Annual Report
2023
CUE ENERGY RESOURCES LIMITED
ABN 45 066 383 971
SKILLED Group Annual Report 2013Annual Report 2013 General Legal Disclaimer
Various statements in this document may constitute statements relating to intentions, opinion, expectations, present and future operations, possible
future events and future financial prospects. Such statements are not statements of fact, and are generally classified as forward looking statements
that involve unknown risks, expectations, uncertainties, variables, changes and other important factors that could cause those future matters to differ
from the way or manner in which they are expressly or impliedly portrayed in this document. Some of the more important of these risks, expectations,
uncertainties, variables, changes and other factors are pricing and production levels from the properties in which the Company has interests, or will
acquire interests, and the extent of the recoverable reserves at those properties. In addition, exploration for oil and gas is expensive, speculative and
subject to a wide range of risks. Individual investors should consider these matters in light of their personal circumstances (including financial and
taxation affairs) and seek professional advice from their accountant, lawyer or other professional adviser as to the suitability for them of an investment in
the Company.
Except as required by applicable law or the ASX Listing Rules, the Company does not make any representation or warranty, express or implied, as to
the fairness, accuracy, completeness, correctness, likelihood of achievement or reasonableness of the information contained in this document, and
disclaims any obligation or undertaking to publicly update any forward-looking statement or future financial prospects resulting from future events or
new information. To the maximum extent permitted by law, none of the Company or its agents, directors, officers, employees, advisors and consultants,
nor any other person, accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of
the information contained in this document.
Reference to “CUE” or “the Company” may be references to Cue Energy Resources Limited or its applicable subsidiaries.
Overview
About us
Cue Energy Resources Limited is an oil and gas production
and exploration company with production assets in
Australia, Indonesia and New Zealand. Offices are located
in Melbourne, Australia and Jakarta, Indonesia.
Joint operations
4 Chairman’s overview
7 Highlights
8
13 Reserves and resources
17 Sustainability report
19 Taskforce on Climate–Related Financial Disclosures (TCFD) Statement
29 Directors’ report
46 Auditor’s Independence Declaration
47 Statement of profit or loss and other comprehensive income
48 Statement of financial position
49 Statement of changes in equity
50 Statement of cash flows
51 Notes to the financial statements
81 Directors’ declaration
82
86 Shareholder information
89 Corporate Directory
Independent Auditor’s Report
Highlights FY23
Revenue
$51.6m
Profit after Tax
$15.2m
EBITDAX
$30.9m
Production
630,000 boe
3
SKILLED Group Annual Report 2013Annual Report 2013Cue Energy Resources Limited Annual Report 2023 Overview
Chairman’s overview
Alastair McGregor
I am pleased to present the 2023 Annual
Report for Cue Energy Limited and happy
to share another year of growth and
robust development.
Dear Shareholders,
Our accomplishments include a 16% increase in revenue
to $51.6 million, marking the highest revenue reported
by the company in over a decade. Profit remained high
at $15.2 million and strong operational performance,
as indicated by EBITDAX of $30.9 million.
The year saw Cue report production of 630,000 barrels
of oil equivalent (boe), supported by new production
from the PV-12 gas well in the Palm Valley field and the
addition of six production wells in the Mahato PSC.
Despite a moderation in global energy prices following
last year’s impact, we anticipate a sustained demand
for our products with corresponding price alignment.
The global oil price has increased by over 20% since the
commencement of FY24, while contracted gas prices in
Australia continue to mirror projections of gas shortages
in the Eastern Australia market in the years to come.
Throughout the year, I have engaged with several
shareholders who have expressed frustration and
concern around the share price performance. The
board and I empathise with this sentiment, particularly
as the company continues to report strong growth and
profitability from its operations without a corresponding
positive reaction in the share price. I extend my gratitude
to shareholders who have shared their perspectives
and ideas with the company. The board will continually
monitor this situation whilst also reviewing our Capital
Management program. We have repaid $3 million of our
debt during the year, and we will prioritise the repayment
of the remaining debt held by the company.
The evolving landscape of government regulations
continues to shape our business strategy and
management. In New Zealand, we are actively
involved in discussions surrounding the introduction of
decommissioning financial assurance regulations, which
might impact the utilisation of cashflow from Maari.
The introduction of a gas price cap by the Australian
Government in 2022 created a period of uncertainty in
the market. Addressing the gas supply shortage is vital to
ensuring stability in Australia’s domestic energy system.
We commend the mandatory gas code of conduct for
exempting smaller producers like Cue, although we
maintain our reservations about regulatory interference
in markets.
Looking at the year ahead we will continue with our
development plans across the portfolio whilst also
remaining attentive to fresh growth opportunities. In
the Mahato PSC, two development wells have already
been completed in FY24 and two more are scheduled.
In addition, the Mereenie Joint venture is planning two
development wells. This is complimented by several
production optimisation projects, including flare gas
recovery in the Mereenie field and increased water
injection capacity at Maari. Furthermore, we have recently
announced an MOU to explore the recovery and sale
of Helium from the Mereenie gas production. All of this
is possible given the financial stability of our balance
sheet enabling Cue to fund these initiatives from existing
cash reserves.
I would like to extend my gratitude to all our shareholders
for their continued support and commend the diligence of
our staff in Melbourne and Jakarta, under the leadership
of our CEO, Matthew Boyall.
FY24 is looking to be another active year, as we continue
to work with our partners to achieve our goals safely and
efficiently.
Alastair McGregor
Chairman
4
Cue Energy Resources Limited Annual Report 2023
5
SKILLED Group Annual Report 2013Annual Report 2013Cue Energy Resources Limited Annual Report 2023 Operations and Financial Review
A year of continued
production and
revenue growth
Cue continued on its growth
pathway, achieving a revenue
of $51.6 million, 16% higher than
the previous year.
This progress was driven by a 45% increase in revenue
from onshore Australian assets and a 12% increase
from Indonesia. This is the highest production revenue
reported by the Company since 2010, demonstrating the
success of its growth strategy.
We reported a profit after tax of $15.2 million, a decrease
of 5.3% and EBITDAX of $30.9 million.
Cue closed the year with a cash balance of $15.2 million,
including $4 million of drawn loans, ensuring our
continued ability to fully fund planned development
and exploration activities.
Reported revenue from the Mereenie, Palm Valley and
Dingo fields in the Amadeus Basin, onshore Australia,
increased 45% to $11.9 million due to a full year of
reporting, production growth at Palm Valley from the
PV-12 well, and strong prices realised for contracted
and uncontracted gas.
Due to production gains from ongoing development
drilling, the PB oilfield in the Mahato Production Sharing
Contract (PSC) in Indonesia contributed the most
revenue to the Company, accounting for $18.7 million.
The field’s gross oil production increased from 4,700
barrels of oil per day (bopd) at the start of the year to
6,400 bopd by the conclusion of the year.
A revenue receivable of $5.1 million is recorded
against the Mahato PSC, which is due to Domestic
Market Obligation (DMO) oil sales to the Indonesian
Government under the PSC. Typically, funds from DMO
sales are received within a normal invoicing cycle period,
however, due to ongoing negotiations concerning the
interpretation of the DMO clause in the PSC, payments to
the Mahato JV partners have been delayed. Subsequent
to the year end, Cue has received $3.2 million of the
$5.1 million receivable.
Administration expenses of $2.5 million were low and
maintained in line with the previous year, excluding
business development costs, as the Company managed
non-operated projects efficiently.
Cue made an early repayment of $3 million of an
outstanding $7 million unsecured loan from New Zealand
Oil & Gas on June 29, 2023, as part of its ongoing capital
management program, $4 million of debt remains unpaid.
Cue’s strong free cash flow permitted this debt reduction,
and the Company will continue to consider further debt
reduction as part of Capital Management activities.
6
SKILLED Group Annual Report 2013Annual Report 2013Cue Energy Resources Limited Annual Report 2023 Highlights
$51.6 million revenue,
up 16% on FY2022
$15.2 million profit
after tax
$30.9 million EBITDAX
Continued growth with
8 production wells drilled
45% revenue increase from
Australian onshore Assets
7
SKILLED Group Annual Report 2013Annual Report 2013SKILLED Group Annual Report 2013Annual Report 2013Cue Energy Resources Limited Annual Report 2023 Operations and Financial Review
Joint operations
Cue
Jakartaaa
Office
8
AUSTRALIAL
He
Melbourne
Amadeus Basin
Mereenie (OL 4/5)
Central Petroleum (Operator)
25%
Macquarie Mereenie
New Zealand Oil & Gas
Cue
Palm Valley (OL 3)
Central Petroleum (Operator)
New Zealand Oil & Gas
Cue
Dingo (L7)
Central Petroleum (Operator)
New Zealand Oil & Gas
Cue
50%
17.5%
7.5%
50%
35%
15%
50%
35%
15%
INDONESIA
Mahato PSC
Texcal Energy Mahato (Operator) 25%
Texcal Mahato
Central Sumatra Energy
Cue
51%
11.5%
12.5%
Sampang PSC
Medco Energi (Operator)
45%
Singapore Petroleum Company
40%
Cue
15%
NNNEEE
EALAND
NEW ZEALAND
Maari and Manala Oil Fields
PMP 38160
OMV (Operator)
Horizon Oil
Cue
69%
26%
5%
Cue Energy Resources Limited Annual Report 2023 INDONESIA
Mahato PSC
Texcal Energy Mahato (Operator) 25%
Texcal Mahato
Central Sumatra Energy
Cue
51%
11.5%
12.5%
Sampang PSC
Medco Energi (Operator)
45%
Singapore Petroleum Company
40%
Cue
15%
NNNEEE
EALAND
NEW ZEALAND
Maari and Manala Oil Fields
PMP 38160
OMV (Operator)
Horizon Oil
Cue
69%
26%
5%
Cue
Jakartaaa
Office
AUSTRALIAL
He
Melbourne
Amadeus Basin
Mereenie (OL 4/5)
Central Petroleum (Operator)
25%
Macquarie Mereenie
New Zealand Oil & Gas
Cue
Palm Valley (OL 3)
Central Petroleum (Operator)
New Zealand Oil & Gas
Cue
Dingo (L7)
Central Petroleum (Operator)
New Zealand Oil & Gas
Cue
50%
17.5%
7.5%
50%
35%
15%
50%
35%
15%
Operations and Financial Review
Australia
MEREENIE,
PALM VALLEY
AND DINGO
LEGEND
Cue Permit
Oil Field
G
as Field
Oil Pipeline
Gas Pipeline
CUE INTERESTS
Mereenie [OL4 & OL5] 7.5%
Palm Valley [OL3]
Dingo [L7]
Operator
15%
15%
Central Petroleum Limited
OL4
Mereenie
OL5
Palm Valley
OL3
N
100km
Alice Springs
Dingo
L7
Cue completed the acquisition
of interests in the Mereenie,
Palm Valley and Dingo fields,
in the Amadeus Basin, onshore
Northern Territory, on 1 October
2021 and incorporated a full year
of reporting in FY 2023.
The assets generated $11.9 million in revenue, a 45%
increase over FY 2022 due to a full year of reporting and
increased gas sales at Palm Valley following the start of
gas production from the Palm Valley 12 (PV-12) well.
The PV-12 well was drilled with a sidetrack, ST2, in the
Pacoota P1 interval, the producing interval in the Palm
Valley field, reaching a total measured depth (MD)
of 3039m on 8 October 2022. Prior to ST2, another
sidetrack (ST1) was drilled into the Pacoota P2 and P3
formations and recovered formation water from the
wellbore. As a result of this water and the absence of
significant gas shows while drilling, the ST1 lateral was
plugged and abandoned.
Cue announced on October 18 2022 that the well was
being completed as a gas producer after flowing gas
at approximately 11.8 million standard cubic feet per
day (mmcfd). PV-12 was successfully tied in during
December 2022.
Towards the end of the year, six well recompletions
were undertaken in the Mereenie field, resulting in an
additional 1.5 TJ/d initial gas rates.
Interruptions to sales were experienced due the
temporary closures of Northern Gas Pipeline (NGP)
from September to December 2022. Cue gas sales were
restricted to the Northern Territory during this time,
leading to a decrease in field production rates.
During the year, the Australian Government introduced
price controls on gas producers, limiting new contracts
sales to $12/GJ from December 2022. These were
subsequently modified by the implementation of the
mandatory Gas Code of Conduct, which provides Cue,
as a small producer, an exemption from the price cap.
Further drilling in the Mereenie field is being planned
to increase production from the currently producing
Pacoota reservoirs and assess the potential for increased
Stairway formation gas production.
9
Cue Energy Resources Limited Annual Report 2023 Operations and Financial Review
Indonesia
MAHATO PSC
Bangko
Balam South
Sumatra
Mahato
PSC
Duri
Libo SE
CUE INTERESTS
Cue
Operator
12.5%
Texcal Energy Mahato Inc
LEGEND
Cue Permit
PB Oil Field
Major Oil Fields
PB
Minas
Kotabatak
Petapahan
40km
Development well PB-12 is planned to commence drilling
in September and Development well PB-22 and two water
injection wells are yet to be started. The PB field approved
well count is twenty-three, which includes twenty wells
for oil production and three water injection wells. To date,
all wells have been completed from the existing well pad,
with analysis ongoing on the development of a new well
pad to access to reserves in the northern portion of the
field. More wells may be proposed in the field after the
completion of the current drilling program.
Exploration well BA-01 commenced drilling subsequent
to the year end on 28 July 2023. On 23 August 2023, Cue
announced that the well had been drilled with four zones
of interest tested with no hydrocarbons produced. The
well has been plugged and abandoned.
The PB field in the Mahato PSC
continued to increase production
and revenue, contributing $18.7
million in revenue for the year, a
25% increase over FY 2022.
Gross oil production increased 36% over the year, from
4,700 bopd to 6,400 bopd.
Development drilling continued, with seven wells
completed as part of the field development optimisation
announced in June 2022, bringing the total number
of production wells at the end of the year to sixteen.
Additionally, there is one well that was drilled and
suspended and one water injection well in the field.
Development wells, PB-10, PB-11, PB-14, PB-17, PB-19,
PB-20 and PB-21 were drilled and started production at
initial rates up to 800 bopd during the year. Additionally,
PB-13 was drilled and logged but encountered technical
issues with casing installation. Subsequent to the year
end, it was completed and started oil production. PB-23
development well commenced drilling during July 2023
and started oil production mid-August 2023 at a rate of
400 bopd.
10
Cue Energy Resources Limited Annual Report 2023 Operations and Financial Review
Indonesia
SAMPANG PSC
CUE INTERESTS
Cue
Operator
15%
Medco Energi
Java
Madura Island
East Java
Wortel
Maleo
Jeruk
Oyong
Paus Biru
Grati Onshore
Gas Facilities
30km
Peluang
LEGEND
Cue Permit
Oil Field
Gas Field
Oyong and Wortel gas fields
continued to produce as
predicted, generating $11.5
million in revenue from long-
term, fixed price contracts.
During the year, progress was made on the Paus Biru
gas development, with the Indonesian Government
approving various changes to the PSC terms, aimed
at increasing the economic benefit for the project
participants. In addition, the government provided
support for an extension application to the term of the
Sampang PSC, which currently is set to expire in 2027.
The Sampang JV expects to apply for a 20-year permit
extension.
The PSC amendments and extension are key steps
required for the JV to proceed with considering a Final
Investment Decision (FID) on the project. The Paus
Biru development is planned to consist of a single well
and wellhead platform at the Paus Biru gas field, with
a 27km subsea pipeline connecting the well to existing
infrastructure at the Oyong field. Subject to final
approvals, gas production from Paus Biru is expected to
commence by 2025 at a rate of 20-25 mmcfd.
An extension to the permit would provide more long-
term certainty and the JV is actively reviewing all existing
opportunities within the permit area, including the
Jeruk oil discovery. A technical workshop was recently
conducted to evaluate the Operator’s revised subsurface
modelling and development concept plans. Additional
work is currently underway, with the objective of defining
an appraisal and development program over the next six
to twelve months.
11
Cue Energy Resources Limited Annual Report 2023 Operations and Financial Review
New Zealand
PMP 38160 (Maari)
CUE INTERESTS
Cue
Operator
5%
Operator OMV
New Zealand
LEGEND
Cue Permit
Oil Field
Gas Field
Taranaki
Peninsula
Tui
Maui
Maari
Manaia
PMP 38160
10km
The JV is now assessing and prioritising value adding
projects, including production enhancement and cost
reduction opportunities with the aim of extending the
field life beyond the existing permit expiration date
of 2027.
An updated decommissioning plan and cost estimate
for the Maari infrastructure was completed by the end
of the year and submitted to the New Zealand regulator
under the Crown Minerals (Decommissioning and
other Matters) Amendment Act. The cost estimate is
expected to be used by the government to determine
the level of financial security required of the Maari JV
for decommissioning. Although the regulations have
not been established, fulfilling obligations may require
Cue to establish a reserve from project cash flow.
Oil production from the Maari
field has remained strong, with
gross production from the
Maari/Manai fields reaching
approximately 5,300 bopd at
the end of the year.
Cue received $9.5 million revenue from the Maari field,
4% higher than the previous year.
Uptime for the field was high, and the positive effects
of water injection and production optimisation are
being seen with stable, and in some wells increasing,
production rates.
During the year, well repairs were undertaken on a
number of wells, impacting the overall field production
levels. Electric submersible pumps were replaced in
MN1 and MR9, with both wells back online producing
at or above pre-repair levels.
The MR6A production well was offline for the entire
year. The project participants have advance plans for
a workover of the well with the aim of reinstating oil
production. The permanent conversion of the MR2 well
to a water injection well, increasing overall injection rates
to provide further pressure support to the production
wells is in preparation. Both projects are expected to
be completed during H1 FY 2024.
The Maari facilities completed life extension works and
inspections with formal sign off expected for the Raroa
FPSO to be certified for a further 5 years until 2028.
