1
2024 Echelon Annual Report
Echelon Resources Limited
Annual
Report
2024
ASX:ECH
Signed on behalf of the Board of Echelon Resources Limited
on 27 August 2024.
Alastair McGregor
Director
Samuel Kellner
Chairman
Contents
Our Values
3
Highlights
5
Our Compass
6
Report from the Chair and CEO
8
Production and Reserves
10
Reserves Compliance Statements
14
Our Operations
16
Sustainability and Community
18
Supporting Tree Planting
20
Sustainability Initiatives
21
Supporting World Class Life Science
22
Supporting Vulnerable Families with their Energy Needs
22
Supporting Science Education
23
Supporting Communities Where We Work
23
Corporate Governance
24
Consolidated Financial Statements
56
Consolidated Statement of Cash Flows
57
Consolidated Statement of Comprehensive Income
59
Consolidated Statement of Financial Position
60
Consolidated Statement of Changes in Equity
61
Notes to the Financial Statements
62
Independent Auditor’s Report
91
Shareholder Information
95
Corporate Directory
97
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2024 Echelon Annual Report
Our Values
Tikanga
The right things
the right way
¬ We operate safely, and do what we say we will do.
¬ We display respect and understanding for other people,
opinions and cultures.
¬ We respect values, rules and laws.
Mahi Tahi
Work together,
collaborate,
cooperate, with
teamwork
¬ We are open, honest and transparent.
¬ We actively pitch in and help.
¬ We have fun and work with passion.
¬ We put big issues on the table so they can be resolved.
Pākiki
Consumed
with curiosity
¬ We seek to better understand ourselves, and the world,
with the goal of constantly improving.
¬ We explore new areas to add value to our work.
¬ We work with initiative and imagination.
Tauhokohoko
Barter, bargain, trade
¬ We continually seek to add value through the application of
skills, brains and hard work.
¬ We develop mutually beneficial relationships with key
stakeholders and partners.
¬ We deliver excellent commercial outcomes.
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2024 Echelon Annual Report
The energy
explorers.
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2024 Echelon Annual Report
Revenue of NZ$92.9m
down 6% from last year
Profit per share of NZ$
1.7 cents
down 3.0 cents per share in FY23
PRODUCTION RESULTS
Production of
1.33 mmboe
same as in FY23 net to Echelon, including Cue share
RESERVES ARE UP
46% at 2P total level
ACTIVITY
A total of 9 wells
have been drilled FY24
this includes 7 wells at Mahato,
1 well at Kupe and 1 well in the Perth Basin
Highlights
FINANCIAL RESULTS
Operating cashflow
up 11% to NZ$36.1m
from $32.5m in FY23
Net profit
after tax NZ$3.9m
down from $10.8m in FY23 due to an
$11.5m impairment of Kupe
Underlying NPAT
excluding Kupe impairment
NZ$15.4 million
up 43% from the previous year
Total dividends of
A$ 4.5 cents per share
Future Activities Timeline
Calendar year 2024
Calendar year 2025
Quarter
Q3
Q4
Q1
Q2
Q3
Q4
Mereenie
2x infill wells
Further infill well(s)
Potential stairway
appraisal
Palm Valley
Potential infill well(s)
Dingo
Potential compression project
Kupe
Possible wireline works
Mahato PSC
Ongoing development drilling
WA L7
L7 drill
(Booth)
Further Exploration well, timing (TBC)
WA EP43
Exploration well, timing (TBC)
Approved activities: Mahato drilling.
Development
Exploration & Appraisal
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2024 Echelon Annual Report
OUR COMPASS
WHO WE ARE
We are an oil and gas company with an Australasian
focus. We are ethical, values based, and nimble.
We are an experienced, Wellington based exploration
and production company, and we are growth ready.
Industry experts trusted by our stakeholders,
providing support and advice.
WHERE WE ARE GOING
Growing
Efficiently deploy our
resources purchasing
additional production that
has development upside
and exploration that fits
our asset base.
Improving
Use our skill sets, optimising
our processes, and
extracting additional value
from our physical assets and
the wider group.
Realising
Support our operating
partners, Cue Energy
Resources (Cue) subsidary,
and stakeholders, to identify
mutual value add.
HOW WE WILL GET THERE
We use our capital resources, technical capability,
relationships, values, shareholder support and
flexibility to create opportunities. We execute reliably
and in a way that makes us proud, so that high quality
people want to work with us.
We see natural gas assets
providing security of supply to an
energy‑constrained world as it undergoes
a decades-long energy transformation
We will pursue quality
investment opportunities
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2024 Echelon Annual Report
New Zealand
production through
Kupe and Maari
Indonesia
production through
our Cue subsidiary
Australia production
and development in the
NT Amadeus Basin and
exploration in the WA
Perth Basin
Ambition to acquire
opportunities with
support from our
global-scale parent
Natural gas assets offer stability in supplying
energy to a world facing energy constraints
amid a prolonged transformation
Strength today and growth tomorrow
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2024 Echelon Annual Report
Dear shareholder,
Your company is moving into the future with growing
revenues from our producing assets, promising prospects
for rapid growth in the future, and a refreshed vision.
Our vision is represented in our new identity: Echelon.
Today it represents for us, a crucial rung on the transition
ladder alongside our own evolution and progress up
a ladder of growth.
We have moved our focus increasingly to Australia
since we purchased our first stake in the Amadeus Basin
assets in 2021.
During the year, we acquired another 25% of the
Mereenie gas field in the Northern Territory. The
transaction doubled our Mereenie 2P reserves and
increased the Company‘s total 2P reserves by 46%.
Mereenie is more than a rung in our own evolution as a
company. It is a rung on the transition ladder because it
powers processes that enable renewables. Gas prices in
Australia’s East Coast markets are strong and we have
secured gas sales agreements directly into that market.
We were able to acquire more of it because we signed a
new agreement, alongside other Mereenie Joint Venture
(JV) partners, to sell 4.8 petajoules (PJ) of gas to Arafura
Rare Earths. The five-year agreement delivers our gas
to mine minerals that are critical for EV batteries and
wind turbines.
Mereenie is making a rich contribution. Its link from our
gas to the renewables transition gives some colour to
Echelon's vision for our role in the energy future.
While our strategy emphasises development in producing
assets, our management team is constantly on the look
out for excellent exploration opportunities.
They found one in the Perth Basin, and late in the
financial year we drilled the Booth-1 well, which was
a disappointing result. We have been able to sustain
profitability, and cashflows, as well as paying a dividend,
despite poor outcomes with wells in New Zealand and
the Perth Basin, Western Australia. This demonstrates
the resilience of a diversified asset portfolio. Producing
strong revenues and earnings, while continuing to invest
in attractive opportunities, makes for a great combination
of growth and returns.
Projects such as Perth Basin and Mereenie have
increased our focus in Australia. It made sense to commit
to our ASX listing and de-list from the New Zealand
bourse. Focusing on a single market has advantages.
The ASX offers a larger capital and investor base and an
investment community comfortable with our resources-
based sector.
Our decision was further reinforced by disappointing
results from KS-9, a development well at Kupe. The effect
of the KS-9 results on the future of the Kupe field are
still under review.
However, we have been actively studying a Kupe
wind project. While we’re not a wind company, Kupe’s
coastal position is a great location for wind generation
and there’s a need for electricity generation on site.
REPORT FROM THE CHAIR AND CEO
Into the Future
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2024 Echelon Annual Report
The project represents another example of Echelon’s
flexibility in responding to the energy transition
to create value.
The Company’s financial results for the year rewarded
shareholders’ patience. Our production returned
$92.9m of revenue in the year, down $5.9m from
$98.9m last year.
Positive cashflow generation and a strong balance
sheet position allow the company to return profits to
shareholders. In the year the Company has returned
AUD 4.5 cents per share to shareholders.
Looking ahead, we have adopted a dividend policy.
The Board has announced ongoing support for returning
a portion of future cashflow to shareholders every half
year, where it makes sense based on the Company’s
obligations, investment and debt facility requirements.
Pleasing financial results are the culmination of our
activities. We choose what to do based on our values and
vision for the company. Echelon will seek opportunities to
make more of the assets we have and acquire new assets
that add value. We are aiming to deliver robust returns
for our shareholders by leveraging our relationships and
skills, while maintaining our ethical standards.
We are on a ladder that extends a long way into the future.
On behalf of the Board, we would like to acknowledge
the work of our Wellington-based team, whose efforts
are creating value for you. And we would like to thank
shareholders for another year of support.
We’re looking forward to continuing to repay your
confidence in the company as Echelon enters its
exciting next phase.
Andrew Jefferies
Chief Executive
Samuel Kellner
Chair
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2024 Echelon Annual Report
Actual and Forecast 2P Production
millions of barrels of oil equivalent (mmboe)
Production and
Reserves to 2024
Maari
Kupe
Mereenie
Palm Valley
Dingo
Sampang
Mahato
FY29
FY30
FY31
FY32
FY33
FY34
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY19
FY20
FY21
2.0
Actual
Forecast
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
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2024 Echelon Annual Report
Echelon's interest in Mahato, Maari and Sampang is held through Cue of which Echelon has a 50.03% interest. The Mahato field is currently under development.
This graph shows Cue's full interest, some rounding is present. Production from the Amadeus assets is from 1 October 2022 to 30 June 2024.
Production
Echelon share (net)
OIL
GAS
LPG
Maari
Kupe
Mereenie
Palm Valley
Dingo
Sampang
Mahato
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2018
2019
2020
2021
2022
2023
2024
terajoules
300,000
250,000
200,000
150,000
100,000
50,000
0
2018
2019
2020
2021
2022
2023
2024
barrels
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
tonnes
2018
2019
2020
2021
2022
2023
2024
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2024 Echelon Annual Report
AT 1 JULY 2024
Reserves
PROVED (1P) RESERVES AT 1 JULY 2024
DEVELOPED
UNDEVELOPED
TOTAL
Geographic area
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
NEW ZEALAND
Maari*
0.0
0.0
0.2
0.2
0.0
0.0
0.2
0.2
0.0
0.0
0.4
0.4
Kupe
3.4
15.1
0.1
0.8
0.0
0.0
0.0
0.0
3.4
15.1
0.1
0.8
AMADEUS BASIN, AUSTRALIA
Mereenie**
47.8
0.0
0.5
8.3
7.0
0.0
0.2
1.3
54.8
0.0
0.7
9.6
Palm Valley**
10.6
0.0
0.0
1.7
0.0
0.0
0.0
0.0
10.6
0.0
0.0
1.7
Dingo**
8.5
0.0
0.0
1.4
10.1
0.0
0.0
1.6
18.5
0.0
0.0
3.0
INDONESIA
Sampang PSC*
2.0
0.0
0.0
0.3
0.4
0.0
0.0
0.1
2.3
0.0
0.0
0.4
Mahato*
0.0
0.0
0.8
0.8
0.0
0.0
0.1
0.1
0.0
0.0
1.0
1.0
TOTAL
72.2
15.1
1.6
13.5
17.4
0.0
0.4
3.3
89.6
15.1
2.1
16.9
*At 100% of Cue Equity in these Assets **Echelon plus Cue Equity
As at evaluation date. Some rounding. Includes 100 per cent of Cue’s interests. Echelon has a 50.03% interest in Cue. See statement Page 14.
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2024 Echelon Annual Report
PROVED (2P) RESERVES AT 1 JULY 2024
DEVELOPED
UNDEVELOPED
TOTAL
Geographic area
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
Gas
(PJ)
LPG
(kt)
Oil &
Condensate
(mmb)
Total
(mmboe)
NEW ZEALAND
Maari*
0.0
0.0
0.3
0.3
0.0
0.0
0.2
0.2
0.0
0.0
0.5
0.5
Kupe
3.8
16.5
0.1
0.8
0.0
0.0
0.0
0.0
3.8
16.5
0.1
0.8
AMADEUS BASIN, AUSTRALIA
Mereenie**
66.4
0.0
0.8
11.6
8.0
0.0
0.0
1.3
74.5
0.0
0.8
12.9
Palm Valley**
11.7
0.0
0.0
1.9
0.0
0.0
0.0
0.0
11.7
0.0
0.0
1.9
Dingo**
10.4
0.0
0.0
1.7
10.6
0.0
0.0
1.7
21.1
0.0
0.0
3.4
INDONESIA
Sampang PSC*
2.4
0.0
0.0
0.4
2.5
0.0
0.0
0.4
4.9
0.0
0.0
0.8
Mahato*
0.0
0.0
1.3
1.3
0.0
0.0
0.2
0.2
0.0
0.0
1.5
1.5
TOTAL
94.7
16.5
2.4
18.0
21.2
0.0
0.4
3.9 115.9
16.5
2.8
21.9
REMAINING PROVEN & PROBABLE (2P) OIL & GAS RESERVES CHANGE (MMBOE)
Geographic area
EOFY23
Acquisition
FY24 Production
EOFY23 Adjusted
In Year Revisions
EOFY24
NEW ZEALAND
Maari*
0.5
0.1
0.4
0.0
0.5
Kupe
1.5
0.1
1.4
-0.5
0.8
AMADEUS BASIN, AUSTRALIA
Mereenie**
6.7
6.5
0.4
6.3
0.1
12.9
Palm Valley**
2.1
0.3
1.8
0.1
1.9
Dingo**
3.3
0.1
3.2
0.3
3.4
INDONESIA
Sampang PSC*
0.8
0.2
0.6
0.2
0.8
Mahato*
1.4
0.2
1.2
0.3
1.5
TOTAL
16.3
6.5
1.3
14.9
0.4
21.9
*At 100% of Cue Equity in these Assets **Echelon plus Cue Equity
As at evaluation date. Some rounding. Includes 100 per cent of Cue’s interests. Echelon has a 50.03% interest in Cue. See statement Page 14.
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2024 Echelon Annual Report
Oil and gas reserves, are
reported as at 1 July 2024
and follow the SPE PRMS
Guidelines (2018).
This resources statement is approved by, based on,
and fairly represents information and supporting
documentation prepared by Echelon's General Manager
Assets & Engineering, Daniel Leeman. Daniel is a
Chartered Engineer with Engineering New Zealand and
holds Masters’ degrees in Petroleum and Mechanical
Engineering as well as a Diploma in Business
Management and has over 15 years of experience. Daniel
is also an active professional member of the Society of
Petroleum Engineers. Echelon reviews reserves holdings
twice a year by reviewing data supplied from the field
operator and comparing assessments with this and
other information supplied at scheduled Operating and
Technical Committee Meetings.
Daniel is currently an employee of Echelon whom, at the
time of this report, are a related party to Cue. Daniel has
been retained under a services contract by Cue Energy
Resources Ltd (Cue) to prepare an independent report
on the current status of the entity’s reserves. As at 1 July
2024, Echelon holds a 50.03% interest in Cue.
In the Amadeus basin, Echelon hold 42.5% equity and
Cue currently holds 7.5% equity in the Mereenie field and
35% and 15% equity respectively in each of the Dingo and
Palm Valley fields. The operator here is Central Petroleum.
Kupe technical forecasts are determined by deterministic
reservoir simulation modelling conducted by the operator
Beach Energy, the operator at Kupe where Echelon
hold 4% equity.
Reserves
Compliance
Statements
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2024 Echelon Annual Report
Cue currently holds an equity position of 5%, 11.25%
and 15% in the Maari (operated by OMV), Mahato and
Sampang assets respectively, though Production Sharing
Contract (PSC) adjustments at the Mahato (operated
by Texcal) and Sampang (operated by Medco) fields
affect the net equity differently across the various
reserve categories.
Estimates are based on all available production data,
the results of well intervention campaigns, seismic
data, analytical and numerical analysis methods, sets of
deterministic reservoir simulation models provided by
the field operators (Beach Energy, OMV, Texcal, Medco
and Central Petroleum), and analytical and numerical
analyses. Forecasts are based on deterministic methods.
Net reserves are net of equity portion, royalties, taxes
and fuel and flare (as applicable).
Developed reserves are expected to be recoverable from
existing wells and facilities. Undeveloped reserves will
be recovered through future investments (e.g. through
installation of compression, new wells into different
but known reservoirs, or infill wells that will increase
recovery). Total reserves are the sum of developed and
undeveloped reserves at a given level of certainty.
For undeveloped reserves, the following project maturity
sub-classes are assumed- at Mahato PSC, Undeveloped-
Approved for Development, at Sampang PSC- Justified
for Development, at Maari- Justified for Development, at
Mereenie and Dingo- Justified for Development.
At all fields, economic modelling has been conducted
to determine the economically recoverable quantities.
For the conversion to equivalent units, standard industry
factors have been used of 6Bcf to 1mmboe, 1Bcf to
1.05PJ, 1 tonne of LPG to 8.15 boe and 1TJ of gas to
163.4 boe. All reserves and resources reported refer to
hydrocarbon volumes post-processing and immediately
prior to point of sale. The volumes refer to standard
conditions, defined as 14.7psia and 60°F.
The extraction methods are as follows; at Kupe gas is
produced to the processing plant and onwards sale
to domestic market. LPG is trucked from site to local
markets, condensate is trucked from site and sold
internationally. At Maari, oil is produced to the FPSO
Raroa and directly exported to international oil markets.
Mahato, it is via EPF facilities which includes an oil and
water separation system, with the oil then piped 6km
to the CPI operated Petapahan Gathering Station.
At Sampang, gas is gathered from the Wortel and Oyong
felds and piped to shore where it is sold into the Grati
power station. Mereenie and Palm Valley gas fields, gas
is gathered from the wells and ultimately collated into
the Amadeus Gas Pipeline where sales vary to different
customers within the region. Further afield at Dingo,
gas is sold into Alice Springs and the Owen Springs
power plant.
Tables combining reserves have been done arithmetically
and some differences may be present due to rounding.
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2024 Echelon Annual Report
Echelon holds interests in
various regions, including:
Australia
Operations in the Amadeus Basin in the Northern
Territory (exploration and production) and the
Perth Basin in Western Australia (exploration).
Indonesia
Production activities in Sumatra and East Java,
through our 50.03% subsidiary, Cue.
New Zealand
Production and exploration activities within the
South Taranaki Basin.
Those operations adhere to the environmental
approval procedures established by the relevant
state and national authorities.
Echelon is a company domiciled in New Zealand,
registered under the Companies Act 1993 and
listed on the Australian Stock Exchange (ASX) .
We have adapted to climate related disclosure
reporting, consistent with standards set,
or emerging, in New Zealand and Australia.
Please see our 2024 Sustainability Report
for more information.
Our supply chain
The oil and gas supply chain covers a broad
spectrum of activities, from the exploration
and production of gas and crude oil to the
manufacturing, processing, of products, through
our JV partners, we are part of this supply chain
that connects companies and people throughout
the world.
Australia
Amadeus Basin, Northern Territory
Perth Basin, Western Australia
Amadeus Basin
MEREENIE OL4 & OL5
Echelon 42.5%
Cue Energy 7.5%*
Central Petroleum 25%
Horizon 25%
PALM VALLEY OL3 & DINGO L7
Echelon 35%
Cue Energy 15%*
Central Petroleum 50%
L7 & EP437
Echelon 25%
Strike Energy 25%
Triangle Energy 50%
Perth Basin
Our
Operations
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2024 Echelon Annual Report
Indonesia
New Zealand
KUPE
Echelon 4%
Genesis 46%
Beach Energy 50%
MAARI
Cue Energy 5%*
Horizon Oil 26%
OMV 6%
MAHATO
Cue Energy 11.25%*#
Texcal 88.75%
East Java
SAMPANG
Cue Energy 15%*
Medco Energi 45%
Singapore Petroleum Corporation 40%
Sumatra
MADURA ISLAND
EAST JAVA
Oyong
Jeruk
Wortel
Sampang PSC
Mahato PSC
Taranaki
Kupe
Maari
NEW PLYMOUTH
*Echelon has a 50.03% interest in Cue. Cue's full interest is shown.
# Subject to government approval
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2024 Echelon Annual Report
SUSTAINABILITY AND COMMUNITY
TCFD RISK DISCLOSURE
Taskforce on Climate-Related
Financial Disclosure (TCFD) risks,
and the framework for managing
climate risks, are comprehensively
reported in the Sustainability Report.
TCFD reporting is also maintained on
our Company website.
The Company publishes a separate
sustainability report. It also maintains a
sustainability section on its website at
echelonresources.com/sustainability
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2024 Echelon Annual Report
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2024 Echelon Annual Report
Supporting
tree planting
513 trees planted in 2024
555 in 2023
545 in 2022
Echelon is proud to contribute 642 trees through Trees
that Count to The Halo Project, administered by the
Landscape Connections Trust (LCT). This umbrella
project encompasses various community-driven
conservation and environmentally focused initiatives in
Ōtepoti/Dunedin, such as predator control, freshwater
enhancement, forest habitat restoration, and seabird
habitat restoration. Covering an area of roughly 124,000
hectares from North Dunedin to the Waihemo Shag River,
the Source to Sea team prioritises fencing and planting
based on data-driven hotspots.
Their seven guiding principles focus on connecting
habitats, restoring entire catchments, emphasising
publicly visible sites for education, aligning with
Māori values, rewarding previous restoration efforts,
encouraging formal site protection, and promoting
wetlands and biodiversity.
The project works with private and public landowners to
enhance the quantity, quality, and connectivity of forest
habitats, aiming to integrate indigenous biodiversity into
agricultural and residential landscapes.
Town Belt Kaitaki
Our support of planting 678 trees to the Town Belt
Kaitiaki (TBK), a student-led education program for
Dunedin schools and early childhood centers. This
initiative helps young people develop environmental
knowledge, stewardship values (kaitiakitanga), leadership
skills, and overall well-being (hauora). TBK encourages
teachers and students to use the Dunedin Town Belt as
a dynamic, real-life setting for place-based learning,
serving as an outdoor classroom and nature play space.
Through this program, students learn to appreciate and
understand the Town Belt's significance and mauri (life
force), gaining the skills to sustain and care for our natural
environment. The program's development, coordination,
and leadership are facilitated by three key groups:
The Student Leadership Team, comprising student
representatives from participating schools, who serve
as ambassadors, share a vision for the Town Belt, and
lead by example.
The Strategic Leadership Group, which includes
representatives from the Dunedin City Council,
Department of Conservation, Te Rūnaka o Ōtākou,
Kāti Huirapa Rūnaka ki Puketeraki, Dunedin Amenities
Society, Otago Natural History Trust, University of
Otago, Chamber of Commerce, and Toitū Otago
Settlers Museum.
The Education Coordinator, who supports, networks, and
connects all partnering groups and schools.
Through this collective effort, TBK empowers students
to make a positive impact on their local environment and
community as part of their school curriculum.
