2017 ANNUAL REPORT
CORPORATE DIRECTORY
NORWEST ENERGY NL
65 078 301 505
ABN
078 301 505
ACN
DIRECTORS
Mr Michael John Fry
(Non-Executive Chairman)
Mr Henry David Kennedy
(Non-Executive Director)
Mr Ronald Gordon Currie
(Non-Executive Director)
CHIEF EXECUTIVE OFFICER
Mrs Shelley Maree Robertson
COMPANY SECRETARY
Mrs Jo-Ann Long
INTERNET ADDRESS
www.norwestenergy.com.au
EMAIL ENQUIRIES
info@norwestenergy.com.au
REGISTERED OFFICE
Level 2, 6 Thelma Street
West Perth WA 6005
Tel:
Fax:
+ 61 8 9227 3240
+ 61 8 9227 3211
SHARE REGISTER
Computershare Investor Services Pty Ltd
GPO Box D182
Perth WA 6840
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 1300 850 505
AUDITORS
Rothsay Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
AUSTRALIAN SECURITIES EXCHANGE
NWE
FRANKFURT STOCK EXCHANGE
NUX
CONTENTS
Chairman’s Letter
Permit Summary
Directors’ Report
Lead Auditor’s Independence Declaration
Corporate Governance Statement
Independent Audit Report
Directors’ Declaration
Statement of Profit and Loss and other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Additional ASX Information
3
4
5
16
17
24
27
28
29
30
31
32
49
2
CHAIRMAN’S LETTER
Dear Shareholders,
I am pleased to present the Norwest Energy NL Annual Report for the year ended 30 June 2017.
The past twelve months represents a challenging yet exciting period for the Company, as we continued to
develop our assets in the northern Perth Basin.
In February 2017, Norwest successfully finalised the TP/15 Joint Venture, being free-carried for a 25% interest in
the drilling of Xanadu-1. With all the necessary approvals in place, and a comprehensive community
consultation program complete, the well was spudded in early September 2017. It was considered a technically
challenging well, due to the deviated profile from onshore to offshore, however the Norwest team delivered
the well ahead of schedule, and under-budget, meeting all the technical objectives of the program.
To the delight of the Norwest Board and management team, the logging program revealed oil shows and
excellent quality sands in the top of the Irwin River Coal Measures, and as a result Xanadu-1 was declared a
discovery. The TP/15 Joint Venture is now busy developing the forward program at Xanadu, with the ultimate
intention to bring the Xanadu Field into commercial production as soon as feasible.
Whilst work progressed on EP413, it was a disappointing outcome to have the State Government announce a
Moratorium on hydraulic fracture stimulation whilst a technical review is carried out. Although the Moratorium
will halt progress on developing EP413, it is important to remember that EP413 has a prospective resource of
2.6 TCF of gas, and a contingent resource of 316 BCF, of which Norwest has a 27.945% interest. Norwest
partners AWE Limited and Bharat PetroResources remain committed to developing this resource, with another
well planned as the next phase of the EP413 work program.
Exploration activity and interest in the Perth Basin has increased over the past 12 months, with the Waitsia Field
closer to production, and new entrants taking up large acreage positions. This will provide additional
opportunities for Norwest to utilise our unique position in the Basin, to deliver increased value to shareholders.
Our objectives for the next 12 months include:
Progressing our exploration program at Xanadu, with the ultimate goal to commence commercial oil
production as soon as feasible
Participating in the drilling of the Lockyer Deep-1 well, currently planned for early 2018
Continuing to work with our EP413 JV partners towards drilling a well, capitalising on the 3D seismic
acquisition program results
Assisting with bringing the Jingemia Oil Field back into production, and along with it a welcome revenue
stream to the company
Continue to look for other opportunities to grow shareholder value
Continue to consult with our local communities and stakeholders to ensure we implement best practice
technical programs
I would like to thank my fellow directors for their time and support during the year as well as the management
team and staff of Norwest for their dedication and hard work in progressing the Company’s initiatives. I would
also like to thank the Company’s shareholders for their ongoing support.
The past twelve months has been a period of significant change for the company, and I look forward to 2018
being an exciting year for further development of our asset portfolio.
Michael Fry
Non-Executive Chairman
3
PERMIT SUMMARY
Permit
Location
Type of Permit
Area (100%)
Norwest (%)
NORTHERN PERTH BASIN
EP368
EP426
EP413
L14
TP/15
TIMOR SEA
Perth Basin, WA
Perth Basin, WA
Perth Basin, WA
Perth Basin, WA
Perth Basin, WA
Onshore
Onshore
Onshore
Onshore
Offshore
600.3 km2
1,197 km2
508.3 km2
39.8 km2
645.8 km2
20%
22.22%
27.945%
6.278%
100%
TOTAL AREA NET TO NORWEST 1,176.4 KM2
AC/L6 (ROYALTY)
Vulcan Sub-Basin, NT
Offshore
252.1 km2
1.25% ORRI
Table 1. Norwest Permit Schedule
Norwest Energy is a junior exploration
company with
five
in the northern Perth
tenements
Basin, Western Australia.
interests
in
Company Strategy
• Think smart – be innovative.
• Continue
to develop
technical
Figure 1. Norwest - Northern Perth Basin Acreage
understanding of projects.
• Secure additional
funding and
partners for our upcoming 2 well
program. Think outside the square
with funding options.
• Continue to work closely with
other operators in the basin.
• Exhibit best practice operations.
• Develop positive relationships with
all stakeholders.
• Every dollar counts. Work hard to
keep costs down by capitalising on
current low cost environment.
• “Expose our shareholders to the
drillbit”
Key Objective: Increase Long-term
Shareholder Value
4
Directors’ Report
The Directors of Norwest Energy NL present their report consisting of Norwest Energy NL (“Norwest” or “the Company”),
and its subsidiaries (“Consolidated entity” or “Group”), for the financial year ended 30 June 2017.
1. DIRECTORS AND OFFICERS
The names and details of the Company's Directors in office during the financial year and until the date of this report are
as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Mr Michael John Fry (Independent Non-Executive Chairman), BCom, FFin
Mr Fry, 60, became a Director of Norwest on 8 June 2009 and Chairman on 18 September 2009. Mr Fry has extensive
experience in capital markets and corporate treasury, specialising in risk management. During the three year period to
the end of the financial year, Mr Fry has held directorships in Brookside Energy Ltd (since April 2004), Challenger Energy
Limited (since January 2007) and Technology Metals Australia Limited (since May 2016).
Mr Henry David Kennedy (Non-Executive Director), MA (Geology), SEG
Mr Kennedy, 81, became a Director of Norwest on 14 April 1997. Mr Kennedy has had a long association with Australian
and New Zealand resource companies and as a technical director has been instrumental in the formation and/or
development of a number of successful listed companies including Pan Pacific Petroleum NL, New Zealand Oil and Gas
Limited (NZOG), Mineral Resources (NZ) Ltd and Otter Exploration NL. During his term as Executive Director of Otter, Pan
Pacific and NZOG, these companies were involved in the discovery of the Tubridgi and South Pepper gas fields in Western
Australia, the North Herald and Chervil oil fields in Western Australia and the Kupe South and Rua oil/gas condensate
fields in New Zealand. During the three year period to the end of the financial year, Mr Kennedy has held directorships in
Pancontinental Oil & Gas NL (August 1999 to present) and East Africa Resources Limited (March 2013 to April 2015).
Mr Ronald Gordon Currie (Non-Executive Director)
Mr Currie, 41, became a Director of Norwest on 31 March 2016. Mr Currie has extensive operational experience in oil and
gas operations through his long association with Bonnie Rock Transport, a company he co-founded in 1998 (now owned
by ASCO Group) which provides transport and logistics solutions for the oil and gas industry. Bonnie Rock Transport
specialises in the mobilisation of large drilling rigs and associated equipment across Australia, as well as providing general
haulage services. During the three year period to the end of the financial year, Mr Currie has not held any other
directorships in listed companies.
Miss Emma Curnow (Company Secretary) B.Com, CA, AGIA
Miss Curnow was appointed to the position of Company Secretary on 18 July 2016. She commenced her career as a Senior
Accountant with Ernst & Young in 2003, and has since worked for a number of listed companies in the oil and gas sector
both in Australia and the United Kingdom. She is a qualified Chartered Accountant and a Company Secretary.
2. DIRECTORS INTERESTS
As at the date of this report, the Director’s interests in the securities of the Company are as follows:
Mr Michael John Fry (Non-Executive Chairman)
Mr Ronald Currie (Non-Executive Director)
Mr Henry David Kennedy (Non-Executive Director)
(*): 140,000,000 shares held in the name of Kemprust Pty Ltd, a company of which Ronald Currie’s father is a director.
(*) 190,000,000
167,494,130
Options over Ordinary Shares
-
-
-
Ordinary Shares
17,145,092
3. EARNINGS PER SHARE
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2017
(0.01)
(0.01)
2016
(0.14)
(0.14)
5
4. CORPORATE INFORMATION
Corporate Structure
Norwest Energy NL is a no liability Company that is incorporated and domiciled in Australia.
Nature of Operations and Principal Activities
The principal activity of the Consolidated entity during the course of the financial year was exploration for hydrocarbon
resources. Norwest is operator of the TP/15 and EP413 Joint Venture.
Objectives
Objectives of the Group include:
continued exploration on the Company’s current permits;
seek new ventures suitable for inclusion in the Group’s assets;
manage risks involved in the exploration industry; and
maintain liquidity.
The Group’s targets and strategies for meeting the above objectives include:
prepare work programmes best suited for exploration success;
consider strategic alliances through joint ventures to minimise risks to the Group;
focus on cost cutting in all non-essential areas; and
review appropriate fundraising proposals.
Employees
The Consolidated Entity had three employees as at 30 June 2017 (2016: five employees).
5. OPERATING AND FINANCIAL REVIEW
Operations Summary
Review of Operations
As at the date of this report, Norwest Group holds the following interests:
25% in TP/15(as operator);
27.945% in EP 413 (as operator);
20% in EP 368 and 22.22% in EP 426; and
6.278% in L14 Jingemia Oilfield.
