tax
The income tax expense for the year is the tax payable on the current period’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 to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income
tax is not accounted for if it arises from 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 or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date 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 and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the 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 to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Cue Energy Resources Limited (the ‘head entity’) and its wholly-owned Australian controlled entities have formed an
income tax consolidated group under the tax consolidation regime effective 1 July 2010.
The head entity and the controlled entities in the tax consolidated group continue to account for their own current
and deferred tax amounts. The tax consolidated group has applied the group allocation approach in determining the
appropriate amount of taxes to allocate to members of the tax consolidated group.
Assets or liabilities arising under tax funding agreement with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that
the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in
neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
44
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 11. Current assets - cash and cash equivalents
Unrestricted
Operating accounts
Restricted
WA-359-P Drilling Programme Account
Total as disclosed in the statement of cash flows
Consolidated
2019
$’000
2018
$’000
14,671
16,983
11,523
-
26,194
16,983
The WA-359-P drilling programme account represents cash held by the entity as required under the funding arrangement
of the WA-359-P joint agreement and is not available as free cash for the purposes of the group’s operations until BP
Developments Australia Pty Ltd, as the operator, draws down on the balance for the purposes of the drilling work
programme agreed by all parties.
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation
purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current
liabilities on the statement of financial position.
Note 12. Current assets - trade and other receivables
Trade receivables
Other receivables and prepayments
Consolidated
2019
$’000
2018
$’000
1,249
4,048
5,297
3,639
3,954
7,593
Allowance for expected credit losses
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due.
The consolidated entity has not recognised any losses in profit or loss in respect of the expected credit losses for the
year ended 30 June 2019 (2018: Nil).
The aging of trade receivables at the reporting date was as follows:
Less than one month
1 to 6 months overdue, not impaired
Consolidated
2019
$’000
2018
$’000
591
658
1,249
2,850
789
3,639
45
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 12. Current assets - trade and other receivables (continued)
Trade receivables are non-interest-bearing and settlement terms are generally within 30 days.
Trade receivables are neither past due nor impaired and relate to a number of independent customers for whom there
is no recent history of default.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2019
$’000
2018
$’000
-
-
-
38
(38)
-
Accounting policy for trade and other receivables
Trade and other receivables are amounts due from customers for goods sold in the ordinary course of business. They are
generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised
initially at the amount of consideration that is unconditional unless they contain significant financing components, when
they are recognised at fair value.
Note 13. Non-current assets - exploration and evaluation assets
Consolidated
2019
$’000
2018
$’000
Exploration and evaluation - Paus Biru-1 exploration well
3,401
-
Under the criteria the costs of a successful exploration well are capitalised and carried forward as exploration and
evaluation assets pending the evaluation of the success of the well. If a well does not result in a successful discovery,
the previously capitalised costs are immediately expensed.
The plan of development (POD) process for the Paus Biru discovery is progressing, with the operator undertaking the
required post well technical work to include in a POD application. Nothing has come to the attention of the Directors to
indicate future economic benefits will not be achieved.
Note 14. Non-current assets - production properties
Consolidated
2019
$’000
2018
$’000
24,547
26,814
Production properties
46
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 14. Non-current assets - production properties (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Expenditure during the year
Amortisation expense from operations
Changes in abandonment provision – production
Balance at 30 June 2018
Expenditure during the year
Changes in abandonment provision – production (note 17)
Amortisation expense
Balance at 30 June 2019
Net accumulated cost incurred on areas of interest
Joint operation assets
Oyong and Wortel - Sampang PSC
Maari - PMP 38160
Balance as at 30 June 2019
Total
$’000
30,082
2,640
(5,430)
(478)
26,814
901
1,184
(4,352)
24,547
Consolidated
2019
$’000
2018
$’000
6,642
17,905
7,009
19,805
24,547
26,814
Accounting policy for production properties
Production properties are carried at the reporting date at cost less accumulated amortisation and accumulated impairment
losses. Production properties represent the accumulation of all exploration, evaluation, development and acquisition
costs in relation to areas of interest in which production licences have been granted.
Amortisation of costs is provided on the unit-of-production basis, separate calculations being made for each resource.
The unit-of-production basis results in an amortisation charge proportional to the depletion of economically recoverable
reserves (comprising both proven and probable reserves), and is expensed through the statement of profit or loss and
other comprehensive income.
Amounts (including subsidies) received during the exploration, evaluation, development or construction phases which
are in the nature of reimbursement or recoupment of previously incurred costs are offset against such capitalised costs.
