2014 Annual Report
The New
Energy Frontier
Company Profile and Highlights
Annual Reserves Statement
Chairman’s Report
Directors’ Report
Director’s Declaration
Corporate Governance Statement
Auditor’s 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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16
18
38
40
50
51
53
54
55
56
57
92
Competent Person
The information in this report is based on information
reviewed by Mr Greg Carlsen (MSc) who is a
Petroleum Geologist and Geophysicist with more than
35 years’ experience in the industry. Mr Carlsen is
Exploration and Operations Manager at New Standard
Energy and consents to the inclusion in the report of
the 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 (Executive Director)
Chris Sadler (Non-Executive Director)
H.C. Kip Ferguson III
(Non-Executive Director)
Greg Channon (Non-Executive Director)
Jeffrey Swanson
(Non-Executive Director)
Joint Company Secretaries
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
Suite 183, Level 6
580 Hay Street
Perth WA 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth WA 6000
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.
Note: in this Annual Report, references to barrels of oil equivalent (BOE) have been calculated using a conversion factor for the gas
component of the relevant figure of 6 million cubic feet of gas (MMcf) = 1,000 BOE
About New
Standard Energy
New Standard Energy is an
onshore hydrocarbon producer,
developer and explorer with a
commitment to develop and realise
the oil and gas potential of the
most prospective shale and tight
gas basins in the US and Australia.
The Company’s exploration and
production program is active and
extensive. It is underpinned and
complemented by targeted corporate
activity to take advantage of
opportunities and to build an extensive
pipeline of prospective projects. New
Standard’s Board has substantial
technical and commercial experience in
the oil and gas sector.
New Standard currently operates in
four primary basins: Eagle Ford Shale,
Texas, USA; Cooper, South Australia;
and the Canning and Carnarvon,
Western Australia.
New Standard Energy Ltd 1
Highlights
Corporate
Cooper Basin
• Completed successful transaction which transformed
the company from a junior oil and gas explorer, into an
explorer, developer and producer
• New Standard has secured a 52.5% working interest
in a 2,400 square kilometre foothold
•
Transaction received overwhelming shareholder
support with in excess of 95 per cent voting in
favour of the transaction
• Welcomed Magnum Hunter Resources
Corporation (NYSE: MHR) as a strategic
business partner and largest shareholder to help
drive development in the Eagle Ford and Cooper
•
Secured US$45 million debt facility with middle market
direct lending group Credit Suisse
• Welcomed three new members to the
New Standard Board with the technical background
and experience to support the Company’s exploration
and development projects
Eagle Ford drilling & production
•
Provides New Standard the opportunity to access one
of the few remaining substantial acreage positions
within the Cooper Basin
•
PEL570 is part of a producing petroleum system
and adjacent to pipeline infrastructure
Western Australia
•
•
All Western Australian drilling activity deferred until
2015 to allow focus on new US and South Australian
assets
Actively seeking partners in all WA projects to reduce
risk and capital commitment
Share Price Movements
•
Secured acreage position within the Eagle Ford oil
window
• Drilled, fracture stimulated and brought two wells into
production, adding to existing five wells
•
•
Peeler Ranch-5H and 6H wells confirmed 30-day
Initial Production rates of 417 and 374 barrels of
oil equivalent per day respectively with oil cuts in
excess of 90 per cent
From May 2014, up to the end of June, more than
27,000 barrels of oil equivalent were produced
from the two wells
)
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New Standard Energy Ltd 3
Company
Profile
New Standard Energy Limited
(New Standard) is an ASX-
listed company (ASX: NSE) with
onshore oil and gas exploration,
development and production
assets in the United States and
Australia, operating in some of the
most prospective basins in the
world.
The Company has undertaken a
substantial corporate transformation in
the past 12 months as it grew from a
Western Australian focussed junior oil
and gas explorer into an international
exploration, development and
production company with a core focus
on driving production in the oil rich
window of the Eagle Ford Basin in the
United States.
The Company’s change in direction
was a part of a strategic decision by
its Board, which sought to diversify risk
away from a 100 per cent focus on high
cost, early stage exploration wells in
remote locations towards opportunities
that were closer to production with
cashflow to support the high impact
exploration projects in the future.
Since the transaction was
overwhelmingly approved by
shareholders, New Standard has made
significant progress at the Atascosa
Project, drilling its first two wells in 2014
which have added to an existing five
wells on the acreage.
Supported by strategic business
partner, and the Company’s largest
shareholder, Magnum Hunter Resources
Corporation (NYSE: MHR¸ Magnum
Hunter), the Eagle Ford has become the
core focus and asset for New Standard
in 2014.
New Standard is focussed on delivering
increased value for shareholders via its
Eagle Ford development and production
assets by growing the reserves base
and production in order to increase
acreage value and in turn drive
Company value.
New Standard Energy Ltd 5
Oil and gas assets
United States acreage
Eagle Ford
Project area
Gross acres
Wells
Eppright Prospect
2,285.95
Lagunillas Camp #1H
Alright Prospect
(includes 1 lease)
Lagunillas Camp #2H
3,108.56
(includes 37 leases)
McCarty Unit A #1H
Peeler Ranch Prospect
1,895.25
Peeler Ranch #3H
(includes 2 leases) Peeler Ranch #4H
Peeler Ranch #5H
Peeler Ranch #6H
Operator
Shale Hunter, LLC ^
Shale Hunter, LLC ^
Marathon Oil EP, LLC
Shale Hunter, LLC ^
Shale Hunter, LLC ^
Shale Hunter, LLC ^
Shale Hunter, LLC ^
Colorado County Project
Well
Heintschel-1
Heintschel-2
D Truchard-1
Joann-1
Interest held
Joint Venture Partner
32.5%
32.5%
32.5%
33.68%
Burleson Energy Ltd, AKG Energy LLC & minority interests
Burleson Energy Ltd, AKG Energy LLC & minority interests
Burleson Energy Ltd, AKG Energy LLC & minority interests
Burleson Energy Ltd, AKG Energy LLC & minority interests
Australian acreage
Cooper Basin, South Australia
Permit
PEL570
Permit Interest
Joint Venture Partner
52.5%
Ambassador Exploration Pty Ltd
Canning Basin, Western Australia
Operator
Outback Energy Hunter
Pty Ltd**
EP 443
EP 450
EP 451
EP 456
STP-EPA-006
STP-EPA-007
STP-EPA-010
STP-EPA-0092
EP 417
STP-EPA-0109
25%
25%
25%
25%
100%*
100%*
100%*
100%
100%
100%
Carnarvon Basin, Western Australia
EP 481
EP 482
100%
100%
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
ConocoPhillips (Canning Basin) Pty Ltd
PetroChina International Investment (Australia) Pty Ltd
New Standard Energy
Onshore Pty Ltd
-
-
-
-
-
New Standard Energy
Onshore Pty Ltd
New Standard Energy
Onshore Pty Ltd
New Standard Energy
Onshore Pty Ltd
New Standard Energy
Onshore Pty Ltd
New Standard Energy
Onshore Pty Ltd
^ Shale Hunter, LLC is a subsidiary of Magnum Hunter Resources Corporation, a strategic business partner, and the largest shareholder, of New
Standard Energy
* with option to dilute to 25%
** Outback Energy Hunter Pty Ltd is a subsidiary of New Standard Energy Limited
6 Annual Report 2014
Strategic outlook – navigating through a transformational year
Following the substantial diversification of the Company’s asset portfolio in January 2014, New Standard Energy has focussed on
development and production. The following three areas were recognised as the central themes for development and growth:
1. Grow the business and generate value through effective execution of drilling program in the Eagle Ford, funded through debt
and revenue, driving up production, reserves and acreage value, seek opportunities to grow the position to 10,000 net acres
and accelerate the drilling program over the next twelve months.
2. Work with Magnum Hunter to develop a revised unconventional program for PEL570 in the Cooper Basin, mitigate
commitments over the next 12 months and explore opportunities to partner with other parties.
3. Retain the large acreage position in Western Australia and actively seek partners to provide funding and mitigate risk over the
coming 12 months.
New Standard continued to make significant progress in all three major areas of strategic focus since the change in portfolio,
paving the way for short-term growth to be driven by the Eagle Ford program while value is enhanced through the mid and long
term Australian portfolio.
Atascosa Project, Texas, USA
New Standard’s Eagle Ford acreage is situated in Atascosa County, Texas, and is located within the regional Eagle Ford Shale
play. The primary targets is the Eagle Ford Shale with a secondary target of the Pearsall Shale formation.
The Eagle Ford Shale was first recognised as a major natural gas play, but is now considered the sixth largest oilfield discovery
in the United States and is a significant contributor to the exponential increase in Texas crude oil production that has occurred
recently.
The Atascosa Project also provides the Company with access to a secondary target in the Pearsall formation, situated below
the Eagle Ford, which provides significant upside potential. The Pearsall was actually recognised before the Eagle Ford was
developed, but to date has largely been overlooked. There are now a number of companies focusing on this opportunity in the
region with some impressive initial results.
A large portion of the acreage is currently undeveloped and up to 50– 60 additional well sites have been identified for development
drilling, providing low risk, low cost appraisal and development opportunities with short term cash flow benefits for New Standard.
Importantly, this is in the oil window (95%+ revenue from oil and NGLs), so revenue is significantly higher than in the dry gas
sections of the Eagle Ford.
New Standard, alongside strategic alliance partner Magnum Hunter has already commenced additional drilling activities since
obtaining the acreage in January 2014.
New Standard Energy’s position within the Eagle Ford
New Standard Energy Ltd 7
New Standard’s acreage position within the oil window of the broader Eagle Ford play
The Company purchased the initial Eagle Ford acreage for US$1,500 per acre (net of production) and is focussed on driving
that acreage value upwards as it drills more wells and generates additional value in its reserves base. Optimising processes and
utilising new technologies alongside its experienced partner, New Standard expects to lower costs and raise Internal Rate of
Return (IRR).
New Standard has made its newly acquired Atascosa Project the core focus of its operations, successfully drilling, hydraulically
fracturing and bringing into production the Peeler Ranch-5H and 6H wells on time and under initial budget forecasts.
The program was operated by strategic business partner and now largest New Standard shareholder, Magnum Hunter, using its
existing technical skillset and local knowledge base to advance the development and production project.
In addition to drilling on its current acreage, the Company aims to increase its Eagle Ford acreage position to between 8,000 and
10,000 net acres over the next twelve months. Consistent with that strategy, New Standard is seeking additional acreage with a
focus on securing leases:
•
•
•
Adjacent to existing leases in order to increase potential wells and/or lateral lengths
Located in attractive areas on the right financial terms
That can provide maximum reserves impact for minimum drilling commitments
The Peeler Ranch-5H (completed 25 February 2014) and 6H (completed 24 March 2014) wells were drilled from the same pad in
parallel lateral lengths, targeting the same Eagle Ford hydrocarbon bearing zone to maximise production and minimise associated
drilling, hydraulic fracturing and production tie-in costs.
The drilling operations for the Peeler Ranch wells were completed on time and under budget forecasts.
The Peeler Ranch-5H and 6H wells recorded 24-hour Initial Production (IP24) of 705 and 758 BOEPD respectively, incorporating
656 and 716 barrels of oil. In comparison, the previous well drilled on the acreage, the Peeler Ranch-4H, which was drilled in
August 2013, delivered IP24 of 735 BOEPD (615 barrels of oil).
Following on from the IP24 results, the 30-day Initial Production (IP30) rates for the Peeler Ranch-5H and 6H wells were 417 and
374 BOEPD respectively, with oil cuts in excess of 90 per cent, which is in line with the Company’s expectations for the wells.
New Standard plans to continue its success in the Eagle Ford by targeting wells with similar IPs and with high oil percentages in
the future. In addition, the Company will work on continuing to drive down well costs and is aiming to keep drilling and completion
costs to under US$6.5 million per well.
Funding of the next wells planned at the Atascosa Project will be provided through a combination of cashflow from production and
additional debt drawdown based on updated reserves.
During the upcoming year, New Standard will work to increase production and reserves, therefore lowering the cost of capital and
debt at the Atascosa Project. The Company will drive this strategy alongside experienced partner Magnum Hunter with optimised
drilling processes and by working with new technologies to lower overall costs and raise its IRRs. By building a meaningful
acreage position in a proven play and drilling the acreage to be all Held by Production (HBP), New Standard will be well positioned
to create value in its Eagle Ford assets.
New Standard Energy Ltd 9
Australia
The development of the Australian shale gas industry is accelerating rapidly and with a large footprint over some of the country’s
most prospective onshore basins, the Cooper, Canning and Carnarvon Basins, New Standard Energy is strategically positioned to
remain at the forefront of this development.
The Company’s Australian projects, while at an early stage, are highly prospective for large, strategic onshore hydrocarbon
resources which New Standard intends to develop alongside joint venture partners and supported by strategic alliance partner
Magnum Hunter.
New Standard has been focussed on continuing to develop an understanding of the geological environments, while progressing its
Australian shale gas and tight gas portfolio with a view to strategically position the Company at the forefront of this emerging sector.
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 New Standard shareholder wealth creation.
10 Annual Report 2014
Primary portion of New Standard’s acreage position in the Cooper Basin, South Australia prospective for Unconventional Developments
PEL570, Cooper Basin, South Australia
The Cooper Basin acquisition in January 2014 provided New Standard the opportunity to access one of the few remaining
substantial acreage positions within the Cooper Basin. Part of a producing petroleum system and adjacent to pipeline infrastructure,
PEL570 has a combination of attractive components, which made the acreage so appealing to New Standard. Recent corporate
activity and significant current and planned drilling surrounding PEL570 confirms that this is a prime location in the basin.
A large and rising east coast gas demand market, with multiple pathways to accessing that market, has triggered significant
corporate activity in the Cooper Basin in the past two years.
Through the farm-in to PEL570, New Standard has secured a 52.5% operated working interest in a 2,400 square kilometre foothold
in the Basin with a relatively quick path to market for future exploration success.
Licence area PEL570 is on trend of a proven, producing petroleum system and also adjacent to existing pipeline infrastructure.
It consists of five parts; two in the core of the Patchawarra trough and three located north of the Patchawarra trough. The
Patchawarra trough is the source for the oil and liquids rich gas fields such as Tirrawarra, Fly Lake and Moorari fields, owned and
operated by the Cooper Basin Joint Venture. These fields are located in the southern part of the trough and New Standard intends
to target the Patchawarra tight gas sands.
In the northern part of the trough, oil and gas have been discovered at Flax, Juniper and Yarrow. The southern section of PEL570 is
also prospective for gas, being almost surrounded by gas fields including Bookabourdie, Crocus Verona, Cuttapirrie and Lamdina.
The Patchawarra Trough has been found to contain low CO2 and possesses higher liquids content, particularly in the northern
region on the Basin.
New Standard expects to work closely with Magnum Hunter to develop a comprehensive unconventional exploration program for
PEL570. Magnum Hunter’s technical input will be invaluable in establishing the most effective exploration strategy for PEL570.