TP/15
During the year, Norwest successfully farmed out 75% of the permit and is free carried for the drilling of Xanadu-1. Upon
completion of the Xanadu-1 drilling program, Norwest will contribute 25% of any future exploration expenditure on
TP/15. Norwest is joined by Triangle (Global) Energy, 3C Group and Whitebark Energy Ltd in the TP/15 Joint Venture (refer
the table below).
Name
Allocation of Expenditure
Interest in TP/15
Norwest
3C Group
Triangle
Whitebark
0%
40%
40%
20%
(Operator)
25%
30%
30%
15%
The drilling program commenced on 4 September 2017. Drilling operations have proceeded as planned.
Xanadu-1 is considered a significant well for the northern Perth Basin, with the Xanadu prospect having an unrisked
recoverable resource of 160 MMbbls. The primary target for the Xanadu-1 well is the Permian Dongara Sandstone, with
secondary targets in the Irwin River Coal Measures and the High Cliff Sandstone. It is situated in very shallow water
immediately adjacent to the coast, and will be drilled from onshore by way of a deviated well.
6
EP 413
The EP413 Joint Venture has been working collaboratively during the year in reviewing and analysing the extensive
Arrowsmith project dataset. This has included combining results from the 3D seismic survey dataset and flowback data
from the Arrowsmith-2 well to map sweet spots in the permit area. The next stage of this process is to determine the
most appropriate location to drill the next well on the permit. The work program commitment for drilling commences in
February 2018.
EP 368 / EP 426
Empire Oil and Gas, as Operator of EP368, successfully secured a 12 month extension on the EP368 well commitment,
now due to be drilled by 29 June 2018. Evaluation work has continued during the year to ensure that the best location is
selected for the upcoming well. Lockyer Deep-1 remains the preferred location to test the Lockyer Deep – North Erregulla
structural trend, which remains untested in the Kingia and High Cliff formations. The conventional well will be drilled to a
depth of 4110m. The Operator has commenced engagement with landowners to negotiate land access agreements, and
planning is underway to secure the key service providers for the upcoming drilling program.
The current work program commitment for EP426 is a 2D seismic survey, to be completed by June 2018, pending
approvals and funding.
L14 Jingemia Oilfield
Subsequent to the year end, Cyclone Energy was placed on title as Operator of the L14 production licence with a 33.722%
interest, whilst the Norwest interest in L14 remains unchanged at 6.278%, a new entrant to the northern Perth Basin –
RCMA makes up the Joint Venture with a 60% interest.
Work is now underway bringing the Jingemia Oil Field back into production, as the Jingemia facility has been in care and
maintenance under operator Origin Energy since 2012. It is an excellent outcome to have this well maintained production
facility brought back online, and Norwest looks forward to first production during Quarter 4 2017, providing a welcome
revenue stream to the Company.
There is identified exploration upside within the Production Licence, with none of the existing Jingemia wells reaching the
deeper structures of the Kingia and High Cliff Sandstone formations, both gas-bearing at Waitsia. A study of these and
other opportunities will be undertaken once the facility has been successfully brought back on line.
EP492
After extensive geotechnical evaluation of the dataset since 2014, although some leads were identified along the eastern
edge of EP492 it was decided that the limited prospectivity did not justify carrying out a 2D seismic survey which was the
planned work program commitment. As a result in October 2016, Norwest surrendered EP492.
SPA-016
Norwest had been progressing an application to DMIRS during the year to convert the SPA into an Exploration Permit.
However, the SPA area includes the Department of Defence Lancelin Defence Training Area and Unexploded Ordnance
Area (Live Firing Range), and due to the high degree of uncertainty on whether future exploration activities could be
carried out within these areas, Norwest Energy made the decision in May 2017 to hand the SPA back to Finder.
UK - 65% in P2265 (Promote Licence – Offshore Wessex Basin)
The Promote period of Bournemouth Bay licenses expired on 30th November 2016. By this date, a commitment had to be
given to drill a well in the subsequent two years or relinquish the licence. Although the project dataset did present some
prospectivity, there was insufficient evidence to justify committing to drill a well. As a result, Halo and Norwest agreed to
relinquish the permit. The relevant documentation is currently being submitted to the Regulator.
7
Performance Indicators
Management and the Board monitor the Group's overall performance by:
evaluating whether exploration activity and expenditure is adding value to the asset portfolio;
analysis of financial budgets versus actual results; and
the Company’s share price.
The underlying drivers which contribute to the Company’s performance and can be managed internally include a
disciplined approach to reducing the Group’s non-essential costs and allocating funds to those activities which will add
shareholder value. The Company’s share price is often influenced by factors outside the control of management and the
Board, such as market conditions, however through effective communication between the Company and all of its
stakeholders the Company can provide assurance that there are regular reviews in place to determine actions which
should be implemented to increase Company performance.
Dynamics of the Business
The Board are focussed on Norwest developing its interests in existing acreage in Western Australia. Norwest seeks to
farm out its interests where appropriate to de-risk its exposures and facilitate successful exploration and development.
Results of Operations
The net loss of the Consolidated entity for the year ended 30 June 2017 of $198,305 was lower than the loss of the prior
year of $1,859,351. The main contributing factors were;
Reversal of provisions (site restoration provision for Jingemia and provision of loan to Finder Exploration for SPA-
016) of $0.9m.
Employee expenses were significantly lower in the year ended 30 June 2017 $0.38m compared to $1.1m due to
cost savings implemented in July 2016.
Financial Position
At 30 June 2017, the Group had cash reserves of $0.5m (2016: $0.3m) and no debt. Fundraising during the financial year
raised $1.33m (before costs). The proceeds were used to fund the Group’s exploration activities and also to supplement
working capital.
At 30 June 2017, the Group had net assets of $5.3m (2016: $4.1m) an increase of $1.2m. This is largely attributable to:
A decrease in non-current provisions from Reversal of provisions (site restoration provision for Jingemia and
provision of loan to Finder Exploration for SPA-016) of $0.9m.
6. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of Directors there were no significant changes in the state of affairs of the Group that occurred during the
financial year under review.
7. SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than the events outlined in note 21 of the financial statements, at the date of this report, there are no matters or
circumstances, which have arisen since 30 June 2017 that have significantly affected or may significantly affect the
operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years
8. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Likely developments in the operations of the Group that were not finalised at the date of this report included:
Drilling program of Xanadu-1
Further information on likely developments in the operations of the Consolidated entity and the expected results of
operations have not been included in this financial report because the Directors believe it would be likely to result in
unreasonable prejudice to the Consolidated entity.
8
9. ENVIRONMENTAL REGULATION AND PERFORMANCE
Norwest has as one of its central tenets, a policy of fully complying with and surpassing the requirements for
environmental management in whatever country/jurisdiction that it operates in. To this end Norwest has developed and
implemented where appropriate the following:
•
•
corporate environment policies and procedures that are communicated to and adhered to by all employees;
environmental management systems and programs relevant to each level of organisation based on but
surpassing the level of standards applying in each jurisdiction;
annual budgets for environmental systems implementation;
plans for continuous monitoring and improvement;
•
•
• workforce training on environmental issues including assignment of management representatives and facilitators
to monitor environmental systems;
a set of quantitative objectives and targets aimed at continuous improvements which exceed legal compliance;
continuous reviews of performance at different levels in the organisation and projects hierarchy; and
a strategy for conducting impact-assessment surveys and periodic audits.
•
•
•
Native Title
There is the risk that native title, exists over the land on which the Consolidated entity holds exploration permits. It is
impossible at this stage to quantify the impact (if any), which native title may have on the operations of the Consolidated
entity.
Past History
Norwest has historically met all environmental requirements through third parties and its partner companies.
Accordingly, Norwest is conversant with environmental requirements and has developed a corporate environmental
policy based on:
government regulation and requirements;
•
• experience from past projects; and
•
assistance from expert consulting groups.
10. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Constitution of the Company requires the Company, to the extent permitted by law, to indemnify any person who
has been an officer of the Company or Group for any liability caused as such by an officer and any legal costs incurred in
defending an action for any liability. During or since the end of the financial year, no amounts have been paid by the
Company or Group in relation to the above indemnities. During the financial year, an annualised insurance premium was
paid to provide adequate insurance cover for Directors and officers against any potential liability and the associated legal
expenses of a proceeding.
11. DIVIDENDS
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends
has been made.
12. REMUNERATION REPORT - Audited
This Remuneration Report, which forms part of the Directors’ Report, outlines the remuneration of the Key Management
Personnel (“KMP”) of Norwest. For the purposes of this report, the KMP are the Directors and the Company Secretary.
Remuneration Policy
The Group’s remuneration policy for its KMP has been developed by taking into account the size of the management
team for the Group, the nature and stage of development of the current operations and market conditions and
comparable salary levels for companies of a similar size and operating in a similar sector.
In addition, the Board in determining the remuneration policy for KMP places emphasis on the following: the Group is
currently only undertaking exploration, appraisal and development activities, risks associated whilst undertaking these
activities and other than profit from asset sales, the Company does not expect any profitable operations until sometime
in the future.
9
Executive Remuneration
The Group’s remuneration policy for its executive officers is to provide a fixed component and a performance based
component (short and long term incentives). The Company aims to:
reward executives with a level and mix of remuneration commensurate with their position and responsibilities
within the Company;
align the interests of executives with those of shareholders and business objectives; and
ensure total remuneration is competitive by market standards.
Fixed remuneration is reviewed regularly by the Board. The process consists of a review of Company and individual
performance, relevant comparative remuneration externally and internally and, where appropriate external advice on
policies and practices. It also takes into account any change to the scope of the role performed by the executive and any
other relevant factors of influence.
The Group has chosen to provide Incentive Options to KMP as part of their remuneration and incentive arrangements in
order to attract and retain their services and to provide incentive linked to performance of the Group. The Incentive
Options have exercise prices at or above market share price (at the time of agreement/grant). As such, the Incentive
Options granted are generally only of benefit if the KMP perform to the level whereby the value of the Group increases
sufficiently to warrant exercising the Incentive Options granted.
The Company prohibits executives entering into arrangements to limit their exposure to Incentive Options granted as part
of their remuneration package.