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2024 Echelon Annual Report
Sustainability
Initiatives
Te Tapu o Tāne
We are thrilled to have contribute 555 trees to Te Tapu
o Tāne, an inspiring new native tree and plant nursery
venture with a charitable purpose. Launched in the
heart of Murihiku Southland—Waihopai / Invercargill,
New Zealand, this initiative is founded by mana whenua,
the four Papatipu Rūnanga of Murihiku—Waihopai,
Awarua, Hokonui, and Ōraka-Aparima. Te Tapu o
Tāne embodies the spirit of its name, which means
‘The Sacredness of Tāne and his tamariki' (the forest),
aiming to restore the mauri of our land and waterways
through high-quality native plantings. We are proud to
support this meaningful project and its commitment to
environmental stewardship and community growth.
Paradise Trust
We have contributed 100 trees to the Paradise Trust
Initiative, recognising the vital role Kowhai trees play
in the Otago landscape. As a unique species native to
New Zealand and in steady decline, planting Kowhai
trees is crucial for both enhancing the landscape and
supporting native birdlife. The Trust offers the community
an accessible wilderness experience, welcoming guests
and visitors year-round to appreciate biodiversity values.
Inner Most Garden
As part of our sustainability initiatives, Echelon is excited
to announce the establishment of a vegetable patch
in Wellington. This initiative reflects our commitment
to sustainability and environmental stewardship.
The vegetable patch will not only provide fresh produce
for our employees but also serve as a hands-on
opportunity to promote environmental awareness and
sustainable practices within our team and simultaneously
promote wellbeing for our people. By engaging in
this project, we aim to reduce our carbon footprint,
encourage teamwork, and foster a connection with
nature right in our workplace.
21
2024 Echelon Annual Report
Supporting world class
life science
The Salk Institute for Biological Studies
Echelon financially supports the Salk Institute, home
to scientists who delve into research areas, from aging,
cancer and immunology to diabetes, brain science and
plant biology.
The Salk Institute's renowned and award-winning
scientists explore the very foundations of life, seeking
new understandings in neuroscience, genetics,
immunology, plant biology and more.
Be it cancer or Alzheimer's, aging or diabetes, Salk is
where cures begin.
Our support goes specifically to the Harnessing Plants
Initiative to mitigate climate change by developing crop
and wetland plants that will store more carbon, longer, to
reduce atmospheric CO2.
Supporting vulnerable
families with their
energy needs
Dunedin Curtain Bank
Dunedin is notorious for cold homes that make children
sick. The cost of energy bills and insulation can create
hardship for vulnerable families.
Echelon proudly partners with Dunedin Curtain Bank to
up-cycle unwanted and unused curtains, line them, and
distribute them to needy families.
Curtains make a big difference to the warmth of a home.
A third of all heat loss in an uninsulated home occurs
through windows. Even double-glazed windows let out
more heat than uninsulated walls.
We purchased curtains for 140 needy households in
Dunedin. Our curtain purchases:
¬ Saved around 8.4 tCO2 from being emitted.
¬ Each household saved an average $170 a year.
¬ Saved around $23,000 for the houses we help through
the Dunedin Curtain Bank.
22
2024 Echelon Annual Report
Supporting
science education
Supporting communities
where we work
EPro8 Challenge
Echelon supports EPro8 Challenge, an inter-school
Science and Engineering Competition. Every year over
22,000 students from throughout New Zealand take part.
Students participate in a series of events: firstly within
their school and then inter-school. These events are
designed to promote science and engineering.
We want to make a contribution to the community where
our head office is located, so our support went to help
students from Wellington Central and Porirua.
Otago Science Fair
Each year Echelon sponsors a number of awards at the
Otago Science Fair to help students understand more
about earth, science, energy efficiency, Mātuaranga
Māori, marine science and much more.
Amadeus Basin
The JV in the Amadeus Basin assets works closely with
the community. It aims to provide employment and
business opportunities to local communities.
Over AU$4 million was spent with Northern Territory local
contractors and businesses in the reporting period.
In the Northern Territory, over half of the operator’s staff
live locally and a quarter are indigenous.
Echelon supports the operator’s open engagement
with the Traditional Owners of our Northern Territory
joint operations located on or near Indigenous lands,
providing employment and training opportunities.
The JV operator works closely with the Central Land
Council and Aboriginal Areas Protection Authority
to ensure operations do not disturb areas of cultural
heritage significance.
Our Joint Ventures
Through our joint ventures we also support community
engagement projects in respect of Kupe and Maari in
New Zealand and via Cue in Indonesia.
23
2024 Echelon Annual Report
Corporate
Governance
Echelon Resources Limited is a New Zealand incorporated
and domiciled limited liability company registered under
the New Zealand Companies Act 1993.
The Company comprises of both Echelon and our
subsidary Cue. The Company is listed and its shares
quoted on the official list of the Australian Securities
Exchange (ASX) - the Company’s code is “ECH”. From a
regulatory perspective this means that, while the ASX
Listing Rules apply to the Company, certain provisions
of the Australian Corporations Act 2001 (Cth) do not.
The Company is not subject to chapters 6, 6A, 6B, and
6C of the Cth dealing with the acquisition of shares
(including substantial holdings and takeovers). The
Companies Act 1993 (NZ) applies to the Company, as
do certain provisions of the Financial Markets Conduct
Act 2013 (NZ) (including in relation to financial reporting,
but not including provisions relating to substantial
shareholdings). Key limitations on the acquisition of
shares in the Company are imposed by the following
New Zealand legislation: Commerce Act 1986, Overseas
Investment Act 2005, and Takeovers Act 1993, together
with various regulations and codes promulgated under
such legislation.
This statement sets out the main corporate governance
practices adopted by the Company.
CORPORATE GOVERNANCE BEST PRACTICE CODES
The Company reviews and assesses governance
processes, policies, and its compliance with corporate
governance best practice at least annually.
This includes assessing compliance with the
ASX Listing Rules, the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations (4th Edition) 2019 (ASX Principles
and Recommendations).
Under Listing Rule 4.10.3, ASX listed entities are
required to benchmark corporate governance practices
against the ASX Principles and Recommendations and,
where they do not conform, to disclose that fact and
the reasons why.
This section of the report is structured to
report performance against the ASX Principles
and Recommendations.
This Corporate Governance Statement is current to, and
was approved by the Board on, 27 August 2024.
24
2024 Echelon Annual Report
Samuel Kellner
CHAIRMAN
Dr Rosalind Archer
INDEPENDENT DIRECTOR
Samuel Kellner has held a variety of senior executive
positions with the Ofer Global Group since joining
the Group in 1980. He has been deeply involved in
various Ofer Global Group’s business lines, with a
particular emphasis on offshore oil and gas, shipping
and real estate, and has advised the Ofer Global Group
companies on investments in a variety of investment
managers, hedge funds and private equity funds.
Most recently, Mr Kellner served as president of Global
Holdings Management Group (US) Inc, where he led
North American real estate acquisition, development
and financing activities. Mr Kellner serves as a director
of O.G. Energy, O.G. Oil & Gas and Cue. He is also an
executive director of the main holding companies for
the Zodiac shipping group and Omni Offshore Terminals,
a leading provider of Floating Production, Storage and
Offloading (FSO and FPSO) solutions to the offshore oil
and gas industry. As a member of the O.G. Energy Senior
Management Committee, he helps drive the strategy for
the Ofer Global Group’s energy activities.
Mr Kellner graduated with a BA degree from
Hebrew University in Jerusalem. He has an MBA from
the University of Toronto, and taught at the University
of Toronto while working toward a PhD in Applied
Economics. Mr Kellner was appointed in December 2017.
He is the Chairman of the Board of Directors
and a member of the Nomination and
Remuneration Committee.
Dr Rosalind Archer joined the Board of Echelon in
November 2014. Dr Archer is Dean (Academic) - Griffith
Sciences Group, Griffith University in Queensland.
Dr Archer is a former President of Engineering
New Zealand. She runs a consulting practice as a
reservoir engineer with clients locally and internationally.
She regularly speaks on reservoir engineering topics at
international conferences.
Dr Archer graduated with a BE from University of
Auckland. She holds a PhD in Petroleum Engineering, and
PhD minor in Geological and Environmental Studies from
Stanford University.
Board Composition
25
2024 Echelon Annual Report
Andrew Jefferies
MANAGING DIRECTOR
Alastair McGregor
DIRECTOR
Rod Ritchie
INDEPENDENT DIRECTOR
Mr Jefferies joined Echelon in
2013. He started his career with
Shell in Australia and has worked in
oil and gas in Australia, Germany,
the United Kingdom, Thailand
and Holland Mr Jefferies is also
a graduate of the Australian
Institute of Company Directors
(GAICD), and a Certified Petroleum
Engineer with the Society of
Petroleum Engineers.
After graduating with a BE Hons
(Mechanical) from the University
of Sydney, Mr Jefferies earned an
MBA in technology management
from Deakin University in
Australia, and an MSc in petroleum
engineering from Heriot-Watt
University in Scotland.
Alastair McGregor has been
actively involved in the oil and gas
sector since 2003. He is currently
chief executive of O.G. Energy,
which holds the Ofer Global Group’s
broader energy interests, and O.G.
Oil & Gas Limited, a company that
holds directly or indirectly oil &
gas exploration and production
interests onshore and offshore.
He leads the O.G. Energy Senior
Management Committee, driving
the strategy for the Ofer Global
Group’s energy activities.
Mr McGregor is also the Chair
of Cue. In addition, he is Chief
Executive of Omni Offshore
Terminals Limited, a leading
integrated provider of FPSO &
FSO solutions to the offshore oil
& gas industry. Omni’s operations
span the globe from New Zealand,
Australia, South East Asia, Middle
East and South America. Prior to
entering the oil and gas industry,
Mr McGregor spent twelve years
as a banker with Citigroup and
Salomon Smith Barney.
Mr McGregor holds a BEng (hons)
in Aeronautical Engineering and
an MSc in Transport Management,
Economics and Finance.
Mr McGregor joined the Board
in October 2017.
Rod Ritchie joined the Board
in 2013. He began his career
as a petroleum engineer with
Schlumberger for 28 Years and
then joined OMV, where he worked
for a further twelve years. Mr
Ritchie has more than 40 years of
global experience in leadership
roles and as a Health, Safety,
Environmental and Security
(HSSE) executive in the oil and
gas industry, including serving as
corporate Senior Vice President of
HSSE and Sustainability at OMV in
Vienna, Austria.
Mr Ritchie has worked closely with
the International Association of Oil
and Gas Producers (IOGP) to create
industry best practice standards
for the oil and gas sector. He is
an active leadership and cultural
change consultant, and an author
on the subject of safety leadership
and several Society of Petroleum
Engineers papers on the subject of
HSSE and safety leadership.
26
2024 Echelon Annual Report
Male
Female
Marco Argentieri
DIRECTOR
Marco Argentieri is Senior Vice
President and General Counsel for
O.G. Energy, and a member of the
Board of Directors of both O.G.
Energy and O.G. Oil & Gas.
As a member of the O.G. Energy
Senior Management Committee,
he helps drive the strategy for
the Ofer Global Group’s energy
activities. Mr Argentieri serves
as the chief legal counsel for the
O.G. Energy Group, where he
advises on financing activities,
acquisitions, and other commercial
and corporate matters. Mr
Argentieri has worked for the Ofer
Global Group since 2006, where
he previously served as chief legal
counsel responsible for Ofer Global
Group finance activities, with a
particular focus on the Group’s
offshore oil services and shipping
businesses. Prior to joining Ofer
Global, Mr Argentieri was an
attorney at the New York offices
of Latham & Watkins LLP and
Skadden, Arps, Slate, Meagher &
Flom LLP.
He holds a B.A. from the University
of Rochester, a J.D. from New
York University, and an MBA from
Columbia University. Mr Argentieri
joined the Board in July 2018.
Composition of the Board
The number of directors is specified in the constitution as
a minimum of three and up to a maximum of seven.
With our ASX listing, two directors must be ordinarily
resident in Australia. Dr Archer and Mr Ritchie are
ordinarily resident in Australia.
The NZ Companies Act requires one director to live in
New Zealand (or in an enforcement country and be a
director of a company there e.g., Australia). Mr Jefferies
lives in New Zealand.
The Company’s constitution requires directors to retire
at the third Annual Meeting since their last appointment,
or every three years (whichever is longer). If eligible, each
retiring director may offer themselves for re-election.
Directors holding office during 1 July 2023 to
30 June 2024.
Directors
Date elected
Year first
appointed
Dr Rosalind Archer
3 November 2021
2014
Marco Argentieri
3 November 2021
2018
Andrew Jefferies
3 November 2021
2017
Samuel Kellner
3 November 2021
2017
Alastair McGregor
12 December 2023
2017
Rod Ritchie
2 November 2022
2013
Board Gender Composition
2023
2024
5
1
1
5
27
2024 Echelon Annual Report
MR S KELLNER
O.G. Oil & Gas Ltd
Director
O.G. Energy Holdings Ltd
Director
Omni Holdings Ltd
Director
Cue Energy Resources Ltd
Director
MR M ARGENTIERI
O.G. Energy Holdings Ltd
Director
O.G. Oil & Gas Ltd
Director
OGOG (Kohatukai) Ltd
Director
OGOG (Otway) Holdings
Pty Ltd
Director
OGOG (Otway) Pty Ltd
Director
OGOG (1) Limited
Director
OGOG (2) Limited
Director
OGOG (K2) Inc
Vice-President/Treasurer/
Secretary/Director
OGOG (GOM1) Inc
Vice-President/Treasurer/
Secretary/Director
GOM 1 Holdings Inc*
Vice President/Treasurer/
Secretary/Director
OGOG (GOM Management)
Inc.
Vice-President/Treasurer/
Secretary/Director
OGOG (Management) Limited
Director
OGOG (Warrior) Inc
Director
Cue Energy Resources Ltd
Director
OGOG (K2) Squared LLC*
Director
OGOG (Buckskin) LLC*
Director
OGOG (Castile) LLC*
Director
OGOG (Leon) LLC*
Director
DR R ARCHER
Capricorn Solutions Ltd
Director
Contact Energy
Shareholder
Infratil
Shareholder
NZ Windfarms
Shareholder
Griffith University
Dean Academic -
Griffiths Sciences Group
Whitebark Energy*
Director
Directors Interests Policy
Directors are required to recognise that the possibility
of conflict of interest exists, and are expected to declare
potential conflict of interest situations to the Board and
manage conflicts of interest in accordance with the
Directors Interests Policy, the Code of Business Conduct
and Ethics, and the Company’s Constitution.
The Company maintains an interests register in
compliance with the Companies Act 1993, which
records particulars of certain transactions and matters
involving directors.
The Directors’ Interests Policy is available in the corporate governance
section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Directors-Interest-Policy.pdf
Directors' Securities Interests
The interests of Directors in securities of the Company
at 30 June 2024 were:
Directors
Direct Interest
Indirect Interest
Mr A Jefferies
50,000
-
2,330,102
share options
-
Directors’ Interests Register
Directors' interests recorded in the Interests Register of
the Company as at 30 June 2024 are detailed below.
Notices given or adjusted during the financial year ended
30 June 2024 are marked with an asterisk (*).
Each such Director will be regarded as interested
in all transactions between the Company and the
disclosed entity.
28
2024 Echelon Annual Report
MR A JEFFERIES
88 Energy Ltd
Shareholder
Carnarvon Petroleum Limited
Shareholder
Central Petroleum
Shareholder
CGX Energy
Shareholder
Cue (Ashmore Cartier) Pty Ltd
Director
Cue Energy Resources Ltd
Director & Shareholder
Cue Exploration Pty Ltd
Director
Cue Mahakam Hilir Pty Ltd
Director
Cue Mahato Pty Ltd
Director
Cue Sampang Pty Ltd
Director
Cue Taranaki Pty Ltd
Director
Global Energy Ventures
Shareholder*
Hartshead Resources
Shareholder*
Melbana Energy
Shareholder*
Pancontinental Resources
Shareholder
Tuatara Energy Limited
Director
Warrego
Shareholder
MR R RITCHIE
Cue Energy Resources Ltd
Director
SPARC NZ consulting
Director
Sparc (Aust) Pty Ltd
Shareholder
SacGasCo
Shareholder
Provaris Energy*
Shareholder
MR A McGREGOR
Cue Energy Resources Ltd
Director
Cue Kalimantan Pte Ltd
Director
Omni Holdings Limited
Director
Omni Offshore Terminals Pte
Ltd
Director
Gading Megah Sdn Bhd
Director
Omni Offshore Terminals
(Operations) (Thailand) Co Ltd
Director
Omni Offshore Terminals
(Brazil) B.V.
Director*
Omni Offshore Terminals (Lay-
Up) B.V.
Director*
Aurora FSO Ltd
Director
Manora FSO Ltd
Director
O.G. Oil & Gas (Singapore)
Pte Ltd
Director
O.G. Oil & Gas Ltd
Director
O.G. Energy Holdings Ltd
Director
OGOG (Kohatukai) Ltd
Director
OGOG (Otway) Pty Ltd
Director
OGOG (Otway) Holdings Pty
Ltd
Director
OGOG (1) Limited
Director
OGOG (2) Limited
Director
O.G. Oil & Gas (Oceania) Pte.
Ltd
Director
OGOG (K2) Inc.
President/Director
OGOG (GOM Management)
Inc.
President/Director
OGOG (GOM NZ) Limited
Director
OGOG (Management) Limited
President/Director
OGOG (Warrior) Inc.
Director
OGOG (K2) Squared LLC
Director*
OGOG (Buckskin) LLC
Director*
OGOG (Castile) LLC
Director*
OGOG (Leon) LLC
Director*
GOM 1 Holdings Inc
Director*
LANCAR DAMAI SDN. BHD.
Director*
OMNI OFFSHORE TERMINALS
MALAYSIA SDN. BHD.
Director*
29
2024 Echelon Annual Report
Management
Andrew Jefferies
CHIEF EXECUTIVE
Alan Clare
GENERAL MANAGER
EXPLORATION AND APPRAISAL
Daniel Leeman
GENERAL MANAGER ASSETS
AND ENGINEERING
See biographical note above.
Alan joined Echelon in March 2023.
He started his career with Esso
Australia in 1989 after graduating
from Macquarie University with
a BSc Hons (Earth Science) and
later an MSc from University of
NSW. Alan has worked in the
energy sector for over 33 years in
Australia, UK, USA, China, Egypt
and New Zealand.
He has held both technical
and managerial roles with
ConocoPhillips, Apache and OMV.
Daniel was appointed General
Manager Assets and Engineering
in 2021 after joining Echelon in
2014. He has over 15 years of
experience within the petroleum
industry. Daniel began his career
at Talisman Energy (UK) working
within the Rotational Graduate
Engineering Programme where he
specialised as a Drilling Engineer.
He later worked at Senergy (UK)
as a Reservoir Engineer, then
Conoco Phillips (UK), where he
was a Senior Reservoir Engineer.
Daniel is a Chartered Professional
Engineer with Engineering New
Zealand and holds Master’s
degrees in Petroleum Engineering
from Heriot-Watt University, and
Mechanical Engineering with a
Diploma in Business Management
from the University of Aberdeen.
Daniel is also an active professional
member of the Society of
Petroleum Engineers and the Royal
Society of New Zealand.
Direct Interest
Indirect Interest
935,350 options
to acquire
ordinary shares*
-
The interests of the current
Company Officers (excluding the
Chief Executive) in securities of the
Company at 30 June 2024 were:
*Shares in accordance with Scheme Rules
Direct Interest
Indirect Interest
113,913 options
to acquire
ordinary shares*
-
30
2024 Echelon Annual Report
Catherine McKelvey
CHIEF FINANCIAL OFFICER
Paris Bree
GENERAL COUNSEL
Michael Wright
GENERAL MANAGER COMMERCIAL
Catherine was appointed Chief
Financial Officer at Echelon in 2017.
With over 30 years of experience
in finance and executive
management, including more than
a decade in the energy sector, she
plays a key role in overseeing the
company’s finance and business
management functions.
Catherine began her career in
London in the banking industry
and later spent over ten years
in New Zealand’s international
telecommunications industry,
where she gained extensive
experience in multinational finance,
international tax, and M&A activity.
These experiences have proven
valuable in her current role, where
she combines global expertise with
local insights.
She holds a BA (Hons) in
Economics and is a member of the
Chartered Institute of Management
Accountants (ACMA, CGMA) and
the Institute of Directors.
Paris started as a lawyer with
Echelon in 2010 after having been a
solicitor in the Bell Gully Wellington
and Herbert Smith Freehills London
litigation departments. Paris has a
law degree and an arts degree from
Victoria University of Wellington
and is admitted to the High Court
of New Zealand as a Barrister and
Solicitor. She is also a delegate of
the University of Dundee Centre
for Energy after completing
the Petroleum and Mineral Law
and Policy course on Petroleum
Agreements and a delegate
of CWC’s Production Sharing
Contracts-Advanced Master Class.
Paris was awarded the Anthony
Harper Young In-House Lawyer of
the Year at the 2019 New Zealand
Law Awards. She was named as
an In-House leader by NZ Lawyer
magazine in 2020 and 2022 and NZ
Lawyer Elite Women in 2021, 2022
and 2023. She was an Excellence
Awardee of In-House Lawyer of
the Year 2023.
Paris was appointed General
Counsel in 2017.
Michael joined Echelon in 2012
having worked in the energy
sector for over 30 years. Michael
started his career working on
gas distribution networks before
spending 11 years planning and
developing power stations. In
2003 Michael joined OMV and
subsequently joined Vector to
manage the implementation of
pipeline open access. Michael
has also worked as a consultant
advising companies in various parts
of the energy sector.
Michael has a Master’s degree
in Mechanical Engineering from
Cranfield University, UK.
Direct Interest
Indirect Interest
10,214 directly
held ordinary
shares
930,419 options
to acquire
ordinary shares*
-
Direct Interest
Indirect Interest
900,577 options
to acquire
ordinary shares*
-
Direct Interest
Indirect Interest
1,172,077
options to acquire
ordinary shares*
-
31
2024 Echelon Annual Report
Clearly delineate the respective roles and responsibilities of its Board
and management and regularly review their performance
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 1
Lay solid foundations for
management and oversight
Role of the Board
The Board is responsible for the overall corporate
governance of the Company including strategic direction,
determining policy, and approving significant contracts,
capital and operating costs, financial arrangements
and investments.
In addition to statutory and constitutional requirements,
the Board has a formal charter that sets out its functions
and structure.