12
Cue Energy Resources Limited Annual Report 2023 Reserves and resources
As at June 30, 2023 Cue has reported 4.6 million barrels of oil equivalent (mmboe) of proven (1P) reserves and
6.3 mmboe of Proven and Probable (2P) reserves. 68% of reported 2P reserves are gas and 32% are oil.
2P Reserves in the Palm Valley field have been reviewed and increased during the year based on the successful
drilling and flow performance of the PV-12 well, which started production in December 2022. Dingo field 2P reserves
have increased as a result of ongoing strong performance from the existing wells and additional field modelling work
undertaken.
Cue’s 2P reserve replacement ratio for FY2023 is 105%, taking into account reserves additions and production during
the year.
2P reserve by Asset (mmboe)
Mahato
1.4
Mereenie
2.0
Palm Valley
0.6
6.3
mmboe
Sampang
PSC
0.8
Maari
0.5
Dingo
1.0
Gas/Oil reserves (mmboe)
Oil
2.0
6.3
mmboe
Gas
4.3
13
30 June 2023Cue Energy Resources Limited Annual Report 2023 Reserves and resources continued
Net to Cue as at 30 June 2023
1P
Developed
1P
Undeveloped
1P
Total
Reserves Proven (1P)
Gas
Oil
Equivalent Gas
Oil
Equivalent Gas
Oil
Equivalent
Country
Field/Permit
PJ MMSTB MMBOE
PJ MMSTB MMBOE
PJ MMSTB MMBOE
AUSTRALIA
Mereenie
Palm Valley
Dingo
NEW ZEALAND Maari
INDONESIA(1)
Sampang PSC
Mahato
TOTAL RESERVES
7.6
3.5
3.0
0.0
2.9
0.0
17.0
0.1
0.0
0.0
0.3
0.0
0.9
1.3
1.3
0.6
0.5
0.3
0.5
0.9
4.0
0.4
0.0
2.3
0.0
0.2
0.0
3.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.4
0.0
0.0
0.0
0.5
8.0
3.5
5.5
0.0
3.1
0.0
20.2
0.1
0.0
0.0
0.3
0.0
1.0
1.3
1.4
0.6
0.9
0.3
0.5
1.0
4.6
2P
Developed
2P
Undeveloped
2P
Total
Reserves Proven & Probable (2P)
Gas
Oil
Equivalent Gas
Oil
Equivalent Gas
Oil
Equivalent
Country
Field/Permit
PJ MMSTB MMBOE
PJ MMSTB MMBOE
PJ MMSTB MMBOE
AUSTRALIA
Mereenie
10.6
0.1
Palm Valley
Dingo
NEW ZEALAND Maari
INDONESIA(1)
Sampang PSC
Mahato
TOTAL RESERVES
3.9
3.5
0.0
3.4
0.0
21.3
0.0
0.0
0.4
0.0
1.3
1.8
1.8
0.6
0.6
0.4
0.6
1.3
5.3
0.9
0.0
2.5
0.0
1.3
0.0
4.6
0.0
0.0
0.0
0.2
0.0
0.1
0.2
0.1
0.0
0.4
0.2
0.2
0.1
1.0
11.5
3.9
6.1
0.0
4.7
0.0
0.1
0.0
0.0
0.5
0.0
1.4
26.1
2.0
2.0
0.6
1.0
0.5
0.8
1.4
6.3
2C Contingent Resource
Country
Field/Permit
AUSTRALIA
Mereenie
Palm Valley
INDONESIA
Jeruk (Sampang PSC)(2)
Paus Biru (Sampang PSC)
TOTAL CONTINGENT RESOURCE
Gas
PJ
13.7
0.6
0.0
7.0
21.3
Oil
Total
MMSTB
MMBOE
0.0
0.0
1.2
0.0
1.2
2.3
0.1
1.2
1.2
4.7
(1)
Indonesian Reserves are net of Indonesian Government share of Production. Production Sharing Contract (PSC) adjustments affect the
net equity across the various reserve categories
(2) Cue interest in Jeruk is 8.18%
LEGEND:
PJ
MMSTB Million Stock Tank Barrels
MMBOE Million Barrels of Oil Equivalent
Petajoules
14
30 June 2023Cue Energy Resources Limited Annual Report 2023
Reserves and resources continued
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 2018 (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 all 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.
Reserves compliance statement
Oil and gas reserves, are reported as at 1 July 2023 and follow the SPE PRMS Guidelines (2018).
This resources statement is approved by, based on, and fairly represents information and supporting documentation
prepared by New Zealand Oil & Gas Assets & Engineering Manager Daniel Leeman. Daniel is a Chartered Engineer with
Engineering New Zealand and holds Masters’ degrees in Petroleum and Mechanical Engineering as well as a Diploma in
Business Management and has over 14 years of experience. Daniel is also an active professional member of the Society
of Petroleum Engineers and the Royal Society of New Zealand. New Zealand Oil & Gas reviews reserves holdings twice
a year by reviewing data supplied from the field operator and comparing assessments with this and other information
supplied at scheduled Operating and Technical Committee Meetings.
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. Since the 17th of January 2017, NZOG has held an equity
of 50.04% of Cue.
Cue currently holds an equity position of 5%, 12.5% and 15% in the Maari, Mahato and Sampang assets respectively.
Production Sharing Contract adjustments at the Mahato and Sampang fields affect the net equity differently across the
various reserve categories.
In the Amadeus basin, Cue currently holds 7.5% equity in the Mereenie field and 15% equity in each of the Dingo and
Palm Valley fields.
For undeveloped reserves, the following project maturity sub-classes are assumed- at Mahato PSC, Undeveloped-
Approved for Development, at Sampang PSC- Justified for Development, at Maari- Justified for Development, at
Mereenie and Dingo- Justified for Development.
For Sampang PSC Contingent Resources, as the developments are not yet sanctioned, the economics and royalties are
not yet known, therefore an assumed net effective equity is used of 15% for Paus Biru and 8.18% for Jeruk.
Estimates are based on all available production data, the results of well intervention campaigns, seismic data, analytical
and numerical analysis methods, sets of deterministic reservoir simulation models provided by the field operators
(OMV, Texcal, Medco and Central Petroleum), and analytical and numerical analyses. Forecasts are based on
deterministic methods.
For the conversion to equivalent units, standard industry factors have been used of 6Bcf to 1mmboe, 1Bcf to 1.05PJ and
1TJ of gas to 163.4 boe.
Net reserves are net of equity portion, royalties, taxes and fuel and flare (as applicable).
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.
The extraction methods are as follows; Maari oil is produced to the FPSO Raroa and directly exported to international oil
markets. At Mahato, it is via EPF facilities which includes an oil and water separation system, with the oil then piped 6km
to the CPI operated Petapahan Gathering Station. At Sampang, gas is gathered from the Wortel and Oyong fields and
piped to shore where it is sold into the Grati power station. In the Mereenie and Palm Valley gas fields gas is gathered
from the wells and ultimately collated into the Amadeus Gas Pipeline where sales vary to different customers within the
region and further afield and at Dingo, gas is sold into Alice Springs and the Owen Springs power plant.
Tables combining reserves have been done arithmetically and some differences may be present due to rounding.
For the 2P change of reserves year-on-year, quoted as the reserves replacement ratio herein, the calculation is
performed via; stated 2P total reserves as at 1 July 2023, divided by the sum of stated 2P total reserves as at 1 July 2022,
less production during FY23, all in millions of barrels of oil equivalent. In this case RRR = 6.3 / (6.6-0.6) = 105%.
15
30 June 2023Cue Energy Resources Limited Annual Report 2023 Reserves and resources continued
2P Reserves and resources reconciliation with 30 June 2022
2P Proven reserves (MMBOE)
Country
Field/Permit
AUSTRALIA
NEW ZEALND
Mereenie
Palm Valley
Dingo
Maari
INDONESIA
Sampang PSC
Mahato
TOTAL RESERVES
30 June 2022
Reserves
Discoveries/
Extensions/
Revisions
Production
30 June 2023
Reserves
2.1
0.6
1.0
0.6
0.8
1.4
6.6
0.0
0.1
0.0
0.0
0.2
0.1
0.3
0.1
0.1
0.0
0.1
0.2
0.1
0.6
2.0
0.6
1.0
0.5
0.8
1.4
6.3
16
30 June 2023Cue Energy Resources Limited Annual Report 2023
Sustainability report
Our commitment
Cue is committed to achieving and maintaining good
health, safety, and environmental standards, which
we consider critical to the success of our business.
We operate in accordance with a Health Safety and
Environment (HSE) Policy approved by our Board of
Directors, and a HSE Management system.
An Operational Risk and Sustainability (ORS) committee,
comprising members of our Board of Directors, convenes
regularly to evaluate the company’s HSE initiatives and
operational risks.
Reflecting on the past year, Cue recorded zero incidents,
zero lost time injuries, and zero significant spills within
our own operations. Regrettably, one Lost Time Injury
(LTI) was reported at the Maari Joint Venture; however,
a comprehensive investigation was conducted, and
remedial actions were taken by the operator. Cue
diligently reviews all incidents and Health and Safety
reports at our projects, contributing input and feedback
to ensure the safe running of all operations.
Our commitment to employee well-being is underscored
by the continual availability of our employee assistance
program, ready to provide aid upon request.
Empowering our communities
Cue continues to support the communities in which
we operate. Through our joint venture partnerships, we
proudly assist our partners in their community activities.
Within our own operations, Cue actively promotes
opportunities for local and regional economic growth,
adhering to our Capturing Local Economic Benefits
Policy, and we encourage our partners to adopt similar
practices.
Our Indonesian operations cultivate close ties with
local communities, offering employment prospects,
community facilities, and aid initiatives.
In the Mahato PSC, Texcal supported various health
initiatives, such as aid for undernourished children and
pregnant women, contributing to local communities
during annual religious festivities, and facilitating the
development of sporting fields in Petapahan village.
Mahato PSC: Land Clearing for sporting fields in Petapahan village
Medco Energy, representing the Sampang PSC joint
venture, placed importance on assisting local fisherman
during the year by distributing fishing equipment. In
addition, they undertake community programs and
infrastructure projects including constructing local roads,
sanitary facilities, and installing external lighting and
community equipment. Medco Sampang also partakes in
tree planting initiatives, including the Peduli 550 Pohon
(care for 550 trees) program.
Mahato PSC: Distribution of aid for stunted children and pregnant
women with Chronic Energy Deficiency
Sampang PSC: village external lighting installation
17
Cue Energy Resources Limited Annual Report 2023
Sustainability report continued
Sampang PSC: Road Construction in Banajar Talela village
Central Petroleum, the operator of Cue’s onshore
Australia Assets in the Northern Territory, maintains a
close partnership with the Traditional Owners in the area,
providing employment and training opportunities at our
operations. A significant number of Centrals’ Northern
Territory staff live locally or are indigenous, and local
contractors are utilised at the operations where possible.
Central Petroleum engages in constructive dialogues
with Traditional owners across Mereenie, Palm Valley and
Dingo, fostering transparency, sharing plans, discussing
performance and gathering input on matters requiring
community support. Central financially supports various
community groups, including literature and indigenous
art programs and operational costs for community centres
in remote communities, as well as sponsoring local AFL
sporting clubs the Pioneer Eagles and Western Arranta
Bulldogs and local softball and basketball programs.
OMV New Zealand continues its partnership with
numerous community organisations in the Taranaki area.
Their enduring relationships encompass supporting the
Taranaki Air Ambulance Service, the Rotakare Scenic
Reserve Trust, and recent involvement in extensive tree
planting projects. OMV New Zealand also supports the
Roderique Hope Trust, offering aid to the increasing
homeless population in Taranaki.
Environment Stewardship
Cue works closely with our operators and joint venture
partners to mitigate the environmental impact of our
operations. Ongoing and recently completed projects
illustrate our dedication:
–
–
Installation of solar panels at the Wortel Wellhead
platform
Implementation of a flare gas recovery project at
Mereenie to reduce flared gas usage
– Evaluation of solar power as a substitute for diesel
power generation at the PB field in the Mahato PSC
– Upgrade of water production facilities on the Maari
FPSO with advanced reverse osmosis units and
improved onboard boiler efficiency to minimise fuel
consumption
We report our estimated emissions risks in compliance
with the Task Force for Climate-Related Financial
Disclosures (TCFD) guidelines within this Shareholder
report. All New Zealand emission are offset though
the purchase of NZUs, while corporate emissions are
mitigated through tree planting initiatives.
Onshore Australia: Sponsorship of local AFL teams
18
Cue Energy Resources Limited Annual Report 2023
Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement
This section outlines the Cue Energy Resources approach to climate disclosure and managing climate risk.
It is structured inline with Taskforce on Climate-Related Financial Disclosures (TCFD) recommendations, using its
recommended headings:
– Governance
– Climate Change Statement
– Strategy
– Risk management
– Metrics and targets
1. Statement on climate change from the chief executive
Cue recognises the scientific consensus of climate change and that climate change will affect our community and
environment.
Our world has begun a transition to a low carbon economy in which the responsibility of contributing to a low emissions
world is shared by everyone, including our company. We all have a role in the transition into the energy future while we also
ensure that our customers and the communities we serve enjoy access to reliable and secure energy at feasible prices.
Our climate strategy places us in the centre of this energy trilemma. Energy markets over the past year have illustrated
the importance of addressing all aspects of the trilemma carefully and together.
In our Australian home, energy markets have been constrained, leading to higher prices, and pressure from regulators to
maximise gas production. Gas will play a critical role in supporting renewables in the East Coast electricity market as coal
fired generation is phased out, and offers one of the most important sources of emissions reductions in Australia.
Indonesia, the world’s fourth-most populous country, has set a target of becoming an advanced economy, and the world’s
fourth-largest economy, by 2045. This is a significant leap ahead from its current position where GDP per capita is 30% lower
than the world average. These ambitious targets are combined with a commitment to reach net zero emissions by 2060.
To make this dual transition, Indonesia urgently needs gas to replace coal for electricity generation and industrial heat. Gas has
an ongoing role supporting the development of renewables in Indonesia, and the transition will not occur without it.
Cue’s New Zealand hydrocarbon production is subject to emissions pricing in New Zealand. Under the New Zealand
Emissions Trading Scheme, Cue purchases credits that offset emissions from our share of the Maari production facilities.
The emissions trading scheme has the economic effect of disincentivising wasteful emissions and rewarding renewable
or low carbon initiatives.
At Cue, we are proud to help deliver the energy needs of these countries in a way that is making a step change in emissions
reductions at the same time that we are supporting human wellbeing in access to reliable and affordable energy.
We are also taking responsibility for our own emissions and, where it’s practical, we reduce our carbon impact and support our
joint venture partners to reduce the carbon footprint of projects that we are involved in. Our corporate offices in Melbourne
and Jakarta have reduced our carbon footprint, which is itself very small and we offset these emissions by planting trees.
Cue recognises and support global efforts to reduce climate change through clear and meaningful policy and market
settings. We believe a collaborative transition is necessary to ensure the success of the transition and recognise that
pricing carbon emissions is likely to be a policy utilised for achieving emissions reductions.
Specific steps we are taking to help reduce carbon intensity while continuing to provide for energy needs include doing
the following:
– We actively identify, manage, report and mitigate material climate risk to our business, and report our governance,
strategy, risk management targets and metrics;
– We meet the carbon reporting requirements of the regions we operate in;
– We promote the benefits of gas as a lower-emitting transition fuel that supports energy reliability and affordability,
and is a strong companion for renewables;
– We review and implement opportunities to reduce the carbon impact of our operations;
support our joint venture partners to look for and implement low carbon solutions; and
–
– We respond meaningfully to stakeholder views and expectations around climate change as it relates to our activities.
This report sets out our assessment of the business risks linked to climate change and how we manage them. We see
opportunity in supporting the transition as well as a concern to manage our footprint responsibly and in the interest of
shareholders and the wider community.
We are pleased to present this report on our progress.
Matthew Boyall
Chief Executive Officer
19
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
2. Governance
TCFD Category
Recommendation
Disclose the organisation’s governance around climate-related risks and
opportunities.
Governance
Describe the board’s oversight of climate related risks and opportunities.
Describe management’s role in assessing and managing climate-related
risks and opportunities.
2.1 Climate-related risk governance process
Summarised in
this document at
2.2, 2.3
2.2, 2.3
2.2, 2.3
BOARD OF DIRECTORS
• Board Charter
• Cue Risk Management System
• ASX Listing Rules and Corporate Governance Code
(E.g. Principal 7, REcognise and Manage Risk)
• Reviews reports from Operational Risk and Sustainability
Committee and manages response
BOARD OPERATIONAL RISK AND
SUSTAINABILITY COMMITTEE
• Reviews risks, including changes in risks reported from
risk owners and management
• Reports risk and opportunities to Board
CUE MANAGEMENT
• Regularly reviews and updates risk register
• Allocates risk to risk owners
• Reports risk register to ORSC
STAFF HEALTH, SAFETY AND
ENVIRONMENT PROCESS
•
Identifies and reviewed site HS
incidents and incorporates these into
the risk register
20
Cue Energy Resources Limited Annual Report 2023
Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
2.2. Board oversight
The CEO is accountable to the Board for ensuring implementation of climate policies. The Board has responsibility for
reviewing all risks, including climate-related risk and opportunities, and ensuring these are appropriately managed to
support delivery of our business strategy.
Recognising and managing risks is an overarching Board accountability under its charter ((2.2 (h))
A copy of the Charter is available in the Corporate Governance section of our website.
The Board reserves to itself specific responsibility to:
“Understand the material risks faced by the Company and ensure the Company has appropriate risk management
strategies and control measures in place and is actively managing these.”
—Board Charter, 3.3 (h).
The process for considering risks is set out in the company’s risk management system framework.
The framework meets the requirements of the ASX Corporate Governance Principles and Recommendations,
Principle 7: Recognise and Manage Risk.