Accounting policy for calculation of recoverable amount
For oil and gas assets the estimated future cash flows are based on value-in-use calculations using estimates of
hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development
costs necessary to produce the reserves. Estimates of future commodity prices are based on contracted prices where
applicable or based on forward market prices where available. The recoverable amount of other assets is the greater of
their net selling price and value-in-use.
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs.
47
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 15. Current liabilities - trade and other payables
Trade payables and accruals
Amounts due to directors and director related entities
Consolidated
2019
$’000
2018
$’000
1,893
14
1,907
3,414
42
3,456
Refer to note 21 for further information on financial instruments.
The Directors consider the carrying amount of payables reflect their fair values. Trade creditors are generally settled
within 30 days.
Accounting policy for trade and other payables
These amounts represent the principal amounts outstanding at the reporting date plus, where applicable, any accrued
interest. Trade payables are normally paid within 30 days, and due to their short term nature are generally unsecured
and not discounted.
Note 16. Non-current liabilities - deferred tax liabilities
Deferred tax liability recognised comprise of
Sampang:
Production properties
Exploration and evaluation assets
Restoration provision offset
Deferred tax liability
Note 17. Non-current liabilities - provisions
Employee benefits
Restoration
Movements in each class of provision during the financial year are set out below:
Consolidated - 2019
Carrying amount at the start of the year
Balance sheet movement* (note 14)
P&L movement
Carrying amount at the end of the year
Consolidated
2019
$’000
2018
$’000
2,923
1,495
(471)
3,947
3,084
-
(32)
3,052
Consolidated
2019
$’000
2018
$’000
101
11,793
11,894
41
9,832
9,873
Employee
Benefits
$’000
Restoration
$’000
41
-
60
9,832
1,184
777
101
11,793
*The changes in abandonment provision includes $1 million from Sampang due to increased cash call for cost of future rehabilitation and $0.2 million
from Maari due to changes in discount rate, inflation rate and economic cut off of the field.
48
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 17. Non-current liabilities - provisions
Accounting policy for provisions
A provision is recognised in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risk specific to the liability.
Restoration
Provisions for future environmental restoration are recognised where there is a present obligation as a result of
exploration, development, production, transportation or storage activities having been undertaken, and it is probable
that an outflow of economic benefits will be required to settle the obligation. The estimated future obligations include the
costs of removing facilities, abandoning wells and restoring the affected areas. Expected timing of outflow of restoration
liabilities is not within the next 12 months from the reporting date.
The provision of future restoration costs is the best estimate of the present value of the future expenditure required to
settle the restoration obligation at the reporting date, based on current legal requirements. Future restoration costs are
reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at the
reporting date, with a corresponding change in the cost of the associated asset.
The amount of the provision for future restoration costs relating to exploration, development and production facilities is
capitalised and depleted as a component of the cost of those activities.
Accounting policy for employee benefits
The following liabilities arising in respect of employee benefits are measured at their nominal amounts:
- wages and salaries and annual leave expected to be settled within twelve months of the reporting date; and
- other employee benefits expected to be settled within twelve months of the reporting date.
All other employee benefit liabilities expected to be settled more than 12 months after the reporting date are measured at
the present value of the estimated future cash outflows in respect of services provided up to the reporting date. Liabilities
are determined after taking into consideration estimated future increase in wages and salaries and past experience
regarding staff departures. Related on-costs are included.
Note 18. Equity - contributed equity
Consolidated
2019
Shares
2018
Shares
2019
$’000
2018
$’000
Ordinary shares - fully paid
698,119,720
698,119,720
152,416
152,416
Ordinary shares entitle the holder to the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts
paid on the shares held. Ordinary shares entitle holders to one vote, either in person or by proxy at a meeting of the
Company. The Company has an unlimited authorised capital and the shares have no par value.
Accounting policy for contributed equity
Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs
arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders.
49
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 19. Equity - Capital management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as
maintaining optimal return for shareholders and benefits for other stakeholders. Management also aims to maintain a
capital structure that ensures the lowest cost of capital available to the entity.
Management will assess the capital structure of the entity to take advantage of favourable costs of capital or high
returns on assets. As the market is constantly changing, management may change the amount of dividends to be paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
During 2019 management did not pay any dividends (2018: nil).
There has been no change during the year to the strategy adopted by management to control the capital of the entity.
The gearing ratios for the years ended 30 June 2019 and 30 June 2018 are calculated as follows:
Trade and other payables
Tax liabilities
Less cash and cash equivalents
Total Equity
Total capital
Consolidated
2019
$’000
2018
$’000
(1,907)
(4,227)
14,671
41,409
(3,456)
(4,946)
16,983
33,270
49,946
41,851
The gearing ratio is nil for both 2018 and 2019 financial year, as the Group does not have external debt other than trade
payables and tax liabilities.