Subsequent to year end, New Standard received approval from the South Australian State regulator for amendments to its five
year work program in PEL570 in the Cooper Basin. As part of the revised program, New Standard now has seismic and drilling
to commence in Year Two before the new deadline of March 2016, with only minor expenditure on geological studies in Year One
required before then.
The Company plans to use the postponement to plan and enhance its upcoming exploration program to commence drilling in Year
Two of the program.
New Standard Energy Ltd 11
Western Australian assets
New Standard’s Western Australian portfolio comprises of three projects located in the Canning and Carnarvon Basins:
•
•
•
The Southern Canning Joint Venture, Canning Basin
The Laurel Project, Canning Basin
The Merlinleigh Project, onshore Carnarvon Basin
In October 2013, the Company reached agreement with Buru Energy Limited to increase its share of the Canning Basin exploration
permit EP417 in the Company’s Laurel Project from 65 to 100 per cent. When combined with the neighbouring Seven Lakes SPA, in
which New Standard also holds 100 per cent equity, New Standard’s net Laurel Project acreage position will now total 1.46 million
acres (5,881 square kilometres) across the Laurel formation – a geological setting that has been the source of numerous recent
exploration successes.
In June 2014, New Standard advised that the Southern Canning Joint Venture (SCJV) agreed to delay drilling of the Brooke North-1
well until late 2015. This decision resulted from delays in receiving various stakeholder approvals making it impossible to drill
the well prior to the commencement of the year’s wet season. In line with this, the Company plans to defer all of its Canning and
Carnarvon Basin drilling activity until 2015.
New Standard is actively seeking farm-in partners for all of its Western Australian assets to reduce risk and defray its capital
commitments.
New Standard’s acreage positions within the Canning and Carnarvon Basins in Western Australia.
Pale blue application areas are 100% NSE
12 Annual Report 2014
Conventional Onshore United States Portfolio
New Standard retains working interests between 32.5 percent and 33.7 percent in various properties in onshore Texas, United
States. The largest asset within this 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 these non-core US assets.
Equity investments
Elixir Petroleum
New Standard’s investment in Elixir Petroleum increased during the year from 13.7 per cent to 28.2 per cent following its support of
an underwritten entitlements issue undertaken by Elixir at 1.2 cents per share. The entitlement 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. The funding gave Elixir
the ability to retain and continue to develop its position in the world class Paris Basin petroleum province.
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 to appoint a nominee to the Elixir Board, post completion of the
raising. Subsequently, New Standard Executive Director Sam Willis joined the Elixir Board.
Summary
New Standard Energy is well positioned to capitalise from its portfolio of assets, combining near term low-risk development in the
Eagle Ford with mid-term prospects in the Cooper Basin and the higher risk, longer dated portfolio in Western Australia.
The Company is now well positioned to extract value from within its revitalised exploration, development and production portfolio
and will continue to assess and progress additional opportunities on an ongoing basis in an effort to further enhance the potential
for New Standard shareholder value creation.
New Standard Energy Ltd 13
Annual Reserves Statement
On 10 January 2014, the Company announced SPE-PRMS compliant reserves information derived from a report (Eagle Ford
Reserves Report) relating to the Eagle Ford shale formation (EFS) contained within its Atascosa Project area, located in Atascosa
County, Texas, USA. This report was prepared for the Company by the global petroleum consulting firm Cawley, Gillespie and
Associates Inc. who are also located in Texas (CG&A). CG&A used the deterministic method of petroleum reserves estimation in
the Eagle Ford Reserves Report, which had an evaluation date of 1 December 2013.
As at the date of this Annual Report, the Company has not prepared or commissioned a further SPE-PRMS compliant reserves
report in relation to the Atascosa Project and accordingly, the reserves estimates disclosed on 10 January 2014 remain the most
up-to-date SPE-PRMS compliant information concerning that project.
For the purposes of Listing Rule 5.39, the Company is pleased to re-confirm the following net reserves (allowing for working
interests, royalties and taxes etc) associated with the Atascosa Project:
Table 1: CG&A certified SPE-PRMS compliant reserves (net) in the Atascosa Project acreage held by New Standard
* Net Reserves
Oil
Gas
NGL
Total BOE
Mbbl**
MMcf***
Mbbl
Mbbl
Proved
Developed
Producing (PDP)
Proved
Undeveloped
(PUD)
282.8
345.6
52.5
392.9
798.4
1,077.8
163.8
1,141.8
Total 1 P
Reserves
1,081.1
1,423.4
216.4
1,534.7
Probable
798.4
1,077.8
163.8
1,141.8
Total 2 P
Reserves
1,879.5
2,501.2
380.2
2,676.6
* Net Reserves are based on the Company’s net revenue interests, as defined in the additional information below, and are estimated at the gate
(which is the reference point for the purposes of Listing Rule 5.26.5)
** 1 Mbbl = 1,000 barrels (1 Mbbl = 1,000 BOE)
*** 1 MMcf = 1 million cubic feet. (6 MMcf = 1,000 BOE)
The Company further confirms for the purposes of Listing Rule 5.39 that:
•
The reserves information disclosed in the above table relates to a single geographical area, being the leasehold package of
7,289.76 gross acres (5,182 net acres) originally acquired by the Company in Atascosa County, Texas.
• No reserves have been estimated in relation to any of the Company’s other assets or projects and accordingly, the information
in the above table constitutes all of the relevant reserves information applicable to the Company and its child entities.
•
•
All of the information in the above table relates to onshore unconventional petroleum reserves.
As at the date of its 2013 Annual Report, no petroleum reserves had been estimated in relation to the petroleum tenements
and projects held by the Company and its child entities. Accordingly, there has been a material variance in the quantity of
reserves reported above as compared to the (nil) reserves from the previous year. The material change in the Company’s
holdings in this regard has arisen as a result of the acquisition by the Company of the Atascosa Project, which completed on
28 January 2014 (as announced by the Company on 29 January 2014).
Additional information relating to reserves estimates
To assist in interpreting the above table, the Company is also pleased to re-state the following information which was originally
disclosed in its announcement of 10 January 2014 in connection with the Eagle Ford Reserves Report and in response to the
requirements of the specific ASX Listing Rules indicated in the headings below:
(a) Description of land area, tenure and economic interest - [LRs 5.25.5, 5.31.3 and 5.31.7]
The Atascosa Project consists of two prospects, the Alright (including the Eppright) Prospect and the Peeler Ranch Prospect.
The Company’s interests in the Atascosa Project are held under lease, with a total aggregate area of 7,289.76 gross acres for the
Atascosa Project in total. Set out below is a table providing additional information in relation to those interests and how they are held:
14 Annual Report 2014
Prospect
Eppright Prospect
Alright Prospect
Peeler Ranch Prospect
Gross acres
Company’s working interest
2,285.95
3,108.56
1,895.25
96.88%
35.40%
98.44%
(b) Number of wells, including operatorship information - [LRs 5.31.6, 5.31.7 and 5.31.2]
The 1P reserves information contained in the Eagle Ford Reserves Report was based on the five then-current (proven developed
producing) wells and a further five proved undeveloped wells. Information for the five relevant producing wells is as follows:
Prospect
Eppright
Eppright
Alright
Peeler
Peeler
Well name
Operator
Company’s working interest
Lagunillas Camp #1H
Shale Hunter, LLC*
Lagunillas Camp #2H
Shale Hunter, LLC*
McCarty Unit A #1H
Marathon Oil EP, LLC
Peeler Ranch #3H
Peeler Ranch #4H
Shale Hunter, LLC*
Shale Hunter, LLC*
100%
96.88%
30.21%
49.71%
100%
*
Shale Hunter, LLC is a subsidiary of Magnum Hunter Resources Corporation (MHR). MHR is a strategic business partner, and the largest
shareholder of New Standard Energy.
Subsequent Production, Drilling and Acquisitions
Since the release of the Eagle Ford Reserves Report, the Company has drilled and completed two additional producing
unconventional wells within the Atascosa Project area (designated Peeler Ranch #5H and Peeler Ranch #6H) and has also
completed a number of additional land transactions. The Peeler #5H and Peeler #6H wells were both included as PUDs in the
Annual Report referenced, therefore drilling of these wells has increased PDP’s but no increase in 1P reserves will necessarily
occur until additional PUD’s are assigned by a qualified reserves estimator because of their successful production.
In this regard, whilst the Company has not yet commissioned an updated report, it is likely to do so in the coming months. As a
matter of good Governance it is the intention of the Company to commission as a minimum, an annual reserves and resources
statement and reconciliation compliant with the Petroleum Resources Management System (PRMS) standards as required at entity
and aggregated levels, as part of our Annual Report. In the interim, as announced by the Company on 15 July 2014, 30-day Initial
Production (IP) rates for the Peeler Ranch #5H and #6H wells have been recorded as being 417 and 374 barrels of oil equivalent
per day (Boepd) respectively, with oil cuts in excess of 90 per cent. As announced, these figures are in line with Company
expectations relating to these wells.
NSE also concluded a deal with Marathon in relation to certain leases within the Alright Prospect which has resulted in an increase
in the Company’s working interest in the respective leases from 30% to 80% and transferred operatorship of the leases to the
Company. A total of 392 additional net acres have been acquired as a result of various additions of net acreage positions and
additional interests in the Company’s prospect areas. This increase of acreage within the producing area of our leases will likely be
reflected in increased reserves in our next updated PRMS Compliant Reserves Report.
In the period between 1 December 2013 (the effective date of the Company’s acquisition of the Atascosa Project) and 30 June
2014, a total of 42,390 BOE (net to the Company’s interests) have been produced from the project, resulting in the generation of
approximately US$3.19M in revenue to the Company.
The information in this reserves statement relating to petroleum reserves and resources is based on and fairly represents
information and supporting documentation prepared by Matthew K. Regan who is a Partner and Reservoir Engineer (License
#113228) at petroleum consulting firm, CG&A. The full information required under Listing Rules 5.41 and 5.42 in connection with
Mr Regan’s sign-off as a qualified petroleum reserves and resources evaluator has previously been disclosed by the Company
in its announcement of 10 January 2014 and the Company confirms for the purposes of Listing Rule 5.43.2 that it is not aware
of any new information or data that materially affects the information or data contained in that announcement and that all the
material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not
materially changed.
This reserves statement as a whole has been approved by Mr Gregory M. Carlsen. Mr Carlsen is the Exploration and Operations
Manager for New Standard Energy. He has 35 years of experience in the oil and gas industry and is a member of the SPE, AAPG,
SEG, and PESA. Mr Carlsen consents to the inclusion of the reserves statement in this Annual Report in the form and context in
which it appears.
New Standard Energy Ltd 15
Chairman’s Report
A transformation as significant as this
does not come without its challenges.
I am pleased that we have realised our
initial goal to diversify, balance the risk
and create the platform to grow the
company.
Some time ago, the Board recognised
the need to diversify the Company’s
portfolio and rebalance the substantial
risk associated with maintaining a sole
Western Australian asset portfolio.
High risk comes with high reward but it
leaves the company exposed to large
sentiment swings and huge capital
requirements on an almost annual basis.
The board wanted to rebalance this to
retain the exposure to long term frontier
exploration success while ensuring we
could create additional nearer term,
lower risk value with development and
production assets in our portfolio.
The January transaction where New
Standard secured acreage in the Eagle
Ford Shale and Cooper Basin fulfilled
that objective. Importantly, subsequent
transactions and takeover offers in
nearby acreage in both of these plays
are at significant premiums to New
Standard’s purchase price.
The benefits of this transaction have
been immediate, particularly given
the issues New Standard and other
explorers are facing with the complexity
and cost of exploration in the north-west
of WA. I am confident that our decision
to diversify our portfolio away from a
‘one trick pony’ will serve us well.
Shifting a large part of our focus
away from Western Australia for the
immediate future has allowed us to
gain momentum in the United States,
with our Atascosa Project validating
the Company’s ability to capitalise on a
proven development play.
In less than a year we have expanded
our asset portfolio, drilled and brought
our first two wells into production,
secured a debt facility with Credit Suisse
and acquired an enviable position within
South Australia’s Cooper Basin.
Initially, we are seeking to increase
the production volumes and reserves
base in the Eagle Ford and thus lower
the cost of capital and debt. Looking
ahead, we will identify acreage
opportunities in the Eagle Ford to add
to our existing portfolio. From there we
will be able to accelerate our drilling
program and systematically increase
our reserves and our revenue.
New Standard has undertaken a
massive transformation since our
last Annual Report 12 months ago
as we have grown from a junior,
frontier oil and gas explorer into an
oil and gas producer, developer
and explorer. The significance of
this should not be underestimated.
From a cost perspective we have
drilled, completed and brought into
production two wells in the Eagle Ford
for considerably less cost than a single
vertical exploration well in the Canning
Basin.
From a path to market perspective
those wells are now on production and
are generating cashflow. Even if we
had drilled a “successful” well in the
Canning or Carnarvon it would take
substantially more investment and many
years before any production, and thus
revenue, could be booked.
Of course, that’s not the whole game,
but it’s much more sustainable for New
Standard, so is less risky and more
manageable, while we still retain the
upside from the strategic exploration of
our frontier assets.
16 Annual Report 2014
We have expanded our Board during
the course of the year to manage
the growth and development of the
Company, welcoming Kip Ferguson III,
Greg Channon and Jeffrey Swanson as
Non-Executive Directors.
Kip brings to New Standard more than
24 years of onshore exploration and
development experience in several
major United States oil and gas basins.
He is also currently the Executive Vice
President of Exploration at Magnum
Hunter Resources Corporation.
Jeffrey brings more than 34 years of
oil and gas experience, with strong
commercial and operational experience
in both conventional and shale oil and
gas exploration and production in the
US, as well as extensive knowledge of
the service provider sector.
Greg is a geologist with more than 29
years of experience in the oil and gas
industry and will be able to provide New
Standard vast technical and operational
knowledge and experience, particularly
in the Cooper Basin.
Kip joined the Company during a
transition period as Dr Mark Hagan
expressed his desire to step-back from
his role as a Non-Executive Director. The
Board accepted Mark’s resignation after
Mark indicated some time ago his desire
to spend more quality time with his family.
I would like to take this opportunity
to express my gratitude to Mark for
his hard work and dedication to this
company over the past seven years.
I do not believe that we would be the
company we are today without his
contribution, his knowledge and his
unrivalled enthusiasm for the shale and
tight gas exploration.
I would like to welcome Kip, Jeffrey
and Greg to the New Standard Board
knowing that their collective level of
experience will be invaluable to the
Company’s future operations.
Unfortunately, our change of direction
with a focus on growth and expansion
in the US has forced us to have a
tough conversation about corporate
rationalisation, as we made the decision
to review overheads that has seen us
cut staff numbers by half. This was a
necessary process given that we are
no longer on the cusp of immediate
drilling in Australia, and has resulted
in a substantial reduction in corporate
overheads.
