2013 Annual Report
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The New
Energy Frontier
Chairman’s Report
Director’s Report
Director’s Declaration
Corporate Governance Statement
Auditors Independence Declaration
Independent Audit Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Shareholder Information
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Competent Person
The information in this report is based on information
reviewed by Dr Mark Hagan (BSc Hons, PhD) who is
a Petroleum Geologist and Geophysicist with more
than 35 years experience in the industry. Dr Hagan
was Technical Director of New Standard Energy during
the financial year and consents to the inclusion in the
report of matters based on his information in the form
and context in which it appears.
Company Directory
Board of Directors
Arthur Dixon AM
(Non-Executive Chairman)
Phil Thick (Managing Director)
Sam Willis (Non-Executive Director)
Mark Hagan (Non-Executive Director)
Chris Sadler (Non-Executive Director)
Joint Company Secretary
David Hansen-Knarhoi
Mark Clements
Place of Business
Level 2, 7 Ventnor Avenue
West Perth WA 6005
Ph: +61 8 9481 7477
Fax: +61 8 9486 7670
www.newstandard.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Legal Advisors
Murcia Pestell Hillard Pty Ltd
MPH Building
23 Barrack Street
Perth WA 6000
Share Registry
Security Transfer Registrar Pty Ltd
770 Canning Highway
Applecross WA 6153
ASX Code:
NSE
Please be aware that this publication may contain the names and/or images of Aboriginal
and Torres Strait Islander people who may now be deceased.
About New
Standard Energy
New Standard Energy is an emerging
oil and gas explorer, with a core
focus on Western Australian onshore
shale and tight gas projects. The
Company’s exploration program is
underpinned and complemented by
targeted corporate activity to take
advantage of opportunities and build
an extensive pipeline of exploration
projects. New Standard’s board and
management have extensive technical
and commercial experience in the oil
and gas sector.
New Standard Energy Ltd 1
Highlights
Drilling to commence
Merlinleigh Project
•
Secured Drilling Services Agreement (DSA) with
Enerdrill for its Rig #3 (subsequent to year end) which
will commence drilling at the Merlinleigh Project in late
2013 and is then set to drill one to three wells in the
Canning Basin in 2014
•
•
Application Areas successfully converted to
Exploration Permits (EP) 481 and 482
Firm one well program announced to begin drilling in
late 2013 with the drilling of exploration well Condon-1
(subsequent to year end)
Southern Canning Project
• Miro Advisors appointed to progress farm-out
opportunities of project (subsequent to year end)
•
PetroChina became the third partner in the Southern
Canning Project following a separate business
transaction with ConocoPhillips
Laurel Project
• Nicolay-1 well successfully drilled, cored and logged
•
•
Post drilling analyses showed gas in place, giving
strategic insight into the Basin’s geology
The Company successfully executed an agreement
with Green Rock Energy Ltd (ASX: GRK) in which
Green Rock agreed to relinquish 100 per cent of its
interests in the Laurel Project to New Standard
• Gibb Maitland-1 well drilled to 2,900 metres
• Complications and issues with drill rig operator
resulted in cancellation of drilling contract and
suspension of well
•
JV partners committed an additional $1.4 million
for additional geological and geophysical work in
preparation for the drilling of a third well
• Comprehensive aerial gravity survey completed over
Laurel acreage in late 2012 to assist in identifying key
areas of interest across the project
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Corporate
•
•
•
Strengthening of senior management through the
appointment of Phil Thick as Managing Director
A strategic decision to sell the Company’s substantial share
in Buru Energy Ltd resulted in a cash result of approximately
$43 million (before associated costs)
Strategic investment in Elixir Petroleum (Elixir, ASX:EXR)
increased to 28.2 per cent via placement and underwriting of
an entitlement issue
New Standard Energy Ltd 3
Company
Profile
New Standard Energy Limited
(New Standard or the Company)
Over the last twelve months the
Company’s primary focus has been on
the following:
is an ASX-listed (ASX:NSE) with
•
onshore oil and gas exploration
assets in the Canning Basin in the
North-West of Western Australia,
the onshore Carnarvon Basin in
the Mid-West of Western Australia
and in Colorado County in the
•
onshore Texas Gulf Coast region,
USA.
Progressing its flagship Southern
Canning Project (formerly Goldwyer
Project) located in the onshore
Canning Basin in Western Australia,
via the selection of a suitable
drilling operator and rig in order to
return to exploration activities in the
region
Finalising and planning all
operational and regulatory
requirements in order to drill
one firm well in late 2013 at the
company’s Merlinleigh Project
The Company has made excellent
progress in achieving both of these
key targets which crystallised once a
drilling rig was secured. The Enerdrill
Rig #3 was contracted in July 2013
following an extensive tendering period.
New Standard is now well positioned to
explore the potential prospectivity on its
major Australian projects.
The Company has maintained a strong
balance sheet over the past year
during a busy operational period and
is pleased with its current cash position
of $41.5 million at the end of the June
quarter. The sale of the company’s Buru
Energy shares supported this strong
year end position and was a strategic
decision made by management and the
Board to allow the company flexibility
and assurance for its future operational
activity.
Staff numbers have remained consistent
during the year, having earlier devoted
considerable time to assessing the
best possible candidates for internal
team structure across the organisation.
The team is well suited to progress
operational activities with a focus on
outcome driven objectives. Newly
appointed Managing Director Phil
Thick has taken over the leadership
role comfortably and is positioning
the Company to be able to meet key
operational objectives over the coming
year.
New Standard Energy Ltd 5
Oil and Gas Assets
The following table provides an overview of the Company’s exploration portfolio holdings as at 30 June 2013.
Australian Oil and
Gas Exploration
Type
Canning Basin
Interest Operator
Joint Venture Partner
EP417
Exploration permit
65% New Standard Onshore Pty Ltd Buru Energy Limited
STP-SPA-0017
Special Prospecting
100% New Standard Onshore Pty Ltd
-
EP443
Exploration permit
25% New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
EP450
Exploration permit
25% New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
EP451
Exploration permit
25% New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
EP456
Exploration permit
25% New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
STP-EPA-006**
Application area
100%*
New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
STP-EPA-007**
Application area
100%*
New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
STP-EPA-010**
Application area
100%*
New Standard Onshore Pty Ltd ConocoPhillips
(Canning Basin) Pty Ltd
PetroChina International
Investment (Australia) Pty Ltd
STP-EPA-0092***
Application area
100% New Standard Onshore Pty Ltd
Carnarvon Basin
EP481
EP482
Exploration permit
Exploration permit
100% New Standard Onshore Pty Ltd
100% New Standard Onshore Pty Ltd
-
-
-
US Oil and Gas
Exploration
Type
Colorado County Project
Interest Operator
Joint Venture Partner
Heintschel-1
Working interest in mineral rights
32.5% AKG Energy LLC
Burleson Energy Ltd,
AKG Energy LLC and
minority interests
Heintschel-2
Working interest in mineral rights
32.5% AKG Energy LLC
D Truchard-1
Working interest in mineral rights
32.5% AKG Energy LLC
Joann-1
Working interest in mineral rights
33.68% AKG Energy LLC
As above
As above
As above
*Diluting to 25%
** Permits formerly referred to by their application names of Application area 1/09-0, 2/09-0 and 5/09-0
***Subsequent to year end, the Company was awarded this acreage block in the northern Canning Basin
6 Annual Report 2013
Australian Shale Gas and Tight Gas Portfolio
New Standard Energy is an emerging oil and gas explorer, with a core focus on Western Australian, onshore shale and tight gas
projects.
With a gross acreage of 15.66 million acres (63,363 square kilometres) across Western Australia, New Standard is strategically
positioned within the rapidly expanding shale gas industry in Australia. Over the past two years the Company has secured two
top tier partners; ConocoPhillips and PetroChina, to fund and progress the company’s Southern Canning Project, located in the
onshore Canning Basin.
New Standard retains 100% ownership of its emerging Merlinleigh Project (onshore Carnarvon Basin) which is focussed on
exploration for shale and conventional gas and holds operated interests of between 65% and 100% in its Laurel Project within the
Canning Basin.
The Company’s early position in this rapidly emerging sector has positioned it to assess and participate in strategic exploration
and corporate activity. Large project equities of between 25% – 100% provide New Standard and its shareholders with both
significant exposure to value creation and corporate/project flexibility.
New Standard’s Board and senior management has been expanded to reflect the growth and development of its exploration
program so it possesses significant technical skills and expertise in hydrocarbon exploration, project development and corporate
strategy – providing New Standard with a skillset to achieve the company’s corporate objectives.
WA Gas Market: An Overview
Western Australia is currently well positioned to extract value from the attractive exploration environment for shale and tight gas
opportunities within the state. WA has some of the most favourable onshore outlooks across the country, with the Canning Basin
potentially holding one of the largest hydrocarbon resources in the world.
As the worldwide demand for gas increases, petroleum companies are exploring undeveloped onshore prospects in Western
Australia, aiming to tap major energy resources. Looking locally, there has been an increasing, and sustained, upward pressure on
WA gas prices. Limited existing supply in the WA energy market has led to an opening for the development of shale and tight gas
opportunities. A major contributing factor in this growing pressure has been spurred by the declining North-West Shelf domestic
gas supply and the increasing costs of incremental supply especially within the offshore fields of Western Australia.
With domestic gas prices likely to remain high, a clear opportunity for shale gas and tight gas resources is emerging in Western
Australia, with New Standard at the forefront of unlocking such value. With a substantial acreage position ahead of the growing
curve New Standard is well positioned for the rise in the WA energy market.
Growing infrastructure in the Canning Basin region is a key contributing factor in the shale development, with multiple LNG
developments and large players positioning to extract maximum value from the emerging market. Recently, the Natural Gas
(Canning Joint Venture) Agreement was signed between Buru Energy, its joint venture partner Mitsubishi Corporation and the
WA State Government. The agreement will facilitate the development of a domestic gas project and pipeline in the regional area
ensuring the potential of the Canning Basin to supply long term domestic gas security and appropriate development is realised in
a way that benefits all stakeholders.
Natural gas will play a critical role in the Australian Government’s planning for the national energy sector in the next decade. The
Government’s draft Energy White Paper on reform outlines how gas could account for approximately 44 per cent of Australia’s
electricity supply by 2050 – which is nearly triple the 15 per cent it accounted for in 2009-10.
There is enough shale gas potential in the Canning Basin alone to meet Australia’s energy needs for decades to come without
support from any other reserve. In terms of the Western Australian domestic market, the Canning Basin gas potential will quickly
and easily meet the gap, with substantial potential for export to global markets in the future.
New Standard Energy Ltd 7
Southern Canning Project: Canning Basin, Western Australia
The Southern Canning Project (formerly Goldwyer Project) covers in excess of 48,000km2 of the most prospective acreage in the
Canning Basin across EP’s 443, 450, 451 and 456 as well as areas STP-EPA-006, STP-EPA-007 and STP-EPA-010. During the
financial year New Standard did not meet all its work commitments related to the permits for the Southern Canning Project due to
the unforeseen circumstances surrounding the termination of the DSA for the MB Century Rig. However, in light of the difficulties
encountered, the Department of Mines and Petroleum has granted extensions to facilitate the meeting of these work commitments.
Following months of planning and preparation, Phase 1 of the Southern Canning Project reached a major execution phase in
August 2012 as New Standard approached the commencement of drilling at the first exploration well location Nicolay-1. Nicolay-1
was the first of three vertical wells planned to target the potential wet gas window of the Goldwyer formation within the Project
acreage.
The original Southern Canning Project partners (New Standard and ConocoPhillips) jointly agreed the drilling locations for the
Phase 1 exploration program with the drilling campaign focused on data acquisition to provide initial validation of the potential for
a substantial resource play across the Southern Canning Project acreage.
Data is being acquired through a combination of full coring throughout the Goldwyer formation, sophisticated mud logging and
a comprehensive suite of electric wireline logs. Following data acquisition, a detailed set of scientific studies and analysis will be
undertaken in specialised laboratories to fully assess the Goldwyer formation’s prospectivity in addition to reservoir evaluation to
be undertaken on site to gather detailed information on reservoir pressures and fracture potential of the formations of interest. This
information will assist to identify which section(s) within the Goldwyer formation has the most prospective characteristics and help
refine the target zones as a result. It will also contribute valuable information to facilitate the early design of Phase 2 work should a
decision be made to proceed.
The information being acquired through the Phase 1 drilling program and subsequent scientific analysis and reservoir evaluation
is aimed at obtaining a comprehensive, modern data set in order to more fully appraise the potential for presence of a regional
hydrocarbon resource of significant scale and prospectivity. In particular, the data being sought is aiming to establish the following
attributes that are important for successful shale plays:
• Quality of the source rock (TOC, Kerogen type, Maturity, Gas to Condensate Ratio, Rock Evaluation)
• Quality of the reservoir (Facies, GRI Porosity, Saturation, Permeability)
• Containment (Seal, Faults, Burial History, Residence Time)
•
Brittle and breakable rock (Mineralogy, Contiguous Thickness, Depth, Pressure, Stress Regime)
Establishment of encouraging results for each of these aspects during Phase 1 will help provide the basis for making a decision to
proceed to Phase 2 of the farm-in program.
Nicolay-1 Drilling Summary
The Nicolay-1 well was drilled on EP456 during the third and fourth quarters of 2012 representing the first modern exploration well
to penetrate the Goldwyer Formation in the remote parts of the southern Kidson basin. The Goldwyer Formation at Nicolay-1 was
intersected slightly higher than the prognosed depth and was developed as a shale-dominated sequence over a thick section.
Based on mudlogs and wireline log analysis the Goldwyer Formation, together with the overlying Nita Formation and parts of the
underlying Willara Formation contained potential hydrocarbon indications over significant intervals. However, preliminary TOC
values, a measure of the organic matter richness of the sediments, were less than anticipated at this location.
Importantly, positive results have been received from the thermal maturity (organic reflectance) analysis which together with
the well temperature data, suggests that the Goldwyer Formation has reached the late-oil window to the wet-gas window at the
Nicolay-1 location.
Gibb Maitland-1 Drilling Summary
The Gibb Maitland-1 well was commenced on EP450 late in 2012. In late January 2013 at a depth of approximately 2,900 metres
and prior to penetrating the Goldwyer formation the drill pipe and bottom hole assembly became stuck. Despite considerable effort
to rectify this it was not successful and plans were progressed to side-track the well. This plan was abandoned when the Drilling
Services Agreement was cancelled due to a combination of concerns around competence, safety, reliability and efficiency. The
company then set about seeking a new drilling contractor to continue the program.
The considerable new information gathered from the Nicolay-1 and Gibb Maitland-1 wells has led to a review of the geological
model for the location of shales within the wet gas to oil rich window in the southern Canning Basin. The delay in securing a new
rig for the Canning allowed the JV partners to commit an additional $1.4 million towards a full review of existing data, including
seismic reprocessing and interpretation and well sample analysis of cores and cuttings from multiple locations across the basin.
This information in addition to the two Phase 1 well results will allow the JV to select the best possible target for the third well, which
in turn gives the best chance of progressing to Phase 2.
The Southern Canning Project has a gross footprint of in excess of 48,000km2 within the Canning Basin, Western Australia
New Standard Energy Ltd 9
Laurel Project: Canning Basin, Western Australia
The Laurel Project is located in the northern Canning Basin in the Fitzroy Trough and comprises of a 65 per cent operated interest
in EP417 and a 100 per cent operated interest in the Seven Lakes Special Prospecting Authority (Seven Lakes SPA). The Laurel
Project provides a second substantial asset for New Standard in the Canning Basin and is emerging as an attractive regional play
following the recent exploration success being experienced by Buru Energy Ltd (ASX: BRU) and its joint venture partners in the
region.
During the year the Company announced that it has successfully executed an agreement with Green Rock Energy Ltd (ASX: GRK)
in which Green Rock has agreed to relinquish 100 per cent of its interests in the Laurel Project to New Standard. As part of the
transaction the parties have also terminated the Area of Mutual Interest agreement (AMI Agreement) involving the Laurel formation
across the broader Canning Basin.
This transaction results in New Standard retaining the 15 per cent equity interest in EP417 that was due to be transferred under the
farm-in agreement with Green Rock, and New Standard assuming Green Rock’s remaining 40 per cent interest in the immediately
adjacent Seven Lakes SPA as a result of terminating the AMI Agreement.
A comprehensive aerial gravity survey was successfully completed in late 2012 over acreage incorporating both EP417 and the
Seven Lakes SPA area. This survey was funded through the respective joint venture partners (at the time) with Buru Energy and
Green Rock. The survey data underwent quality control reviews and was interpreted and integrated with the existing database
across the region.
The 2013 work program on the Laurel Project will involve the following activities:
•
•
•
•
EP417 seismic data reprocessing and 2014 drill target selection
Sampling and geological studies
Regional information collation to understand recent Laurel successes
Seven Lakes SPA acreage retention
The above program has been designed primarily to refine and de-risk the drill prospects on EP417 ahead of an intended drilling
campaign to target Valhalla and Yulleroo style prospects in 2014. The program will also ensure that the most prospective acreage
is retained across the Seven Lakes SPA acreage position ahead of making an application to convert the acreage into a granted
exploration permit in the coming months.
Any ongoing success from this continued activity will provide solid ongoing encouragement regarding the potential of the
emerging Laurel play across the region.
Merlinleigh Project: Carnarvon Basin, Western Australia
The Merlinleigh gas/condensate project is based around the 5,500km2 (1.36 million acres) held by the Company in the onshore
Carnarvon Basin. New Standard owns a 100 per cent operated interest in the project which is presently comprised of two
exploration permits; EP481 and EP482. A significant milestone for the project’s progression came in August with the signing and
finalisation of Native Title agreements allowing for the application areas to be converted to exploration permits. The exploration
permits are strategically located adjacent to the Dampier to Bunbury Natural Gas Pipeline (DBNGP) which supplies gas to a large
number of industrial, mining and domestic customers in Western Australia.
The project lies within the Merlinleigh sub-basin of the greater Carnarvon basin and comprises the majority of the mature geological
settings within the proven working petroleum system. The project has significant potential for unconventional hydrocarbons
as evidenced by the encouraging presence of thick, organic rich source rocks with excellent TOC measurements, elevated
hydrocarbon readings on historical logs and evidence of gas bleeding from various associated cores.
During the second half of the year New Standard’s technical team undertook a significant amount of in-house work that was
primarily focussed on the following:
•
•
•
•
•
Further assessing the unconventional potential of the numerous shales and source rocks within the project area;
Refining the potential target areas of interest for the unconventional resource plays within the large 1.36 million acre holding to
a primary zone of interest covering 1,100km2 zone;
Finalising the contractors, suppliers and environmental/native title approvals for the drilling of Condon-1 (to commence late
2013);
Refining the conventional targets and enhancing their prospectivity based on seismic reprocessing and further analysis of
sand quality and hydrocarbon composition apparent from previous wells; and
Ensuring potential drilling prospects are ranked on the basis they provide attractive targets for both unconventional and
conventional tests.
10 Annual Report 2013
The work completed to date has confirmed the presence of a working petroleum system in the Merlinleigh Basin which is
supported by evidence from Kennedy Range-1 drilled as a basin centre test in 1967. Kennedy Range-1 included a coring
program, and further analysis of the well completion data, logs and cores taken from this well confirms the presence of thick,
organic rich shales with TOC ranges of between 2-4 per cent over significant thicknesses of up to 300m.
Subsequent to year-end New Standard has awarded a Drilling Services Agreement to Enerdrill to drill its first well in the Carnarvon
Basin in Quarter 4 2013. The company commenced ancillary works to prepare access roads, the drill pad, water bores and
other necessary site amenities in preparation for spudding Condon-1 late this year. Heritage clearance has been granted and an
environmental management plan (EMP) has been submitted and approved. The application for approval to drill a well has also been
submitted to the Department of Mines and Petroleum (DMP). The Enerdrill Rig #3 is in Mandurah, Western Australia, undergoing a
series of final operations testing, which is expected to be finalised by mid-October, after which the rig will be mobilised to site. New
Standard has also commenced a farm-out process for the Merlinleigh Project and is assessing potential partnering options, looking
for the right partner on the right terms for an agreement prior to spudding the well. If the right deal cannot be done the company is
equally prepared to drill the well on a 100% basis and look at further options for farm-out after drilling.
The Merlinleigh Project has the potential for abundant quantities of natural gas.
New Standard Energy Ltd 11
Top Wooramel depth map for the Merlinleigh Project.
12 Annual Report 2013
Conventional Onshore United States Portfolio
New Standard retains working interests of between 32.5 per cent and 33.7 per cent in various properties in onshore Texas, United
States (US). The largest asset within the US portfolio is the Colorado County Project, which hosts the Heintschel field that was
discovered in 2010 by the joint venture partners. New Standard continues to receive monthly income from the producing wells
within the Colorado County Project and continues to assess its strategic alternatives in relation to the US assets.
Equity Investments
Buru Energy Limited
In August 2012, New Standard sold 5 million Buru shares at a price of $3.18 per share to realise cash proceeds of $15.9 million
before costs. Then in October 2012, in line with the board endorsed capital management plan to manage and balance the risk
and volatility associated with its balance sheet and leave the Company well positioned for growth, the company sold its remaining
stake in Buru. New Standard sold 10 million Buru shares at an agreed price of $2.74 per share to realise cash proceeds of $27.4
million before costs. The sale price represents a return of more than 1,600 per cent for New Standard shareholders.
The transactions helped to strengthen the Company’s balance sheet and were a positive reflection of the Board’s ability to make
the right decisions at the times for optimal shareholder value creation.
Elixir Petroleum
New Standard’s investment into Elixir Petroleum for a 13.7 per cent corporate equity stake in the company offers exposure to
a 100 per cent owned Moselle Project in the Paris Basin in France. The Moselle Project spans an area of 5,360km² and is the
largest single exploration block in onshore France, and has the potential for both conventional and unconventional exploration
opportunities.
Subsequent to year end New Standard agreed to increase its equity position in Elixir by providing cornerstone support for an
underwritten entitlements issue being undertaken by Elixir at 1.2 cents per share. The entitlements issue raised a total of $1.85
million (before costs) and New Standard purchased 83,655,036 shares at a total cost of approximately $1 million, and as a result
increased its equity stake in Elixir from 13.7 per cent to 28.2 per cent.
The new shares were acquired as a result of New Standard following its existing entitlements and taking up $0.75 million of the
shortfall in the issue. New Standard was also granted the right (but not the obligation) to appoint a nominee to the Elixir board, post
completion of the raising. Subsequently, New Standard director Sam Willis has joined the Elixir board. The funds raised give Elixir
the ability to retain and continue to develop its position in the world class Paris Basin petroleum province.
This opportunistic investment positively met assessment criteria, project evaluation and the long term strategy goals for New
Standard. The investment has been made more attractive by a minimal ongoing financial and management commitment.