Note 20. Equity - reserves
Foreign currency reserve
Options reserve
Consolidated
2019
$’000
2018
$’000
(784)
34
(750)
(340)
-
(340)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Foreign currency translation
Balance at 30 June 2018
Foreign currency translation
Share-based payments
Balance at 30 June 2019
50
Foreign
currency
reserve
$’000
Options
reserve
$’000
Total
$’000
-
(340)
(340)
(444)
-
(784)
-
-
-
-
34
34
-
(340)
(340)
(444)
34
(750)
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments
The Group’s principal financial instruments comprise receivables, payables, cash and cash equivalents (inclusive of
restricted balances).
The Group manages its exposure to key financial risks, including interest rate and currency risk through management’s
regular assessment of financial risks. The objective of the assessment is to support the delivery of the Group’s financial
targets whilst protecting future financial security.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, commodity
price risk, credit risk and liquidity risk. The Group uses different methods to measure and manage different types of
risk to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and
assessments of market forecasts for interest rate, foreign exchange and commodity prices. These risks are summarised
below.
Primary responsibility for identification and control of financial risks rests with the Chief Financial Officer under the
authority of the Board. The Board reviews and agrees management’s assessment for managing each of the risks
identified below.
The carrying amounts and net fair values of the economic entity’s financial assets and liabilities at the reporting date are:
CONSOLIDATED
Financial assets
Cash and cash equivalents*
Trade and other receivables
Carrying amount
Net fair value
2019
$’000
2018
$’000
2019
$’000
2018
$’000
26,194
5,297
16,983
7,593
26,194
5,297
16,983
7,593
Non-traded financial assets
31,491
24,576
31,491
24,576
Financial liabilities
Trade and other payables
Tax liabilities
1,907
4,227
3,456
4,946
1,907
4,227
3,456
4,946
Non-traded financial liabilities
6,134
8,402
6,134
8,402
*inclusive of restricted balances
Risk Exposures and Responses
(a) Fair value risk
The financial assets and liabilities of the Group are recognised in the statement of financial position at their fair value in
accordance with the accounting policies set out in note 2. In all instances the fair value of financial amounts and liabilities
approximates to their carrying value.
Basis for determining fair value
The following summarises the significant methods and assumptions used in estimating the fair values of financial
instruments:
51
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
Trade and other receivables
The carrying value less impairment provision of trade receivables is a reasonable approximation of their fair values due
to the short-term nature of trade and other receivables.
Financial liabilities
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market
rate of interest at the reporting date. Where these cash flows are in a foreign currency the present value is converted
into Australian dollars at the foreign exchange spot rate prevailing at the reporting date.
The carrying value of trade payables is a reasonable approximation of their fair values due to the short term nature of
trade payables.
(b) Interest rate risk
The Group’s exposure to market interest rates is related primarily to the Group’s cash deposits.
At the reporting date, the Group had the following financial assets exposed to Australian and overseas variable interest
rate risk that are not designated in cash flow hedges:
Consolidated
2019
$’000
2018
$’000
Cash and cash equivalents, inclusive of restricted balances
26,194
16,983
The Group constantly analyses its interest rate opportunity and exposure. Within this analysis consideration is given to
existing positions and alternative arrangement on fixed or variable deposits.
The following sensitivity analysis is based on the interest rate opportunity/risk in existence at the reporting date.
Based upon the balance of net exposure at the year end, if interest rates changed by +/-1%, with all other variables held
constant, the estimated impact on post-tax profit and equity would have been:
Impact on post-tax profit
Interest rates +1%
Interest rates -1%
Impact on equity
Interest rates +1%
Interest rates -1%
Consolidated
2019
$’000
2018
$’000
262
(262)
262
(262)
170
(170)
170
(170)
A movement of +1% and – 1% is selected because this is historically within a range of rate movements and available
economic data suggests this range is reasonable.
52
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
(c) Foreign exchange risk
The Group is subject to foreign exchange risk on its international exploration and appraisal activities where costs
are incurred in foreign currencies, in particular United States dollars. However, given the group generates and holds
significant balances of foreign currencies, the Group foreign exchange risk exposures are mitigated through naturally
hedging.