Employment Contracts with Executives
Mrs Shelley Robertson, Chief Executive Officer – from 11 July 2016
Shelley has an Executive Services Agreement (“the agreement”) which specifies the duties and obligations to be fulfilled in
her role. Mrs Robertson receives a fixed remuneration component of $240,000 (including superannuation) per annum.
The agreement may be terminated by either party by giving three months’ notice. No amount is payable in the event of
negligence or incompetence in regard to the performance of duties. However where Mrs Robertson’s employment:
1.
2.
is terminated by the Company for redundancy; or
is permanently relocated to an area more than 20 kilometers from the current location of the Company’s offices,
the three (3) month notice provisions shall not apply and instead the Company shall pay Mrs Robertson a severance
payment equivalent to six (6) months of the Salary due to Mrs Robertson on the date of cessation of employment.
Mrs Robertson is also entitled to participate in a short term incentive plan and incentive option scheme.
Under the short term incentive plan, the Company shall make a $30,000 payment to Mrs Robertson on or about the 15th
of the month immediately following achievement of the following milestones:
1. a ‘net-profit’ achieved on the first 12 months of Jingemia operations following first oil from the re-start of the
Jingemia Oil Field;
2. commercial flow rates achieved on the successful drilling of Xanadu-1;
3. commercial flow rates achieved on the successful drilling of Arrowsmith-3; and
4. commercial flow rates achieved on the successful drilling of the first well within either EP368 or EP426.
Under the incentive option scheme, the Company will issue 3,000,000 options (Scheme Options) to Mrs Robertson upon
the Company achieving each of the following milestones:
1.
2.
3.
4.
first oil from the re-start of the Jingemia Oil Field (Scheme Milestone 1);
the spudding of Xanadu-1 (Scheme Milestone 2);
the spudding of Arrowsmith-3 (Scheme Milestone 3); and
the spudding of the first well within either EP368 or EP426 (Scheme Milestone 4).
The Scheme Options are to be issued:
1. upon achievement of Scheme Milestone 1 are exercisable at $0.01 on or before 30 June 2020;
2. upon achievement of Scheme Milestone 2 are exercisable at $0.02 on or before 30 June 2020;
3. upon achievement of Scheme Milestone 3 are exercisable at $0.03 on or before 30 June 2020; and
4. upon achievement of Scheme Milestone 4 are exercisable at $0.04 on or before 30 June 2020
10
During the previous financial year, the Company granted 10,000,000 options to Shelley under the Company Incentive
Option Scheme, the exercise price of these options is $0.006 and the expiry is 30 June 2020.
Miss Emma Curnow Company Secretary – from 18 July 2016
Emma has an employment contract which specifies the duties and obligations to be fulfilled in her role. The contract may
be terminated by either party by giving one months’ notice. No amount is payable in the event of negligence or
incompetence in regard to the performance of duties. Miss Curnow receives a fixed remuneration component of $98,400
(plus superannuation) per annum.
During the financial year, the Company granted 4,800,000 options to Emma under the Company Incentive Option
Scheme, the exercise price of these options is $0.006 and the expiry is 30 June 2020.
Non-Executive Director Remuneration
The Board’s policy is for fees to Non-Executive Directors to be no greater than market rates for comparable companies for
time, commitment and responsibilities and seeks to set remuneration at a level which provides the Company with the
ability to attract and retain directors of the highest calibre, whist incurring a cost which is acceptable to shareholders.
The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought when required.
The non-executive directors receive a fixed fee for their services. The maximum aggregate amount of fees that can be
paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting (this is currently $400,000
per annum). Fees for Non-Executive Directors are not linked to the performance of the Group. However to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company and given the current
size, nature and opportunities of the Company, Non-Executive Directors may receive Incentive Options in order to secure
their initial or ongoing holding and to retain their services.
Fees for the Chairman are presently $36,000 per annum (2016: $36,000) and fees for Non-Executive Directors are
presently set at $30,000 per annum (2016: $30,000). These fees cover main board activities and Non-Executive Directors
may receive additional remuneration for other services provided to the Company, including but not limited to,
membership of committees.
The Company prohibits Non-Executives entering into arrangements to limit their exposure to Incentive Options granted as
part of their remuneration package.
Relationship between Remuneration of KMP and Shareholder Wealth
During the Company’s exploration and development phases, the Board anticipates that the Company will retain
earnings (if any) and other cash resources for the exploration and development of its projects. Accordingly the Group
does not have a policy with respect to the payment of dividends and returns of capital and thus there was no
relationship between the Board’s policy for determining the nature and amount of remuneration of KMP and dividends
paid and returns of capital by the Company.
The Board did not determine the nature and amount of remuneration of the KMP by reference to changes in the
Company’s shares traded between the beginning and end of the financial years. However, as noted above certain KMP
are granted Incentive Options which generally will be of greater value to KMP if the value of the Company’s share price
increases.
Relationship between Remuneration of KMP and earnings
As discussed above, the Company is currently undertaking exploration and development activities, and does not expect
to be undertaking profitable operations until sometime in the future. Accordingly the Board does not consider earnings
during the current and previous financial years when determining, and in relation to, the nature and amount of
remuneration of KMP.
11
Emoluments of Directors and Other KMP
Short term Salary
& Fees
Post-Employment
Superannuation
$
$
Share-based
Payments
Options
$
Total
$
Performance
related
%
-
-
30,000
7,500
30,000
41,667
30,000
41,667
36,000
50,000
36,000
50,000
Directors
Michael J Fry
2017
2016
Henry D Kennedy
2017
2016
Ronald G Currie (1)
2017
2016
Other KMP
Shelley Robertson
2017
(2)
2016
Emma Curnow (3)
2017
2016
John D Annand (4)
2017
2016
TOTAL 2017
TOTAL 2016
(1): Mr Currie was appointed on 31 March 2016. (2) Mrs Robertson was appointed as CEO on 11 July 2016. (3) Miss Curnow
was appointed as Company Secretary on 18 July 2016 and (4) Mr Annand was Company Secretary until 18 July 2016.
95,972
311,001
577,891
596,168
95,168
270,693
500,391
555,860
-
21,000
48,600
21,000
804
19,308
28,900
19,308
275,031
-
216,723
-
110,888
-
39,000
-
19,308
-
30,000
7,500
92,500
-
14.18
-
9,600
-
8,788
-
-
7
8.7
-
-
-
-
Options and rights granted to KMP
During the financial year ended 30 June 2017, the Company granted options for no consideration over unissued ordinary
shares in the Company to the following executives as part of their remuneration.
Emma Curnow
Shelley
Annand
Robertson
Number granted
Grant date
4,800,000
12 May 17
12,000,000
10 July 15
Fair value per
option at
grant date ($)
$0.002
$0.003-
$0.004
Exercise price
per option ($)
$0.006
$0.01-$0.04
Expiry date
30 June
2020
30 June
2020
Number of
options vested
during 2017
4,800,000
-
The options granted to Shelley Robertson will only vest upon the Company achieving certain milestones which are fully
detailed in note 14.
12
Details of the values of options granted, exercised or lapsed for each KMP of the Group during the past two financial
years are as follows:
Value of
Options
granted (A)
$
Value of
Options
exercised (B)
$
Value of Options
lapsed (C)
$
Value of Options
included in
remuneration report
$
Remuneration that
consists of Options
%
2017
Emma Curnow
9,600
-
-
9,600
39,000
Shelley Robertson
2016
John Annand
21,000
Peter L Munachen
(*)
((*
(*): Mr Annand ceased as Company Secretary on 18th July 2016 and these options were subsequently lapsed.
20,000
(*): Mr Munachen resigned prior to the vesting of these options.
(*)
21,000
-
-
20,000
39,000
-
-
-
-
8.7
14.18
7
-
A. The value of options granted is the fair value of the options calculated at grant date using an appropriate option pricing
model.
B. The value of options exercised during the year (if any) is calculated as the market price of the shares of the Company on
the ASX at the close of trading on the date the options were exercised after deducting the price paid to exercise the option.
C. The value of options that lapsed during the year (if any) represents the benefit forgone and is calculated at the date of
option issue using option pricing model.
For details on the valuation of the options, including models and assumptions used, please refer to Note 14 to the financial
statements.
Option holdings of Key Management Personnel
Held at 1 July
Granted as
Remuneration
Exercised
Net Other Change
Vested and
exercisable at 30 June
2017
Michael J Fry
Henry D Kennedy
Ronald G Curie
Shelley Robertson
Emma Curnow
2016
Michael J Fry
Peter L Munachen
Henry D Kennedy
Ronald G Curie
John D Annand
4,000,000
4,000,000
-
22,000,000
-
4,000,000
8,000,000
4,000,000
-
5,000,000
-
-
-
-
4,800,000
-
10,000,000
-
-
10,000,000
-
-
-
-
-
-
-
-
-
(4,000,000) (#)
(4,000,000) (#)
-
-
-
-
(^) (10,000,000)
-
-
-
-
-
-
10,000,000
4,800,000
4,000,000
8,000,000
4,000,000
-
10,000,000 (*)
(*): Mr Annand ceased as Company Secretary on 18th July 2016 and these options were subsequently lapsed.
(^): Mr Munachen resigned prior to the vesting of these options.
(#): These options lapsed on 28 November 2016.
13
Shareholdings of Key Management Personnel
Held at 1 July
Purchases
Sales
Net Other Change
Held at 30 June
2017
Michael J Fry
Henry D Kennedy
Ronald G Currie
Shelley Robertson
Emma Curnow
2016
Michael J Fry
Peter L Munachen
Henry D Kennedy
Ronald G Currie
John D Annand
12,457,592
62,806,630
90,000,000
57,000
-
9,966,067
20,105,084
41,449,262
-
21,661,291
-
100,000,000
100,000,000
125,000
-
2,491,525
5,026,280
21,357,368
-
6,338,710
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90,000,000 (*)
-
12,457,592
162,806,630
190,000,000
182,000
-
12,457,592
25,131,364
62,806,630
90,000,000
28,000,001
(*): 140,000,000 shares held in the name of Kemprust Pty Ltd which is a company which Ronald Currie’s father is a
Director.
Loans with KMP
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2017 (2016: nil).