The Board Operational Risk and Sustainability Committee (ORSC) sets, reviews and agrees relevant risk policies,
practices, frameworks, targets and performance. The Committee’s Charter makes it the responsible for approving
environmental policy and monitoring progress, including climate change responses.
The ORSC Charter is also published on our website.
Cue’s risk register assesses risks related to climate policy, climate-related events, and public perception. Examples of
risks are disclosed below in the section titled Climate-Related Risks.
Management is responsible for identifying, assessing and managing risk and reporting this to the Board through
the ORSC. Management risk owners identify and manage risks. Management regularly reviews the corporate risk
framework, including the Risk Register. The ORSC receives a report on updates to the register.
Management retains specialist expertise to review risk management. At an operational level, responsibility for
day-to-day oversight of climate risk and opportunity (including managing climate objectives and targets) rests with
the Chief Executive.
3. Strategy
TCFD category
Recommendation
Strategy
Disclose the actual potential impacts of climate-related risks and
opportunities on the organisation’s businesses, strategy and financial
planning where such information is material.
Describe the climate related risks and opportunities the organisation has
identified over the short, medium and long term.
Describe the impact of these risks on businesses, strategy and financial
planning.
Describe the resilience of the organisation’s strategy, taking into
cosideration different climate related scenarios including a 2 degree
celsius or lower scenario.
Summarised in
this document at
3.1
3.2, 4.3
3.3
3.4
21
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
3.1. Actual and potential impacts of climate-related risks and opportunities on the
organisation’s businesses, strategy and financial planning
The Company is involved in natural gas production for Indonesian and East Coast Australian markets that are energy
constrained and hungry for gas to generate electricity that would otherwise likely come from coal generation.
The Company’s forecasts indicate constrained markets will be sustained, with continued economic value for its
production and value for its reserves.
3.2. Ongoing gas demand will be strong
Short term
Gas demand in the current financial year is high, reflected in high prices. The IEA says global gas supply is set to remain
tight. The global balance is subject to ‘an unusually wide range of uncertainties’ and could return to heightened volatility.
https://www.iea.org/reports/gas-market-report-q2-2023
Conditions for gas demand are different in locations where we operate. Australia is gas constrained, with demand
expected to remain high as coal exits electricity generation.
In Australia, the ACCC says there should be sufficient gas to meet forecast demand across the east coast in 2024, while
the southern states are expected to experience a shortfall. It warns that the major risk is transport and storage capacity to
deliver Queensland’s surplus gas to southern states.
https://www.accc.gov.au/media-release/gas-supply-outlook-for-2024-improves-but-risk-of-winter-shortfalls-remains
In Indonesia, consultancies Rystad, Refinitiv and Wood Mackenzie all expect gas consumption to rise, with the main risk
to consumption volumes being reductions in government subsidies causing prices to rise.
The IEA projects global oil demand will climb by 2.2 mb/d in 2023 to reach 102.1 mb/d, a new record. Growth is forecast
to continue, though more slowly, at 1.1 mb/d in 2024.
https://www.iea.org/topics/oil-market-report
Medium term / Long term
The IEA and other forecasters believe the energy transition has begun.
The IEA says growth in world oil demand will slow through the 2020s, while total demand continues to rise. It estimates
global oil demand will reach 105.7 mb/d in 2028, up 5.9 mb/d compared with 2022. Petrochemicals are the key driver of
global oil demand growth.
https://www.iea.org/reports/oil-2023
In Australia and New Zealand, the transition will likely mean a long-term moderation in demand for oil, while in Indonesia
the outlook depends on the uptake of renewables. Indonesia is heavily energy constrained and rapid uptake of
renewables may moderate growth in demand for oil and gas but is unlikely to reduce overall demand in the medium term.
To support its energy requirements, the Indonesian government has domestic production targets of 1 million barrels of
oil per day and 12 billion cubic feet of gas per day by 2030. This is a 50%-100% increase in 2023 production forecasts.
Overall, the demand picture represents volume and price opportunity, although longer term volumes are uncertain
and volatile.
Cue assesses that existing forward prices adequately capture the balance of future price risks.
3.3. Regulation is likely to increase in australia and new zealand, carbon prices are likely to rise,
and limits are likely to be imposed on emissions from domestic consumption.
In anticipation of higher carbon prices, the Company’s sensitivity testing includes a shadow carbon price when screening
new investments and testing of existing assets.
The Company applies sensitivity testing to its assets and reviews assets for impairment as part of our financial audit and
assurance processes. This testing reviews whether asset valuations have been materially affected by climate-created
conditions, including effects on prices, costs, insurance, financing and abandonment. Sensitivity and impairment testing
manages economic risks to assets. Where those risks change materially, disclosure is made under the Company’s
continuous disclosure obligations.
Resilience to physical risks, such as weather events, is reviewed as a normal part of engineering risk management.
Regulatory risks are mitigated by having revenue producing assets in three diverse jurisdictions.
22
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
The Company complies with existing regulations. Its emissions in New Zealand are subject to an emissions trading
scheme, which requires the Company to purchase carbon credits (NZUs) and surrender one for each tonne of carbon
emitted.
Indonesia has enacted laws that plan to implement a carbon tax, although the implementation has been postponed for
most industries. There is currently no mandated carbon pricing mechanism in Australia for Cue emissions.
Emissions from Scope 3 use (use of oil and gas products by other businesses and consumers) are not able to be reliably
measured, are subject to double counting of total emissions, and are not meaningful in jurisdictions applying national
emissions caps.
All Cue produced gas in Indonesia and most in Australia is used in electricity generation. The high proportion of coal
fired power generation in Australia and Indonesia means that gas from Cue substitutes higher emissions alternative
sources.
3.4. Resilience in alternative scenarios
The Company monitors the International Energy Agency’s World Energy Outlook, and models produced by other
industry forecasters and consultancies.
In all scenarios, we expect to see continuing strong demand for gas in the short term in all our markets.
A more rapid decarbonisation outlook could affect the longer-term outlook.
Gas fields cannot easily or quickly increase supply in response to increased demands, and therefore increased demand
is likely to contribute upward price pressure. In the longer term, the response to lower prices would be likely to be slower
investment in deliverability.
In both Australia and Indonesia, regulatory appetite for capturing carbon emissions is high. In a scenario where CCS
becomes more economic than the cost of emitting, Cue would expect to investigate the potential to reduce emissions
and continue production through CCS. No such abatement plan is currently under consideration, but it exists as a
response in an alternative scenario where emissions pricing is high.
If oil prices fall significantly, our interests in the Mahato and Maari oil fields may be affected. This risk is reflected in the
forward price curve that forms the basis of impairment analysis and reviews of the expected value of the assets.
Resilience to financial or economic changes is tested as part of financial audit and assurance processes, which includes
impairment testing. Financial planning incorporates expected prices and revenues, including carbon costs, insurance
costs, maintenance costs, and the availability of corporate finance.
Specific material risks or changes to financial outlooks are disclosed in financial reports where these are material.
4. Risk management
TCFD category
Recommendation
Risk management
Disclose how the organisation identifies, assesses and manages climate-
related risks.
Describe the process for identifying and assessing climate risks.
Describe processes for managing climate risks.
Describe how processes for identifying, assessing and managing are
integrated into overall risk management.
Summarised in
this document at
4.1
4.1
4.1
4.1
4.1. How we identify, assess and manage climate-related risks
The Company’s Risk Management System Framework applies consistent and comprehensive risk management practices.
Climate risks are recorded in the central risk register, which considers the risks, reviews the controls, assigns ownership of
risk and tracks treatment plans.
Climate risks are identified on an ongoing basis and consideration is given to industry and peer information and
expertise, shareholder and community feedback, regulatory changes, and analysis by our own staff and contractors.
Risk assurance and oversight of climate risk management is provided through internal review by the board Operation
Risk and Sustainability committee.
The Chief Executive has responsibility for climate risk, including risks to individual assets and financial and investment
risks associated with climate change.
23
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
Potential risks to Cue Energy Resources from climate change are assessed under the following headings:
– Policy and Legal,
– Physical (acute and chronic),
– Financial and Market,
– Social/Political/Regulatory, and
– Technological.
All these risks have potential financial and operational implications due to lost profitability and increased delays.
Financial and market risks, and social/political risks also present opportunities associated with more rapid uptake of
natural gas as a lower-carbon replacement for coal.
Risk types and controls are specifically discussed below at 4.3.
4.2. Calculating climate risks in asset models
Physical risks associated with climate are assessed in engineering planning.
For forward price risk associated with production, the company uses impairment testing based on forward market prices
and contracts.
New Zealand
For our New Zealand Maari asset, Cue uses the New Zealand ETS market pricing for carbon emissions.
The Company purchases NZUs annually. (NZUs are New Zealand emissions units, reflecting a tonne of carbon emitted.
One unit must be surrendered to the government each year for each tonne of carbon emitted.)
The expected price of NZUs is modelled in Maari performance forecasts and impairment testing. NZU prices have been
volatile, future prices are modelled with an expectation of government policy toward the carbon market. Government
policy is not expected to allow the carbon price to fall further, while intervention in the market in 2023 suggested an
implicit policy price cap exists at around NZD$80/t.
For physical risks to the Maari production site, the Company carries insurance and equipment is engineered to standards
in excess of expected weather activity.
Australia
There is currently no mandated carbon pricing mechanism in Australia for Cue emissions.
For investment into the Amadeus basin assets, Cue’s advisers used a range of sensitivities to test the economics of the
investment based on market prices in other comparable international regimes.
For physical risks to Amadeus Basin interests, the Company has comprehensive insurance cover. The risks associated
with climate are assessed in engineering planning.
For forward price risk associated with production, the Company uses impairment testing based on forward market prices
and contracts.
The Company uses an internal price to test economics of investments based on market prices in other comparable
international regimes. Expectations of forward prices reflect the market consensus about the likelihood and level of future
carbon charges and market demand. Potential increased carbon pricing or reduced prices are part of the Company’s
sensitivity testing.
Carbon prices have generally conformed to forward curves in the reporting period, while oil and gas commodity prices
have been higher due to concerns about energy security and actual shortages of gas. As a result, the financial risks
associated with climate change are assessed to be limited or positive (upside) as of the date of this report.
Indonesia
Emissions from the company’s interest in the Sampang and Mahato PSCs are considered in performance forecasts and
impairment testing.
Indonesia has enacted laws that plan to implement a carbon tax but the implementation has been postponed for most
industries. A carbon cost mechanism allows coal power plants to buy emissions credits from plants with lower emissions
and renewables.
The Company monitors the economic effects of climate-related policy and climate conditions on the value and
operation of its assets.
Due to uncertainty about future carbon pricing mechanisms and the rapidly changing policy positions in some countries
where the Company operates and investigates new projects, carbon price testing is undertaken using the most available
information and estimates at the time.
24
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
For physical risks to all our asset interests, the Company has comprehensive insurance and regularly participates in
technical review meetings that assess engineering risks to plant.
4.3. Risk types and controls
The table of risks below uses the following time horizon categories:
Short - 0-5 years,
Medium - 5-10 years,
Long - 10+ years.
Risk type
Recommendation
Description
Time Control
Non physical
risks
Policy and legal risks
Reputational and
social license risks
Financial risks
Litigation against companies
and/or directors on climate
grounds (claiming causation
or seeking greater action to
mitigate effects) could have
reputational, development and
operating cost impacts.
Risk of regulatory backlash
against ESG initiatives.
Changing regulations
including banks and
restrictive regulations, taxes
and emissions limits across
all jurisdictions risk viability
of projects.
Stakeholder disengagement
and oppositional activism. Loss
of social license, leading to
project delays or stoppages.
Recruitment and retention risk.
ESG investing affects
availability and cost of capital.
Insurance premiums increase.
Potential for classes of assets
and locations to become
uninsurable.
Capital cost increase if new
environmental standards
require more expensive
supplies relative to alternatives.
Carbon pricing adopted across
jurisdictions, or inconsistently
between them.
Changes to price and cost
forecasts result in stranded
assets or reserves.
s, m, l Board and management
understand their fiduciary duties
around climate change risk.
Internal processes include due
diligence and joint venture
processes to identify and manage
climate risk.
Monitoring the jurisdictions where
we undertake activities.
Strategy of diversifying jurisdictions
to mitigate changes on any
individual regulatory environment.
Reporting on climate related
governance, strategy, risks and
targets.
s, m, l Manage environmental
performance.
Due diligence screening of
commercial opportunities and joint
ventures
s, m, l
s, m, l
Shadow price on carbon to
sensitivity testing in investment
decisions.
Due diligence screening of
commercial opportunities and joint
venture processes.
m, l
Assurance relating to insurance
forecasts.
s, m, l
s, m, l
Access to a range of funding
options.
Reporting on climate related
governance, strategy, risks and
targets.
Jurisdictional diversification to
avoid impact on sudden, unilateral
changes, confiscation or value
destruction by regulation.
25
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
Risk type
Recommendation
Description
Time Control
Physical risks Acute & Chronic
Opportunities Commercial
To increased frequency and
intensity of extreme weather
events such as storms,
flooding, coastals inundation,
lack of water availability, or
slips.
Offshore drilling and
production delayed or shut in
by increased weather events
Global reduction in high
carbon sources such as coal is
increasing demand for natural
gas as a lower carbon partner
to renewables.
m,l
Engineering anticipates
environmental conditions.
Carbon policy provides for review
of climate issues in strategic and
operational decisions.
s,m,l
Strategic preference for natural
gas. Support for our joint venture
partners pursuing low carbon
innovations on sites.
TCFD category
Recommendation
Targets and Metrics
Disclose the metrics and targets used ti assess
and manage relevant climate-related risks and
opportunities where such information is material.
Disclose the metrics used by the organisation to assess
the climate related risks and opportunities in line with
its strategy and risk management process.
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhouse gas emissions, and the related risks.
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets.
Summarised in
this document at
4.2
4
5.1
The company does not report
Scope 3 emissions as the
information does not exist.
5.2, 5.3
5. Measurements and targets
The TCFD recommends disclosure of:
–
–
–
the measures we use to assess climate-related risks and measure them,
emissions (by Scope 1, 2 and 3), and
the targets that we use to manage climate-related risk.
Measures used to assess risks and measures them are described in section 4, above.
Scope 1 and 2 emissions are disclosed below in Table 5.1.
Scope 1 and 2 emissions relate to Cue’s share of emissions from production facilities in New Zealand, Australia and
Indonesia and corporate office activities.
The Company does not report Scope 3 emissions as the information is not obtainable from end users, and reporting
would double count emissions across the economies in which we operate.
26
Cue Energy Resources Limited Annual Report 2023 Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
5.1. Metrics
Total greenhouse gas emissions
Oil and gas operations
Emissions from producing oil and gas fields are reported below and include Cue’s share of Scope 1 and scope 2 emissions
from operations.
The company makes use of the best information or estimates available for reporting CO2 emissions. Maari and Sampang
PSC field Operators report detailed monthly emissions. Central Petroleum, operator of Cue’s Onshore Australia
Assets, reports emission on the NGER. FY23 data is not available at the time of the report and is not included in totals or
comparisons.
Corporate offices
An annual estimate is prepared of carbon emissions from corporate activity, using inputs such as electricity bills and air
travel.
Scope 1 Emissions
FY21*
FY22
FY23
Emissions (tCO2e)**
boe produced**
Intensity Factor (tCO2e per boe)
8,720
8,311
8,442
352,338
452,251
388,648
0.025
0.018
0.022
*
**
Mahato Emissions for 2021 are not included as the data was not available for the first part year
Amadeus Basin emissions data is not included due to timing of the Operators NGER reporting and will be published by Cue when
available later this year
Scope 2 Emissions
Total Office emissions (Melbourne & Jakarta)
Samarinda Warehouse
Sampang
Total Scope 2 Emissions
CUE Emissions (tCO2e) FY23
Previous Year
7.7
5.6
279.8
293.1
15.1
5.6
319.7
340.4
Cue offset estimated office and air travel emissions through the planting of approximately 100 trees with Greenfleet
Australia, who plant native trees in legally protected biodiverse forests to capture carbon emissions.
CO2e(t)/boe
produced
Cue Emissions Intensity
0.030
0.025
0.020
0.015
0.010
0.005
0.000
FY21
FY22
FY23
Onshore Australia data excluded due to timing of Operators NGER reporting. Mahato emissions data was not reported
for FY21.
27
Cue Energy Resources Limited Annual Report 2023
Taskforce on Climate–Related Financial
Disclosures (TCFD) Statement continued
Our Results: Targets for FY2023
Focus Area
Target
Impact
Status
Reporting
Continue to report Scope 1 and 2 emissions Disclosure of risks,
impacts and climate
responsiveness
Complete, Ongoing
refinement of data
collection and
reporting
Reporting
Reporting
Maintain TCFD statements and reporting
online and in the 2022 Annual Report.
Disclosure of risks,
impacts and climate
responsiveness
Reported for FY 22 in
October 2022 Annual
report
Continue to enhance Mahato emissions
collection from Operator
Disclosure of risks,
impacts and climate
responsiveness
Policy and Legal
Review climate change policy and update if
necessary
Disclosure of climate
strategy
Commercial
Apply internal price on carbon to investment
decisions
Management of carbon
pricing risk
Emissions reductions
Participate with JV partners to identify
material emissions reductions or offsets at
producing sites
Ongoing mitigation of
emissions
Ongoing. Standardised
reporting is expected
to be implemented in
Mahato PSC in FY24
Publication in annual
report. Available on
website
Actioned as required
Material Emissions
reduction projects
underway at Maari
and Mereenie
Emissions reductions Offset 100% of emissions from head office
and corporate travel.
Net zero from our own
operations
FY23 offsetting of
60T Co2 through tree
planting
Emissions reductions
Support office sustainability improvement
opportunities.
Sustained emissions
reductions
Ongoing
Our Intentions : TCFD Targets for FY2024
Focus Area
Target
Impact
Measured by
Reporting
Reporting
Reporting
Reporting
Continue to report Scope 1 and 2 emissions.