The Group’s exposure to foreign exchange risk at the reporting date was as follows (holdings are shown in AUD
equivalent):
30 June 2019
30 June 2018
USD
$’000
NZD
$’000
IDR
$’000
USD
$’000
NZD
$’000
IDR
$’000
Consolidated
Financial assets
Trade and other receivables
5,033
127
Financial liabilities
Trade and other payables
Tax liabilities
957
4,227
794
-
9
10
-
7,215
65
2,017
4,946
1,093
-
15
41
-
At the reporting date, if the currencies set out in the table above, strengthened or weakened against the Australian dollar
by the percentage shown, with all other variables held constant, net profit for the year would (decrease)/increase and
net assets would (decrease)/increase by:
Impact on post-tax profit
Exchange rates +10%
Exchange rates -10%
Impact on equity
Exchange rates +10%
Exchange rates -10%
Impact on post-tax profit
Exchange rates +10%
Exchange rates -10%
Impact on equity
Exchange rates +10%
Exchange rates -10%
USD
$’000
NZD
$’000
IDR
$’000
(15)
15
(15)
15
(67)
67
(67)
67
USD
$’000
NZD
$’000
IDR
$’000
25
(25)
25
(25)
(103)
103
(103)
103
-
-
-
-
(2)
2
(2)
2
Consolidated
2019
TOTAL
$’000
(82)
82
(82)
82
Consolidated
2018
TOTAL
$’000
(80)
80
(80)
80
53
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
Management believes the risk exposures as at the reporting date are representative of the risk exposure inherent in the
financial instruments.
(d) Commodity price risk
The Group is involved in oil and gas exploration and appraisal, and since April 1998 has received revenue from the sale
of hydrocarbons. Exposure to commodity price risk is therefore limited to this production and from successful exploration
and appraisal activities the quantum of which at this stage cannot be measured.
The Group is exposed to commodity price fluctuations through the sale of petroleum products denominated in US
dollars. The Group may enter into commodity crude oil price swap and option contracts to manage its commodity price
risk.
At 30 June 2019, the Group had no open oil price swap contracts (2018: nil).
If the US dollar oil price changed by +/-20% from the average oil price during the year, with all other variables held
constant, the estimated impact on post-tax profit and equity would have been:
Impact on post-tax profit
US dollar oil price +20%
US dollar oil price -20%
Impact on post-tax equity
US dollar oil price +20%
US dollar oil price -20%
Consolidated
2019
$’000
2018
$’000
2,167
(2,167)
2,167
(2,167)
2,123
(2,123)
2,123
(2,123)
Management believes the risk exposures as at the reporting date are representative of the risk exposure inherent in the
financial instruments. A movement of + 20% and – 20% is selected because a review of historical oil price movements
and economic data suggests this range is reasonable.
(e) Liquidity risk
Liquidity Risk is the risk that the group, although balance sheet solvent, cannot meet or generate sufficient cash resources
to meet its payment obligations in full as they fall due, or can only do so at materially disadvantageous terms.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have established an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of
financial assets and liabilities.
The Group is consequently more than sufficiently solvent to meet its payment obligations in full as they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims
to maintain flexibility in funding to meet ongoing operational requirements, exploration and development expenditure,
and small-to-medium-sized opportunistic projects and investments, by keeping committed credit facilities available.
The following table analyses the contractual maturities of the Group’s financial liabilities into relevant groupings based on
the remaining period at the reporting date to the contractual undiscounted cash flows comprising principal and interest
repayments. Estimated variable interest expense is based upon appropriate yield curves existing as at 30 June 2019.
54
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
Consolidated 2019
Non-derivative financial liabilities
Trade and other payable (Note 16)
Consolidated 2018
Non-derivative financial liabilities
Trade and other payables
(f) Credit risk
12 months
or less
1 to 2 years 2 to 5 years More than
$’000
$’000
$’000
5 years
$’000
1,907
3,456
-
-
-
-
-
-
Credit risk arises from the financial assets of the group, which comprise cash and cash equivalents and trade and other
receivables. The Group’s exposure to credit risk arises from potential default by the counter-party, with maximum exposure
equal to the carrying amount of these instruments. Exposure at the reporting date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the
Group’s policy to securitize its trade and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures
including an assessment of their independent credit rating, financial position, past experience and industry reputation.
The risks are regularly monitored.
At the reporting date there are no significant concentrations of credit risk within the Group.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are
considered representative across all customers of the consolidated entity based on recent sales experience, historical
collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Note 22. Key management personnel disclosures and related party disclosures
Other key management personnel
Total remuneration payments and equity issued to Directors and key management personnel are summarised below.
Elements of Directors and executives remuneration includes:
• Short term employment benefits, including non-monetary benefits and consultancy fees
• Post employment benefits – superannuation and long service leave entitlements
• Long term employee benefits
Short term employment benefits (including non-monetary benefits)
Cash bonuses
Post employment benefits
Share-based payments
Total employee benefits
Consolidated
2019
2018
485,768
112,200
43,222
10,307
471,206
25,774
27,988
-
651,497
524,968
55
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 22. Key management personnel disclosures and related party disclosures (continued)
Other related party transactions
Repayment of amounts owing to the Company as at 30 June 2019 and all future debts due to the Company, by the
controlled entities are subordinated in favour of all other creditors. Cue Energy has agreed to provide sufficient financial
assistance to the controlled entities as and when it is needed to enable the controlled entities to continue operations.