Other Transactions with KMP
Subsequent to the year end, a drilling contract for the performance of drilling rig services was entered into between
Westranch Pty Ltd (as Operator of the TP/15 Joint Venture) and Enerdrill Pty Ltd of which Ronald Currie is a Director.
End of Remuneration Report.
13. SHARE OPTIONS
At 30 June 2017 unissued ordinary shares under options were:
Expiry date
Exercise price
30 June 2020
10 February 2018
Total outstanding as at 30 June 2017
$0.006
$0.024
Number of options
20,000,000
60,000,000
80,000,000
14. DIRECTORS’ MEETINGS
The number of Board meetings held during the year and the number of meetings attended by each Director was as follows:
Mr Michael John Fry (Non-Executive Chairman)
Mr Henry David Kennedy (Non-Executive Director)
Mr Ronald Gordon Currie (Non-Executive Director)
Number eligible to
attend
10
10
10
Number attended
10
10
10
The Board also dealt with various matters by circular resolution, as such eight circular resolutions were signed.
Committee membership
As at the date of this report, the Company did not have any formal committees.
14
15. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 13 and forms part of the Directors’ Report for the year ended 30
June 2017.
16. NON-AUDIT SERVICES
The Company’s auditor, Rothsay Chartered Accountants, did not provide any non-audit services during the year (2016: nil).
Dated this 26th day of September 2017 in accordance with a resolution of the Directors and signed for and behalf of the
Board by Mr Michael John Fry
Michael John Fry
Non-Executive Director and Chairman
15
16
Corporate Governance Statement
This Corporate Governance Statement has been prepared on the basis of disclosure under the 3rd Edition of the
ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (“ASX Principles
and Recommendations”).
The Company has followed each recommendation where the Board has considered the recommendation to be
an appropriate benchmark for corporate governance practices, taking into account factors such as the size of
the Company and the Board, resources available and activities of the Company. Where, after due consideration,
the Company's corporate governance practices depart from the ASX Principles and Recommendations, the
Board has offered full disclosure of the nature of and reason for the departure.
The Company's website www.norwestenergy.com.au contains a corporate governance section that includes
copies of the Company’s corporate governance policies and practices mentioned in this statement.
Recommendation
Principle 1 – Lay solid foundations for management and oversight
Comply
Yes/No
1.1
1.2
Disclose the respective roles and responsibilities of the Board and management and
disclose those matters expressly reserved to the Board and those delegated to
management.
Undertake appropriate checks before appointing a Director or putting forward for their
election and provide security holders with all material information in its possession
relevant to their election or re-election as a director.
Yes
Yes
1.3 Written agreement with each director and senior executive setting out the terms of their
Yes
1.4
1.5
1.6
1.7
appointment.
The Company Secretary should be accountable to the Board through the Chair, on all
matters to do with the proper functioning of the Board.
Have a diversity policy with the measurable objectives for achieving gender diversity and
to assess annually both the objectives and the entity's progress in achieving them. The
proportion of men and woman on the Board, Senior Management and the whole
organisation should be disclosed.
Disclose a process for periodically evaluating the performance of the Board, its
committees and individual directors and disclose whether a performance evaluation was
undertaken during the reporting period.
Disclose a process for periodically evaluating the performance of the senior executives
and disclose in relation to each reporting period whether an evaluation took place during
the reporting period.
Principle 2 – Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
If the entity does not have a Nomination Committee disclose that fact and the processes
it employs to address board succession issues and to ensure the Board has the correct
mix of directors to enable it to discharge its duties and responsibilities effectively.
Disclose a Board skills matrix setting out the mix of skills and diversity that the Board has
or would like to achieve.
Disclose the names of the independent Directors, along with the length of service of
each director.
A majority of the Board should be independent.
The Chair of a Board should be an independent director, and should not be the same
person as the CEO.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
17
2.6
Have a program for inducting new directors and provide appropriate professional
development opportunities for directors to develop and maintain the skills and
knowledge needed to perform their role as directors effectively.
Yes
Principle 3 – Act ethically and responsibly
3.1
Establish a code of conduct for its directors, senior executives and employees.
Yes
Principle 4 – Safeguard integrity in corporate reporting
4.1
4.2
4.3
If the entity does not have an Audit Committee disclose that fact and the processes it
employs that independently safeguard the integrity of its corporate reporting, including
the processes for the appointment and removal of the external auditor and the rotation
of the audit engagement partner.
Before the Board approves its’ financial statements, it should receive from its CFO and
CEO a declaration that in their opinion the financial records have been maintained
properly and that the financial records comply with the appropriate accounting
standards and the opinion has been formed on the basis of a sound system of risk
management and internal control.
Ensure that its external auditor attends its AGM and is able to answer questions from
security holders relevant to the audit.
Principle 5 – Make timely and balanced disclosure
5.1
The entity should have a written policy for complying with its continuous disclosure
obligations under the Listing Rules.
Principle 6 – Respect the rights of the shareholders
Yes
Yes
Yes
Yes
6.1
6.2
6.3
6.4
Provide information about the entity and its governance to investors via its website.
Yes
Design and implement an investor relations program to facilitate effective two-way
communication.
Disclose the policies and processes to facilitate and encourage participation at meetings
of shareholders.
Give shareholders the option to receive and send communications to the entity and it
share registry electronically.
Yes
Yes
Principle 7 – Recognise and manage risk
7.1
7.2
7.3
7.4
If the entity does not have a Risk Committee disclose that fact and the processes it
employs for overseeing the entity’s risk management framework.
The Board should review the entity's risk management framework at least annually to
satisfy itself that it continues to be sound and disclose when the review is undertaken.
If the entity does not have an internal audit function, disclose that fact and the processes
it employs for evaluating and improving the effectiveness of its risk management and
internal control processes.
Disclose whether it has any material exposure to economic, environmental and social
sustainability risks and if it does, how it manages or intends to manage those risks.
Yes
Yes
Yes
Yes
Principle 8 – Remunerate fairly and responsibly
8.1
If the entity does not have a Remuneration Committee disclose that fact and the
processes it employs for setting the level and composition of remuneration for directors
Yes
18
8.2
8.3
and senior management and ensuring that such remuneration is appropriate.
Separately disclose its policies and practices regarding the remuneration of non-
executive directors, executive directors and other senior executives.
If the entity has an equity based remuneration scheme, it should have a policy on
whether participants are permitted to enter into derivative or other transactions to limit
their risk.
Yes
Yes
Further information required and non-compliance explanations
Recommendation 1. 5 - Diversity Policy with measurable objectives
The Company’s primary objectives with regard to diversity are as follows:
the Company’s composition of the Board, executive, management and employees to be as diverse as
practicable; and
to provide equal opportunities for all positions within the Company and continue the Company’s
commitment to employment based on merit.
The measurable objectives set by the Company with regard to diversity have been met, as described below:
blend of skills – wide range of backgrounds; geology, engineering, finance and corporate experience;
cultural backgrounds – Australian, American and South African;
gender – both male and female members; and
age – the age range spans over 25 years.
The above points relate to the composition of the Board and full time employees.
The Company’s annual reporting on the percentage of females in the organisation is as follows:
Full Time Employees
Executive Employees & Board Members
% Female
2017
100%
40%
2016
80%
20%
Recommendation 1.6 and 1.7 – Performance evaluation
During the year an evaluation of the Board and its individual directors was not carried out. The Board and
management’s suitability, overall structure and composition to carry out the Company's objectives is however,
discussed and reviewed on an as-required basis.
Performance evaluation of the CEO, senior executives and employees is undertaken annually through a
performance appraisal process which involves reviewing and assessment of performance against agreed
corporate, industry and individual key performance indicators.
Recommendation 2.1 – Nomination Committee
The Board does not have a separate Nomination Committee, rather the full Board considers those matters that
would usually be the responsibility of a Nomination Committee. Given the size and composition of the Board, it
is not practicable for a separate committee to be formed.
To assist it in carrying out its function in relation to nomination matters, the Board has adopted a Nomination
Committee Charter which includes the following responsibilities:
- board succession planning;
- performance evaluation of the Board and individual directors;
- director induction and professional development; and
19
-
appointment and re-election of directors.
Recommendation 2.2 – Board skills matrix – composition of the Board
The names of the Directors of the Company in office at the date of this statement and information regarding
Director’s skills, experience and expertise are set out in the Directors’ Report. The Company seeks to maintain a
Board which brings together a diverse range of skills, experience, and perspectives to support the strategic
direction of the Company and enable effective management oversight and governance.
The below is the preferred combination of capabilities, skills and experience for the Board:
technical disciplines of upstream oil and gas exploration, development and production;
finance, taxation, treasury and accounting;
company strategy and business planning;
risk and governance knowledge;
-
-
-
-
- business growth and corporate development;
-
corporate social responsibility including sustainability and community stakeholder;
-
local and international experience; and
- ASX listed public company administration.
Each of these skills are currently represented on the Board and the Board considers that collectively it has the
appropriate range of skills and experience to direct the Company.
Recommendation 2.3– Name of independent Directors and length of service of each Director
In considering the independence of a director, the “Factors relevant to assessing the independence of a
director” in Box 2.3 of the ASX Principles and Recommendations ("Independence Criteria") have been applied.
Mr Fry has been considered an independent Director, whilst Mr Kennedy is a substantial shareholder and Mr
Currie is associated with a substantial security holder of the entity and thus were not considered independent.
The length of service of Messrs Fry, Kennedy and Currie are eight, twenty and one year(s) respectively.
Recommendation 2.4 – Majority of the Board should be independent
As at 30 June 2017, only one of the three Directors are considered to be independent.
Given the size and scope of the Company's operations the Board considers that it is appropriately structured to
discharge its duties in a manner that is in the best interests of the Company. Further, mechanisms are in place
so that if a director considers it necessary, they may obtain independent professional advice.
Recommendation 4.1 – Audit Committee
The Board does not have a separate Audit Committee, rather the full board fulfils the function of an audit
committee and therefore no separate audit committee has been formed in accordance with the compositional
recommendation. Given the size and composition of the Board, it is not practicable that a separate audit
committee be formed.