The Board Charter is available in the corporate governance section
of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Audit-Committee-Charter.pdf
Responsibilities of the Board
The Board operates under a written charter which sets
out the roles and responsibilities of the Board. The Board
Charter clearly distinguishes and discloses the respective
roles and responsibilities of the Board and management.
The procedure for nomination and appointment of
directors to the Board is set out in the Charter.
The Board is accountable for the performance of
the Company. The specific responsibilities of the
Board include:
¬ Approving corporate strategy and performance
objectives;
¬ Establishing policies appropriate for the Company;
¬ Oversight of the Company, including its control and
accountability systems;
¬ Approving major investments and monitoring the
return of those investments;
¬ The overall risk management and control framework
for the Company and ensuring appropriate risk
management systems are established and applied;
¬ Appointing, removing and evaluating the performance
of the Chief Executive;
¬ Reviewing the performance of senior management;
¬ Appointing and removing the company secretary;
¬ Setting broad remuneration policy;
¬ Reviewing implementation of strategy and ensuring
appropriate resources are available;
¬ Nominating and appointing new directors to the Board;
¬ Evaluating the performance of the Board, committees
of the Board, and individual directors;
¬ Reviewing and ratifying systems of risk management,
internal compliance and control, codes of conduct, and
legal compliance;
32
2024 Echelon Annual Report
¬ Approving and monitoring the progress of any
major capital expenditure, capital management and
acquisitions and divestitures;
¬ Reviewing and ratifying HSSE Sustainability and
Operational Risk policies, the HSSE Sustainability and
Operational Risk Management System and monitoring
its implementation and performance;
¬ Approving and monitoring financial and
other reporting;
¬ Ensuring that the Company provides continuous
disclosure of information such that shareholders
and the investment community have available
all information to enable them to make informed
assessments of the Company’s prospects;
¬ Overall corporate governance of the
consolidated entity;
¬ Determining the key messages that the Company
wishes to convey to the market from time to time; and
¬ Monitoring information commitments and continuous
disclosure obligations.
Performance reviews of the Board
The Board charter states: The Board shall undertake
regular reviews of the operations and performance
of the Board, its committees and individual directors.
Where appropriate, the Board may engage external
consultants to conduct this review. In addition to
compliance with each committee’s individual charter,
the review shall consider:
¬ The skills required by the Board, including processes
to satisfy any skill-gaps;
¬ How the required skills are best represented on
the Board; and
¬ The process for identifying suitable candidates,
for appointment to the Board.
Reviews are undertaken by way of a questionnaire
submitted to directors. Responses are collated
and reviewed by the Chair of the Nominations and
Remuneration Committee.
The Chair of the Nominations and Remuneration
Committee then undertakes an overall review on
the outcomes and produces a written report which
is reviewed by the full Board. Individual director
performance is addressed by one-on-one review with the
Chair of the Nominations and Remuneration Committee.
For the financial year, the Nominations and Remuneration
Committee agreed that the above process that
was followed.
The Directors’ Interests Policy is available in the corporate governance
section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Directors-Interest-Policy.pdf
33
2024 Echelon Annual Report
Board Proceedings
The Board meets on a formal scheduled basis four times
per year, and holds other meetings as required, including
by video conference.
The Commercial Committee and the Company Secretary
establish the agenda for each Board meeting.
The Chief Executive keeps the Board informed of material
or potentially material matters between meetings
and provides a weekly update to the Board on all
relevant matters.
A report is prepared for each meeting, which includes:
¬ Updates on assets
¬ Updates on exploration and production activities and
financial management;
¬ Summaries of new business opportunities;
¬ An update on human resources and facilities;
¬ An investor relations report;
¬ Updates on stakeholder engagement, media and
sustainability; and
¬ Other reports as relevant.
Key strategic issues and opportunities are also presented
to the Board by management as part of each meeting.
To ensure that independent judgement is achieved
and maintained, the Board has adopted a number
of processes in respect of its decision making.
These include:
¬ Any director may obtain independent advice at the
Company’s expense where the director considers it
necessary to carry out their duties and responsibilities
as a director, with the prior consent of the Chair of
the Audit Committee (or in the case of the Audit
Committee Chair’s absence, the prior consent of the
Chair of the Board). Such consent may not be withheld
unreasonably; and
¬ Directors must comply with the Directors’ Interests
Policy. It addresses disclosable interests, conflicts
of interest, director information obligations, Board
review and determination obligations, and the rules for
participation in Board deliberations in the event of a
conflict of interest.
On appointment, each director has also acknowledged
their individual disclosure obligations.
BOARD AND COMMITTEE MEETING ATTENDANCE
1 JULY 2023 TO 30 JUNE 2024
Director
Board meetings
Audit Committee
Nominations and
Remuneration Committee
Operational Risk and
Sustainability Committee
Samuel Kellner
6/6
3/3
Dr Rosalind Archer
6/6
2/2
3/3
1/1
Marco Argentieri
6/6
3/3
Andrew Jefferies
6/6
1/1
Alastair McGregor
5/6
2/2
2/3
1/1
Rod Ritchie
6/6
2/2
3/3
1/1
34
2024 Echelon Annual Report
Delegation to Management
While the Board has overall and final responsibility for the
business of the Company, it has delegated substantial
responsibility for the conduct and administration of the
Company’s business and policy implementation to the
chief executive and his management team.
Board approved policies and procedures are
in place to set parameters for the delegated
responsibilities, including:
¬ Health and Safety Policy;
¬ Environment Policy;
¬ Climate Change Policy;
¬ Community Engagement Policy;
¬ Capturing Local Economic Benefit Policy;
¬ Code of Business Conduct and Ethics;
¬ Communications, Market Disclosure and
Social Media Policy;
¬ Dividend Policy;
¬ Securities Trading Policies for Directors, Employees
and Dedicated Contractors;
¬ Directors’ Interests Policy;
¬ Protected Disclosure (Whistleblower) Policy;
¬ Diversity Policy;
¬ Delegated Authorities Manual;
¬ Remuneration and Performance Appraisal Policy;
¬ Treasury Policy;
¬ Email and Internet Use Policy;
¬ Anti-Harassment Policy;
¬ Drugs and Alcohol Policy;
¬ Workplace Flexibility Policy;
¬ Paid Parental Leave Policy; and
¬ Modern Slavery Policy.
These policies are reviewed regularly. The Board may
establish other policies and practices to ensure it fulfils
its functions.
All of these policies are available in the corporate governance section of the
Company's website at
echelonresources.com/investors/company-reports/corporate-governance
Delegated
Authorities Manual
The Board has established formal limits of authority to
provide clarity to the chief executive and management
so that they are in a position to carry out the business
of the Company efficiently and effectively within the
parameters of proper corporate governance.
The Delegated Authorities Manual sets limits to financial
commitments and other decision-making, and is
monitored by the Board through the audit function.
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35
2024 Echelon Annual Report
The Board should be of an appropriate size and collectively have the skills,
commitment, and knowledge of the entity and the industry in which it operates
to enable it to discharge its duties effectively and to add value
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 2
Structure the Board to be
effective and add value
Composition of the Board
The Board as a whole, supported by the Nomination and
Remuneration Committee, undertakes the process for
identifying suitable candidates for appointment to the
Board and recommending directors for appointment,
having reviewed its operations, the performance of
individual directors, the qualifications of candidates for
the Board, the skills required by the Board, and how the
required skills are best represented.
The Board provides clear recommendations and
relevant information in the Notice of Meeting at which
candidate directors are put forward. Biographical
information is presented in the Notice of Meeting, and
further information about directors is presented on the
Company’s website.
Where possible, the process of vetting prospective
directors includes background checks into character,
education, criminal record, and bankruptcy. The
Nomination and Remuneration Committee also
undertakes other vetting procedures that it deems
appropriate in the circumstances
As the Board has not recommended any new candidate
since 2018, these checks have not been performed in the
past year. Background checks have not been undertaken
where directors are nominated by the major shareholder
of the Company, reflecting the reality of the ownership
structure of the Company.
Upon appointment to the Company’s Board, directors are
advised of salient requirements and policies. Obligations
such as disclosure of interests, managing conflicts, and
share trading are managed through policies. Directors
have received training in health and safety governance.
Further training about how to best perform their duties as
directors was not required during the reporting period as
the Company has robust policies around director duties
and the Board’s skills are appropriate.
When the Company converted its listing to being primary
listed on the ASX, each director entered into individual
written agreements with the Company consistent with
ASX listing rule 3.19B.
The Company enters into an employment agreement with
the managing director and the senior executives, the
material terms of which are disclosed below.
The Company Secretary is Paris Bree, who is also the
Company’s General Counsel. She is appointed by the
Board and accountable directly to the Board.
The company was not in the S&P/ASX 300 Index at
the commencement of the reporting period, and
is not a “relevant employer” under the Workplace
Gender Equality Act.
36
2024 Echelon Annual Report
Committees of the Board
The Board has established the following committees
to assist it by focusing on specific responsibilities,
reporting back to the Board and making any necessary
recommendations:
¬ Audit Committee,
¬ Nominations and Remuneration Committee,
¬ Operational Risk and Sustainability Committee,
¬ Commercial Committee.
Each committee has a Charter, approved by the Board
and reviewed regularly. The Board has sole responsibility
for the appointment of directors to committees. Any
director is entitled to attend a meeting of a committee
if that director so wishes, except that members who are
not members of the Audit Committee may only attend its
meetings at the invitation of the Audit Committee.
More detail about the role and activities of these
committees is reported under relevant headings below.
All Committee Charters are available on the Company’s website at
echelonresources.com/investors/company-reports/corporate-governance
Board Skills
Board skills are set out in the accompanying chart.
The Board considers its composition brings together
skill-sets that are highly valued in the industry. The
Board has a balance of independence, skills, knowledge,
experience, and perspectives.
In considering the appropriate Board composition,
account is given to whether or not a shareholder owns
a majority of the shares in the Company. The Board
composition is a consequence of the Company’s
ownership structure.
Two out of six directors are independent. The Chair is not
independent, reflecting the ownership structure of the
Company. The Chair and CEO are not the same person.
The Board has determined that as at 30 June 2024,
Dr Archer and Mr Ritchie are independent directors as
they do not fall into any of the categories specified in the
ASX Principles and Recommendations as being examples
of interests, positions and relationships that might raise
issues about the independence of a director.
Mr Kellner, Mr Argentieri, and Mr McGregor are not
independent because of their association with O.G. Oil
& Gas (Singapore) Pte Limited, which is a substantial
shareholder in Echelon Resources Ltd.
Mr Jefferies is not independent because he is the
managing director of Echelon.
Upon appointment to the Company’s Board, directors are
advised of salient requirements and responsibilities for
directors of the Company.
NUMBER OF DIRECTORS WITH
SPECIFIC SKILLSET
6
3
3
3
6
1
2
3
Executive
Management
HSSE
Legal
M&A
Exploration
Engineering
& Operations
Finance
& Economics
Oil & Gas
37
2024 Echelon Annual Report
Instill and continually reinforce a culture across the
organisation of acting lawfully, ethically and responsibly
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 3
Instill a culture of acting lawfully,
ethically and responsibly
Echelon practices the highest standards of corporate
governance and aspires to continuous improvement in its
governance performance.
The Board has adopted the following overarching
governance objectives:
¬ Lay solid foundations for management and oversight.
¬ Achieve high standards of transparency and ethical and
responsible decision-making.
¬ Structure itself to add value.
¬ Make timely and balanced disclosure.
¬ Respect the rights of its shareholders.
¬ Safeguard integrity in its financial reporting.
¬ Recognise and manage risks.
¬ Encourage enhanced performance.
¬ Promote a corporate culture that upholds agreed
Company values.
The Company’s values are displayed in the graphic on the
inside front cover of this report.
Code of Business Conduct and Ethics
The Company’s Code of Business Conduct and Ethics
sets out values and ethics expected of the Company’s
directors, management, employees and contractors.
The Company strives to create a strong culture of
honesty, integrity, loyalty, fairness, forthrightness and
ethical behaviour.
Company representatives are required to:
¬ Act with high standards of honesty, integrity, fairness,
and equity in all aspects of their involvement with the
Company;
¬ Comply fully with the content and spirit of all laws
and regulations governing the Company’s operations,
business environment, and employment practices;
¬ Not knowingly participate in illegal or unethical activity;
¬ Actively promote compliance with laws, rules,
regulations, and the Company’s Code of Business
Conduct and Ethics; and
¬ Not do anything that would be likely to negatively
affect the Company’s reputation.
The Code addresses in detail issues such as:
¬ Conflicts of interest and corporate opportunities;
¬ Protection and proper use of Company assets;
¬ Confidential and proprietary information;
¬ Intellectual property;
¬ Competition and fair dealing;
¬ Business entertainment and gifts;
¬ Anti-bribery and corruption;
¬ Cash koha;
¬ Insider trading or tipping: and
¬ Reporting Code violations.
The Code requires the Board to be informed of
any material breaches.
Modern Slavery Policy
Echelon is committed to eliminating modern slavery
from its operations and supply chains. We believe that
all people have the right to be free from exploitation and
that no one should be forced to work in conditions of
slavery or servitude.
This policy sets out our commitment to preventing
modern slavery and outlines the steps we will take to
ensure that our operations and supply chains are free
from modern slavery.
The Code of Business Conduct and Ethics is available in the corporate
governance section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Code-of-Business-Conduct-and-Ethics.pdf
38
2024 Echelon Annual Report
Protected Disclosures
The Company has a Protected Disclosures
(Whistleblower) Policy that provides a procedure for
employees and contractors to raise concerns or make
disclosures about what they observe happening at work.
The purpose is to facilitate disclosure and investigation
of serious wrongdoing. It provides a mechanism for
concerns being raised and dealt with at an early stage
and in an appropriate manner. The person making the
report is protected from any adverse consequences
where the concern is raised in good faith. The Board
is to be informed of any material incidents reported
under this policy.
The protected Disclosures (Whistleblower) Policy is available in the
corporate governance section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Protected-Disclosures-Whistleblower-Policy.pdf
Anti-bribery and Corruption
The Company’s anti-bribery and corruption policies are
included as specific items within the Code of Business
Conduct and Ethics.
The Code of Business Conduct and Ethics is available in the corporate
governance section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Code-of-Business-Conduct-and-Ethics.pdf
39
2024 Echelon Annual Report
Have appropriate processes to verify the integrity
of corporate reports
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 4
Safeguard the integrity
of corporate reports
The Chief Executive and Chief Financial Officer (CFO)
provide the Board with a letter affirming that, in their
opinion, the financial records have been properly
maintained, that the financial statements comply with
the appropriate accounting standards and give a true
and fair view of the Company’s financial position and
performance, and that they form their opinion on the
basis of appropriate and effective controls.
Senior management review quarterly activity reports,
cash flow reports and other formal reports to verify and
confirm content.
The Managing Director, CFO and General Counsel
approve reports prior to being circulated to the full Board
for approval ahead of public release.
The Audit Committee Charter in available here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Audit-Committee-Charter.pdf
Audit Committee
The Audit Committee, together with the Chief Executive,
is responsible to the Board for overseeing the financial
and internal controls, financial reporting and audit
practices of the Company.
The Chair of the Audit Committee also oversees and
authorises any trading in securities by directors,
employees or contractors. Restrictions on trading are
outlined in the Securities Trading Policy and Guidelines
for Directors, and in the Securities Trading Policy and
Guidelines for Employees and Dedicated Contractors.
In practice the Committee considers:
¬ Corporate reporting and internal controls,
¬ Whether financial statements reflect their
understanding of the financial position and
performance of the Company and otherwise provide a
true and fair view,
¬ The appropriateness of the accounting judgements
and choices exercised by management in preparing the
financial statements,
¬ The appointment of the external auditor and rotation of
the audit engagement partner;
¬ The fees payable to the auditor for audit and
non‑audit work,
¬ The scope and adequacy of the external audit, and
¬ The independence and performance of the
external auditor.
40
2024 Echelon Annual Report
Audit Committee Composition
Alastair McGregor, Dr Rosalind Archer and Rod Ritchie
comprise the Audit Committee. As Dr Archer and
Mr Ritchie are independent, a majority of members of
the Audit Committee are independent and none are
executive directors.
The Chair of the Audit Committee, Mr McGregor, is
not the Chair of the Board. Mr McGregor is not an
independent director, which reflects the composition
of the Board.
Mr McGregor has a financial background. Dr Archer and
Mr Ritchie have gathered considerable experience about
the Company’s financial affairs through their service
on the Board and on the Audit Committee. Further
information about the skills and qualifications of the
committee members are set out in the biography page
(see pages 27 & 28).
The Committee met twice during the year by video
conference, and all members attended both meetings.
The Chair of the Board, directors, the Chief Executive
and other staff may be invited by the Audit Committee to
attend meetings of the Committee.
The Audit Committee can meet with the external auditors
and senior management in separate sessions. An annual
process considers engagement of auditors, having
regard to the auditors’ independence and policies for
rotation of partners.
The Company does not have an internal audit function, as
the scale and complexity of the business and the nature
of its financial management does not currently require it.
Dividend Policy
Echelon's dividend policy aims to deliver sustainable
returns to shareholders, with the Board evaluating the
Company’s financial position semi-annually. Factors
considered include cash flow, capital needs, operating
commitments, investment plans, debt, and external
market conditions. Dividend payments are subject
to compliance with the New Zealand Companies Act
1993 and the Board's discretion. The policy is regularly
reviewed to ensure ongoing relevance.
The Securities Trading Policy and Guidelines for Employees and Contractors
is available on the Company’s website here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Securities-Trading-Policy-Guidelines-for-
employees.pdf
41
2024 Echelon Annual Report
Make timely and balanced disclosure of all matters that a reasonable
person would expect to have a material effect on the price or value of
the Company's securities
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 5
Make timely and
balanced disclosure
Echelon complies with Listing Rule 3.1, which requires a
listed entity, subject to certain exceptions, to disclose
to ASX immediately any information that a reasonable
person would expect to have a material effect on the
price or value of its securities.
The Board receives advance copies of all
material announcements.
New presentations are released to the ASX market
ahead of the presentation, and promptly posted to the
Company website.
Continuous Disclosure
The company releases to markets, promptly and without
delay, information that a reasonable person would expect
to have a material effect on the price of its securities.
The only exceptions to this disclosure principle are those
permitted under the Listing Rules.
The Board is responsible for monitoring commitments
and continuous disclosure obligations and initiating
action as warranted to ensure reporting is fair
and reasonable.
The Company has a Communications, Market Disclosure
and Social Media Policy. Its purpose is to:
¬ Reinforce the Company’s commitment to the
continuous disclosure obligations imposed by law and
stock exchange rules,
¬ Describe the processes to ensure compliance,
¬ Outline the Company’s general communications
approach aimed at ensuring timely and accurate
information is provided to shareholders, market
participants and market observers, and
¬ Provide ground rules for the use of social media.
Non-Financial Reporting
The Company publishes a Sustainability Report.
Sustainability reporting includes material exposure
to environmental, economic and social sustainability
risks and other key risks. It explains how the Company
manages those risks and how operational or non-financial
targets are measured.
Components of sustainability reported include:
¬ A summary of the Company’s values;
¬ TCFD including Governance of climate risk, Company
policies and the Company’s climate change statement;
¬ Sustainability and climate risk strategy and risk
management and corporate responsibility strategy;
¬ Diversity Statement, performance metrics and targets;
¬ A summary of the Company’s approach to
stakeholder engagement,
¬ Summary of the Company’s contribution to
local communities;
¬ A materiality matrix; and
¬ Relationship between business strategy and the UN’s
Sustainable Development Goals.
A copy of our Sustainability Reports are available on the
Company’s website, here
echelonresources.com/investors/company-reports/sustainability-report
42
2024 Echelon Annual Report
Provide security holders with appropriate information and facilities
to allow them to exercise their rights as security holders effectively
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 6
Respect the rights of
security holders
Shareholder Participation
The Company communicates openly with investors with
the aim of growing understanding about the business, its
activities and plans, governance, financial performance
and prospects.
The Company encourages shareholder participation
at the annual meeting by inviting questions in advance
and discussion from the floor. Meeting agendas and
supporting documents such as presentations are posted
on the Company’s website.
It makes directors and management available at annual
meetings and provides and opportunity for conversation
about the Company. Investor queries to the Company
by phone and email are answered promptly by senior
managers. For major Company events, management and
directors reach out to larger minority holders to discuss
issues and concerns.
The Company encourages participation in annual
meetings. It holds meetings online as well as in person
and provides extensive opportunities before and during
meetings for questions, discussion and engagement.
Questions may be submitted in advance by shareholders
not present and answers are made available on the
webcast recording on the website. Shareholders continue
to avail these opportunities.
The Notice of Annual Meeting of Shareholders is posted
when it is available and at least 20 working days prior to
the meeting.
Shareholders can directly message the Company at
any time through the website and management aims
to respond promptly. The Company makes available
key staff and directors to answer questions about
major initiatives. The chief executive actively contacts
shareholders who seek to engage.
Shareholders have the right to vote on major decisions
that change the nature of the Company’s activities.
All shares participate equally with other shares on
the basis of one share, one vote. There are no special
voting rights attached to any stock. Voting is conducted
by poll, not by show of hands, as recommended by
shareholders’ associations.
The Company accepts the principle of one share-
one vote in the listing rules and agrees that a show of
hands is inconsistent with this principle. The Company
holds ballots with scrutineers present on all votes
at all meetings.
The Company’s offices and shareholder meetings are
wheelchair accessible.
43
2024 Echelon Annual Report
Website
The Company maintains a website, echelonresources.com,
where comprehensive information is presented about its
activities, governance and financial performance.
Shareholders and interested parties can subscribe via
the website to receive notice of the Company’s market
announcements by email.
The dedicated investor relations section of the
website makes available share price information, detail
about shareholdings, statutory reports, corporate
governance information, and market updates about
the Company’s activities.
The corporate governance landing page presents all
relevant corporate governance documents, including
policies, charters, and the constitution.
The Investors section provides links to:
¬ News, market announcements, and investor briefings;
¬ Policies, charters and other corporate governance
documentation;
¬ Periodic reports, including annual and quarterly reports
and sustainability reporting;
¬ Information about annual and special meetings,
including notices of meeting, voting cards, CEO and
Chair’s addresses, results and webcasts, including
historical records of past meetings;
¬ Shareholder information including the distribution of
listed holdings, information about past dividends and a
share price graph.
Recent reports are typically linked from the most
prominent panel of the front page of the website.
The website provides detailed descriptions of
current activities:
¬ Production and financial data
¬ The names, photographs and brief biographical
information for each directors and senior executive;
¬ A statement of values;
¬ Sustainability and corporate responsibility information;
¬ Investor relations materials.