The parent company provides management, administration and accounting services to the subsidiaries. No Management
fees were charged to subsidiaries in 2018 and 2019 financial year.
The ultimate parent company is O.G. Oil & Gas (Singapore) Pte. Ltd., a company incorporated in Singapore.
Note 23. Auditors remuneration
During the financial year the following fees were paid or payable for services provided by BDO East Coast Partnership,
the auditor of the company:
Audit services - BDO East Coast Partnership
Audit or review of the financial statements
Other services - BDO East Coast Partnership
Advisory services
Tax compliance
Consolidated
2019
$
2018
$
117,857
114,799
-
10,000
375
20,000
10,000
20,375
127,857
135,174
No other services were provided by the auditor during the year, other than those set out above.
Note 24. Contingent assets and liabilities
The Group has no contingent assets or liabilities as at 30 June 2019 (2018: Nil).
Cue Energy Resources Limited and Cue Resources Inc. were named as defendants, along with a number of other
companies, in litigation pending in Texas, USA in relation to the Pine Mills oilfield. On March 27, 2019 the court dismissed
the claims against Cue in their entirety. On April 26, 2019, the plaintiff filed an amended lawsuit against Cue and the
other defendants. Cue has filed a motion to dismiss, which is now pending in U.S. court.
56
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 25. Commitments for expenditure
a) Exploration tenements*
The Group participates in a number of licences, permits and production sharing contracts
for which the Group has made commitments with relevant governments to complete
minimum work programmes.
Within one year
One to five years
Consolidated
2019
$’000
2018
$’000
1,645
27,033
34,800
-
28,678
34,800
b) Production development expenditure**
The Group participates in a number of development projects that were in progress at
the end of the period. These projects require the Group, either directly or through joint
venture arrangements, to enter into contractual commitments for future expenditures.
Within one year
706
-
c) Operating lease commitments***
Non-cancellable operating lease are payable as follows:
Within one year
One to five years
90
99
189
122
2
124
* If the economic entity decides to relinquish certain tenements and/or does not meet these obligations, assets recognised
in the Statement of Financial Position may require review in order to determine the appropriateness of carrying values.
The sale, transfer or farm-out of exploration rights to third parties could potentially reduce or extinguish these obligations.
All commitments relate to Joint Operation projects.
$27 million included in “one to five years” category refers to the total Cue commitment for the Ironbark well. Approximately
$16 million will be funded by joint venture partners, with the remaining $11 million funded from Cue’s cash reserves
which have been escrowed for this purpose (refer to note 11).
** All development expenditure commitments relate to the development of oil and gas fields.
*** The operating lease commitments consist of the following:
-
Property lease at Level 3, 10-16 Queen Street Melbourne renewed on 1 October 2018 and will expire on
30 September 2021.
- Property lease for Indonesian office renewed on 1 April 2019 and will expire on 31 March 2021.
- Minor lease commitment on printer.
Accounting policy for leases
Operating leases are leases which the lessor effectively retains substantially all the risks and benefits incidental to
ownership of the leased asset. Operating lease payments, net of any incentives received from the lessor, are charged
to profit or loss on a straight line basis over the term of the lease.
57
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 26. Parent entity information
Cue Energy Resources Limited is the parent entity.
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Options reserve
Accumulated losses
Total equity
Parent
2019
$’000
2018
$’000
(1,390)
(1,403)
(1,390)
(1,403)
Parent
2019
$’000
2018
$’000
12,214
17,009
23,404
24,853
200
301
353
394
152,416
152,416
34
-
(129,346)
(127,957)
23,104
24,459
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for the acquisition of capital assets as at 30 June 2019 (2018: nil).
Lease commitments
The parent entity has no commitments in relation to leases as at 30 June 2019 other than disclosed in note 25.
58
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 27. Shares in subsidiaries
Shares held by parent entity at the reporting date:
Name
Cue Mahato Pty Ltd
Cue Mahakam Hilir Pty Ltd
Cue Kalimantan Pte Ltd*
Cue (Ashmore Cartier) Pty Ltd
Cue Sampang Pty Ltd
Cue Taranaki Pty Ltd
Cue Exploration Pty Ltd
Principal place of business /
2019
Country of incorporation
%
2018
%
Ownership interest
Australia
Australia
Singapore
Australia
Australia
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
All companies in the Group have a 30 June reporting date.