Consider applicability of Scope 3 emissions
reporting
Disclosure of risks,
impacts and climate
responsiveness
Publication in Annual
report and website.
Adopt reporting requirements under
Treasury proposals for Climate-related
disclosures in line with published timelines
Disclosure of risks,
impacts and climate
responsiveness
Publication in Annual
report and website.
Continue to enhance Mahato emissions data
collection from Operator
Disclosure of risks,
impacts and climate
responsiveness
Publication in Annual
report and website.
Report on Australian Onshore assets Carbon
emissions when available and update
company published data
Disclosure of risks,
impacts and climate
responsiveness
Publication in Annual
report and website.
Policy and Legal
Review climate change policy and update if
necessary
Disclosure of climate
strategy
Publication in Annual
report and website.
Commercial
Apply internal price on carbon testing to
investment decisions
Management of carbon
pricing risk
Publication in Annual
report and website.
Emissions reductions
Participate with JV partners to identify
material emissions reductions or offsets at
producing sites
Ongoing mitigation of
emissions
Publication in Annual
report and website.
Emissions management Offset 100% of emissions from head office
and corporate travel.
Net zero from our own
operations
Publication in Annual
report and website.
28
Cue Energy Resources Limited Annual Report 2023 Directors’ report
Cue Energy Resources Limited
Directors' report
30 June 2023
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Consolidated Entity') consisting of Cue Energy Resources Limited (referred to hereafter as the 'company' or 'parent
entity') and the entities it controlled at the end of, or during, the year ended 30 June 2023.
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 AO
Richard Malcolm
Rod Ritchie
Samuel Kellner
Marco Argentieri
Chief Executive Officer
Matthew Boyall
Chief Financial Officer and 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 at: https://www.cuenrg.com.au/site/About-Us/corporate-directory.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Financial performance
The Consolidated Entity reported a net profit after tax of $15.21 million for the year ended 30 June 2023 (FY 2023), as
compared to a net profit of $16.07 million for the year ended 30 June 2022 (FY 2022). This was mainly attributable to a $5.69
million profit after tax on $18.71 million in revenue generated from the Mahato PSC, which drilled an additional 7 production
wells during the year, increasing production from 4,700 bopd at the beginning of FY 2023 to 6,400 bopd at 30 June 2023.
Maari’s net profit after tax decreased by $1.13 million to $4.22 million on $9.51 million in revenue for FY 2023 (FY 2022: net
profit after tax of $5.35 million), primarily arising from an increase in production costs of $1.61 million.
The onshore Australian assets, acquired on 1 October 2021, contributed $1.02 million profit after tax (FY 2022: loss after tax
of $0.50 million) on $11.89 million in revenue for the year ended 30 June 2023 (FY 2022: $8.21 million), primarily as a result
of a full year's results being reflected in FY 2023 supplemented by additional gas revenue generated by the commencement
of production at the PV-12 well in December 2022. The FY 2023 net profit after tax includes $2.22 million in exploration and
evaluation expenses in FY 2023 (FY 2022: $1.53 million).
The Group also recognised a $9.51 million deferred tax asset (30 June 2022: $1.78 million) on carried forward tax losses it
now considers it will be able to use to offset future taxable income.
6
29
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Business Risks
The Consolidated Entity is subject to risks that are specific to the Consolidated Entity and its business activities, as well as
general risks.
Exposure to oil and gas prices
The Consolidated Entity is exposed to global commodity price variability for oil products produced in Indonesia, New Zealand
and Australia which are sold on a US dollar Brent crude benchmark price basis.
The majority of the Consolidated Entity ’s gas production is sold on fixed price contracts and is exposed to changes in the
gas price on renewal or signing of new contracts. Gas sold in Australia on the short term market is exposed to daily variations
in price. In addition to normal market operations, gas prices for Australian sales are subject to risk of government intervention,
including under the Competition and Consumer Amendment (Gas Market) Bill 2022.
Oil and Gas prices can be volatile. A decline in the price of oil and gas may have a material adverse effect on Consolidated
Entity’s financial performance.
The valuation of oil and gas assets is affected by expectations of future oil and gas prices. An extended or substantial decline
in oil and/or gas prices or demand, or an expectation of such a decline, may reduce the expected cash flows and/or quantity
of reserves and resources classified in relation to the associated oil and gas assets, which may lead to a reduction in the
valuation of these assets.
Foreign exchange risk
The Consolidated Entity is exposed to foreign currency risk on cash and cash equivalents, oil sales recoverable value of oil
and gas assets and capital commitments that are denominated in foreign currencies.
The Consolidated Entity ’s financial report is presented in Australian Dollars and the functional currency for its operations in
New Zealand and Indonesia is the United States Dollar (USD). The majority of the Consolidated Entity ’s costs are incurred
in currencies other than Australian Dollars and revenue mainly received in USD. Accordingly, it is subject to fluctuations in
the rates of currency exchange between these currencies, the primary impact of which is reflected in other comprehensive
income.
The Consolidated Entity currently does not utilise hedging or other derivate instruments. The Consolidated Entity’s foreign
exchange risk exposures are mitigated through natural hedging of cost and revenue currencies, where appropriate.
Ability to access funding
Exploration, development, and production can involve significant capital expenditure. If cash flows decrease or the
Consolidated Entity is not able to access necessary funding, this may result in postponement or reduction of capital
expenditures, relinquishment of rights in assets or otherwise may have an adverse effect on the Consolidated Entity’s
operations and financial performance.
The Consolidated Entity’s ability to raise additional funds would be subject to, among other things, factors beyond the control
of the Consolidated Entity and its Directors, including cyclical factors affecting the economy, investment climate for the energy
sector and share markets generally. If for any reason the Consolidated Entity was unable to raise future funds, its ability to
realise its strategy would be significantly affected.
Joint Operations
The Consolidated Entity participates in its business activities through minority interest in joint operations operated by other
companies, governed by operating agreements. Under these agreements, the Consolidated Entity does not control the
approval of work programmes and budgets and other project partners may participate in activities without the Consolidated
Entity's approval. The Consolidated Entity may also be required to participate in activities which it did not approve, have its
interests diluted or not gain the benefit of an activity.
Project agreements can be subject to differences in interpretation and implementation with Operator responsibility for day to
day operations. As a result, the Consolidated Entity may be exposed to operational and financial obligations outside of its
control.
The Mahato PSC and subsequent Indonesian Government regulations contain terms which may require the dilution of the
existing partners in the joint operations for no consideration, including the Consolidated Entity’s, interests by up to 10% after
production has commenced.
30
8
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
We work closely with our partners to achieve mutually beneficial outcomes.
Reserves and resources
Estimating oil and gas reserves and resources is subject to significant uncertainties associated with technical data and the
interpretation of that data, future commodity prices, and development and operating costs. There can be no guarantee that
the Consolidated Entity will successfully produce the volume of hydrocarbons that it estimates as reserves or that
hydrocarbon resources will be successfully converted to reserves.
The Consolidated Entity’s reserves and resources estimates are prepared by qualified, experienced engineers in accordance
with the 2018 update to the Petroleum Resources Management System sponsored by the Society of Petroleum Engineers,
World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers
(SPE-PRMS).
Exploration and Development
The Consolidated Entity’s projects are at various stages of exploration, development and production. Oil and gas exploration
and development activities can be high-risk undertakings and there can be no assurance that the exploration or development
of any projects will result in the discovery of, and ability to realise any economic resources. Even if an apparently viable oil
and gas resource is identified, there is no guarantee that it can be economically produced.
Exploration and development activities may be affected by a range of factors including geological conditions, limitations on
activities due to seasonal weather patterns or adverse weather conditions, unanticipated operational and technical difficulties,
difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated
reservoir problems which may affect production volumes and/or costs, industrial disputes, unexpected shortages and
increases in the costs of plant and equipment, native title processes, changing government regulations and many other
factors beyond the Consolidated Entity’s control.
Production
The Consolidated Entity’s oil and gas production is exposed to interruptions which may result from mechanical or technical
failure, pipeline access, project delays or other unforeseeable events. Restrictions on the movement and supply of personnel
and products due to external influences such as geopolitical unrest or conflict and a pandemic may also cause interruption
to production.
A significant interruption to production could result in loss of revenue and additional costs to repair or replace equipment.
Regulatory risk
The Consolidated Entity currently operates in Australia, Indonesia and New Zealand and is subject to changes in government
policy or statutory changes that may affect our business operations and financial position. A change in government regime
may significantly result in changes to fiscal, monetary, property rights and other issues which may result in a material adverse
impact on Consolidated Entity’s business and its operations.
Profitability may be affected by changes in government taxation and royalty policies or the interpretation and application of
policies in our operating jurisdictions.
The Consolidated Entity monitors changes in relevant regulations and engages with regulators and governments to ensure
policy and law changes are appropriately understood. Any failure to comply with or changes to applicable laws, regulations
or permits, even if non-compliance is inadvertent, could result in material fines, penalties, changes in the cost of operations,
additional investment or other liabilities. In extreme cases, non-compliance with or amendments applicable laws, regulations
or permits could result in suspension of activities or forfeiture of one or more of the Consolidated Entity’s projects.
Access to infrastructure
Our oil and gas sales are dependent on access to third party owned infrastructure. Infrastructure failure, such as pipelines
and processing facilities, increased tariffs or restrictions on access to third party infrastructure may have a material effect on
financial performance.
The Consolidated Entity works with its project partners, customers and infrastructure suppliers to understand and mitigate
the risk of delays or failure.
9
31
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Permit Risk
All petroleum licences held by the Consolidated Entity are subject to the granting and approval of relevant government bodies
and ongoing compliance with licence terms and conditions, including periodic requirements for renewal or extension.
The Consolidated Entity monitors project operators’ tenure management processes and standard operating procedures to
minimise the risk of losing tenure.
Litigation
The Consolidated Entity is not currently involved in any litigation. However, in the ordinary course of business we may
become involved in litigation and disputes, for example with our partners, contractors or employees over a broad range of
matters. Any such litigation or dispute could involve significant economic costs and damage to relationships with partners or
other stakeholders. Outcomes of any litigation may have an adverse impact on the Consolidated Entity’s business, market
reputation and financial condition and financial performance.
Health Safety and Environmental risk
Exploration, development, production and transportation of oil and gas involves a variety of risks which may impact the health
and safety of personnel, the community and the environment.
Natural disasters, operational error and equipment failure, amongst other things, could result in oil and gas leaks or spills or
loss of well control which may lead injury or loss of life, damage to equipment and facilities, legal liability and reputational
damage.
Losses or liabilities from such events could reduce revenue or increase costs and materially impact Consolidated Entity’s
financial position.
The Consolidated Entity works with project operators to ensure processes and procedures are in place to minimise these
risks and seeks to maintain appropriate insurance policies to mitigate against the financial effects of any incident.
Climate change and the development of alternative energy sources
The Consolidated Entity's operating environment is and will continue to be impacted by the continually developing impact of
climate change and the response needed to ensure the well-being of the global community. The adverse impact of climate
change continues to impact the search for and development of alternative energy sources to those historically based on the
use of hydrocarbons in the generation of energy for industrial and private use.
The Consolidated Entity is conscious of its responsibilities in respect of minimising the impact of its operations on the
environment, however, fundamental shifts in the commercial availability of alternative energy sources developed as a result
of the adverse impact of climate change may impact the Consolidated Entity's future operational and financial performance.
Digital and Cyber Security
Any information technology system is potentially vulnerable to interruption and/or damage from a number of sources,
including but not limited to computer viruses, cyber security attacks and other security breaches, power, systems, internet
and data network failures, and natural disasters.
The Consolidated Entity is committed to preventing and reducing cyber security risks through outsourcing the IT environment
which it utilizes to a reputable service provider.
Reliance on key personnel
The Consolidated Entity’s success depends to a significant extent upon its key management personnel, as well as other staff
and technical personnel including those employed on a contractual basis. The loss of the services of such personnel or the
reduced ability to recruit additional personnel could have an adverse effect on the Consolidated Entity's performance.
We maintain a mix of permanent staff and expert consultants to advance its projects and ensure access to multiple skill sets.
The remuneration policy is reviewed regularly to ensure it appropriately reflects current and expected employment conditions
and best practices.
Refer to the Financial and Operations review preceding this Director's Report.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Consolidated Entity during the financial year.
32
10
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
On 30 August 2022, the Consolidated Entity issued 3,649,298 options over fully paid ordinary shares for an exercise price
of $0.089 (8.9 cents) per fully paid ordinary share, with an expiry date of 1 July 2027.
Matters subsequent to the end of the financial year
On 1 July 2023, 3,473,653 options over fully paid ordinary shares in the Company with an exercise price of $0.07 (7 cents)
expired.
On 10 July 2023, $3.07 million was received from Maari oil sales in June 2023, reducing the trade and other receivables in
note 10.
On 23 August 2023, the Consolidated Entity announced the results from the drilling and testing at the BA-01 well in the
Mahato PSC. The conclusion reached was that no hydrocarbons had been identified. The Mahato PSC partners will continue
to identify and assess further exploration opportunities in Mahato's PB Field.
No other matter or circumstance has arisen since 30 June 2023 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:
●
●
●
●
●
Progress on Paus Biru and the Final Investment Decision;
Further exploration and development drilling in the Mahato PSC;
Changes in New Zealand legislation and the impact it may have on the scope and funding of the Maari field
decommissioning obligations;
Continuing volatility in global energy markets; and
Actively seeking to acquire new production opportunities.
The Russian-Ukrainian conflict continues to develop, the result of which have had significant global macro-economic impacts,
including energy prices. Related impacts include volatility in commodity prices and currencies, supply-chain and travel
disruptions, disruption in banking systems and capital markets, increased costs and expenditures and cyberattacks.
The Board and management team continue to assess the potential impacts on the business, however given the continued
uncertainties the future financial impact, if any, cannot be determined.
Environmental regulation
Within the last year there have been no incidents, lost time injuries or 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. Cue Energy Resources Limited continues to monitor the progress of reported incidents and work with the
joint operation partners and operators to improve overall health and safety and minimise any impact on the environment.
11
33
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Alastair McGregor
Non-Executive Chairman
BEng, MSc
Mr McGregor 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.
Mr McGregor is also a director of New Zealand Oil & Gas. In addition, Mr McGregor 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 Mr McGregor spent 12 years as a banker with Citigroup and Salomon Smith
Barney. Mr McGregor holds a BEng(Hons) and an MSc in Aeronautical Engineering.
New Zealand Oil & Gas Limited (NZOG)
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Member, Remuneration and Nomination Committee
None
None
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Andrew Jefferies
Non-Executive Director
BE Hons (Mechanical), MBA, MSc in petroleum engineering, GAICD, Certified
Petroleum Engineer
Mr Jefferies is managing director of NZOG. 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. Mr Jefferies 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, Holland and is currently
based in New Zealand.
NZOG Offshore Limited
NZOG
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Member, Audit and Risk Committee
Member, Remuneration and Nomination Committee
Member, Operational Risk and Sustainability Committee
Member, Commercial Committee
8,000 fully paid ordinary shares
None
34
12
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Name:
Title:
Experience and expertise:
Other current directorships:
Peter Hood AO
Non-Executive Director
Mr Hood is a professional chemical engineer with 50 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
and a Non-Executive Director of De Grey Mining 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
Former directorships (last 3 years): None
Special responsibilities:
Chair, Independent Board Committee
Member, Audit and Risk Committee
Member, Commercial Committee
80,000 fully paid ordinary shares
None
Interests in shares:
Interests in options:
Name:
Title:
Experience and expertise:
Richard Malcolm
Non-Executive Director
Mr Malcolm is a professional geoscientist with over 40 years of varied oil and gas
experience within seven international markets including Australia/NZ/PNG, UK North
Sea/West of Shetlands, Gulf of Mexico and the Middle East/ North Africa.
His latter roles from 2006 to 2013 included Managing Director of OMV UK and
Managing Director of Gulfsands Petroleum, an AIM listed exploration and production
company with operations in Syria, Tunisia, Morocco, USA and Colombia.
He is currently a Non-executive Director of Larus Energy Limited.
Larus Energy Limited
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Chairman, Remuneration and Nomination Committee
Member, Independent Board Committee
Member, Operational Risk and Sustainability Committee
300,000 Fully Paid Ordinary Shares
None
13
35
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Rod Ritchie
Non-Executive Director
B.Sc
Mr Ritchie is a Non-Executive director of NZOG. Mr Ritchie joined NZOG's board in
2013. He began his career as a petroleum engineer with Schlumberger and after 28
Years and then joined OMV where he worked for a further 12 years. Mr Ritchie has
over 45 years of global experience in leadership roles and as a Health, Safety,
Environmental and Security (HSSE) executive in the Oil and Gas industry, including
being the corporate Senior Vice President of HSSE and Sustainability at OMV based
in Vienna, Austria. He has also worked closely with the International Association of Oil
and Gas produces (IOGP) to create Industry best practice standards for the Oil and
Gas Industry. He is also an active leadership and cultural change consultant, and an
author on the subject of Safety Leadership and several Society of Petroleum Engineers
papers on the subject of HSSE and safety Leadership. More recently he has qualified
as an executive and leadership coach with the Australian Institute of Professional
coaches (AIPC) and also works with the CEO institute in Perth WA as a syndicate chair.
NZOG
Coromandel Pure Honey Limited
Former directorships (last 3 years): None
Special responsibilities:
Member, Remuneration and Nomination Committee
Chair, Operational Risk and Sustainability Committee
None
None
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
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 NZOG, 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.
NZOG
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
36
14
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Name:
Title:
Experience and expertise:
Mr Marco Argentieri
Non-Executive Director
Mr Argentieri is a Director of NZOG, Executive Vice President of O.G. Energy, and a
member of the Board of Directors of both O.G. Energy and O.G. Oil & Gas. Prior to
O.G. Energy, Mr Argentieri worked extensively in finance, offshore oil services and
shipping. Mr Argentieri started his career as an attorney at the New York offices of
Skadden, Arps, Slate, Meagher & Flom LLP and Latham & Watkins LLP. He holds a
B.A. from the University of Rochester, a J.D. from New York University and an MBA
from Columbia University.