It is never an easy decision to make, and
I thank the staff for their understanding
during this process. I would like to take
this opportunity to thank all of New
Standard’s employees for their valuable
contribution to the company.
Looking ahead, this year will focus on
driving the development and production
in the Eagle Ford, while planning our
future work program in the Cooper
Basin. We will be pursuing a farm-out
of our Western Australian assets to
eliminate major capital commitments
whilst retaining the upside potential.
On behalf of the Board, I wish to
thank Phil Thick and his management
team, including all of our employees
and contractors, for their work over
the last financial year and for driving
the transformation of the Company’s
portfolio. I look forward to the year
ahead and to watching the further
development of all of our projects.
Yours Sincerely,
Arthur Dixon AM
Chairman
New Standard Energy Ltd 17
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 2014.
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.
Current and Former Directorships in
listed entities in the last 3 years
Discovery Africa Ltd (ASX:DAF)
(until April 2014)
Argosy Minerals Ltd (ASX:AGY)
(until April 2014)
MHM Metals Ltd (ASX:MHM)
(until December 2013)
Relevant interests in shares
and options
2,500,000 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
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
1,800,000 performance rights with
vesting based on absolute TSR and
measurement date 14 September 2016
Mr Phil Thick
Managing Director
(Originally appointed Non-Executive
Director on 16 July 2012 and became
Managing Director on 2 April 2013)
Age
55
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.
Mr Arthur Dixon AM
Non-Executive Chairman
(Appointed 1 May 2011)
Age
72
Qualifications
B.E. (Chem)
Experience
Arthur Dixon graduated from
Melbourne University as a Chemical
Engineer. Arthur is a 40 year oil and
gas 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 was also formerly 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
389,212 fully paid ordinary shares
450,000 options over fully paid shares
exercisable at $0.385 and expiring 20
December 2014
300,000 options over fully paid shares
exercisable at $0.430 and expiring 20
December 2014
18 Annual Report 2014
Mr Chris Sadler
Non-Executive Director
(Appointed 23 April 2012)
Mr H.C. Kip Ferguson III
Non-Executive Director
(Appointed 11 February 2014)
Age
52
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 Ltd (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
Age
49
Qualifications
University of Texas at Austin
– Bachelor degree in Geology
Experience
Kip currently serves as the Executive
Vice President of Exploration for
strategic alliance partner Magnum
Hunter Resources Corporation (NYSE:
MHR). Kip brings more than 26 years
of exploration and development
experience in several major U.S.
basins to New Standard. As a third-
generation geologist and earning his
degree in Geology from the University
of Texas at Austin, Kip has an excellent
foundation of technical background
and experience in the oil and gas
sector. Kip was also formerly the
President of Sharon Resources, Inc.
Kip’s practical experience in the
development of oil and gas fields
will be critical to New Standard as it
seeks to unlock the value across its
Australian acreage positions. Kip has
published case studies and papers
on the study and analysis of using
advanced drilling and completion
technology for unconventional
resources.
Current and Former Directorships in
listed entities in the last 3 years
Nil
Relevant interests in shares
and options
Nil
Mr Sam Willis
Executive Director Corporate
(Originally appointed Managing
Director on 28 July 2008, became
Non-Executive Director on 1 July
2013, and became Executive Director
Corporate on 10 December 2013)
Age
42
Qualifications
B.Com
Experience
Mr Willis is an experienced company
director in the resources and energy
sectors and previously served as
Managing Director of New Standard
for 7 years as part of his 10 year
involvement with the company.
Mr Willis provides New Standard with
in excess of 15 years’ experience
and expertise in capital markets,
corporate finance and executive board
involvement with emerging small and
mid-cap companies.
Mr Willis has also held previous
roles as a private client advisor with
Hartleys and investment analyst at
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)
Elixir Petroleum Ltd (ASX:EXR)
Relevant interests in shares
and options
10,700,000 fully paid ordinary shares
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
1,000,000 performance rights with
vesting based on absolute TSR and
measurement date 14 September 2016
New Standard Energy Ltd 19
Dr G. Mark Hagan
(Appointed 28 July 2008 as Technical
Director, moved into Non-Executive
Director role on 1 September 2013,
resigned 11 February 2014)
Age
67
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.
Current and Former Directorships in
listed entities in the last 3 years
Nil
Relevant interests in shares
and options
3,767,539 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 Jeffrey Swanson
Non-Executive Director
(Appointed 24 June 2014)
Mr Greg Channon
Non-Executive Director
(Appointed 24 June 2014)
Age
51
Qualifications
BSc (Hons)
Experience
Mr Channon is a geologist with more
than 29 years of experience in the
oil and gas industry and will provide
New Standard with vast technical
and operational knowledge and
experience, particularly in the Cooper
Basin.
Greg worked for Santos Ltd for 13
years with geological responsibility
for its Cooper Basin program. He has
since held a number of senior roles
with oil and gas listed companies,
including at CEO and Managing
Director level.
Greg brings extensive experience in
both onshore and offshore exploration
and production management, leasing,
mergers and acquisitions and farm-in/
farm-out agreements and is currently
the Vice President of New Business at
Pathfinder Energy Pty Ltd.
Current and Former Directorships in
listed entities in the last 3 years
Sirocco Energy Ltd (ASX:SCY)
Statesman Resources (TSX:SRR)
Relevant interests in shares
and options
Nil
Age
58
Qualifications
Southern Methodist University
– BBA – Cox School of Business
Experience
Jeffrey Swanson has more than 34
years of oil and gas experience, with
strong commercial and operational
experience in both conventional
and shale oil and gas exploration
and production in the US, as well as
extensive knowledge of the service
provider sector.
Jeffrey is a leader in the development
and application of innovation and
technology to the exploration and
production businesses of the oil
and gas industry. He founded, and
is Chairman, CEO and President of
GrailQuest Corp, a company set up
in 2002 as a software and service
provider to meet various needs in the
oil and gas industry.
As a consultant, Jeffrey has broad
experience internationally, primarily
in South and Latin America where
he consulted for Petroleos De
Venezuela, Pemex, Exxon, Mobil, Kerr
McGee, Pennzoil and others. He is
also Chairman, CEO and President
of Durango Resources Corp, an
oil and gas operator and producer
predominantly in Texas, and a Non-
Executive Director at Magnum Hunter
Resources Corporation (NYSE: MHR).
Current and Former Directorships in
listed entities in the last 3 years
Magnum Hunter Resources
Corporation (NYSE:MHR)
Relevant interests in shares
and options
Nil
20 Annual Report 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 member of the
Institute of Chartered Accountants of
Australia, an affiliated member of the
Governance Institute of Australia and
a member of the Institute of Directors
of the United Kingdom. He has over
19 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 Governance
Institute of Australia. He has over
19 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. Mark previously worked for
an international accounting firm.
New Standard Energy Ltd 21
Principal Activities
The principal activities of the Company during the course of the year were the management, operation and development of oil
and gas producing and prospective properties in the Eagle Ford Shale in Texas, USA, and the exploration for oil and gas in the
Cooper Basin in South Australia and the Carnarvon Basin and Canning Basin in Western Australia, and investments in onshore
development in the Texas Gulf region, Southern USA.
Operating Results
The consolidated entity’s net loss attributable to members of New Standard for the year ended 30 June 2014 after applicable
income tax was $2.0 million (2013: profit of $16.7 million).
Future Developments
The Company intends to pursue its current stated objectives as a hydrocarbon explorer, developer and producer.
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 undertook a substantial diversification of its asset portfolio in January 2014. As a result, the Company has changed
from a Western Australian focused junior oil and gas explorer into an international exploration, development and production
company with a core focus on driving production in the oil rich window of the Eagle Ford Shale in the United States. New Standard,
supported by strategic business partner, and the Company’s largest shareholder, Magnum Hunter Resources Corporation (NYSE:
MHR¸ Magnum Hunter), has made significant progress at the Atascosa Project, drilling its first two wells in 2014, which have
added to an existing five producing wells on the acreage. These new wells came into production in May 2014 and have added
significantly to the Company’s revenue and cash flow.
The Eagle Ford has become the core focus and project area for New Standard in 2014. New Standard is focused on delivering
increased value for shareholders via its Eagle Ford development and production assets by growing the reserves base in order to
increase acreage value and in turn drive Company value. The Company has delivered on its first two major objectives following
the transformational transaction – putting in place a debt facility to help fund the Eagle Ford program and successfully drilling
and bringing into production the first two New Standard wells. Both targets were delivered on time and as planned. The Company
is now working on plans to increase acreage in the Eagle Ford and accelerate the drilling program, to further drive reserves,
production and asset value growth.
New Standard has also acquired a significant farm-in position in the heart of the Patchawarra Trough in South Australia’s Cooper
Basin. This gives the Company a large footprint over some of Australia’s most prospective onshore basins, the Cooper, Canning and
Carnarvon Basins. New Standard Energy is strategically positioned to remain at the forefront of the development of shale and tight gas
fields in Australia. These projects, while at an early stage, are highly prospective for large, strategic onshore hydrocarbon resources
which New Standard intends to develop alongside joint venture partners and supported by strategic alliance partner Magnum Hunter.
The Cooper Basin acquisition provided New Standard the opportunity to access one of the few remaining substantial acreage
positions within the Cooper Basin. Part of a producing petroleum system and adjacent to pipeline infrastructure, PEL570 has a
combination of attractive components, which made the acreage very appealing to New Standard. Recent corporate activity and
significant current and planned drilling surrounding PEL570 confirms that this is a prime location in the basin. Through the farm-in
to PEL570, New Standard has secured a 52.5% operated working interest in a 2,400 square kilometre foothold in the Cooper Basin
with a relatively quick path to market for future exploration success. Licence area PEL570 is on trend from a proven, producing
petroleum system and also adjacent to existing pipeline infrastructure. New Standard expects to work closely with Magnum Hunter
and other parties to develop a comprehensive unconventional exploration program for PEL570.
New Standard retains its three projects and a large acreage position in Western Australia. In October 2013, the Company
increased its share of the Canning Basin exploration permit EP417 in the Company’s Laurel Project from 65 to 100 per cent through
an agreement with Buru. In December 2013 the Company deferred the drilling of the Condon-1 well in the Merlinleigh Project in the
Carnarvon Basin to focus on the asset diversification transaction. In June 2014, New Standard advised that the Southern Canning
Joint Venture (SCJV) agreed to delay drilling of the Brooke North-1 well until late 2015. This decision resulted from delays in
receiving various stakeholder approvals making it impossible to drill the well prior to the commencement of the year’s wet season.
In line with this, the Company plans to defer all of its Canning and Carnarvon Basin drilling activity until 2015.
New Standard is actively seeking farm-in partners for all of its Western Australian assets to reduce risk and defray its capital
commitments.
22 Annual Report 2014
New Standard also retains working interests between 32.5 percent and 33.7 percent in various properties in onshore Texas, United
States.
New Standard’s investment in Elixir Petroleum increased during the year from 13.7 per cent to 28.2 per cent following its support of
an underwritten entitlements issue undertaken by Elixir at 1.2 cents per share.
Post year-end New Standard has completed a major restructure of the Company to more accurately and efficiently fit the new
business structure. The result was a reduction in staff and overheads, with staff numbers being reduced from 28 to 12.
Financial summary
Year ended 30 June
Revenue
Depletion, Depreciation & Impairment
Operating Profit Before Tax
Operating Profit After Tax
Exploration and Development Costs
Capitalised Production Costs
Net Assets
2014
2013
4,184,398
42,590,776
(1,308,562)
(7,392,530)
(6,116,652)
30,308,167
(2,041,618)
16,699,068
14,594,278
21,047,204
37,804,717
-
80,268,735
71,126,358
The Group reported a loss after tax of $2.0 million for the year ended 30 June 2014. Whilst this is significantly down on the $16.7
million profit after tax for the previous year, a one-off gain on sale of Buru shares for $40.6 million was realised in that year.
The Group’s net revenue from continuing operations was $3.2 million for the year ended 30 June 2014, and relates entirely to
oil and gas sales from the Atascosa Project in the Eagle Ford Shale, Texas. Production and depletion costs of $1.9 million were
incurred in generating the revenue. As these assets were acquired during the 2014 financial year, no comparisons can be made to
the prior financial year.
Finance costs for the year of $0.5 million related to the establishment of a US$45 million reserves based lending facility to support
growth of the Atascosa Project. At balance date US$9 million had been drawn down against this facility.
A loss on investment in associate of $1.2 million was recorded in the year, relating to NSE’s proportional share in the loss recorded
by Elixir Petroleum Ltd (ASX:EXR) as reflected by NSE’s 28% ownership in EXR. This is an accounting entry as required by
Australian accounting standards.
A total of $13.2 million exploration, evaluation and development costs were invested in the year ended 30 June 2014 relating to
New Standard’s Australian assets, which includes $6.4 million consideration for the acquisition of the interest in PEL570 in the
Cooper Basin of which $2.4 million was paid in NSE stock. This was offset by $6 million research and development claim relating
to activities undertaken in the Canning and Carnarvon Basins during the 2012/13 financial year. Further, $8.1 million of the $30.5
million invested to acquire the Eagle Ford assets was classified as exploration assets whilst the remaining $22.4 million has been
classified as oil and gas properties, reflecting the proved production nature of part of the acreage acquired. Of the $30.1 million
paid to acquire the Eagle Ford assets, $10.8 million was paid in NSE stock. Additional spend of $15.5 million was incurred on the
drilling and completion of two production wells on this acreage.
The net assets of the Group have increased by $9.2 million from $71.1 million at 30 June 2013 to $80.3 million as at 30 June 2014.
This net increase is substantially due to the increase in issued capital used as part consideration for the acquisition of the Eagle
Ford and Cooper Basin assets.
Outlook
New Standard’s primary focus in the coming financial year will be on its Eagle Ford Shale assets, accumulating additional acreage
and accelerating the drilling program. The Company plans to drill 6-8 wells by the end of 2015 to increase reserves, production
and asset value.
New Standard is actively seeking partners in its Cooper Basin assets to defray capital exposure on its farm-in commitments.
The Company will be working with its partners and Magnum Hunter to develop and have approved by the Regulator a new
unconventional program for PEL570 with drilling to commence in the second half of 2015.
New Standard is also seeking to farm-out its Western Australian assets over the coming six months to retain upside but
substantially reduce or eliminate capital commitments.