Summary
Corporately New Standard remains well positioned in a rapidly emerging energy sector in Australia and is well placed with large
equity positions in technically attractive projects providing the opportunity to effectively progress exploration on its portfolio of
assets in the coming years.
The Company is well positioned to extract value from within the current exploration portfolio and will continue to assess and
progress other opportunities on an ongoing basis in an effort to further enhance the potential for ongoing New Standard
shareholder wealth creation.
New Standard Energy Ltd 13
Chairman’s Report
Dear New Standard Shareholders,
The past year has been full of both
challenging and rewarding outcomes for
New Standard Energy. Our Company’s
ability to overcome those challenges
and capture opportunities has been
important as we progress each of
our projects along the value creation
pathway.
In particular, I am delighted with how we
have been able to keep advancing our
operations and forward programs. We
are now poised to discover the potential
of the Merlinleigh Project later this year,
with planning also underway to return to
the Canning Basin in 2014 for a multiple
well program. Importantly, we are
approaching this exploration campaign
with a healthy cash balance.
During the past year, the Board
and shareholders of New Standard
have participated in a tremendous
transformation. There have been
challenges we have had to overcome,
particularly our decision to terminate the
Century Energy Services Pty Ltd (MB
Century) Drilling Services Agreement
(DSA) in the Canning Basin in February
2013. This decision was taken based
on a combination of concerns about
competency, operational performance,
reliability and safety.
I, along with my fellow Board members,
am acutely aware of the frustration and
disappointment the decision created,
but even more so on reflection, I am
certain that we made the best decision
for our operations and for long term
project viability.
The decision to terminate the DSA,
coupled with changing investor
sentiment towards the natural resources
sector in the second half of the financial
year and the absence of liquids rich gas
at Nicolay-1, has impacted on the NSE
share price, which is disappointing.
However, we remain focussed on
creating shareholder value through
moving our projects up the valuation
creating pathway through safe,
methodical and efficient exploration.
The knowledge gained from our
Canning Basin drilling campaign to
date has reaffirmed to us that we have
a substantial foothold in prospective
acreage, and we remain focussed on
unlocking that potential.
The technical data and insight gathered
from drilling two wells in the Canning
Basin in 2012 is helping to structure
the drilling campaign for 2014. It is
important to remember that this was
the first modern exploration program
undertaken for over 30 years in that
area of the Basin. This information has
certainly further encouraged our views
of the potential prospectivity of our large
exploration acreage.
The desire by PetroChina to buy into our
acreage in a deal with ConocoPhillips
supports that belief.
Enerdrill, our new drilling contractor,
fully supports our safety ethos, and it
was part of the reason the new DSA was
awarded to Enerdrill for their Rig #3.
Using that rig, New Standard expects
to commence drilling at the Merlinleigh
Project in the Carnarvon Basin late this
year. The fit-for-purpose rig will also be
used when we re-enter the Canning
Basin for one to three wells in 2014.
The technical analysis conducted
by New Standard indicates that the
Merlinleigh Project has the potential
to host a significant amount of
hydrocarbons in both conventional
structures and shale\tight source rocks.
I look forward to watching this project
grow and develop.
Moving from operations to the corporate
side of the Company, we were delighted
to appoint Phil Thick as the Company’s
Managing Director role following the
resignation of Sam Willis in April this year.
I would like to take this opportunity to
thank Sam for his dedicated enthusiasm
and note that under Sam’s guidance
the Company has grown into an
organisation with a substantial portfolio
of valuable assets, world class joint
venture partners, a strong balance
sheet and an excellent team of people.
14 Annual Report 2013
I am delighted that Sam agreed
to remain a member of the Board
to concentrate on developing and
managing numerous corporate
initiatives and decisions.
I have no doubt Phil, with his strong
operational experience; will build
on the base that Sam and the team
have developed. It was testament to
Phil’s integrity that he demanded a
full external search and evaluation
be conducted to assess whether
there were any better credentialed
candidates before he accepted the role
as Managing Director in addition to his
board duties. During this transitional
period, the Company has remained
agile and moved fast to ensure proper
management processes and controls
are in place to accommodate the next
period of growth.
New Standard has been liaising with
various stakeholders across all of its
projects to ensure they are fully aware
of the activities we are conducting. We
have been proactive in opening the lines
of communication with key stakeholders
as we become familiar faces in the
communities in which we operate.
As a Company, we have been
proactive in providing information to the
communities in which we operate about
our drilling operations. Even though
our past wells and planned 2013/14
wells are traditional vertical wells,
much of the discussion has focussed
on hydraulic fracturing, which has
become a prominent point of discussion
in the media and general public. I am
concerned by the large amount of
misinformation currently being provided
to the public by activist groups. It is
unfortunate that in many cases their
campaigns are based on a fear, emotion
and a complete lack of understanding
about the oil and gas industry which
creates unnecessary anxiety in the
community. At New Standard we
are committed to talking with our
stakeholders and the broader public
about the fundamentals, safegaurds
and advanced technology of techniques
used in onshore oil and gas exploration
and production.
Protecting the health and safety
of our people and the surrounding
environment is at the forefront of
everything we do, and our commitment
to the APPEA code of practice for
onshore operators is representative of
that principle.
I would also like to thank the Traditional
Owners on whose land we operate
for their continued support of our
operations, and for providing their
services for a range of work relating to
our projects. The team at New Standard
has enjoyed the opportunity to form
strong and long-lasting relationships
with those groups we work closely with.
Looking forward, the coming years will
become increasingly busy for the team
at New Standard with drilling activities
recommencing this year at Merlinleigh
and one to three wells planned for the
Canning Basin in 2014. Our team has
been diligently planning all logistics for a
comprehensive, safe exploration program
aimed at gaining a more extensive
understanding for our prospective and
expansive acreage positions.
The Canning Basin, via the Southern
Canning and Laurel Projects, will be
a key focus for the technical team this
year as drilling operations are set to
commence in 2014 once the Enerdrill
Rig #3 is mobilised from Carnarvon after
completing the Condon-1 well.
An extensive amount of hard work is
conducted at a desktop level prior to
commencing drilling operations. It is a
truly rewarding experience for the team
internally when we are able to spud on
any of our projects. It is this end result
that drives our team every day as they
work to create shareholder value.
Yours Sincerely,
Arthur Dixon AM
Chairman
New Standard Energy Ltd 15
Directors’ Report
The Directors of New Standard submit herewith the annual financial report of the Company and the entities it controlled at the end
of, or during the financial year ended 30 June 2013.
Directors
The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows.
Directors were in office for the period stated.
Mr Arthur Dixon AM
Non-Executive Chairman
(Appointed 1 May 2011)
Age
71
Qualifications
B.E. (Chem)
Experience
Arthur Dixon graduated from Melbourne
University as a Chemical Engineer.
Arthur is a 40 year oil and gas year
veteran with Shell and of that, more than
20 years in the LNG business. He has
served on the boards of Australia LNG
Ship Operating Company (ALSOC),
Brunei LNG, Brunei Shell Tankers
and Shell International Gas and has
considerable experience working with
joint venture partners.
Arthur currently advises selected
clients, conducts executive training
courses on LNG and was Chairman
of the Board of the Australian Centre
for Natural Gas Management, a joint
venture between the University of
Western Australia and Curtin University
of Technology. Arthur was made a
Member of the Order of Australia in
January 2008.
Current and Former Directorships in
listed entities in the last 3 years
Nil
Relevant interests in shares and options
221,212 fully paid ordinary shares
450,000 options over fully paid shares
exercisable at $0.385 and expiring
20 December 2014
Mr Phil Thick
Mr Sam Willis
Managing Director
(Appointed 16 July 2012 as
Non-Executive Director, became
Managing Director on 02 April 2013)
Age
54
Qualifications
B.E. (Hons), FAICD
Experience
Phil has extensive experience in the
downstream oil sector and particularly
in the areas of logistics, terminals and
transport through his experience at
Coogee Chemicals and Shell. Phil also
brings a valuable understanding of the
WA energy market as a result of his
most recent role as Managing Director
at Coogee Chemicals – a company that
remains a significant end user of energy
in the WA market.
Phil is a Civil Engineer from the University
of Western Australia and a Fellow of the
Australian Institute of Company Directors.
He commenced his career in Perth with
Alcoa before joining Shell in 1986. A 20
year career with Shell saw stints in London
and in most cities around Australia,
culminating in 8 years in Melbourne,
where Phil was on the Board of Shell
Australia Limited. He was also Chairman
of Shell Fiji Limited and a Director of the
Australian Institute of Petroleum.
Current and Former Directorships in
listed entities in the last 3 years
Argosy Minerals Ltd (ASX:AGY)
MHM Metals Ltd (ASX:MHM)
Non-Executive Director
(Appointed 28 July 2008 as Managing
Director, resigned from this position
on 2 April 2013 and moved into Non-
Executive Director role on 01 July
2013)
Age
41
Qualifications
B.Com
Experience
Prior to his role at New Standard, Sam
worked in the corporate advisory
and financial markets fields for over
10 years where his primary duties
involved assisting companies achieve
an ASX listing, providing general
corporate advice, M&A assessment,
deal co-ordination and structuring and
capital raising for unlisted and listed
companies.
Sam has also previously worked as a
private client advisor with Hartleys, in
an advisory capacity with Red Dingo
(venture capital), and as an investment
analyst with both Deutsche Bank and
Schroders Investment Management in
London.
Current and Former Directorships in
listed entities in the last 3 years
Base Resources Ltd (ASX:BSE)
Northern Energy Corporation
(ASX:NEC)
Elixir Petroleum Ltd (ASX:EXR)
Relevant interests in shares and options
Relevant interests in shares and options
650,000 fully paid ordinary shares
11,130,762 fully paid ordinary shares
300,000 options over fully paid shares
exercisable at $0.430 and expiring
20 December 2014
150,000 options over fully paid shares
exercisable at $0.390 and expiring
12 December 2015
150,000 options over fully paid shares
exercisable at $0.440 and expiring
12 December 2015
1,000,000 options over fully paid shares
exercisable at $0.400 and expiring
02 April 2016*
1,000,000 options over fully paid shares
exercisable at $0.500 and expiring
02 April 2016*
*The issue of these options is subject to
shareholder approval at the 2013 AGM.
16 Annual Report 2013
2,500,000 options over fully paid shares
exercisable at $0.385 and expiring
20 December 2014
1,500,000 options over fully paid shares
exercisable at $0.430 and expiring
20 December 2014
Dr G. Mark Hagan
Mr Chris Sadler
Non-Executive Director
(Appointed 23 April 2012)
Age
51
Qualifications
BCA, MBA
Experience
Chris has considerable experience in
both the corporate finance and energy
sectors, through his role on the Eastern
Star Gas board prior to the takeover
by Santos, and involvement in various
mergers and acquisitions as a non-
executive director at Gloucester Coal,
Mitre 10 and Austock.
With approximately 20 years’
experience in investment banking,
working for Deutsche Bank, JP Morgan,
SG Warburg and Salomon Brothers
in Melbourne, London, New York
and Sydney, Chris brings extensive
experience in mergers and acquisitions,
corporate restructurings, equity and
debt financings.
Current and Former Directorships in
listed entities in the last 3 years
Austock Group Limited (ASX: ACK)
(resigned February, 2012)
Eastern Star Gas (ASX:ESG) (resigned
November 2011)
Relevant interests in shares and options
100,000 fully paid ordinary shares
150,000 options over fully paid shares
exercisable at $0.390 and expiring
12 December 2015
150,000 options over fully paid shares
exercisable at $0.440 and expiring
12 December 2015
Non-Executive Director
(Appointed 28 July 2008 as Technical
Director, moved into Non-Executive
Director role on 01 September 2013)
Age
66
Qualifications
B.Sc., Ph.D.
Experience
Mark holds a Ph.D in Geology from the
University of Western Australia (1974)
and has over 30 years’ experience in
oil and gas exploration and production
with expertise in the integration and
operation of all technical, operational
and marketing aspects of oil and gas
business ventures. He spent over 18
years in USA/Europe on worldwide
projects in a variety of positions and was
ultimately responsible for exploration
activities in Europe, Africa, South
America and Asia for Sun Oil Company
– a large US based integrated oil
company. Mark was on the Board of Sun
Exploration and Production Company
from 1989 to 1991 during which time
new discoveries were made in diverse
exploration spheres and oil production
rose to 70,000 barrels/day.
Since returning to Australia in 1991,
Mark has been an independent
consultant, mainly on projects in the
Australia/Asia region and is past
Chairman of Empire Oil and Gas NL
(1999-2002) – an ASX listed exploration
company.
Current and Former Directorships in
listed entities in the last 3 years
Nil
Relevant interests in shares and options
4,088,893 fully paid ordinary shares
1,750,000 options over fully paid shares
exercisable at $0.385 and expiring
20 December 2014
1,000,000 options over fully paid shares
exercisable at $0.430 and expiring
20 December 2014
Mr David Hansen-Knarhoi
Chief Financial Officer and Joint
Company Secretary (Appointed 7
September 2011)
Qualifications
B.Com, CA, CSA (Cert)
Experience
David has a Bachelor of Commerce
degree from the University of Western
Australia. David is a Fellow of the
Institute of Chartered Accountants of
Australia and a member of the Institute
of Directors of the United Kingdom.
He has over 18 years’ management,
corporate administration, finance and
accounting experience working for a
number of listed and unlisted public
companies both in Australia and the
United Kingdom.
Mr Mark Clements
Joint Company Secretary
(Appointed 28 July 2008)
Qualifications
B.Com, FCA, MAICD
Experience
Mark has a Bachelor of Commerce
degree from the University of Western
Australia and is a Fellow of the Institute
of Chartered Accountants of Australia.
Mark is also a member of the Australian
Institute of Company Directors and
an affiliated member of the Institute
of Chartered Secretaries in Australia.
He has over 16 years management,
corporate administration, finance and
accounting experience working for a
number of listed and unlisted public
companies for which he has held the
role of Company Secretary for over 11
years. Mark previously worked for an
international accounting firm.
New Standard Energy Ltd 17
Principal Activities
The principal activities of the Company during the course of the year were the continued exploration for oil and gas in the Canning
Basin in north-west Western Australia and investments in onshore development in the Texas Gulf region, Southern USA. In addition,
resources were applied to reviewing and securing Exploration Permits for the Merlinleigh Project in the onshore Carnarvon Basin.
Operating Results
The consolidated entity’s net profit attributable to members of New Standard for the year ended 30 June 2013 after applicable
income tax was $17 million (2012: profit of $205,129).
Future Developments
The Company intends to pursue its current stated objectives as an oil and gas explorer.
Dividends
No dividend has been declared or paid during the financial year and the Directors do not recommend the payment of any dividend
in respect of the current or preceding financial years.
Operating and Financial Review
New Standard’s Western Australian drilling and exploration operations continued to be the focal point of the Company’s financial
year. The Company drilled two wells (Nicolay-1 and Gibb Maitland-1) in the Canning Basin as part of Phase 1 of the Southern
Canning Project. The two wells were drilled in a remote and underexplored region of Western Australia, requiring the construction
of more than 500km worth of road, airstrips and drill pads. Data from these two wells have been used in a comprehensive review,
including reprocessing of seismic data and analysis of core samples from other nearby wells, in further defining the resource
structure and potential and in determining the best possible target for the third well in Phase 1 of this project.
Another significant milestone was reached once the Company successfully converted its Merlinleigh Special Prospecting Authority
acreage to granted Exploration Permits after securing native title agreement with the Gnulli Native Title Claim Group (Gnulli) and
executing all necessary agreements and State Deeds with both the Gnulli and Western Australian Department of Mines and
Petroleum (DMP). The execution of these documents triggered an offer for the grant of two Exploration Permits from the DMP which
New Standard formally accepted via its wholly owned subsidiary New Standard Onshore Pty Ltd. The granting of the Exploration
Permits paves the way for access to the Merlinleigh Project acreage and provides the ability for on ground exploration activity to
commence during 2013.
Other operational expenditure was focused on developing the Company’s Laurel Project, which was the subject of an extensive
aerial gravity survey resulting in a detailed suite of geological information and analyses on the acreage, to support a drilling
campaign planned for 2014.
The Company retains its interest in the Colorado Country Project, onshore Texas, US, which is operated by AKG Energy. The wells
continued to produce income throughout the period. The future of these assets, considered non-core by the Company, is under
review.
The Company also began a formal farm-out process for its Merlinleigh Project by appointing Miro Advisors with a view to finding a
partner for the project prior to commencement of drilling. However, if a suitable agreement cannot be reached for a farm-out New
Standard is committed to proceeding with its drilling program later this year, with nearly all necessary approvals and plans in place
to commence on ground operations.
Other key highlights from the FY2013 were focussed around securing a new Drilling Services Agreement (DSA) after the New
Standard Board made the decision to terminate an existing drilling contract with MB Century. The decision to terminate the
DSA was made based on concerns relating to operational performance, reliability, competency and safety, supported by an
independent audit of the drill rig commissioned by New Standard and finalised on 6 February.
PetroChina received approval from the Chinese and Australian Governments to proceed with the acquisition of a 29 per cent
interest from ConocoPhillips in the New Standard-operated joint venture in the Southern Canning Basin. The value of the cash
transaction implies a current value in excess of AUD$110 million for the Southern Canning Basin assets, valuing New Standard’s
retained 25 per cent interest at approximately AUD$28 million.
New Standard expanded its workforce to 25 staff and strengthened its senior management, via the placement of Phil Thick as
Managing Director, in order to ensure the upcoming drilling campaigns were adequately prepared for operational activity. The
internal team is prepared to deliver on a number of key corporate objectives over the coming financial year.
18 Annual Report 2013
Financial summary
Year ended 30 June 2013
Revenue
Depreciation, Amortisation & Impairment
Net Interest (Paid)/Received
Operating Profit Before Tax
Operating Profit After Tax
Exploration Costs
Net Assets
2013
42,590,776
(7,392,531)
1,969,310
2012
844,077
(66,485)
814,536
30,308,167
(3,454,500)
16,699,068
205,129
21,299,880
4,305,357
71,126,358
83,605,745
Whilst the Company posted a significant profit for the year, no tax liabilities are expected due to the carry-forward losses available
to the Company, as well as the tax deductible exploration expenditure incurred in the financial year.
New Standard maintained a strong cash position despite up scaling its operational activities after a decision was made to sell the
Company’s shares in Buru Energy Ltd. A total of $43 million was received from the sale, which occurred at two separate occasions.
The strong cash position was further enhanced via $2 million interest income.
An impairment assessment was made on all assets which resulted in the booking of the following impairments:
•
•
$5.4 million impairment of the Colorado County exploration assets in the US in line with current market value expectations,
based on the declining production from the producing fields and the likely relinquishment of some acreage in the exploration
areas.
$1.7 million impairment of the Company’s investment in Elixir Petroleum Ltd (EXR) in line with AASB 139 as the EXR share
price has been trading at levels below New Standard’s purchase consideration over a prolonged period of time.
A total of $28.6 million exploration costs were invested in the year ended 30 June 2013, including $24.3 million related to the
Southern Canning Project drilling campaign, $2.1 million related to aerial gravity survey and other geological studies on the Laurel
acreage, and $1.2 million on progression of the Merlinleigh permits.
The net assets of the Group have decreased by $12.5 million from $83.6 million at 30 June 2012 to $71.1 million as at 30 June
2013. This net decrease is primarily due to the recording of impairments as described above.
Outlook
The Company will focus on its Western Australian operations in the upcoming financial year, with an aim at meeting milestones
across all three of its Projects. Management of permits continues to be a critical activity for New Standard. The Company will
seek to meet all of its exploration, operational and expenditure obligations for each project in order to retain the rights over its
application and exploration acreage.
The Company plans to drill an exploration well at the Condon-1 site in its Merlinleigh Project in the onshore Carnarvon Basin in late
2013. In addition the recently signed DSA provides options for drilling up to three wells in 2014, most likely in the Canning Basin.
As a result, the opportunity exists to undertake exploration drilling to test all three projects by the end of 2014, and the Company
will be planning and progressing this program through the next financial year. Plans and decisions for the Southern Canning
Project and the Laurel Project are both subject to negotiations and agreement with the respective JV partners.
New Standard will continue to manage its portfolio of assets and projects to reduce risk and best utilise the Company’s resources.
Suitable farm-in partners will be sought wherever appropriate to add expertise and share cost. New investment opportunities will
continue to be pursued and reviewed in line with the Company’s long term strategy and risk profile.
Environmental Regulations
The economic entity holds participating interests in oil and gas Exploration Permits. The New Standard group is subject to
environmental regulations under relevant Australian and Western Australian legislation in relation to its oil and gas exploration
activities, particularly with the Western Australian Department of Mines and Petroleum and the Western Australian Department of
Environment and Conservation. The Directors actively monitor compliance with the regulations and as the date of this report, the
Directors are not aware of any material breaches in respect of the regulations.
Greenhouse gas and energy data reporting requirements
Given the nature and location of the Group’s operations in Australia and the USA, both the Energy Efficiency Opportunities Act
2006 and the National Greenhouse and Energy Reporting Act 2007 are not expected to have a material impact.
New Standard Energy Ltd 19
Share Options
Share options on issue at year end or exercised during the year:
Details of unissued ordinary shares of the Company under option at the date of this report are as follows:
Item
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Number of
Shares under Option
500,000
500,000
6,250,000
3,750,000
300,000
300,000
300,000
300,000
375,000
375,000
300,000
300,000
1,00,000
1,00,000
Date
of Issue
29/03/2011
29/03/2011
20/12/2011
20/12/2011
24/04/2012
24/04/2012
09/05/2012
09/05/2012
10/08/2012
10/08/2012
12/12/2012
12/12/2012
02/04/2013
02/04/2013
Exercise
Price of Options
Expiry
Date of Options
$0.225
$0.275
$0.385
$0.430
$0.810
$0.905
$0.535
$0.600
$0.745
$0.835
$0.390
$0.440
$0.400
$0.500
30/06/2015*
30/06/2015*
20/12/2014
20/12/2014
24/04/2015
24/04/2015
09/05/2015
09/05/2015
10/08/2015
10/08/2015
12/12/2015
12/12/2015
02/04/2016**
02/04/2016**
* On 28 June 2013 the ASX granted New Standard a waiver from listing rule 6.23.3 to the extent necessary to permit New Standard to amend the
terms of 1,000,000 unlisted options to extend the expiry date to 30 June 2015, subject to New Standard obtaining shareholder approval, which is
to be sought at the 2013 AGM.
** The issue of these options is subject to shareholder approval, which is to be sought at the 2013 Annual General Meeting.
During the year and up to the date of the report no options were exercised prior to expiry.
Refer to the notes to the financial statements for details of options granted during the period.
Proceedings on Behalf of the Company
No person has applied for leave of the Court under Section 237 of the Corporations Act 2001 to bring proceedings on behalf of the
Company or intervene in any proceedings to which the Company is a party for the purposes of taking responsibility on behalf of
the Company for all or any part of those proceedings.
The Company was not a party to any proceedings during the year.