* Shares held by Cue Mahakam Hilir Pty Ltd
Note 28. Interests in joint operations
Property
Operator
Petroleum exploration properties
Cue
Interest (%)
Gross Area
(km2)
Net Area
(km2)
Permit
expiry date
Carnarvon Basin – Western Australia
WA-359-P
BP Developments Australia Pty Ltd
WA-389-P
WA-409-P
Cue Exploration Pty Ltd
BP Developments Australia Pty Ltd
21.5
100
20
645
1,939
565
645
25/04/2021
775.60
08/10/2020
169.50
20/07/2021
Indonesia
Mahakam Hilir PSC Cue Kalimantan Pte Ltd
Mahato PSC
Texcal Mahato EP Ltd
Petroleum production properties
100
12.50
222.14
5,600
88.90
12/05/2020
700
19/06/2020
New Zealand
PMP38160
Madura - Indonesia
Sampang
OMV New Zealand Limited
5
80.18
4
02/12/2027
Ophir Indonesia (Sampang) Pty Ltd
15 (8.18
Jeruk Field)
534.50
80.20
04/12/2027
59
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 28. Interests in joint operations (continued)
Information relating to joint operations that are material to the consolidated entity are set out below:
Summarised statement of financial position
Cash and cash equivalents
Receivables
Inventory
Deferred tax assets
Production Properties (note 14)
Exploration and evaluation assets (note 13)
Total assets
Payables
Current tax liabilities
Restoration provisions
Deferred tax liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Production income
Production expenses
Exploration and evaluation expenditure
Profit before income tax
Other comprehensive income
Total comprehensive income
2019
$’000
2018
$’000
5
1,478
1,003
3,002
24,547
3,401
5
3,930
519
2,733
26,814
-
33,436
34,001
1,757
457
11,793
3,948
3,112
1,370
9,832
3,052
17,955
17,366
15,481
16,635
25,730
(7,223)
(1,222)
17,285
-
24,547
(9,881)
-
14,666
-
17,285
14,666
Refer to note 24 in relation to contingent liabilities of the Group.
Commitments for expenditure are disclosed in note 25.
Accounting policy for joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the arrangement. The consolidated entity has recognised its share of
jointly held assets, liabilities, revenues and expenses of joint operations. These have been incorporated in the financial
statements under the appropriate classifications.
60
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 29. Events after the reporting period
On 29 July 2019, the consolidated entity issued 4,277,888 unlisted options to eligible employees for services rendered
from 1 July 2018, exercisable at $0.07 (7 cents). The options will vest on 1 July 2021 and expire on 1 July 2023.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years.
Note 30. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax (expense)/benefit for the year
Adjustments for:
Share-based payments
Abandonment provision expense
Depreciation
Amortisation
Net gain on foreign currency conversion
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Increase in deferred tax assets
Decrease in trade and other payables
(Decrease)/Increase in tax liabilities
Increase/(decrease) in deferred tax liabilities
Increase/(decrease) in provisions
Net cash from operating activities
Note 31. Earnings per share
Consolidated
2019
$’000
2018
$’000
8,549
7,739
34
777
10
4,352
(1,141)
2,296
(484)
(269)
(1,549)
(719)
895
72
12,823
-
495
14
5,430
(728)
(3,222)
28
(2,733)
(475)
1,004
(348)
(372)
6,832
Consolidated
2019
$’000
2018
$’000
Profit after income tax attributable to the owners of Cue Energy Resources Limited
8,549
7,739
Weighted average number of ordinary shares used in calculating basic earnings per share 698,119,720
698,119,720
Weighted average number of ordinary shares used in calculating diluted earnings per share 698,119,720
698,119,720
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
1.22
1.22
1.11
1.11
61
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 31. Earnings per share (continued)
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to the owners of Cue Energy Resources Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial 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 shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Note 32. Share-based payments
On 29 July 2019, the consolidated entity issued 4,277,888 unlisted options to eligible employee under the share option
scheme. The options are exercisable at $0.07 (7 cents) per option, and will vest on 1 July 2021 and expire on 1 July 2023.
Under IG4, which is set out in the Appendix to AASB 2 Share Based Payments, the service commencement date of these
options were deemed to be 1 July 2018. The options were valued using Black-Scholes option pricing model. $34,255
of share-based payment expense was recorded in relation to these options for the financial year ending 30 June 2019.
Set out below are summaries of options granted under the plan:
2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
01/07/2018
01/07/2023
$0.07
-
-
4,277,888
4,277,888
-
-
-
-
4,277,888
4,277,888
Weighted average exercise price
$0.00
$0.07
$0.00
$0.00
$0.07
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant
date
01/07/2018
01/07/2023
$0.06
$0.07
53.00%
-
2.25%
$0.024
Accounting policy for share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount
of cash is determined by reference to the share price.