New Standard Energy Ltd 23
Shares under Option
Details of unissued ordinary shares in 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
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Number of
Shares under Option
500,000
500,000
6,250,000
3,750,000
150,000
150,000
300,000
300,000
500,000
500,000
500,000
500,000
100,000
100,000
75,000
75,000
500,000
500,000
Date
of Issue
29-Mar-11
29-Mar-11
20-Dec-11
20-Dec-11
24-Apr-12
24-Apr-12
12-Dec-12
12-Dec-12
12-Dec-13
12-Dec-13
12-Dec-13
12-Dec-13
13-Feb-14
13-Feb-14
27-May-14
27-May-14
06-Aug-14
06-Aug-14
Exercise
Price of Options
Expiry
Date of Options
$0.225
$0.275
$0.385
$0.430
$0.810
$0.905
$0.390
$0.440
$0.400
$0.400
$0.500
$0.500
$0.519
$0.581
$0.224
$0.248
$0.167
$0.187
30-Jun-15
30-Jun-15
20-Dec-14
20-Dec-14
24-Apr-15
24-Apr-15
12-Dec-15
12-Dec-15
01-Apr-16
01-Apr-16
01-Apr-16
01-Apr-16
12-Dec-17
12-Dec-17
26-May-17
26-May-17
05-Aug-17
05-Aug-17
No option holder has any right under the options to participate in any other share issue of the Company or any other entity. 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.
Environmental Regulations
The New Standard group is subject to environmental regulations under relevant Australian legislation in relation to its oil and
gas exploration activities, particularly with the Western Australian Department of Mines and Petroleum, the Western Australian
Department of Environment and Conservation, and Department of State Development in South Australia. 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.
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
New Standard advised on 30 July 2014, that it had received approval for amendments to its five year work program in PEL570 in
the Cooper Basin. New Standard requested a suspension of the work program for PEL570 acreage and a deferral of the planned
seismic due to the uncertainty surrounding the ownership of the Company’s PEL570 joint venture partner. As part of the revised
program, New Standard now has seismic and drilling to commence in Year Two before the new deadline of March 2016, with only
minor expenditure on geological studies in Year One required before then.
Other than the above, there has been no other matter or circumstance that has arisen since the end of the year that requires
disclosure.
24 Annual Report 2014
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, eleven Board meetings were held. There were three remuneration
committee meetings and four 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
Mr. H.C. Ferguson III
Mr G Channon
Mr J Swanson
*
attended by invitation
11
11
11
6
11
5
-
-
11
11
10
5
10
4
-
-
4
4
4
n/a
4
n/a
n/a
n/a
4
4*
2*
-
4
-
-
-
3
n/a
n/a
n/a
3
n/a
n/a
n/a
3
-
-
-
3
-
-
-
Dr Hagan resigned from the Board effective 11 February 2014. Mr Ferguson was appointed as Non-executive Director on 11
February 2014, and Mr Channon and Mr Swanson were both appointed as Non-Executive Directors on 24 June 2014. All 3
appointments were in line with the rights to Board positions agreed with Magnum Hunter Resources Corporation and Pathfinder
Energy Pty Ltd as part of the transaction approved by shareholders in January 2014.
Whilst there is currently no formal nomination committee established, when required a sub-committee of the Board is delegated
the responsibility for identifying suitable candidates for Board appointments. The sub-committee will engage 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 Group’s
activities in the USA.
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 Corporation Act 2001 in relation to the audit of the full year
is included on page 50.
New Standard Energy Ltd 25
Remuneration Report - Audited
This remuneration report sets out the remuneration arrangements for New Standard Energy Limited (New Standard) for the year
ended 30 June 2014. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the
Corporations Act 2001.
Remuneration Policy
New Standard is committed to the close alignment of executive remuneration to shareholder return. 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.
The Company’s remuneration policy and structure 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 Quantum Rights consisting of Performance Rights with performance hurdles linked
to absolute total shareholder return (TSR) and Retention Rights linked to tenure.
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.
In determining competitive remuneration rates, the Remuneration Committee seeks independent advice on local and international
trends among comparative companies and industry generally. It examines terms and conditions for employee incentive schemes,
benefit plans and share plans. Independent advice is obtained to confirm that executive remuneration is in line with market
practice and is reasonable in the context of Australian executive reward practices.
Board Remuneration
Shareholders approve the maximum aggregate remuneration for non-executive directors. The board determines actual payments
to directors and reviews their remuneration annually, based on independent external advice with regard to market practice,
relativities, and the duties and accountabilities of directors. A review of directors’ remuneration is conducted annually to
benchmark overall remuneration including retirement benefits.
Key principles of executive remuneration
Remuneration for the executive management team 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. If target at-risk remuneration is earned, the proportion of total remuneration represented by fixed and at-risk
remuneration would be:
Role
Managing Director
Direct Reports
Fixed Remuneration (TFR)
Variable Remuneration (at risk)
50%
59%
50%
41%
Total
100%
100%
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.
26 Annual Report 2014
STIP
The STIP 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 reward 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.
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 criterion may be allocated a weighting for each year that reflects the relative importance of each performance
criterion for the year.
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.
The proportion of Absolute TSR Performance Rights which vest will be determined on the basis of New Standard’s TSR on the
following scale:
Increase in TSR over 3 year period
Percentage of absolute TSR performance rights that vest
Less than 33%
33%
Nil
25%
Between 33% and 52%
Pro rata between 25% and 50%
52%
>52% and <73%
73% or greater
50%
Pro rata between 50% and 100%
100%
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 and the first cycle of the LTIP began on 15 September 2012.
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
Target Retention LTI (% of TFR)
Target Performance LTI (% TFR)
Total LTI (% TFR)
Managing Director
Direct Reports
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.
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 and positive benefit to shareholders.
The Company uses a retention period of 3 years as the standard benchmark for vesting of Retention Rights.
New Standard Energy Ltd 27
Use of independent 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.
Voting and comments made at the Company’s 2013 Annual General Meeting
The Company received more than 95% of “yes” votes on its remuneration report for the 2013 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
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:
Name
Executives
P Thick
S Willis (i)
M Hagan (ii)
Position
Appointed during the year
Managing Director
Executive Director Corporate
10 December 2013
Technical Director
D Hansen-Knarhoi
Chief Financial Officer and Joint Company Secretary
M Gracey
P Achour
K Aitken (iii)
G Carlsen
Non-executive
A Dixon
C Sadler
K Ferguson III
G Channon
J Swanson
Business Development Manager & General Counsel
Health, Safety and Environment Manager
Engineering and Operations Manager
Exploration and Operations Manager
29 July 2013
Chairman
Director
Director
Director
Director
11 February 2014
24 June 2014
24 June 2014
(i) Mr Willis was appointed to the role as Executive Director Corporate on 10 December 2013, after serving as Non-executive Director
since 1 July 2013.
(ii) Dr Hagan resigned from the role as Technical Director and moved into a Non-Executive Director role on 31 August 2013, and subsequently
resigned from this role on 11 February 2014.
(iii) Mr Aitken resigned on 30 April 2014.
Executive remuneration outcomes for 2014
Overview
As the Company recognised it has gone through a period of significant change, increases in base salary packages for KMP
were minimal in the 2013/14 financial year, and there was no increase applied to the Managing Director’s base salary. Further, the
Company applied a 65% reduction in Incentive Rights to all KMP from the calculated LTI values prescribed under the LTIP.
Base Package Salaries
In 2013, independent remuneration consultant, Godfrey Remuneration Group Pty Ltd (Godfrey) was engaged to review the
structure of the Company’s remuneration components, including base salary packages of KMP. Their review compared the
Company’s existing base scale with the latest executive remuneration data and trends among comparative companies and the
industry generally and their findings were put to the Remuneration Committee for consideration. As a result, the Remuneration
Committee recommended to the Board that Base Package salaries of KMP be adjusted by reference to the P50 range of market
practice using a +/-20% range to recognise role scope and individual competence in fulfilling the role responsibilities, which was
subsequently approved by the Board, effective 1 July 2013. Under the terms of the engagement, Godfrey was paid $63,850 for
these services in the 2013 financial year.
The Remuneration Committee considers the present policy remains appropriate for the financial year ended 30 June 2015.
28 Annual Report 2014
Short Term Incentives
For the year ended 30 June 2014, 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 size of any payment is linked to the extent of achievement. Levels of performance required for target levels of STI are 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 STIP
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 of 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 Managing Director and other executives have a target STIP 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 based on external advice to achieve the remuneration policy intent of 75% percentile total remuneration package market
positioning.
The Remuneration Committee is responsible for assessing whether the KPIs are met. The STIP target annual payment is reviewed
annually. The Remuneration Committee has the discretion to adjust STI’s downwards in light of unexpected or unintended
circumstances.
The STIP entitlements earned for performance in the year ended 30 June 2014 noted in the Remuneration Table which follows have
been accrued as at 30 June 2014 and will be paid in the year ended 30 June 2015.
Long Term Incentives
The Incentive Rights granted under the LTIP have a 3 year measurement period. Performance Rights are measured against New
Standard’s share price performance and will vest on a sliding scale against pre-determined absolute TSR targets after a 3 year
measurement period. Retention Rights are linked to tenure and will vest if a 3 year continuous period of service is completed. Any
Performance Rights or Retention Rights that do not vest after the measurement period will immediately lapse.
Absolute TSR is calculated by reference to share price growth 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 and positive benefit to
shareholders.
Of the Incentive Rights that were tested against their vesting conditions during the year ended 30 June 2014, all Retention Rights
vested and all Performance Rights lapsed.
Company performance
The table below sets out summary information about the Company’s assets, profitability and share price movements for the 5 years
to 30 June 2014:
30 June 2014
$
30 June 2013
$
30 June 2012
$
30 June 2011
$
30 June 2010
$
0.14
0.12
0.535
0.19
0.215
117,371,505
83,675,665
30,308,167
94,362,875
30,430,324
19,792,879
(3,454,500)
(79,081)
3,298,537
Share price
Total Assets
Net Profit/(loss) before Tax
(6,116,652)
Remuneration Tables
The remuneration for each Executive Director and KMP of the Company for the years ending 30 June 2013 and 30 June 2014 was
as follows:
New Standard Energy Ltd 29
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Notes
(i) The cash bonuses have been accrued at 30 June 2014 as STIP amounts resulting from KPI achievements for the year ended 30 June 2014, and have
since been reviewed and confirmed 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 were approved by shareholders 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 2014, using the Black-Scholes options
pricing model, was $47,379.
Mr Aitken resigned as Engineering and Operations Manager effective 30 April 2014. The negative remuneration amount of $28,710 relates to the
forfeiture of options that were issued to Mr Aitken in the year ended 30 June 2013.
(iii) Incentive rights were granted in the years ended 30 June 2013 and 30 June 2014, 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-rata value of these incentive rights in the year ended 30 June 2014. The amount included as remuneration is not
related to or indicative of the benefit (if any) that the individual may receive.
(iv) Mr Willis was appointed as Non-Executive Director on 1 July 2013, and then appointed as Executive Director Corporate on 10 December 2013.
(v) Mr Aitken resigned as Engineering and Operations Manager effective 30 April 2014.
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
2014
2013
92,011
103,533
91,800
103,628
48,000
48,000
Non-Executive remuneration for the year ended 30 June 2014 and comparative 2013 remuneration:
Salary and fees
$
Non-cash benefit
$
Superannuation
$
Options(v)
$
Total
$
Value of Options
as a proportion of
Remuneration
$
84,220
57,523
26,964
164,868
-
-
-
333,575
84,220
55,046
40,043
179,309
-
-
-
-
-
-
-
-
-
-
-
-
7,790
2,546
-
21,932
-
-
-
-
-
-
-
-
-
-
92,011
82,000
26,964
164,868
-
-
-
10,336
21,932
365,843
7,580
4,954
3,584
16,118
17,234
18,407
18,407
54,047
109,034
78,407
62,034
249,475
0%
27%
0%
0%
0%
0%
0%
6%
16%
23%
30%
22%
Name
2014
Mr A Dixon
Mr C Sadler
Dr M Hagan(i)
Mr S Willis(ii)
Mr K Ferguson III(iii)
Mr G Channon(iv)
Mr J Swanson(iv)
Total
2013
Mr A Dixon
Mr C Sadler
Mr P Thick
Total
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) Dr Hagan resigned from the role as Technical Director and moved into a Non-Executive Director role on 31 August 2013, and subsequently
resigned from this role on 11 February 2014.
(ii) Mr Willis served as Non-executive Director from 1 July 2013 until he was appointed to the role as Executive Director Corporate on 10 December
2013. During his time as Non-executive Director Mr Willis also provided consultancy services for the value of $148,368 to the Company.
(iii) Mr Ferguson III is not paid by the Company for his Non-executive Director services to the Company because his executive role at Magnum
Hunter Resources (MHR) includes fulfilling such a role, and therefore it is MHR policy that no additional remuneration should be provided.
(iv) Mr Channon and Mr Swanson were appointed as Non-executive Directors on 24 June 2014 and each receives a fixed remuneration of $60,000
per annum.
(v) The fair value of options is calculated at the date of grant using the Black-Scholes option pricing model and recognised over the period in which
the minimum service conditions are fulfilled (the vesting period).
New Standard Energy Ltd 31
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(
Loans to Key Management Personnel
On 15 August 2012, the Company issued the following fully paid ordinary shares, funded via non-recourse loans, pursuant to the
Employee Share Plan to Key Management Personnel (KMP). All loans are outstanding at balance date.
Name
Mr Gracey
Title
No. of Shares
Non-recourse
Loan Value ($)
Fair Value at
Grant Date ($)
Interest
Business Development
Manager & General Counsel
123,601
67,500
27,514
Interest not charged
Mr Hansen-Knarhoi CFO & Joint Company
89,399
48,822
19,900
Interest not charged
Secretary
Mr Achour
HSE Manager
40,410
253,410
22,069
138,391
8,995
Interest not charged
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.
Other Transactions with Key Management Personnel
There were no other transactions with key management personnel during the year ended 30 June 2014.
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 2014 are provided below.
Name
Mr P Thick
Employee
Ongoing
Engagement
Term of Contract
Notice Period by Either Party
Termination Benefit
Mr S Willis
Consultancy
Ongoing
Mr P Achour
Employee
Ongoing
Mr G Carlsen
Employee
Ongoing
Mr M Gracey
Employee
Ongoing
Mr D Hansen-Knarhoi Employee
Ongoing
Mr A Dixon
Employee
Mr G Channon
Employee
Mr K Ferguson III
Employee
Mr C Sadler
Employee
Mr J Swanson
Employee
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
None
None
None
None
None
12 weeks
No notice required for termination
by Company for cause
9 months
30 days
No notice required for termination
by Company for cause
None
12 weeks
No notice required for termination
by Company for cause
12 weeks
No notice required for termination
by Company for cause
12 weeks
No notice required for termination
by Company for cause
12 weeks
No notice required for termination
by Company for cause
12 weeks
12 weeks
12 weeks
12 weeks
None
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
Chairman
25 September 2014
New Standard Energy Ltd 37
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 2014 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
25 September 2014
38 Annual Report 2014
New Standard Energy Ltd 39
Corporate Governance Statement
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 a 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.
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 the following:
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;
• 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 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 seven directors of whom three are considered independent. The remaining directors
do not meet the Company’s criteria for independence.
Given the significant transformation the Company has undergone over the past year the Board feels the composition of the
Board is appropriate at this stage. The Board will review the composition over the coming year to better align with the new
direction of the Company. The Board endeavours to review this policy from time to time.
40 Annual Report 2014
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.