Registry
The Company shifted registry management to
Computershare Australia (from New Zealand) following its
Annual Meeting of Shareholders in November 2022.
Any shareholder may receive all communications from
Echelon and from the registry in electronic form. Contact
Computershare to make arrangements:
AUSTRALIA
Computershare Investor Services Pty Ltd
GPO Box 3329 Melbourne,
VIC 8060 Australia
Freephone
1 800 501 366 (within Australia)
Telephone
+61 3 9415 4083
Facsimile
+61 3 9473 2500
Email
Web.Queries@computershare.com.au
Website
www.computershare.com.au
NEW ZEALAND
Computershare Investor Services Ltd
Level 2, 159 Hurstmere Road Takapuna,
Private Bag 92119 Auckland, New Zealand
Telephone
+64 9 488 8777
Freephone
0800 467 335
Facsimile
+64 9 488 8787
Email
enquiry@computershare.co.nz
Website
www.investorcentre.com
44
2024 Echelon Annual Report
Establish a sound risk management framework and periodically
review the effectiveness of that framework
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 7
Recognise and
manage risk
The Board allocates oversight of risk management in
relation to health, safety and environment and company
operations to the Operational Risk and Sustainability
Committee (ORS) and oversight in relation to accounting
standards and principles, financial statement
compliance and reliability and the audit process to the
Audit Committee.
Operational Risk and
Sustainability Committee
The ORS Committee is chaired by Rod Ritchie, who is
independent. The other members are Dr Rosalind Archer,
Andrew Jefferies, and Alastair McGregor.
The Committee met once during the year by video
conference, and all members were present for
that meeting.
The ORS Committee’s role is to advise and support the
Board in meeting its responsibilities in relation to health,
safety, security, environment, sustainability, operational
risk and community engagement matters arising out of
the activities and operations of the Group.
The committee’s responsibilities include:
¬ Risk Management Framework: Monitor the
performance and effectiveness of, and compliance
with, the Company’s Risk Management Framework and
review the adequacy of risk controls.
¬ Approve policy and monitor progress: Set, review and
agree ORS policies, practices, frameworks and targets,
including performance against these, as recommended
by management, including but not limited to:
› Sustainability performance framework,
targets and reporting;
› Community and Iwi engagement;
› Environmental policies and programmes
including Climate Change responses.
¬ Seek assurance of the Company’s compliance with all
ORS legislative requirements, licence conditions and
stakeholder commitments.
¬ Support the Board and management in defining the
Company’s ORS objectives, taking into account legal
obligations and industry best practice.
¬ Work with management to agree how ORS objectives
will be achieved, monitored and reviewed.
¬ Support a culture of continuous improvement by
reviewing significant incidents and system failures
and monitoring actions and measures to minimise
recurrence.
¬ Ensure the necessary skills are obtained and
maintained within the Group to achieve ORS objectives.
¬ Provide leadership to the Board and support the
Company in aspiring to proactively manage ORS issues.
¬ Ensure that significant issues are brought to the
attention of the full Board
Company policies, frameworks and strategies relevant
to this Committee:
¬ Health and Safety Policy
¬ Environment Policy
¬ Capturing Local Economic Benefits Policy
¬ Community Engagement Policy
¬ HSSE Management Framework and Management
System - Risk Register
¬ Risk Management Procedure
¬ Sustainability Framework
¬ Climate Change Policy
¬ The Sustainability Report
Read the Operational Risk and Sustainability Committee's charter here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Operational-Risk-and-Sustainability-
Committee-Charter.pdf
45
2024 Echelon Annual Report
Health and Safety
The Company values the wellbeing of employees,
contractors and communities in which we operate. It is
fully committed to the provision of a safe and healthy
environment for all employees, contractors and visitors
to Echelon sites, and to achieving a health and safety
aspiration of 'no one gets hurt’ and ‘no incidents’.
All employees, contractors and JV parties engaged
in activities under the Company’s operational
control are responsible for the application of the
Health and Safety Policy.
All employees are responsible for taking all practical
steps to avoid harm to themselves or to others in the
workplace. They must report any potentially hazardous
situations, maintain good housekeeping in all areas and
comply with safe work practices and procedures.
The Company’s managers are responsible for
promoting the Health and Safety Policy in non-operated
joint ventures.
The full Health and Safety Policy is available in the corporate governance
section of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Health-Safety-Policy.pdf
Environment
The Company values our natural environment and is
committed to responsible management practices
that minimise environmental impacts arising from our
activities, using soundly-based science as the basis for
all of our environmental decisions.
All employees, contractors and JV's engaged in activities
under the Company’s operational control are responsible
for applying the Environment Policy. The Company’s
managers are responsible for promoting the policy in
non-operated JV's.
Management reviews the risk management framework
twice per year and reports to the ORS Committee.
The full Board reviews the risk register annually.
The full Environment Policy is available in the corporate governance section
of the Company's website at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Environmental-Policy.pdf
Recognising and Managing Risk
The Company has a risk management system
framework, which outlines the Company’s approach to
risk management. It provides a framework for applying
consistent and comprehensive risk management
practices across all functional areas of the business.
A central Company risk register, which considers the
risks, reviews the controls, assigns ownership of a risk
and tracks treatment plans, is maintained. Risk assurance
is provided through a prioritised programme of audits and
internal review.
The Board’s accountabilities include:
¬ Overseeing the effectiveness of the risk management
system framework,
¬ Monitoring compliance, and
¬ Approving polices and systems for the ongoing
identification and management of risks.
46
2024 Echelon Annual Report
The Board’s responsibilities include:
¬ Approving the Company’s risk capacity and appetite,
¬ Reviewing material risks, and
¬ Reviewing the risk register.
Responsibility for identifying, documenting and
managing risks and opportunities is delegated to the
appropriate level of management. The Chief Executive
is responsible for such things as integrating risk
management into core business processes, managing the
Company’s corporate strategic risks and opportunities,
and regularly reviewing the Company’s risk profile.
The Chief Executive has ultimate responsibility to the
Board for design, development and improvement of the
risk management framework system and maintains the
Company’s risk register.
The Company does not have an internal risk function.
The process employed for evaluating and improving the
effectiveness of risk management and internal control
processes is:
¬ Risks are formally reviewed by risk owners;
¬ Management regularly reviews the risk register to
ensure adherence and continuous improvement;
¬ The ORS Committee regularly reviews the risk register,
with a particular emphasis on reducing key risks to as
low as reasonably practicable;
¬ For specific operational activities (including seismic
acquisition campaigns), the Board reviews the
intended operational activity against activities related
to elements of the Company’s HSSE management
framework to ensure a compliant work programme,
achieving desired objectives safely; and
¬ After-action reviews of an operational phase of a
project are undertaken by the HSSE Advisor and
project team, to identify improvement in control
processes. The after-action review is then reviewed by
the ORS Committee.
The ORS Committee reviews specific risks at each
meeting of the committee and, at least annually, reviews
the risk register and framework document to satisfy itself
that the system continues to be sound.
The process employed for evaluating and improving the
effectiveness of risk management and internal control
processes is:
¬ Risks are formally reviewed by risk owners;
¬ Management regularly reviews the risk register to
ensure adherence and continuous improvement;
¬ The ORS Committee regularly reviews the risk register,
with a particular emphasis on reducing key risks to as
low as reasonably practicable;
¬ For specific operational activities (including seismic
acquisition campaigns), the Board reviews the
intended operational activity against activities related
to elements of the Company’s HSSE management
framework to ensure a compliant work programme,
achieving desired objectives safely; and
¬ After-action reviews of an operational phase of a
project are undertaken by the HSSE Advisor and
project team, to identify improvement in control
processes. The after- action review is then reviewed by
the ORS Committee.
The ORS Committee reviews specific risks at each
meeting of the committee and, at least annually, reviews
the risk register and framework document to satisfy itself
that the system continues to be sound.
TCFD Risk Disclosure
TCFD risks, and the framework for managing
climate risks, are comprehensively reported in the
Sustainability Report.
TCFD reporting is also maintained on our
Company website.
A copy of our Sustainability Reports are available on the
Company’s website, here
echelonresources.com/investors/company-reports/sustainability-report
47
2024 Echelon Annual Report
Climate risk management
How we identify, assess and manage
climate-related risks
The Company’s Risk Management System Framework
applies consistent and comprehensive risk
management practices.
Climate risks are recorded in the central risk register,
which considers the risks, reviews the controls, assigns
ownership of risk and tracks treatment plans.
Climate risks are identified on an ongoing basis and
consideration is given to industry and peer information
and expertise, shareholder and community feedback,
regulatory changes, and analysis by our own staff
and contractors.
Risk assurance and oversight of climate risk management
is provided through internal review by the Board
Operation Risk and Sustainability committee.
How we model climate risk
KUPE, NEW ZEALAND
For our New Zealand Kupe asset, Echelon uses the New
Zealand ETS market pricing for carbon emissions.
The Company has sufficient forward emissions credits
for future demand. As these were purchased at much
lower carbon prices, the emissions trading system
carbon costs represent a positive opportunity for
competitive advantage.
For physical risks to the Kupe offshore platform, onshore
coastal processing plant and connecting pipeline, the
Company carries insurance and equipment is engineered
to standards well in excess of expected weather activity.
AMADEUS BASIN, AUSTRALIA
For physical risks to our Amadeus Basin interests, the
Company has comprehensive insurance to cover physical
risk. The risks associated with climate are assessed in
engineering planning. For forward price risk associated
with production, the Company uses impairment testing
based on forward market prices and contracts.
The Company uses an internal price to test economics of
investments based on market prices in other comparable
international regimes. Expectations of forward prices
reflect the market consensus on the likelihood and level
of future carbon charges and market demand. Potential
increased carbon pricing or reduced prices are part of the
Company’s sensitivity testing.
Carbon prices have generally conformed to forward
curves in the reporting period, while oil and gas
commodity prices have been much higher due to
concerns about energy security and actual shortages of
gas. As a result, the financial risks associated with climate
change are assessed to be considerably positive (upside)
as of the date of this report.
PERTH BASIN, AUSTRALIA
In the acquisition of exploration opportunities in Western
Australia, the Company used a shadow carbon price to
test the economics of a discovery during due diligence.
Expectations of forward prices were based on market
consensus. Potential increased carbon pricing or reduced
prices were also considered as part of the Company’s
sensitivity testing. Engineering risks will be assessed
in the Front End Engineering Design (FEED) process
following any new discovery.
ASSETS HELD BY CUE
For assets held by its subsidiary, Cue in New Zealand
and Indonesia, risks are modelled by Cue, and the Cue
Board manages the risk for those assets. The risk model
is broadly similar to the one used by Echelon to manage
assets held directly.
Climate risk, drilling and
discovering new resources
The risks associated with drilling and operating new oil
and gas wells are managed by the field operator. Echelon
does not operate any exploration or production site. The
Company exercises active oversight of operator health,
safety and environment risks and manage these through
its risk management framework.
Oil and gas are fossil fuels that produce climate changing
emissions. Our Statement on Climate Change can be read
in our Sustainability Report. We target gas production in
Australia, New Zealand and Indonesia, and evidence is
clear that our production provides energy security and
substitutes for much higher emitting alternatives. New
discoveries do not materially alter demand for oil and gas
products and so any production needs to be measured
against the alternative energy source.
The Climate Change Policy is available here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Climate-Change-Policy.pdf
48
2024 Echelon Annual Report
RISK TYPE
DESCRIPTION
TIME
CONTROL
NON PHYSICAL RISKS
Policy and
legal risks
Litigation against companies and/or directors
on climate grounds (claiming causation or
seeking greater action to mitigate effects)
could have reputational, development and
operating cost impacts.
Changing regulations including bans and
restrictive regulations, taxes and emissions
limits across all jurisdictions risk viability
of projects.
S M L
Board and management understand their fiduciary duties
around climate change risk.
Internal processes, including due diligence and joint venture
processes, identify and manage climate risk.
Monitor jurisdictions where we undertake activities. Look to
diversify jurisdictions to mitigate changes to any individual
regulatory environment.
Participate in New Zealand’s environmental regulation
framework through reputable industry advocacy bodies,
including Energy Resources Aotearoa, Business New Zealand
and the Business Energy Council.
Develop evidence for the role of natural gas in a net carbon-
zero future.
Reputational
and social
license risks
Stakeholder disengagement and oppositional
activism. Loss of social license, leading to
project delays or stoppages.
Recruitment and retention risk.
Risk of partner misalignment from divergent
approaches to carbon management.
S M L
Manage environmental performance through sustainability
framework.
Promote corporate values, including our pride in our work.
Due diligence screening of commercial opportunities and joint
ventures.
Financial
risks
Divestment movement increases, affecting
availability and cost of capital.
Insurance premiums increase. Potential
for classes of assets and locations to
become uninsurable.
Capital cost increases if new environmental
standards require more expensive supplies
relative to alternatives.
Carbon pricing adopted across jurisdictions, or
inconsistently between them.
Changes to price and cost forecasts result in
stranded assets or reserves.
S M L
S M L
M L
S M L
S M L
Incorporation of a shadow price on carbon in sensitivity testing
for investment decisions.
Due diligence screening of commercial opportunities and
JV processes. Assurance of insurance forecasts.
Access to a range of funding options.
Reporting on environmental, social, and governance (ESG)
matters, including TCFD compliant reporting.
Jurisdictional diversification to mitigate the impact of
sudden, unilateral changes, confiscation, or value destruction
by regulation.
PHYSICAL RISKS
Acute &
Chronic
Physical assets, especially our coastally-
located gas production plant, may be subject
to increased frequency and intensity of
extreme weather events such as storms,
flooding, coastal inundation, lack of water
availability, or slips.
Offshore drilling and production delayed or
shut in by increased weather events.
M L
Engineering anticipates environmental conditions.
Carbon policy provides for review of climate issues in strategic
and operational decisions.
OPPORTUNITIES
Commercial
Global reduction in high carbon sources such
as coal is increasing demand for natural gas as
a lower carbon partner to renewables.
S M L
Strategic preference for natural gas.
Support for our JV partners pursuing low carbon
innovations on sites.
Ongoing investigation of investment opportunities in lower
emission technologies, including carbon capture and storage.
Reputational
Partnering with local communities to support
low carbon initiatives.
S M L
Local relationships and discussions about contributing to
socially desirable low carbon outcomes.
Risk Assessment
The table uses the following time horizon categories:
Short (S): 0–5 years, Medium (M) 5–10 years, Long (L) 10+ years.
49
2024 Echelon Annual Report
Pay director remuneration sufficient to attract and retain high quality directors and
design executive remuneration to attract, retain and motivate high quality senior
executives and to align their interests with the creation of value for security holders
and with the Company’s values and risk appetite
ASX PRINCIPLES AND RECOMMENDATIONS
PRINCIPLE 8
Remunerate fairly
and responsibly
Nomination and
Remuneration Committee
The Company has a Nomination and Remuneration
Committee comprising Dr Rosalind Archer (Chair),
Marco Argentieri, Samuel Kellner, Alastair McGregor
and Rod Ritchie.
The Committee charter requires that it comprises at least
three non-executive directors of the Board. The Chair,
Dr Archer, is independent.
Principle 2.1 of the ASX Principles and Recommendations
recommends that a majority of the nomination
committee should be independent directors. A majority
of the Board is not independent and the composition of
the committee also reflects this.
Nomination and Remuneration
Committee Member
Meetings
attended during
the year
Dr Rosalind Archer (Chair)
3
Marco Argentieri
3
Samuel Kellner
3
Alastair McGregor
2
Rod Ritchie
3
The Nomination and Remuneration Committee is
responsible to the Board for:
¬ Providing recommendations to the Board in relation to
the director selection and appointment practices of
the Company;
¬ Evaluation and remuneration of directors and
Board succession;
¬ Chief Executive remuneration, appointment,
performance criteria and review;
¬ Reviewing and providing recommendations to the
Board in relation to:
› Senior executive and key staff succession plans;
› The Company’s remuneration, recruitment,
retention and termination policies and
procedures for all employees;
› Implementing the Company’s Diversity Policy and
achieving any associated measurable objectives; and
› Other relevant matters identified from
time to time by the Board.
50
2024 Echelon Annual Report
Remuneration and
Performance Appraisal
The Company aims to attract, retain and motivate
professional staff capable of achieving the goals of
the Company.
To achieve this, the Company wants to encourage and
reward its staff fairly and appropriately within the market
to reflect performance and contribution.
The Remuneration Policy sets out a process to assess
the competitiveness of remuneration.
The Nomination and Remuneration Committee makes
recommendations on remuneration policies for
the Chief Executive and senior managers based on
assessment of relevant market conditions and linking
remuneration to the Company’s financial and operational
performance and individual performance.
Executive remuneration may comprise salary, short-term
incentive payments and share options.
Read the Committee's Charter here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Remuneration-and-Performance-Appraisal-
Policy.pdf
Short Term Incentive
Officers of the Company may receive payments under a
short term incentive scheme.
40% of the STI is based on company performance, 30%
is Board discretion, and 30% on personal performance.
45% of the personal performance component is assessed
on behaviours aligned with Company values, 10% on HSE
performance, and 45% on the personal performance
criteria agreed at the start of the financial year between
the Chief Executive and the respective officers.
In 2023-24 the company factors affecting short term
incentive payments were:
Acquisitions
Board approval to make binding offer on
two opportunities, execution of one sales
and purchase agreement, completion of
two deals.
Group Strategy
Execute Board-agreed group strategy.
Overheads
Not exceeding budgeted overheads.
Emphasis on achievement of meaningful
cost reduction initiatives.
Reserves
replacement
2P reserves replacement.
HSSE
Develop a transition plan across
the portfolio.
Influencing Process Safety with operating
JV partners.
Implement carbon related disclosures
across the business.
Corporate
discretion
Awarded on overall company performance,
share price performance and oil and gas
market conditions.
In the reporting period the Company has determined that
the overall business performance outcome was 85%.
51
2024 Echelon Annual Report
CEO SALARY
Salary Paid
$642,376
Benefits1
$129,158
Cash STI2
$257,244
LTI share options
$68,087
TOTAL
$1,097,973
(1)
Benefits include Kiwisaver at 3% and health insurance
(2)
STI for current period, paid out in August 2024
Options to acquire ordinary shares are issued in accordance with
Scheme Rules, which are available here
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/NZOG-Share-Option-Scheme-Rules-FINAL-adopted-11-
December-2019-33303794-v-1.pdf
STAFF SALARY BANDS
$100,000—$110,000
1
$110,000—$120,000
1
$120,000—$130,000
1
$130,000—$140,000
1
$180,000—$190,000
1
$210,000—$220,000
2
$220,000—$230,000
1
$230,000—$240,000
2
$240,000—$250,000
1
$330,000—$340,000
1
$400,000—$410,000
1
$410,000—$420,000
1
$420,000—$430,000
1
$470,000—$480,000
1
$480,000—$490,000
1
$1,090,000-$1,100,000
1
TOTAL
18
Director’s Remuneration
At the 2008 Company Annual Meeting, shareholders
approved a resolution that director’s fees be set at a
maximum of $600,000 per annum, being the combined
total for all non-executive directors. There has been no
increase in the fee level since 2008 and in March 2016 the
Board and directors volunteered a reduction in their fees.
OGOG representative directors have not yet drawn any
fees for their services.
Directors do not receive any performance-based
remuneration. Mr Jefferies does not receive fees
because he is the Chief Executive.
The total remuneration and other benefits to directors for
services in all capacities during the year ended 30 June
2024 was:
Dr R Archer
$82,255
Mr M Argentieri
Mr A Jefferies
$1,097,973*
Mr S Kellner
Mr A McGregor
Mr R Ritchie
$82,255
*Includes remuneration received as Chief Executive
52
2024 Echelon Annual Report
Securities Trading Policies
The Company’s Securities Trading Policies set out
procedures about when and how an employee, dedicated
contractor or director can deal in Company securities.
These policies are consistent with New Zealand’s
Financial Markets Conduct Act 2013 and its insider
trading procedures, and they comply with ASX
listing rules.
The Board ensures that these policies are up-to-date
and compliant at all times with changes to the law and
to listing rules.
Proudly Rainbow Inclusive
Echelon is proud to earn a Rainbow Tick and be a leader
in our industry in accepting and valuing people in the
workplace, embracing the diversity of sexual and gender
identities.
The Tick certification process tests whether a workplace
understands and welcomes sexual and gender
diversity. The process involves an on-going quality
improvement process.
Rainbow refers to people who identify as lesbian,
gay, bisexual, transgender, takatāpui and
intersex (LGBTTQIA+).
Diversity Statement
The Company is committed to an inclusive workplace
that embraces diversity.
The Company values, respects and leverages the unique
contributions of people with diverse backgrounds,
experiences and perspectives.
The Company recognises diversity is about commitment
to equality and treating all individuals with respect,
and includes, but is not limited to, gender, age,
disability, ethnicity, marital or family status, religion,
sexual orientation, gender identity or expression, and
cultural background.
The Company commits to recruiting from a diverse pool
of candidates, who will be considered with no conscious
or unconscious bias that might discriminate against
certain candidates.
The Company’s employment practices and policies take
into account the domestic responsibilities of employees
and adopts flexible work practices. Examples of these are
set out below, under Diversity Performance Metrics.
The Company supports the determination of self-identity
by all employees including using the titles, names and
pronouns of their choice. We seek advice from external
organisations to appropriately support staff.
The Board establishes measurable objectives for
achieving gender diversity. The Board may establish
measurable objectives for other aspects of diversity,
and assesses regularly both the set objectives and the
progress in achieving them.
The Nomination and Remuneration Committee makes
an annual assessment of success in achieving and
implementing the policy and the set objectives, then
reports to the Board with recommendations.
Our Diversity Policy is at
backend.echelonresources.com/assets/Reports/Corporate-Governance/
Echelon-Policies/2024-06-Diversity-Policy.pdf
53
2024 Echelon Annual Report
Diversity Performance Metrics
DIVERSITY PERFORMANCE 2023-24
The following charts show gender diversity across the Company (excluding contractors) as at 30 June 2024,
and compares that to numbers as at 30 June 2023.
BOARD
2023
2024
SENIOR
EXECUTIVES
OTHER
EMPLOYEES
Male
Female
Gender Diverse
5
1
3
2
5
9
1
5
2
3
8
5
54
2024 Echelon Annual Report
Compliance with the Diversity Policy
With respect to the provision of the diversity policy, the Board has determined that the Company has complied
with the policy.
Objective
Progress
Promote ongoing
engagement with
diversity initiatives,
policies and guidelines
to ensure they are
evolving appropriately.