62
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Notes to the financial statements
30 June 2019
Note 32. Share-based payments (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that
do not determine whether the consolidated entity receives the services that entitle the employees to receive payment.
No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid
to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not
satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting
period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
63
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Directors’ Declaration
30 June 2019
In the directors’ opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as
at 30 June 2019 and of its performance for the financial year ended on that date; and
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 required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Alastair McGregor
Non-Executive Chairman
21 August 2019
64
Cue Energy Resources LimitedAnnual Report 2019
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
Tel: +61 3 9603 1700
www.bdo.com.au
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Collins Square, Tower Four
Melbourne VIC 3008
Level 18, 727 Collins Street
GPO Box 5099 Melbourne VIC 3001
Melbourne VIC 3008
Australia
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR'S REPORT
To the members of Cue Energy Resources Limited
To the members of Cue Energy Resources Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
Opinion
We have audited the financial report of Cue Energy Resources Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
We have audited the financial report of Cue Energy Resources Limited (the Company) and its
June 2019, the consolidated statement of profit or loss and other comprehensive income, the
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
June 2019, the consolidated statement of profit or loss and other comprehensive income, the
then ended, and notes to the financial report, including a summary of significant accounting policies
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
and the directors’ declaration.
then ended, and notes to the financial report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
(i)
(ii)
(ii)
Basis for opinion
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Report section of our report. We are independent of the Group in accordance with the Corporations
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
Report section of our report. We are independent of the Group in accordance with the Corporations
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
with the Code.
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
We confirm that the independence declaration required by the Corporations Act 2001, which has been
time of this auditor’s report.
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
53
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
53
65
Cue Energy Resources LimitedAnnual Report 2019
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 of the current period. These 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.
Impairment of Production Assets
Key audit matter
How the matter was addressed in our audit
The total carrying value of the oil and gas production
During our audit, we evaluated management’s
property assets at 30 June 2019 is $24.547 million (2018:
assessment of the recoverable value of each
$26.814 million), which consists of Maari and Sampang
production asset.
(Oyong and Wortel) assets, as disclosed in Note 14.
The nature of these production property assets requires
management to assess for indicators of impairment. For
the year ended 30 June 2019, management has
undertaken a formal impairment test of these
production property assets using a value in use (VIU)
methodology. A VIU impairment assessment is complex
and highly judgemental, and includes modelling a range
of assumptions and cash flow estimates that are
affected by expected future performance and market
conditions.
Our procedures included, but were not limited to:
Obtaining and reviewing the reserve quantity
reports from an external expert. This included
assessing the competency, objectivity and
independence of the expert and reviewing the
report to determine if the assumptions were
reasonable and in line with our understanding
and expectations of the asset and the industry.
Engaged our corporate valuation specialists to
assess the discount rates used by management to
other comparable participants in the industry.
Benchmarking and analysing management’s
future oil price assumptions against external
data.
Comparing the expected future costs to operator
budgets and other third party reports.
Performing a sensitivity analysis over the
underlying variables to determine the impact of
unfavourable changes to cash flows and in turn
recoverable value of each production asset.
66
54
Cue Energy Resources LimitedAnnual Report 2019 Accounting treatment of the Ironbark Project Farm-Out
Key audit matter
How the matter was addressed in our audit
During the 2019 financial year, a joint arrangement was
formed between BP Developments Australia, Beach
Energy Limited, New Zealand Oil & Gas and Cue
Exploration Pty Ltd to drill the Ironbark-1 well in
During the audit, we evaluated the accounting
adopted by the company for reimbursement of
back costs and the free carry amount included as
part of the Ironbark Farm-out.
exploration permit WA-359-P in Western Australia. The
Our procedures included, but were not limited to:
arrangement in place stipulates that Cue Exploration Pty
Ltd (Farmer) receives cash consideration for
reimbursement of back costs and a free carry
consideration up to a maximum of
US$11.308 million from the other parties (Farmees).
This joint arrangement is material to the company.
Reviewing the underlying agreement for the
joint arrangement including the obligations of
each party involved.
Discussing the transaction with Cue Board of
Directors and management to ensure all
implications of the various accounting
approaches were considered.
Reviewing Cue’s management position paper
to support the accounting treatment of the
Ironbark Project.
Obtaining a technical consultation from our
IFRS accounting specialists to ensure that the
accounting approach adopted is in line with
best practice.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Group’s annual report for the year ended 30 June 2019, but does not
include the financial report and our auditor’s report thereon, which we obtained prior to the date of
this auditor’s report, and the Reserve Report, which is expected to be made available to us after that
date.