Events Subsequent to Year End
On 3 July 2013, the Company announced it will resume drilling operations towards the end of 2013 after it signed a Drilling
Services Agreement (DSA) for a firm two well program with the option for an additional two wells at New Standard’s election. This
arrangement will provide New Standard with flexibility as operator of all its joint ventures and projects to allocate drilling slots
as exploration programs are firmed up over the coming 6-12 months. Subject to the DSA receiving final approvals, drilling will
commence at the Company’s Merlinleigh Project in the onshore Carnarvon Basin in late 2013, to be followed by up to three wells in
the Canning Basin after the wet season in mid-2014.
On 13 August 2013, New Standard announced it had significantly increased its equity position in Elixir Petroleum Ltd (ASX: EXR)
following its support of a $1.85 million entitlements issue completed by Elixir at a price of 1.2 cents per share. New Standard
purchased 83,655,036 shares at a total cost of $1 million, and as a result increased its equity stake in Elixir from 13.7 per cent to
28.2 per cent. Subsequently New Standard director Sam Willis has joined the Elixir board.
On 11 July 2013, the Company announced that China’s largest energy company, PetroChina Company Limited (PetroChina), has
received Chinese and Australian federal government approval to proceed with acquiring a 29 per cent interest from ConocoPhillips
in New Standard’s joint venture in the Southern Canning Basin. The deal between PetroChina and ConocoPhillips had been closed
by a cash payment, and PetroChina’s full participation only awaits approval and registration by Western Australia’s Department of
Mines and Petroleum.
New Standard Energy increased its acreage position in Western Australia after being awarded a new exploration area in the
northern Canning Basin by the Department of Mines and Petroleum following a successful bid submission for acreage release area
L12-15. Exploration Permit Application STP-EPA-0092 covers an area of 3,305km2. There are no work requirements for this area
until Native Title and heritage negotiations are initiated and completed.
Other than the above, there has been no other matter or circumstance that has arisen since the end of the year that requires
disclosure.
20 Annual Report 2013
Directors’ Meetings
The following table sets out the number of Directors’ meetings held during the financial year and the number of meetings attended
by each Director whilst in office. During the financial year, 12 Board meetings were held. There were four remuneration committee
meetings and three audit committee meetings.
Directors
Board of Directors
Audit Committee
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
Mr A Dixon AM
Mr P Thick
Mr S Willis
Dr M Hagan
Mr C Sadler
12
12
12
12
12
* Attended by invitation
12
11
11
12
11
3
3
3
3
3
2
3
3*
3*
3
4
4
4
-
4
4
2
1*
-
4
Mr Thick’s attendance at audit committee and remuneration committee meetings was during his tenure as Non-Executive Director.
Upon appointment as Managing Director, Mr Thick immediately tendered his resignation from both committees.
Whilst there was no formal nomination committee established, during the year a sub-committee of the Board was delegated
the responsibility for identifying suitable candidates to replace the outgoing Managing Director, as well as identifying potential
candidates for a Non-Executive Director appointment to the Board. The sub-committee engaged independent external recruitment
consultants as required.
Indemnification of Officers and Auditors
During and since the financial year the Company has indemnified and entered into Deeds of Indemnity and Access with each of
the current Directors to indemnify the Director or any related body corporate against a liability incurred as a Director. The Deeds
provide for the Company to pay all damages and costs which may be awarded against the Directors.
The Company has paid premiums to insure each of the Directors against liabilities for cost and expenses incurred by them in
defending any legal proceedings arising out of their conduct while acting in the capacity of a Director of the Company, other than
conduct involving a wilful breach of duty in relation to the Company. This cover has also been extended to cover the activity in the
USA through the wholly owned subsidiary, New Standard Energy Inc.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory duties where the auditor’s expertise
and experience with the Company and/ or the consolidated entity are important.
Details of the amounts paid or payable to the auditor BDO Audit (WA) Pty Ltd for audit and non-audit services provided during the
year are set out below.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as outlined below,
did not compromise the auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
–
–
All non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and
objectivity of the auditor; and
None of the services undermine the general principle relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
During the year no fees were paid or payable to the auditor or its related entities for any non-audit services.
Auditor’s Independence Declaration
A copy of the auditor’s independences declaration under s.307C of the Corporations Act 2001 in relation to the audit
of the full year is included on page 45.
Remuneration Report – Audited
This remuneration report sets out the remuneration arrangements for New Standard Energy Limited (New Standard) for the year
ended 30 June 2013. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the
Corporations Act 2001.
Policy
Basic Policy:
•
•
Executive remuneration comprises fixed remuneration, and variable (or “at-risk”) remuneration, which is determined by
individual and Company performance. Where targets for senior managers are achieved, New Standard sets total fixed
remuneration (TFR) at the 50th percentile of salaries for comparable companies within the energy industry, and total
remuneration package (TRP), including “at target” variable remuneration, at the 75th market percentile. As a consequence,
New Standard’s executives have a higher proportion of remuneration at risk than industry averages.
The TRP consists of base pay (inclusive of superannuation) and short and long term incentives.
• Non-executive directors will receive fees in line with industry practice and with consideration of the independent remuneration
consultant’s recommendations.
Background
At the Company’s 2012 Annual General Meeting (AGM), New Standard received approximately 28 per cent of ‘no’ votes on its
Remuneration Report for the 2012 financial year. Prior to the 2012 AGM, the Company had already recognised that the legacy
remuneration structure required updating and as such implemented a new remuneration structure for the 2013 financial year in
line with best practice recommendations from an independent remuneration consultant. However the 2012 Remuneration Report
required reporting to be on the legacy 2012 remuneration structure.
In addition, New Standard recognises that it does not currently comply with the ASX recommendation to have a majority of the
Board being independent directors and is in the process of recruiting a third independent director to meet this requirement in
future.
A summary of the key legacy issues identified and rectified and key characteristics of the new remuneration structure are as
follows:
Previous (Legacy) Schemes Dropped:
• New Standard traditionally offered a small parcel of unlisted options to non-executive directors, subject to shareholder
approval, as part of a sign-on package to promote strong alignment with shareholders as well as to effectively manage
cashflow. The terms of the offers were in line with the Employee Share Option Plan (ESOP) that was approved by shareholders
at the 2011 AGM. Australian investor guidelines now suggest that the grant of equity instruments to non-executive directors
may be perceived to impair their ability to act in the long term best interests of the company. As such, New Standard has
altered its remuneration policy to cease this practice.
•
The legacy 2012 executive remuneration structure involved a share purchase plan with associated non-recourse loans as part
of a long term incentive plan that was approved by shareholders at the 2010 AGM. Local market standards now generally
oppose the use of non-commercial loans in providing executive remuneration. As such, New Standard has altered its
remuneration policy to cease this practice.
Incentive Practices Adopted from September 2012:
•
•
•
•
•
•
•
Short-term incentives are determined annually against Key Performance Indicators and paid as a percentage of base pay in
cash.
The Long Term Incentive Plan follows an independent review and benchmarking exercise to ascertain best practice
remuneration structure and quantum and involves the grant of Incentive Rights with a three year measurement period (LTIP).
The grant of Incentive Rights to executives may be in the form of Performance Rights or Retention Rights.
Performance Rights are measured against New Standard’s share price performance and will vest on a sliding scale against
pre-determined absolute Total Shareholder Return (TSR) targets after a three year measurement period. Details of the
absolute TSR targets are outlined later in this report.
Retention Rights are linked to tenure and will vest if a three year continuous period of service is completed.
Any Performance Rights or Retention Rights that do not vest after the measurement period will immediately lapse.
The Incentive Rights granted under the new LTIP have a three year measurement period. To ensure incumbents are not
penalised by the transition between plans, a shorter, 18 month measurement period has been applied to 50 per cent of
the Incentive Rights issued in the first year of operation of the LTIP, whilst the remaining 50 per cent have a three year
measurement period. All grants of LTIP Incentive Rights beyond the first year of its operation will also have a three year
measurement period.
Absolute TSR is calculated by reference to share price growth and dividends (assuming dividends are reinvested into the
Company’s shares) over the measurement period. New Standard believes that absolute TSR is an appropriate performance hurdle
because it ensures that a proportion of each participant’s remuneration is linked to shareholder value and ensures that participants
only receive a benefit where there is a corresponding direct benefit to shareholders.
22 Annual Report 2013
Details of key management personnel
The remuneration report details the remuneration arrangements for key management personnel (‘KMPs’) who are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Group, and comprise
the Directors (whether executive or otherwise) of the Company and other executives. Details of KMP are set out below:
Position
Appointed during the period
Name
Executives
P Thick (i)
S Willis (i)
M Hagan
Managing Director
Executive Director
Technical Director
D Hansen-Knarhoi
Chief Financial Officer and Joint Company Secretary
M Gracey
P Achour
K Aitken
B Walker (ii)
Non-executive
A Dixon AM
C Sadler
Commercial, Legal and Indigenous Affairs Manager
Health, Safety and Environment Manager
Engineering and Operations Manager
Exploration Manager
Chairman
Director
2 April 2013
2 April 2013
30 July 2012
(i) Mr Willis resigned from the role as Managing Director and moved into the Executive Director role effective 2nd April 2013. Mr Thick was
appointed Managing Director effective the same date, after serving as Non-executive Director at New Standard for the 9 months prior.
(ii) Mr Walker left the Company on 31st May 2013.
Remuneration Committee
New Standard has adopted a Remuneration Committee as a sub-committee of the Board and does not include Directors that are
either Executive or not Independent. The Remuneration Committee is responsible for oversight of the remuneration policy and
system and reporting of such to the Board. It is also responsible for evaluating the performance of the Executive Directors and
monitoring performance of the executive management team. The Board, upon recommendation of the Remuneration Committee,
determines the remuneration of the Executive Directors and approves the remuneration of the executive management team.
The objective of the Remuneration Committee is to ensure that remuneration policies and systems attract and retain executives
and directors who will create value for shareholders. As part of this process the Remuneration Committee may seek advice from
independent remuneration consultants.
The Corporate Governance Statement provides further information on the role of this Committee.
Use of remuneration consultants
To ensure the Remuneration Committee is fully informed when making remuneration decisions, it may seek external remuneration
advice. Any such advice is usually from independent sources with some expertise in their relevant field and that are sufficiently
independent to allow independent and un-biased advice to be provided to the Remuneration Committee.
In 2012 the Remuneration Committee and the Board formed the view that the incumbent remuneration structure that was in place
during the 2012 Financial Year was not reflective of accepted remuneration practices, and a review of the remuneration policy and
structure was warranted to ensure the Company was in line with best practice to assist in securing and retaining quality staff.
As a result the Godfrey Remuneration Group Pty Ltd (Godfrey) was engaged to review the structure of the Company’s remuneration
components, advise on the policy positioning objectives and to provide recommendations in respect of executive long-term
incentive plan design. Under the terms of the engagement, Godfrey was paid $63,850 for these services.
In order to ensure the Remuneration Committee is provided with advice, and as required, remuneration recommendations,
free from undue influence by members of the KMP to whom the recommendations may relate, the engagement of the above
consultants by the Remuneration Committee was based on an agreed set of protocols that would be followed by each external
remuneration consultant, members of the Remuneration Committee and members of KMP. Those protocols included:
• Godfrey was engaged by, and reported directly to, the Remuneration Committee. The agreement for the provision of
remuneration consulting services was executed by a member of the Remuneration Committee under delegated authority on
behalf of the board;
•
reports containing the remuneration recommendations were provided directly to the Remuneration Committee; and
• Godfrey were permitted to speak to management throughout the engagement to understand Company processes, practices
and other business issues and obtain management perspectives. However, Godfrey was prohibited from providing advice or
recommendations to KMP before the advice or recommendations were given to members of the Remuneration Committee and
not in any case unless Godfrey had approval to do so from members of the Remuneration Committee. As a consequence, the
board is satisfied that the recommendations were made free from undue influence from any members of the KMP.
New Standard Energy Ltd 23
Remuneration policy
New Standard is committed to the close alignment of remuneration to shareholder return, particularly that of the executives. To
this end, the Company’s remuneration system is designed to attract, motivate and retain people by identifying and rewarding high
performers and recognising their contribution to the continued growth and success of the Company.
Key objectives of the Company’s remuneration policy are to ensure that remuneration practices:
•
•
•
•
•
facilitate the achievement of the Company’s objectives;
provide strong linkage between executive incentive rewards and creation of value for shareholders;
attract, retain and motivate employees of the required capabilities;
are simple to understand and implement, openly communicated and are equitable across the Company; and
comply with applicable legal requirements and appropriate standards of governance.
Developments for 2013 Financial Year – A Revised Remuneration Structure
The Company went through considerable corporate and commercial change during the 2012 financial year and this has been
reflected in the changes to the Company’s remuneration policy and practices.
In conjunction with remuneration specialist Godfrey, the Company undertook a major review of the structure of the Company’s
remuneration components, and Godfrey’s advice provided guidance and assisted to design a revised remuneration system to
ensure the continued ability of the Company to attract and retain people of the required capability. The revised remuneration policy
and structure has been implemented for the 2013 financial year, and reflects the following broad remuneration practices to ensure
Policy target remuneration package positioning:
•
•
•
A performance based remuneration system;
A Short-Term Incentive Plan (STIP) with performance criteria assigned for both individual and Company performance; and
A Long-Term Incentive Plan (LTIP) utilising Incentive Rights consisting of Performance Rights with performance hurdles linked
to absolute total shareholder return (TSR) and Retention Rights linked to tenure.
As part of the above review, in October 2012, Godfrey also carried out a review of remuneration packages for all KMP’s
benchmarking against similar companies in the sector to ensure that packages were in line with the market. This resulted in new
base salaries being established for all key positions.
During the course of the year the Company engaged with major shareholders and proxy advisors to canvass views on
remuneration structure, and these views were important considerations in the development of all aspects of the remuneration
policy.
Key principles of executive remuneration
Remuneration comprises fixed remuneration, and variable (or ’at-risk‘) remuneration, which is determined by individual and
Company performance. The Company targets total fixed remuneration (TFR) at the 50th market percentile and total remuneration
package (TRP), including ’at target’ variable remuneration, at the 75th market percentile, for the executive management team. As a
consequence, the Company’s executives have a higher proportion of remuneration at risk than industry averages.
Questions and answers about executive remuneration are set out below:
Remuneration mix
What is the balance
between fixed and ‘at risk’
remuneration?
The mix of fixed and at-risk remuneration varies depending on the organisational level of executives,
and also depends on the performance of the Company and individual executives. More senior
positions have a greater proportion of their remuneration at-risk.
If target at-risk remuneration is earned, the proportion of total remuneration represented by fixed and
at-risk remuneration would be:
• Managing Director: 50% fixed and 50% at-risk
• Other Executives who are KMP: 59% fixed and 41% at-risk
Fixed remuneration
What is included in fixed
remuneration?
When and how is fixed
remuneration reviewed?
24 Annual Report 2013
TFR includes a base salary plus superannuation. Allowances and other benefits may be provided
and are as agreed, including leased motor vehicles and additional superannuation, provided that no
extra cost is incurred by the Company.
TFR is reviewed annually. Any adjustments to the TFR for the Executive Directors must be approved
by the Board after recommendation by the Remuneration Committee. Any adjustments to the TFR for
other senior executives must be approved by the Remuneration Committee after recommendation
by the Managing Director within guidelines approved by the Board. The Company seeks to position
the fixed remuneration at the 50th percentile of salaries for comparable companies within the energy
industry, utilising datasets and specific advice provided by independent remuneration consultants.
STIP
What is the STI Plan?
Why does the Board
consider an STI is
appropriate?
Does the STI take into
account different levels of
performance compared
to objectives?
The STI is the cash component of the at-risk remuneration, payable based on a mix of Company and
individual annual performance standards.
At-risk remuneration strengthens the link between pay and executive performance. The purpose of
these programs is to rewards executives for annual performance relative to expectations of their role
accountabilities, required behaviours and KPI’s as well as the delivery of annual business plans. A
reward structure that provides at-risk remuneration is also necessary as a competitive remuneration
package in the Australian and global marketplace for executives.
The size of any payment is linked to the extent of achievement. Levels of performance required for
target levels of STI should be set such that they are challenging but achievable.
Required performance levels for each performance criteria are set at three levels being:
•
•
•
Threshold - a performance level that is below optimal but nevertheless acceptable. It is the
minimum for which a small STI award would be payable. The STIP is designed such that there is
an 80% probability the executive will achieve or exceed this level of achievement.
Target - a performance level that represents a challenging but achievable level of performance.
The STIP is designed such that there is a 50% to 60% probability the executive will achieve or
exceed this level of achievement.
Stretch - a performance level that is clearly at the upper limit of what may be achievable. The
STIP is designed such that there is a 10% to 20% probability the executive will achieve or
exceed this level of achievement.
The probabilities of achievement are set at these levels such that, over time, awards approximately
equal to the target level would become payable, assuming performance to role. The achievement of
this target level of award would support 75th percentile total remuneration package policy objective
for executives.
What are the
performance criteria?
Performance criteria are assigned for both individual and Company performance and may vary from
year to year.
Reflecting the importance attached to role clarity within New Standard, Individual Performance
Criteria will be drawn directly from the role accountabilities in the participant’s role description and
demonstrated adherence to New Standard’s values. The Performance Criteria for the Managing
Director are set by the Board and for other executives are set by the Managing Director and reviewed
by the Board.
Corporate performance criteria are set by the Board at the commencement of each financial year
and may vary from time to time to include other aspects of performance for which there is shared
accountability and which the Company wishes to emphasise.
Each performance criteria may be allocated a weighting for each year that reflects the relative
importance of each performance criteria for the year.
What is the value of the
STI award opportunity?
The Managing Director and other executives have a target STI opportunity of 10% of TFR, with a
minimum opportunity (if only threshold level is met) of 5% and a maximum opportunity (if the stretch
targets are achieved) of 20% of TFR.
These percentages are set based on external advice to achieve the remuneration policy intent of
75th percentile total remuneration package market positioning.
Individual performance criteria - are assessed using a performance rating scale. In making the
assessment in respect of a particular area of accountability, consideration is given to the extent
to which the behaviours and performance indicators identified in the role description have been
modelled and observed. For Executives, this assessment is undertaken by the Managing Director
and then signed-off by the Remuneration Committee. In the case of the Managing Director, the
assessment is undertaken by the Remuneration Committee and approved by the Board.
Corporate performance criteria – the Board and/or the Remuneration Committee will determine the
extent to which each corporate performance criteria has been achieved.
How is STI assessed?
LTIP
What is the LTI Plan (LTIP)? The LTIP is the equity component of at-risk remuneration and is linked to the Company’s TSR
performance over a 3 year period.
The LTIP aims to reward participants for New Standard’s TSR performance in absolute terms such
that LTI awards only become valuable to the recipient upon achievement of absolute TSR hurdles as
set by the Remuneration Committee.
How often are LTIP awards
made?
The LTIP operates on the basis of a series of cycles. Each cycle commences on 15 September
and is followed by a 3 year performance period, with a test date on the 3rd anniversary of the
commencement of the cycle. As a result, the LTIP awards may occur annually with the first cycle of
the LTIP began on 15 September 2012.
New Standard Energy Ltd 25
Why does the Board
consider an LTIP is
appropriate?
The Company believes that a LTIP can:
•
•
attract executives with the requisite capability;
retain key talent;
• maintain a stable leadership team; and
•
explicitly align and link the interests of New Standard’s leadership team and shareholders.
What types of equity may
be granted under the LTIP?
Under the LTIP Performance Rights may be granted to the Managing Director and other key
employees as a percentage of TFR. In addition key employees also may be granted Retention Rights
as an encouragement to stay with the Company for the longer term, as it is viewed as important for a
relatively new company to maintain continuity of key management personnel where possible. Details
of Performance and Retention Rights are outlined in the table below.
Role
Managing Director
Direct Reports
Target Retention
LTI (% of TFR)
Target Performance
LTI (% TFR)
Total
LTI (% TFR)
0%
20%
90%
40%
90%
60%
All rights are a right granted to acquire one share in New Standard, subject to satisfying either
performance or retention criteria that will be established and agreed from time to time.
A participant is not entitled to participate in or receive any dividends or other shareholder benefits
until the right has vested and a share has been allocated and transferred to the participant.
What are the LTIP
performance conditions?
The Company uses absolute TSR as the sole LTIP performance criteria to determine the proportion of
Performance Rights which vest.
The Board considers that absolute TSR is an appropriate performance hurdle because it ensures
that a proportion of each participant’s remuneration is linked to shareholder value and ensures that
participants only receive a benefit where there is a corresponding direct benefit to shareholders.
Absolute TSR performance rights
The proportion of Absolute TSR Performance Rights which vest will be determined on the basis of
New Standard’s TSR on the following scale:
New Standard 3-year TSR
Less than 33%
33%
Between 33% and 52%
52%
>52% and <73%
73% or greater
Percentage of absolute TSR
performance rights that vest
Nil
25%
Pro rata between 25% and 50%
50%
Pro rata between 50% and 100%
100%
The Performance Rights issued in 2013 require a share price of 66.51c per share to reach the
minimum vesting hurdle (33% 3 year TSR) and 86.35c per share to reach the maximum vesting
hurdle (73% or greater 3 year TSR)
What are the LTIP Retention
conditions?
The Company uses a retention period of 3 years as the standard benchmark for vesting of Retention
Rights.
What happens to Incentive
Rights granted under the
LTIP when an executive
ceases employment?
Where an executive who holds Incentive Rights ceases to be employed by a Group member (and is
not immediately employed by another Group member) for any reason other than a qualifying reason,
all unvested Incentive Rights of that participant are automatically forfeited.
Where an eligible employee who holds Incentive Rights ceases to be employed by a Group member
because of a qualifying reason, then the Board must determine, in its absolute discretion, the number
of unvested Incentive Rights of a participant (if any) that will remain on foot and become capable of
vesting in accordance with LTIP rules.
The Board will generally exercise its discretion in the following manner:
•
•
Incentive Rights granted in the cycle beginning on the 15 September immediately prior to the
participant ceasing to be employed by a Group member will be forfeited in the same proportion
as the remainder of the cycle year bears to the full year; and
all other Incentive Rights that are not forfeited on the participant ceasing to be employed by a
Group member will continue to be held by the participant and will be tested for vesting on the
test date for the relevant Incentive Right.
Qualifying reasons include but are not limited to death, total and permanent disablement, retirement
or redundancy.
What happens in the event
of a change of control?
In the event of a change-in-control including a takeover the vesting conditions attached to the
tranche at the time of the Offer will cease to apply and vesting will be triggered at the Board’s
discretion.
26 Annual Report 2013
Executive remuneration outcomes for 2013
Short Term Incentives
For the year ended 30 June 2013, the KPIs linked to the STIP were based on capital management, partner, contractor and
stakeholder relations, operational, environmental and safety performance in the field, resource base and asset management, office
and employee operations, management of technical team and database and corporate governance, weighted depending on the
accountabilities of the role and impact on the Group’s performance.