The Te Ata initiative carries this. Te Ata supports and nurtures the wellbeing of the whole team and includes
coaching opportunities, training/upskilling opportunities, Dale Carnegie being the best you training, effective
communication training, Stevie the ITP (a new internal training platform) and a monthly bookclub.
Policies have been reviewed and retained to ensure they are not impacting our ability to maintain a
diverse workplace.
We have a flexible working guideline which compliments the family friendly policies and diversity policy (on our
website). Candidates have commented positively on these initiatives when we have recruited.
Providing talent
management support
for diverse and
emerging leaders.
Te Ata maintains a cultural calendar which celebrates cultural events that have meaning to our people and we
have tied these into all staff gatherings and disseminated information e.g. Thanksgiving, St Patricks Day, Burns
night, Dwali, Matariki, Christmas, Pride Month.
The Company is a participant in Diversity Works and Staff have had the opportunity to participate in workshops,
webinars and networking opportunities. This will continue in 2024-25.
Development coaching has been made available to selected employees.
Stevie the ITP is an initiative that was launched earlier in the year. It is an in-house training platform that we
developed ourselves, and is a hub for continual learning with spaces for each team and group training to be
captured (retained and accessible to all). This show cases the continual learning and development individuals
and groups undertake, and facilitates access to others and Coursera.
Retain Rainbow Tick
This has been retained, including an audit and further full team training. Our continuing retention of this has
also been commented on positively by recruitment candidates, and external stakeholders.
Diversity Performance
Targets for 2024-25
¬ Promote ongoing engagement with diversity
initiatives, policies and guidelines to ensure they are
evolving appropriately
¬ Providing talent management support for diverse and
emerging leaders
¬ During any relevant Board selection process,
the NARC must ensure at least one credible and
suitably experienced female candidate is provided
for consideration
¬ Retain Rainbow Tick
55
2024 Echelon Annual Report
For the year ended 30 June 2024
Authorised on behalf of the Echelon's
Board of Directors on 27 August 2024:
Rosalind Archer
Director
Consolidated
Financial Statements
Alastair McGregor
Director
56
2024 Echelon Annual Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
NZ$000
Notes
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Customer receipts
96,202
87,011
Production and marketing payments
(30,835)
(31,391)
Supplier and employee payments (inclusive of GST)
(13,799)
(10,534)
Interest received
1,470
872
Income tax paid
(8,721)
(7,370)
Royalties paid
(6,105)
(7,018)
Other
(2,128)
882
NET CASH INFLOW FROM OPERATING ACTIVITIES
36,084
32,452
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and evaluation expenditure
(2,400)
(12,070)
Oil and gas asset expenditure
(16,852)
(24,678)
Prospects acquired (net of cash)
(42,156)
-
Deferred consideration
(6,143)
(22,160)
Security deposits and bonds
312
(1,239)
Property, plant and equipment expenditure
(114)
(117)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
(67,353)
(60,264)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and borrowings
53,303
-
Transaction costs relating to loans and borrowings
(1,206)
-
Dividends paid
(14,995)
-
Lease liabilities principal element payments
(281)
(249)
NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES
36,821
(249)
Net decrease in cash and cash equivalents
5,552
(28,061)
Cash and cash equivalents at the beginning of the year
36,380
64,590
Exchange rate effects on cash and cash equivalents
358
(149)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
10
42,290
36,380
The notes to the financial statements are an integral part of these financial statements
57
2024 Echelon Annual Report
The notes to the financial statements are an integral part of these financial statements.
Reconciliation of profit for the year to net cash inflow from operating activities
NZ$000
2024
2023
Profit for the year
7,748
19,079
Depreciation and amortisation
14,931
15,396
Asset impairment
11,500
-
Deferred tax benefit
(425)
(5,284)
Contract liabilities non-cash
(3,397)
(4,897)
Exploration expenditure
775
9,128
Emissions costs settled by units
101
202
Net foreign exchange differences
515
837
Unwind of discount
1,713
2,759
Share based payments
456
418
Lease payments in financing
160
260
Other
(76)
260
CHANGE IN OPERATING ASSETS AND LIABILITIES
Movement in receivables
(285)
(4,075)
Movement in contract assets
5,544
(3,586)
Movement in contract liabilities
(1,425)
-
Movement in inventories
(3,169)
51
Movement in payables
2,445
407
Movement in provisions
11
42
Movement in tax payable
(1,038)
1,455
NET CASH INFLOW FROM OPERATING ACTIVITIES
36,084
32,452
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
58
2024 Echelon Annual Report
NZ$000
Notes
2024
2023
Revenue
4
92,871
98,784
Operating costs
5
(29,364)
(35,117)
Exploration and evaluation expenditure
(1,022)
(9,128)
Other income
4
1,484
1,008
Other expenses
6
(16,713)
(12,447)
Profit from operating activities excluding amortisation, impairment and net finance costs
47,256
43,100
Amortisation of production assets
15
(14,760)
(15,178)
Asset impairment
15
(11,500)
-
Net finance (costs)/income
7
(553)
(686)
Profit before income tax and royalties
20,443
27,236
Income tax (expense)/benefit
8
(7,114)
(4,101)
Royalties expense
8
(5,581)
(4,056)
Profit for the year
7,748
19,079
Profit for the year attributable to
Profit attributable to shareholders
3,930
10,757
Profit attributable to non-controlling interest (NCI)
3,818
8,322
PROFIT FOR THE YEAR
7,748
19,079
OTHER COMPREHENSIVE INCOME
Items that may be classified to profit or loss
Foreign currency translation reserve (FCTR) differences
22
1,638
(901)
Asset revaluation reserve
22
184
(1,408)
Total other comprehensive income for the year
9,570
16,770
Total comprehensive income for the year is attributable to
Equity holders of the Group
5,752
7,936
Non-controlling interest
3,818
8,834
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
9,570
16,770
Earnings per share
Basic earnings per share attributable to shareholders (cents)
24
1.7
4.7
Diluted earnings per share attributable to shareholders (cents)
24
1.7
4.7
The notes to the financial statements are an integral part of these financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
59
2024 Echelon Annual Report
NZ$000
Notes
2024
2023
ASSETS
Current assets
Cash and cash equivalents
42,290
36,380
Receivables and prepayments
11
18,781
17,017
Contract assets
-
5,567
Inventories
5,860
2,668
Right of use assets
128
130
Total current assets
67,059
61,762
Non‑current assets
Exploration and evaluation assets
14
4,019
2,625
Oil and gas assets
15
236,086
183,015
Property, plant and equipment
199
148
Right of use assets
1,469
343
Other intangible assets
1,533
1,423
Net deferred tax assets
8
14,155
13,663
Other financial assets
16
8,125
8,307
Total non‑current assets
265,586
209,524
TOTAL ASSETS
332,645
271,286
LIABILITIES
Current liabilities
Payables
17
14,994
12,171
Lease provisions
266
268
Contract liabilities
-
2,837
Deferred consideration
9
4,381
817
Current tax liabilities
3,329
4,349
Total current liabilities
22,970
20,442
Non‑current liabilities
Contract liabilities
18
14,602
15,708
Rehabilitation provisions
19
65,832
55,115
Borrowings
20
52,996
-
Lease provisions
1,360
261
Total non‑current liabilities
134,790
71,084
TOTAL LIABILITIES
157,760
91,526
NET ASSETS
174,885
179,760
EQUITY
Share capital
236,883
236,883
Reserves
10,803
9,215
Retained losses
(92,242)
(88,930)
Attributable to shareholders of the Group
155,444
157,168
Non-controlling interest in subsidiaries
19,441
22,592
TOTAL EQUITY
174,885
179,760
Net asset backing per share (cents)
23
76.9
79.1
Net tangible asset backing per share (cents)
23
68.3
71.3
Consolidated Statement of Financial Position
For the year ended 30 June 2024
The notes to the financial statements are an integral part of these financial statements
60
2024 Echelon Annual Report
NZ$000
Share capital
Reserves
Retained
earnings
Total
Non-
controlling
interest
Total
equity
BALANCE AS AT 30 JUNE 2022
236,883
11,639
(99,877)
148,645
13,757
162,402
Profit for the year
-
-
10,757
10,757
8,322
19,079
Foreign currency translation
differences
-
(1,414)
-
(1,414)
513
(901)
Share based compensation expense
-
418
-
418
-
418
Forfeited and expired ESOP awards
-
(20)
20
-
-
-
Asset revaluation reserve
-
(1,408)
170
(1,238)
-
(1,238)
BALANCE AS AT 30 JUNE 2023
236,883
9,215
(88,930)
157,168
22,592
179,760
Profit for the year
-
-
3,930
3,930
3,818
7,748
Asset revaluation reserve
-
277
-
277
-
277
Surrender of ETS units
-
(93)
93
-
-
-
Share based compensation expense
-
53
-
53
404
457
Forfeited and expired share options
-
(8)
8
-
-
-
Issue of shares to NCI
-
(69)
-
(69)
69
-
Foreign currency
translation differences
-
1,428
-
1,428
210
1,638
Dividends paid
-
-
(7,343)
(7,343)
(7,652)
(14,995)
BALANCE AS AT 30 JUNE 2024
236,883
10,803
(92,242)
155,444
19,441
174,885
Consolidated Statement of Changes in Equity
For the year ended 30 June 2024
The notes to the financial statements are an integral part of these financial statements
61
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Reporting entity
Echelon Resources Limited (Echelon), formally New
Zealand Oil & Gas (NZO), is a company domiciled in
New Zealand (NZ), registered under the New Zealand
Companies Act 1993 and listed on the Australian Stock
Exchange (ASX) using the ticker symbol ECH. The Group
is required to be treated as a Financial Markets Conduct
(FMC) reporting entity for the purposes of the FMC Act
and the Financial Reporting Act 2013. Echelon de-listed
from the NZX on 28 June 2024.
The financial statements presented are for Echelon,
its subsidiaries and the interests in associates and
jointly controlled operations (together referred to
as the “Group”).
The ultimate parent company is O.G.Oil & Gas (Singapore)
Pte. Limited ("OGOG"), a company incorporated in
Singapore, which is a subsidiary and part of the O.G.
Energy Holdings Ltd. (“OGE”) Group.
Comparative figures have been adjusted to conform to
changes in presentation for the current reporting period.
Basis of preparation
The financial statements have been prepared in
accordance with New Zealand Generally Accepted
Accounting Practices ("NZ GAAP") and the Financial
Reporting Act 2013. They comply with the NZ equivalents
to International Financial Reporting Standards ("NZ IFRS")
as appropriate for profit-oriented entities, and with
International Financial Reporting Standards ("IFRS").
The presentation and reporting currency used in the
preparation of the financial statements is New Zealand
dollars (NZD or $) rounded to the nearest thousand unless
otherwise stated. The financial statements are prepared
on a goods and services tax (GST) exclusive basis except
billed receivables and payables which include GST.
These financial statements are prepared on the basis of
historical cost except where otherwise stated in specific
accounting policies contained in the accompanying notes.
Basis of consolidation
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date
that control ceases. Consistent accounting policies are
employed in the preparation and presentation of the Group
financial statements. Intra-group balances, transactions,
unrealised income or expenses arising from intra-group
transactions and dividends are eliminated in preparing the
Group financial statements.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign
currencies, are recognised in the income statement,
except when deferred in the statement of comprehensive
income and held in equity reserves as qualifying cash flow
hedges and qualifying net investment hedges. Translation
differences on non‑monetary items, such as equities
classified as fair value through other comprehensive
income, are included in the statement of comprehensive
income and held in the fair value reserves in equity.
1 BASIS OF ACCOUNTING
62
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income, and expenses. Actual results may differ from
these estimates.
The estimates and assumptions that have the most
significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year relate to:
¬ Recoverability of deferred tax assets, assessment of
the ability of entities in the Group to generate future
taxable income (refer to note 8).
¬ Identification of assets and liabilities acquired under
a business combination and the measurement of
the associated fair values of the identified assets and
liabilities (refer to note 9).
¬ Recoverability of exploration and evaluation assets
and oil and gas assets. Assessment includes future
commodity prices, future cash flows, estimated discount
rates and estimates of reserves. Management performs
an assessment of the carrying value of investments at
each reporting date and considers objective evidence
for impairment on each investment, taking into account
observable data on the investment, the fair value, the
status or context of capital markets, its own view of
investment value and its long-term intentions (refer to
notes 14 and 15).
¬ Provision for rehabilitation obligations includes
estimates of future costs, timing of required rehabilitation
and an estimated discount rate (refer to note 19).
Operating segments’ operating results are reviewed
regularly by the Group’s chief executive officer (CEO), the
entity’s chief decision maker, and have discrete financial
information available. Segment results that are reported to
the CEO include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
The following summaries describe the activities within
each of the reportable operating segments:
¬ Perth Basin (from 20 March 2023): Exploration interests
in Western Australian comprising the L7 Production
licence (L7) and EP437 Exploration Permit (EP437).
¬ Kupe oil & gas field (Kupe): Development, production,
and sale of natural gas, liquified petroleum gas (LPG) and
condensate (light oil), located in the offshore Taranaki
Basin, New Zealand.
¬ Amadeus Basin oil & gas fields: Comprising Echelon's
share of the Mereenie oil and gas field, Palm Valley gas
field and Dingo gas field, all located in the Amadeus
Basin in Australia. Cue a partially owned subsidiary of
Echelon, holds a participating interest in the Amadeus
Basin assets. These are included in the Cue segment
below. When relevant acquisition related expenditure is
included in the segment.
¬ Other and unallocated: Unallocated items comprise
corporate assets, corporate overheads, and income tax
assets and liabilities.
¬ Cue Energy Resources Limited: The Group acquired a
controlling interest in Cue during the 2015 financial year
and from 1 October 2021 this segment includes Cue's
participating interest in the Amadeus Basin assets.
2 CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
3 SEGMENT INFORMATION
63
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
For the year ended 30 June 2024
$000
Perth Basin
Kupe oil &
gas field
Amadeus Basin
oil & gas fields
Other &
unallocated
Cue Energy
Resources Ltd
Total
Sales to external customers ‑ New Zealand
-
7,834
-
-
-
7,834
Sales to external customers ‑ Australia
-
-
30,324
-
12,200
42,524
Sales to external customers ‑ Other countries
-
1,025
-
-
41,488
42,513
Total sales revenue
-
8,859
30,324
-
53,688
92,871
Other income
-
113
13
1,352
6
1,484
Total sales revenue and other income
-
8,972
30,337
1,352
53,694
94,355
Impairment
-
(11,500)
-
-
-
(11,500)
SEGMENT RESULT
(380)
(7,785)
8,119
1,326
19,715
20,995
Other net finance expense
(552)
Profit before income tax and royalties
20,443
Income tax and royalties expense
(12,695)
PROFIT FOR THE YEAR
7,748
Segment assets
4,061
22,127
160,360
32,357
113,740
332,645
Segment liabilities
-
14,153
99,230
1,723
42,654
157,760
Included in segment results
DEPRECIATION AND AMORTISATION EXPENSES
-
2,780
5,178
212
6,919
15,089
For the year ended 30 June 2023
$000
Perth Basin
Kupe oil &
gas field
Amadeus Basin
oil & gas fields
Other &
unallocated
Cue Energy
Resources Ltd
Total
Sales to external customers ‑ New Zealand
-
9,548
-
-
-
9,548
Sales to external customers ‑ Australia
-
-
30,272
-
12,933
43,205
Sales to external customers ‑ Other countries
-
2,612
-
-
43,419
46,031
Total sales revenue
-
12,160
30,272
-
56,352
98,784
Other income
-
-
3
1,622
7
1,008
Total sales revenue and other income
-
12,160
30,275
1,622
56,359
99,792
SEGMENT RESULT
(243)
6,332
6,430
(7,641)
23,044
27,922
Other net finance expense
(686)
Profit before income tax and royalties
27,236
Income tax and royalties expense
(8,157)
PROFIT FOR THE YEAR
19,079
Segment assets
2,214
28,279
85,864
34,867
120,062
271,286
Segment liabilities
-
12,726
30,834
2,020
45,946
91,526
Included in segment results
DEPRECIATION AND AMORTISATION EXPENSES
-
3,259
5,401
258
6,649
15,567
3 SEGMENT INFORMATION (CONTINUED)
64
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Sales comprise revenue earned from the sale of petroleum
products, when control of ownership of the petroleum
products has been transferred to the buyer, which will
vary depending on the contract (e.g. at the plant or at
the port). Revenue is recognised at the fair value of the
consideration received net of the amount of GST (Goods
and Services Tax).
(A)
REVENUE FROM CONTRACTS WITH CUSTOMERS
$000
2024
2023
Crude oil and condensate
37,361
37,983
Natural gas and LPG
55,510
60,801
TOTAL REVENUE FROM CONTRACTS
WITH CUSTOMERS
92,871
98,784
Other income
1,484
1,008
TOTAL REVENUE AND OTHER INCOME
94,355
99,792
(B)
TARIFFS INCLUDED IN REVENUE
Natural gas revenue includes charges for transportation
costs incurred when the gas delivery point is not at the
plant. The cost of the transportation for the year ending
30 June 2024 was $1.1 million (30 June 2023: $1.4 million).
(C)
MAJOR CUSTOMERS
Customers with revenue exceeding 10% of the Group’s
total hydrocarbon sales revenue are shown below.
$000
2024
% of sales
revenue
First largest
21,322
23.0%
Second largest
20,590
22.2%
Third largest
10,946
11.8%
TOTAL REVENUE FROM
MAJOR CUSTOMERS
52,858
56.9%
$000
2023
% of sales
revenue
First largest
20,434
20.7%
Second largest
12,551
12.7%
Third largest
10,384
10.5%
TOTAL REVENUE FROM
MAJOR CUSTOMERS
43,369
43.9%
$000
2024
2023
Production and sales marketing costs
27,587
28,828
Workover expenditure
106
2,025
Carbon emissions expenditure
395
376
Insurance expenditure
894
921
Movement in inventory
(1,266)
988
Royalties (i)
1,648
1,979
TOTAL OPERATING COSTS
29,364
35,117
(i) Royalties include private royalties with respect to the Amadeus Basin
assets and Government royalties at the Maari oil field which are based on
a gross revenue method of calculation.
4 REVENUE
5 OPERATING COSTS
65
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Interest income or expense is recognised using the
effective interest method. The ‘effective interest rate’
is the rate that exactly discounts estimated future
cash payments or receipts through the expected life of
the financial instrument to the gross carrying amount
of the financial asset or the amortised cost of the
financial liability.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to the
amortised cost of the financial liability.
$000
2024
2023
Interest expense
(336)
-
Bank fees
(52)
(46)
Exchange (losses) on
foreign currency balances
(151)
-
Unwind of discount
(1,573)
(1,971)
TOTAL FINANCE COSTS
(2,112)
(2,017)
Interest income
1,559
1,119
Exchange gains on foreign currency
balances
-
212
TOTAL FINANCE INCOME
1,559
1,331
NET FINANCE (COSTS)/INCOME
(553)
(686)
7 FINANCE INCOME AND COSTS
$000
2024
2023
CLASSIFICATION OF OTHER EXPENSES BY NATURE
Audit fees paid to the Group auditor
- KPMG
801
603
Directors’ fees
418
390
Legal fees
600
169
Consultants’ fees
786
874
Employee expenses
6,852
6,869
Depreciation
329
389
Share based payment expense
457
418
IT and software expenses
1,099
1,189
Registry and stock exchange fees
358
331
Stamp duty on Mereenie acquisition
3,082
-
Other
1,931
1,215
TOTAL OTHER EXPENSES
16,713
12,447
FEES PAID TO THE GROUP AUDITOR
Audit and review of financial
statements
801
603
Tax compliance services
107
125
Tax advisory services
119
324
Other assurance services
65
-
TOTAL FEES PAID TO GROUP AUDITOR
1,092
1,052
Included in Other expenses are costs of $3.7 million
relating to the acquisition of the 25% interest in Mereenie.
This includes $0.6 million of external costs and stamp duty
of $3.1 million (refer to note 9). In addition to these costs,
a further $0.6 million of internal time writing costs were
incurred in relation to the acquisition and are included in
Employee expenses.
During the year, $1.3 million (June 2023: $0.7 million) of
inter-group services were provided to subsidiaries of the
ultimate parent company. Income relating to the provision
of these services is included in Other income and not
offset against Other expenses.
6 OTHER EXPENSES
66
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Current and deferred tax is calculated on the basis of the
laws enacted or substantively enacted at balance date.
Current tax is the expected tax payable on the taxable
income for the year and any adjustment to tax payable in
respect of previous years.
Current and deferred tax are recognised in profit or loss
except when the tax relates to items recognised in other
comprehensive income, in which case the tax is also
recognised in other comprehensive income.
$000
2024
2023
INCOME TAX (EXPENSE)/BENEFIT
Current tax
(7,897)
(9,385)
Deferred tax
783
5,284
(A) TOTAL INCOME TAX
(EXPENSE)/BENEFIT
(7,114)
(4,101)
INCOME TAX (EXPENSE)/BENEFIT CALCULATION
(Profit)/loss before income tax
and royalties
(20,443)
(27,236)
Less: royalties expense
5,581
4,056
(Profit)/loss before income tax
(14,862)
(23,180)
Tax at the New Zealand tax rate of 28%
(4,189)
(6,490)
Tax effect of amounts which are (not deductible)/taxable:
Difference in overseas tax rate
(3,221)
(2,153)
Non-deductible expenses
(968)
(43)
Foreign exchange adjustments
(163)
212
Unrealised timing differences
(1,297)
2,478
Recognition of deferred (liabilities)/
tax assets
3,175
2,101
Prior year tax losses (not recognised)/
recognised
(234)
(719)
Other
(106)
589
Total tax effect of amounts which are
(not deductible)/taxable:
(7,003)
(4,025)
Adjustment recognised for current tax
in prior years
(111)
(76)
TOTAL INCOME TAX (EXPENSE)/BENEFIT
(7,114)
(4,101)
Government royalty expenses incurred by the Group
relate to petroleum royalty payments to the New Zealand
and Australian Governments in respect of the Kupe and
Amadeus oil and gas fields, and are recognised on an
accrual basis.
At 30 June 2024, no imputation credits were held for
subsequent years (2023: nil).
(B)
CURRENT TAX LIABILITIES
$000
2024
2023
Current tax liabilities
3,329
4,349
The Group has an ongoing Indonesian Tax matter relating
to a notice of amended assessment which is being
disputed by Cue Kalimantan Pte Ltd on behalf of SPC
E&P Pte Ltd. Cue is indemnified by SPC for any losses
arising from this disputed notice of assessment and has
recognised a liability and receivable on the balance sheet.