Our opinion on the financial report does not cover the other information and 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
identified above 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. When we read the
Reserve Report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to the directors and will request that it is corrected. If it is not corrected,
we will seek to have the matter appropriately brought to the attention of users for whom our report is
prepared.
55
19
19
19
67
Cue Energy Resources LimitedAnnual Report 2019 Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included pages 12 to 17 of the directors’ report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Cue Energy Resources Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
David Garvey
Partner
Melbourne, 21 August 2019
68
56
Cue Energy Resources LimitedAnnual Report 2019 Cue Energy Resources Limited
Shareholder information
30 June 2019
Shareholder Information
1. Distribution of equitable securities
The shareholder information set out below was applicable as at 24 October 2019:
Number of holders of ordinary shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
2. Registered Top 20 Shareholders
61
164
488
1,501
327
2,541
190
The registered names and holdings of the 20 largest holdings of quoted ordinary shares in the Company as at 24 October 2019:
Shareholder
1. NZOG Offshore Limited
2. BNP Paribas Noms Pty Ltd (DRP)
3. ABN Amro Clearing Sydney Nominees Pty Ltd (Custodian A/C)
4. Portfolio Securities Pty Ltd
5. Reviresco Nominees Pty Ltd (Reviresco S/F A/C)
6. HSBC Custody Nominees (Australia) Limited
7. Finot Pty Ltd
8. Citicorp Nominees Pty Limited
9. Mrs Janet Backhouse
10. Jarden Scrip Limited
11. HSBC Custody Nominees (Australia) Limited - A/C 2
12. Grizzley Holdings Pty Limited
13. Lakemba Pty Ltd
14. Berne No 132 Nominees Pty Ltd (52293 A/C)
15. Ms Rachel Irene Alembakis
16. Beira Pty Limited
17. Milliara Nominees (Aust) Pty Limited (Gill Family A/C)
18. Custodial Services Limited (Beneficiaries Holdings A/C)
19. Equity Trustees Limited (Lowell Resources Fund A/C)
20. Mr Damiano Giorgio Pilla
3. Unquoted equity securities
Unquoted options over ordinary shares
The following persons hold 20% or more of unquoted equity securities:
Ordinary shares
Number
held
349,368,803
113,925,816
12,225,025
10,000,000
7,500,000
6,932,415
5,000,000
3,865,297
3,847,338
3,778,439
3,243,818
3,202,203
3,084,051
3,000,000
2,960,000
2,909,452
2,818,289
2,217,425
2,000,000
1,996,427
543,874,798
% of total
shares
issued
50.04
16.32
1.75
1.43
1.07
0.99
0.72
0.55
0.55
0.54
0.46
0.46
0.44
0.43
0.42
0.42
0.40
0.32
0.29
0.29
77.89
Number on
issue
Number of
holders
8,131,186
7
69
Cue Energy Resources LimitedAnnual Report 2019
Cue Energy Resources Limited
Shareholder information
30 June 2019
Name
Balakrishnan Kunjan
Matthew Boyall
Class
Unquoted options
Unquoted options
4. Vendor Securities
There are no restricted securities on issue as at 24 October 2019.
5. Voting rights
At meeting of members or classes of members:
Number held
2,852,940
2,687,932
(a) each member entitled to vote may vote in person or by proxy, attorney or respective;
(b) on a show of hands, every person present who is a member or a proxy, attorney or representative of a member has
one vote; and
(c) on a poll, every person present who is a member or a proxy, attorney or representative of a member has:
(i)
(ii)
for each fully paid share held by person, or in respect of which he/she is appointed a proxy, attorney or
representative, one vote for the share;
for each partly paid share, only the fraction of one vote which the amount paid (not credited) on the share bears
to the total amounts paid and payable on the share (excluding amounts credited).
Subject to any rights or restrictions attached to any shares or class of shares.
6. Share registry
Enquiries
Cue’s share register is managed by Computershare. Please contact Computershare for all shareholding and dividend
related enquiries.
Change of shareholder details
Shareholders should notify Computershare of any changes in shareholder details via the Computershare website (www.
computershare.com.au) or writing (fax, email, mail). Examples of such changes include:
• Registered name
• Registered address
• Direct credit payment details
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne, Victoria 3001 Australia
Telephone: 1300 850 505 (within Australia)
or +61 3 9415 4000 (outside Australia)
Facsimile: +61 3 9473 2500
Email: web.queries@computershare.com.au
Website: www.computershare.com.au
7. Sharecodes
ASX Share Code: CUE
70
Cue Energy Resources LimitedAnnual Report 2019
Level 3, 10-16 Queen Street, Melbourne VIC 3000, Australia
Phone: +61 3 8610 4000
WWW.CUENRG.COM.AU