NZOG
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Chair, Audit and Risk Committee
Member, Commercial Committee
None
None
'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
Ms Melanie Leydin, BBus (Acc. Corp Law) CA FGIA
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the Institute
of Chartered Accountants, Fellow of the Governance Institute of Australia and is a Registered Company Auditor. She
graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and from February 2000 to October
2021 was the principal of Leydin Freyer. In November 2021, Vistra acquired Leydin Freyer and, Melanie is now Vistra
Australia’s Managing Director. Vistra is a prominent provider of expert advisory and administrative support to Fund,
Corporate, Capital Market and Private Wealth clients.
Melanie has over 25 years’ experience in the accounting profession and over 15 years’ experience holding Board positions
including Company Secretary of ASX listed entities. She 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
Full Board
Attended
Full Board
Held
Remunerati
on and
Nomination
Committee
Attended
Remunerati
on and
Nomination
Committee
Held
Audit and
Risk
Committee
Attended
Audit and
Risk
Committee
Held
Operational
Risk and
Sustainabilit
y Committee
Attended
Operational
Risk and
Sustainabilit
y Committee
Held
Alastair McGregor
Andrew Jefferies
Peter Hood
Richard Malcolm
Rod Ritchie
Samuel Kellner
Marco Argentieri
5
5
5
5
5
3
5
5
5
5
5
5
5
5
3
3
-
3
3
-
-
3
3
-
3
3
-
-
-
2
2
-
-
-
2
-
2
2
-
-
-
2
-
4
-
4
4
-
-
-
4
-
4
4
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
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 2023, in accordance with the Corporations Act 2001 and its regulations.
15
37
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Key management personnel (KMP) 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)
Richard Malcolm (Non-Executive Director)
Rod Ritchie (Non-Executive Director)
Samuel Kellner (Non-Executive Director)
Marco Argentieri (Non-Executive Director)
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 “Executive” 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.
(C) Details of remuneration
The structure of Non-Executive Director and Executive remuneration is separate and distinct.
38
16
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
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.
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 base cash salary and fees
Short term incentive (STI) programme benefits, including cash bonuses
Long term benefits in the form of long service leave;
Superannuation entitlements post employment; and
Equity settled benefits, including but not limited to long term incentives in the form of options and/or performance rights.
Fixed compensation
Fixed compensation consists of base salary (which is calculated on a total cost base and including any fringe benefits tax
("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. The Board last reviewed the salaries paid to peer company executives in determining the salary of
the Company’s KMP at the end of the 2022 financial year. 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 as required. There is no
guaranteed base salary increase included in any executive’s contracts.
Cash bonuses
A cash bonus was paid to the CEO during this financial year on the achievement of his annual STI, based on actual
performance against key performance indicators (KPIs).
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
Original Agreement effective from 1 July 2017, with salary terms revised on 6 October 2022.
Term: Permanent employment contract, no fixed terms.
Details: Base salary of $400,800 per annum plus superannuation, up to the super guarantee maximum employer
contribution, to be reviewed annually by the Board. Mr Boyall is also entitled to short-term incentive up to 30% (2022: 30%)
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. Mr Boyall’s entitlements to long-term incentives is determined at the Board’s sole discretion.
Notice period: 3 months
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:
17
39
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
KMP Compensation - 30 June 2023
Short-term
benefits
Cash salary
and fees
$
Deemed
short term
benefits*
$
Short-term benefits
Cash
bonuses
$
Consulting
Fees
$
Long-term
benefits
Long
service
leave
$
Post
employment
Share-based
payments
Superannua
tion
$
Equity-
settled
$
Total
$
-
-
68,096
63,301
70,026
-
-
94,340
59,416
-
-
-
59,416
70,026
-
-
-
-
-
-
-
-
-
-
-
12,000
-
-
-
-
-
-
-
-
-
-
-
7,235
6,725
-
-
-
-
-
-
-
-
-
-
94,340
59,416
75,331
70,026
82,026
59,416
70,026
398,592
600,015
-
283,198
90,180
90,180
-
12,000
27,021
27,021
27,500
41,460
50,688
593,981
50,688 1,104,562
30 June 2023
Directors
Alastair
McGregor*
Andrew Jefferies*
Peter Hood
Richard Malcolm
Rod Ritchie
Samuel Kellner*
Marco Argentieri*
Other Key
Management
Personnel:
Matthew Boyall**
*
As in previous years, during the year ended 30 June 2023, Alastair McGregor, Andrew Jefferies, Samuel Kellner and
Marco Argentieri declined to receive compensation for the provision of Directorial services from the Company, nor was
any paid to any related parties on their behalf. The deemed compensation shown above reflects the estimated
compensation paid by those Directors’ employers considered attributable to the company for services provided.
Total remuneration of $1,104,562 for FY 2023 includes the presentation of deemed compensation amounting to
$283,198. The entire value of the $283,198 (i) solely arose from the technical application of disclosure requirements of
the accounting standards, and (ii) the $283,198 is deemed only and neither the Company nor any member of the
Consolidated Entity paid or in any way settled or has obligations to settle the aforementioned deemed remuneration of
$283,198. The Consolidated Entity's actual obligations for the settlement of Directors' and other key management
personnel’s remuneration for FY 2023 is $821,364.
**
Matthew Boyall's cash bonus consists of $90,180 for achieving a 75% performance rating against 2022 key performance
indicators (KPIs). The KPIs were measured against the actual results for the calendar year ending 31 December 2022.
Mr Boyall is entitled to up to 30% of base salary in short term incentives.
40
18
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
KMP Compensation - 30 June 2022
Short-term
benefits
Short-term
benefits
Restated
Deemed
short term
benefits*
$
Cash salary
and fees
$
Short-term
benefits
Cash
bonuses
$
Long-term
benefits
Long
service
leave
$
Post
employment
Share-based
payments
Superannua
tion
$
Equity-
settled
$
Total
Restated
$
-
-
64,473
59,932
66,000
-
-
88,916
56,000
-
-
-
56,000
66,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,527
6,068
-
-
-
-
-
-
-
-
-
-
88,916
56,000
71,000
66,000
66,000
56,000
66,000
366,868
557,273
-
266,916
73,085
73,085
9,606
9,606
27,500
40,095
61,175
538,234
61,175 1,008,150
30 June 2022
Directors
Alastair McGregor*
Andrew Jefferies*
Peter Hood
Richard Malcolm
Rod Ritchie
Samuel Kellner*
Marco Argentieri*
Other Key Management
Personnel:
Matthew Boyall**
*
Total remuneration of $1,008,150 has been restated by $266,916 for FY 2022 as a result of the presentation of deemed
compensation, as compared to nil previously disclosed. The entire value of the $266,916 increase (i) solely arose from
the technical application of disclosure requirements of the accounting standards, and (ii) the $266,916 is deemed only
and neither the Company nor any member of the Consolidated Entity paid or in any way settled or has obligations to
settle the aforementioned deemed remuneration of $266,916. The Consolidated Entity's actual obligations for the
settlement of Directors' remuneration is unchanged from that which has been previously reported.
**
Matthew Boyall's cash bonus consists of $73,085 for achieving a 65.7% performance rating against 2021 key
performance indicators (KPIs). The KPIs were measured against the actual results for the calendar year ending 31
December 2021. Mr Boyall is entitled to up to 30% of base salary in short term incentives.
The proportion of remuneration linked to the Consolidated Entity's performance and the fixed proportion are as follows:
Name
Directors:
Alastair McGregor*
Andrew Jefferies*
Peter Hood
Marco Argentieri*
Richard Malcolm
Rod Ritchie
Samuel Kellner*
Other Key Management
Personnel:
Matthew Boyall
Fixed
remuneration
Fixed
remuneration
At risk - STI
30 June 2023 30 June 2022 30 June 2023 30 June 2022 30 June 2023 30 June 2022
At risk - LTI
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85%
86%
15%
14%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Alastair McGregor, Andrew Jefferies, Samuel Kellner and Marco Argentieri were not directly remunerated by the Company
during the years ended 30 June 2023 and 2022.
19
41
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
(D) Equity based remuneration
Overview of share options
The Board in their meeting held on 24 June 2019 approved the Employee Share Option Plan ('ESOP'), which was
subsequently approved by shareholders at 2019 Annual General Meeting.
The ESOP has been developed to provide the greatest possible flexibility in choice to the Board in implementing the executive
incentive schemes. The ESOP enables the Board to offer employees a number of Options.
A summary of material terms of the ESOP is set out as follows:
●
●
●
●
●
●
●
●
the ESOP sets out the framework for the offer of Options by the Company, and is typical for an ESOP;
in making its decision to issue Options, the Board may decide the number of securities and the vesting conditions which
are to apply in respect of the securities. The Board has flexibility to issue Options having regard to a range of potential
vesting criteria and conditions;
in certain circumstances, unvested Options will immediately lapse and any unvested Shares held by the participant will
be forfeited if the relevant person is a “bad leaver” as distinct from a “good leaver”. Unless the Board determines
otherwise at its sole discretion, Options held by good leavers will expire upon cessation of employment;
if a participant acts fraudulently or dishonestly or is in breach of their obligations to the Company or its subsidiaries, the
Board may determine that any unvested Options held by the participant immediately lapse and that any unvested Shares
held by the participant be forfeited;
in certain circumstances Options can vest early upon a change of control event as defined under the Plan rules;
the total number of Options and Shares which may be offered by the Company under these Rules shall not at any time
exceed 5% of the Company's total issued Shares when aggregated with the number of Options and Shares issued or
that may be issued as a result of offers made at any time during the previous three year period under an employee
incentive scheme;
the Board has discretion to impose restrictions (except to the extent prohibited by law or the ASX Listing Rules) on
Shares issued or transferred to a participant on vesting of an Option or a Performance Right, and the Company may
implement appropriate procedures to restrict a participant from so dealing in the Shares; and
the Board is granted a certain level of discretion under the Employee Incentive Programme (EIP), including the power
to amend the rules under which the EIP is governed and to waive vesting conditions, forfeiture conditions or disposal
restrictions, including but not limited to the execution of the EIP's terms upon termination of employment.
The options will vest on the date determined by the Board and as specified in the Invitation Letter.
3,649,298 options were granted under the ESOP during the financial year to 30 June 2023 (2022: 4,599,003). 216,124
options were forfeited due to an employee departure from the Company during the year. These options did not have any
other vesting conditions other than continuing employment and the related time of service through the vesting date.
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 2023.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of KMP in this financial year
or future reporting years are as follows:
Number of
options
Vesting date and
Name
granted
Grant Date
exercisable date
Expiry date
Exercise
price (Cents)
Fair value
per option
at grant date
(Cents)
Matthew Boyall
Matthew Boyall
Matthew Boyall
Matthew Boyall
Matthew Boyall
1,288,338 29 July 2019
1,399,595 4 October 2019
1,102,607 16 July 2020
1,428,843 23 July 2021
1,714,612 30 August 2022
1 July 2021
1 July 2022
1 July 2023
1 July 2024
1 July 2025
1 July 2023
1 July 2024
1 July 2025
23 July 2026
1 July 2027
7.000
9.000
11.700
7.800
8.900
4.000
5.900
5.100
3.900
3.200
42
20
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Options granted carry no dividend or voting rights.
(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 2023.
2023
$'000
2022
$'000
2021
$'000
2020
$'000
2019
$'000
Production revenue from continuing operations
Profit/(loss) before income tax expense from
continuing operations
Profit/(loss) after income tax expense
Total KMP remuneration settled by the
Consolidated Entity
51,605
44,439
22,449
23,916
25,730
19,881
15,211
21,756
16,068
(7,442)
(12,743)
5,099
1,313
12,856
8,549
821
741
659
690
651
2023
2022
2021
2020
2019
Share price at start of year (cents)
Share price at end of year (cents)
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
Dividend ($'000)
6.50
5.60
2.18
2.18
-
6.00
6.50
2.30
2.30
-
9.50
6.00
(1.83)
(1.83)
-
8.30
9.50
0.19
0.19
-
5.70
8.30
1.22
1.22
-
The Company remuneration policy also seeks to reward staff members on achieving non-financial key performance
indicators, including safety and operational performance.
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
Richard Malcolm
Other Key Management Personnel
Matthew Boyall
Balance at
the start of
the year
Additions
Disposals/
other
Balance at
the end of
the year
-
8,000
80,000
300,000
-
200,000
588,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,000
80,000
300,000
-
200,000
588,000
*
Alastair McGregor, Rod Ritchie, Samuel Kellner and Marco Argentieri do not hold any fully paid ordinary shares.
NZOG Offshore Limited (a related entity to Alastair McGregor, Andrew Jefferies, Rod Richie, Samuel Kellner and Marco
Argentieri) holds 349,368,803 fully paid ordinary shares in the Company.
21
43
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
Option holding
The number of options over ordinary 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:
Balance at
the start of
the year
Granted
Expired/
forfeited/
Balance at
the end of
the year
Exercised
other
Options over ordinary shares
Matthew Boyall
5,219,383
5,219,383
1,714,612
1,714,612
-
-
-
-
6,933,995
6,933,995
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
29/07/2019
04/10/2019
16/07/2020
23/07/2021
30/08/2022
Expiry date
Vesting date
01/07/2023
01/07/2024
01/07/2025
23/07/2026
01/07/2027
01/07/2021
01/07/2022
01/07/2023
01/07/2024
01/07/2025
Exercise
price (cents)
Number
under option
7.00
9.00
11.70
7.80
8.90
3,473,653
3,523,014
3,204,237
4,005,799
3,598,698
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.
Shares issued on the exercise of options
There were no ordinary shares of Cue Energy Resources Limited issued on the exercise of options during the year ended
30 June 2023 and up to the date of this report.
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 17 to the financial statements.
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.
44
22
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Directors' report
30 June 2023
The Board of Directors pre-approves all non audit services 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, 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.
●
Officers of the company who are former partners of KPMG
There are no officers of the company who are former partners of KPMG.
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 and forms part of the directors' report.
Auditor
In accordance with the provisions of the Corporations Act 2001 the Company’s auditor, KPMG, 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
25 August 2023
23
45
Cue Energy Resources Limited Annual Report 2023 Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Cue Energy Resources Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Cue Energy Resources
Limited for the financial year ended 30 June 2023 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
KPMG
Vicky Carlson
Partner
Melbourne
25 August 2023
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
24
46
Cue Energy Resources Limited Annual Report 2023
Statement of profit or loss and other comprehensive income
Cue Energy Resources Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue from continuing operations
Revenue from operations
Production costs
Gross profit from production
Other income
Net foreign currency exchange gain
Expenses
Exploration activities
Corporate and administration expenses
Sales expenses
Finance (cost)/reversal
Profit before income tax expense
Note
Consolidated
2023
$'000
2022
$'000
5
6
7
8
51,605
(22,743)
44,439
(17,286)
28,862
27,153
487
10
15
10
(3,073)
(2,485)
(2,217)
(1,703)
(1,531)
(3,058)
(1,092)
259
19,881
21,756
Income tax expense
9
(4,670)
(5,688)
Profit after income tax expense for the year attributable to the owners of Cue
Energy Resources Limited
15,211
16,068
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
947
947
1,759
1,759
16,158
17,827
Cents
Cents
Basic earnings per share
Diluted earnings per share
25
25
2.18
2.18
2.30
2.30
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
47
Cue Energy Resources Limited Annual Report 2023
Statement of financial position
Cue Energy Resources Limited
Statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Total current assets
Non-current assets
Advances paid for restoration works
Property, plant and equipment
Right-of-use assets
Exploration and evaluation assets
Production properties
Development assets
Deferred tax assets
Deposits
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Tax liabilities
Provisions
Deferred consideration
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
Consolidated
2023
$'000
2022
$'000
10
12
7
11
11
9
9
15
9
12
13
14
15,238
10,822
5,118
1,181
32,359
5,994
26
110
114
62,289
4,458
12,250
404
85,645
23,223
6,904
1,836
1,237
33,200
6,300
34
175
1,950
54,117
4,243
6,888
-
73,707
118,004
106,907
3,929
822
3,945
91
3,998
231
225
13,241
4,332
-
45
7,631
28,563
40,571
4,651
1,545
-
86
2,666
192
6,337
15,477
5,207
6,895
122
6,751
24,517
43,492
53,812
58,969
64,192
47,938
152,416
6,393
(94,617)
152,416
1,132
(105,610)
64,192
47,938
The above statement of financial position should be read in conjunction with the accompanying notes
2
48
Cue Energy Resources Limited Annual Report 2023
Statement of changes in equity
Cue Energy Resources Limited
Statement of changes in equity
For the year ended 30 June 2023
Consolidated
Contributed
equity
$'000
Reserves
$'000
General
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 July 2021
152,416
(815)
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 26)
-
-
-
-
-
1,759
1,759
188
Balance at 30 June 2022
152,416
1,132
-
-
-
-
-
-
(121,678)
29,923
16,068
16,068
-
1,759
16,068
17,827
-
188
(105,610)
47,938
Consolidated
Contributed
equity
$'000
Reserves
$'000
General
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 July 2022
152,416
1,132
-
(105,610)
47,938
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 26)
-
-
-
-
-
4,218
10,993
15,211
947
947
-
-
947
4,218
10,993
16,158
96
-
-
96
Balance at 30 June 2023
152,416
2,175
4,218
(94,617)
64,192
The above statement of changes in equity should be read in conjunction with the accompanying notes
3
49
Cue Energy Resources Limited Annual Report 2023
Statement of cash flows
Cue Energy Resources Limited
Statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Payments for exploration and evaluation expenditure
Income tax paid
Royalties paid
Interest and other finance costs paid
Note
Consolidated
2023
$'000
2022
$'000
43,458
432
(18,845)
(2,618)
(6,738)
(2,353)
13,336
(683)
43,548
11
(15,790)
(1,885)
(7,274)
(943)
17,667
(5)
Net cash from operating activities
24
12,653
17,662
Cash flows from investing activities
Payments for exploration, development and production properties
Payments for plant and equipment
Payment for businesses acquired
Payments for security bonds
22
Net cash used in investing activities
Cash flows from financing activities
Payments of principal element of lease liabilities
Proceeds from borrowings, net of fees
Repayment of borrowings
Net cash from/(used in) financing activities
Net increase/(decrease) 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 and restricted cash
Cash and cash equivalents at the end of the financial year
(11,261)
(5)
(6,082)
(282)
(6,588)
(5)
(12,522)
-
(17,630)
(19,115)
(81)
-
(3,000)
(48)
6,895
-
(3,081)
6,847
(8,058)
23,223
73
5,394
17,644
185
15,238
23,223
The above statement of cash flows should be read in conjunction with the accompanying notes
4
50
Cue Energy Resources Limited Annual Report 2023
Notes to the financial statements
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
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, hereinafter collectively referred to as the
Consolidated Entity. 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.