(C)
DEFERRED TAX
Deferred taxation is recognised in respect of temporary
differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
Deferred tax assets and future tax benefits are recognised
where realisation of the asset is probable. Deferred
tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities
in a transaction that is not a business combination and
that affects neither accounting nor taxable profit, and
differences relating to investments in subsidiaries to the
extent that they probably will not reverse in the foreseeable
future. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when
they reverse.
During the year ended 30 June 2024, the Group utilised
$2.7 million in previously recognised deferred tax assets
on carry forward losses in offsetting against taxable
profits generated. The Consolidated Entity recognised
a deferred tax asset of $3.5 million (30 June 2023: $10.4
million) in respect of unutilised carried forward tax losses
not previously recognised.
8 TAXATION
67
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
9 BUSINESS COMBINATIONS
At 30 June 2024, the Group had $74.2 million in unutilised
carry forward losses, the tax effect of which is $22.0
million. The aforementioned potential tax benefit has not
been recognised in the statement of financial position as
the recovery of this benefit is uncertain.
Deferred tax assets and liabilities are disclosed on a net
basis in respect of their tax jurisdictions.
$000
2024
2023
THE BALANCE COMPRISES TEMPORARY DIFFERENCES
ATTRIBUTABLE TO:
Deferred Tax Assets
Non-deductible provisions
12,350
9,905
Carried forward tax losses
22,701
22,899
Other
345
558
Total deferred tax assets
35,396
33,362
Deferred Tax Liabilities
Oil & gas assets
(21,241)
(19,676)
Other items (including lease assets)
-
(23)
Total deferred tax (liabilities)
(21,241)
(19,699)
NET DEFERRED TAX ASSETS /
(LIABILITIES)
14,155
13,663
MOVEMENTS:
Opening balance at the beginning of
the year
13,663
8,420
Recognised in profit and loss
783
5,284
Recognised in other comprehensive
income
(291)
(41)
CLOSING BALANCE AT END OF YEAR
14,155
13,663
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the
acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the
acquirer to former owners of the acquiree and the amount
of any non-controlling interest in the acquiree.For each
business combination, the non-controlling interest in
the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net
assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the Group assesses
the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance
with the contractual terms, economic conditions, the
Group's operating or accounting policies and other
pertinent conditions in existence at the acquisition-date.
Contingent and deferred consideration to be transferred
by the acquirer is recognised at the acquisition-date
fair value. Subsequent changes in the fair value of the
contingent and deferred consideration classified as an
asset or liability is recognised in profit or loss.
The difference between the acquisition-date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised
as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition-
date, but only after a reassessment of the identification
and measurement of the net assets acquired, the
non-controlling interest in the acquiree, if any, the
consideration transferred and the acquirer's previously
held equity interest in the acquirer.
8 TAXATION (CONTINUED)
68
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
9 BUSINESS COMBINATIONS (CONTINUED)
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets or liabilities during the measurement
period, based on new information obtained about the
facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier
of (i) 12 months from the date of the acquisition or (ii)
when the acquirer receives all the information possible to
determine fair value.
On 11 June 2024, the Group acquired 25% of the Mereenie
gas field in the Amadeus Basin business, Northern
Territory, Australia, from Macquarie Mereenie Pty Ltd
(MM). This is in addition to the 25% participating interest
already held in the Group.
The
Group's
interests
are
as
follows:
50% interest in the Mereenie gas and oil field (OL4 and OL5
Production Licences)
Mereenie joint venture by entity
% of ownership
Echelon Resources Limited
42.5%
Central Petroleum Limited
25.0%
Horizon Oil Pty Limited
25.0%
Cue Energy Resources Limited
7.5%
The acquiring company is Echelon Mereenie Pty Ltd
(previously known as NZOG Mereenie Pty Ltd) which also
holds the original 17.5% participating interest acquired on
1 October 2021. The functional currency of this company is
Australian dollars.
The effective date of the transaction was 1 April 2023. On
11 June 2024 the acquisition completed when conditions
precedent were satisfied, the completion payment was
made and legal ownership passed to the Group. The Group
has consolidated the additional 25% from 1 June 2024
being the reporting date closest to acquisition date. The
completion payment comprised a cash payment of $42.1
million (Australian dollars $39.1 million). This excludes
costs of $0.8 million (Australian dollars $0.7 million) which
relate to a period after acquisition date and are not part of
the consideration.
(A) PROVISIONAL FAIR VALUE
Details of the Group's interest in the provisional fair value
of the assets and liabilities upon acquisition are as follows:
$000
June 2024
Oil and gas production properties
51,416
Cash and cash equivalents
102
Trade Receivables
1,069
Prepayments
57
Trade and other payables
(796)
Rehabilitation asset
10,278
Rehabilitation liability
(10,278)
Lease assets
608
Lease liabilities
(608)
Deferred tax asset
3,083
Deferred tax liability
(3,083)
PROVISIONAL ACQUISITION FAIR VALUE OF
MEREENIE ASSETS AND LIABILITIES ASSUMED
51,848
REPRESENTING
Contractually agreed price
55,460
Net revenue received
(3,664)
Working capital adjustments
52
ACQUISITION DATE FAIR VALUE OF TOTAL
CONSIDERATION TRANSFERRED OR TO BE
TRANSFERRED
51,848
CASH USED TO ACQUIRE BUSINESS
Acquisition date fair value of the total
consideration transferred
51,848
Less contingent payments
(9,692)
NET CASH USED
42,156
69
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Amounts in financial statements are reported as
provisional. Provisional fair value of the rehabilitation
provision is estimated based on the present value of the
expected cash outlays. The latest third party estimate
of rehabilitation costs from April 2022 has been updated
using relevant inflation and discount rates relating to
the dates of expected rehabilitation cash outlay; this
is consistent with the methodology outlined in the
Rehabilitation Provision in note 19. Operating leases
relating to pipeline access, land and easements acquired
are recognised in accordance with NZ IFRS 16. Working
capital is provisionally fair valued at the joint venture
accounting book carrying value on 31 May 2024.
Deferred tax assets and liabilities are recognised and
measured in accordance with NZ IAS 12. Oil and gas
production properties consists of physical on-site assets
and reserves. The physical assets were valued by a
third party in 2021 during the original 25% acquisition of
Mereenie. The provisional fair value has been estimated
using the 2021 values and adjusted for depreciation
and subsequent fixed asset acquisitions and disposals.
The acquisition date fair value of total consideration is
considered to be equal to the fair value, with the reserves
value equal to the balance of consideration paid less the
physical assets and the working capital acquired.
The valuation of assets and liabilities identified as part of
this process will be finalised following completion of the
30 June 2024 financial statements as work is continuing
to assess the underlying fair values of the assets and
liabilities. If new information is obtained within one year
of the date of acquisition, about facts and circumstances
that existed at the date of acquisition that identify
adjustments to the above amounts, or any additional
provisions that existed at the date of acquisition, then the
accounting for the acquisition will be revised.
(B) GOODWILL
Based on the provisional fair value assessment, no
goodwill was recognised on the acquisition of the 25%
interest in Mereenie.
(C) ACQUISITION RELATED COSTS
Acquisition related costs amounting to $0.6 million are not
included as part of the consideration for the acquisition
and have been recognised as transaction costs in the
profit and loss statement. These costs include legal, tax
services and other costs. In addition, the Group incurred
stamp duty of $3.1 million. Costs exclude internal time
writing which amounted to $0.6 million and is disclosed in
Employee expenses in note 6.
(D) CASH GENERATING UNITS
The acquired business is included in the Mereenie/Palm
Valley cash generating unit.
(E) DEFERRED CONSIDERATION
The acquisition of the 25% interest in Mereenie included
two contingent payments. The first contingent payment
of $5.4 million (Australian dollars $5.0 million) was subject
to certain conditions being met. These conditions have
been fulfilled and the payment was made on 30 June
2024. The second contingent payment of $4.4 million
(Australian dollars $4.0 million) is also subject to certain
conditions being met. Payment is anticipated to occur
at the end of the 2025 financial year. The contingent
payment outstanding at the year ending 30 June 2024 is
reported as a deferred consideration in the Statement of
Financial Position.
(F) CONTRIBUTION TO GROUP RESULTS
The acquisition of the 25% interest in Mereenie contributed
revenues of $1.9 million and net profit before tax of $0.5
million to the Group from 1 June 2024 to 30 June 2024.
For the period 1 July 2023 to 30 June 2024, including the
acquisition of the 25% interest in Mereenie as though the
acquisition had occurred at the beginning of the reporting
period, the Group proforma revenues and net profit before
tax would have been $114.6 million and $20.9 million
respectively. Past earnings are not necessarily a reflection
of future earning capacity.
9 BUSINESS COMBINATIONS (CONTINUED)
70
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Cash and cash equivalents comprise cash on hand, cash
at bank, short-term deposits and deposits on call with an
original maturity of three months or less.
$000
2024
2023
Cash at bank and in hand
40,011
28,969
Deposits at call
88
2,364
Short term deposits
1,193
4,448
Share of oil and gas interests’ cash
998
599
TOTAL CASH AND CASH EQUIVALENTS
AT END OF YEAR
42,290
36,380
$000
By currency
Base
Currency
NZD
Equivalent
2024
New Zealand dollar
2,553
2,553
United Sates dollar
9,190
15,088
Australian dollar
22,425
24,561
Indonesian rupiah
877,376
88
TOTAL CASH AND CASH EQUIVALENTS
AT END OF YEAR
42,290
2023
New Zealand dollar
5,745
5,745
United Sates dollar
6,286
10,297
Australian dollar
18,637
20,273
Indonesian rupiah
596,896
65
TOTAL CASH AND CASH EQUIVALENTS
AT END OF YEAR
36,380
$000
2024
2023
Trade receivables
10,123
7,196
Share of oil and gas
interests' receivables
6,362
9,262
Prepayments
701
559
Other*
1,595
-
TOTAL RECEIVABLES AND
PREPAYMENTS AT END OF YEAR
18,781
17,017
$000
By currency
Base
Currency
NZD
Equivalent
2024
New Zealand dollar
3,452
3,452
United Sates dollar
5,374
8,823
Australian dollar
5,947
6,503
Indonesian rupiah
31,800
3
TOTAL RECEIVABLES AND PREPAYMENTS
AT END OF YEAR
18,781
2023
New Zealand dollar
1,687
1,687
United Sates dollar
7,166
11,738
Australian dollar
3,294
3,584
Indonesian rupiah
72,651
8
TOTAL RECEIVABLES AND PREPAYMENTS
AT END OF YEAR
17,017
*During the year the Group reassessed its accounting treatment of the
New Zealand Emissions Trading Scheme (ETS). Whilst the Group has
a responsibility to meet the overall ETS obligation, the majority of the
obligation is met via receipts of ETS units from customers. The Group
retains ETS obligations relating to the venting and flaring of gas during
the production process. As a result of the reassessment, an asset of $1.6
million (30 June 2023: $1.0 million) is recognised in respect of the ETS
units receivable from the customers, and a payable of $1.7 million (30 June
2023: $1.2 million) is recognised in respect of the obligation to the New
Zealand Government. The ETS units are valued at the market price at 30
June 2024. This change has been assessed as not material under NZ IAS 8
so no restatements to prior periods are provided.
11 RECEIVABLES AND PREPAYMENTS
10 CASH AND CASH EQUIVALENTS
71
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Name of entity
Country of
incorporation
Equity Holding
2024
Equity Holding
2023
Functional
Currency
ECHELON RESOURCES LIMITED*
Australia and New Zealand Petroleum Limited
New Zealand
100%
100%
NZD
Echelon Onshore Limited
New Zealand
100%
100%
NZD
Echelon Canterbury Limited
New Zealand
100%
100%
NZD
Echelon 2013 O Limited
New Zealand
100%
100%
NZD
NZOG Bohorok Pty Limited
Australia
100%
100%
USD
Echelon Devon Limited
New Zealand
100%
100%
NZD
Echelon GNA Trustee Limited
New Zealand
100%
100%
NZD
Echelon 2013 T Limited
New Zealand
100%
100%
NZD
Echelon Energy Limited
New Zealand
100%
100%
NZD
Echelon Offshore Limited
New Zealand
100%
100%
NZD
Echelon Pacific Holdings Pty Limited
Australia
100%
100%
AUD
Echelon Pacific Limited
New Zealand
100%
100%
NZD
Echelon Services Limited
New Zealand
100%
100%
NZD
Echelon Taranaki Limited
New Zealand
100%
100%
NZD
Petroleum Resources Limited
New Zealand
100%
100%
NZD
NZOG MNK Bohorok Pty Limited
Australia
100%
100%
USD
Echelon (Ironbark) Pty Limited
Australia
100%
100%
AUD
Echelon Mereenie Pty Limited
Australia
100%
100%
AUD
Echelon Palm Valley Pty Limited
Australia
100%
100%
AUD
Echelon Dingo Pty Limited
Australia
100%
100%
AUD
Echelon Acacia Pty Limited
Australia
100%
100%
AUD
Echelon Compass Pty Limited
Australia
100%
100%
AUD
*
On 30 July 2024 the parent company announced a name change from NZOG to Echelon (refer to note 28).
Subsidiaries are entities controlled by the Group.
The Group controls an entity when it has power over the
entity, has exposure or rights to variable returns from this
involvement and when it has the ability to use its power to
affect the amount of the returns.
At 30 June 2024 the Group held a 50.03 per cent interest
in Cue (30 June 2023: 50.04 per cent). Cue entities
below reflect the Group’s 50.03 per cent interest
in Cue subsidiaries.
In March 2024 some of Cue's share options were exercised,
this resulted in a slight decrease in the parent's interest in
Cue (refer to note 27).
Non‑controlling interests in the results and equity of
subsidiaries are shown separately in the Consolidated
Statement of Comprehensive Income and Consolidated
Statement of Financial Position respectively.
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 functional currency of the subsidiaries
within the Group are shown below.
The consolidated financial statements incorporate the
assets, liabilities and results of the following entities:
12 INVESTMENTS IN SUBSIDIARIES
72
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Name of entity
Country of
incorporation
Equity Holding
2024
Equity Holding
2023
Functional
Currency
CUE ENERGY RESOURCES°°
Cue Energy Resources Limited
Australia
50.03%
50.04%
AUD
Cue Mahakam Hilir Pty Ltd°
Australia
50.03%
50.04%
AUD
Cue (Ashmore Cartier) Pty Ltd
Australia
50.03%
50.04%
AUD
Cue Sampang Pty Ltd
Australia
50.03%
50.04%
USD
Cue Taranaki Pty Ltd
Australia
50.03%
50.04%
USD
Cue Kalimantan Pte Ltd
Singapore
50.03%
50.04%
USD
Cue Mahato Pty Ltd
Australia
50.03%
50.04%
USD
Cue Exploration Pty Ltd
Australia
50.03%
50.04%
AUD
Cue Palm Valley Pty Ltd
Australia
50.03%
50.04%
AUD
Cue Mereenie Pty Ltd
Australia
50.03%
50.04%
AUD
Cue Dingo Pty Ltd
Australia
50.03%
50.04%
AUD
°
Mahakam Hilir Profit Sharing Contract (PSC) exploration permit has expired and regulatory processes for surrender are ongoing as at 30 June 2024.
°°
Echelon's shareholding in Cue reduced by 0.01% during the year as a result of Cue issuing 252,562 shares as part of Cue's share option scheme.
12 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
73
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
The Group has interests in a number of joint arrangements which are classified as joint operations. The Group financial
statements include a proportionate share of the oil and gas interests’ assets, liabilities, revenue, and expenses with items
of a similar nature on a line by line basis, from the date that joint control commences until the date that joint control ceases.
The Group held the following oil and gas production, exploration and evaluation, and appraisal interests at the end of the year:
Name
Entity
Country of permit
Interest 2024
Interest 2023
ECHELON RESOURCES LIMITED
PML 38146 – Kupe
Echelon Taranaki Ltd
New Zealand
4.0%
4.0%
OL4 and OL5 - Mereenie*
Echelon Mereenie Pty Ltd
Australia
42.5%
17.5%
OL3 - Palm Valley**
Echelon Palm Valley Pty Ltd
Australia
35.0%
35.0%
L 7 - Dingo
Echelon Dingo Pty Ltd
Australia
35.0%
35.0%
L7 Production licence*
Echelon Acacia Pty Ltd
Australia
25.0%
25.0%
EP437 Exploration Permit*
Echelon Compass Pty Ltd
Australia
25.0%
25.0%
CUE ENERGY RESOURCES°
Mahato PSC°°
Cue Mahato Pty Ltd
Indonesia
11.25%
12.5%
PMP 38160 – Maari
Cue Taranaki Pty Ltd
New Zealand
5.0%
5.0%
Sampang PSC
Cue Sampang Pty Ltd
Indonesia
15.0%
15.0%
OL4 and OL5 - Mereenie
Cue Mereenie Pty Ltd
Australia
7.5%
7.5%
OL3 - Palm Valley
Cue Palm Valley Pty Ltd
Australia
15.0%
15.0%
L7 - Dingo
Cue Dingo Pty Ltd
Australia
15.0%
15.0%
*
On the 11 June 2024 the Group acquired an additional 25% equity interest in Mereenie joint venture. The Mereenie production license was renewed
until 17 November 2044.
**
The Palm Valley production license was renewed until 7 November 2045.
°
represents the percentage interest held by Cue. The Group interest is 50.03% (June 2023: 50.04%) of the Cue interest.
°°
During April 2024, Cue diluted its interest in the Mahato PSC from 12.5% to 11.25% (a reduction of 10%) for no consideration in accordance with the Mahato
PSC and subsequent Indonesian Government regulations. The Group has accounted for the reduced interest effective from 1 November 2023.
13 OIL AND GAS INTERESTS
74
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
The Group uses the successful efforts method of
accounting for oil and gas exploration costs. All general
exploration and evaluation costs are expensed as incurred
except the direct costs of acquiring the rights to explore,
drilling exploratory wells, and evaluating the results of
drilling. These direct costs are capitalised as exploration
and evaluation assets pending the determination of
the success of the well. If a well does not result in a
successful discovery, the previously capitalised costs are
immediately expensed.
Key judgement:
recoverability of exploration and
evaluation assets
Assessment
of
the
recoverability
of
capitalised
exploration and evaluation expenditure requires certain
estimates and assumptions to be made for future
events and circumstances, particularly in relation to
whether economic quantities of reserves that have been
discovered. Therefore, such estimates and assumptions
may change as new information becomes available. If
it is concluded that the carrying value of an exploration
and evaluation asset is unlikely to be recovered by
future development or sale, the relevant amount is then
expensed in the profit and loss.
Capitalised exploration and evaluation assets, including
expenditure to acquire mineral interests in oil and gas
properties, related to wells that find proven reserves are
classified as development assets within oil and gas assets
at the time of sanctioning the development project.
$000
2024
2023
Opening balance
2,625
7,193
Exploration expenditure incurred
during the year
1,361
7,336
Expenditure transferred to oil and gas
assets relating to Palm Valley
-
(11,318)
Revaluation of foreign currency
exploration and evaluation assets
33
(586)
TOTAL EXPLORATION AND EVALUATION
ASSETS AT END OF YEAR
4,019
2,625
After year end the Group drilled an exploration well at
the Booth prospect in the Perth Basin. The well was not
successful, as no hydrocarbons encountered and has
been plugged and abandoned. This is a non-adjusting post
balance sheet event and the well costs will be expensed
in the next reporting period. Refer to note 29 for events
occurring after balance date.
14 EXPLORATION AND EVALUATION ASSETS
75
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
DEVELOPMENT
Development assets include construction, installation and
completion of infrastructure facilities such as pipelines
and development wells. No amortisation is provided in
respect of development assets until they are reclassified
as production assets.
PRODUCTION ASSETS
Production assets capitalised represent the accumulation
of all development expenditure incurred by the Group in
relation to areas of interest in which petroleum production
has commenced. Expenditure on production areas of
interest and any future estimated expenditure necessary
to develop proven and probable reserves are amortised
using the units of production method on a basis consistent
with the recognition of revenue. Where it is possible to
separately identify tangible assets, they are depreciated
on a straight line basis in line with their economic life.
SUBSEQUENT COSTS
Subsequent costs are included in the assets carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the asset will flow to the Group and the
cost of the item can be measured reliably. All other repairs
and maintenance are expensed in the income statement
during the financial year in which they are incurred.
IMPAIRMENT
The carrying value is assessed for impairment each
reporting date. An impairment loss is recognised if the
carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. A cash generating unit is
the smallest identifiable asset group that generates cash
flows that are largely independent from other assets and
groups. Impairment losses are recognised in the profit or
loss, and in respect of cash generating units, are allocated
first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying
amount of the other assets in the unit (group of units) on
a pro rata basis.
The recoverable amount of an asset or cash generating
unit is the greater of its value in use and its fair value
less costs to sell. In assessing recoverable amount, 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.
Impairment losses recognised in prior years are reassessed
at each reporting date and the loss is reversed if there
has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised previously.
$000
2024
2023
Opening balance
183,015
173,926
Additions - acquisition 25% interest in
Mereenie asset (refer to note 9)
51,415
-
Make up gas forfeited
581
(1,263)
Expenditure capitalised
16,477
13,664
Expenditure transferred from
Exploration and evaluation (refer to
note 13)
-
11,318
Impairment of Kupe asset
(11,500)
-
Amortisation for the year
(14,760)
(15,178)
Rehabilitation provision movement
(refer to note 18)
8,816
1,838
Revaluation of foreign currency oil
and gas assets
2,042
(1,290)
TOTAL OIL AND GAS ASSETS
AT END OF YEAR
236,086
183,015
The Group acquired an additional 25% interest in Mereenie
in a transaction that completed on 11 June 2024. Provisional
fair value of the oil and gas assets acquired is $51.8 million
on acquisition date (refer to note 9).
During April 2024, Cue diluted its interest in the Mahato
PSC from 12.5% to 11.25% (a reduction of 10%) for no
consideration in accordance with the Mahato PSC and
subsequent Indonesian Government regulations. The
Group has accounted for the reduced interest effective
from 1 November 2023.
15 OIL AND GAS ASSETS
76
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Hydrocarbon reserves are estimates of the amount of
hydrocarbons that can be economically extracted from
the Groups' oil and gas permits. The Group estimates its
reserves based on all available production data, the results
of well intervention campaigns, seismic data, analytical
and numerical analysis methods, sets of deterministic
reservoir simulation models provided by the field operators
and analytical and numerical analyses. Forecasts are
based on deterministic methods. Reserves are reported
in line with the principles contained in the Society of
Petroleum Engineers Petroleum Resources Management
Reporting System. As the economic assumptions used
may change and as additional geological information is
obtained during the operation of the field, estimates of
recoverable resources may change impacting the Group's
financial results.