New Standard Energy Ltd 41
Diversity Reporting
The Group’s gender diversity as at the end of the reporting period is as follows:
30 June 2014
30 June 2013
Female
Male
Female
Male
Gender representation
Board representation
Group representation
No
-
10
%
-
40
No
7
15
%
100
60
No
-
9
%
-
39
No
5
14
%
100
61
The following senior positions with the Group are currently held by female employees:
• Human Resources Manager
The Company’s proposed diversity objectives for the 2015 financial year are as follows:
• Continue to assess and proactively monitor gender diversity at all levels of the Company’s business and the implementation
and effectiveness of the Company’s diversity initiatives and programs;
• 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 Chief Financial Officer 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.
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.
42 Annual Report 2014
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. The Company does not have a Risk Management Committee because the Board considers it would not be a more efficient
mechanism than the full Board for focusing the Company on specific issues.
The Managing Director and Chief Financial Officer 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 and Chief Financial Officer 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 Company’s 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 incentives 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:
Principal No. Recommendation
Compliance
Reason for Non-compliance
1.
1.1
Lay solid foundations for management and oversight
Establish the functions reserved to
the Board and those delegated to
senior executives and disclose those
functions.
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
the Executive Leadership Team (ELT).
The ELT’s 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
1.2
Disclose the process for evaluating
the performance of senior executives.
1.3
Provide the information indicated in
the Guide to reporting on Principle 1.
44 Annual Report 2014
Principal No. Recommendation
Compliance
Reason for Non-compliance
Structure the board to add value
A majority of the Board should be
independent of Directors.
A definition of Director
independence can be accessed at
www.newstandard.com.au. The
Board consists of three independent
Directors and four non-independent
Directors.
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.
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.
The 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.
2.
2.1
2.2
2.3
2.4
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.
Given the significant transformation
the Company has undergone
over the past year the Board feels
the composition of the Board is
appropriate at this stage. The Board
will review the composition over the
coming year to better align with the
new direction of the Company. The
Board endeavours to review this
policy from time to time.
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.
The Board’s Charter clearly
establishes that it is responsible for
ensuring there is a sound system
for overseeing and managing risk.
The Company does not have a
Nomination Committee because the
Board considers it would not be a
more efficient mechanism than the full
Board for focusing the Company on
specific issues.
Not applicable
Not applicable
New Standard Energy Ltd 45
Principal No. Recommendation
Compliance
Reason for Non-compliance
3.
3.1
3.2
3.3
3.4
3.5
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
46 Annual Report 2014
Principal No. Recommendation
Compliance
Reason for Non-compliance
4.
4.1
4.2
4.3
4.4
5.
5.1
5.2
6.
6.1
6.2
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 four
members, including two 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 composition 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
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
New Standard Energy Ltd 47
Principal No. Recommendation
Compliance
Reason for Non-compliance
7.
7.1
7.2
7.3
7.4
8.
8.1
8.2
8.3
8.4
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.
Companies should provide the
information indicated in the Guide to
reporting on Principle 7.
Remunerate fairly and responsibly
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 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
Company’s 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
The information has been disclosed
in the Annual Report.
Not applicable
Not applicable
Not applicable
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
The Remuneration Committee
consists of four members, of which
two are independent non-executive
directors and is chaired by an
independent non-executive director.
The two Joint Company Secretaries
are also members of the
Remuneration Committee.
The Remuneration Committee
may seek external advice where
appropriate.
Companies should clearly distinguish
the structure of Non-Executive Directors’
remuneration from that of Executive
Directors and senior executives.
The structure of Non-Executive
Directors’ remuneration is clearly
distinguished from that of Executive
Directors and ELT, as described in the
Directors’ Report in the Annual Report.
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
48 Annual Report 2014
Financial Statements 2014
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
50
51
53
54
55
56
57
New Standard Energy Ltd 49
Auditor’s Independence Declaration
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF NEW STANDARD
ENERGY LIMITED
As lead auditor of New Standard Energy Limited for the year ended 30 June 2014, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of New Standard Energy Limited and the entities it controlled during the
period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 25 September 2014
50 Annual Report 2014
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Independent Audit Report
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of New Standard Energy Limited
Report on the Financial Report
We have audited the accompanying financial report of New Standard Energy Limited, which comprises
the consolidated statement of financial position as at 30 June 2014, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
New Standard Energy Ltd 51
has been given to the directors of New Standard Energy Limited, would be in the same terms if given to
the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of New Standard Energy Limited is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates
that the ability of the consolidated entity to continue as a going concern is dependent upon the future
successful raising of necessary funding through debt or equity, successful exploration and subsequent
exploitation of the consolidated entity’s tenements. These conditions, along with other matters as set
out in Note 1, indicate the existence of a material uncertainty that may cast doubt about the
consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may
be unable to realise its assets and discharge its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of New Standard Energy Limited for the year ended 30 June
2014 complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, 25 September 2014
52 Annual Report 2014
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2014
Revenue from continuing operations
Gain on sale of available-for-sale financial assets
Gain on investments
Other Revenue
Total revenue and other income
Expenses
Production and lease operating expenses
Depletion, depreciation and accretion expenses
Exploration and evaluation costs
Administrative expenses
Share based payments
Foreign exchange gain/(loss)
Impairment of exploration and evaluation and development expenditure
Impairment of available-for-sale investment
Loss on investment in associate
Profit/(loss) before income tax expense
Income tax benefit/(expense)
Note
2
2
2
2
3
3
3
26
10
4
2014
$
3,192,845
2013
$
-
-
40,588,300
41,768
949,785
-
2,002,476
4,184,398
42,590,776
(944,882)
(1,308,562)
-
-
(296,000)
(33,933)
(6,666,877)
(4,114,171)
(198,479)
10,763
-
-
(740,051)
(1,924)
(5,383,445)
(1,713,085)
(1,193,013)
-
(6,116,652)
30,308,166
4,075,034
(13,609,099)
Profit/(loss) after tax attributable to owners of the Parent entity
(2,041,618)
16,699,068
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)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive loss for the year
(2,398,729)
543,288
(2,398,729)
(29,918,507)
Total comprehensive loss for the year
(4,440,347)
(13,219,439)
Total comprehensive loss for the year is attributable to:
Owners of the Company
(4,440,347)
(13,219,439)
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)
Cents Per Share
Cents Per Share
23
23
(0.60)
(0.60)
5.49
5.49
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
New Standard Energy Ltd 53
Consolidated Statement of Financial Position
As at 30 June 2014
Current Assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Derivative financial instruments
Other assets
Total Current Assets
Non-Current Assets
Derivative financial instruments
Exploration and evaluation and development expenditure
Oil and Gas properties
Investment in associate
Property, plant and equipment
Deferred tax asset
Other assets
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 earnings
Total Equity
Note
22(a)
6
7
7
8
9
10
11
14
12
13
13
14
15
16
2014
$
2013
$
8,625,765
2,862,295
-
48,157
203,797
41,536,690
715,618
536,915
-
-
11,740,014
42,789,223
119,961
-
54,408,596
39,814,318
36,891,767
389,531
708,984
12,931,384
181,268
-
-
1,072,124
-
-
105,631,491
40,886,442
117,371,505
83,675,665
8,132,416
138,700
8,271,116
2,403,870
73,667
2,477,537
9,186,312
19,645,342
122,300
9,949,470
28,831,654
10,071,770
37,102,770
12,549,307
80,268,735
71,126,358
67,011,182
53,626,937
839,916
3,040,166
16(d)
12,417,636
14,459,255
80,268,735
71,126,358
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
54 Annual Report 2014
Consolidated Statement of Changes In Equity
For the year ended 30 June 2014
Issued Capital
$
Retained
Earnings
$
Share Based
Payment
Reserve
$
Available for
Sale Financial
Assets
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
Equity as at 1 July 2013
53,626,937
14,459,254
3,964,386
Profit/(Loss) for the year
Loss on translation of foreign operations
Total comprehensive income / (loss)
Transactions with owners in their
capacity as owners;
-
-
-
(2,041,618)
-
(2,041,618)
Issue of shares, net of transaction costs
13,384,245
Share based payments
-
-
-
-
-
-
-
198,479
Equity as at 30 June 2014
67,011,182
12,417,636
4,162,865
-
-
-
-
-
-
-
(924,220)
71,126,358
-
(2,041,618)
(2,398,729)
(2,398,729)
(2,398,729)
(4,440,347)
-
-
13,384,245
198,479
(3,322,949)
80,268,735
Issued Capital
$
Retained
Earnings
$
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 / (loss)
Transactions with owners in their
capacity as owners;
Share based payments
-
-
-
-
-
16,699,068
-
-
16,699,068
-
-
-
-
-
-
-
16,699,068
543,288
543,288
(30,461,795)
-
(30,461,795)
(30,461,795)
543,288
(13,219,439)
Equity as at 30 June 2013
53,626,937
14,459,254
3,964,386
-
740,051
-
-
-
740,051
(924,220)
71,126,358
The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.
New Standard Energy Ltd 55
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Cash Flows From Operating Activities
Oil & Gas sales
Payments to suppliers and employees
Interest received
Interest Paid
Note
2014
$
2013
$
1,820,022
-
(6,857,843)
(3,259,012)
1,105,594
1,861,207
(15,498)
(28,183)
Net cash used in operating activities
21(b)
(3,947,725)
(1,425,988)
Cash Flows From Investing Activities
Payments for oil and gas properties
Reimbursement of exploration expenditure
Cash receipts offset against development expenditure
(14,958,808)
6,030,755
580,092
-
3,146,196
167,237
Payment for exploration, evaluation and development
(10,044,617)
(27,438,849)
Proceeds from available-for-sale financial assets
-
43,122,130
Payments for acquisition of subsidiary net of cash acquired
24
(18,476,419)
Payments for purchase of equity investments
(1,003,860)
-
-
Payments for plant and equipment
(75,320)
(932,558)
Net cash (used in)/provided by investing activities
(37,948,177)
18,064,156
Cash Flows From Financing Activities
Proceeds from borrowings
Proceeds from issue of shares
Repayment of borrowings
9,135,234
151,999
(73,667)
-
-
(67,648)
Net cash flows (used in)/provided by financing activities
9,213,566
(67,648)
Net increase/(decrease) in cash and cash equivalents
(32,682,336)
16,570,520
Cash and cash equivalents at beginning of the financial year
41,536,690
24,890,855
Exchange rate adjustments
(228,589)
75,315
Cash and cash equivalents at the end of the financial year
21(a)
8,625,765
41,536,690
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
56 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial Statements
For the year ended 30 June 2014
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 25 September 2014.
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 2014.
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the normal course of business.
During the year the consolidated entity incurred a net loss after income tax for the year ended of $2,041,618 and incurred
net cash outflows from operating and investing activities of $41,895,902.
The ability of the consolidated entity to continue as a going concern is dependent upon future capital raisings to fund
ongoing exploration commitments and for working capital. The Directors believe that they will be able to raise additional
capital as required and are in the process of evaluating the consolidated entity’s cash requirements.
The Directors believe that the consolidated entity will continue as a going concern. As a result the financial report has been
prepared on a going concern basis. However, should the consolidated entity be unsuccessful in undertaking additional
raisings, the consolidated entity may not be able to continue as a going concern. No adjustments have been made relating
to the recoverability and classification of liabilities that might be necessary should the Consolidated Entity not continue as a
going concern.
Principals of Consolidation
(a)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an
entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement,
statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
New Standard Energy Ltd 57
1.
Summary Of Accounting Policies (continued)
(b) Associates
Associates are all entities over which the group has significant influence but not control or joint control. This is
generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are
accounted for using the equity method of accounting after initially being recognised at cost.
(c)
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal
structure of the joint arrangement. The Group has joint operations.
Joint operations
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share
of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial
statements under the appropriate headings.
Joint ventures
Interests in joint ventures are accounted for using the equity method after initially being recognised at cost in the
consolidated statement of financial position.
(d)
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the
investment.
When the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent
of the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed
where necessary to ensure consistency with the policies adopted by the Group.
(e) 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.
(f)
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.
58 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
(g) 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 cash flows 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.
(h)
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.
(i)
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.
New Standard Energy Ltd 59
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
(j)
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.
ii.
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
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.
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.
(k) Development Expenditure
Development expenditure is accumulated in respect of each separate area of interest. Development expenditure
relates to costs incurred to access a hydrocarbon resource after the technical feasibility and commercial viability
of extracting the hydrocarbon 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(h).
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.
60 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
(l)
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.
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.
(m)
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.
New Standard Energy Ltd 61
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
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.
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.
(n)
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.
(o)
Revenue Recognition
Revenue from the sale of oil and gas related products are recognised when the significant risks and rewards of
ownership has transferred to the buyer and can be measured reliably. In the case of oil, this is usually at the time of
lifting. Interest income is recognised in profit or loss as it accrues and takes into account 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.
(p)
Property, Plant and Equipment
Owned assets
Items of property, plant and equipment are recognised at cost less accumulated depreciation (see below) and
impairment losses (see Impairment Note 1(h)).
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.
62 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
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 useful life and depreciation method applied to an asset are reassessed at least annually.
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
1-15 years depending on the nature of the asset
(iii)
Leasehold improvements 3-10 years depending on the nature of the asset
The useful life and depreciation method applied to an asset are reassessed at least annually.
(q) Oil and gas properties
These properties represent the accumulation of all exploration, evaluation and development expenditure, pre-
production development costs and ongoing costs of continuing to develop reserves for production incurred by or
on behalf of the entity in relation to areas of interest. When further development expenditure is incurred in respect
of a property after the commencement of production, such expenditure is carried forward as part of the cost of that
property only when expected future economic benefits are to be received, otherwise such expenditure is classified as
part of the cost of production
Depletion / depreciation / amortisation
Oil and gas properties are depleted using the units of production method. Depletion is not charged until
commencement of production. Changes in factors such as estimates of proved and probable reserves that effect
unit of production calculations do not give rise to prior year financial period adjustments and are dealt with on a
prospective basis
(r)
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.
(s)
Borrowings
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings
are measured at amortised cost with any difference between the initial recognised amount and the redemption value
being recognised in profit or loss over the period of the borrowing using the effective interest rate method. Borrowings
are classified as current liabilities, unless the entity has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
(t)
Derivatives
Currently the Group uses certain hedging derivatives to mitigate commodity price risk. These derivatives are initially
measured at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair
value monthly. The accounting treatment for subsequent changes in fair values is that the changes are recorded in
profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk.
(u)
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.
New Standard Energy Ltd 63
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
(v)
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.
(w) 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.
(x)
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.
(y)
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.
64 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
(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.
(z) 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.
(aa) Adoption of new and revised accounting standards
The nature and effect of each new and revised standards on the Group’s consolidated financial report at 30 June 2014
are described below.
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 impact on its existing arrangements
and the change has had no 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 impact on its existing arrangements and the change has had no 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 impact on its existing arrangements and
the change has had no material effect on the financial statements.