To assist it in carrying out its function in relation to audit matters, the Company has adopted an Audit
Committee Charter to assist it to fulfil its role as the Audit Committee, which includes the following
responsibilities:
- monitor and review the integrity of the financial reporting of the Company;
-
review the Company’s internal financial control system; and
20
- monitor, review and oversee the external audit function including matters concerning appointment,
remuneration, independence and non-audit services.
The Charter provides that independent directors may meet with the external auditor.
Recommendation 7.1 – Risk Committee
The Company believes that it is crucial for all Board members to be a part of overseeing the risk management
process, and as such the Board has not established a separate committee to oversee risk. This along with the
size and composition of the Board has meant that the full Board fulfils the function of a risk committee. The
Board is responsible for reviewing the Company’s policies on risk oversight and management and satisfying
itself that management has developed a sound system of risk management and internal control.
Recommendation 7.2 – Risk Management Framework review
The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks
and opportunities are identified on a timely basis and that the Company’s objectives and activities are aligned
with the risks and opportunities identified by the Board. The Company has a risk management policy in place.
The Board is ultimately responsible for risk management, however implementation of the risk management
system and day-day management of risk is the responsibility of the CEO, with the assistance of senior
management. Management reports to the Board annually, or more frequently as required, on the Company’s
key risks and the extent to which it believes these risks are being managed. During 2017, the Board reviewed
the overall risk profile for the Company and received input from management on the effectiveness of the
Company’s management of its material business risks.
The Board has a number of active mechanisms in place to ensure that management's objectives and activities
are aligned with the business risks identified. These include the following:
Implementation of approved operating plans and cash flow forecasts and Board monitoring of progress
against these plans and forecasts;
Management reporting on specific business risks, including matters such as environmental issues and
occupational health and safety concerns.
The Company has advised each director, manager and employee that they must comply with a set of
ethical standards maintaining appropriate core company values and objectives. Such standards ensure
shareholder value is maintained and developed. Standards cover legal compliance, conflict resolution,
employment best practices, privileged information and fair dealing.
Recommendation 7.3 – Internal Audit function or process for reviewing internal controls
The Company does not have a dedicated internal audit function, however strong internal control policies and
procedures are in place to effectively manage potential risks and detect any control breakdowns. These are
reviewed (and if necessary improved) on an annual basis, as well as when any new risks are identified or
changes occur in the business or industry.
The processes for the review are as follows:
-
External auditors independently evaluating the Company’s internal control environment and its
compliance with the International Financial Reporting Standards on an annual basis;
- Ongoing oversight of strategic matters by executive management and of operational matters ensuring
that risks identified are assessed and proactively managed;
- Written internal control assurance from the CEO and CFO prior to sign off of financial statements by the
Board; and
- Monthly reporting and review of financial and budgetary information.
Recommendation 7.4 – Material exposure to economic, environmental and social sustainability risks
21
The Company has identified a series of business risks (economic, environmental and social sustainability risks)
which the Group believes to be inherent in the industry.
Economic risks
- Ability to gain additional funding or a farm-out partner
The Company is not in production as yet and the development of its permits will require substantial additional
financing. Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration
and any development or a loss of interest. However, the Board is experienced in capital markets and financing
resource projects as well as having an extensive reach for potential farm-in partners (as evidenced during the
year by successfully farming out 75% of TP/15 and being free carried for the costs associated with drilling the
Xanadu-1 well).
There are various other economic risks including; commodity risk, exchange rate risk and market risk (these
risks are examined in Note 7).
Environmental and social sustainability risks
-
Impact on the environment and community from Company activities
The Board and management are committed to developing and building a sustainable business, ensuring the
Company is an active and responsible member of the communities in which we operate. Corporate
environmental policies and procedures are in place and communicated to and adhered to by all employees.
External impact-assessment surveys and audits are conducted using third-party consultants who are specialists
in their field.
- Native title risk in relation to claims over the permits held by the Company
Norwest works closely with the respective parties associated with any claim to come to a mutually beneficial
agreement.
Recommendation 8.1 – Remuneration Committee
The Board does not have a separate Remuneration Committee, rather the full Board fulfils the function of a
remuneration committee and therefore no remuneration committee has been formed in accordance with the
compositional recommendation. Given the size and composition of the Board, it is not practicable that a
separate remuneration committee be formed.
To assist it in carrying out its function in relation to remuneration matters, the Company has adopted a
Remuneration Committee Charter to assist it to fulfil its role as the Remuneration Committee, which states the
function of the committee is to assist the Board in fulfilling its corporate governance responsibilities with
respect to remuneration by reviewing and making appropriate recommendations on:
- Remuneration packages of directors and senior executives; and
-
Employee incentive and equity-based plans.
Recommendation 8.2 – Remuneration policies and practices
The Company’s remuneration policy has been developed by taking into account the size of the management
team, the nature and stage of development of the current operations and market conditions and comparable
salary levels for companies of a similar size and operating in a similar sector.
For details of the Company’s policies and practices regarding the remuneration of directors and senior
executives refer to the Remuneration Committee Charter on the Company’s website as well as the
Remuneration Report included within the Directors’ Report which includes the remuneration paid to Key
Management Personnel and other relevant information.
22
Recommendation 8.3 – Transactions to limit exposure to economic risk from participating in equity-based
remuneration schemes
The Company prohibits executives entering into arrangements to limit their exposure to Incentive Options
package.
granted
remuneration
their
part
as
of
23
24
25
26
Directors’ Declaration
The Directors of the Company declare that, in the opinion of the Directors:
(a)
The attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position and performance of the consolidated entity; and
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements.
The financial statements and notes thereto also comply with International Financial Reporting Standards, as
disclosed in Note 1 and other mandatory professional reporting requirements.
The Directors have been given the declarations required by s.295A of the Corporations Act 2001.
There are reasonable grounds to believe that Norwest Energy NL will be able to pay its debts as and when they
become due and payable.
(b)
(c)
(d)
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
Dated in Perth on this 26th day of September 2017
Michael John Fry
Non-Executive Director and Chairman
27
Statement of Profit or Loss and Other Comprehensive
Income for the year ended 30 June 2017
Continuing Operations
Interest income
Other income
Depreciation
Audit fees
Consulting fees
Legal expense
Exploration and production expenditure impairment
Operating costs to P & L
Reversal of site restoration provision
Reversal of provision – SPA16
Employee expenses
Administration expenses
Share based payment expense
Note
Consolidated Entity
2017
$
2016
$
2
2
18
9
11
11
13(b)
3,039
139,742
6,478
118,250
142,781
124,728
(15,850)
(21,500)
(21,502)
(29,790)
(415,878)
(66,402)
396,895
538,000
(383,382)
(218,810)
(101,000)
(17,305)
(38,578)
(52,958)
(17,347)
(374,432)
(43,102)
-
-
(1,057,667)
(400,200)
(42,000)
Loss)from continuing operations before income tax
(196,438)
(1,875,759)
Income tax benefit
4
-
-
Loss from continuing operations for the year
(196,438)
(1,875,759)
Other Comprehensive Income
Exchange differences on translation of foreign operations
Net change in fair value of available for sale financial assets transferred to
profit and loss
-
(1,867)
15,408
1,000
Total Comprehensive Loss attributable to Members of Norwest Energy NL
(198,305)
(1,859,351)
Profit/(Loss) per share attributable to the ordinary equity holders of the
company:
Basic and diluted earnings/(loss) per share
5
(0.01)
(0.14)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
28
Statement of Financial Position
as at 30 June 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation expenditure
Other financial assets
Investments
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
Consolidated Entity
2017
$
2016
$
6
8
9
10
11
541,919
71,255
25,000
638,174
335,143
73,784
-
408,927
17,732
4,950,269
-
133
4,968,134
33,196
4,897,697
25,000
2,000
4,957,893
5,606,308
5,366,308
228,359
31,675
260,034
226,378
24,784
251,162
36,544
36,544
977,550
977,550
296,578
1,228,712
5,309,730
4,138,108
12
13(b)
13(a)
57,345,391
101,000
(52,136,661)
5,309,730
56,076,464
1,409,600
(53,347,956)
4,138,108
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
29
Statement of Changes in Equity
for the year ended 30 June 2017
Consolidated Entity
Balance at 1 July 2016
Comprehensive income for the year
Profit/(Loss) for the year
Total Comprehensive Income for the Year
Transactions with owners in their capacity
as owners:
Contributed
Equity
$
Share-Based
Payment
Reserve
$
Accumulated
Losses
$
Total Equity
$
56,076,464
1,409,600
(53,347,956)
4,138,108
-
-
-
(198,305)
(198,305)
(198,305)
(198,305)
-
1,268,927
Share issue (net of costs)
1,268,927
Share options expired/exercised
Share based payments expense
-
-
(1,409,600)
1,409,600
-
101,000
-
101,000
Balance at 30 June 2017
57,345,391
101,000
(52,136,661)
5,309,730
54,953,620
1,672,348
(51,793,353)
4,832,615
Balance at 1 July 2015
Comprehensive income for the year
Profit/(Loss) for the year
Other comprehensive loss
Total Comprehensive Income for the Year
Transactions with owners in their capacity
as owners:
-
-
-
-
(1,875,759)
(1,875,759)
16,408
16,408
(1,859,351)
(1,859,351)
-
1,122,844
-
-
-
-
-
Share issue (net of costs)
1,122,844
Share options expired/exercised
Share based payments expense
-
-
(304,708)
304,748
42,000
-
42,000
Balance at 30 June 2016
56,076,464
1,409,600
(53,347,956)
4,138,108
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
30
Statement of Cash Flows
for the year ended 30 June 2017
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Net Cash Used In Operating Activities
Cash Flows from Investing Activities
Payments for property, plant and equipment
Payments for exploration and evaluation expenditure
Net Cash Used In Investing Activities
Cash Flows from Financing Activities
Proceeds from share issue
Share issue costs
Net Cash Provided by Financing Activities
Note
Consolidated Entity
2017
$
2016
$
(596,356)
3,039
(593,317)
(1,711,979)
6,478
(1,705,501)
6(b)
(383)
(468,451)
(468,834)
(14,429)
(505,370)
(519,799)
1,330,000
(61,073)
1,268,927
1,320,229
(187,385)
1,132,844
Net Increase/ (Decrease) in Cash Held
206,776
(1,092,456)
Cash and Cash Equivalent at the Beginning of the Financial Year
Effects of exchange rate changes on cash held
Cash and Cash Equivalents at 30 June
335,143
-
541,919
1,412,191
15,408
335,143
6(a)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
31
Notes to the Financial Statements
1
ABOUT THIS FINANCIAL REPORT
Reporting Entity
This financial report of Norwest Energy NL (‘the Company’) for the year ended 30 June 2017 comprises the Company and
its subsidiary (collectively referred to as ‘the consolidated entity’ or ‘Group’). Norwest Energy NL is a company limited by
shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.