The Remuneration Committee is responsible for assessing whether the KPIs are met. The STIP target annual payment is reviewed
annually. The Remuneration Committee is currently assessing whether the KPI's for the year ended 30 June 2013 had been
achieved, and the financial statements as at 30 June 2013 include a provision for $102,917.
The Remuneration Committee has the discretion to adjust STI’s downwards in light of unexpected or unintended circumstances.
At the end of the 2013 financial year, a review of the performance of each executive was undertaken against each of their 2013
individual performance measures as explained above. STIP entitlements earned for 2013 performance are accrued in 2013 and
paid in the 2014 financial year.
The following table outlines the STI that was earned for the 2013 financial year:
2013
Executive Directors
Mr P Thick
Mr S Willis*
Dr M Hagan
Key Management Personnel
Mr M Gracey
Mr D Hansen-Knarhoi
Mr P Achour
Mr K Aitken
Total
STIP Amount
$
Ineligible
-
-
24,000
27,500
17,500
33,917
102,917
* Mr Willis was eligible for STI in 2013, but has chosen to totally relinquish those rights as a result of him stepping down from the Managing
Director role during the year
Long Term Incentives
The Incentive Rights granted under the new LTIP have a 3 year measurement period. To ensure incumbents are not penalised by
the transition between plans, a shorter, 18 month measurement period has been applied to 50% of the Incentive Rights issued
in the first year of operation of the LTIP, whilst the remaining 50% have a 3 year measurement period. All grants of LTIP Incentive
Rights beyond the first year of its operation will also have a 3 year measurement period. Accordingly, half of the Incentive
Rights issued in the year ended 30 June 2013 have a measurement period ending on 14 March 2014 and the remainder have
a measurement period ending 14 September 2015. As a result, no Incentive Rights were tested against their vesting conditions
during 2013 and none vested.
The table below sets out summary information about the Company’s assets, profitability and share price movements for the 5 years
to June 2013:
Share price
Total Assets
30 June 2013
$
30 June 2012
$
30 June 2011
$
30 June 2010
$
30 June 2009
$
0.12
0.535
0.19
0.215
0.05
83,025,665
94,362,875
30,430,324
19,792,879
12,319,396
Net Profit/ before Tax
30,308,167
(3,454,500)
(79,081)
3,298,537
(5,025,880)
The remuneration for each Executive Director and KMP of the Company for the years ending 30 June 2012 and 2013 was as
follows:
New Standard Energy Ltd 27
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28 Annual Report 2013
Notes
(i) The cash bonuses have been accrued at 30 June 2013 as STIP amounts resulting from KPI achievements for the year ended 30 June 2013,
and are subject to review and confirmation by the Remuneration Committee. Bonus payments are pro-rated for KMP who commenced part way
through the year.
(ii) The amounts included under Share Based Payments for options are non-cash items that are subject to vesting conditions, are not freely
tradeable and require exercising before they have any tangible value for KMP.
Mr Thick was granted options in the year ended 30 June 2013 that are subject to shareholder approval at the 2013 Annual General Meeting, in
accordance with his employment contract. The pro-rata value of these options for the year ended 30 June 2013, using the Black-Scholes options
pricing model, was $20,687.
Mr Aitken was granted options in the year ended 30 June 2013, in accordance with his employment contract. The pro-rata value of these options
for the year ended 30 June 2013, using the Black-Scholes options pricing model, was $123,040.
In the year ending 30 June 2012, options were granted to Mr Willis, Dr Hagan, Mr Gracey and Mr Hansen-Knarhoi as approved by shareholders
on 30 November 2011. The options were issued as a tool to incentivise high quality executive personnel and help align the long term interests of
management and shareholders. The pro-rata value of these options for the year ended 30 June 2013, using the Black-Scholes options pricing
model, was $91,914, $63,191, $45,118 and $18,694 respectively.
Mr Achour was granted options in the year ended 30 June 2012, in accordance with his employment contract. The pro-rata value of these
options for the year ended 30 June 2013, using the Black-Scholes options pricing model, was $63,569.
Mr Gracey was granted options in the year ended 30 June 2011, in accordance with his employment contract. The pro-rata value of these
options for the year ended 30 June 2013 using the Black-Scholes options pricing model was $1,498.
(iii) Incentive rights were granted in the year ended 30 June 2013, in accordance with the LTI Plan. The fair value of incentive rights is calculated
at the date of grant using the Monte Carlo Simulation model and recognised over the measurement (vesting) period. The value disclosed is the
pro-rate value of these incentive rights in the year ended 30 June 2013. The amount included as remuneration is not related to or indicative of the
benefit (if any) that the individual may receive.
(iv) Mr Gracey, Mr Hansen-Knarhoi and Mr Achour’s LTI component of their employment contracts were achieved for year ended 30 June 2012.
Under the legacy LTI scheme that was applicable in relation to 2012 performance, the Company allotted and issued 123,601, 89,399, and 40,410
fully paid ordinary shares (Shares) to Mr M Gracey, Mr Hansen-Knarhoi and Mr Achour under the Employee Share Plan (Share Plan). The values
disclosed are the pro-rata value of these share options in the year ended 30 June 2013 using the Black-Scholes options pricing model.
Under the legacy LTI scheme New Standard provided interest free limited recourse loans for the full amounts to purchase these Shares on the
terms set out in the Share Plan (Loan), and the loans are repayable in full by 31 December 2014 (Loan Repayment Date). As set out in the Share
Plan, all or part of the Loan may be repaid prior to the Loan Repayment Date. The issued Shares are subject to certain restrictions, including
restrictions on transfer until the Loan is repaid in full. In addition, the Loan must be repaid early in certain circumstances as set out in the Share
Plan. New Standard has since revised its remuneration policy to cease this practise.
(v) Mr Thick was appointed as Managing Director effective 2 April 2013.
(vi) Shareholders approved LTI for Mr Willis for 2012 and 2013, and Mr Willis was eligible for STI in 2013, but has chosen to totally relinquish those
rights as a result of him stepping down from the Managing Director role during the year.
(vii) Mr Walker resigned as Exploration Manager effective 31 May 2013.
Non-executive remuneration
Shareholders approve the maximum aggregate remuneration for non-executive directors. Fees paid to non-executive directors are
recommended by the Remuneration Committee and the Board is responsible for ratifying any recommendations, if appropriate.
As approved at the Annual General Meeting on 26 November 2010, the aggregate limit of fees payable per annum is $400,000 in
total.
All directors have their indemnity insurance paid by the Company.
Non-executive directors’ receive a fixed fee remuneration consisting of a cash fee and statutory superannuation contributions
made by the company and additional fees for committee roles as set out below:
Base fees
Chairman
Other non-executive directors
Additional fees
Company secretarial services
2013
91,800
103,628
48,000
Non-Executive remuneration for the year ended 30 June 2013 and comparative 2012 remuneration:
Name
2013
Mr A Dixon AM
Mr C Sadler
Mr P Thick(i)
Total
2012
A Dixon AM
C Sadler
I Paton
Total
Salary and fees
$
Non-cash benefit
$
Superannuation
$
Options(ii)
$
Total
$
84,220
55,046
40,043
179,309
60,550
9,811
45,833
116,194
-
-
-
-
-
-
-
-
7,580
4,954
3,584
16,118
5,450
883
-
6,333
17,234
18,407
18,407
54,047
95,906
-
-
95,906
109,034
78,407
62,034
249,475
161,906
10,694
45,833
218,433
In accordance with the Company’s remuneration policy, non-executive directors are not eligible for any performance based remuneration and as
such no shares or incentive rights were issued.
(i) Mr Thick was appointed as Non-Executive Director on 16 July 2012, and then became Managing Director on 2 April 2013
(ii) The fair value of options is calculated at the date of grant using the Black-Scholes option pricing model and recognised over the period in which
the minimum service conditions are fulfilled (the vesting period).
New Standard Energy Ltd 29
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O
30 Annual Report 2013
Value at exercise date is calculated as the underlying share price at the exercise date less the exercise price of the option,
multiplied by the number of options exercised. There were no options issued as remuneration that were exercised in the current
financial year.
Incentive rights
The LTIP was introduced during the 2013 financial year with effect from 15 September 2012. Under the plan, the Board may offer
Incentive Rights in the form of Performance Rights and Retention Rights to executives. During the 2013 financial year Performance
Rights and Retention Rights were granted to executives as part of their remuneration packages. Shareholders approved the LTIP
for Mr Willis for 2013 but he elected to totally relinquish those rights as a result of him stepping down from the Managing Director
role during the year.
The table below outlines movements in Incentive Rights during the 2013 financial year and the balance held by each executive as
at 30 June 2013.
Type of
Incentive
Rights
Number of
Incentive
Rights
Fair Value of
each Incentive
Right ($)
Vesting Date(i)
Maximum
Value yet to
Vest ($)
Number
Lapsed
Minimum
Vesting Hurdle
Performance
Rights
Performance
Rights
Retention
Rights
Retention
Rights
Performance
Rights
Performance
Rights
Retention
Rights
Retention
Rights
Performance
Rights
Performance
Rights
Retention
Rights
Retention
Rights
Performance
Rights
Performance
Rights
Retention
Rights
Retention
Rights
296,000
0.002
14/03/2014
296,000
0.014
14/09/2015
74,000
0.120
14/03/2014
74,000
0.120
14/09/2015
220,000
0.002
14/03/2014
220,000
0.014
14/09/2015
55,000
0.120
14/03/2014
55,000
0.120
14/09/2015
192,000
0.002
14/03/2014
192,000
0.014
14/09/2015
48,000
0.120
14/03/2014
48,000
0.120
14/09/2015
140,000
0.002
14/03/2014
140,000
0.014
14/09/2015
35,000
0.120
14/03/2014
35,000
0.120
14/09/2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,120,000
64,147
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.5765
$0.6651
18 months tenure
3 years tenure
$0.5765
$0.6651
18 months tenure
3 years tenure
$0.5765
$0.6651
18 months tenure
3 years tenure
$0.5765
$0.6651
18 months tenure
3 years tenure
Name
Grant Date
Ken Aitken
28/06/2013
28/06/2013
28/06/2013
28/06/2013
David
Hansen-Knarhoi
28/06/2013
28/06/2013
28/06/2013
28/06/2013
Marcus Gracey
28/06/2013
28/06/2013
28/06/2013
28/06/2013
Pierre Achour
28/06/2013
28/06/2013
28/06/2013
28/06/2013
Total
Notes
(i) On the vesting date the performance rights will be tested against the absolute TSR criteria, and the retention rights tested against tenure criteria.
Only those rights that satisfy the criteria will vest, and the remainder will immediately lapse.
New Standard Energy Ltd 31
Employment arrangements for key management personnel
The employment arrangements of the KMPs are formalised in standard employment agreements. Details for the termination
provisions contained in the agreements that were in place at 30 June 2013 are provided below.
Name
Mr P Thick
Engagement
Employee
Term of
Contract
Ongoing
Notice Period
by Either Party
12 weeks
Termination
Benefit
9 months
No notice required for
termination by Company
for cause
Mr S Willis
Consultancy
Ongoing
30 days
Mr M Hagan
Consultancy
Ongoing
30 days
No notice required for
termination by Company
for cause
No notice required for
termination by Company
for cause
none
none
Mr P Achour
Employee
Ongoing
12 weeks
12 weeks
No notice required for
termination by Company
for cause
Mr K Aitken
Employee
Ongoing
12 weeks
12 weeks
Mr M Gracey
Employee
Ongoing
12 weeks
12 weeks
No notice required for
termination by Company
for cause
No notice required for
termination by Company
for cause
Mr D Hansen-Knarhoi
Employee
Ongoing
12 weeks
12 weeks
No notice required for
termination by Company
for cause
Mr A Dixon AM
Mr C Sadler
Employee
Employee
Ongoing
Ongoing
none
none
none
none
End of audited Remuneration Report
This Report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board of
Directors.
Arthur Dixon AM
Chairman
Dated: 20 September 2013
32 Annual Report 2013
Director’s Declaration
In the directors’ opinion:
(a)
the financial statements and notes are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the
financial year ended on that date, and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
(c)
the consolidated entity has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards; and
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Arthur Dixon AM
Non-Executive Chairman
20 September 2013
New Standard Energy Ltd 33
34 Annual Report 2013
Corporate Governance Statement
Principle 2 – Structure the
Board to add value
“Have a board of an effective
composition, size and
commitment to adequately
discharge its responsibilities
and duties.”
The Board has been structured so as to
provide an adequate mix of proficient
directors that lead the Board with
enterprise, integrity and judgement.
The Board acts in the best interest of
the Company and its stakeholders.
The Board is directed on the principles
of transparency, accountability and
responsibility.
The ASX Corporate Governance
Council guidelines recommend that
ideally the Board should constitute of a
majority of independent directors. The
Board consists of five directors of whom
three are considered independent. The
remaining directors do not meet the
Company’s criteria for independence.
Given the size and nature of the
Company the Board feels the
composition of the Board is appropriate
at this stage. The Board endeavours to
review this policy from time to time.
In fulfilling its obligations and
responsibilities to its various
stakeholders, the Board of New
Standard is a strong advocate of
corporate governance. The Board has
adopted corporate governance policies
and practices consistent with the
ASX Corporate Governance Council’s
“Corporate Governance Principles and
Recommendations” (Recommendations)
where considered appropriate for
company of New Standard’s size and
nature.
This document describes how New
Standard has addressed the Council’s
guidelines and eight corporate
governance principles.
•
•
Setting the strategic aims of
New Standard and overseeing
management’s performance within
that framework;
• Making sure that the necessary
resources (financial and human)
are available to the company and
its senior executives to meet its
objectives;
• Overseeing management’s
performance and the progress and
development of the company’s
strategic plan;
Selecting and appointing a suitable
Chief Executive Officer/Managing
Director with the appropriate skills
to help the Company in the pursuit
of its objectives;
Principle 1 – Lay solid
foundations for management
and oversight
“Companies should establish
and disclose the respective
roles and responsibilities of the
Board and Management.”
The main function of the Board is to set
strategic objectives for the company,
supervising and guiding management
through the implementation process.
The aim is for the Board to provide the
entrepreneurial leadership required
for the Company to evolve within a
framework of prudent and effective risk
management.
New Standard has adopted a formal
board charter delineating the roles,
responsibilities, practices and
expectations of the Board collectively,
the Individual directors and senior
management.
The Board of New Standard ensures
that each member understands its roles
and responsibilities and ensures regular
meeting so as to retain full and effective
control of the Company.
The Board specifically emphasises on
the following:
• Determining the remuneration
policy for the Board and Key
Management Personnel;
• Controlling and approving financial
reporting, capital structures and
material contracts;
•
•
Ensuring that a sound system of
risk management and internal
controls is in place;
Setting the Company’s values and
standards;
• Undertaking a formal and
•
•
•
rigorous review of the Corporate
Governance policies; to ensure
adherence to the ASX Corporate
Governance Council principles;
Ensuring that the Company’s
obligations to shareholders are
understood and met;
Ensuring the health, safety
and well-being of employees
in conjunction with the senior
management team, developing,
overseeing and reviewing the
effectiveness of the Company’s
occupational health and safety
systems to assure the well-being of
all employees;
Ensuring an adequate system is in
place for the proper delegation of
duties for the effective operative
day to day running of the Company
without the Board losing sight of
the direction that the Company is
taking.
Principle 3 – Promote ethical and responsible decision-making
“Actively promote ethical and responsible decision-making”
New Standard is aware that law and regulations alone is no guarantee of fair practice and thus to ensure the integrity of its
operations, it has adopted a code of ethics and conduct to sustain its corporate culture.
New Standard’s ethical rules demands high standards of integrity, fairness, equity and honesty from all Directors and Key
Management Personnel and Employees. New Standard expects its employees to understand that the Company acts morally and
that the main goal of the Company is to maximise shareholders value.
The Code of Ethics and Conduct include the following issues:
•
•
The avoidance of conflicts of interest;
Employees behaviour towards the use of Company property;
• Confidentiality;
•
•
Fair dealing with customers, suppliers, employees and competitors;
Protection and proper use of the Company’s assets;
• Compliance with laws and regulations;
•
•
Encouraging the reporting of illegal and unethical behavior;
Provide a framework for the Company to achieve a diverse and skilled workforce.
Diversity
The Board is committed to having an appropriate blend of diversity on the Board and in all areas of the Group’s business. The
Board has established a policy regarding gender, age, ethnic and cultural diversity. Details of the policy are available on the
Company’s website.
Diversity Policy
The Company and all its related bodies corporate are committed to workplace diversity.
The Company recognises the benefits arising from employee and Board diversity, including a broader pool of high quality
employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent.
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background.
To the extent practicable, the Company will address the recommendations and guidance provided in the ASX Corporate
Governance Council's Principles and Recommendations.
The Diversity Policy does not form part of an employee's contract of employment with the Company, nor gives rise to contractual
obligations. However, to the extent that the Diversity Policy requires an employee to do or refrain from doing something and at all
times subject to legal obligations, the Diversity Policy forms a direction of the Company with which an employee is expected to
comply.
The key objectives of the Diversity Policy are to achieve:
•
•
•
•
•
a diverse and skilled workforce, leading to continuous improvement in service delivery and achievement of corporate goals;
a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
improved employment and career development opportunities for women;
a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and
perspectives through improved awareness of the benefits of workforce diversity and successful management of diversity; and
awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity,
(collectively, the Objectives).
The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any obligation to engage in, or
justification for engaging in, any conduct which is illegal or contrary to any anti-discrimination or equal employment opportunity
legislation or laws in any State or Territory of Australia or of any foreign jurisdiction.
Diversity Reporting
The Group’s gender diversity as at the end of the reporting period is as follows:
30 June 2013
30 June 2012
Female
Male
Female
Male
Gender representation
No
Board representation
Group representation
-
9
%
-
39
No
5
14
%
100
61
No
-
8
%
-
33
No
4
16
%
100
67
36 Annual Report 2013
The following senior positions within the Group are currently held by female employees:
• Human Resources Manager
The Company’s proposed diversity objectives for the 2014 financial year are as follows:
• Continue to assess and proactively monitor gender diversity at all levels of the Company’s business and monitor the
implementation and effectiveness of the Company’s diversity initiatives and programs;
• Update recruitment policies and procedures to reflect the Company’s position on diversity;
• Undertake an annual review of maternity and paternity leave and flexible working arrangements to ensure roles are
appropriate to maintain career development.
Principle 4 – Safeguard integrity in financial reporting
“Have a structure to independently verify and safeguard the integrity of the Company’s
financial reporting”
New Standard has a financial reporting process which includes half year and full-year results which are signed off by the Board
before they are released to the market.
The Audit Committee has been developed as per the guidelines of good corporate governance and its responsibilities are
delineated in the Audit Committee Charter.
The Audit Committee provides assistance to the Board of directors in fulfilling its corporate governance and oversight
responsibilities, as well as advise on the modification and maintenance of the Company's financial reporting, internal control
structure, external audit functions, and appropriate ethical standards for the management of the Company.
In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to
all books, records, facilities, and personnel of the Company and the authority to engage independent counsel and other advisers
as it determines necessary to carry out its duties.
The CFO reports in writing on the propriety of compliance on internal controls and reporting systems and ensures that they are
working efficiently and effectively in all material respects.
The Committee also advises on the modification and maintenance of the Company's risk management systems, the Company’s
risk profile, compliance and control and an assessment as to their effectiveness.
Principle 5 – Make timely and balanced disclosure
“Promote timely and balanced disclosure of all material matters concerning the Company.”
New Standard has adopted a formal policy dealing with its disclosure responsibilities. The Board has designated the
Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as
communicating with the ASX. In accordance with the ASX Listing Rules the Company immediately notifies the ASX of information:
•
•
concerning the Company that a reasonable person would expect to have a material effect on the price or value of the
Company’s securities; and
that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or
dispose of the Company’s securities.
The policy also addresses the Company’s obligations to prevent the creation of a false market in its securities. New Standard
ensures that all information necessary for investors to make an informed decision is available on its website.
The Managing Director has ultimate authority and responsibility for approving market disclosure which, in practice, is exercised in
consultation with the Board and Company Secretary.
The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of
information to the ASX.
In addition, the Board will also consider whether there are any matters requiring continuous disclosure in respect of each and
every item of business that it considers.
New Standard Energy Ltd 37
Principle 6 – Respect the rights of shareholders
“Respect the rights of shareholders and facilitate the effective exercise of those rights”
New Standard is aware that regular and constructive two-way communications between the Company and its shareholders can
help investors understand what the Board of Directors is planning to achieve and how the Company intends to set about achieving
its objectives.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights, the Company is
committed to:
•
•
•
communicating effectively in a timely and accurate way with shareholders through releases to the market via ASX, website
communication, Annual Reports, the general meetings of the Company and any information mailed to shareholders;
sending a notice of any general meetings to which they are entitled to attend together with an explanatory memorandum of
proposed resolutions (as appropriate). If shareholders cannot attend the General Meeting, they are entitled to lodge a proxy in
accordance with the Corporations Act and the Company’s Constitution.
giving shareholders ready access to balanced and understandable information about the Company and corporate proposals;
• making it easy for shareholders to participate in general meetings of the Company; and
•
requesting the external auditor to attend the annual general meeting and be available to answer shareholder questions about
the conduct of the audit and the preparation and content of the auditor’s report.
The address made by the Chairman and/or the Managing Director to the Annual General Meeting is released to the ASX. All ASX
announcements are accessible via the Company’s website.
Principle 7 – Recognise and Manage Risk
“Companies should establish a sound system of risk oversight and management and internal control”
New Standard’s policy is to regularly review processes and procedures to ensure the effectiveness of its internal systems
control, so as to keep the integrity and accuracy of its reporting and financial results at a high level at all times. Internal controls
are devised and enforced to ensure, as far as practicable in the given circumstances, the orderly and efficient conduct of the
business. They include measures to safeguard the assets of the Company, prevent and detect fraud and error, ensure the
accuracy and completeness of accounting records and ensure the timely preparation of reliable financial information.
The Board’s Charter clearly establishes that it is responsible for ensuring there is a sound system for overseeing and managing
risk. As the whole Board only consists of five (5) members, the Company does not have a Risk Management Committee because it
would not be a more efficient mechanism than the full Board for focusing the Company on specific issues.
The Managing Director and CFO are required to state to the Board, in writing, that to the best of their knowledge the integrity of
the financial statements is founded on a sound system of risk management and internal compliance and control which operates
efficiently and effectively in all material respects.
The Managing Director, Technical Director and CFO are also required to report monthly to the Board on the areas they are
responsible for, including material business risks and provide an annual written report to the Board summarizing the effectiveness
of the companies’ management of material business risks.
Principle 8 – Remunerate fairly and responsibly
“Companies should ensure that the level and composition of remuneration is sufficient and reasonable
and that its relationship to performance is clear.”
The Company is committed to remunerating its executives in a manner that is market-competitive and consistent with best practice
as well as supporting the interests of shareholders.