New Standard Energy Ltd 65
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
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 impact on its existing arrangements and the change has had no material effect on the financial
statements.
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 impact on its existing arrangements and the change has had no 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 has assessed the impact on its existing arrangements and the change has had no material effect
on the financial statements.
(bb) Standards and Interpretations Issued not yet Effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June
2014. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
66 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
Reference and Title
Summary
Financial Instruments
- AASB 9 (issued
December 2009 and
amended December
2010)
Amends the requirements for classification
and measurement of financial assets. The
available-for-sale and held-to-maturity categories
of financial assets in AASB 139 have been
eliminated.
Application date
of standard
Periods beginning
on or after
1 January 2018
Impact on
New Standard Energy
Limited
financial statements
When this standard is
first adopted from 1 July
2018, there will be no
impact on transactions
and balances recognised
in the financial
statements.
Under AASB 9, there are three categories of
financial assets:
•
•
•
Amortised cost
Fair value through profit or loss
Fair value through other comprehensive
income.
The following requirements have generally
been carried forward unchanged from AASB
139 Financial Instruments: Recognition and
Measurement into AASB 9:
• Classification and measurement of financial
liabilities; and
• Derecognition requirements for financial
assets and liabilities.
However, AASB 9 requires that gains or losses
on financial liabilities measured at fair value
are recognised in profit or loss, except that the
effects of changes in the liability’s credit risk are
recognised in other comprehensive income.
When an entity acquires an interest in a joint
operation whose activities meet the definition of a
‘business’ in IFRS 3 Business Combinations, to the
extent of its share of assets, liabilities, revenues
and expenses as specified in the contractual
arrangement, the entity must apply all of the
principles for business combination accounting in
IFRS 3, and other IFRSs, to the extent that they do
not conflict with IFRS 11 Joint Arrangements.
This means that it will expense all acquisition-
related costs and recognise its share, according
to the contractual arrangements, of:
•
Fair value of identifiable assets and liabilities,
unless fair value exceptions included in IFRS
3 or other IFRSs, and
• Deferred tax assets and liabilities that arise
from the initial recognition of an asset or
liability as required by IFRS 3 and IAS 12
Income Taxes.
Goodwill will then be recognised as the excess
consideration over the fair value of net identifiable
assets acquired.
Accounting for
Acquisitions of
Interests in Joint
Operations –
Amendments to IFRS
11(issued May 2014)
Annual reporting
periods
commencing on
or after 1 January
2016
There will be no
impact on the financial
statements when these
amendments are first
adopted because they
apply prospectively to
acquisitions of interests
in joint operations.
New Standard Energy Ltd 67
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
Reference and Title
Summary
AASB 2013-3
(issued June 2013)
Amendments to AASB
136 – Recoverable
Amount Disclosures
for Non-Financial
Assets
Clarifies the disclosure requirements for cash-
generating units (CGUs) with significant amounts
of goodwill and intangibles with indefinite useful
lives and also adds additional disclosures when
recoverable amount is determined based on fair
value less costs to sell.
Application date
of standard
Annual reporting
periods
commencing
on or after
1 January 2014
Share-based
payments
transactions for
which grant date
is on or after
1 July 2014
Business
combinations
occurring on or
after 1 July 2014
IFRS 2 Share
– based Payment
Definition of vesting condition
The amendment clarifies the definition of vesting
conditions and market conditions by separately
defining a performance condition and a service
condition, both of which were previously
incorporated within the definition of a vesting
condition without themselves being specifically
defined
IFRS 3 Business
Combinations
Accounting for contingent consideration in a
business combination
The amendment clarifies that contingent
consideration is assessed as either a liability
or an equity instrument on the basis of IAS 32
Financial Instruments: Presentation.
The amendment also requires contingent
consideration that is not classified as equity to be
remeasured to fair value at each reporting date,
with changes in fair value being reported in profit
or loss.
68 Annual Report 2014
Impact on
New Standard Energy
Limited
financial statements
As this standard amends
disclosure requirements
only, there will be no
impact on amounts
recognised in the
financial statements. The
recoverable amount for
CGUs with significant
amounts of goodwill and
intangibles with indefinite
lives will only be required
to be disclosed where
an impairment loss
has been recognised.
However, there will be
additional disclosures
about the level of the fair
value hierarchy where
recoverable amount for
a CGU is determined
based on fair value less
costs to sell.
There will be no
impact on the financial
statements when these
amendments are first
adopted because they
apply prospectively to
share-based payment
transactions for which the
grant date is on or after 1
July 2014.
There will be no
impact on the financial
statements when these
amendments are first
adopted because they
apply prospectively to
business combinations
for which the acquisition
date is on or after 1 July
2014.
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 Application date
of standard
Annual periods
commencing on or
after 1 July 2014
1.
Summary Of Accounting Policies (continued)
Reference and Title
Summary
IFRS 8) Operating
Segments
Aggregation of operating segments
When operating segments have been
aggregated in determining reportable segments,
additional disclosures are required regarding
judgements made by management in applying
the aggregation criteria used to assess that the
aggregated segments have similar economic
characteristics, including:
•
•
A description of the operating segments that
have been aggregated
The economic indicators considered in
determining that the aggregated operating
segments share similar economic
characteristics.
Reconciliation of the total of a reportable
segment’s assets to the entity’s assets
The amendment clarifies that a reconciliation of
the total of reportable segments’ assets to the
entity’s assets is only required if a measure of
segment assets is regularly provided to the chief
operating decision maker (CODM).
Annual reporting
periods beginning
on or after
1 January 2014
IAS 24 Related Party
Disclosures
Key management personnel
The amendment clarifies that an entity that
provides key management personnel services
(‘management entity’) to a reporting entity (or to
the parent of the reporting entity), is a related
party of the reporting entity.
The amendment also requires separate disclosure
of amounts recognised as an expense for key
management personnel services provided by
a separate management entity (but not in the
categories set out in IAS 24.17).
Impact on
New Standard Energy
Limited
financial statements
There will be no
impact on the financial
statements when these
amendments are first
adopted because this
is a disclosure standard
only. Further, because the
group does not currently
aggregate operating
segments in determining
reportable segments,
it is unlikely that any
additional disclosures
will be required when this
amendment is adopted
for the first time for the
year ended 30 June
2015.
There will be no
impact on the financial
statements when these
amendments are first
adopted because this
is a disclosure standard
only. As the group
does not currently
engage the services of
a management entity, it
is also unlikely that any
additional disclosures
will be required when this
amendment is adopted
for the first time for the
year ended 30 June
2015.
New Standard Energy Ltd 69
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 1.
Summary Of Accounting Policies (continued)
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
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 and development 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 $54,408,596.
The ultimate recoupment of costs carried forward for development assets is dependent either upon the successful
development and commercial exploitation, or sale, of the respective areas of interest. If the asset is successfully developed
it will be transferred and reclassified as a production asset. The production asset will then be accounted within Oil and Gas
properties to which its carrying value will be depleted as production value is extracted from the asset.
Determination of hydrocarbon reserves
Estimates of recoverable quantities of proven, probable and possible reserves reported include judgemental assumptions
regarding commodity prices, exchange rates, discount rates, capital costs and production and operating costs for future
cash flows. It also requires interpretation of complex and difficult geological and geophysical models in order to make an
assessment of the size, shape, depth and quality of reservoirs, and their anticipated recoveries. The economic, geological
and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can
impact asset carrying values and the recognition of deferred tax assets due to changes in expected future cash flows.
Reserves are integral to the amount of amortisation charged to the profit and loss.
Determination of fair values on intangible assets acquired in business combinations
On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial
position at their fair values. In measuring fair value management uses estimates about expected future cash flows generated
from the use or eventual sale (less costs) of the asset. Details of acquired assets and liabilities are given in Note 24.
Units of production depletion of oil and gas assets
Oil and gas properties are depleted using the method units of production over the total provided and undeveloped reserves.
This results in a depletion charge proportional to the depletion of the anticipated remaining production.
The economic life of the well, which is assessed annually, has regard to present assessments of economically recoverable
reserves of the field at which the asset is located. These calculations require the use of estimates and assumptions,
including the amount of recoverable reserves and estimates of future capital expenditure. The calculation of the depletion
rate could be impacted to the extent that actual production in the future is different from the current forecast production
based on total proved reserves, or future capital expenditure estimates.
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.
70 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 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.
Impairment
The carrying amounts of the Group’s assets are reviewed at the end of the reporting period to determine whether there is
any indication of impairment. If any such indication exists, the assets recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an assets or its cash-generating unit exceeds its
recoverable amount. The recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate independent cash inflows, the recoverable amount is determined for the cash generating unit to which
the assets belong.
2. Revenue
Revenue:
Oil and Gas sales revenue (net of royalties)
Interest revenue
Other revenue
Other income consisted of the following items:
Gain on sale of available-for-sale financial assets
Gain on investments
Total Revenue
3.
Expenses
Profit/(loss) before income tax includes the following specific expenses:
Production and operating expense
Sales taxes
Lease operating expenses
Total production and operating expenses
Depletion, depreciation and accretion expenses
Depletion
Depreciation
Accretion
Total depletion, depreciation and amortisation expense
Administrative expenses
Employee benefit expenses
Professional fees
Occupancy expenses
Other administrative expenses
Total administrative expense
2014
$
2013
$
3,192,845
932,785
17,000
-
1,969,310
33,166
-
40,588,300
41,768
4,184,398
-
42,590,776
159,116
785,766
944,882
912,950
393,518
2,094
1,308,562
3,474,294
539,310
568,506
2,084,767
6,666,877
-
-
-
-
296,000
-
296,000
2,879,036
325,331
226,789
683,015
4,114,171
New Standard Energy Ltd 71
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
4.
Income Tax Expense
(a)
The components of tax expense/(benefit) comprise:
Current Tax
Deferred Tax
Deferred tax expense/(benefit) included in income tax expense comprises:
Decrease (increase) in deferred tax assets
(Decrease) increase in deferred tax liabilities
(b)
The prima facie tax from ordinary activities before income tax is
reconciled to the income tax expense as follows:
Profit/(loss) before tax
Tax expense (benefit) calculated at 30%
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
Deferred tax liability not previously recognised
Deferred tax asset not previously recognised
Tax losses and timing differences not recognised
Income tax expense/(benefit)
2014
$
2013
$
-
-
(4,075,034)
13,609,099
(4,075,034)
13,609,099
(12,931,384)
-
8,856,350
13,609,099
(4,075,034)
13,609,099
(6,116,652)
30,308,167
(1,834,996)
9,092,450
59,544
37,265
8,636
(20,491)
222,015
1,432,643
11,320
(29,544)
-
2,880,215
(2,670,366)
-
(4,420,408)
13,609,099
345,374
-
(4,075,034)
13,609,099
The Company will have no tax payable due to prior year losses carried forward and tax deductible exploration expenditure.
Tax consolidation legislation
News Standard Energy Limited and its wholly owned Australian controlled entities elected to enter into the tax consolidation
legislation from 1 July 2008. On adoption of the tax consolidation legislation, the entities in the tax consolidated group
entered into a tax sharing agreement which, in the opinion of the Directors, limits the joint and several liability of the wholly
owned entities in the case of a default by the head entity, New Standard Energy Limited.
5. Auditors Remuneration
Auditor of the Parent Entity –
(a) Audit Services
BDO Audit (WA) Pty Ltd
BDO USA LLP
72 Annual Report 2014
61,760
38,889
100,649
57,890
-
57,890
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
6.
Trade and Other Receivables
Current
Trade receivables
Other receivables
Total
2014
$
2,282,212
580,083
2,862,295
2013
$
-
715,618
715,618
The average credit period on trade and other receivables is 30 days. No interest is charged on prepayments and
receivables. The Group 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 22 for the Group’s risk management policy.
7. Derivative Financial Instruments
Current Assets
Commodity put options
Non-current Assets
Commodity put options
Total assets
48,157
119,961
168,118
-
-
-
From time to time, the Group is party to derivative financial instruments, in the normal course of business, in order to hedge
exposure to fluctuations in commodity prices. The Group enters into certain commodity derivative instruments to mitigate
risk associated with a portion of its future crude oil and natural gas production and related cash flows.
8.
Exploration, Evaluation and Development Expenditure
Movement in Exploration, Evaluation and Development Expenditure
Balance at beginning of the year
39,814,318
18,767,114
Acquisition from business combination (note 24)
Acquisition of exploration assets
Revenue Offset
Expenditure incurred
Expenditure impaired
Foreign exchange movement
Expenditure recovered(1)
Balance at end of the year
8,129,391
6,400,000
-
(287,347)
(688,108)
6,789,699
29,025,327
-
(5,383,445)
(406,710)
460,922
(6,030,755)
(2,367,492)
54,408,596
39,814,318
(1) The exploration expenditure incurred during the period relates to the Company’s oil and gas permits and application areas in Australia, and
working interests in the Atascosa County and Colorado County both 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. 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 $6,030,755 relating to applicable works undertaken in the
year ended 30 June 2013 in the Canning and Carnarvon Basins.
New Standard Energy Ltd 73
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
8.
Exploration, Evaluation and Development Expenditure (continued)
The Consolidated Entity has interests in the following wholly-owned and non-wholly owned oil and gas exploration and
development assets:
Country
Area
Asset
Operator
Principal Activity
USA
Eagle Ford
Eppright Prospect
(includes 1 lease)
Alright Prospect
(includes 37 leases)
NSE Texas LLC
Exploration, development of
hydrocarbons
Percentage
Interest
96.88%
35.40%
32.5%
32.5%
32.5%
33.68%
Exploration, development of
hydrocarbons
Exploration of hydrocarbons
52.5%
Exploration of hydrocarbons
Colorado County
Heintschel-1
AKG Energy LLC
Heintschel-2
D Truchard-1
Joann-1
Australia Cooper Basin
PEL 570
Canning Basin
EP443
EP450
EP451
EP456
STP–EPA-006
STP-EPA-007
STP-EPA-010
STP-EPA-0092
EP417
STP-EPA-0109
Outback Energy Hunter
Pty Ltd
New Standard Onshore
Pty Ltd
Carnarvon Basin
EP481
EP482
New Standard Onshore
Pty Ltd
Exploration of hydrocarbons
Assets acquired on the Peeler Prospect are included with note 9 oil and gas properties.
9. Oil and Gas Properties
At cost
Accumulated depletion
Net carrying value
A reconciliation of movements in oil and gas properties during
the year is as follows:
At cost
Opening balance
Acquisitions from business combination (note 24)
Additions
Foreign exchange movement
Closing balance
Accumulated depletion
Opening balance
Depletion
Closing balance
74 Annual Report 2014
2014
$
37,804,717
(912,950)
36,891,767
-
23,290,622
15,456,854
(942,759)
37,804,717
-
(912,950)
(912,950)
25%
25%
25%
25%
100%
100%
100%
100%
100%
100%
100%
100%
2013
$
-
-
-
-
-
-
-
-
-
-
-
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 10.