The notes to the financial statements are organised into the following sections:
(a) Key Performance: Provides a breakdown of the key individual line items in the statement of comprehensive income
that is most relevant to understanding performance and shareholder returns for the year:
Notes
2
3
4
5
Revenue from continuing operations
Segment information
Income tax expense
Profit/(Loss) per share
(b) Financial Risk Management: Provides information about the Consolidated Entity’s exposure and management of
various financial risks and explains how these affect the Consolidated Entity’s financial position and performance:
Notes
6
7
Cash and cash equivalents
Financial risk management
(c) Other Assets and Liabilities: Provides information on other balance sheet assets and liabilities that do not materially
affect performance or give rise to material financial risk:
Trade and other receivables
Exploration and evaluation expenditure
Notes
8
9
10 Trade and other payables
11 Provisions – non current
(d) Capital Structure: This section outlines how the Consolidated Entity manages its capital structure and related
financing costs (where applicable), as well as capital adequacy and reserves. It also provides details on the dividends
paid by the Company:
Notes
12 Contributed equity
13 Reserves and accumulated losses
14 Share-based payments
(e) Consolidated Entity Structure: Provides details and disclosures relating to the parent entity of the Consolidated
Entity, controlled entities, investments in associates and any acquisitions and/or disposals of businesses in the year.
Disclosure on related parties is also provided in the section:
Notes
15 Parent entity information
16
17 Key Management Personnel Disclosures & Related party transactions
Investment in controlled entities
(f) Other: Provides information on items which require disclosure to comply with Australian Accounting Standards
and other regulatory pronouncements however, are not considered significant in understanding the financial
performance or position of the Consolidated Entity:
Notes
18 Remuneration of Auditors
19 Commitments for expenditure
20 Contingencies
21 Events occurring after reporting period
32
Basis of Preparation
1a
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and
the Corporations Act 2001. Norwest Energy NL is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRSs
The financial statements of Norwest Energy NL also comply with International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board (IASB).
New, revised or amending Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Any significant impact on the accounting policies of the Consolidated Entity from the adoption of these Accounting
Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not
have any significant impact on the financial performance or position of the Consolidated Entity.
New Accounting Standards and Interpretations
(i) New and amended standards adopted
The Group has adopted the following new and revised accounting standards, amendments and Interpretations issued that
are mandatory for the current reporting period:
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint
Operations
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012-2014 Cycle
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative – Amendments to AASB 101
The adoption of these new and revised standards did not have a material impact on the Group’s financial statements.
(ii) New accounting standards and interpretations issued but not yet effective
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted. The Group has not yet assessed the impact of the adoption of the new accounting standards or interpretations.
Principles of Consolidation
1b
The consolidated financial statements incorporate the assets and liabilities of the Company as at 30 June 2017 and the
results of its subsidiaries for the year then ended. The Company and its subsidiaries are referred to in this financial report as
Reward or the Consolidated Entity.
All inter-company balances and transactions between entities in the Consolidated Entity, including any unrealised profits or
losses, have been eliminated on consolidation.
GST
1c
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated as inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of
Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
33
REVENUE FROM CONTINUING OPERATIONS
2
Interest income
JV Operator fees and other recoveries
Research and development tax rebate received
3
SEGMENT INFORMATION
2017
$
2016
$
3,039
108,314
31,428
6,478
7,787
110,463
142,781
124,728
The Group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the basis of
internal reports of the Group that are reviewed by the chief operating decision-maker in order to allocate resources to
the segment and to assess its performance.
The Board of Norwest reviews internal reports prepared as Consolidated financial statements and strategic decisions of
the Group are determined upon analysis of these internal reports. During the period the Group operated in one
business segment, being the oil and gas sector. Accordingly under the management approach outlined only one
operating sector has been identified and no further disclosures are required in the notes to the Consolidated financial
statements.
INCOME TAX EXPENSE
The major components of income tax expense are
4
(a)
Income statement
Current income tax:
Current income tax benefit
Deferred income tax:
Relating to origination and reversal of temporary differences
Unused tax losses not recognised as a DTA
Income tax (expense)/income reported in the income statement
489,503
603,454
(123,869)
(365,634)
(54,294)
(549,160)
-
-
The aggregate amount of income tax attributable to the financial period differs from the amount calculated on the
operating loss.
The differences are recorded as follows:
Accounting loss
Prima facie tax payable at 27.5% (2016: 28.5%)
Add tax effect of items not brought to account:
Non-deductible and non-assessable permanent items
Tax losses not bought to account
2017
$
2016
$
(198,305)
(54,534)
(1,859,351)
(529,915)
(311,099)
365,634
(19,245)
549,160
-
-
34
(b) Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Tax effect of exploration expenses
Set-off against carry forward losses
Deferred tax liability balance
Deferred tax assets
Tax value of carry forward losses
Set off against deferred tax liability
Non-recognition of deferred tax asset
Deferred tax assets
Deferred tax asset balance
(c) Tax losses
Deferred tax assets
Tax losses – revenue
Tax losses – capital
1,331,998
(1,331,998)
-
1,356,283
(1,356,283)
-
11,248,224
(1,331,998)
(9,916,226)
-
11,115,896
(1,356,283)
(9,759,613)
-
9,156,764
1,947,779
11,104,543
8,522,856
2,018,607
10,541,463
At 30 June 2017, the Consolidated entity has $40,380,155 (2016: $39,003,144) of tax losses that are available indefinitely
for offset against future taxable profits of the Company. A net deferred tax asset balance has not been recognised on the
Statement of Financial Position in respect of the amount of these losses.
The recognition and utilisation of losses is subject to the loss recoupment rules being satisfied. The potential deferred tax
asset will only be obtained if:
- assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be
realised or the benefit can be utilised by the Company and/or the Consolidated entity providing that;
- the conditions for deductibility imposed by the law are complied with; and
- no changes in tax legislation adversely affect the realisation of the benefit from the deductions.
(d) Tax consolidation legislation
The Company had not elected to consolidate for tax purposes at balance date.
PROFIT/(LOSS) PER SHARE
5
Basic loss per share
The profit/(loss) for the year and the weighted average number of ordinary
shares used in the calculation of basic loss per share are as follows:
Loss for the year after income tax
2017
Cents Per Share
2016
Cents Per Share
(0.01)
(0.14)
2017
$
2016
$
(198,305)
(1,859,351)
2017
No.
2016
No.
Weighted average number of ordinary shares for the purposes of basic
earnings per share
2,499,176,700
1,287,270,900
35
2017
$
2016
$
CASH AND CASH EQUIVALENTS
Reconciliation of Cash
6
6a
For the purposes of the Statements of Cash Flows, cash includes cash on hand
and in banks. Cash at the end of the financial year as shown in the Statement
of Cash Flows is reconciled to the related items in the Statement of Financial
Position as follows:
Cash and short term deposits
541,919
335,143
6b
Reconciliation of Net Cash used In Operating Activities to Operating
Profit/(Loss) after Income Tax
Profit/(Loss) for the year
Depreciation
Exploration costs expensed included in investing activities
Equity settled share-based payment
Change in assets and liabilities during the financial year:
Trade and other receivables
Investments and assets
Provisions
Trade and other payables
(198,305)
15,850
415,879
101,000
2,529
1,867
(934,115)
1,981
(1,859,351)
17,305
331,330
42,000
56,092
(1,000)
(16,340)
(275,537)
Net cash inflow/(outflow) from operating activities
(593,317)
(1,705,501)
7
FINANCIAL RISK MANAGEMENT
The consolidated entity's activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk and cash
flow interest rate risk. The consolidated entity's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting
policies to these financial statements, are as follows:
Financial Assets
Cash and cash equivalents
Loans and receivables
Total Financial Assets
Financial Liabilities
Financial liabilities at amortised cost
Trade and other payables
Note
6a
8
2017
$
2016
$
541,919
71,255
335,143
73,784
613,174
408,927
10
228,359
226,378
Total Financial Liabilities
228,359
226,378
Risk management is carried out by the Board of Directors, who identify, evaluate and manage financial risks as they
consider appropriate.
7a Market Risk
(i)
Cash Flow Interest Rate Risk
Refer to (d) below.
36
Credit Risk
7b
The Group does not have any significant concentrations of credit risk. Credit risk is managed by the Board and arises from
cash and cash equivalents as well as credit exposure including outstanding receivables and committed transactions.
All cash balances held at banks are held at internationally recognised institutions. The majority of receivables are
immaterial to the Group. Given this, the credit quality of financial assets that are neither past due or impaired can be
assessed by reference to historical information about default rates. The maximum exposure to credit risk at reporting date
is the carrying amount of the financial assets as summarised at the start of this note.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates. Financial assets that are neither past due
and not impaired are as follows:
Cash and cash equivalents
‘AA’ S&P rating
2017
$
2016
$
541,919
335,143
Liquidity Risk
7c
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and, the availability of
funding through the ability to raise further equity or through related party entities. Due to the dynamic nature of the
underlying businesses, the Board aims at maintaining flexibility in funding through management of its cash resources. The
Group has no financial liabilities at the year-end other than normal trade and other payables incurred in the general course
of business. All financial liabilities mature in less than 6 months.
Cash Flow Risk
7d
As the Group has significant interest-bearing assets in the form of cash, the Group's income and operating cash flows are
exposed to changes in market interest rates.
Based on the year-end balances, a 1% increase in interest rates would have increased the consolidated profit by $49,570
(2016: Profit $62,993) and increased the cash balances by a corresponding amount. There were no other amounts
included in Net Assets subject to material interest rate risks.