As detailed in note 16, Cue Energy Resources Limited’s parent entity is New Zealand Oil & Gas Limited (NZOG), a company
incorporated in New Zealand and its ultimate parent entity is O.G. Oil & Gas (Singapore) Pte. Ltd. (OGOG), a company
incorporated in Singapore.
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 25 August 2023.
Note 2. Significant accounting policies
Significant accounting policies have been disclosed in the respective notes to the financial statements and below.
(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 Consolidated Entity is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and in accordance with that instrument, amounts in the consolidated financial statements and directors’ report
have been rounded off to the nearest thousand dollars, unless otherwise stated.
The consolidated financial statements have 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 19.
5
51
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
(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 2023 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 Consolidated
Entity.
Subsidiaries are all those entities over which the Consolidated Entity 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 Consolidated Entity controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. 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 Consolidated Entity.
Investments in subsidiaries are accounted for at cost in the standalone financial statements of the parent entity, Cue Energy
Resources Limited.
(e) Production revenue
Revenue from the sale of crude oil and gas is recognised at the point in time when control of the product is transferred to the
customer, which is generally when the product is physically transferred into a vessel, pipe or other delivery mechanism and
the customer accepts the product. Consequently, the Consolidated Entity’s performance obligations are considered to relate
only to the sale of crude oil / gas, with each barrel of crude oil or cubic meter of gas is considered to be a separate
performance obligation under the contractual arrangements in place.
Under the terms of the relevant production sharing arrangements, the Consolidated Entity is entitled to its participating share
in the crude oil based on the Consolidated Entity’s working interest. Revenue from contracts with customers is recognised
based on the actual volumes sold to customers.
The Consolidated Entity’s sales of crude oil are priced based on market prices and sales of gas are priced based on different
contractual arrangements which include fixed and market prices.
(f) Interest income
Interest income 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.
(g) 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.
(h) Trade and other payables
Trade and other payables 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.
(i) 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.
52
6
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
(j) Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
(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 functional currencies of Group companies is the currency of the primary economic environment in which it operates. The
consolidated financial statements are presented in Australian dollars, the Consolidated Entity’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.
Foreign operations
The results and financial position of Consolidated Entity’s foreign operations are translated into its presentation currency
using the following procedures:
(a) 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;
(b) income and expenses for each statement presenting profit or loss and other comprehensive income (i.e. including
comparatives) shall be translated at average exchange rates for the year; and
(c) all resulting exchange differences shall be recognised in other comprehensive income.
(m) Advances paid for rehabilitation works
Advances paid for rehabilitation works represent amounts paid to special purpose funds established with the primary
objective of meeting future rehabilitation obligations and are recognised and measured in accordance with AASB
Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
(AASBI 5). AASBI 5 requires restoration provisions and contributions to funds to be separately disclosed in the Consolidated
Entity’s statement of financial position.
(n) Contract assets and liabilities
Contract assets and liabilities are recognized and measured in accordance with AASB 15 Revenue from Contracts with
Customers.
7
53
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Contract assets
Contract assets represent rights to consideration for performance obligations satisfied to date, which will be recognised as
trade receivables when the right to invoice becomes unconditional.
Contract liabilities
Contract liabilities represent the Consolidated Entity's obligation to transfer gas to customers and are recognised when a
customer pays consideration or when a receivable is recognised reflecting its unconditional right to consideration before the
Consolidated Entity has satisfied its performance obligations in respect of the transfer of the goods or services to the
customer.
The Consolidated Entity has performance obligations for the delivery of gas for which payment was received in advance and
for gas not taken by its sole customer in the Dingo field, in respect of a take or pay arrangement in accordance with which
the Consolidated Entity has the obligation to upon request provide gas in the contractually defined volumes which were not
able to be consumed. The customer must take the future delivery of gas no later than 2035. If and when concluded that the
customer's entitlements to take future gas deliveries within the contractually defined time, the relevant portion of the contract
liability is derecognised.
(o) Loans and borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
(p) 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.
(q) 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. There was no impact
upon adoption of these standards.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Note 3. Critical accounting estimates and judgements
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgements in the application of accounting standards, make certain assumptions that affect the application of policies and
consider and conclude on sources of and apply estimation uncertainties which affect the reported amounts of assets,
liabilities, income and expenses.
The judgements made, assumptions applied and the consideration of sources of estimation uncertainty, are based on the
application of historical experience and various other factors that are believed to be reasonable under the circumstances,
the results of which form the basis of concluding on the carrying values of assets and liabilities that may not be readily
apparent from other sources. Actual results may differ from these estimates. These accounting policies have been
consistently applied by each entity in the Consolidated Entity, and the judgements made, assumptions applied and
consideration of sources of estimation uncertainty 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.
54
8
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 3. Critical accounting estimates and judgements (continued)
(i) Recovery of deferred tax assets
Management recognise deferred tax assets on unutilised carry forward tax losses if management considers it is probable
that future tax profits will be available to utilise the unused tax losses (refer to note 9).
Management are required to make assumptions on and consider inherent uncertainties in respect of the various inputs used
in the estimation of future taxable income against which unutilised losses may be applied. These assumptions include but
are not limited to the nature, timing and extent of project development and reserves, production and sales performance,
energy prices where not contractually fixed and which are subject to global macroeconomic factors and inflation and its
impact on future tax deductions. The inherent estimation uncertainty when forecasting future operational and financial
performance also directly the actual generation of future taxable income, which may differ to the estimated taxable income
and associated deferred tax asset.
(ii) Impairment of production properties
Production properties impairment testing requires an estimation of recoverable amount, which management have determined
using either fair value less costs to sell or a value-in-use model for the respective cash generating units (CGUs).
Management is required to apply its judgement in concluding on the definition of CGUs to which an asset or group of assets
relates. Furthermore, in defining the discount rate appropriate to calculate the present value of future outflows when
determining the fair value less costs to sell or value-in-use, management is requirement to apply judgement in determining
the relevant risks and basis of calculating the risks associated with compiling an appropriate discount rate.
The calculation of a CGU's recoverable amount through either the fair value less costs to sell or its value-in-use requires the
entity to make certain assumptions on reserves, future production volumes, pricing of its energy products and cost estimates,
exchange rates and how they impact on future cashflows, where appropriate the costs to sell and in respect of the inputs
utilised in defining an appropriate discount rate.
These assumptions are inherently uncertain inputs and assumptions and accordingly management review their accuracy
and appropriateness periodically, no less than twice a year. Other assumptions used in the calculations which could have an
impact on future years are detailed in note 11.
Management have considered and made assumptions in respect of the impact of climate change and the development of
commercially viable alternative energy sources on future cashflows and the respective CGUs' value in use and fair value
less costs to sell. The assumptions are based on current information, historical trends and future expectations which may
differ to the assumptions made by management when concluding on the impact of climate change and the development of
commercially viable alternative energy sources.
The Russian-Ukrainian conflict continues to develop, the result of which has had significant global macro-economic impacts,
including increasing instability in global energy prices. Related impacts include volatility in commodity prices, currency
movements, supply-chain and travel disruptions, disruption in banking systems and capital markets, increased costs and
expenditures and cyberattacks. The conflict’s development and conclusion is inherently uncertain and the consequences for
the global economy and the Company’s operations unpredictable. The Consolidated Entity has, to the extent possible, in
assessing its CGUs for impairment, made certain assumptions on the potential impact which the conflict has and will have
on its future financial performance.
(iii) Useful life of production properties and their amortisation
As detailed in note 11, certain production properties are amortised on a unit-of-production basis, with separate calculations
being made for each resource. As noted below, estimates of reserve quantities and future production volumes are based on
certain assumptions and subject to inherent estimation uncertainties. These factors are critical elements of the calculation of
the amortisation of production property assets.
9
55
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 3. Critical accounting estimates and judgements (continued)
(iv) Estimates of reserve quantities
The estimated quantities of Consolidated Entity's reported Proven and Probable hydrocarbon reserves 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 certain 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 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 Consolidated Entity’s policies and procedures for
reserves estimation, which conform to guidelines prepared by the Society of Petroleum Engineers.
(v) Restoration (rehabilitation or rehab) 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 in accordance with the terms of the respective permits and
relevant legislation in the various jurisdictions in which the Consolidated Entity operates. There is inherent uncertainty in the
definition of the works undertaken, technology used to complete the works, the estimation of the relevant costs associated
with the defined works and the timing of settlement of restoration obligations. Details of restoration provisions are disclosed
in note 12.
(vi) Capitalised exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity expects to commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral
resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures
directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition,
costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant
mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and
resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity
prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the
period in which this determination is made.
(vii) Development assets
Development costs have been capitalised on the basis that the Consolidated Entity expects to commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of mineral resources. Key
judgements are applied in considering costs to be capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. The primary assumption made in respect of development assets is that
these assets will be able to be realised through the successful development of the relevant mining tenement or through its
sale.
Assumptions are also made, that could impact the future commercial production at the mine, when concluding on the level
of reserves and resources, the impact on future technology changes on mining techniques which could impact the cost of
mining, future legal changes, the impact of climate change and changes in commodity prices. To the extent that capitalised
costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is
made.
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 EBITDAX, an adjusted measure of earnings
before interest expense, tax, depreciation and amortisation, which allows peer comparison when assessing performance.
The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the Group financial
statements.
56
10
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 4. Financial reporting by segments (continued)
With the expansion and contribution of the Mahato operations to the Group's financial position and performance,
management have concluded that the Group operates in four principal segments: Australia, being the Amadeus Basin assets,
Maari in New Zealand and Sampang and Mahato in Indonesia. The Group has a distinct corporate function which has been
presented separately in order to reconcile to the statutory results.
The comparative financial information presented herein has been restated to reflect the change in the definition of the
operating segments from prior periods, where segments were defined on a geographic basis.
Australian onshore operations
The company resides in Melbourne, Australia. The Consolidated Entity, through separate legal entities, Cue Mereenie Pty
Ltd, Cue Palm Valley Pty Ltd and Cue Dingo Pty Ltd, holds 3 permits for onshore activities in Australia in the Amadeus Basin
in the Northern Territory. For details of subsidiaries refer to note 20 and interests in joint operations refer to note 21.
New Zealand
The Group, through its wholly owned subsidiary, Cue Taranaki Pty Ltd, holds a 5% interest in petroleum production property,
PMP38160 (Maari) in New Zealand.
Indonesia
The Group, through its wholly owned subsidiary, Cue Sampang Pty Ltd, holds a 15% interest in the Sampang PSC gas
production property and through Cue Mahato Pty Ltd, a 12.5% interest in the Mahato PSC oil production property.
Information regarding the Group’s reportable segments is presented below:
Consolidated - 2023
$'000
Australia
New Zealand
Maari
$'000
Indonesia
Corporate
Total
Mahato
$'000
Sampang
$'000
$'000
$'000
Revenue
Revenue from operations
Total revenue
EBITDAX
Depreciation and amortisation
Share-based payments
expense
Business development
expenses
Finance costs
Exploration and evaluation
expenses
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
11,889
11,889
6,630
(2,127)
-
21
(202)
9,510
9,510
4,512
(2,081)
-
-
(144)
18,714
18,714
14,069
(1,118)
-
-
(3)
11,492
11,492
7,473
(707)
(22)
-
(601)
-
-
(1,819)
(66)
(74)
(34)
(753)
51,605
51,605
30,865
(6,099)
(96)
(13)
(1,703)
(2,217)
-
(816)
-
(40)
(3,073)
2,105
2,287
12,132
6,143
(2,786)
19,881
(4,670)
15,211
11
57
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 4. Financial reporting by segments (continued)
Consolidated - 2022
$'000
Australia
New Zealand
Maari
$'000
Indonesia
Corporate
Total
Mahato
$'000
Sampang
$'000
$'000
$'000
Revenue
Revenue from operations
Total revenue
EBITDAX
Depreciation and amortisation
Business development
expenses
Finance costs
Share-based payments
Exploration and evaluation
expenses
Profit/(loss) before income
tax expense
Income tax expense
Profit after income tax
expense
8,208
8,208
4,594
(1,590)
(654)
(77)
-
(1,469)
9,169
9,169
5,987
(1,371)
-
266
-
-
14,915
14,915
12,579
(1,232)
-
-
-
-
12,147
12,147
8,305
(1,236)
-
81
(9)
-
-
-
(1,976)
(71)
(119)
(11)
(179)
44,439
44,439
29,489
(5,500)
(773)
259
(188)
(62)
(1,531)
804
4,882
11,347
7,141
(2,418)
21,756
(5,688)
16,068
Non-current assets by geographic segment
Australia
Indonesia
New Zealand
Major customers
Consolidated
2023
$'000
2022
$'000
33,654
24,058
15,590
33,169
20,447
13,048
73,302
66,664
The Group has a number of customers to whom it provides oil products, of which 63% (FY 2022: 58%) of revenue is supplied
to one customer and 32% (FY 2022: 36%) another. The Group supplies gas to a number of external customers, one of which
generates 51% (FY 2022: 63%) of revenue and 13% (FY 2022: 13%) another.
Note 5. Revenue from operations
Crude oil and condensate revenue
Natural gas revenue
Consolidated
2023
$'000
2022
$'000
29,580
22,025
25,716
18,723
51,605
44,439
58
12
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 6. Production costs
Production costs
Amortisation of production properties
Note 7. Exploration activities
Exploration assets
Palm Valley
Dingo
Consolidated
2023
$'000
2022
$'000
16,738
6,005
11,871
5,415
22,743
17,286
Consolidated
2023
$'000
2022
$'000
-
114
114
1,770
180
1,950
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Exploration assets
Balance at 1 July
Additions during the year
Transfers to production properties
Amounts expensed during the year
Palm Valley
$'000
Dingo
$'000
Total
$'000
1,770
1,576
(3,162)
(184)
-
180
(66)
-
-
114
1,950
1,510
(3,162)
(184)
114
Consolidated
2023
$'000
2022
$'000
Profit/(loss) before income tax includes the following specific expenses:
Exploration costs expensed
Palm Valley
Mahato
Dingo
Mereenie
Other
Exploration costs expensed
2,158
816
45
14
40
1,835
-
15
28
(347)
3,073
1,531
The Consolidated Entity incurred $2.16 million (30 June 2022: $0.87 million) in exploration and evaluation expenses in
respect of the discontinued exploration works on the Palm Valley Deep well. Palm Valley exploration activities were
successfully completed in December 2022 and consequently $3.16 million were transferred to production properties.
13
59
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 7. Exploration activities (continued)
Accounting policy on exploration activities
AASB 6 Exploration for and Evaluation of Mineral Resources allows the Group to either capitalise or expense exploration
and evaluation expenditure incurred. Exploration and evaluation costs have been capitalised on the basis that the
consolidated entity expects to commence commercial production in the future, from which time the costs will be amortised in
accordance with the policy on the amortisation of proportion assets. Costs are only capitalised that are expected to be
recovered either through successful development or sale of the relevant mining interest. To the extent that capitalised costs
are determined not to be recoverable in the future, they will be written off in the period in which this determination is made.
Note 8. Corporate and administration expenses
Employee expenses
Accounting and audit fees
Share based payments
Depreciation expense
Superannuation contribution expense
Business development expenses
Legal expenses
Other expenses
Total administration expenses
Note 9. Income tax expense
Income tax expense
Current tax
Adjustment recognised for current tax in prior periods
Initial Recognition of previously unrecognised net deferred tax assets
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Recognition of deferred tax (assets)/liabilities
Difference in overseas tax rates
Differences arising from the application of royalty regimes
Other balances and permanent differences
Prior year tax losses not recognised/(recognised)
Adjustment recognised for current tax in prior periods
Income tax expense
Consolidated
2023
$'000
2022
$'000
1,200
597
96
94
57
13
3
425
1,308
393
188
84
71
773
19
222
2,485
3,058
Consolidated
2023
$'000
2022
$'000
9,154
-
(1,027)
(3,457)
7,902
299
-
(2,513)
4,670
5,688
19,881
21,756
5,964
6,527
(3,814)
1,653
827
(615)
655
4,670
-
(2,513)
2,833
485
(2,422)
479
5,389
299
4,670
5,688
The Consolidated Entity's effective tax rate for the year ended 30 June 2023 was 23% (30 June 2022: 26%).
60
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Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 9. Income tax expense (continued)
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Deferred tax – origination and reversal of temporary differences
Current tax liabilities
Consolidated
2023
$'000
2022
$'000
(5,362)
880
(4,247)
1,734
(4,482)
(2,513)
Consolidated
30 June 2023 30 June 2022
$'000
$'000
3,998
2,666
The Group 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.