Consequently, the Board ensures that executive remuneration follows the guidelines of good governance and the criteria for
remuneration are as follows:
•
•
•
fixed salary that is determined from a review of the market and reflects core performance requirements and expectations;
participation in any securities incentive scheme with thresholds approved by shareholders;
statutory superannuation.
New Standard has devised a framework for remuneration that aligns the interest of the Company’s shareholders with that of the
Board and Key Management Personnel. The aim is to make the structure agreeable to both parties. The elements of consideration
are as follows:
For the Shareholders:
•
•
•
They should see that there is an economic profit in the remuneration structure;
The structure is one that focuses on the continued growth of share price and sustained returns on assets;
Attracts and retains high calibre Board and Key Management Personnel.
For the Board and Key Management Personnel:
•
•
•
•
Their capability and experience should be rewarded;
The arrangement for reward should be clear and understandable;
Their active contribution should be rewarded;
Reward is competitive, tax effective and linked with growth in shareholder value.
New Standard is committed in providing the right remuneration structure so that Board and Key Management Personnel are not
unaware to shareholder value. The structure provides long and short term incentive designed to retain and motivate Board and
Key Management Personnel in bringing more value to the Company.
A summary of how the Company has addressed it’s compliance with the corporate governance principles and recommendations is
outlined below:
Principle No. Recommendation
Compliance
Reason for Non-compliance
Lay solid foundations for management and oversight
1.
1.1
1.2
Establish the functions reserved to
the Board and those delegated to
senior executives and disclose those
functions.
Disclose the process for evaluating
the performance of senior
executives.
1.3
Provide the information indicated in
the Guide to reporting on Principle 1.
The Board has adopted a formal
charter setting out the responsibilities
of the Board. This charter can be
accessed at: www.newstandard.com.
au. Any functions not reserved for the
Board and not expressly reserved
for members by the Corporations Act
and ASX Listing Rules are reserved
for senior executives.
The Board and remuneration
committee meets at least once
annually to review the performance
of executives. The senior executives’
performance is assessed against the
performance of the company as a
whole.
A performance evaluation has been
completed during the reporting
period in accordance with the
process detailed in 1.2 above.
Not applicable
Not applicable
Not applicable
New Standard Energy Ltd 39
Principle No. Recommendation
Compliance
Reason for Non-compliance
2.
2.1
Structure the board to add value
A majority of the Board should be
independent of Directors.
The Company complied with
this recommendation for the
majority of the year. The Board will
consider appointing an additional
independent director should a
suitable candidate present.
A definition of Director independence
can be accessed at
www.newstandard.com.au. For
the majority of the year the Board
consisted of three independent
Directors and two non-independent
Directors. In April 2013, an
independent director was appointed
as an executive and therefore for
the remainder of the year, the Board
consisted of two independent directors
and three non-independent directors.
2.2
2.3
2.4
The chair should be an independent
Director.
The Chairman is an independent
director.
Not applicable
The roles of Chair and Chief
Executive Officer should not be
exercised by the same individual.
New Standard’s Chairman and
Managing Director is not the same
person.
Not applicable
The Board should establish a
nomination committee.
The Board has not established a
Nomination Committee.
The Board’s Charter clearly
establishes that it is responsible for
ensuring there is a sound system
for overseeing and managing risk.
As the whole Board only consists
of five (5) members, the Company
does not have a Nomination
Committee because it would not
be a more efficient mechanism
than the full Board for focusing the
Company on specific issues.
Not applicable
Not applicable
2.5
Disclose the process for evaluating
the performance of the Board, its
committee and individual Directors.
2.6
Provide the information indicated in
the Guide to reporting on Principle 2.
The performance evaluation of Non-
Executive and Executive Directors
occurs by way of a review by the
Remuneration Committee which
engages independent remuneration
consultants for advice where
necessary.
The skills, experience and expertise
relevant to the position held by each
Director is disclosed in the Directors’
Report which forms part of the
Annual Report.
The Board consisted of a majority of
independent directors for the majority
of the year. The Board will consider
appointing an additional independent
director should a suitable candidate
present.
The Directors are entitled to take
independent professional advice at
the expense of the Company. The
period of office held by each Director
is disclosed in the Directors’ Report
which forms part of this Annual
Report.
40 Annual Report 2013
Principle No. Recommendation
Compliance
Reason for Non-compliance
3.
3.1
3.2
3.3
3.4
3.5
4.
4.1
4.2
4.3
4.4
Promote ethical and responsible decision-making
Establish a code of conduct and
disclose a summary of the code as to:
•
•
•
the practice necessary to
maintain confidence in the
Company’s integrity;
the practices necessary
to take into account their
legal obligations and the
reasonable expectations of their
stakeholders;
the responsibility and
accountability of individuals
for reporting and investigating
reports of unethical practices.
Companies should establish a policy
concerning diversity and disclose the
policy or a summary of that policy. The
policy should include requirements for
the board to establish measureable
objectives for achieving gender
diversity and for the board to assess
annually both the objectives and
progress in achieving them.
Companies should disclose in each
annual report the measureable
objectives for achieving gender
diversity set by the board in
accordance with the diversity policy
and progress in achieving them.
Companies should disclose in
each annual report the proportion
of women employees in the whole
organisation, women in senior
executive positions and women on
the board.
The Company has adopted a Board
Code of Conduct and a Company
Code of Conduct, both of which can
be accessed at www.newstandard.
com.au.
Not applicable
The Company has a diversity policy
which can be accessed at
www.newstandard.com.au
Not applicable
This information has been disclosed
in the Annual Report.
Not applicable
This information has been disclosed
in the Annual Report.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 3.
The information has been disclosed
in the Annual Report.
Not applicable
Safeguard integrity in financial reporting
The Board should establish an audit
committee.
The Board has established an Audit
Committee.
Not applicable
The audit committee should be
structured so that it:
•
•
•
•
consists only of Non-Executive
Directors;
consists of a majority of
independent Directors;
is chaired by an independent
chair, who is not chair of the
Board;
has at least three members.
The Audit Committee consists of
five members, inclusive of the Joint
Company Secretaries, the majority of
which are independent non-executive
directors and is chaired by an
independent non-executive director
who is not Chair of the Board.
The two Joint Company Secretaries
are also members of the Audit
Committee.
Due to the size of the Board the
Audit Committee does not consist
only of non-executive directors.
The Audit Committee should have a
formal charter.
The formal charter can be accessed
at www.newstandard.com.au.
Not applicable
Provide the information in the Guide
to reporting on Principle 4.
The information has been disclosed
in the Annual Report.
Not applicable
New Standard Energy Ltd 41
Principle No. Recommendation
Compliance
Reason for Non-compliance
5.
5.1
5.2
6.
6.1
6.2
7.
7.1
7.2
7.3
Make timely and balanced disclosure
Establish written policies and
procedures designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to
ensure accountability at a senior
executive level for that compliance
and disclose those policies or a
summary of those policies.
The Company has adopted a
Disclosure Policy which can be
accessed at
www.newstandard.com.au.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 5.
The information has been disclosed
in the Annual Report.
Not applicable
Respect the rights of shareholders
Design a communications policy for
promoting effective communication
with shareholders and encourage
their participation at general
meetings and disclose that policy or
a summary of that policy.
The Company has adopted a
Shareholder Communications Policy
which can be accessed at
www.newstandard.com.au.
Not applicable
Provide the information indicated in
the Guide to reporting on Principle 6.
The information has been disclosed
in the Annual Report.
Not applicable
Not applicable
Not applicable
The Company has adopted a Risk
Management Policy which can be
accessed at www.newstandard.com.au.
This policy outlines the material risks
faced by the Company as identified by
the Board.
The Managing Director, Technical
Director and Chief Financial Officer
report monthly to the board on
the areas they are responsible for,
including material business risks
and provide an annual written
report to the Board summarising
the effectiveness of the companies’
management of material business
risks.
The Board receives assurance
in the form of a declaration from
the Managing Director and Chief
Financial Officer.
Not applicable
Recognise and manage risk
Establish policies for the oversight
and management of material
business risk and disclose a
summary of those policies.
The Board should require
management to design and
implement the risk management and
internal control system to manage the
Company’s material business risks
and report to it on whether those
risks are being managed effectively.
The Board should disclose that
management has reported to it as to
the effectiveness of the Company’s
management of its material business
risks.
The Board should disclose whether
it has received assurance from
the Chief Executive Officer (or
equivalent) and the Chief Financial
Officer (or equivalent) that the
declaration provided in accordance
with section 295A of the Corporations
Act is founded on a sound system of
risk management and internal control
and that the system is operating
effectively in all material respects in
relation to financial reporting risks.
7.4
Companies should provide the
information indicated in the Guide to
reporting on Principle 7.
The information has been disclosed
in the Annual Report.
Not applicable
42 Annual Report 2013
Principle No.
Recommendation
Compliance
Reason for Non-compliance
8.
8.1
8.2
8.3
8.4
Remunerate fairly and responsibly
The Board should establish a
Remuneration Committee.
The Board has established a
Remuneration Committee.
The remuneration committee should
be structured so that it:
•
•
•
consists of a majority of
independent directors
is chaired by an independent
director
has at least three members
Companies should clearly distinguish
the structure of Non-Executive
Directors’ remuneration from that
of Executive Directors and senior
executives.
During the year the Remuneration
Committee consisted of five
members, for the majority of the year,
including a majority of independent
non executive directors and was
chaired by an independent non-
executive director. From April 2013,
to the Remuneration Committee
consisted of four members, of which
two were independent non-executive
directors.. The two Joint Company
Secretaries are also members of
the Remuneration Committee. The
Remuneration Committee may seek
external advice where appropriate.
The structure of Non-Executive
Directors’ remuneration is clearly
distinguished from that of Executive
Directors and Key Management
Personnel, as described in the
Directors’ Report in the Annual
Report.
Not applicable
Not applicable
Not applicable
Companies should provide the
information indicated in the guide to
reporting on Principle 8.
The information has been disclosed
in the Annual Report.
Not applicable
New Standard Energy Ltd 43
Financial Statements 2013
Auditors Independence Declaration
Independent Audit Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
45
46
48
49
50
51
52
44 Annual Report 2013
Auditor’s Independence Declaration
New Standard Energy Ltd 45
Independent Audit Report
46 Annual Report 2013
New Standard Energy Ltd 47
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2013
Revenue from Continuing operations
Gain on sale of available-for-sale financial assets
Other Revenue
Expenses from Continuing operations
Administrative expenses
Employee benefit expenses
Occupancy expenses
Depreciation expense
Impairment of exploration and evaluation and development expenditure
Impairment of available-for-sale investment
Unrealised foreign exchange gain/(loss)
Project expenses
Share based payments
Profit/(loss) before income tax expense
Income tax expense
Note
2
2
2013
$
2012
$
40,588,300
-
2,002,476
844,077
(1,008,346)
(1,029,618)
(2,879,036)
(1,594,229)
(226,789)
(138,462)
(296,000)
(66,485)
(5,383,445)
(1,713,085)
(1,924)
(33,933)
-
-
5,839
(25,321)
27
4
(740,051)
(1,450,301)
30,308,167
(3,454,500)
(13,609,099)
3,659,629
Profit/(loss) attributable to owners of the Parent entity
16,699,068
205,129
Other comprehensive income
Items that have been reclassified to profit or loss
Changes in the fair value of available for sale financial assets
(30,461,795)
36,476,637
Deferred tax liability
-
(13,289,842)
Items that have been reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
543,288
349,800
(29,918,507)
23,536,595
(13,219,439)
23,741,724
Owners of the Company
(13,219,439)
23,741,724
Earnings/(loss) per Share for profit/(loss) from continuing
Operations attributable to the ordinary shareholders of the Company
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
24
24
5.49
5.49
0.08
0.07
Cents Per Share Cents Per Share
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
48 Annual Report 2013
Consolidated Statement of Financial Position
As at 30 June 2013
Current Assets
Cash and cash equivalents
Available for sale financial assets
Trade and other receivables
Total Current Assets
Non-Current Assets
Exploration and evaluation expenditure
Development assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred Tax Liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained Profits/(Accumulated losses)
Note
2013
$
2012
$
22(a)
41,536,690
24,890,855
8
7
9
10
11
12
13
14
15
536,915
48,551,637
715,618
1,697,830
42,789,223
75,140,322
38,098,974
16,799,094
1,715,344
1,968,020
1,072,124
455,439
40,886,442
19,222,553
83,675,665
94,362,875
2,403,870
856,145
73,667
2,477,537
74,805
930,950
122,300
195,967
9,949,470
9,630,213
10,071,770
9,826,180
12,549,307
10,757,130
71,126,358
83,605,745
16
17
17(d)
53,626,937
53,626,937
3,040,166
32,218,622
14,459,255
(2,239,814)
71,126,358
83,605,745
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
New Standard Energy Ltd 49
Consolidated Statement of Changes In Equity
For the year ended 30 June 2013
Retained
Profits/
(Accumulated
Losses)
$
Issued
Capital
$
Share Based
Payment
Reserve
$
Available for
Sale Financial
Assets Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
Equity as at 1 July 2012
53,626,937
(2,239,814)
3,224,335
30,461,795
(1,467,508)
83,605,745
Profit for the year
Unrealised profit on translation
of foreign operations
Movement in available-for-sale
assets
Total comprehensive Income
Transactions with owners in their
capacity as owners;
Share based payments
-
-
-
-
-
16,699,068
-
-
16,699,068
-
-
-
-
-
740,051
Equity as at 30 June 2013
53,626,937
14,459,255
3,964,386
-
-
-
16,699,068
543,288
543,288
(30,461,795)
-
(30,461,795)
(30,461,795)
543,288
(13,219,439)
-
-
-
740,051
(924,220)
71,126,358
Retained
Profits/
(Accumulated
Losses)
$
Issued
Capital
$
Share Based
Payment
Reserve
$
Available for
Sale Financial
Assets Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
Equity as at 1 July 2011
24,226,520
(2,444,943)
1,774,034
7,275,000
(1,817,308)
29,013,303
Profit for the year
Unrealised profit on translation
of foreign operations
Unrealised gain on available for
sale financial assets
Deferred Tax Liability
Total comprehensive Income
Transactions with owners in their
capacity as owners;
Issue of shares, net of transaction
costs
Share based payments
-
-
-
-
-
205,129
-
-
-
205,129
29,400,417
-
-
-
-
-
-
-
-
1,450,301
-
-
-
205,129
349,800
349,800
36,476,637
(13,289,842)
-
36,476,637
(13,289,842)
23,186,795
349,800
23,741,724
-
-
-
-
29,400,417
1,450,301
Equity as at 30 June 2012
53,626,937
(2,239,814)
3,224,335
30,461,795
(1,467,508)
83,605,745
The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
50 Annual Report 2013
Consolidated Statement of Cash Flows
For the year ended 30 June 2013
Cash Flows From Operating Activities
Interest received
Interest Paid
Payments to suppliers and employees
Other income
Note
2013
$
2012
$
1,861,207
741,745
(28,183)
(8,765)
(3,259,012)
(4,159,388)
-
321,903
Net cash provided by/(used in) operating activities
22(b)
(1,425,988)
(3,104,505)
Cash Flows From Investing Activities
Payments for plant and equipment
Reimbursement of prior exploration expenditure
Cash receipts offset against development expenditure
Payment for exploration expenditure
Proceeds from available-for-sale financial assets
Payments for purchase of equity investments
(932,558)
(108,529)
3,146,196
3,649,874
167,237
1,019,159
(27,438,849)
(8,267,066)
43,122,130
-
-
(2,250,770)
Net cash (used in)/provided by investing activities
18,064,155
(5,957,332)
Cash Flows From Financing Activities
Proceeds from issue of equity securities
Repayment of borrowings
Payment for share issue costs
Net cash flows provided by financing activities
-
30,825,000
(67,648)
(13,652)
-
(1,424,583)
(67,648)
29,386,765
Net increase in cash and cash equivalents
16,570,519
20,324,928
Cash and cash equivalents at beginning of the financial year
Exchange rate adjustments
24,890,855
4,552,777
75,315
13,150
Cash and cash equivalents at the end of the financial year
22(a)
41,536,690
24,890,855
The above consolidated statement of cashflows should be read in conjunction with the accompanying notes.
New Standard Energy Ltd 51
1.
Summary of Accounting Policies
Corporate information
New Standard Energy Limited (New Standard) is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange. The address of the Company’s registered office and principal place
of business is Level 2, 7 Ventnor Avenue, West Perth WA 6005.
Statement of compliance
The financial statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other requirements of the
law.
The financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the Directors on 20 September 2013.
Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost convention, as modified by
the revaluation of available-for-sale financial assets. New Standard Energy Limited is a for-profit entity for the purpose of
preparing the financial statements.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June
2013.
Principals of consolidation
(a)
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of New Standard Energy
Limited (“Company” or “parent entity”) as at 30 June 2013 and the results of all subsidiaries for the year then ended.
New Standard Energy Limited and its subsidiaries together are referred to in this financial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern
the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction proves evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the consolidated statement of
profit or loss and other comprehensive income and statement of financial position respectively.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
52 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
(c)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Trade receivables are generally due for settlement within
30 days. They are presented as current assets unless collection is not expected for more than 12 months after the
reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible
are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade
receivables) is used when there is objective evidence that the group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days
overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is
the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of
discounting is immaterial.
(d) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost
of acquisition of an asset or as part of an item of expense; or
(ii) for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables.
Cash flows are included in the statement of cashflows on a gross basis. The GST component of cash flows arising
from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as
operating cash flows.
(e)
Impairment of assets
At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where
the asset does not generate cash flows that are independent from other assets, the entity estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised in the profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised in the profit or loss.
New Standard Energy Ltd 53
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
(f)
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable
profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent
that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of
those items.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available
against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However,
deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the
initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
branches, associates and joint ventures except where the consolidated entity is able to control the reversal of the
temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with these investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
(g)
Exploration and evaluation expenditure
Exploration for and evaluation of hydrocarbon resources is the search for hydrocarbon resources after the entity
has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and
commercial viability of extracting the hydrocarbon resources. Accordingly, exploration and evaluation expenditures
are those expenditures incurred by the Company in connection with the exploration for and evaluation of hydrocarbon
resources before the technical feasibility and commercial viability of extracting a hydrocarbon resource is
demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each ‘area of interest’. An ‘area of
interest’ is an individual geological area which is considered to constitute a favourable environmental for the presence
of a hydrocarbon resource or has been proved to contain such a resource.
Expenditure incurred on activities that precede exploration of hydrocarbon resources, including all expenditure
incurred prior to securing legal rights to explore an area, is expensed as incurred. For each area of interest the
expenditure is recognised as an exploration and evaluation asset where the following conditions are satisfied:
(a) The rights to tenure of the area of interest are current; and
(b) At least one of the following conditions is also met:
(i) The expenditure is expected to be recouped through the successful development and commercial
exploitation of an area of interest, or alternatively by its sale; and
(ii) Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage
which permits a reasonable assessment of the existence or otherwise of ‘economically recoverable reserves’
and active and significant operations in, or in relation to, the area of interest are continuing. Economically
recoverable reserves are the estimated quantity of product in an area of interest that can be expected to be
profitably extracted, processed and sold under current and foreseeable conditions.
54 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
Exploration and evaluation assets include:
• Acquisition of rights to explore;
• Topographical, geological, geochemical and geophysical studies;
• Exploratory drilling, logging and coring; and
• Activities in relation to evaluating the technical feasibility and commercial viability of extracting the hydrocarbon
resource.
General and administrative costs are expensed as incurred.
(h) Development expenditure
Development expenditure is accumulated in respect of each separate area of interest. Development expenditure
relates to costs incurred to access a mineral resource after the technical feasibility and commercial viability of
extracting the mineral resource from the area of interest has been demonstrated. Development expenditure related
to an area of interest is carried forward to the extent that they are expected to be recouped either through sale or
successful exploitation of the area of interest.
When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated cost in
respect of that area is written off in the financial period the decision is made. Each area of interest is reviewed at the
end of each accounting period and accumulated cost written off to the extent that they will not be recoverable in the
future. Impairment of assets is discussed at note 1(e).
Capitalisation of development expenditure ceases once the production commences, at which point it is transferred
into Property, Plant and Equipment, and amortised on a units of production basis over the life of economically
recoverable reserves.
Although production revenue has been received during the period, sufficient information has not been obtained
from further technical analysis to form a definitive view regarding the economically recoverable reserves associated
with the producing wells and field. At the date of this report the results of an independent resource and reserves
assessment remains incomplete and technical analysis regarding the quality of the reservoir completion techniques
utilised for the producing wells has yet to be fully determined. As a result the Directors deem that it is appropriate
under the circumstances to continue to classify the US Oil and Gas Properties as development assets as at 30 June
2013.
(i)
Business combinations
The acquisition method of accounting is used to account for all business combinations. Consideration is measured
at the fair value of the assets transferred, liabilities incurred and equity interests issued by the group on acquisition
date. Consideration also include the acquisition date fair values of any contingent consideration arrangements, any
pre-existing equity interests in the acquiree and share-based payment awards of the acquiree that are required to
be replaced in a business combination. The acquisition date is the date on which the group obtains control of the
acquiree. Where equity instruments are issued as part of the consideration, the value of the equity instruments is
their published market price at the acquisition date unless, in rate circumstances, it can be demonstrated that the
published price at acquisition date is not fair value and that other evidence and valuation methods provide a more
reliable measure of fair value.
Identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with
limited exceptions, initially measure at their fair values at acquisition date. Goodwill represents the excess of
the consideration transferred and the amount of the non-controlling interest in the acquiree over fair value of the
identifiable net assets acquired. If the consideration and non-controlling interest of the acquire is less than the fair
value of the net identifiable assets acquired, the difference is recognized in profit or loss as a bargain purchase price,
but only after a reassessment of the identification and measurement of the net assets acquired.
For each business combination, the group measures non-controlling interests at either fair value or at the non-
controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed when incurred.
New Standard Energy Ltd 55
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
Where the group obtains control of a subsidiary that was previously accounted for as an equity accounted investment
in associate or jointly controlled entity, the group remeasures its previously held equity interest in the acquiree as its
acquisition date fair value and the resulting gain or loss is recognised in profit or loss. Where the group obtains control
of a subsidiary that was previously accounted for as an available-for-sale investment, any balance on the available-
for-sale reserve related to that investment is recognised in profit or loss as if the group had disposed directly of the
previously held interest.
Where settlement of any part of the cash consideration is deferred, the amounts payable in future are discounted to
present value as the date of exchange using the entity’s incremental borrowing rate as the discount rate.
Assets and liabilities from business combinations involving entities or businesses under common control are
accounted for at the carrying amounts recognised in the group’s controlling shareholder’s consolidated financial
statements.
(j)
Investments and other financial assets
Classification
The Group classifies its financial assets in the following categories: loans and receivables, and available-for-sale
financial assets. The classification depends on the purpose for which the investments were acquired. Management
determines the classification of its investments at initial recognition.