TRADE AND OTHER RECEIVABLES
8
GST receivable
Trade and other receivables
2017
$
2016
$
6,414
64,841
5,602
68,182
71,255
73,784
No receivables are impaired or past due but not impaired. Refer to Note 7 for Financial Risk considerations. The carrying
value of all receivables approximates their fair value.
9 EXPLORATION AND EVALUTION EXPENDITURE
Exploration and evaluation phase:
Carrying amount at the beginning of the year
Additions
Exploration expenditure impairment
2017
$
2016
$
4,950,269
4,897,697
4,897,697
259,799
(207,227)
4,749,065
449,992
(301,360)
37
Carrying amount at the end of the year
4,950,269
4,897,697
Production phase:
Carrying amount at the beginning of the year
Additions
Operating costs to P & L
Production expenditure impairment
Balance at 30 June
-
275,053
(66,402)
(208,651)
-
-
73,072
(43,102)
(29,970)
-
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful
development and commercial exploitation or sale of the respective area of interest. This is assessed at balance date on an
annual basis.
10
TRADE AND OTHER PAYABLES
Trade Payables
Accrued Expenses
Other payable
11
PROVISIONS – NON CURRENT
Permit L14 site restoration (1)
Finder Exploration (2)
Employee Benefits – Long Service Leave
2017
$
2016
$
47,491
163,500
17,368
101,279
106,879
18,219
228,359
226,378
2017
$
2016
$
-
-
36,544
396,895
538,000
42,655
36,544
977,550
(1): The provision for site restoration relates to production permit L14 Jingemia. It is reassessed on an annual basis and
reflects the Company’s share of the present value of restoration costs. There has been a change in operations for the L14
permit, with the new Operator Cyclone Energy appointed, activities have commenced on site to bring the facility back into
production and thus the site restoration provision as determined by Origin is no longer relevant.
(2): The provision in relation to Finder Exploration Pty Ltd (“Finder”) relates to part of the consideration for the purchase
from Finder of Finder No.5 Pty Ltd, the applicant for an Exploration Permit over the SPA-16 AO area. Upon completion of
the transaction the Company is to pay Finder for past costs incurred on SPA-16 AO and for assistance in obtaining the grant
of the Exploration Permit. In May 2017, the Company handed back SPA-16 (prior to it becoming an Exploration Permit) to
Finder and thus the provision is no longer applicable.
38
CONTRIBUTED EQUITY
Issued capital
12
12a
2,673,902,727 fully paid ordinary shares (30 June 2016: 2,050,569,394)
12b Movements in Ordinary Shares during the past two years
Date
01-Jul-16
20-Jul-16
01-Sep-16
10-Feb-17
30 Jun-17
30 Jun-17
Details
Opening balance
Share placement
Share placement
Share placement
Share issue costs
Closing balance
1-Jul-15
2-Dec-15
Opening balance
Share placement
23-Dec-15
Non-renounceable right issue
06-Jan-16
30-Jun-16
30-Jun-16
Non-renounceable right issue - shortfall
Share issue costs
Closing balance
No. of Ordinary
Shares
2,050,569,394
215,000,000
200,000,000
208,333,333
-
2,673,902,727
1,440,454,999
200,000,00
136,652,968
273,461,427
-
2,050,569,394
57,345,391
56,076,464
Issue price $
$
-
0.002
0.002
0.024
-
0.0025
0.002
0.002
56,076,464
430,000
400,000
500,000
(61,073)
57,345,391
54,953,620
500,000
273,306
546,923
(197,385)
56,076,464
12c Terms of Conditions of Ordinary Shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
12d Unissued Capital - Options
In February 2017, the Company issued 60 million unlisted options to subscribe for new fully paid ordinary shares in
Norwest to 3C Group at an exercise price calculated as the lesser of (1) A$0.0024 and (2) the price Norwest issues shares
under the last placement completed before the options are exercised, and expiring on 10 February 2018.
Incentive Options are described in detail in note 14.
Capital Risk Management
12e
The Group defines its Capital as total equity of the Group, being $5,309,730 for the year ended 30 June 2017 (2016:
$4,138,108). The Group manages its capital to ensure that it is able to continue as a going concern while financing the
development of it projects through primarily equity based financing. The Board’s policy is to maintain a strong capital base
so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the
stage of development of the Group, the Board’s objective is to minimise debt and to raise funds as required through the
issue of new shares.
There were no changes in the Consolidated entity’s approach to capital management during the year. During the next 12
months, the Group will continue to explore farm-out opportunities and additional issues of equity.
39
RESERVES AND ACCUMULATED LOSSES
Accumulated Losses
13
13a
Accumulated losses at the beginning of the year
Net loss for the year
Other comprehensive income
Transfer of reserves due to cancelled incentive options
Accumulated Losses at the end of the year
Reserves
13b
Share based payments reserve (i)
Share-Based Payments Reserve
(i)
The share-based payments reserve is used to recognise the fair value of
incentive options issued by the Group.
Balance at beginning of the year
Expired during the year
Exercised during the period
Granted during the period
Balance at the End of the Year
2017
$
2016
$
(53,347,956)
(196,438)
(1,867)
1,409,600
(52,136,661)
(51,793,353)
(1,875,759)
16,408
304,748
(53,347,956)
101,000
101,000
1,409,600
1,409,600
1,409,600
(1,409,600)
-
101,000
101,000
1,672,348
(304,748)
-
42,000
1,409,600
14
SHARE-BASED PAYMENTS
(a) Recognised Share-based Payments Expense
The Group provides Incentive Options to officers, employees and consultants as part of remuneration and incentive
arrangements from time to time. The number of options granted and the terms of the options are determined by the
Board. Shareholder approval is sought where required. During the past two years, the following equity settled share-
based payments have been recognised:
(b) Summary of Incentive options granted as Share-based payments
The following table illustrates the number and weighted average exercise prices (“WAEP”) of Incentive Options granted
as share-based payments at the beginning and end of the financial year.
•
•
Nu
mber
•
WAEP
•
Number
2017
•
2017
•
2016
•
•
WAEP
2016
Outstanding at the beginning of year
Expired/lapsed during the year
Exercised during the year
Granted during the year
Outstanding and exercisable at end of year
54,150,000
(44,150,000)
-
10,000,000
20,000,000
0.1111
0.1111
0.006
41,650,000
(17,500,000)
-
30,000,000
54,150,000
0.1111
0.1155
-
0.006
40
(c) Valuation models and key assumptions used
The fair value of the equity-settled share options granted is estimated as at the date of grant using a Binomial option
valuation model taking into account the terms and conditions upon which the options were granted.
The table below lists the inputs to the valuation model used for the share options granted by the Group that are currently
on issue and outstanding at the end of year:
Number of options
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility¹
Expected life²
Dividend yield (%) ³
Risk-free interest rate
•
•
•
May 2017
•
Nov 2015
10,000,000 •
$0.002
•
6,000,000
$0.003
•
•
•
July 2015
4,000,000
$0.006
$0.003
$0.006
150%
3.13 years
Nil
1.79%
$0.004
$0.006
110%
4.62 years
Nil
2.32%
$0.007
$0.006
110%
4.98 years
Nil
2.22%
•
July 2015
(*)
•
12,000,000
Various - see below
$0.005
Various - see below
120%
4.98
Nil
2.06%
(*): 3 million options will vest when each of the following milestones are achieved and each milestone has a specific
exercise price, however the expiry date is the same of 30 June 2020:
1.
2.
3.
4.
1) with an exercise price of $0.01;
price of $0.02;
price of $0.03; and
Milestone 4) with an exercise price of $0.04.
first oil from the re-start of the Jingemia Oil Field (Scheme Milestone
the spudding of Xanadu-1 (Scheme Milestone 2) with an exercise
the spudding of Arrowsmith-3 (Scheme Milestone 3) with an exercise
the spudding of the first well within either EP368 or EP426 (Scheme
The fair value of the options granted under Milestone 1 was $0.004 and the fair value of the remaining options granted under Milestone
2, 3 and 4 was $0.003 each.
¹: The expected volatility is indicative of future trends, which may not necessarily be the actual outcome.
²: The dividend yield reflects the assumption that the current dividend pay-out will remain unchanged.
³: The expected life of the options is based on the expiry date of the options as there is limited track record of early
exercise of options.
(d) Weighted Average Remaining Contractual Life
As 30 June 2017, the weighted average remaining contractual life of Incentive Options on issue that had been granted as
share-based payments was 3 years (2016: 1.74 years).
(e) Range of Exercise Prices
At 30 June 2017, the range of exercise prices of Incentive Options granted as share-based payments is $0.006 to $0.04
(2016: $0.006 to $0.1155).
(f) Weighted average Fair Value
The weighted average fair value of Incentive Options granted as share-based payments by the Group is $0.006 (2016:
$0.08).
41
15
PARENT ENTITY INFORMATION
15a
Summary Financial Information
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial Performance
Profit/(Loss) for the year
Other comprehensive income
Parent
2017
$
2016
$
506,084
5,081,020
304,360
4,989,987
5,587,104
5,294,347
240,730
36,543
167,719
439,549
277,273
609,268
57,345,391
101,000
(52,136,560)
56,076,464
1,409,600
(52,800,985)
5,309,831
4,685,079
745,179
-
(1,500,064)
-
Total comprehensive profit/ (loss) for the year
745,179
(1,500,064)
15b Guarantees
Norwest Energy NL has not entered into any guarantees in relation to the debts of its subsidiary.
15c Other Commitments and Contingencies
Norwest Energy NL has no commitments to acquire property, plant and equipment. Refer to Note 20 for the Company’s
contingent liabilities.
16
INVESTMENT IN CONTROLLED ENTITIES
Name of Entity
Westranch Holdings Pty Ltd
Norwest Perth Basin Pty Ltd
Norwest Holdings (UK) Pty Ltd
NWE Mirrabooka (UK) Pty Ltd
Country of
Incorporation
Australia
Australia
UK
UK
(1): These companies were deregistered during the year.