Deferred tax assets recognised comprises of:
Restoration provisions
Carried forward tax losses
Other
Consolidated
2023
$'000
2022
$'000
2,518
9,508
224
4,703
1,772
413
12,250
6,888
During the year ended 30 June 2023, the Consolidated Entity recognised a deferred tax asset of $7.74 million (30 June 2022:
$1.77 million) in respect of previously unrecognised carried forward tax losses. The Consolidated Entity has a deferred tax
asset of $9.51 million at 30 June 2023 for carried forward tax losses recognised.
Deferred tax liabilities recognised comprises of:
Production, development and exploration and evaluation assets
Other
Deferred tax liabilities
Reconciliation of movement in deferred tax balances
Opening balance of net deferred tax assets/(liabilities)
Restoration provisions
Carried forward losses
Production, development and exploration and evaluation assets
Other
Closing balance of net deferred tax assets
15
Consolidated
2023
$'000
2022
$'000
7,631
-
6,768
(17)
7,631
6,751
Consolidated
2023
$'000
2022
$'000
137
(2,185)
7,736
(863)
(206)
(2,376)
2,167
1,772
(1,661)
235
4,619
137
61
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 9. Income tax expense (continued)
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
Accrued expenses
Net deferred tax not recognised
Consolidated
2023
$'000
2022
$'000
-
23,033
-
-
-
58
39,298
(3,172)
(360)
36
23,033
35,860
At 30 June 2023, the Consolidated Entity had $76.78 million in unutilised carry forward losses, the tax effect of which is
$23.03 million. The aforementioned potential tax benefit has not been recognised in the statement of financial position as
the recovery of this benefit is uncertain.
At 30 June 2023 no franking and imputation credits were held for subsequent reporting periods (30 June 2022: nil).
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.
62
16
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 9. Income tax expense (continued)
Cue Taranaki Pty Ltd is subject to the provisions of its Petroleum Mining Permit (the Permit) which, in conjunction with the
Minerals Programme for Petroleum (1995) Act and Crown Minerals (Royalties for Petroleum) Regulations 2013 (collectively
the Legislation), defines the basis of provisional royalty payments made each reporting period. The provisions of the Permit
define a hybrid royalty system whereby the minimum royalty payment, is the higher of 5% of revenues or 20% of the
provisional accounting profit (APR), as defined in the legislation.
The Consolidated Entity recognises the minimum royalty payment as a royalty expense, included in the statement of profit
or loss and other comprehensive income as production costs, with any excess of the APR over the minimum royalty payment
presented as an income tax expense, in accordance with AASB 112. At 30 June 2023 a deferred tax asset of $5.06 million
and a deferred tax liability of $1.38 million have been recognised in respect of the application of the terms of the Legislation
to timing differences arising between the recognition and measurement criteria in the Legislation and the application of
Australian Accounting Standards. These deferred tax balances are in addition to balances recognised on temporary timing
differences generated through the application of the respective corporate income tax legislation in the jurisdictions in which
the Consolidated Entity operates.
Note 10. Current assets - trade and other receivables
Trade receivables
Other receivables
Prepayments
Consolidated
2023
$'000
2022
$'000
8,510
2,121
10,631
4,508
2,221
6,729
191
175
10,822
6,904
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 2023 (30 June 2022: Nil).
The ageing of trade and other receivables at the reporting date was as follows:
Not overdue
Less than one month
More than 1 month overdue, not impaired
Consolidated
2023
$'000
2022
$'000
5,432
5,148
51
2,150
4,415
-
10,631
6,565
Trade and other receivables are not considered impaired and relate to a number of independent customers for whom there
is no recent history of default.
On 10 July 2023, $3.07 million was received from Maari oil sales in June 2023, reducing amount noted as trade and other
receivables.
17
63
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 10. Current assets - trade and other receivables (continued)
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 11. Non-current assets - production properties
Net accumulated cost incurred on areas of interest
Joint operation production assets
Sampang
Maari
Mahato
Palm Valley
Mereenie
Dingo
Balance as at 30 June
Consolidated
2023
$'000
2022
$'000
2,794
15,590
10,910
6,523
18,564
7,908
3,820
13,048
6,131
3,127
19,762
8,229
62,289
54,117
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Production properties
Balance at 1 July
Additions during the year
Changes in restoration provision – production (note 12)
Amortisation expense
Contract liabilities reversed
Transfers
Additions through Amadeus Basin business combination (note 22)
Changes in foreign currency translation
Closing balance 30 June
Consolidated
2023
$'000
2022
$'000
54,117
7,662
2,919
(6,032)
(348)
3,055
-
916
18,344
3,233
2,799
(5,415)
-
-
33,609
1,547
62,289
54,117
Estimates of each cash generating unit’s (CGU) recoverable amounts are based on either the fair value less costs to sell or
value-in-use, which is determined by discounting each CGU’s estimated future cash flows at CGU specific discount rates.
Estimated future cashflows are based on the following key assumptions:
●
●
●
●
●
reserves estimates and the impact of technological advancements on the ability to commercially extract oil and gas;
production volumes and timing thereof;
commodity prices and the macroeconomic, technological and climate related factors which may influence forward
looking estimates;
legislative & compliance obligations & entitlements, including the extension of licenses where applicable; and
costs and the impact of inflation.
The pre-tax discount rates applied in discounting estimated future cashflows were between 12.88% and 14.29% at 30 June
2023 (30 June 2022: 14.3%), equivalent to post-tax discount rates between 12.47% and 13.30% (30 June 2022: 10.0%)
depending on the nature of the risks specific to each cash generating unit.
64
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Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 11. Non-current assets - production properties (continued)
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 performed on the basis which best reflects the consumption of future economic benefits. In the
Amadeus Basin properties, physical assets are amortised on the straight line basis whilst all other production properties are
amortised 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 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 and reversals are 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.
Accounting policy for calculation of recoverable amount
For oil and gas assets the estimated future cash flows are based on either the fair value less costs to sell or the value-in-use
calculations, which use 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 consensus estimates of forward market prices where available. The
recoverable amount of cash generating units is the greater of their fair value less cost to sell and value-in-use.
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a post-tax discount
rate based on assumptions that reflect 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.
The Mahato PSC and subsequent Indonesian Government regulations contain terms which may require the dilution of the
existing partners in the joint operations for no consideration, including the Consolidated Entity’s interests by up to 10% after
production has commenced, for no consideration in exchange.
The restoration provision is deducted from the carrying value of the asset as the cost of restoration is included in its cost
base. This adjustment is required to allow a true reflection of its carrying value against its recoverable value.
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.
19
65
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 11. Non-current assets - production properties (continued)
Development assets
Net accumulated cost incurred on areas of interest
Development assets
Sampang - Paus Biru
Mereenie
Note 12. Non-current liabilities - provisions
Restoration provisions
Movements in restoration provision during the financial year are set out below:
Consolidated - 30 June 2023
Carrying amount at the start of the year
Change in provisions recognised
Unwinding of discount
Impact of foreign currency translation
Carrying amount at the end of the year
Consolidated
2023
$'000
2022
$'000
4,348
110
4,185
58
4,458
4,243
Consolidated
2023
$'000
2022
$'000
28,563
24,517
Restoration
provisions
$'000
24,517
2,903
406
737
28,563
During the year ended 30 June 2023, the provision for site restoration costs has increased by $2.90 million, excluding the
impact of foreign exchange rates, primarily as a result of the reassessment of the Maari restoration provision, which increased
by $3.43 million to $16.83 million following an update of the Maari estimated restoration costs.
Restoration provisions
Advances paid for restoration works
Net unfunded restoration provisions
Consolidated
2023
$'000
2022
$'000
28,563
(5,994)
24,517
(6,300)
22,569
18,217
In accordance with legislative obligations in the respective jurisdictions in which the Consolidated Entity operates,
contributions are made to special purpose funds established solely for the purpose of financing future restoration works, any
amounts which have been funded are not available for general use and restricted solely for the purpose of funding future
restoration works. As at 30 June 2023, $5.99 million (30 June 2022: $6.30 million) has been contributed to such funds in
respect of the Mahato and Sampang assets in Indonesia.
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.
66
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Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 12. Non-current liabilities - provisions (continued)
Restoration provision
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. The expected timing of outflows for restoration liabilities is not
within 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.
When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying
amount of the related oil and gas assets to the extent that it was incurred by the development/construction of the field, any
subsequent changes to the provision, excluding the unwinding of interest in producing assets, commensurately changes the
carrying amount of the related oil and gas asset.
Note 13. Equity - contributed equity
Consolidated
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Shares
Shares
$'000
$'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.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
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 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 declare a dividend to be paid to shareholders, return capital
to shareholders, or issue new shares.
During the year ended 30 June 2023 management did not pay any dividends (FY 2022: nil).
There has been no change during the year to the strategy adopted by management to control the capital of the entity.
The gearing ratio is 6.15% at 30 June 2023 and 14.38% at 30 June 2022.
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.
21
67
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 14. Equity - reserves
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 2021
Foreign currency translation
Share-based payments
Balance at 30 June 2022
Foreign currency translation
Share-based payments
Transfer from accumulated profits
Balance at 30 June 2023
Foreign
currency
reserve
$'000
Options
reserve
$'000
General
reserve
$'000
Total
$'000
(1,178)
1,759
-
581
947
-
-
1,528
363
-
188
551
-
96
-
647
-
-
-
-
-
-
4,218
(815)
1,759
188
1,132
947
96
4,218
4,218
6,393
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Options reserve
The reserve is used to recognise the value of equity benefits provided to employees under the Employee Share Option Plan.
General reserve
The reserve is used to quarantine the Company's standalone accumulated profits generated in a reporting period.
Note 15. Financial instruments
The Consolidated Entity’s principal financial instruments comprise receivables, payables, cash and cash equivalents
(inclusive of restricted balances) and borrowings.
The Consolidated Entity 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
Consolidated Entity’s financial targets whilst protecting future financial security.
The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk, foreign currency risk,
commodity price risk, credit risk and liquidity risk. The Consolidated Entity 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 rates, foreign exchange and commodity prices. These risks are
summarised below.
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 Consolidated Entity’s short, medium and long-term funding
and liquidity management requirements. The Board reviews and agrees management’s assessment for managing each of
the risks identified below.
Risk Exposures and Responses
(a) Fair value risk
68
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Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 15. Financial instruments (continued)
The financial assets and liabilities of the Consolidated Entity are recognised in the statement of financial position at their fair
value in accordance with the accounting policies set out in these notes to the financial statements. The Consolidated Entity
has trade receivables, other financial assets, trade payables and borrowings, which are a reasonable approximation of their
fair values due to their short-term nature. Given the nature of the financial assets and liabilities noted and the relatively short-
term nature and the use of the appropriate interest rates in determining the loan's fair value, there is no material fair value
risk.
(b) Interest rate risk
The Consolidated Entity’s exposure to market interest rates is related primarily to its cash deposits and borrowings.
The Consolidated Entity 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 impact of interest rate movement
is not material to the Consolidated Entity.
(c) Foreign exchange risk
The Consolidated Entity is subject to foreign exchange risk on its international exploration and appraisal activities where
costs are incurred in foreign currencies. The Consolidated Entity generates revenue denominated in foreign currencies, and
does hold significant foreign currency cash balances. The Consolidated Entity’s foreign exchange risk exposures are
mitigated through natural hedging, where appropriate.
The Consolidated Entity’s exposure to foreign exchange risk at the reporting date was as follows (holdings are shown in AUD
equivalent):
Consolidated
30 June 2023
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
USD
$'000
NZD
$'000
IDR
$'000
84
-
3
1,380
AUD weakened
Effect on
5
-
AUD strengthened
Effect on
Consolidated - 30 June 2023
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
Trade and other receivables
Trade and other payables
10%
10%
(10)
130
120
-
-
-
-
-
10
(144)
(134)
Consolidated
30 June 2022
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
USD
$'000
NZD
$'000
IDR
$'000
-
-
53
901
23
-
-
-
7
-
69
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 15. Financial instruments (continued)
Consolidated - 30 June 2022
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
Trade and other receivables
Trade and other payables
10%
10%
(4)
88
84
10%
10%
-
-
-
5
(92)
(87)
-
-
-
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 generates revenue from the sale of
hydrocarbons. Exposure to commodity price risk is therefore limited to this revenue and from future revenue potentially
generated from successful exploration and appraisal activities, the quantum of which at this stage cannot be measured. The
Group’s exposure to commodity price fluctuations is therefore in respect of the sale of petroleum products denominated in
US dollars.
Gas contracts are primarily fixed, with an immaterial value of contracts subject to spot prices, limiting the Group's exposure
to fluctuations in gas price.
Commodity price risks are measured by monitoring and stress testing the Group’s forecast financial position to sustained
periods of low oil and gas prices. This analysis is regularly performed on the Group’s portfolio and, as required, for discrete
projects and acquisitions.
(e) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity 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.
Consequently, there are reasonable grounds to conclude that the Group is able to meet its payment obligations in full as and
when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash to meet the Group's obligations. 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, including taking out loans and where available and appropriate,
maintaining credit facilities.
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.
30 June 2023
Non-derivative financial liabilities
Trade and other payables
Lease liabilities
Borrowings
12 months or
less
$'000
1 to 2 years
$'000
2 to 5 years
$'000
More than 5
years
$'000
3,929
91
4,398
-
45
-
-
-
-
-
-
-
70
24
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 15. Financial instruments (continued)
30 June 2022
Non-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
12 months or
less
$'000
1 to 2 years
$'000
2 to 5 years
$'000
More than 5
years
$'000
4,652
630
89
-
7,618
106
-
-
17
-
-
-
On 23 June 2022, the Consolidated Entity entered into a two-year, unsecured loan agreement with NZOG for $7.0 million.
The loan is unsecured, with an interest rate of 10% p.a. fixed for the term of the loan and an establishment fee of 1.5% of
the loan amount. The term of the loan is two years from inception date in June 2022 and early repayments are allowed with
no penalty. During the year ended 30 June 2023, $3 million in loan repayments were made.
At 30 June 2023 the fair value of the loan is $3.95 million (30 June 2022: $6.90 million).
(f) Credit risk
Credit risk arises from the financial assets of the group, which comprise cash and cash equivalents and restricted cash and
trade and other receivables. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Consolidated Entity.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements, reflecting the potential default by the counter-party. The Consolidated Entity does not hold any collateral.
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 which
could include an assessment of their independent credit rating, financial position, past experience and industry reputation.
The risks are regularly monitored.
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 16. Key management personnel disclosures and related party disclosures
Directors
The following persons were directors of Cue Energy Resources Limited during the financial year:
Alastair McGregor (Non-executive Chairman)*
Andrew Jefferies (Non-Executive Director)*
Peter Hood AO (Non-Executive Director)
Richard Malcolm (Non-Executive Director)
Rod Ritchie (Non-Executive Director)
Samuel Kellner (Non-Executive Director)*
Marco Argentieri (Non-Executive Director)*
*As in previous years, during the year ended 30 June 2023, Alastair McGregor, Andrew Jefferies, Samuel Kellner and Marco
Argentieri declined to receive compensation for the provision of Directorial services from the Company, nor was any paid to
any related parties on their behalf. The deemed compensation shown above reflects the estimated compensation paid by
those Directors’ employers considered attributable to the company for services provided.
25
71
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 16. Key management personnel disclosures and related party disclosures (continued)
The allocation of this compensation has been included as remuneration below for the purposes of compliance with Australian
Accounting Standards on disclosure of transactions and relationships with related parties, and with reference to the
compensation paid to other Directors for Directorial services provided to the Company.
Key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities of the
Consolidated Entity, directly or indirectly, during the financial year:
Matthew Boyall (Chief Executive Officer)
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
Deemed short term benefits*
Long term benefits
Post-employment benefits
Share-based payments
Total employee benefits
Consolidated
2023
2022
Restated
612,015
90,180
283,198
27,021
41,460
50,688
557,273
73,085
266,916
9,606
40,095
61,175
1,104,562
1,008,150
*As in previous years, during the year ended 30 June 2023, Alastair McGregor, Andrew Jefferies, Samuel Kellner and Marco
Argentieri declined to receive compensation for the provision of Directorial services from the Company, nor was any paid to
any related parties on their behalf. The deemed compensation shown above reflects the estimated compensation paid by
those Directors’ employers considered attributable to the company for services provided.
Total remuneration has been restated for FY 2022 to increase total remuneration by $266,916 to $1,008,150 as a result of
the presentation of deemed compensation, as compared to deemed compensation as previously disclosed of nil. The entire
value of the $266,916 increase (i) solely arose from the technical application of disclosure requirements of the accounting
standards, and (ii) the $266,916 is deemed only and neither the Company nor any member of the Consolidated Entity paid
or in any way settled or has obligations to settle the aforementioned deemed remuneration of $266,916. The Consolidated
Entity's actual obligations for the settlement of Directors' remuneration is unchanged from that which has been previously
reported.
Other related party transactions
Repayment of amounts owing to the Company as at 30 June 2023 and all future debts due to the Company, by the controlled
entities are subordinated in favour of all other creditors. The Company 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 Company provides management, administration and accounting services to the subsidiaries. No management fees were
charged to subsidiaries in the 2023 and 2022 financial years.
The ultimate parent company is O.G. Oil & Gas (Singapore) Pte. Ltd. (OGOG), a company incorporated in Singapore. The
immediate parent company is New Zealand Oil & Gas Limited (NZOG), a company incorporated in New Zealand.
72
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Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 16. Key management personnel disclosures and related party disclosures (continued)
The Consolidated Entity enters into operating arrangements where the Group has joint control over the respective venture’s
oil and gas net assets, described in note 22. In each of the joint operations, the participants appoint an operator to act on
their behalf in managing operations (the Operator).
All financial relationships with the Operator are on an arm’s length basis.
During the financial year, NZOG provided technical and legal services to the Group under consulting agreements. The
arrangements are on normal commercial terms. As at 30 June 2023, $0.16 million was accrued for services rendered from
the immediate parent company and directors (30 June 2022: $0.16 million).