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally of marketable equity securities, are non-derivatives that are
either designated in this category or not classified in any of the other categories. They are included in current assets
as management may dispose of the investment within 12 months of the reporting date. Investments are designated as
available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends
to hold them for the short term. Available for sale assets are subsequently carried at fair value with movements in fair
value are recognised in equity.
Investments are recognised and derecognised on trade date where the purchase sale or sale of an investment is
under a contract whose terms require delivery of the investment within the time frame established by the market
concerned; and are initially measured at fair value, net of the transaction costs.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as ‘loans and receivables’. Loans and receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method less impairment.
Interest is recognised by applying the effective interest rate.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired
where there is objective evidence that as a result of one or more events that occurred after the initial recognition of
the financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate
(if applicable).
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When
a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
56 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
Impairment of available for sale financial assets
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of
a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists
for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss - is reclassified from equity and recognised in profit or loss as a reclassification adjustment. Impairment losses
recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or
loss. If there is evidence of impairment for any of the group’s financial assets carried at amortised cost, the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial
asset’s original effective interest rate. The loss is recognised in profit or loss.
(k)
Share-based payments
Equity-settled share-based payments with employees and others providing similar services are measured at the fair
value of the equity instrument at the grant date and recognised over the vesting period. Fair value is measured by use
of an appropriate valuation model.
The above policy is applied to all equity-settled share-based payments.
(l)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Interest Revenues
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
(m) Government grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will
be received and the group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
(n)
Property, plant and equipment (other than oil & gas properties)
Owned assets
Items of property, plant and equipment are recognised at cost less accumulated depreciation (see below) and
impairment losses (see Impairment Note 1(e)).
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
Depreciation/amortisation
Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful life of an item of
property, plant and equipment.
The estimated useful lives for each class of assets in the current and comparative periods are as follows:
(i) Motor Vehicles
4-5 years
(ii)
Plant and equipment
3-15 years depending on the nature of the asset
The useful life and depreciation method applied to an asset are reassessed at least annually.
(o)
Trade and other payables
Trade payables and other accounts payable are recognised when the entity becomes obliged to make future
payments resulting from the purchase of goods and services. They are recognised initially at fair value and
subsequently at amortised cost. The amounts are unsecured and are normally settled within 30 days of recognition.
New Standard Energy Ltd 57
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
1.
Summary of Accounting Policies (continued)
(p)
Leases
The lease of a vehicle where the Group, as lessee, has substantially all the risks and rewards of ownership has been
classified as a finance lease. The finance lease has been capitalised at the lease’s inception at the fair value of the
leased vehicle. The corresponding rental obligations, net of finance charges, have been included in other short-
term payables and long-term borrowings. Each lease payment is allocated between the liability and finance cost.
The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period. The vehicle acquired under the finance lease is being
depreciated over the asset’s useful life.
(q)
Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the Company, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise
of options outstanding during the financial year.
(r)
Segment reporting
The Group has applied AASB 8 Operating Segments. AASB 8 requires a ‘management approach’ under which
segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in
an increase in the number of reportable segments presented, as the previously reported geographical segments have
been disaggregated into separate segments within the Group.
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision-maker has been identified as the Managing Director that
makes strategic decisions.
Provisions
Provisions are recognised when the Consolidated Entity has a present obligation as a result of a past event, the future
sacrifice of economic benefits is probable, and the amount of the provision can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of
the receivable can be measured reliably.
58 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
Foreign Currency Translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars, which is New Standard Energy Limited’s functional and
presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at
fair value are reported as part of the fair value gain or loss.
For example, translation differences on non-monetary assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation
differences on non-monetary assets such as equities classified as available-for-sale financial assets are
recognised in other comprehensive income.
(iii) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
(i)
(ii)
assets and liabilities for each statement of financial position presented are translated at the closing rate
at reporting date
income and expenses for each item in the statement of profit or loss and other comprehensive income
are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the dates of the transactions), and
(iii)
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss
on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entities and translated at the closing rate.
(s)
Joint ventures
A joint venture is either an entity or operation over which whose activities the entity has joint control, established by
contractual agreement.
Jointly controlled operations and assets
Interests in unincorporated joint ventures are reported in the financial statements by including the entity’s share of
assets employed in joint ventures, the share of liabilities incurred in relation to the joint ventures and its share of
revenue and expenses.
New Standard Energy Ltd 59
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
(t)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from proceeds.
(u)
Standards and interpretations issued not yet effective
Certain new accounting standards and interpretations have been published that may have an impact on the Group;
these standards are not mandatory for 30 June 2013 reporting periods. The Group has not applied any of the
following in preparing this financial report:
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting
Standards arising from AASB 9 (effective from 1 January 2015)
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect
the Group’s accounting for its financial assets. The standard is not applicable until 1 January 2015 but is available for
early adoption. The Group is yet to assess its full impact. However, initial indications are that it may affect the Group’s
accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and
losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains
and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in profit
or loss. In the current reporting period, the Group recognised a loss of $30,461,795 for its available for sale financial
assets in other comprehensive income. The Group has not yet decided when to adopt AASB 9.
AASB 10 Consolidated Financial Statements
(effective for the annual reporting periods commencing on or after 1 January 2013)
AASB 10 introduces certain changes to the consolidation principles, including the concept of de facto control and
changes in relation to the special purpose entities. The Group has assessed the potential impact on its existing
arrangements and are of the opinion that the change is not likely to have a material effect on the financial statements.
AASB 11 Joint Arrangements
(effective for the annual reporting periods commencing on or after 1 January 2013)
AASB 11 introduces certain changes to the accounting for joint arrangements. Joint arrangements will be classified
as either joint operations (where parties with joint control have rights to assets and obligations for liabilities) or joint
ventures (where parties with joint control have rights to the net assets of the arrangement). Joint arrangements
structured as a separate vehicle will generally be treated as joint ventures and accounted for using the equity method.
The Group has assessed the potential impact on its existing arrangements and are of the opinion that the change is
not likely to have a material effect on the financial statements.
AASB 12 Disclosure of Interests in Other Entities and AASB 2011-7 Amendments to Australian Accounting
Standards arising from the consolidation and Joint Arrangement standards
(effective from 1 January 2013)
AASB 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general, the disclosure requirements in AASB 12 are
more extensive than those in the current standards. The Group has assessed the potential impact on its existing
arrangements and are of the opinion that the change is not likely to have a material effect on the financial statements.
AASB 13 Fair Value Measurement
(effective for annual reporting periods commencing on or after 1 January 2013)
AASB 13 establishes a single framework for measuring fair value of financial and non-financial items recognised at
fair value on the statement of financial position or disclosed in the notes to the financial statements. The Group has
assessed the potential impact on its existing arrangements and are of the opinion that the change is not likely to have
a material effect on the financial statements.
60 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
1.
Summary of Accounting Policies (continued)
AASB 119 Employee Benefits
(effective from 1 January 2013)
In September 2011, the AASB released a revised standard on accounting for employee benefits. It requires the
recognition of all measurements of defined benefits liabilities/assets immediately in other comprehensive income and
the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability or
asset. This replaces the expected return on plan assets that is currently included in profit or loss. The standard also
introduces a number of additional disclosures for defined benefit liabilities/assets and could affect the timing of the
recognition of termination benefits. The amendments will have to be implemented retrospectively. The Group has
assessed the potential impact on its existing arrangements and are of the opinion that the change is not likely to have
a material effect on the financial statements.
AASB 128 Investments in Associates and Joint Ventures (2011) and AASB 2011-7 Amendments to Australian
Accounting Standards arising from the consolidation and Joint Arrangement standards
(effective from 1 January 2013)
The objective of AASB 128 is to prescribe the accounting for investments in associates and to set out the
requirements for the application of the equity method when accounting for investments in associates and joint
ventures. The Group is continuing to assess the impact of the standard.
Critical accounting judgements and key source of estimation uncertainty
In the application of the Group’s accounting policies, which are described in Note 1, management is required to make
judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the
judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty and significant judgements
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty and
significant judgements at the reporting date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Carrying value of exploration expenditure
The recoverability of the carrying amount of the exploration and evaluation assets is dependent upon the successful
development and commercial exploitation, or alternatively, sale of the respective areas of interest. The carrying
amount of exploration expenditure at the reporting date was $38,098,974. Details of the impairment can be found in
note 9.
Deferred tax balances
The Group has carried forward losses which have been recognised as deferred tax assets as it is probable that the
company will derive future assessable income of a nature and amount sufficient to enable the benefit to be realised.
New Standard Energy Ltd 61
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 1.
Summary of Accounting Policies (continued)
Share-based payment transactions
The Group measures the cost of equity-settled transactions with directors and employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-
Scholes model.
Rehabilitation and decommissioning obligations
The Group estimates the future rehabilitation costs of production facilities, wells and pipelines at different stages of
the development and construction of assets or facilities. In most instances, removal of assets occurs many years into
the future. This requires judgemental assumptions regarding removal date, future environmental legislation, the extent
of restoration activities, the future removal technology available and liability specific discount rates to determine the
present value of these cash flows. As at 30 June 2013 the carrying value of rehabilitation obligations have not been
calculated given the preliminary stage of development.
Impairment
Assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying
amounts exceed their recoverable amounts. The assessment of the carrying amount often requires estimates and
assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future
operating performance.
Recoverability of development assets
The ultimate recoupment of costs carried forward for development assets is dependent upon the successful
development and commercial exploitation, or sale, of the respective areas of interest.
2.
Revenue
Revenue:
2013
$
2012
$
Interest revenue
1,969,310
814,536
Other income consisted of the following items:
Gain on sale of available-for-sale financial assets
Other Income
Total Revenue
40,588,300
33,166
42,590,776
-
29,541
844,077
As detailed in Note 1(h) well revenues of $688,108 have been capitalised and offset against the development expenditure
incurred to date on the development wells producing the revenue. This amount is reflected at Note 10.
3.
Profit / (Loss) From Operations
Profit/(loss) before income tax has been arrived at after crediting/ (charging) the
following gains and losses:
Unrealised foreign exchange gain/(loss)
Share based payments
Impairment of available for sale financial assets
Project expenses
Impairment of exploration expenditure
(1,924)
5,839
(740,051)
(1,450,301)
(1,713,085)
-
(33,933)
(25,321)
(5,383,445)
-
62 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 4.
Income Tax Expense
(a)
The components of tax expense comprise:
Current tax
Deferred tax
2013
$
2012
$
-
-
(13,609,099)
(3,659,629)
(b)
The prima facie tax from ordinary activities before income tax is reconciled to
the income tax expense as follows:
Profit/(loss) before tax
30,308,167
(3,454,500)
Tax expense (benefit) calculated at 30%
9,092,450
(1,036,350)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
Share based payments
Other permanent differences
Entertainment
Difference in overseas tax rate
Benefit of tax losses not previously recognised
Deferred tax liability not previously recognised
Deferred tax asset not previously recognised
Tax losses and timing differences not recognised
Income tax expense/(benefit)
222,015
1,432,643
11,320
(29,544)
435,090
6,802
2,527
(826)
-
(6,870,026)
2,880,215
4,488,479
-
(685,325)
13,609,099
3,659,629
-
(3,659,629)
13,609,099
(3,659,629)
The Company will have no tax payable due to prior year losses carried forward and tax deductible exploration expenditure
5. Key Management Personnel Compensation
Directors and other Key Management Personnel
Short term employee benefits
Post employment benefits
Share based payments
2,173,303
1,543,294
128,423
610,039
85,427
1,425,908
2,911,766
3,054,629
Detailed remuneration disclosures are provided in the remuneration report included in the Director’s Report.
Equity instrument disclosures relating to key management personnel
i.
Options provided as remuneration and shares
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms
and conditions of the options can be found in the audited Remuneration Report of the Directors Report.
New Standard Energy Ltd 63
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
5. Key Management Personnel Compensation (continued)
ii.
Option holdings
The number of options over ordinary shares in the Company held during the financial year by Key Management
Personnel is set out below.
Granted as
Compensation(1)
Net Change
Other(2)
Balance
30.6.2013
Vested and
Exercisable
Unvested
2013
Mr A Dixon AM
Mr P Thick
Mr S Willis
Dr M Hagan
Mr C Sadler
Balance
1.7.2012
750,000
-
-
2,300,000
4,000,000
2,750,000
-
-
-
300,000
Mr M Gracey
2,750,000
-
Mr K Aitken
-
750,000
Mr D Hansen-Knarhoi
750,000
Mr P Achour
Mr B Walker
300,000
600,000
-
-
-
-
-
-
-
-
-
-
-
-
(600,000)
750,000
750,000
-
2,300,000
-
2,300,000
4,000,000
4,000,000
2,750,000
2,750,000
-
-
300,000
-
300,000
2,750,000
2,750,000
-
750,000
750,000
300,000
-
-
750,000
750,000
300,000
-
-
-
-
11,900,000
3,350,000
(600,000)
14,650,000
11,300,000
3,350,000
2012
Balance
1.7.2011
Granted as
Compensation
Net Change
Other
Balance
30.6.2012
Vested and
Exercisable
Unvested
Mr A Dixon AM
-
750,000
-
750,000
450,000
300,000
Mr S Willis
Dr M Hagan
Mr I Paton
Mr C Sadler
5,250,000
4,000,000
(5,250,000)
4,000,000
2,500,000
1,500,000
7,250,000
2,750,000
(7,250,000)
2,750,000
1,750,000
1,000,000
2,000,000
-
-
-
Mr M Gracey
1,000,000
1,750,000
Mr D Hansen-Knarhoi
Mr P Achour
Mr B Walker
-
-
-
750,000
300,000
600,000
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
2,750,000
1,600,000
1,150,000
750,000
300,000
600,000
450,000
-
-
300,000
300,000
600,000
15,500,000
10,900,000
(14,500,000)
11,900,000
6,750,000
5,150,000
Notes:
(1) Following shareholder approval at the 2012 AGM, on 12 December 2012 the Company issued a total of 300,000 unlisted options
as part of an incentive component of an employment agreement for the Non-Executive roles to each of Mr P Thick and Mr C
Sadler. The options have been issued in different tranches and 50 per cent have an exercise price of 39.0 cents and the balance
have an exercise price of 44.0 cents. All options expire on 12 December 2015 if not exercised before. The options are non-
transferrable and cannot be exercised until such time as employment periods of 12 and 24 months have been served.
On 14 August 2012, the Company issued a total of 750,000 unlisted options as part of an incentive component of an employment
agreement for the senior executive role of General Manager Operations & Engineering, Mr K Aitken. The options have been issued
in different tranches and 50 per cent have an exercise price of 74.5 cents and the balance have an exercise price of 83.5 cents.
All options expire on 14 August 2015 if not exercised before. The options are non-transferrable and cannot be exercised until such
time as employment periods of 12 and 24 months have been served.
In relation to Mr P Thick’s options it is proposed that 2,000,000 unlisted options will be issued as part of an incentive component of
his employment agreement as Managing Director, subject to shareholder approval at the 2013 AGM. The options will be issued in
different tranches and 50 per cent have an exercise price of 40.0 cents and the balance will have an exercise price of 50.0 cents.
All options will expire on 1 April 2016 if not exercised before. The options will be non-transferrable and cannot be exercised until
such time as employment periods of 12 and 24 months have been served.
All options were issued under the terms of the Company’s Employee Share Option Scheme. Provision also exists for immediate
lapse in the event employment is terminated for fraud or wilful misconduct.
(2) Mr B Walker ceased to be KMP on 31 May 2013.
64 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
5. Key Management Personnel Compensation (continued)
iii.
Incentive Rights holdings
The number of Incentive Rights in the Company held during the financial year by Key Management Personnel are set
out below.
2013
Type of Rights
Balance
1.7.2012
Granted as
Compensation
Net Change
Other
Balance
30.6.2013 Vested
Balance held
nominally at
30.6.2013
Mr A Dixon AM
Mr P Thick
Mr S Willis
Dr M Hagan
Mr C Sadler
Mr M Gracey
Mr D Hansen-Knarhoi
Mr P Achour
Mr K Aitken
-
-
-
-
-
-
Performance
Retention
Performance
Retention
Performance
Retention
Performance
Retention
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
384,000
96,000
440,000
110,000
280,000
70,000
592,000
148,000
2,120,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
384,000
96,000
440,000
110,000
280,000
70,000
592,000
148,000
2,120,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
384,000
96,000
440,000
110,000
280,000
70,000
592,000
148,000
2,120,000
(iv) Share holdings
The number of shares in the Company held during the financial year by Key Management Personnel of the Group is
set out below.
2013
Mr A Dixon AM
Mr P Thick
Mr S Willis
Dr M Hagan
Mr C Sadler
Mr K Aitken
Mr M Gracey
Mr D Hansen-Knarhoi
Mr P Achour
Mr B Walker
2012
Mr A Dixon AM
Mr S Willis
Dr M Hagan
Mr I Paton
Mr C Sadler
Mr M Gracey
Mr M Clements
Mr D Hansen-Knarhoi
Balance
1.7.2012
86,000
-
11,130,762
4,588,893
100,000
-
87,786
80,000
-
-
16,073,441
Options
Exercised
Granted as
Compensation(1)
Net Change
Other(2)
Balance
30.6.2013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
123,601
89,399
40,410
-
253,410
135,212
650,000
-
(500,000)
-
-
10,000
-
-
-
221,212
650,000
11,130,762
4,088,893
100,000
-
221,387
169,399
40,410
-
Balance
1.7.2011
Options
Exercised
Granted as
Compensation
Net Change
Other
Balance
30.6.2013
36,000
8,270,864
2,166,456
1,000,000
-
10,000
420,000
-
-
5,250,000
7,250,000
2,000,000
-
-
-
11,903,320
14,500,000
-
234,898
234,898
-
-
77,786
-
-
547,582
50,000
(2,625,000)
(5,062,461)
(300,000)
100,000
-
(420,000)
80,000
86,000
11,130,762
4,588,893
-
100,000
87,786
-
80,000
Balance held
nominally at
30.6.2013
221,212
650,000
11,130,762
4,088,893
100,000
-
221,387
169,399
40,410
-
Balance held
nominally at
30.6.2012
86,000
11,130,762
4,588,893
-
100,000
87,786
-
80,000
295,212
16,622,063
16,622,063
(10,877,461)
16,073,441
16,073,441
New Standard Energy Ltd 65
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 5. Key Management Personnel Compensation (continued)
Notes:
(1) On 15 August 2012, the Company allotted and issued 123,601, 89,399, and 40,410 fully paid ordinary shares (Shares) to Mr
Gracey, Mr Hansen-Knarhoi and Mr Achour under the Employee Share Plan (Share Plan) that was the legacy LTI scheme
applicable in relation to 2012 performance.
New Standard has provided interest free limited recourse loans for the full amounts to purchase these Shares on the terms set out
in the Share Plan (Loan), and the loans are repayable in full by 31 December 2014 (Loan Repayment Date). As set out in the Share
Plan, all or part of the Loan may be repaid prior to the Loan Repayment Date. The issued Shares are subject to certain restrictions,
including restrictions on transfer until the Loan is repaid in full. In addition, the Loan must be repaid early in certain circumstances
as set out in the Share Plan.(Notes 21 and 27)
Under the revised remuneration policy the Employee Share Plan and provision of interest free limited recourse loans has ceased.
(2) Mr Dixon purchased 14,000 shares on 4 December 2012 and 121,212 shares on 8 May 2013, through on-market trades.
Mr Thick purchased 100,000 shares on 20 August 2012 from Dr Hagan through an off-market trade, 60,000 shares on 12 December 2012,
240,000 shares on 2 April 2013 and 250,000 shares on 15 April 2013 all through on-market trades.
On 20 August 2012, Dr Hagan sold 100,000 shares to Mr Thick through an off-market trade and 400,000 shares through an on-market
trade, for tax planning purposes.
Mr Gracey purchased 10,000 shares on 11 September 2012 through an on-market trade.
Other transactions with key management personnel
Other than above there have been no transactions with related parties during the year other than loans between subsidiaries
6. Auditors Remuneration
Auditor of the Parent Entity –
(a) Audit services
BDO Audit (WA) Pty Ltd
7.
Trade And Other Receivables
Current
Goods and services tax recoverable
Prepayments
Research & Development Tax Concession
Receivables from Joint Ventures
Other
2013
$
2012
$
57,890
57,890
55,609
55,609
12,671
80,227
-
207,462
415,258
715,618
31,844
270,313
493,951
535,744
365,978
1,697,830
The average credit period on trade and other receivables is 30 days. No interest is charged on prepayments and
receivables. The Consolidated Entity has financial risk management policies in place to ensure that all receivables are
received within the credit timeframe. Due to the short term nature of these receivables, their carrying value is assumed to
be approximately their fair value. None of the receivables are past due or impaired. Refer to note 23 for the Group’s risk
management objectives and policies.
66 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
8. Available For Sale Financial Assets
Listed securities
Equity securities
2013
$
2012
$
536,915
48,551,637
During the year ending 30 June 2013, the Company sold 5 million Buru Energy Ltd (ASX: BRU) shares at a price of $3.18
per share and 10 million Buru shares at a price of $2.74 per share. This represents a full divestment of the Company’s
shareholding in Buru.
The fair value of available for sale securities is based on quoted market price at the end of the reporting period. The quoted
market price used for available for sale financial assets held by the Group is the current bid price which as at 30 June
2013 $0.014 (30 June 2012: $0.046) for Elixir Petroleum Ltd (ASX: EXR). Refer to note 23 for the Group’s risk management
objectives and policies.
During the 2013 financial year the Company has been monitoring the market value of Elixir shares and has identified a
decline in value over a prolonged period. As such, in accordance with AASB 139 the Company has recorded an impairment
of $1,713,085 and has recognised this in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
9.
Exploration And Evaluation Expenditure
Movement in Exploration and Evaluation Expenditure
Balance at beginning of the year
Expenditure incurred
Expenditure impaired(2)
Foreign exchange movement
Expenditure recovered(1)
Balance at end of the year
16,799,094
12,493,737
28,571,493
6,959,308
(5,177,472)
273,351
-
-
(2,367,492)
(2,653,951)
38,098,974
16,799,094
The exploration expenditure incurred during the period relates to the Company’s oil and gas permits and application areas
in Australia and working interest in the Colorado County Project in onshore Texas.
The Board assesses impairment of all exploration expenditure at each reporting date by evaluating the conditions specific
to the Company and to the particular asset lead to impairment. These include if substantive expenditure has been incurred
on exploration and evaluation of resources and this has not led to the discovery of commercially viable quantities of
resources or sufficient data exists to indicate that the carrying amount of the exploration and evaluation asset is unlikely to
be recovered in full from successful development or by sale. The ultimate recoupment of exploration expenditure carried
forward is dependent on successful development and exploitation, or alternatively sale, of the respective area of interest.
Notes:
(1) The Company received a Research & Development Tax Concession claim for $2,247,002 relating to applicable works undertaken in the
year ended 30 June 2012 in the Canning and Carnarvon Basins.