Investment In Associate
On August 13, 2013 New Standard Energy increased its equity holding in Elixir Petroleum Limited (ASX: EXR) to
28.23% resulting in the investment being classified as an associate, previously held as an available for sale asset
(30 June 2013: $536,915).
(a) Movements in carrying amount
Carrying amount at the beginning of the period
Transfer of available for sale investment
Share of net loss in associate
Carrying amount at the end of the period
(b)
Summarised financial information of associates
The group’s share of the results of its associate are as follows:
2014
$
2013
$
-
1,582,544
(1,193,013)
389,531
-
-
-
-
Ownership
Interest
%
Group’s share of:
Assets
$
Liabilities
$
Revenues
$
Profit/(Loss)*
$
2014
Elixir Petroleum Limited
28.23
2,428,124
2,428,124
727,035
727,035
-
-
(1,193,013)
(1,193,013)
* Portion of losses recognised from the date of Elixir Petroleum Limited being recognised as an investment in associate.
At 30 June 2013 New Standard Energy did not recognise the equity investment in Elixir Petroleum Limited as an investment
in associate and therefore there is no comparative data.
11. Property, Plant and Equipment
Property, plant and equipment
Accumulated depreciation
Net book amount
2014
$
2013
$
1,403,933
1,389,281
(694,949)
708,984
(317,157)
1,072,124
Year ended 30 June 2014
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation expense
Closing net book amount
Furniture and
equipment
$
Motor Vehicles
$
Leasehold
Improvements
$
Total
$
513,833
30,378
-
(184,038)
360,173
196,553
456,834
(7,080)
(132,474)
513,833
189,871
368,420
1,072,124
-
-
(61,939)
127,932
256,706
1,838
-
(68,673)
189,871
-
-
(147,541)
220,879
2,180
461,691
(598)
(94,853)
368,420
30,378
-
(393,518)
708,984
455,439
920,363
(7,678)
(296,000)
1,072,124
New Standard Energy Ltd 75
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
12. Trade and Other Payables
Current
Trade payables
Sundry payables and accrued expenses
2014
$
2013
$
5,124,799
3,007,617
8,132,416
752,181
1,651,689
2,403,870
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 22 for the Group’s risk management policy.
Due to their short-term nature, these payables are deemed to approximate their fair value.
13. Borrowings
Current
Credit facility
Finance lease-vehicle
Non-current
Credit facility
Finance lease-vehicle
(a) Credit facility
2014
$
77,550
61,150
138,700
9,125,162
61,150
9,186,312
2013
$
-
73,667
73,667
-
122,300
122,300
On 28 May 2014 the Group entered into a credit agreement with the bank Credit Suisse which provides borrowings of up
to US$45M that is subject to achieving certain oil and gas reserve levels. The facility is a secured reserve based lending
facility which provides funding against oil and gas reserves that have been certified by an independent reserves engineer.
The base interest rate payable on the loan is 13 per cent per annum, with only 7 per cent being paid in cash and 6%
accrued to the loan for the period of the first six months of the loan, after which the full interest amount will be payable in
cash. The maturity date of the loan is 30 months after the completion date (28 May 2014). The credit facility requires the
Group to maintain certain financial ratios and limits the amount of indebtedness the Group can incur. As at 30 June 2014 the
Group has only drawn down US$9M, and is in compliance with its financial ratios.
A fair value assessment of the borrowings has taken place, given that the loan was entered into during the current reporting
period, the Directors of the Company have deemed that the risk profile of the Company is unchanged at 30 June 2014 from
that at 28 May 2014 and hence there has been no change in relation to the fair value of the borrowings.
(b) Finance leases
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.
76 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 14. Deferred Tax Balances
Deferred tax assets recognised
Unused tax losses
- Australia
- US
Unexpired capital raising costs
US deductible temporary differences
Deductible temporary differences
Total deferred tax assets
2014
$
2013
$
1,561,557
8,634,418
222,921
687,066
1,825,422
12,931,384
2,106,831
1,035,767
322,776
1,692,785
756,854
5,915,013
Set of deferred tax liabilities pursuant to set-off provisions
-
(5,915,013)
Net deferred tax assets
Reconciliation of movement in deferred tax assets:
Opening balance
(Debited) credited to statement of profit or loss and other
comprehensive income
Closing balance
Deferred tax liabilities
Accrued revenue/income
Property, plant & equipment
Foreign currency translation
12,931,384
-
12,931,384
12,931,384
-
-
-
-
-
-
-
56,758
11,771
170,805
Capitalised exploration expenditure - Australia
11,232,281
12,670,892
Capitalised exploration - US
Business combination
Other
Total deferred tax liabilities
7,573,539
839,522
-
2,953,042
-
1,216
19,645,342
15,864,484
Set of deferred tax liabilities pursuant to set-off provisions
-
(5,915,013)
Net deferred tax liability
19,645,342
9,949,470
Reconciliation of movement in deferred tax liabilities:
Opening balance
9,949,470
9,630,213
Debited (credited) to statement of profit or loss and other
comprehensive income
Debited (credited) to assets
Debited (credited) to equity
Closing balance
8,856,350
13,609,099
839,522
-
-
(13,289,842)
19,645,342
9,949,470
New Standard Energy Ltd 77
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 15.
Issued Capital
2014
$
2013
$
386,169,603 fully paid ordinary shares (2013: 305,331,847)
67,011,182
53,626,937
(a) Fully paid ordinary shares
2014
No.
$
Balance at beginning of financial year
305,331,847
53,626,937
On 8 January 2014, consideration on expiry of ESOP loans
-
151,995
On 21 January 2014, issue of shares to the previous owners of
Outback Energy Hunter Pty Ltd
15,000,000
2,400,000
On 29 January 2014, issue of shares to Magnum Hunter Corporation
65,650,000
10,832,250
On 28 March 2014, issue of shares upon vesting of Retention Rights
187,756
-
Balance at end of financial year
386,169,603
67,011,182
2013
Balance at beginning of financial year
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
(b) Terms and Conditions of Issued Capital
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 and Incentive Rights
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 26 of the consolidated financial statements.
78 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 16. Reserves
Share based payments reserve
Foreign currency translation reserve
(a) Movements in available for sale financial assets reserve
Balance at beginning of year
Impairment of financial assets available for sale
Balance at end of year
Nature and purpose of reserve
The available for sale investments revaluation reserve represents
the unrealised gain or loss on the market value of available for sale financial
assets
2014
$
2013
$
4,162,865
3,964,386
(3,322,949)
(924,220)
839,916
3,040,166
-
-
-
30,461,795
(30,461,795)
-
(b) Movements in share based payments reserve
Balance at the beginning of the year
3,964,386
3,224,335
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 shares and options
issued to employees and directors.
(c)
Movements in foreign currency translation reserve
Balance at the beginning of the year
Unrealised profit 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 profits/(losses)
130,466
68,013
229,839
510,212
4,162,865
3,964,386
(924,220)
(1,467,508)
(2,398,729)
(3,322,949)
543,288
(924,220)
Balance at the beginning of the year
14,459,254
(2,239,814)
Net profit/(loss) attributable to members of the Company
(2,041,618)
16,699,068
Balance at the end of the year
12,417,636
14,459,254
17. Dividends
There have been no dividends paid or proposed in the 2013 or 2014 financial years.
New Standard Energy Ltd 79
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 18. Commitments For Expenditure
Exploration Permits and Oil and Gas Leases – Commitments for Expenditure
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
2014
$
2013
$
47,500,000
23,368,378
134,380,000
38,817,500
-
625,000
181,880,000
62,810,878
Australian Exploration Permits
In order to maintain current rights of tenure to Australian exploration permits and tenements, the Group is required to meet
the minimum expenditure requirements established with the Western Australian Department of Mines and Petroleum (DMP)
and the South Australian Department of State Development (DSD). The above commitments reflect the minimum work
programs and costs as required by the DMP and DSD and total $97,800,000.
US Exploration Permits
In order to maintain current rights to leases held in the US, the Group is required to meet certain periodic drilling obligations
until the lease reaches held by production (HBP) status. The above commitments reflect this work and the associated costs
total $84,000,000.
Leases
The Company entered into a 5 year operating lease agreement effective 1 December 2012 for the corporate head offices
at Level 2, 7 Ventnor Ave, 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 years
Longer than 5 years
19. Segment Reporting
2014
$
237,705
574,454
-
2013
$
237,705
812,159
-
812,159
1,049,864
The segment information provided to the Managing Director for the reportable segments for the year ended 30 June 2014
are as follows:
Australia
The Group currently operates within 3 geological basins, being the Canning, Carnarvon and Cooper basins
United States
The Group currently operates within the Atascosa and Colorado counties in Texas
80 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
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New Standard Energy Ltd 81
20. Related Party Disclosures
(a)
Key Management Personnel Compensation
Short term employee benefits
Post employment benefits
Share based payments
Detailed remuneration disclosures are provided in the remuneration report
included in the Director’s Report.
(b)
Transactions with related parties.
Share based payments(i)
Amounts recognised as other revenue(ii)
Rental of office space
Provision of accounting services
2014
$
2013
$
2,443,633
2,352,612
142,532
185,528
144,541
664,086
2,771,693
3,161,239
-
56,409
15,000
2,000
17,000
-
-
56,409
Note:
(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 reporting date.
Name
Mr Gracey
Title
No. of Shares
Non-recourse
Loan Value
($)
Fair Value at
Grant Date
($)
Interest
Business Development Manager
& General Counsel
123,601
67,500
27,514
Interest not charged
Mr Hansen-Knarhoi
CFO & Joint Company Secretary
89,399
48,822
19,900
Interest not charged
Mr Achour
HSE Manager
40,410
22,069
8,995
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%
risk-free interest rate: 2.94%
time to maturity: 2.38 years
dividend yield: 0%
(ii) New Standard Energy (“NSE”) entered in to a services contract with Elixir Petroleum Limited (“EXR”), to which NSE is a significant
shareholder at the reporting date, to provide office space and accounting services from 1 February 2014. The contract was based on
normal commercial terms and conditions. NSE director Mr Sam Willis is also the Chairman of EXR and does not receive any personal
benefit from this services agreement.
82 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
21. Notes To The Statement Of Cash Flow
For the purposes of the statement of cash flows, cash includes cash on hand and in banks less un-presented cheques
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
Cash and cash equivalents
8,625,765
41,536,690
2014
$
2013
$
(b)
Reconciliation of net profit/(loss) after tax to net cash flows from
operating activities
Profit/(loss) 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
Loss on investment in associate
Depletion, depreciation and amortisation expense
Unrealised foreign exchange gain
Income tax expense/ (benefit)
(Increase)/decrease in assets:
Receivables
Other current assets
Increase/(decrease) in liabilities:
Current payables
Net cash used in operating activities
(2,041,618)
16,699,068
198,479
740,051
-
-
-
-
1,193,013
1,308,562
(10,763)
(40,588,300)
7,678
5,383,445
1,713,085
-
296,000
1,924
(4,075,034)
13,609,099
(2,146,677)
317,049
(251,954)
-
1,878,267
394,913
(3,947,725)
(1,425,988)
(c) Non-cash investing and financing activities
Acquisition of exploration assets and oil and gas properties
10,832,250
-
22. Financial Risk Management
The Group’s principal financial instruments, other than derivatives, comprise cash and cash equivalents, borrowings,
receivables and payables, and also investments in associates. 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 trade receivables and
trade payables, which arise directly from its operations. The Group also enters into derivative transactions in the form of
commodity hedges.
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.
New Standard Energy Ltd 83
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
22. Financial Risk Management (continued)
(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. The Group’s reserve based lending facility has a fixed interest rate in the US, so is not exposed to market interest
rate fluctuations. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing.
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
2014
$
8,625,765
8,625,765
2013
$
41,536,690
41,536,690
2014
$
8,625,765
8,625,765
2013
$
41,536,690
41,536,690
Financial Assets
Cash at Bank
Total
Note
21(a)
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability
of funding through adequate credit facilities to meet obligations when due. The Group is primarily funded through on-
going cash flow, debt funding and equity capital raisings, as and when required. Funding is in place with a reputable
financial institution in the US. US bank compliance reporting is undertaken monthly and adherence is checked regularly.
Management also regularly monitors actual and forecast cash flows to manage liquidity risk. The Group has access to a
US$45 million reserve based lending facility, of which the following was drawn at the end of the reporting period:
Fixed Rate
–
–
Expiring within one year
Expiring beyond one year
2014
$
77,550
9,125,162
9,202,712
2013
$
-
-
-
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities as at 30 June 2014. The amounts disclosed in the table are the contractual undiscounted cash flows.
At 30 June 2014
Trade Payables
Borrowings
Finance Lease
Less than 6
months
($)
8,132,416
6 - 12
months
($)
Between 1
and 2 years
($)
Between 2
and 5 years
($)
Total
contractual
cash flows
($)
Carrying
amount of
liabilities
($)
-
-
-
8,132,416
8,132,416
474,460
788,778
1,603,294
9,777,074
12,643,606
9,202,712
37,227
37,227
74,125
-
148,579
122,300
Total
8,644,103
826,005
1,677,419
9,777,074
20,924,601
17,457,428
84 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 22. Financial Risk Management (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. The Group seeks to mitigate this exposure by borrowing in USD for US
operations. The Group’s exposure to foreign exchange risk at the reporting date is limited to the transfer of funding from the
Australian head office to US operations that is provided in US dollars.
The Company also has a joint venture with Conoco Philips (Canning Basin) Pty Ltd (COP) and PetroChina International
Investment (Australia) Pty Ltd (CNPC) to explore and evaluate the shale gas potential of the Southern Canning Project in
the Canning Basin, Western Australia. Under the agreement, 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 contracts for the duration of the 2012/13 drilling program to protect
against an upward movement in the AUD/USD exchange rate. As operational activity has since decreased significantly,
foreign exchange exposure was negligible, no foreign exchange hedge contracts were in place at year end. As such, no
sensitivity analysis is required or provided.
(d) Fair Value
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure
purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting
date and represent fair value. The fair value of investment in associates is equal to the carrying value, and accounts for the
Group’s share in the net profit or loss of the associate. The fair value of financial instruments that are not traded in an active
market is determined using valuation techniques. The Group makes a number of assumptions based upon observable
market data existing at each reporting period. The fair value of current financial assets and liabilities settled within 12
months approximate fair value due to their short term nature.
The following tables classify financial instruments recognised in the statement of financial position 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).
2014
Investment in Associate
Available for sale investments
Commodity Put Options
Total
2013
Level 1
$
389,531
-
-
389,531
Investment in Associate
-
Available for sale investments
536,915
Commodity Put Options
Total
-
536,915
Level 2
$
-
-
168,118
168,118
-
-
-
-
Level 3
$
-
-
-
-
-
-
-
-
Total
$
389,531
-
168,118
557,649
-
536,915
-
536,915
New Standard Energy Ltd 85
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
22. Financial Risk Management (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 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. In the US, trade receivables (balances with oil and gas
purchasers) have not exposed the Group to any bad debts to date, and all purchasers are major oil companies with a credit
rating of “A” or higher.