During the year ended 30 June 2022, NZOG granted a $7.0 million unsecured loan to the consolidated entity, the carrying
amount of which is $3.95 million at 30 June 2023 (30 June 2022: $6.90 million) and in respect of which $0.70 million in
finance costs have been incurred (30 June 2022: $0.01 million), the details of which are in note 15.
Note 17. Auditor remuneration
During the financial year the following fees were paid or payable for services provided by the auditor of the company:
Audit services - KPMG
Audit or review of the financial statements
Other assurance services
Other services - KPMG
Advisory services
Tax compliance
Consolidated Consolidated
2023
$
2022
$
273,810
8,000
281,810
167,360
8,280
175,640
65,270
21,377
86,647
72,036
28,142
100,178
368,457
275,818
No other services were provided by the auditor during the year, other than those set out above.
Note 18. Contingencies and commitments
Contingent assets and liabilities
The Directors are not aware of any contingent assets or contingent liabilities as at 30 June 2023 (30 June 2022: Nil).
Expenditure commitments
Exploration and evaluation, development and production expenditure commitments*
The Consolidated Entity participates in a number of licences, permits and production sharing
contracts for which it has made commitments, including but not limited to with
relevant governments, to complete minimum work programmes.
Within one year
One to five years
Consolidated
2023
$'000
2022
$'000
5,169
-
15,728
878
5,169
16,606
27
73
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 18. Contingencies and commitments (continued)
As of 30 June 2023, Cue has $5.2 million of exploration and development expenditure commitments, $4.2 million of which
relates to drilling and infrastructure works in the Mahato PSC.
Commitments reflect the Consolidated Entity's interest in future financial obligations, based on existing facts and
circumstances, where the Consolidated Entity is contractually or substantively committed to making future expenditure.
These commitments may be either direct obligations or, as is the case with most commitments, obligations which the
respective projects' operators enter into on the Consolidated Entity's behalf with suppliers and service providers.
Note 19. 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
Profit/(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
2023
$'000
2022
$'000
3
3
(1,939)
(1,939)
Parent
2023
$'000
2022
$'000
11,754
21,204
21,438
28,497
4,748
6,899
4,765
13,887
152,416
647
(136,390)
152,416
551
(138,357)
16,673
14,610
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2023 (2022: nil).
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 (2022: nil).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for the acquisition of capital assets as at 30 June 2023 (2022: nil).
74
28
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 20. 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
Cue Palm Valley Pty Ltd
Cue Mereenie Pty Ltd
Cue Dingo Pty Ltd
Principal place of business /
Country of incorporation
Indonesia/Australia
Indonesia/Australia
Singapore
Australia
Indonesia/Australia
New Zealand/Australia
Australia
Australia
Australia
Australia
Ownership interest
2022
2023
%
%
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%
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 21. Interests in joint operations
Property
Operator
Cue Interest
2023 (%)
Cue Interest
2022 (%)
Permit expiry
date
Indonesia
Mahakam Hilir PSC
Petroleum development properties
Indonesia
Sampang PSC
Petroleum production properties
New Zealand
PMP38160
Indonesia
Sampang PSC
Mahato PSC
Amadeus Basin
Mereenie
Licences)
Palm Valley (OL3 Production Licence)
Dingo (L7 Production Licence)
Cue Kalimantan Pte Ltd
100*
100*
15/04/2021
Medco Energi Sampang Pty Ltd 15 (8.18 Jeruk Field) 15 (8.18 Jeruk Field) 04/12/2027
OMV New Zealand Limited
5
5
02/12/2027
Medco Energi Sampang Pty Ltd 15 (8.18 Jeruk Field) 15 (8.18 Jeruk Field) 04/12/2027
20/07/2042
Texcal Energy Mahato Inc.
12.5
12.5
(OL4 and OL5 Production
Central Petroleum
7.5%**
7.5%**
Central Petroleum
Central Petroleum
15%
15%
15%
15%
17/11/2023
05/11/2024
06/07/2039
*Mahakam Hilir PSC exploration permit has expired and regulatory processes for surrender are ongoing as at 30 June 2023.
**The Mereenie production license expires on 17 November 2023. As at 30 June 2023, the license renewal process has not
commenced, however, it is expected that the renewal will be successful.
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.
Note 22. Business combinations
During the year ended 30 June 2023, there were no business combinations.
29
75
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 22. Business combinations (continued)
Business combinations during the year ended 30 June 2022
On 1 October 2021, the consolidated entity acquired the Amadeus Basin business, being the acquisition of interests in the
Mereenie, Palm Valley and Dingo gas and oil fields in the Northern Territory, Australia, from Central Petroleum Limited (ASX:
CTP) (Central).
The Consolidated Entity’s acquired interests in the joint operation are a:
- 7.5% interest in the Mereenie gas and oil field (OL4 and OL5 Production Licences);
- 15% interest in the Palm Valley gas field (OL3 Production Licence); and
- 15% interest in the Dingo gas field (L7 Production Licence).
The ownership interests in the Amadeus Basin joint operation are as follows:
Cue Energy
Resources Limited
New Zealand Oil &
Gas Limited
Central Petroleum
Limited
Macquarie
Mereenie Pty Ltd
Ownership interest in
Amadeus Basin business
Mereenie
Palm Valley
Dingo
%
7.5%
15%
15%
%
17.5%
35%
35%
%
25%
50%
50%
%
50%
-
-
In accordance with AASB 3 Business Combinations, the consolidated entity previously reported its interest in the provisional
fair value of the assets and liabilities upon acquisition of the Amadeus Basin assets at 30 June 2022. During the year ended
30 June 2023, the consolidated entity has finalised its acquisition accounting for the Amadeus Basin assets, a summary of
its interest in the final valuations presented below:
Cash and cash equivalents
Trade receivables
Oil and gas production properties
Inventories
Right of use assets
Prepayments
Deferred tax asset
Trade payables
Contract liabilities
Restoration provision
Lease liability
Deferred tax liability
Acquisition-date fair value of the total consideration transferred
Final fair
value
$'000
62
4
33,609
331
54
50
1,964
(1,122)
(7,562)
(6,546)
(50)
(1,964)
18,830
There was no change in the final fair values of assets and liabilities upon acquisition of the Amadeus Basin business from
those provisional fair values disclosed in the annual report for the year ended 30 June 2022.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
76
30
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 22. Business combinations (continued)
On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Consolidated
Entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent and deferred consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent and deferred consideration classified as an asset or liability is
recognised in profit or loss. Contingent and deferred consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Note 23. Events after the reporting period
On 1 July 2023, 3,473,653 options over fully paid ordinary shares in the Company with an exercise price of $0.07 (7 cents)
expired.
On 10 July 2023, $3.07 million was received from Maari oil sales in June 2023, reducing the trade and other receivables in
note 10.
On 23 August 2023, the Consolidated Entity announced the results from the drilling and testing at the BA-01 well in the
Mahato PSC. The conclusion reached was that no hydrocarbons had been identified. The Mahato PSC partners will continue
to identify and assess further exploration opportunities in Mahato's PB Field.
31
77
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Notes to the financial statements
30 June 2023
Note 24. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Share-based payments
Finance costs associated with abandonment provision
Exploration expenses
Depreciation
Amortisation
Net gain on foreign currency conversion
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in contract assets
Decrease/(increase) in inventories
Increase in deferred tax assets
Increase/(decrease) in trade and other payables
Decrease in contract liabilities
(Decrease)/increase in tax liabilities
Increase/(decrease) in deferred tax liabilities
Increase/(decrease) in provisions
Net cash from operating activities
Note 25. Earnings per share
Consolidated
2023
$'000
2022
$'000
15,211
16,068
96
1,703
913
94
6,005
879
(3,918)
(3,282)
56
(5,362)
(721)
(1,271)
1,332
880
38
188
259
-
82
5,415
520
498
(1,836)
(468)
(2,283)
570
(810)
551
(1,052)
(40)
12,653
17,662
Consolidated
2023
$'000
2022
$'000
Profit after income tax attributable to the owners of Cue Energy Resources Limited
15,211
16,068
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
Accounting policy for earnings per share
Cents
Cents
2.18
2.18
2.30
2.30
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.
78
32
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Cue Energy Resources Limited
Shareholder information
Notes to the financial statements
30 June 2023
30 June 2023
Note 22. Business combinations (continued)
Note 26. Share-based payments
During the year ended 30 June 2023, $0.10 million in share-based payments expenses was recognised (FY 2022: $0.19
On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities assumed for
million).
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Consolidated
Entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
On 30 August 2022, the Company issued 3,649,298 unlisted options to eligible employee under the share option scheme.
The options are exercisable at $0.089 (8.9 cents) per option and will vest on 1 July 2025 and expire on 1 July 2027.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
The options were valued using Black-Scholes option pricing model. $0.03 million of share-based payment expense was
is recognised in profit or loss.
recognised in relation to the aforementioned options for the year ended 30 June 2023.
Contingent and deferred consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Set out below are summaries of options granted under the plan:
Subsequent changes in the fair value of the contingent and deferred consideration classified as an asset or liability is
recognised in profit or loss. Contingent and deferred consideration classified as equity is not remeasured and its subsequent
30 June 2023
settlement is accounted for within equity.
Balance at
the start of
the year
Expired/
Balance at
the end of
the year
Granted
Exercised
Expiry date
-
-
-
-
-
-
Exercise
price
forfeited/oth
er
$0.070
$0.090
$0.117
$0.078
$0.089
(39,777)
(46,750)
(36,830)
(42,167)
(50,600)
-
-
-
-
3,649,298
3,649,298
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
Grant date
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
29/07/2017
3,513,430
3,473,653
01/07/2023
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
3,569,765
3,523,015
04/10/2019
01/07/2024
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
3,241,067
3,204,237
01/07/2025
16/07/2020
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
23/07/2021
4,005,799
4,047,966
22/07/2026
previously held equity interest in the acquirer.
30/08/2022
3,598,698
-
01/07/2027
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
(216,124) 17,805,402
14,372,228
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
Weighted average exercise price
$0.088
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
The weighted average remaining contractual life of outstanding options at 30 June 2023 is 2.56 years (30 June 2022: 2.57
years).
Note 23. Events after the reporting period
30 June 2022
On 1 July 2023, 3,473,653 options over fully paid ordinary shares in the Company with an exercise price of $0.07 (7 cents)
expired.
Grant date
On 10 July 2023, $3.07 million was received from Maari oil sales in June 2023, reducing the trade and other receivables in
29/07/2017
3,784,025
3,513,430
note 10.
04/10/2019
3,853,298
3,569,765
16/07/2020
3,241,067
3,743,260
On 23 August 2023, the Consolidated Entity announced the results from the drilling and testing at the BA-01 well in the
23/07/2021
4,047,966
-
Mahato PSC. The conclusion reached was that no hydrocarbons had been identified. The Mahato PSC partners will continue
(1,607,358) 14,372,228
11,380,583
to identify and assess further exploration opportunities in Mahato's PB Field.
-
-
-
4,599,003
4,599,003
01/07/2023
01/07/2024
01/07/2025
22/07/2026
Balance at
the start of
the year
Balance at
the end of
the year
(270,595)
(283,533)
(502,193)
(551,037)
Expired/
forfeited/oth
er
$0.070
$0.090
$0.117
$0.078
Exercise
price
Expiry date
Exercised
-
-
-
-
-
Granted
$0.089
$0.088
$0.088
$0.000
Weighted average exercise price
$0.092
$0.078
$0.000
$0.091
$0.088
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
30/08/2022
01/07/2027
$0.070
$0.089
58.00%
-
3.39%
$0.032
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.
31
33
79
Cue Energy Resources Limited Annual Report 2023
Cue Energy Resources Limited
Cue Energy Resources Limited
Shareholder information
Notes to the financial statements
30 June 2023
30 June 2023
15,211
2023
$'000
2022
$'000
Consolidated
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
Note 24. Reconciliation of profit after income tax to net cash from operating activities
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
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.
16,068
Profit after income tax expense for the year
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
Adjustments for:
188
Share-based payments
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
259
Finance costs associated with abandonment provision
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
-
Exploration expenses
periods.
82
Depreciation
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
5,415
Amortisation
520
Net gain on foreign currency conversion
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.
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
If the non-vesting condition is within the control of the Consolidated Entity or employee, the failure to satisfy the condition is
498
Increase in contract assets
treated as a cancellation. If the condition is not within the control of the Consolidated Entity or employee and is not satisfied
(1,836)
Decrease/(increase) in inventories
(468)
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
Increase in deferred tax assets
(2,283)
award is forfeited.
Increase/(decrease) in trade and other payables
570
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
(810)
Decrease in contract liabilities
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
(Decrease)/increase in tax liabilities
551
(1,052)
is treated as if they were a modification.
Increase/(decrease) in deferred tax liabilities
(40)
Increase/(decrease) in provisions
(3,918)
(3,282)
56
(5,362)
(721)
(1,271)
1,332
880
38
96
1,703
913
94
6,005
879
Net cash from operating activities
Note 25. Earnings per share
12,653
17,662
Consolidated
2023
$'000
2022
$'000
Profit after income tax attributable to the owners of Cue Energy Resources Limited
15,211
16,068
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
Accounting policy for earnings per share
Cents
Cents
2.18
2.18
2.30
2.30
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.
80
32
34
Cue Energy Resources Limited Annual Report 2023
Directors’ declaration
Cue Energy Resources Limited
Directors' declaration
30 June 2023
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 2023 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
25 August 2023
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81
Cue Energy Resources Limited Annual Report 2023 Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Cue Energy Resources Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
(the
Cue Energy Resources Limited
Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:
• giving a true and fair view of the Group’s
financial position as at 30 June 2023 and
of its financial performance for the year
ended on that date; and
•
complying with Australian Accounting
Standards
Corporations
and
Regulations 2001.
the
The Financial Report comprises:
• Consolidated Statement of financial position as at
30 June 2023;
• Consolidated Statement of profit or loss and other
comprehensive income, Consolidated Statement
of changes in equity, and Consolidated Statement
of cash flows for the year then ended;
• Notes
including a summary of significant
accounting policies;
• Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
60
82
Cue Energy Resources Limited Annual Report 2023
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.
This matter was 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 this matter.
Restoration provision relating to the Maari field included within provisions of $16.8 million
Refer to Note 12 Provisions
The key audit matter
How the matter was addressed in our audit
We identified the restoration provision
for the Maari field as a key audit matter
due to:
•
•
estimation
uncertainty
the
relating to the updated forecast
restoration cash flows, which
require auditor
to
evaluate their appropriateness;
and
judgement
the significant size of
the
restoration provision relative to
the Group’s financial position.
The Group incurs obligations to close,
restore and rehabilitate its sites and
associated facilities. We focused on the
following key assumptions made by the
Group in determining its restoration
provision for the Maari field:
•
•
•
•
useful
lives of assets, giving
consideration to the economic
resources and
reserves and
production profiles;
the interpretation of legislative
regulatory
requirements
Group’s
governing
obligations;
the
the cost and timing of future
rehabilitation costs; and
discount and forecast inflation
rates applied by the Group to
determine the net present value
of forecast cash flows for the
restoration provision.
Our procedures included:
•
•
•
•
•
•
•
•
evaluated
the
the Group’s accounting policy
measurement of the restoration provision for consistency
in the
with regulatory requirements and the criteria
accounting standards;
for
assessed the design of the Group’s process to determine the
restoration provision. This included the review and approval
by the Group of key calculation inputs including reserves and
resources and future restoration costs;
assessed the nature and extent of work performed by the
operator’s external expert in identifying future restoration
activities and assessing the timing and likely cost of such
activities. We compared the nature and extent of restoration
work to the relevant regulatory requirements. We assessed
the consistency of timing between planned restoration
activities and the Group’s reserves and resources estimates
and expected production profile;
evaluated the scope, competency and objectivity of the
operator’s external experts and the scope and competency
of the Group’s competent person responsible for the
in
estimation of economic
accordance with industry standards;
reserves and
resources
used our knowledge of the Group and our industry
experience to challenge the reasonability of the future
restoration costs and their timing;
evaluated discount and forecast inflation rates applied by the
Group to determine the net present value of the restoration
provision against publicly available data, including risk free
rates;
assessed the integrity of the provision calculation, including
the accuracy of the underlying calculation formulas;
assessed the appropriateness of the Group’s disclosures in
the financial report, using our understanding obtained from
our testing and against the requirements of accounting
standards.
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83
Cue Energy Resources Limited Annual Report 2023 Other Information
Other Information is financial and non-financial information in Cue Energy Resources Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors
are responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report were the Financial and
Operations Review, Directors’ Report, and the Shareholder Information. The Chairman’s Overview,
Reserves and Resources Summary and Sustainability are expected to be made available to us after the
date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001;
•
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error;
and
• assessing the Group and Company’s ability to continue as a going concern and whether the use
of the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
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84
Cue Energy Resources Limited Annual Report 2023
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Cue Energy Resources Limited for the year
ended 30 June 2023, complies with Section
300A of the Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included in
the Directors’ report for the year ended 30 June
2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Vicky Carlson
Partner
Melbourne
25 August 2023
63
85
Cue Energy Resources Limited Annual Report 2023 Shareholder information
Shareholder Information
1. Distribution of equitable securities
The shareholder information set out below was applicable as at 18 September 2023:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Ordinary shares
Options over ordinary shares
Number
of holders
% of total
shares issued
Number
of holders
% of total
shares issued
75
171
508
1,443
297
2,494
–
0.08
0.64
7.03
92.25
100.00
-
-
-
-
6
6
-
-
-
-
100.00
100.00
Holding less than a marketable parcel - Minimum
$ 500.00 parcel at $ 0.0660 per unit.
355
0.18
2. Registered top 20 shareholders
The registered names and holdings of the 20 largest holdings of quoted ordinary shares in the Company as at 18 September
2023:
Ordinary shares
Shareholder
1. NZOG OFFSHORE LIMITED
2. BNP PARIBAS NOMS PTY LTD UOBKH A/C R'MIERS
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