Climate-related risks have been considered with respect
to the evaluation of the estimated recoverable amounts
associated with oil and gas assets.
Estimates of recoverable amounts are based on the
assets' fair value less cost to sell, determined by
discounting each asset’s estimated future cash flows at
asset specific discount rates. The discount rates applied
ranged from 10.10% to 10.38% (2023: 12.9 to 14.3%).
Commodity price assumptions were based on consensus
estimates of forward market prices unless contracted
prices were available.
At 30 June 2024 the Group assessed each oil and gas asset
to determine whether an indicator of impairment existed.
Indicators of impairment include changes in future selling
prices, future costs and reserves. The recoverable amount
of each oil and gas asset was estimated and compared to
its carrying amount.
KUPE
During the year, the KS-9 development well was drilled at
Kupe, however, the well was not successful. Impairment
testing was carried out based on this being an indicator of
impairment, the outcome of which is an impairment write-
down of $11.5 million (2023: nil). The impairment is included
in asset impairment in the profit or loss. The recoverable
amount was based on its fair value less cost of disposal
estimated using discounted cash flows. Following the
reserves downgrade, the Group reassessed its estimates
of the Kupe field's production profile which reduced the
end of field life by one year from June 2036 to June 2035.
Following the impairment loss recognised, the recoverable
amount is equal to the carrying amount of $17.8 million.
Therefore, any adverse movement in a key assumptions
could lead to further impairment.
The estimate of fair value was determined using a post
tax discount rate of 10.38% (June 2023: 13.62%) based
on 10 year government bonds issued by the New Zealand
Government adjusted for a risk premium to reflect both
the increased risk of investing in equities generally and
the systematic risk of the specific asset. Eleven years
of cash flows were included in the discounted cashflow
model. A long term inflation rate assumption of 3% (June
2023: 3%) was used. Commodity price assumptions for
LPG and condensate were based on consensus estimates
of forward market prices; LPG pricing is assumed to
correlate to the oil price consensus estimates. Gas
price assumptions used the contracted gas price for the
duration of the contract and thereafter the contracted
price inflated by 3% per year.
Risks have been identified that are reasonably possible
to occur in three key assumptions that could cause lead
to further impairment, or a reversal of impairment. The
following table shows the amounts by which these three
assumptions would individually change the estimated
recoverable amount.
SENSITIVITY IMPACT ON KUPE RECOVERABLE AMOUNT ($ MILLIONS)
Risk area
Sensitivity
% change
2024
Discount rate or weighted
average cost of capital
+10%
(0.5)
–10%
0.5
Gas Price
+10%
1.0
–10%
(1.0)
Oil Price
+10%
1.2
–10%
(1.2)
15 OIL AND GAS ASSETS (CONTINUED)
77
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Other financial assets are initially measured at fair value.
Transaction costs are included as part of the initial
measurement, except for financial assets which are
measured at fair value through profit or loss. Such assets
are subsequently measured at amortised cost.
Financial assets are derecognised when the rights to
receive cash flows have expired or have been transferred
and the Group has transferred substantially all the risks
and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset,
its carrying value is written off.
$000
2024
2023
BY FINANCIAL ASSET
Security deposits
1,478
1,787
Abandonment and Site Restoration
Fund (ASR) - Cue Sampang
rehabilitation
6,647
6,520
TOTAL OTHER FINANCIAL ASSETS
AT END OF YEAR
8,125
8,307
MOVEMENT
Opening balance
8,307
7,347
Security deposits
(310)
1,411
Abandonment and Site Restoration
Fund (ASR) - Cue Sampang
rehabilitation
82
(334)
Revaluation of foreign currency
financial assets
46
(117)
TOTAL OTHER FINANCIAL ASSETS
AT END OF YEAR
8,125
8,307
In accordance with legislative obligations in the respective
jurisdictions in which the Group operates, contributions
are made to funds established for the purpose of
financing future rehabilitation and restoration of sites. As
at 30 June 2024, $6.7 million (2023: $6.5 million) has been
contributed to such funds in respect of the Mahato and
Sampang assets in Indonesia and $1.5 million (2023: $1.8
million) with the Northern Territory Government in respect
of the Amadeus Assets.
16 OTHER FINANCIAL ASSETS
$000
2024
2023
Trade payables
6,364
3,096
Royalties payable
811
531
Share of oil and gas interests' payable
4,274
6,650
Other payables*
3,545
1,894
TOTAL PAYABLES AT END OF YEAR
14,994
12,171
*Other Payables includes a grossed up carbon emission liability of $1.7
million (June 2023: $1.0 million) related to the New Zealand Emissions
Trading Scheme (ETS). This liability is partially offset by a carbon emission
receivable associated with gas sales contracts held with our customers
(refer to note 11).
$000
By currency
Base
Currency
NZD
Equivalent
2024
New Zealand dollar
4,630
4,630
United Sates dollar
672
1,103
Australian dollar
8,453
9,257
Indonesian rupiah
41,393
4
TOTAL PAYABLES AT END OF YEAR
14,994
2023
New Zealand dollar
4,608
4,608
United Sates dollar
1,262
2,068
Australian dollar
5,011
5,495
Indonesian rupiah
2,500
-
TOTAL PAYABLES AT END OF YEAR
12,171
17 PAYABLES
78
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
A contract liability is recorded for obligations under sales
contracts to deliver natural gas in future periods for which
payment has already been received.
$000
2024
2023
Current
-
2,837
Non-current
14,602
15,708
TOTAL CONTRACT LIABILITIES
14,602
18,545
As part of the acquisition of the Amadeus Basin assets in
May 2021, the Group assumed two obligations to deliver
gas to third parties.
i.
The Group assumed performance obligations to
deliver gas to a customer by 31 December 2023. This
obligation was fulfilled during the year.
ii.
The Group assumed performance obligations for the
delivery of 'gas not taken' by its sole customer in the
Dingo asset. Under the take or pay arrangement, the
Group has the obligation to provide make up gas (MUG)
within the contractually defined volumes, which were
not previously taken by the customer. The customer
must take the future delivery of gas by 2035.
During the contract calendar year, 879TJs of the MUG
gas was forfeited (30 June 2023: 150TJs) as it was no
longer contractually possible for the customer to take
this volume of gas prior to the end of the contract term.
Receipts of $3.7 million have been received under the Take
or Pay arrangements for this portion of the forfeited gas
and this has been recognised in the profit and loss.
18 CONTRACT LIABILITIES
Provisions for rehabilitation have been recognised where
the Group has an obligation, as a result of its operating
activities, to restore certain sites to their original condition.
There is uncertainty in estimating the timing and amount
of the future expenditure. The provision is estimated
based on the present value of the expected expenditure.
The initial provision and subsequent remeasurement are
recognised as part of the cost of the related asset. The
unwind of the discount is recognised in finance costs in
profit and loss.
$000
2024
2023
Carrying amount at start of year
55,115
51,856
Change in provision recognised
(1,931)
1,838
Addition in provision from acquisition
10,278
-
Unwind of discount on provision
1,901
1,324
Revaluation of foreign currency
rehabilitation provision
469
97
TOTAL REHABILITATION PROVISION
AT END OF YEAR
65,832
55,115
The discount rate used is the risk-free interest rate
obtained from the country related to the currency of the
expected expenditure.
The discount rates used to determine the provision ranged
from 2.09% to 4.83% (30 June 2023: 1.56% to 4.81%).
A rehabilitation provision of $10.3 million is recognised in
relation to the acquisition of the 25% interest in Mereenie.
Refer to note 9.
19 REHABILITATION PROVISIONS
79
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
$000
Number
of shares
000s
BALANCE AT 30 JUNE 2023
236,883
227,369
Share capital issued
-
-
BALANCE AT 30 JUNE 2024
236,883
227,369
Comprised of:
Fully paid shares
236,873
223,951
Partly paid shares
10
3,418
TOTAL SHARES ON ISSUE
236,883
227,369
The Group retains 3.4 million (2023: 3.4 million) of
unallocated partly paid shares that have not yet been
cancelled. All fully paid shares have equal voting rights
and share equally in dividends and equity.
On 5 April 2024, Cue paid a special dividend of Australian
dollars 2 cents per fully paid ordinary share. This returned
Australian dollars $14.0 million (NZD dollar equivalent $15.0
million). This dividend was a Conduit Foreign Income (CFI),
unfranked special dividend.
On 10 April 2024, Echelon paid a special dividend of
Australian dollars 3 cents per ordinary share. This returned
Australian dollars $6.7 million (NZD equivalent $7.3 million).
The dividend was not imputed or franked.
21 SHARE CAPITAL
Loans and borrowings are initially recognised at the fair
value of the consideration received, net of any directly
attributable transaction costs. They are subsequently
measured at amortised cost using the effective interest
method. The effective interest rate amortisation is
included in finance costs in profit or loss.
On 11 June 2024, the Group executed an Australian dollars
$63.0 million (NZD $69.0 million equivalent) long-term
secured loan facility (2023: $nil) specifically to facilitate
the acquisition of a 25% interest in the Mereenie gas
field, Amadeus Basin and additional development as
required. As at 30 June 2024, the group has external loan
borrowings as follows:
$000
Maturity
date
Facility
limit
Utilised
balance at
the end of
the year
Unused
balance at
the end of
the year
Facility
agreement
30 June
2031
69,000
54,212
14,788
Less: transaction costs
-
(1,216)
-
TOTAL INTEREST BEARING
LOANS AND BORROWINGS
69,000
52,996
14,788
Refer to note 25 for further information on financial
instruments. The Australian dollar $63 million loan
facility is secured by the assets of Echelon Mereenie Pty
Ltd, Echelon Palm Valley Pty Ltd and Echelon Dingo Pty
Ltd. These three companies hold the Amadeus Basin
assets on behalf of the Company. All remaining unused
amounts are unrestricted as at the reporting date. An
unsecured guarantee is provided by Echelon over of the
external loan borrowing as parent entity of the Group, and
a featherweight guarantee provided by Echelon Pacific
Limited, a New Zealand registered entity.
The loan is repayable in tranches within seven years of
first utilisation. There are no loan principal repayments
required for 24 months from the initial first utilisation date,
being 11 June 2026.
At
30
June
2024,
the
Group
is
compliant
with loan covenants.
20 BORROWINGS
80
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
(A)
RESERVES
$000
2024
2023
Asset revaluation reserve
965
781
Share based payments reserve
1,733
1,757
Foreign currency translation reserve
8,105
6,677
TOTAL RESERVES AT END OF YEAR
10,803
9,215
MOVEMENTS:
i)
Asset revaluation reserve
Opening balance at 1 July
781
2,189
Revaluation of Emissions Trading
Scheme (ETS) units for the year
277
(1,238)
Disposal of ETS units to retained
earnings
(93)
(170)
CLOSING BALANCE AT END OF YEAR
965
781
ii)
Share based payments reserve
Opening balance at 1 July
1,757
1,359
Share based payment expense for
the year
53
418
Forfeited and expired ESOP awards
(8)
(20)
Issue of shares to NCI
(69)
-
CLOSING BALANCE AT END OF YEAR
1,733
1,757
iii)
Foreign currency translation reserve
Opening balance at 1 July
6,677
8,091
Other foreign currency translation
differences for the year
1,428
(1,414)
CLOSING BALANCE AT END OF YEAR
8,105
6,677
(B)
NATURE AND PURPOSE OF RESERVES
ASSET REVALUATION RESERVE
Revaluation gains and losses on ETS units are transferred
to the asset revaluation reserve.
SHARE BASED PAYMENTS RESERVE
The reserve is used to recognise the value of equity benefits
provided to employees under the Share Option Scheme.
FOREIGN CURRENCY TRANSLATION RESERVE
Exchange differences arising on translation of companies
within the Group with a different functional currency to
the Group are taken to the foreign currency translation
reserve. The reserve is recognised in other comprehensive
income when the net investment is disposed of.
22 RESERVES
2024
2023
Number of shares on issue (000s)
227,369
227,369
Net assets ($000s)
174,885
179,760
Net tangible assets ($000s)
155,207
162,103
NET ASSET BACKING
PER SHARE (CENTS)
76.9
79.1
NET TANGIBLE ASSET BACKING
PER SHARE (CENTS)
68.3
71.3
The basis for the calculation of the net asset backing
per share is the carrying value of the assets held on the
Statement of Financial Performance divided by the
number of shares on issue at balance date.
23 NET ASSET BACKING PER SHARE
81
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
2024
2023
Profit after tax attributable to the
shareholders of ECH ($000s)
3,930
10,757
Weighted average number of ordinary
shares (000s)
227,369
227,369
Weighted average number of ordinary
shares including share options (000s)
227,369
227,369
BASIC EARNINGS PER SHARE
ATTRIBUTABLE TO SHAREHOLDERS
OF THE GROUP (CENTS)
1.7
4.7
DILUTED EARNINGS PER SHARE
ATTRIBUTABLE TO SHAREHOLDERS
OF THE GROUP (CENTS)
1.7
4.7
The potentially dilutive effects of employee share options
have not been considered in the diluted profit per share
calculation for the year ended 30 June 2024. In the current
reporting period, the exercise price of the employee
share options are lower than the average market price,
therefore are anti-dilutive.
Risk exposure to market, credit, liquidity, capital
management, sensitivity, financial instruments arises in
the normal course of the Group’s business.
(A)
MARKET RISK
(I)
FOREIGN EXCHANGE RISK
The Group is exposed to foreign currency risk on cash and
cash equivalents, oil sales, recoverable value of oil and gas
assets and capital commitments that are denominated
in foreign currencies. The Group manages its foreign
currency risk by monitoring its foreign currency cash
balances and future foreign currency cash requirements.
The Group may enter into foreign currency hedge
transactions in circumstances where the risk-adjusted
returns to shareholders are enhanced as a consequence.
(II)
COMMODITY PRICE RISK
Commodity price risk is the risk that the Group’s sales
revenue and recoverable value of oil and gas assets will
be impacted by fluctuations in world commodity prices.
The Group is exposed to commodity prices through its
petroleum interests. The Group may enter into oil price
hedge transactions in circumstances where the risk-
adjusted returns to shareholders are enhanced as a
consequence. The Group had no call option contracts at
30 June 2024 (2023: nil).
(III) CONCENTRATIONS OF INTEREST RATE EXPOSURE
The Group's main interest rate risk arises from long-
term borrowings. The Group’s long-term borrowings
are obtained at variable rates and expose the Group to
interest rate risk with the variable element being the
BBSW (Bank Bill Swap Rates) as at utilisation of each loan
tranche drawn down. The margin on each loan borrowing
utilised is fixed at 5% in accordance with the terms of the
debt facility.
The minimum principal repayments of $nil (2023:
$nil) are due during the next year, which reflects the
repayment maturity of loan. The first principal repayment
is due 24 months after first utilisation of the loan,
being 10 June 2026.
24 EARNINGS PER SHARE
25 FINANCIAL RISK MANAGEMENT
82
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
(B)
CREDIT RISK
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to
the Group. The Group has adopted a policy of only dealing
with credit worthy counterparties and obtaining sufficient
collateral where appropriate as a means of minimising
the risk of financial defaults. Financial instruments
which potentially subject the Group to credit risk consist
primarily of securities and short-term cash deposits,
trade receivables and short-term funding arrangements.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings, with
funds required to be invested with a range of separate
counterparties. The Group’s maximum exposure to credit
risk for trade and other receivables is its carrying value.
The Group may be exposed to financial risk if one or
more of their joint venture partners is unable to meet
their obligation in relation to the rehabilitation costs for
jointly owned oil and gas assets. Under the joint venture
operating agreement if one or more partners fails to meet
their financial obligation, the other partners may become
proportionately liable for their share of the financial
obligations but would have contractual rights of recovery
against the defaulting party.
As at 30 June 2024 the exposure to credit risk for trade
receivables and contract assets by type was as follows:
$000
2024
2023
Trade receivables
10,123
7,196
Share of oil and gas interests’
receivables
6,362
9,262
Prepayments
701
559
Other
1,595
-
TOTAL CREDIT RISK EXPOSURE TO
RECEIVABLES AND PREPAYMENTS AT
END OF YEAR
18,781
17,017
(C)
LIQUIDITY RISK
Liquidity risk represents the Group’s ability to meet its
contractual obligations. The Group evaluates its liquidity
requirements on an ongoing basis. In general, the Group
generates sufficient cash flows from its operating
activities to meet its obligations arising from its financial
liabilities and has liquid funds to cover potential shortfalls,
utilising and available borrowing facilities to be able to pay
debts as and when they become due and payable.
A loan facility of $69 million, as described in note 20. The
unused borrowings at reporting of date were:
$000
2024
2023
Bank loans - unused borrowings
14,788
-
The loan utilisations may be drawn at any time, with the
loan facility maturing 7 years from the initial first utilised
loan draw down date completed as at 11 June 2024.
25 FINANCIAL RISK MANAGEMENT (CONTINUED)
83
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
The following table sets out the undiscounted contractual cash flows for all non-derivative financial liabilities and for
derivatives that are settled on a gross cash flow basis:
$000
6 months or
less
6–12 months
1–2 years
2–5 years
More than
5 years
Contractual
cash flows
30 JUNE 2024
Non-interest bearing
Payables
14,994
-
-
-
-
14,994
Interest-bearing - fixed rate
Bank Loans*
2,992
2,987
6,462
48,735
40,631
101,807
TOTAL NON-DERIVATIVE LIABILITIES
17,986
2,987
6,462
48,735
40,631
116,801
30 JUNE 2023
Payables
12,171
-
-
-
-
12,171
Total non-derivative liabilities
12,171
-
-
-
-
12,171
*The weighted average interest rate was 9.38%.
At 30 June 2024 the Group had no derivatives to settle (2023: nil).
25 FINANCIAL RISK MANAGEMENT (CONTINUED)
The Group’s secured external bank loan contains a loan
covenants. A future breach of covenant may require
the Group to repay the loan earlier than indicated in
the above table.
The interest payments on the variable interest rate
loan component in the table above reflect market
forward interest rates at the reporting date and these
amounts may change as market interest rates change.
The interest expense cost recognised in the period to
30 June 2024 was $0.3 million (2023: $nil). The cash
flows in the maturity analysis above are not expected
to occur significantly earlier than contractually
disclosed above. It is noted that in measuring the fair
value, the loan is assessed as Level 2 in the fair value
hierarchy, with the input for the loan interest based on
observable inputs.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Unless otherwise stated, the carrying amounts of
financial instruments reflect their fair value.
(D)
CAPITAL MANAGEMENT
The Group manages its capital through the use of cash
flow and corporate forecasting models to determine its
future capital requirements and maintains a flexible capital
structure which allows access to debt and equity markets
to draw upon and repay capital as required. The Group has
an adequate capital base and significant cash reserves.
(E)
SENSITIVITY ANALYSIS
The Group’s reporting result at the end of each year is
sensitive to financial risks from fluctuations in interest
rates, commodity prices and foreign currency exchange
rates. The sensitivity table below shows the impact of
exchange rate changes on current assets and liabilities
and the impact of interest rate changes on current
cash balances.
84
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
The 200 basis point change (bps) is based on the expected volatility of interest rates using market data
and analysts forecasts.
$m
Risk area
Sensitvity
2024
2023
Impact on Group profit before tax
Exchange rate
+5%
0.2
(0.4)
–5%
(0.2)
0.4
Impact on foreign currency translation reserves in equity
Exchange rate
+5%
(0.6)
(1.2)
–5%
0.6
1.2
Impact on interest income
Interest rate
+200bps
0.8
0.3
–200bps
(0.8)
(0.3)
Impact on interest expense
Interest rate
+200bps
(0.1)
-
–200bps
0.1
-
(F)
FINANCIAL INSTRUMENTS BY CATEGORY
$000
2024
carrying value
2023
carrying value
ASSETS
Cash and cash equivalents
42,290
36,380
Trade and other receivables
16,485
16,458
Contract assets
-
5,567
TOTAL ASSETS
58,775
58,405
LIABILITIES
Payables
14,994
12,171
Borrowings
52,996
-
TOTAL LIABILITIES
67,990
12,171
The fair value and amortised cost of financial instruments is equivalent to their carrying value.
25 FINANCIAL RISK MANAGEMENT (CONTINUED)
85
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
26 RELATED PARTY TRANSACTIONS
All transactions and outstanding balances with related
parties are in the ordinary course of business on normal
trading terms. Any transactions within the Group are
eliminated on consolidation.
During the period certain activities were undertaken
between the Group and OGE. The inter-group services
agreement, which was entered into on 21 June 2019,
allows the Group to provide technical services and related
activities to OGE. Income of $1.3 million has been included
in 'Other income' in the profit and loss (30 June 2023: $0.7
million).
In September 2023, Cue made a final loan repayment of
$4.3 million to Echelon. The unsecured loan of $7.6 million
was granted in June 2022, with an interest rate of 10%.
The following persons were directors of Cue during
the financial year:
CUE DIRECTORS
Alastair McGregor
Non-Executive Chairman*
Andrew Jefferies
Non-Executive Director*
Marco Argentieri
Non-Executive Director*
Peter Hood AO
Non-Executive Director
Richard Malcolm
Non-Executive Director
Rod Ritchie
Non-Executive Director
Samuel Kellner
Non-Executive Director*
*Commencing 1 July 2023, Directors' fees were invoiced by Echelon and
paid on a quarterly basis. The Directors’ fees are retained by Echelon and
not personally received by the Directors. During the year, Directors' fees
of $0.3 million (2023: nil) were paid by Cue to Echelon in relation to these
Directors. Deemed Directors’ fees for year ending 30 June 2024 were nil
(2023: $0.2 million).
The following persons were directors of Echelon during
the financial year:
ECHELON DIRECTORS
Alastair McGregor
Non-Executive Director°
Andrew Jefferies
Managing Director and CEO°°
Marco Argentieri
Non-Executive Director°
Rod Ritchie
Non-Executive Director
Rosalind Archer
Non-Executive Director
Samuel Kellner
Non-Executive Chairman*
° As in previous years these Directors declined to receive compensation
for the provision of directorial services from Echelon, nor was any
compensation paid to any related parties on their behalf. The deemed
compensation for the year ending 30 June 2024 was $0.3 million (2023:
$0.2 million) reflects the estimated compensation for the services
provided and is disclosed for financial reporting
°°The directorial services provided by Andrew Jefferies are included in
remuneration received as Chief Executive of Echelon.