The Company received $120,490 on 28 March 2013 from sale of Moeller leases.
(2) Based on a review of the carrying value of capitalised exploration expenditure on each area of interest, $5,177,472 of exploration
expenditure has been written off in the current reporting period in relation to the Moeller, Wharton County, Colorado County and NE Altair
assets in USA.
10. Development Assets
Development assets
At cost
Accumulated amortisation
Net carrying value
1,715,344
-
1,968,020
-
1,715,344
1,968,020
New Standard Energy Ltd 67
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
10. Development Assets (continued)
Development assets
2013
Cost
At 1 July 2012
Additions
Impairment
Revenue offset
Foreign exchange movement
At 30 June 2013
Net carrying value
At 1 July 2012
At 30 June 2013
2012
Cost
At 1 July 2011
Additions
Revenue offset
At 30 June 2012
Net carrying value
At 1 July 2011
At 30 June 2012
Tangible Costs
$
Intangible Costs
$
Total
$
806,494
285,462
(205,973)
-
76,867
962,849
1,161,526
168,372
-
(688,108)
110,705
1,968,020
453,834
(205,973)
(688,108)
187,572
752,495
1,715,344
806,494
962,849
1,161,526
752,495
1,968,020
1,715,344
796,173
10,321
-
806,494
796,173
806,494
1,671,075
842,007
(1,351,556)
2,467,248
852,328
(1,351,556)
1,161,526
1,968,020
1,671,075
1,161,526
2,467,248
1,968,020
Based on a review of the carrying value of capitalised development expenditure on each area of interest, $205,973 of
development expenditure has been written off in the current reporting period in relation to the Brasher # 1 well within the
Colorado County asset in USA.
The ultimate recoupment of development assets carried forward is dependent on successful development and exploitation,
or alternatively sale, of the respective area of interest
11. Property, Plant And Equipment
Property, plant and equipment
Accumulated depreciation
Net book amount
2013
$
2012
$
1,389,281
613,545
(317,157)
(158,106)
1,072,124
455,439
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
68 Annual Report 2013
Total
$
455,439
920,363
Furniture and
equipment
$
Motor Vehicles
$
Leasehold
Improvements
$
196,553
456,833
(7,080)
256,706
1,838
2,180
461,691
-
(598)
(7,678)
(132,474)
(68,673)
(94,853)
(296,000)
513,833
189,871
368,420
1,072,124
59,645
197,759
(13,921)
(46,930)
196,553
48,335
225,194
-
(16,823)
256,706
3,751
3,737
(2,576)
(2,732)
2,180
111,731
426,690
(16,497)
(66,485)
455,439
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
12. Trade And Other Payables
Current
Trade payables
Sundry payables and accrued expenses
2013
$
752,181
1,651,689
2,403,870
2012
$
262,410
593,735
856,145
The average credit period on purchases is 30 days. No interest is charged on the trade payables. The consolidated entity
has financial risk management policies in place to ensure that all payables are paid within the credit time frame. Refer to
note 23 for the Group’s risk management objectives and policies.
13. Current Liabilities – Borrowings
Current
Finance lease-vehicle
73,667
74,805
Finance leases have been taken out on the purchase of four vehicles. These vehicles have been separated into current and
non-current liabilities as required by AASB117.
14. Other Non-Current Liabilities
Non-current
Finance lease-vehicle
122,300
195,967
Finance leases have been taken out on the purchase of four vehicles. These leases have been separated into current and
non-current liabilities as required by AASB117.
15. Non-Current Liabilities – Deferred Tax Liability
Income statement
Accrued revenue/income
Property, plant & equipment
Foreign currency translation
Capitalised exploration expenditure
Other
Equity
Financial assets held for sale
Deferred tax assets recognised
Unused tax losses
- Australia
- US
Unexpired capital raising costs
Accrued income/revenue
Deductible temporary differences
Total deferred tax assets
Net deferred tax liability
Reconciliation of movement in deferred tax liabilities:
Opening balance
Debited (credited) to income statement
Debited (credited) to equity
Closing balance
56,758
11,771
170,805
15,623,934
1,216
42,357
15,070
109,779
5,630,134
-
-
13,289,842
15,864,483
19,087,182
(2,106,831)
(1,035,767)
(322,776)
-
(2,449,639)
(7,296,710)
(1,498,960)
(421,550)
(42,357)
(197,392)
(5,915,013)
(9,456,969)
9,949,470
9,630,213
9,630,213
13,609,099
(13,289,842)
-
(3,659,629)
13,289,842
9,949,470
9,630,213
New Standard Energy Ltd 69
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
16.
Issued Capital
2013
$
2012
$
305,331,847 fully paid ordinary shares (2012: 305,022,751)
53,626,937
53,626,937
(a) Fully paid ordinary shares
2013
Balance at beginning of financial year
No.
$
305,022,751
53,626,937
On 15 August 2012, issue of shares pursuant to employee share plan
309,096
-
Balance at end of financial year
305,331,847
53,626,937
2012
Balance at beginning of financial year
198,975,169
24,226,520
Fully Paid ordinary shares issued pursuant to;
- Share Purchase Plan (i)
- Placement (i)
13,333,333
4,000,000
76,666,667
23,000,000
- On 20 July 2011, issue of shares following the exercise of 1,000,000 20c options
1,000,000
200,000
- On 5 October 2011, issue of shares pursuant to employee share plan
- On 15 December 2011, issue of shares pursuant to employee share plan
- On 10 January 2012, issue of shares following exercise of 750,000 22.5c options.
- On 24 February 2012, issue of shares following the exercise of 250,000 22.5c options
and 250,000 27.5c options.
- On 23 March 2012, issue of shares following exercise of 500,000 27.5c options.
- On 14 May 2012, issue of shares following exercise of 250,000 27.5c options.
- On 1 June 2012, issue of shares following exercise of 6,250,000 22.5c options
77,786
469,796
750,000
500,000
500,000
250,000
-
-
168,750
125,000
137,500
68,750
and 6,250,000 27.5c options.
Less: Issue costs
Balance at end of financial year
(b) Terms and Conditions of issued capital
12,500,000
3,125,000
-
(1,424,583)
305,022,751
53,626,937
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
(c) Options
Information on options and incentive rights granted to Directors and employees as remuneration during the period including
the Long Term Incentive Plan (LTIP) are disclosed in Note 27 of the consolidated financial statements.
70 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
17. Reserves And Accumulated Losses
Available for sale financial assets reserve
Share based payments reserve
Foreign currency translation reserve
(a) Movements in available for sale financial assets reserve
Balance at beginning of year
Revaluation of financial assets available for sale
Impairment of financial assets available for sale
Deferred tax liability
Balance at end of year
Nature and purpose of reserve
2013
$
2012
$
-
30,461,795
3,964,386
3,224,335
(924,220)
(1,467,508)
3,040,166
32,218,622
30,461,795
7,275,000
-
36,476,637
(30,461,795)
-
-
-
(13,289,842)
30,461,795
The available for sale investments revaluation reserve represents the unrealised gain
or loss on the market value of available for sale financial assets
(b) Movements in share based payments reserve
Balance at the beginning of the year
3,224,335
1,774,034
Add: Issue of options
- Directors
-
Employees
Balance at the end of year
Nature and purpose of reserve
The share based payments reserve represents the value of options issued to
employees, directors and promoters.
(c) Movements in foreign currency translation reserve
Balance at the beginning of the year
Unrealised gain/(loss) on translation of foreign operation
Balance at the end of the year
Nature and purpose of reserve
The foreign currency translation reserve represents the unrealised gain or loss upon
translation of subsidiaries with a different functional currency.
(d) Movements in accumulated losses
Balance at the beginning of the year
Net profit/(loss) attributable to members of the Company
Balance at the end of the year
18. Dividends
There have been no dividends paid or proposed in the 2012 or 2013 financial years.
229,839
1,033,863
510,212
416,438
3,964,386
3,224,335
(1,467,508)
(1,817,308)
543,288
349,800
(924,220)
(1,467,508)
(2,239,814)
(2,444,943)
16,699,068
205,129
14,459,254
(2,239,814)
New Standard Energy Ltd 71
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
19. Commitments for Expenditure
Exploration permits and tenements – commitments for expenditure
In order to maintain current rights of tenure to Australian exploration permits and tenements, the Group’s required to outlay
rentals and to meet the minimum expenditure requirements established with the Western Australian Department of Mines
and Petroleum (DMP). Minimum expenditure commitments may be subject to renegotiation and with approval may otherwise
be mitigated or reduced by sale, farm out or relinquishment. These work commitments or obligations are not provided for in
the accounts but are to be incurred as outlined below:
Not longer than 1 year
Longer than 1 year and not longer than 5 year
Longer than 5 years
Australian Exploration Permits
Southern Canning Project
2013
$
23,368,378
38,817,500
625,000
62,810,878
2012
$
5,931,719
42,630,000
5,100,000
53,661,719
The above commitments reflect minimum work programs and costs as required by the DMP. Additional commitments or
liabilities may arise from time to time in relation to rehabilitation requirements following the completion of certain exploration
activities however no such commitments or liabilities are sufficiently identifiable to warrant specific disclosure at the
reporting date given the inherent uncertainties involved.
On 30 September 2011, the Company announced that it had executed a binding farm-out agreement with ConocoPhillips
(Canning Basin) Pty Ltd (COP) to explore and evaluate the shale gas potential of the Southern Canning Project in the
Canning Basin, Western Australia. Under the farm-out agreement it is anticipated that, subject to completion of the farm-in
work contemplated under the agreement, the expenditure commitments relating to EPS 443, 450, 451 and 456 will be
substantially met by COP via it’s funding of up to US$119m over four phases of shale exploration work to earn and retain a
75 per cent interest in the Southern Canning Project.
On 11 July 2013, the Company announced that that China’s largest energy company, PetroChina Company Limited
(PetroChina), received Chinese and Australian Government approval to proceed with acquiring a 29 per cent interest from
ConocoPhillips in the Southern Canning Project.
The Company drilled two wells (Nicolay-1 in EP456 and Gibb Maitland-1 in EP450) in the Canning Basin as part of Phase
1 of the Southern Canning Project. Data from these two wells have been used in further defining the resource structure and
potential and in determining the best possible target for the third well in Phase 1 of this project.
A request to the DMP has been made to recognise the suspended Gibb Maitland-1 well as having met the permit year
3 commitment for permit EP450. New Standard expects the request to be granted, however at the date of this report the
outcome has not been finalised so the commitment remains incorporated in the above table.
Merlinleigh Project
On 13 August 2012, the Company announced that it had converted its Merlinleigh Special Prospecting Authority acreage to
granted exploration permits EPS 481 and 482. The above table incorporates the expenditure commitments associated with
the grant of EPS 481 and 482.
On 3 July 2013, the Company announced it signed a Drilling Services Agreement (DSA) for a firm two well program with the
option for an additional two wells at New Standard’s election. The DSA is subject to final approvals, drilling will commence
at the Company’s Merlinleigh Project in the onshore Carnarvon Basin in late 2013, to be followed by up to three wells in the
Canning Basin after the wet season in mid-2014.
US Exploration Permits
United States oil and gas exploration working interests do not have minimum expenditure requirements and due to the
expenditure being largely discretionary there are no amounts included in the above table.
Leases
The Company entered into a five year operating lease agreement effective 1 December 2012 for the corporate head offices
at Level 2, 7 Ventnor Avenue, West Perth. The lease obligation is not provided for in the Consolidated Statement of Financial
Position but is to be incurred as outlined below.
Not longer than 1 year
Longer than 1 year and not longer than 5 year
Longer than 5 years
72 Annual Report 2013
2013
$
237,705
812,159
-
1,049,864
2012
$
131,826
59,063
-
190,889
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
20. Segment Reporting
Segment results
The segment information provided to the Managing Director for the reportable segments for the year ended 30 June 2013
are as follows:
30 June 2013
Total Segment Revenues
Profit Before Tax
Total Segment Assets
Total Segment Liabilities
30 June 2012
Total Segment Revenues
Profit Before Tax
Total Segment Assets
Total Segment Liabilities
Australia
Oil and Gas
Exploration
$
United States
Oil and Gas
Exploration
$
Total
$
-
-
-
-
(5,383,445)
(5,383,445)
37,020,807
2,793,511
39,814,318
-
-
-
-
-
-
-
-
-
11,055,429
7,711,685
18,767,114
(26,909)
(15,000)
(41,909)
Australia - oil and gas exploration
Canning Basin comprises of exploration associated with the Group’s interests in oil and gas permits in the Canning Basin
including EP 417, 443, 450, 451 & 456.
Carnarvon Basin comprises of exploration associated with the Group’s interests in oil and gas permits in the Carnarvon
Basin namely in the Merlinleigh Project (EP481 and EP482).
United States - oil and gas exploration
Colorado Country comprises of exploration expenditure associated with the Group’s working interest in oil and gas projects
in the Colorado County Project in Texas, U.S.A. including the Heintschel #1, Heintschel #2, D Truchard #1 and Joann #1
wells.
(a) Other segment information
(i)
Segment revenue
Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue from
external parties reported to the Managing Director is measured in a manner consistent with that in the statement of
profit or loss and other comprehensive income.
Revenues from external customers are derived from the sale of gas. However these are minimal and therefore there
are no major customers to report.
Segmented revenue reconciles to total revenue from continuing operations as follows:
Total Segment Revenue
Interest revenue
Other income
Total revenue from continuing operations (note 2)
2013
$
-
1,969,310
33,166
2,002,476
2012
$
-
814,536
29,541
844,077
New Standard Energy Ltd 73
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
20. Segment Reporting (continued)
A reconciliation of adjusted segment loss to profit/loss before income tax from continuing operations is provided as
follows:
Adjustment segment profit/(loss) per above segments
Intersegment eliminations
Interest
Gain on available-for-sale financial assets
Share based payments
Depreciation
Impairment of available for sale financial assets
Other non-segment and corporate
2013
$
(5,383,445)
-
2012
$
-
-
1,969,310
814,536
40,588,300
-
(740,051)
(1,450,301)
(296,000)
(1,713,085)
-
-
(4,116,862)
(2,818,735)
Profit/(loss) before income tax from continuing operations
30,308,168
(3,454,500)
(ii)
Segment assets
The amounts provided to the Managing Director with respect to total assets are
measured in a manner consistent with that of the financial statements. These
assets are allocated based on the operations of the segment and the physical
location of the asset.
Investment in shares (classified as available-for-sale financial assets) held by
the Group are not considered to be segment assets but rather managed by the
corporate office.
Reportable segment assets are reconciled to total assets as follows:
Segment assets
Unallocated:
Available-for-sale financial assets
Cash
Other non-segment and corporate
39,814,318
18,767,114
536,915
48,551,637
41,536,690
24,890,855
1,787,742
2,153,269
Total assets as per the statement of financial position
83,675,665
94,362,875
(iii)
Segment liabilities
The amounts provided to the Managing Director with respect to total liabilities
are measured in a manner consistent with that of the financial statements. These
liabilities are allocated based on the operations of the segment.
Reportable segment liabilities are reconciled to total liabilities as follows:
Segment liabilities
Unallocated:
-
-
Other non-segment and corporate
12,549,307
10,757,130
Total liabilities as per the statement of financial position
12,549,307
10,757,130
74 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
21. Related Party Disclosures
(a) Key Management Personnel compensation
Disclosures relating to Options and Rights issued to Key Management Personnel are set out at Notes 5 and 27.
(b)
Transactions with related parties loans
Other than loans to subsidiary companies, there have been no additional transactions with related parties.
Share based payments(i)
Note:
2013
$
56,409
56,409
2012
$
72,138
72,138
(i) On 15 August 2012, the Company issued the following fully paid ordinary shares, funded via non-recourse loans, pursuant to the
Employee Share Plan to Key Management Personnel (KMP). All loans are outstanding at balance date.
Name
Mr Gracey
Mr Hansen-Knarhoi
Title
Head of Commercial, Legal
& Indigenous Affairs
CFO & Joint Company
Secretary
No. of Shares
Non-recourse
Loan Value ($)
Fair Value at
Grant Date ($)
123,601
67,500
27,514
89,399
48,822
19,900
Mr Achour
HSE Manager
40,410
22,069
8,995
Interest
Interest not
charged
Interest not
charged
Interest not
charged
253,410
138,391
56,409
The fair values were calculated using the Black-Scholes pricing model that took into account the term, the underlying value of the shares,
the exercise price, the expected dividend yield, the impact of dilution and the risk-free interest rate.
Model inputs used to value the share options granted included:
-
exercise price: $0.5461 per share
- market price of shares at grant date: $0.56
-
-
-
-
expected volatility of the Company’s shares: 80 per cent
risk-free interest rate: 2.94 per cent
time to maturity: 2.38 years
dividend yield: zero per cent
New Standard Energy Ltd 75
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
22. Notes to the Cash Flow Statements
For the purposes of the statement of cash flows, cash includes cash on hand and
in banks and investments in money market instruments, net of outstanding bank
overdrafts. Cash at the end of the financial year as shown in the cash flow statements
are reconciled to the related items in the statement of financial position as follows:
(a) Reconciliation of cash and cash equivalents
2013
$
2012
$
Cash and cash equivalents
41,536,690
24,890,855
(b) Reconciliation of net profit after tax to net cash flows from operating activities
Profit after income tax
Non-cash expenditure:
Share based payments
Gain on sale of financial assets
Loss on sale of fixed assets
Impairment of exploration expenditure
Impairment of Available for Sale Financial Assets
Depreciation
Unrealised foreign exchange gain
Bad Debt written down
Income tax expense
(Increase)/decrease in assets:
Receivables
Other current assets
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
16,699,068
205,129
740,051
1,450,301
(40,588,300)
-
7,678
16,497
5,383,445
1,713,085
296,000
1,924
-
-
-
66,485
(5,839)
449
13,609,099
(3,659,629
317,049
(1,066,509)
-
20,134
394,913
(131,523)
(1,425,988)
(3,104,505)
The Group’s principal financial instruments comprise cash and cash equivalents and also includes available for sale
financial assets and payables. The main purpose of these financial instruments is to finance the Group’s operations. The
Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from
its operations. It is, and has been throughout the entire period, the Group’s policy is that no trading in financial instruments
shall be undertaken.
The main risks arising from the consolidated entity’s financial instruments are currency risk, credit risk, price risk, liquidity
risk and cash flow interest rate risk. The Board reviews and agrees policies for managing each of these risks.
76 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 23. Financial Risk Management Objectives and Policies
(a) Cash flow interest rate risk
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s short-term deposits
with a floating interest rate. These financial assets with variable rates expose the consolidated entity to cash flow interest
rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The Group
does not engage in any hedging or derivative transactions to manage interest rate risk.
The following tables set out the carrying amount of the Group’s exposure to interest rate risk and the effective weighted
average interest rate for each class of these financial instruments.
The Group has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the Group
continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions,
alternative investments and the mix of fixed and variable interest rates.
A sensitivity analysis has not been disclosed in relation to variable rate instruments for Group as the results are immaterial to
the statement of profit or loss and other comprehensive income.
Float Interest Rate
Total Carrying Amount
2013
$
2012
$
2013
$
2012
$
41,536,690
24,890,855
41,536,690
24,890,855
Note
22 (a)
41,536,690
24,890,855
41,536,690
24,890,855
Financial Assets
Cash at Bank
Total
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to ensure the ability to meet debt requirements. The
Group manages liquidity risk by continuously monitoring forecast and actual cash flows. The Group aims at maintaining
flexibility in funding by having in place operational plans to source further capital as required.
All trade payables are contractually due within 30 days.
Liquidity risk is measured using liquidity ratios such as working capital as follows:
Current Assets
Current Liabilities
Surplus
2013
$
2012
$
42,789,223
75,140,322
(2,477,537)
(930,950)
40,311,686
74,209,372
New Standard Energy Ltd 77
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
23.
Financial Risk Management Objectives and Policies (continued)
(c) Currency risk
The Group has operations located in the United States where both revenues and expenditures are recorded. The statement
of financial position can be affected by movements in the USD/AUD exchange rates upon translation of the US operations
into AUD.
Foreign exchange risk arises from commercial transactions and recognised assets and liabilities denominated in a currency
that is not the Group’s functional currency.
This risk arises as at times the Group is exposed to purchasing goods and services denominated in US dollars, which is
unavoidable due to the nature of the working interest acquired in the US oil and gas permits.
The Company also has a joint venture with ConocoPhilips (Canning Basin) Pty Ltd (COP) to explore and evaluate the
shale gas potential of the Southern Canning Project in the Canning Basin, Western Australia. Under the agreement, COP
expenditure commitment limits have been set in US dollars. As associated expenditures are predominantly incurred in AUD,
movements in the AUD/USD exchange rate exposes the Company to foreign exchange gains or losses when received
funds are converted to AUD. To minimise this exposure, the Company entered into foreign exchange put option contract for
the duration of the 2012/13 drilling program to protect against an upward movement in the AUD/USD exchange rate, and as
such, a sensitivity analysis has not been performed. No foreign exchange hedge contracts were in place at year end.
(d) Fair value
The fair value of available for sale securities is based on quoted market price at the end of the reporting period. The quoted
market price used for available for sale financial assets held by the Group is the current bid price.
The following tables classify financial instruments recognised in the statement of financial positions of the Group, according
to the hierarchy stipulated in AASB 7 as follows:
Level 1 -
the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - a valuation technique is used using other than quoted prices within Level 1 that are observable for the financial
instrument either directly (i.e. as prices) or indirectly (i.e. derived from prices); or
Level 3 - a valuation technique is used using inputs that are not based on observable market data (unobservable inputs).
2013
Available for sale financial assets
Level 1
$
Level 2
$
Level 3
$
Total
$
Listed equity securities
536,915
2012
Available for sale financial assets
Listed equity securities
48,551,637
-
-
-
-
536,915
48,551,637
The fair value of financial instruments traded in active markets is based upon quoted market price at the end of the
reporting period. The quoted market price is the quoted bid prices which are included in Level 1.
78 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 23. Financial Risk Management Objectives and Policies (continued)
(e) Credit risk
Credit risk is the potential that the Group will suffer a financial loss due to the unwillingness or inability of counterparty to
fully meet their contractual debts and obligations. Credit risk arises from potential trading activities and holding cash. The
carrying amount of financial assets represents the maximum credit exposure.
The Group trades only with recognised, credit worthy third parties and has apportioned cash reserves amongst several
financial institutions. The credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to external credit ratings:
Cash at Bank and short term bank deposits (AA-)
Cash at Bank and short term bank deposits (A)
Cash at Bank and short term bank deposits (BBB)
Total
2013
$
2012
$
21,807,157
24,231,974
729,533
658,881
19,000,000
-
41,536,690
24,890,855
Subsequent to financial year end, the amounts held in BBB deposits were transferred to AA- deposits.
(f)
Price risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group in other listed
exploration companies and classified on the Statement of Financial Position as available-for-sale financial assets. The Group
monitors its available-for-sale financial assets on a regular basis including daily monitoring of ASX listed prices and ASX
releases.