The Group has apportioned cash reserves amongst several financial institutions and 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)
Cash at Bank and short term bank deposits (BBB-)
Total
(f)
Price Risk
2014
$
6,680,372
316,097
-
1,629,296
8,625,765
2013
$
21,807,157
729,533
19,000,000
-
41,536,690
The Group’s revenues are exposed to commodity price fluctuations, in particular oil prices. The Group enters forward
commodity hedges to manage its exposure to falling spot oil prices. The Group’s commodity hedging program utilizes
financial instruments based on regional benchmarks including Nymex WTI. For the year ended 30 June 2014, 80% of
forecasted oil production was subject to a Put Option hedge at US$99.75 per barrel. A sensitivity analysis is not included
because based on the minimal financial instruments held as at 30 June 2014 the sensitivity analysis is deemed not to have a
material impact on the Consolidated Profit or Loss and other Comprehensive Income. As the Group did not own any material
producing assets in the year ended 30 June 2013 no commodity hedging was in place during that year.
23. Earnings / (Loss) Per Share
Basic earnings / loss per share
Diluted earnings / loss per share
2014
Cents Per Share
2013
Cents Per Share
(0.60)
(0.60)
5.49
5.49
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per
share are as follows:
Profit / (loss) for the year
$
$
(2,041,618)
16,699,068
2014
No.
2013
No.
Weighted average number of ordinary shares used in the calculation of
basic EPS
339,504,547
304,446,205
Weighted average number of ordinary shares used in the calculation of diluted
EPS
339,504,547
304,446,205
24. Business Combination
On December 10 2013 the Group announced that it had entered into an agreement to acquire oil and gas assets in the Eagle
Ford, Texas, US from Magnum Hunter Resources. The transaction was settled by the issuance of 65,650,000 ordinary shares
at an issue price of $0.154 each, with further cash payments of US$15,000,000 and AUD$3,000,000. A further 45 million
performance shares were also to be issued after approximately 18 months from completion, if certain conditions are met.
At the reporting date no monetary value has been assigned to these shares as it is deemed too early in the lifecycle of the
effected production wells for management to form an assessment. The Group completed the acquisition on the 28 January
2014 and has been provisionally accounted for using the guidelines as set out in IFRS/AASB 3 ‘Business Combinations’.
Details of the purchase consideration and assets acquired are as follows:
86 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
24. Business Combination (continued)
Provisional Fair Value
as at 28 January
2014
$
8,129,391
23,290,622
(900,000)
30,520,013
19,687,763
10,832,250
30,520,013
Country of
Incorporation Nature of Activities
Ownership Interest
2013
%
2014
%
Net Assets Acquired
Exploration assets
Oil and gas properties
Deferred tax liability
Purchase Consideration
Net cash outflow on acquisition
Shares
Total consideration paid
25. Subsidiaries
Name of Entity
Parent Entity
New Standard Energy Limited
Australia
Exploration, development and production
of hydrocarbons
Subsidiaries
New Standard Onshore Pty Ltd
Australia
Exploration of hydrocarbons
Outback Energy Hunter Pty Ltd
Australia
Exploration of hydrocarbons
Pathfinder Onshore Energy Pty Ltd
Australia
Exploration of hydrocarbons
New Standard Energy Inc
USA
Exploration, development of hydrocarbons
New Standard Energy Texas LLC
New Standard Energy Colorado LLC
New Standard Energy Ventures LLC
USA
USA
USA
Exploration, development and production
of hydrocarbons
Exploration, development and production
of hydrocarbons
Exploration, development and production
of hydrocarbons
100
100
100
100
100
100
N/A
N/A
100
N/A
100
N/A
100
N/A
26. Share Based Payments
Expenses arising from share-based payment transactions
Options issued to directors
Incentive Rights 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 to other employees
Incentive Rights issued to other employees
2014
$
69,311
61,156
-
(28,710)
83,771
-
4,814
8,137
2013
$
229,839
-
56,409
377,536
302
12,396
63,569
-
198,479
740,050
New Standard Energy Ltd 87
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 26. Share Based Payments (continued)
Unlisted Options
The Employee Share Option Plan (ESOP) was approved by shareholders at the 2011 annual general meeting. The ESOP
is designed to provide long-term incentives for senior managers and executives to deliver long-term shareholder returns.
Under the Plan, participants are granted Options which only vest if certain tenure requirements are met. Participation in
the ESOP is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to receive any
guaranteed benefits. Options are granted under the Plan for no consideration, and carry no dividend or voting rights.
The tables below provide summaries of Options granted under the ESOP
2014
Grant date
Expiry date
29-Mar-11
30-Jun-15
29-Mar-11
30-Jun-15
20-Dec-11
20-Dec-14
20-Dec-11
20-Dec-14
24-Apr-12
24-Apr-15
24-Apr-12
24-Apr-15
09-May-12
09-May-15
09-May-12
09-May-15
10-Aug-12
10-Aug-15
10-Aug-12
10-Aug-15
12-Dec-12
12-Dec-15
12-Dec-12
12-Dec-15
02-Aug-13
01-Apr-16
02-Aug-13
01-Apr-16
02-Aug-13
01-Apr-16
02-Aug-13
01-Apr-16
13-Feb-14
12-Dec-17
13-Feb-14
12-Dec-17
27-May-14
26-May-17
27-May-14
26-May-17
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.
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
0.400
0.500
0.500
0.519
0.581
0.224
0.248
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000(1)
500,000(1)
500,000(1)
500,000(1)
100,000
100,000
75,000
75,000
13,550,000
2,350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
500,000
500,000
6,250,000
6,250,000
3,750,000
3,750,000
(150,000)
150,000
(150,000)
150,000
150,000
150,000
(300,000)
(300,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375,000
375,000
300,000
300,000
500,000
500,000
500,000
500,000
100,000
100,000
75,000
75,000
-
-
375,000
-
300,000
-
500,000
-
500,000
-
100,000
100,000
-
-
(900,000) 15,000,000
13,175,000
Weighted Average exercise price
0.42
0.44
0.00
0.66
0.43
0.42
2013
29-Mar-11
30-Jun-15
29-Mar-11
30-Jun-15
20-Dec-11
20-Dec-14
20-Dec-11
20-Dec-14
24-Apr-12
24-Apr-15
24-Apr-12
24-Apr-15
09-May-12
09-May-15
09-May-12
09-May-15
10-Aug-12
10-Aug-15
10-Aug-12
10-Aug-15
12-Dec-12
12-Dec-15
12-Dec-12
12-Dec-15
0.225
0.275
0.385
0.430
0.810
0.905
0.535
0.600
0.745
0.835
0.390
0.440
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
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
375,000
375,000
300,000
300,000
300,000
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
(1) These options were granted in accordance with an employment contract on 2 April 2013 that was subject to shareholder approval at the
2013 Annual General Meeting. Shareholder approval was duly received and the options were issued on 12 December 2013.
88 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
26. Share Based Payments (continued)
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.
2014
Fair value of share options and assumptions for the year ended 30 June 2014:
Fair value at grant date of $0.400 and $0.500 options
Number of options
Share price
Exercise price
Employment vesting conditions
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 $0.519 and $0.581 options
Number of options
Share price
Exercise price
Employment vesting conditions
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 $0.224 and $0.248 options
Number of options
Share price
Exercise price
Employment vesting conditions
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)
2013
Fair value of share options and assumptions for the year ended 30 June 2013:
Fair value at grant date of $0.745 and $0.835 options
Number of options
Share price
Exercise price
Employment vesting conditions
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 $0.390 and $0.440 options
Number of options
Share price
Exercise price
Employment vesting conditions
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)
$0.055 - $0.064
2,000,000
$0.185
$0.400 - $0.500
12-24 months
75%
3 years
0%
2.88%
$0.200 - $0.220
200,000
$0.120
$0.519 - $0.581
none
80%
3 years
0%
2.98%
$0.056 - $0.060
150,000
$0.150
$0.224 - $0.248
12-24 months
80%
3 years
0%
2.85%
$0.236 - $0.252
750,000
$0.550
$0.745 - $0.835
12-24 months
80%
3 years
0%
2.73%
$0.147 - $0.156
600,000
$0.320
$0.390 - $0.440
12-24 months
80%
3 years
0%
2.52%
New Standard Energy Ltd 89
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014 26. Share Based Payments (continued)
The fair value of services received in return for share options have been fair valued based upon the fair value of equity securities
granted, measured using a Black Scholes model. The fair value of the options issued has been used, as the fair value of the
services cannot be reliably measured.
Incentive Rights
The LTIP was introduced during the 2013 financial year with effect from 15 September 2012. Under the plan, the Board may offer
Incentive Rights in the form of Performance Rights and Retention Rights. During the 2014 financial year Performance Rights
and Retention Rights were granted to executives as part of their remuneration packages. On the vesting date the performance
rights will be tested against the absolute TSR criteria, and the retention rights tested against tenure criteria. Only those rights that
satisfy the criteria will vest, and the remainder will immediately lapse. Refer to the Remuneration Report in the Director’s Report
for further details on the structure of the LTIP.
The table below outlines movements in Incentive Rights during the 2014 financial year and the balance held as at 30 June 2014.
Type of Incentive
Rights
Grant Date Vesting Date
Performance Rights
28-Jun-13
14-Mar-14
Performance Rights
28-Jun-13
14-Sep-15
Incentive Rights
28-Jun-13
14-Mar-14
Incentive Rights
28-Jun-13
14-Sep-15
Performance Rights
14-Feb-14
14-Sep-16
Performance Rights
14-Feb-14
14-Sep-16
Performance Rights
14-Feb-14
14-Sep-16
Performance Rights
14-Feb-14
14-Sep-16
Incentive Rights
14-Feb-14
14-Sep-16
Incentive Rights
14-Feb-14
14-Sep-16
Fair Value
of each
Incentive
Right
($)
Balance at
start of Year
No.
Granted
during
the year
No.
Vested
during
the Year
No.
0.002
0.014
0.120
0.120
0.080
0.088
0.081
0.076
0.105
0.101
848,000
848,000
212,000
212,000
-
-
-
-
-
-
-
-
-
-
1,800,000
1,000,000
920,000
1,400,000
380,000
500,000
-
-
212,000
-
-
-
-
-
-
-
Lapsed
during
the Year
No.
848,000
-
-
-
-
-
-
-
-
-
Balance at
the end of
the Year
No.
-
848,000
-
212,000
1,800,000
1,000,000
920,000
1,400,000
380,000
500,000
2,120,000
6,000,000
212,000
848,000
7,060,000
The table below outlines movements in Incentive Rights during the 2013 financial year and the balance held as at 30 June 2013.
Type of Incentive
Rights
Grant Date Vesting Date
Performance Rights
28-Jun-13
14-Mar-14
Performance Rights
28-Jun-13
14-Sep-15
Incentive Rights
28-Jun-13
14-Mar-14
Incentive Rights
28-Jun-13
14-Sep-15
Fair Value
of each
Incentive
Right
($)
0.002
0.014
0.120
0.120
Balance at
start of Year
No.
-
-
-
-
-
Granted
during
the year
No.
848,000
848,000
212,000
212,000
2,120,000
Vested
during
the Year
No.
Lapsed
during
the Year
No.
Balance at
the end of
the Year
No.
-
-
-
-
-
-
-
-
-
-
848,000
848,000
212,000
212,000
2,120,000
27. Contingencies
There were not material contingent liabilities or contingent assets for the Group as at 30 June 2014 or as at the date of the report.
90 Annual Report 2014
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
28. Parent Entity Information
The following details information related to the parent entity, New Standard Energy Limited, as at 30 June 2014. 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 2014, 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 liabilities
Total liabilities
Contributed equity
Retained earnings
Reserves
Total equity
Profit/(loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
29. Events Subsequent To Year End
2014
$
2013
$
13,997,699
41,387,111
80,692,126
41,693,444
94,689,825
83,080,555
3,127,659
1,200,486
11,293,431
10,157,955
14,421,090
11,358,441
76,171,014
62,786,779
2,333,100
1,764,621
4,952,429
3,982,906
80,268,735
71,722,114
(2,619,332)
17,516,376
(2,398,729)
(29,918,507)
(5,018,061)
(12,402,131)
New Standard advised on 30 July 2014, that it had received approval for amendments to its five year work program in
PEL570 in the Cooper Basin. New Standard requested a suspension of the work program for PEL570 acreage and a deferral
of the planned seismic due to the uncertainty surrounding the ownership of the Company’s PEL570 joint venture partner. As
part of the revised program, New Standard now has seismic and drilling to commence in Year Two before the new deadline
of March 2016, with only minor expenditure on geological studies in Year One required before then.
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 91
Notes to and Forming Part of the Consolidated Financial StatementsFor the year ended 30 June 2014
Shareholder Information
As at 2 October 2014
The shareholder information set out below was applicable as at 2 October 2014.
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
186
440
406
1,315
381
2,728
Number of shares
% of capital
51,485
1,416,015
3,465,508
53,605,528
327,631,067
386,169,603
0.01%
0.37%
0.90%
13.88%
84.84%
100.00%
(b) There are 542 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
Magnum Hunter Resources Corp
J P Morgan Nominees Aust Ltd
Buru Energy Ltd
Citicorp Nominees PL
National Nominees Ltd
Phoenix Props Int PL
Willis Samuel J C & C M
HSBC Custody Nominees Aust Ltd
Young Alan
TC Inv Pte Ltd
HSBC Custody Nominees Aust Ltd
Harris Richard J & S E
Kensington Cap Mgnt PL
Alybrit Inv PL
Tess Aust PL
Shorai Holdings PL
Harris Richard & Susan
Ice Cold Inv PL
Carossa Holdings PL
Merrill Lynch Aust Nom PL
Total
Holding
65,650,000
21,663,757
13,057,930
11,145,682
10,234,609
8,508,453
7,400,000
7,034,484
6,905,252
6,860,000
6,510,779
5,560,834
4,500,000
4,296,923
4,296,923
4,296,923
3,904,166
3,500,000
3,300,000
2,292,856
%
17.00
5.61
3.38
2.89
2.65
2.20
1.92
1.82
1.79
1.78
1.69
1.44
1.17
1.11
1.11
1.11
1.01
0.91
0.85
0.59
200,919,571
52.03
3.
Substantial Shareholders
As at 2 October 2014, the Company has received substantial notices from the following shareholders:
Name of Shareholder
Magnum Hunter Resources Corp
4. Unquoted Securities
No of shares
65,650,000
% of Issued Capital
at the Time of Notice
17.00
As at 2 October 2014 there were a total of 6 Performance Rights holders holding 5,052,000 Performance Rights, a total of
6 Retention Rights holders holding 863,000 Retention Rights, and a total of 10 Unlisted Option holders holding 15,250,000
Unlisted Options.
5.
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.
92 Annual Report 2014
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