The Group's related parties also include key management
personnel, which have been defined as the Directors, the
Chief Executive Officer and the Executive team for the
Group. Key Cue management personnel are included.
$000
2024
2023
Short term employee benefits
4,241
3,922
Share based payments
247
249
Termination benefits
-
218
Post employment benefits
138
155
KEY MANAGEMENT PERSONNEL
RELATED COSTS
4,626
4,544
Deemed Directors' compensation
for related party Directors
275
439
TOTAL KEY MANAGEMENT PERSONNEL
RELATED COSTS
4,901
4,983
86
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
27 SHARE-BASED PAYMENTS
ACCOUNTING POLICY
Share-base payments are equity or cash settlements to
employees in exchange for services. Equity transactions
are settled in shares or options over shares. Cash
settlements are determined by the share price.
The cost of equity settled transactions are measured at
fair value on grant date. Fair value is determined using the
Black-Scholes option pricing model that takes into account
the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not
determine whether the consolidated Group received the
services that entitle the employees to receive payment no
account is taken of any other vesting conditions.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
Equity transactions are recognised as an expense with the
corresponding increase in equity over the vesting period.
The cumulative charge to a profit or loss is calculated
based on the grant date fair value of the award, the best
estimate of the number of awards that are likely to vest
and the expired portion of the vesting period.
If the non-vesting condition is within the control of the
consolidated Group or employee the failure to satisfy
the condition is treated as a cancellation. If the condition
is not within the control of the consolidated Group or
employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised
over the remaining vesting period, unless the award is
forfeited. Cancellations are accounted for on the date of
cancellation, as if it had vested.
THE COMPANY HAS THE FOLLOWING SHARE BASED
PAYMENT SCHEMES:
(a) Echelon Share Option Scheme,
established March 2020
(b) Cue Energy Share Option Scheme,
established July 2019
(A)
ECHELON SHARE OPTION SCHEME
On 22 November 2023, the Group issued 2,788,983
unlisted options to eligible Echelon Resources Limited
employees under the share option scheme. The options
are exercisable at $0.47 (47 cents) per option, which will
vest on 1 July 2026 and expire on 1 July 2029. The exercise
price was determined by adding a 20% premium to the
average market price on the date of the offer (being the
volume weighted average market price over the previous
10 business days) at 30 June 2023. The options were
valued using Black-Scholes option pricing model.
During the year $0.3 million of share-based payment
expense was recorded in relation to the Echelon Share
Option Scheme for the financial year ending 30 June 2024
(2023: $0.3 million).
Since delisting from the NZX on 28 June 2024, Echelon
no longer has a NZ dollar share price for determining
whether the exercise price has been reached. The Board
has approved that the Australian dollar share price will be
converted to NZ dollars using the closing exchange rate
quoted on the Reserve Bank of New Zealand website for
each tranche at the award date.
87
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Set out below are summaries of options granted under the plan:
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
2024
19/03/2020
01/07/2025
$0.61
2,761,444
-
-
-
2,761,444
08/10/2020
01/07/2026
$0.65
1,785,499
-
-
-
1,785,499
23/11/2021
01/07/2027
$0.52
2,215,110
-
-
-
2,215,110
22/11/2022
01/07/2028
$0.54
2,401,636
-
-
(129,611)
2,272,025
22/11/2023
01/07/2029
$0.47
-
2,788,983
-
-
2,788,983
9,163,689
2,788,983
-
(129,611)
11,823,061
WEIGHTED AVERAGE EXERCISE PRICE
$0.58
$0.47
-
$0.54
$0.55
2023
19/03/2020
01/07/2025
$0.61
2,761,444
-
-
-
2,761,444
08/10/2020
01/07/2026
$0.65
1,828,603
-
-
(43,104)
1,785,499
01/11/2021
01/07/2027
$0.52
2,370,333
-
-
(155,223)
2,215,110
01/11/2022
01/07/2028
$0.54
-
2,631,017
-
(229,381)
2,401,636
6,960,380
2,631,017
-
(427,708)
9,13,689
WEIGHTED AVERAGE EXERCISE PRICE
$0.59
$0.54
-
$0.54
$0.58
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
22/11/2023
01/07/2029
$0.37
$0.47
36%
-
5.63%
$0.13
27 SHARE-BASED PAYMENTS (CONTINUED)
88
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
Set out below are summaries of options granted under the plan:
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
2024
29/07/2017
01/07/2023
$0.08
3,473,653
-
-
(3,473,653)
-
04/10/2019
01/07/2024
$0.10
3,523,015
-
(2,152,654)
-
1,370,361
16/07/2020
01/07/2025
$0.13
3,204,237
-
-
-
3,204,237
23/07/2021
22/07/2026
$0.09
4,005,799
-
-
-
4,005,799
30/08/2022
01/07/2027
$0.10
3,598,698
-
-
-
3,598,698
08/09/2023
01/07/2028
$0.08
-
4,640,759
-
-
4,640,759
17,805,402
4,640,759
(2,152,654)
(3,473,653)
16,819,854
WEIGHTED AVERAGE EXERCISE PRICE
$0.10
$0.08
$0.10
$0.08
$0.10
2023
29/07/2017
01/07/2023
$0.08
3,513,430
-
-
(39,777)
3,473,653
04/10/2019
01/07/2024
$0.10
3,569,765
-
-
(46,750)
3,523,015
16/07/2020
01/07/2025
$0.13
3,241,067
-
-
(36,830)
3,204,237
23/07/2021
22/07/2026
$0.08
4,047,966
-
-
(42,167)
4,005,799
30/08/2022
01/07/2027
$0.10
-
3,649,298
-
(50,600)
3,598,698
14,372,228
3,649,298
-
(216,124)
17,805,402
WEIGHTED AVERAGE EXERCISE PRICE
$0.10
$0.10
-
$0.08
$0.10
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, were as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
8/09/2023
01/07/2028
$0.07
$0.08
56%
-
3.82%
$0.03
27 SHARE-BASED PAYMENTS (CONTINUED)
(B)
CUE SHARE OPTION SCHEME
On 8 September 2023, the Company issued 4,640,759
unlisted options to eligible employee under the share
option scheme. The options are exercisable at $0.079
(7.9 cents) per option and will vest on 1 July 2026 and
expire on 1 July 2028. The options were valued using
Black-Scholes option pricing model.
During the year $0.1 million of share-based payment
expense was recorded in relation to the Cue share option
scheme for the financial year ending 30 June 2024
(2023: $0.1 million).
In March 2024 Cue exercised 2,152,654 share options. The
exercise price was $0.10 (10 cents) per fully paid ordinary
share, resulting in the issue of 252,562 ordinary shares.
These were awarded on a cashless basis.
89
2024 Echelon Annual Report
Notes to the Financial Statements
For the year ended 30 June 2024
(A)
DEVELOPMENT AND EXPLORATION EXPENDITURE
To maintain the various permits in which the Group is
involved the Group has ongoing expenditure as part of
its normal operations. The actual costs will be dependent
on a number of factors such as joint venture decisions
including final scope and timing of operations. The
Group participates in a number of development projects
that were in progress at the end of the year. These
projects require the Group, either directly or through
joint operation arrangements, to enter into contractual
commitments for future expenditures.
The Group has commitments of $19.7 million for the
drilling and infrastructure works at the Mahato PSC.
The carry under the farm out agreement with Triangle has
$2.9 million remaining at 30 June 2024.
The Group’s share of commitments associated with the
Amadeus Basin permits for production and development
expenditure is $0.8 million at 30 June 2024.
As part of the acquisition of the 25% interest in Mereenie,
the Group has an obligation to pay bonds of $0.9 million
to the Northern Territory Government.
(B)
CONTINGENT ASSETS AND LIABILITIES
The Directors are not aware of any contingent assets or
liabilities at 30 June 2024.
On 30 July 2024 the Group announced the name
change of the parent company to Echelon Resources,
trading as Echelon. The names of Echelon's wholly
owned subsidiaries have subsequently been updated
to include Echelon.
On 31 July 2024 drilling commenced in the Perth
Basin of the Booth well. On the 7 August 2024 the
Group announced that the key prospective reservoirs
had been drilled and no moveable hydrocarbons had
been intersected. The Booth well is now plugged and
abandoned. Costs relating to this drilling operation will be
expensed in the next financial reporting period.
On 23 August 2024, Cue declared a final dividend
of Australian dollar 1 cent per share to be paid on
26 September 2024.
On 27 August 2024, Echelon declared a final dividend of
Australian dollar 1.5 cents per fully paid ordinary share,
with a record date of 17 September 2024, to be paid on
4 October 2024.
There are no further material events that have occurred
after the balance date.
28 COMMITMENTS AND CONTINGENT ASSETS
AND LIABILITIES
29 EVENTS OCCURRING AFTER BALANCE DATE
90
2024 Echelon Annual Report
© 2024 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. Document classification: KPMG Public
Report on the audit of the consolidated financial statements
Opinion
Basis for opinion
We have audited the accompanying consolidated financial
statements which comprise:
¬ the consolidated statement of financial position as at
30 June 2024;
¬ the
consolidated
statements
of
comprehensive
income, changes in equity and cash flows for the year
then ended;
¬ notes, including material accounting policy information
and other explanatory information
In our opinion, the accompanying consolidated financial
statements of Echelon Resources Limited (the Company)
and its subsidiaries (the Group) on pages 58 to 92 present
fairly in all material respects:
¬ the Group’s financial position as at 30 June 2024 and its
financial performance and cash flows for the year ended
on that date; and
¬ In accordance with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS)
issued by the New Zealand Accounting Standards
Board and the International Financial Reporting
Standards issued by the International Accounting
Standards Board.
We conducted our audit in accordance with International
Standards on Auditing (New Zealand) (ISAs (NZ)).
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis
for our opinion.
We are independent of Echelon Resources Limited in
accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners
(Including
International
Independence
Standards)
(New Zealand) issued by the New Zealand Auditing
and Assurance Standards Board and the International
Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code),
and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described
in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has provided other services to the Group in relation
to tax compliance and advisory, and other assurance
services. Subject to certain restrictions, partners and
employees of our firm may also deal with the Group
on normal terms within the ordinary course of trading
activities of the business of the Group. These matters
have not impaired our independence as auditor of the
Group. The firm has no other relationship with, or interest
in, the Group.
Independent Auditor's Report
To the shareholders of Echelon Resources Limited
91
2024 Echelon Annual Report
Materiality
The scope of our audit was influenced by our application of
materiality. Materiality helped us to determine the nature,
timing and extent of our audit procedures and to evaluate
the effect of misstatements, both individually and on
the consolidated financial statements as a whole. The
materiality for the consolidated financial statements as a
whole was set at $2.4 million, determined with reference
to a benchmark of the Group’s total assets. We chose the
benchmark because, in our view, this is a key measure of
the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the consolidated financial statements in the
current period. We summarise below those matters and
our key audit procedures to address those matters in order
that the shareholders as a body may better understand
the process by which we arrived at our audit opinion.
Our procedures were undertaken in the context of
and solely for the purpose of our audit opinion on the
consolidated financial statements as a whole and we do
not express discrete opinions on separate elements of the
consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
ACQUISITION OF ADDITIONAL INTEREST IN AMADEUS BASIN ASSETS
Refer
to
Note
9
within
the
consolidated financial statements.
On
11
June
2024,
the
Group
completed the acquisition of an
additional 25% interest as a joint
venture partner in the Mereenie
gas and oil fields in the Northern
Territory, Australia.
This business combination is a key
audit matter due to the financial
significance
of
the
transaction
to the Group and the judgement
required by the Group to measure
the provisional fair values of assets
and liabilities assumed.
Our audit procedures included:
¬ Reviewing the acquisition agreements and other related transaction
documents to understand the structure, key terms and conditions;
¬ Evaluating the acquisition accounting methodology applied by the Group
against the requirements of the accounting standards;
¬ Assessing the Group’s determination of accounting acquisition date and
provisional fair value of purchase consideration with reference to the
underlying assets sale agreement and accounting standard requirements;
¬ Evaluating the qualifications, competence and objectivity of external and
internal experts used by the Group including an assessment as to the
extent to which the information provided by them could be relied upon;
¬ Evaluating the Group’s provisional assessment of the fair value of oil and
gas production properties and rehabilitation obligations: and
¬ Assessing the appropriateness of the Group’s disclosures in the
consolidated financial statements using our understanding obtained from
our testing and against the requirements of accounting standards.
92
2024 Echelon Annual Report
The key audit matter
How the matter was addressed in our audit
RECOVERABILITY OF OIL AND GAS ASSETS
Refer
to
Note
15
within
the
consolidated financial statements.
The recoverability of oil and gas
assets is a key audit matter due to the
judgement involved in assessing the
recoverable value of the oil and gas
assets. Key assumptions include:
¬ future oil and gas prices;
¬ oil and gas reserves, and future
production levels discount rate;
and
¬ future operating and capital costs
During the period management
recorded a $11.5 million impairment
of the Kupe assets and our testing
focused on this asset.
Our audit procedures to assess the reasonableness of the recoverable value
of the oil and gas assets included.
¬ Evaluating the Group’s impairment indicator assessment, utilising our
knowledge of the Group and the Oil and Gas industry, in which the
Group operates.
¬ For the Kupe Asset, where an indicator of impairment was identified,
in conjunction with our valuation specialists, we evaluated the key
inputs and assumptions included in management’s valuation model.
Our procedures included:
› Assessing whether the valuation methodology applied was in accordance
with the requirements of accounting standards;
› Challenging the feasibility of reserve and resource estimates
and production profiles by comparing for consistency with other
internal and external information, including reports prepared by
management’s experts;
› Comparing management’s forecast of oil and gas prices to observable
market data and contracted prices;
› Using our valuation specialist to assess the reasonableness of the
discount rate used;
› Reviewing operator budgets and forecasts of operating costs and capital
programmes for reasonableness; and
› Performing sensitivity analysis over key assumptions included in the
Group’s impairment assessments.
¬ Comparing the carrying amount of the net assets of the group to its market
capitalisation and evaluating whether any differences would suggest
further impairments are required
Other information
The directors, on behalf of the Group, are responsible for
the other information. The other information comprises
the information included in the Annual Report, but
does not include the consolidated financial statements
and our auditor’s report thereon. The Annual Report is
expected to be made available to us after the date of
this auditor’s report.
Our opinion on the consolidated financial statements does
not cover any other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements our responsibility is to read the other
information and in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the
audit or otherwise appears materially misstated.
When we read the Annual Report, if we conclude that
there is a material misstatement therein, we are required
to communicate the matter to the directors.
93
2024 Echelon Annual Report
Use of this independent
auditor’s report
This independent auditor’s report is made solely to the
shareholders. Our audit work has been undertaken so
that we might state to the shareholders those matters
we are required to state to them in the independent
auditor’s report and for no other purpose. To the fullest
extent permitted by law, none of KPMG, any entities
directly or indirectly controlled by KPMG, or any of their
respective members or employees, accept or assume any
responsibility and deny all liability to anyone other than
the shareholders for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the
consolidated financial statements
The directors, on behalf of the Group, are responsible for:
¬ the preparation and fair presentation of the consolidated
financial statements in accordance with NZ IFRS issued
by the New Zealand Accounting Standards Board and
the International Financial Reporting Standards issued
by the International Accounting Standards Board;
¬ implementing the necessary internal control to enable
the preparation of a consolidated set of financial
statements that is free from material misstatement,
whether due to fraud or error;
¬ assessing the ability of the Group to continue as a
going concern. This includes disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless they either intend
to liquidate or to cease operations or have no realistic
alternative but to do so.
Auditor’s responsibilities for
the audit of the consolidated
financial statements
Our objective is:
¬ to obtain reasonable assurance about whether the
financial statements as a whole free from material
misstatement, whether due to fraud or error; and
¬ to
issue
an
independent
auditor’s
report
that
includes our opinion.
Reasonable assurance is a high level of assurance but it
is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error. They are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of the
consolidated financial statements.
A further description of our responsibilities for the audit
of the consolidated financial statements is located
at the External Reporting Board (XRB) website at:
https://www.xrb.govt.nz/standards/assurance-
standards/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s
report. The engagement partner on the audit resulting in
this independent auditor’s report is Gavin Silva.
For and on behalf of:
KPMG
Wellington
27 August 2024
94
2024 Echelon Annual Report
Stock Exchange Listing
The Company is listed and its shares quoted on the
official list of the Australian Securities Exchange (ASX),
the Company’s code is “ECH”.
DISTRIBUTION OF SECURITY HOLDERS
AS AT 12 AUGUST 2024
Range
Total
Holders
Units
% Units
1—1,000
1,296
873,864
0.39
1,001—5,000
1,702
3,996,695
1.78
5,001—10,000
418
3,036,374
1.36
10,001—100,000
521
15,308,913
6.84
100,001 Over
72
200,734,992
89.63
ROUNDING
0.00
TOTAL
4,009
223,950,838
100.00
UNMARKETABLE PARCELS
Minimum
Parcel Size
Holders
Units
Minimum $500.00
parcel at $0.4050
per unit
1,235
1,564
1,175,216
Securities On Issue
As at 31 August 2023 Echelon Resources Limited had
the following securities
Listed Ordinary Shares
Options to acquire
ordinary shares
223,950,838
9,591,398
Option holders will be able to exercise the Options within
a three year period, three years post issue. The Board
fixes the exercise price of the Option. To date, there have
been four tranches of options issued.
As a consequence of delisting off the NZX, and
consistent with a Board resolution of 30 August,
each tranche of the options issued to date received
an adjustment to the exercise price as per the
following table:
Award Date*
Original
Exercise price
NZD
Revised
Exercise price
AUD
Tranche 1
30/06/2019
$0.61
$0.58
Tranche 2
30/06/2020
$0.65
$0.61
Tranche 3
30/06/2021
$0.52
$0.48
Tranche 4
30/06/2022
$0.54
$0.48
Tranche 5
30/06/2023
$0.47
$0.43
*Exercise price is based on award date.
Shares issued on the exercise of Options will be issued on
the same terms and will rank equally in all respects with
ordinary shares currently on issue. Options do not carry
voting rights or any entitlement to receive dividends
unless and until exercised and converted to shares. In
the event of a change of control event, generally the
vesting date of Options will accelerate and the Options
will become exercisable. Options are generally forfeited
by a participant on the occurrence of a lapse event, which
includes when the participant ceases to be an employee
of the Company.
Substantial Shareholders
Substantial Product Holder Notices are received pursuant
to the Financial Markets Conduct Act 2013. Shareholders
are required to disclose their holding to the issuer and the
issuer’s registered exchanges when:
¬ They have a substantial holding (5% or more of the
listed voting securities);
¬ Subsequent movements of 1% or more in a substantial
holding from prior notification;
¬ Any change is made in the nature of any relevant
interest in the substantial holding; and
¬ They cease to have a substantial holding.
According to the Company’s records and Substantial
Product Holding Notices previously released to the
ASX, as at 30 June 2024, no Substantial Product Holder
Notice, has been received since the date of the last
Annual Report.
Shareholder
Information
95
2024 Echelon Annual Report
TOP 20 SHAREHOLDERS AS AT 12 AUGUST 2024
Security Holder
Units
% Units
1
O.G. OIL AND GAS SINGAPORE PTE. LTD
160,583,035
71.70
2
SIK-ON CHOW
6,000,000
2.68
3
LAWRENCE HERD
3,692,024
1.65
4
SHARESIES AUSTRALIA NOMINEE PTY LIMITED
3,520,241
1.57
5
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2,913,432
1.30
6
MEHASU PTY LIMITED
2,050,000
0.92
7
CITICORP NOMINEES PTY LIMITED
1,970,246
0.88
8
RIUO HAURAKI LIMITED
1,750,000
0.78
9
TRIBAL NOMINEES LIMITED
1,504,507
0.67
10
RADFORD SFT PTY LTD
1,340,000
0.60
11
AOTEAROA RENTAL ENTERPRISES LIMITED
1,273,593
0.57
12
ZILSTAME NOMINEES PTY LTD
875,024
0.39
13
CHIN-YI LIN + YU-CHING LIN-CHAO
810,000
0.36
14
RICHARD BRUCE LEES
768,162
0.34
15
ASB NOMINEES LIMITED <317253 A/C>
514,585
0.23
16
CITIBANK NOMINEES NEW ZEALAND LIMITED
498,932
0.22
17
JANET BACKHOUSE
494,000
0.22
18
NEIL DOUGLAS WAITES
439,928
0.20
19
DYLAN LANCE SCHISCHKA
410,835
0.18
20
ROY ANTHONY RADFORD
393,000
0.18
TOTALS: TOP 20 HOLDERS OF ORDINARY SHARES (TOTAL)
191,801,544
85.64
TOTAL REMAINING HOLDERS BALANCE
32,149,294
14.36
Share buy-backs
No shares were bought back in the period.
TRADING STATISTICS FOR THE 12 MONTHS ENDED 30 JUNE 2024
High
Low
ASX (trading Code ECH) AUD
0.43
0.32
ASX closing price 30 June 2024: AUD 0.395
Track the share price and volumes at
echelonresources.com/investors/investor-dashboard
Dividends
An AUD 3 cent per share special dividend was paid out
to shareholders on 10 April 2024.
An AUD 1.5 cent per share final dividend was declared on
27 August 2024 to be paid on 4 October 2024.
96
2024 Echelon Annual Report
Registered and Head Office
Level 1, 36 Tennyson Street
Wellington 6011
New Zealand
Telephone
+64 4 495 2424
Email
enquiries@echelonresources.com
Auditors
KPMG
KPMG Centre, 44 Bowen Street
PO Box 996
Wellington, New Zealand
Share Registry
AUSTRALIA
Computershare Investor Services Pty Ltd
GPO Box 3329 Melbourne,
VIC 8060 Australia
Freephone
1 800 501 366 (within Australia)
Telephone
+61 3 9415 4083
Facsimile
+61 3 9473 2500
Email
Web.Queries@computershare.com.au
Website
www.computershare.com.au
NEW ZEALAND
Computershare Investor Services Ltd
Level 2, 159 Hurstmere Road Takapuna,
Private Bag 92119 Auckland, New Zealand
Telephone
+64 9 488 8777
Freephone
0800 467 335
Facsimile
+64 9 488 8787
Email
enquiry@computershare.co.nz
Website
www.investorcentre.com
Update your details here
computershare.com.au/easyupdate/ECH
Corporate
Directory
97
2024 Echelon Annual Report
Echelon Resources Limited
Level 1, 36 Tennyson Street
Wellington 6011, New Zealand
+64 4 495 2424
www.echelonresources.com
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investor news at
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