The table below summarises the impact of a 10 per cent increase/decrease in the listed share price of available-for-sale
financial assets on the pre-tax profit for the year and on equity
2013
Impact on Pre-Tax Profit
Impact on Other Components of Equity
Increase
$
-
Decrease
$
(53,691)
Increase
$
53,691
Decrease
$
-
(g) Capital risk management
The Group manages capital to ensure that the Group will be able to continue as a going concern. In order to maintain or
adjust the capital structure, the Group may issue new shares.
The Group defines capital as equity and net debt.
The Group defines net debt as total borrowings less cash and equity as the sum of share capital, reserves and retained
earnings (or accumulated losses) as disclosed in the statement of financial position.
The Board of Directors regularly monitors capital by reviewing its future operating cashflows to ensure it maintains an
appropriate amount of capital to be able to meet its exploration programs. No formal targets are in place for return on
capital, or gearing ratios as the Group has not derived any income from its exploration activities and currently has no debt
facilities in place.
Equity
Net Cash/(Debt)
Surplus
2013
$
2012
$
71,126,358
83,605,745
41,340,723
24,620,083
112,467,081
108,225,828
New Standard Energy Ltd 79
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
24. Earnings/(loss) per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
The earnings and weighted average number of ordinary shares used in the calculation
of basic and diluted earnings per share are as follows:
Profit for the year
2013
Cents
Per Share
5.49
5.49
2012
Cents
Per Share
0.08
0.07
$
$
16,699,068
205,129
2013
No.
2012
No.
Weighted average number of ordinary shares used in the calculation of basic EPS
304,446,205
254,509,608
Weighted average number of ordinary shares used in the calculation of diluted EPS
304,446,205
273,856,594
25.
Interests in Joint Venture operations
The Consolidated Entity has an interest in the following joint ventures as at 30 June 2013 whose principal activities were oil
and gas exploration.
Permit
EP417
EP443
EP450
EP451
EP456
2013 Interest
Operator
65%
25%
25%
25%
25%
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
New Standard Onshore Pty Ltd
The Consolidated Entity’s interest in assets/liabilities venture operations are detailed below. The amounts are included in the
financial statements under their respective categories.
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Exploration expenditure
Total non-current assets
2013
$
2012
$
10,245
-
5,296
95,678
10,245
100,974
33,411,144
7,246,176
33,411,144
7,246,176
Share of total assets of joint venture operations
33,421,390
7,347,150
Income
Interest
Total income
Share of net income from joint venture operations
1,336
1,336
1,336
-
-
-
Details of joint venture agreements entered into during the year are provided in the Review of Operations.
80 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
26. Subsidiaries
Name of Entity
Parent Entity
New Standard Energy Limited
Subsidiaries
New Standard Onshore Pty Ltd
New Standard Energy Inc
27. Share Based Payments
Employee Share Scheme
Ownership Interest
Country of
Incorporation
2013
%
2012
%
Australia
Australia
Delaware, USA
100
100
100
100
Outlined below is a summary of the key terms of the Company’s Employee Share Plan. This plan was replaced in the year
ended 30 June 2013 by the Executive Long Term Incentive Plan (LTIP). Refer to the Director’s Report for further details on
the structure of the LTIP.
a) Eligibility: Participants in the Plan may be Directors, full-time and part-time employees of the Company or any of its
subsidiaries (Participants).
b) Administration of plan: The Board is responsible for the operation of the Plan and has a broad discretion to determine
which Participants will be offered Shares under the Plan.
c) Number of shares offered: The Board determines the number of Shares offered to Participants in the Plan having regard
to:
(i) the seniority of the Participant and the position the Participant occupies with the Company or any Subsidiary;
(ii) the length of service of the Participant with the Company and its Subsidiaries;
(iii) the record of employment of the Participant with the Company and its Subsidiaries;
(iv) the potential contribution of the Participant to the growth and profitability of the Company and its Subsidiaries; and
(v) any other matters which the Board considers relevant.
(d) Offer: The Board may issue an offer to a Participant to participate in the Plan. The offer:
(i) will invite application for the number of Shares specified in the offer;
(ii) will specify the issue price for the Shares;
(iii) may invite applications for a loan up to the amount payable in respect of the Shares accepted by the Participant in
accordance with the offer;
(iv) will specify any restriction conditions applying to the Shares;
(v) will specify an acceptance period; and
(vi) specify any other terms and conditions attaching to the Shares.
e) Issue price: the issue price of each Share will be not less the volume weighted average price at which Shares were
traded on the ASX over the 5 trading days up to and including the trading day before the date of the offer.
f) Restriction conditions: Shares may be subject to restriction conditions (such as a period of employment) which
must be satisfied before the Shares can be sold, transferred, or encumbered. Shares cannot be sold, transferred or
encumbered until any loan in relation to the Shares has been repaid or otherwise discharged under the Plan.
New Standard Energy Ltd 81
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 27. Share Based Payments (continued)
g) Loan: A Participant who is invited to subscribe for Shares may also be invited to apply for a loan up to the amount
payable in respect of the Shares accepted by the Participant (Loan), on the following terms:
(i) the Loan will be interest free;
(ii) the Loan made available to a Participant shall be applied by the Company directly toward payment of the issue
price of the Shares;
(iii) the Loan repayment date and the manner for making such payments shall be determined by the Board and set out
in the offer;
(iv) a Participant must repay the Loan in full by the loan repayment date but may elect to repay the Loan amount in
respect of any or all of the Shares at any time prior to the loan repayment date;
(v) the Company shall have a lien over the Shares in respect of which a Loan is outstanding and the Company shall be
entitled to sell those Shares in accordance with the terms of the Plan; and
(vi) a Loan will be non-recourse except against the Shares held by the Participant to which the Loan relates.
h) Unsatisfied restriction condition: Where a restriction condition in relation to Shares is not satisfied by the due date, or
becomes incapable of satisfaction in the opinion of the Board, the Company must, unless the Restriction Condition is
waived by the Board:
(i) arrange to sell the Shares as soon as reasonably practicable either on the ASX or to an investor who falls within an
exemption under Section 708 of Corporations Act 2001 provided that the sale must be at a price that is no less than
80 per cent of the volume weighted average price at which Shares were traded on the ASX on the 10 trading days
before the sale date;
(ii) apply the sale proceeds (Sale Proceeds) in the following priority:
A. first, to pay the Company any outstanding Loan Amount (if any) in relation to the Shares and the Company’s
reasonable costs in selling the Shares; and
B. second, to the extent the Sale Proceeds are sufficient, to repay the Participant any cash consideration paid by
the Participant or Loan Amount repayments (including any cash dividends applied to the Loan Amount) made
by or on behalf of the Participant. The Participant acknowledges that the Company is not liable to repay the
Participant any cash consideration or Loan Amount repayments except to the extent covered by the remaining
Sale Proceeds; and
C. lastly, any remainder to the Company to cover its costs of managing the Plan
i) Sale of shares to repay loan:
(i) A Loan shall become repayable in full where:
A. the Participant (or, where the Participant is an Associate of an Eligible Employee, the Eligible Employee) ceases
to be an Eligible Employee for any reason (including death);
B. the Participant suffers an event of insolvency;
C. the Participant breaches any condition of the Loan or the Plan; or
D. a Restriction Condition in relation to Shares subject to the Loan is not satisfied by the due date, or becomes
incapable of satisfaction in the opinion of the Board (and is not waived).
(ii) Where a Loan becomes repayable and at that time a Restriction Condition in relation to Shares subject to the Loan
is not satisfied, or is incapable of being satisfied in the opinion of the Board (and is not waived), the Shares must be
sold and the Sale Proceeds applied to repay the Loan in accordance to the Plan.
(iii) Where a Loan in relation to Shares becomes repayable and at that time Restriction Conditions in relation to the
Shares have either been satisfied or are waived, the Company must give the Participant a 30 day period to repay
the Loan, failing which the Company must sell the Shares and apply the Sale Proceeds in accordance with the Plan.
j) Power of Attorney: The Participant irrevocably appoints the Company and each director of the Company severally as
his or her attorney to do all things necessary to give effect to the sale of the Participant’s Shares in accordance with the
Plan.
82 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 27. Share Based Payments (continued)
k) Plan limit: The Company must take reasonable steps to ensure that the number of Shares offered by the Company
under the Plan when aggregated with:
(i) the number of Shares issued during the previous five years under the Plan (or any other employee share plan
extended only to Eligible Employees); and
(ii) the number of Shares that would be issued if each outstanding offer for Shares (including options to acquire
unissued Shares) under any employee incentive scheme of the Company were to be exercised or accepted, does
not exceed 5 per cent of the total number of Shares on issue at the time of an offer (but disregarding any offer of
Shares or option to acquire Shares that can be disregarded in accordance with relevant ASIC Class Orders).
l) Restriction on transfer: Participants may not sell or otherwise deal with a Plan Share until the Loan Amount in respect of
that Plan Share has been repaid and any restriction conditions in relation to the Shares have been satisfied or waived.
The Company is authorised to impose a holding lock on the Shares to implement this restriction.
m) Quotation on ASX: The Company will apply for each Plan Share to be admitted to trading on ASX upon issue of the Plan
Share. Quotation will be subject to the ASX Listing Rules and any holding lock applying to the Shares.
n) Rights attaching to shares: Each Plan Share shall be issued on the same terms and conditions as the Company’s
issued Shares (other than in respect of transfer restrictions imposed by the Plan) and it will rank equally with all other
issued Shares from the issue date except for entitlements which have a record date before the Issue Date.
If there is a bonus issue to shareholders, the number of shares over which the Option is exercisable may be increased
by the number of shares which the holder of the Option would have received if the Option had been exercised before
the record date for the bonus issue.
In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the
Company, the exercise price of the Options may be reduced in accordance with Listing Rule 6.22.
Expenses arising from share-based payment transactions
Shares issued to directors
Options issued to directors
Shares issued to key management personnel
Options issued to key management personnel
Incentive Rights issued to key management personnel
Shares issued to other employees
Options issued other employees
2013
$
-
229,839
56,409
377,536
302
12,396
63,570
2012
$
60,929
972,934
11,210
380,836
-
-
24,393
740,051
1,450,302
New Standard Energy Ltd 83
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 27. Share Based Payments (continued)
Unlisted Options
Exercise
price
$
Balance at
start of
the year
No.
Granted
during
the year
No.
Exercised
during
the year
No.
Forfeited
during
the year
No.
Balance at
the end of
the year
No.
Vested and
exercisable
at end of
the year
No.
Grant date
2013
Expiry date
29 March 2011
30 June 15
29 March 2011
30 June 15
0.225
0.275
500,000
500,000
20 December 2011 20 December 2014
0.385
6,250,000
20 December 2011 20 December 2014
0.430
3,750,000
24 April 2012
24 April 2012
24 April 15
24 April 15
09 May 2012
09 May 2015
09 May 2012
09 May 2015
10 August 2012
10 August 2015
10 August 2012
10 August 2015
12 December 2012 12 December 2015
12 December 2012 12 December 2015
0.810
0.905
0.535
0.600
0.745
0.835
0.390
0.440
-
-
-
-
-
-
-
-
300,000
300,000
300,000
300,000
-
-
-
-
375,000
375,000
300,000
300,000
12,200,000 1,350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
500,000
500,000
6,250,000 6,250,000
3,750,000 3,750,000
300,000
300,000
300,000
300,000
300,000
300,000
300,000
375,000
375,000
300,000
300,000
-
-
-
-
-
13,550,000 11,900,000
Weighted Average exercise price
0.39
0.62
0.00
0.00
0.44
0.42
In addition to the above table, on 2nd April 2013, the Company proposed to issue 2,000,000 unlisted options to Mr P Thick
as part of an incentive component of his employment agreement as Managing Director, subject to shareholder approval at
the 2013 AGM. The options will be issued in different tranches and 50 per cent have an exercise price of 40.0 cents and the
balance will have an exercise price of 50.0 cents. All options will expire on 1 April 2016 if not exercised before. The options
will be non-transferrable and cannot be exercised until such time as employment periods of 12 and 24 months have been
served.
2012
3 December 2009
30 June 2012
0.225
7,250,000
3 December 2009
30 June 2012
0.275
7,250,000
- 7,250,000
- 7,250,000
29 March 2011
30 June 2013
29 March 2011
30 June 2013
20 December 2011
20 December 2014
20 December 2011
20 December 2014
24 April 2012
24 April 2015
24 April 2012
24 April 2015
9 May 2012
9 May 2012
9 May 2015
9 May 2015
0.225
0.275
0.385
0.430
0.810
0.905
0.535
0.600
500,000
500,000
-
-
- 6,250,000
- 3,750,000
-
-
-
-
300,000
300,000
300,000
300,000
-
-
-
-
-
-
-
-
15,500,000 11,200,000 14,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
250,000
500,000
250,000
6,250,000 3,125,000
3,750,000 1,875,000
300,000
300,000
300,000
300,000
-
-
-
-
12,200,000 5,500,000
Weighted Average exercise price
0.25
0.44
0.25
0.00
0.42
0.39
Options granted as part of remuneration have been valued using a Black-Scholes option pricing model, which takes into
account various factors including the option exercise price, the current level and volatility of the underlying share price,
the risk-free interest rate, expected dividends on the underlying share, current market price of the underlying share and
the expected life of the option. The expected volatility has been based on the historic volatility (based upon the life of the
option) adjusted for non-trading days and any expected changes to future volatility.
84 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 27. Share Based Payments (continued)
2013
Fair value at grant date of $0.745 and $0.835 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.390 and $0.440 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
$0.236 - $0.252
$0.550
$0.745 - $0.835
80%
3 years
0%
2.73%
$0.147 - $0.156
$0.320
$0.390 - $0.440
80%
3 years
0%
2.52%
Fair value at proposed date of $0.400 and $0.500 options, subject to shareholder approval at 2013 AGM $0.055 - $0.064
Share price
$0.185
$0.400 - $0.500
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
80%
3 years
0%
2.88%
2012
Fair value of share options and assumptions for the year ended 30 June 2012:
Fair value at grant date of $0.385 and $0.430 options
Share price
Exercise price
Expected volatility
(expressed as a weighted average volatility used in the modeling under Black Scholes model)
Option life (expressed as weighted average life used in the modeling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.810 and $0.905 options
Share price
Exercise price
Expected volatility (expressed as a weighted average volatility used in the modelling under Black Scholes
model)
Option life (expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
Fair value at grant date of $0.535 and $0.600 options
Share price
Exercise price
Expected volatility (expressed as a weighted average volatility used in the modelling under Black Scholes
model)
Option life (expressed as weighted average life used in the modelling under Black Scholes model)
Expected dividends
Risk-free interest rate (based on government bonds)
$0.139 - $0.147
0.295
$0.385 - $0.430
85%
3 years
0%
3.02%
$0.285 - $0.301
0.648
$0.810 - $0.905
85%
3 years
0%
3.05%
$0.257 - $0.270
$0.500
$0.535 - $0.600
85%
3 years
0%
2.62%
The fair value of services received in return for share options have been fair valued based upon the fair value of equity
securities granted, measured using a Black Scholes model. The fair value of the options issued has been used, as the fair
value of the services cannot be reliably measured.
New Standard Energy Ltd 85
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 27. Share Based Payments (continued)
Incentive Rights
The LTIP was introduced during the 2013 financial year with effect from 15 September 2013. Under the plan, the Board
may offer Incentive Rights in the form of Performance Rights and Retention Rights to executives. During the 2013 financial
year Performance Rights and Retention Rights were granted to executives as part of their remuneration packages. On the
vesting date the performance rights will be tested against the absolute TSR criteria, and the retention rights tested against
tenure criteria. Only those rights that satisfy the criteria will vest, and the remainder will immediately lapse. Refer to the
Director’s Report for further details on the structure of the LTIP.
The table below outlines movements in Incentive Rights during the 2013 financial year and the balance held by each
executive as at 30 June 2013
Name
Grant Date
Type of Incentive
Rights
Number of
Incentive Rights
Fair Value of
each Incentive
Right ($)
Vesting Date
Mr D Hansen-Knarhoi
28/06/2013
Performance Rights
28/06/2013
Performance Rights
28/06/2013
28/06/2013
Retention Rights
Retention Rights
Mr P Achour
28/06/2013
Performance Rights
28/06/2013
Performance Rights
28/06/2013
28/06/2013
Retention Rights
Retention Rights
Mr K Aitken
28/06/2013
Performance Rights
28/06/2013
Performance Rights
28/06/2013
28/06/2013
Retention Rights
Retention Rights
Mr M Gracey
28/06/2013
Performance Rights
28/06/2013
Performance Rights
28/06/2013
28/06/2013
Retention Rights
Retention Rights
Total
28. Contingencies
220,000
220,000
55,000
55,000
140,000
140,000
35,000
35,000
296,000
296,000
74,000
74,000
192,000
192,000
48,000
48,000
2,120,000
0.002
0.014
0.120
0.120
0.002
0.014
0.120
0.120
0.002
0.014
0.120
0.120
0.002
0.014
0.120
0.120
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
14/03/2014
14/09/2015
Following the Southern Canning Project drilling campaign in the 2012/13 financial year, Century Energy Services Pty Ltd
(MBC) has made claims against the Company for various amounts under the Drilling Services Agreement (DSA) for a total
of $4,054,440. All of the claims have been disputed by the Company and it does not believe based upon legal advice it has
any liability with respect to the claims by reason of MBC’S breaches of the DSA. Further and in any event, the Company
has claims against MBC in relation to the above breaches in excess of $4,054,440 which are still in the process of being
quantified. The Company therefore has not recognised any provision with respect to this claim.
86 Annual Report 2013
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013 29. Parent Enitity Information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2013. The
information presented here has been prepared using consistent accounting policies as presented in Note 1.
There were no material contingent liabilities or assets for the parent entity as at 30 June 2013, or as at the date of the report,
other than those already disclosed elsewhere in the report.
Current Assets
Non-current assets
Total assets
Current liabilities
Non-current assets
Total liabilities
Contributed equity
Retained earnings/(Accumulated losses)
Reserves
Total equity
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
30. Subsequent Events
2013
$
2012
$
41,387,111
73,198,756
41,693,444
21,452,746
83,080,555
94,651,502
1,200,486
897,840
10,157,955
9,826,180
11,358,441
10,724,020
62,786,779
62,786,779
4,952,429
(12,563,947)
3,982,906
33,704,649
71,722,114
83,927,481
17,516,376
727,929
(29,918,507)
36,476,637
(12,402,131)
37,204,566
On 3 July 2013, the Company announced it will resume drilling operations towards the end of 2013 after it signed a Drilling
Services Agreement (DSA) for a firm two well program with the option for an additional two wells at New Standard’s election.
This arrangement will provide New Standard with flexibility as operator of all its joint ventures and projects to allocate drilling
slots as exploration programs are firmed up over the coming 6-12 months. Subject to the DSA receiving final approvals,
drilling will commence at the Company’s Merlinleigh Project in the onshore Carnarvon Basin in late 2013, to be followed by
up to three wells in the Canning Basin after the wet season in mid-2014.
On 13 August 2013, New Standard announced it had significantly increased its equity position in Elixir Petroleum Ltd
(ASX:EXR) following its support of a $1.85 million entitlements issue completed by Elixir at a price of 1.2 cents per share.
New Standard purchased 83,655,036 shares at a total cost of $1 million, and as a result increased its equity stake in Elixir
from 13.7 per cent to 28.2 per cent. Subsequently New Standard director, Mr Sam Willis, has joined the Elixir board.
On 11 July 2013, the Company announced that that China’s largest energy company, PetroChina Company Limited
(PetroChina), has received Chinese and Australian federal government approval to proceed with acquiring a 29 per cent
interest from ConocoPhillips in New Standard’s joint venture in the Southern Canning Basin. The deal between PetroChina
and ConocoPhillips had been closed by a cash payment, and PetroChina’s full participation only awaits approval and
registration by Western Australia’s Department of Mines and Petroleum.
New Standard Energy increased its acreage position in Western Australia after being awarded a new exploration area in
the northern Canning Basin by the Department of Mines and Petroleum following a successful bid submission for acreage
release area L12-15. Exploration Permit Application STP-EPA-0092 covers an area of 3,305 subscript km2. There are no work
requirements for this area until Native Title and heritage negotiations are initiated and completed.
Other than the above, there has been no other matter or circumstance that has arisen since the end of the year that requires
disclosure.
New Standard Energy Ltd 87
Notes to and Forming Part of the Consolidated Financial Statements For the year ended 30 June 2013
Shareholder Information
As at 23 September 2013
The shareholder information set out below was applicable as at 23 September 2013.
1. Distribution of Shareholders
(a) Analysis of number of shareholders by size of holding.
Category of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Holders
189
489
456
1,578
403
3,115
Number of shares
% of capital
57,396
1,576,924
3,891,795
63,165,790
236,639,942
305,331,847
0.02%
0.52%
1.27%
20.69%
77.50%
100.00%
(b) There are 380 shareholders with less than a marketable parcel of ordinary shares.
2.
Twenty Largest Shareholders
The names of the twenty largest shareholders by account holding of quoted ordinary shares are listed below:
Shareholder
J P Morgan Nominees Aust Ltd
Buru Energy Ltd
National Nominees Ltd
Phoenix Props Int PL
TC Inv Pte Ltd
Willis Samuel J C & Willis C M
Young Alan
Harris Richard J & S E
Harris Richard & Susan
HSBC Custody Nominees Aust Ltd
Tilpa PL
Kensington Cap Mgnt PL
Carossa Holdings PL
Ice Cold Inv PL
J P Morgan Nominees Aust Ltd
Bayrunner PL
Young Robert
Xanadu WA PL
Don Martin Super PL
Grandor PL
Holding
18,253,736
18,057,930
12,297,639
9,508,453
8,250,000
7,400,000
6,905,252
5,650,834
4,224,166
3,899,803
3,700,000
3,500,000
3,150,000
2,500,000
2,402,157
2,069,000
2,000,081
2,000,000
2,000,000
2,000,000
%
5.98
5.91
4.03
3.11
2.70
2.42
2.26
1.85
1.38
1.28
1.21
1.51
1.03
0.82
0.79
0.68
0.66
0.66
0.66
0.66
Total
119,769,051
39.24
3.
Substantial Shareholders
As at 23 September 2013, the Company has received substantial notices from the following shareholders:
Name of Shareholder
Acorn Capital Limited
Buru Energy Limited
No of shares
19,831,543
18,057,930
% of Issued Capital
at the Time of Notice
7.01
5.91
Note: The above details may not reconcile to the information in the Twenty Largest Shareholders list as revised substantial shareholders
notices had not been received by the Company as at 23 September 2013.
4.
Voting Rights
At a general meeting of shareholders:
(a) On a show of hands, each person who is a member or sole proxy has one vote.
(b) On a poll, each shareholder is entitled to one vote for each fully paid share.
88 Annual Report 2013
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