Class of Shares
Ordinary
Equity Holding
2017
%
100
-
-
-
(1)
(1)
(1)
2016
%
100
100
100
100
42
17
KEY MANAGEMENT PERSONNEL DISCLOSURES & RELATED PARTY
TRANSACTIONS
17a Details of Remuneration of Key Management Personnel
Short-term salary and fees
Post-employment benefits
Share-based payments
REMUNERATION OF AUDITORS
18
Australia – Rothsay Chartered Accountants
UK – Geoffrey Cole & Co
2017
$
2016
$
500,391
28,900
48,600
577,891
21,500
-
21,500
555,860
19,308
21,000
596,168
29,500
9,078
38,578
No non-audit services have been provided to the Group by the auditor.
Detailed remuneration disclosures are provided in the remuneration report on pages 7 - 12.
19
19a
COMMITMENTS FOR EXPENDITURE
Exploration expenditure commitments
Within one year
One year or later and no later than five years
Later than five years
1,738,090
10,496,780
-
8,140,330
14,824,560
364,440
12,234,870
23,329,330
In order to maintain current rights of tenure to exploration permits, the Consolidated entity is required to perform
minimum exploration work to meet the minimum expenditure requirements specified by various Governments. These
obligations are subject to renegotiation. These obligations are not provided for in the financial report.
The permit commitments above will be met through either capital raisings, free carry from farm-in partners, or asset sales.
In order to ensure that the Group’s permits remain in good order, discussions and negotiations with the relevant regulatory
bodies take place on an as required basis to amend the timing of permit commitments where possible so as to align the
permit commitments with the financial capacity of the Group. Should the Group not be permitted to amend the timing of
the permit commitments, or have sufficient funds to satisfy those commitments, the Group risks having to relinquish title
to those permits and return the permit(s) to the relevant regulatory body.
19b Other commitments
Management have identified the operating lease for the registered office as a commitment (other than the exploration
commitments disclosed above):
Within one year
One year or later and no later than five years
Later than five years
68,517
-
-
112,056
74,704
-
68,517
186,760
43
20
CONTINGENCIES
20a Contingent Assets
There are no other contingent liabilities at reporting date.
20b Contingent Liabilities
As at 30 June 2016, part of the consideration for the acquisition of SPA-16 AO from Finder Exploration Pty Ltd was an over-
riding royalty of 25% of the Government Royalty that is payable on petroleum production and is only payable if future
production from the SPA is achieved . No value was recorded in the financial statements for this potential royalty payment
to Finder Exploration Pty Ltd.
There are no contingent liabilities at this reporting date.
21
EVENTS OCCURRING AFTER REPORTING DATE
On 28th July 2017, the Company’s Share Purchase Plan (“the Plan”) closed and it raised $510,000 from eligible
shareholders. A further placement to sophisticated and professional investors (‘the Placement’) totalling $536,000 brings
the total funds raised to $1,046,000. The Offer price of each New Share under the Plan and the Placement was $0.0032.
No matters or circumstances have arisen other than the above, since the end of the financial year which significantly
affected or may significantly affect the operations of the Consolidated Entity, the results of the Consolidated Entity, or the
state of affairs of the Consolidated Entity as reported to the year ended 30 June 2017.
22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
22a Historical Cost Convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
available-for-sale financial assets.
Critical Accounting Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 23.
Income Tax
22b
The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on
the profit adjusted for any non-assessable or disallowed items.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is
settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it
relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law.
44
Revenue Recognition
22c
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for major business
activities as follows:
(i)
(ii)
Interest Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
Other Services
Other debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of
the month in which services were provided.
Exploration and Evaluation Expenditure
22d
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs
are only carried forward to the extent that they are expected to be recouped through the successful development of the
area or where activities in the area have not yet reached a stage which permits reasonable assessment of the economically
recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against operating results in the year in which the
decision to abandon the area is made. When production commences the accumulated costs for the relevant area of
interest are classified as development costs and amortised over the life of the project area according to the rate of
depletion of the economically recoverable reserves.
Where independent valuations of areas of interest have been obtained, these are brought to account. Subsequent
expenditure on re-valued areas of interest is accounted for in accordance with the above principles. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to
that area of interest.
At 30 June 2017 the Directors considered that the carrying value of the mineral tenement interests of the consolidated
entity was as shown in the Statement of Financial Position and no further impairments arises other than that already
recognised.
Plant and Equipment
22e
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and
impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive Income
during the financial period in which they are incurred.
The carrying amount of plant and equipment is reviewed annually by the Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all plant and equipment is depreciated on a diminishing value over their useful lives to the
consolidated entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and Equipment
Depreciation Rate
30%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An
asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount.
45
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the Statement of Comprehensive Income. When revalued assets are sold, amounts included in the revaluation
reserve relating to that asset are transferred to retained earnings.
Trade Receivables
22f
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for
doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off.
An allowance for bad debts is established when there is objective evidence that the consolidated entity will not be able to
collect all amounts due according to the original terms of receivables. The amount of the provision is recognised in the
Statement of Comprehensive Income. They are recognised initially at fair value and subsequently at amortised cost.
Deposits with maturity periods in excess of three months but less than twelve months are included in receivables and not
discounted if the effect of discounting is immaterial.
Trade and Other Payables
22g
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid, together with assets ordered before the end of the financial year. The amounts are
unsecured and are usually paid within 30 days of recognition.
Employee Entitlements
22h
(i) Wages, salaries and annual and sick leave
A liability for wages, salaries and annual leave expected to be settled within 12 months of the reporting date is
recognised in other payables and is measured as the amount unpaid at balance date at current pay rates in respect
of employees’ services up to that date. No liability exists for sick leave.
(ii)
Long service leave
A liability for long service leave is recognised in the provision for employee benefits and is measured as the present
value of expected future payments to be made in respect of services provided by employees’ up to balance date.
Equity-Based Payments
22i
Equity-based compensation benefits are provided to Directors and executives.
The fair value of options granted to Directors and executives is recognised as an employee benefit expense with a
corresponding increase in contributed equity. The fair value is measured at grant date and recognised over the period
during which the Directors and/or executives becomes unconditionally entitled to the options. Where options are issued to
consultants the fair value of the options given is valued by the market value of the service being provided.
The fair value at grant date is independently determined using an option pricing model that takes into account the exercise
price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the
option, the share price at grant date and expected price volatility of the underlying share, the expected divided yield and
the risk-free interest rate for the term of the option.
22j
(i)
(ii)
Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Segment Reporting
22k
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the steering committee that makes strategic
decisions.
46
The standard requires a ‘management approach’, under which segment information is presented on the same basis as that
used for internal reporting purposes. The segments are reported in a manner that is consistent with the internal reporting
provided to the chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All
operating segments’ operating results are regularly reviewed by the Group’s Managing Director to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information is
available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the
Company’s headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets other than goodwill.
Impairment of Assets
22l
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets
that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units).
22m Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the Statement of Financial Position.
Provisions
22n
Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past
events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has
been reliably estimated.
Contributed Equity
22o
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, e.g. as the result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the Statement of Comprehensive
Income and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised
directly in equity.
Comparative Figure
22p
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
22q Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group satisfies all attached conditions.
When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a
systematic basis to the costs that it is intended to compensate.
47
When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the
Consolidated Statement of Profit or Loss and other Comprehensive Income over the expected useful life of the relevant
asset by equal annual instalments.
Where a grant is received in relation to the tax benefit of research and development costs, the grant shall be credited to
other income in the Consolidated Statement of Profit or Loss and other Comprehensive Income in the year of receipt.
23
i)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart
from those involving estimations, which have the most significant effect on the amounts recognised in the financial
statements:
Capitalisation of exploration and evaluation expenditure
The Group has capitalised significant exploration and evaluation expenditure on the basis either that this is
expected to be recouped through future successful development (or alternatively sale) of the Areas of Interest
concerned or on the basis that it is not yet possible to assess whether it will be recouped. As at 30 June 2017, the
carrying value of capitalised exploration expenditure is $15,350,960.
ii)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological
changes, costs of drilling and production, production rates, future
legal changes (including changes to
environmental restoration obligations) and changes to commodity prices.
Valuation of share based payments
The Group measures the cost of equity settled share based payments at fair value at the grant date using the Black-
Scholes model taking into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date, the expected volatility of the underlying share, the expected dividend yield and risk free interest rate
for the term of the option.
Where options are issued to consultants, the Group values the service provided based on market rates. In the
absence of market rates the share based payments are valued as above.
48
Additional information required by the ASX Ltd and not shown elsewhere in this report is as follows. The information is
current as at 28 September 2017.
(a) Distribution of equity securities
An analysis of numbers of holders of listed securities by size of holdings as at 28 September 2017 is listed below:
1
1,001
5,001
- 1,000
- 5,000
- 10,000
10,001
- 100,000
100,001
and over
The number of shareholders holding less than a
marketable parcel of shares are:
Ordinary shares
Number of
holders
Number of shares
167
229
356
1,631
1,833
4,216
2,217
34,443
764,618
2,993,116
75,029,607
2,926,770,943
3,005,592,727
62,221,784
(b) Twenty largest shareholders
The names of the twenty largest holders of listed securities as at 28 September are listed below:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
TAMARIND CLASSIC RESOURCES PRIVATE LIMITED
SUNDOWNER INTERNATIONAL LIMITED
KEMPRUST PTY LTD
WHITEBARK ENERGY LIMITED
REY CATTAMARRA PTY LTD
MR RONALD GORDON CURRIE
CARJAY INVESTMENTS PTY LTD
MR ROBERT ANTHONY HUTCHFIELD
MR ANDREW TROTT HOPKINS + MRS ADRIENNE JANET HOPKINS
MR VERNON REGINALD PARROTT
MR JOHN DOUGLAS ANNAND
MR KEVIN MARK JOHNSON
BSG SERVICES PTY LTD
MR MICHAEL STOKES
CRESCENT NOMINEES LIMITED
SURFIT CAPITAL PTY LTD
CORRALLINE PTY LTD
MR MINGCAI WANG
MR ROBERT DUNN + MR NOEL BRUCE HOSKING
Listed ordinary shares
Number of
shares
246,208,804
148,437,500
131,862,205
96,000,000
57,500,000
53,056,027
50,000,000
35,000,000
34,987,500
29,687,501
29,687,500
28,000,001
24,000,000
23,665,848
23,022,472
22,870,862
19,450,000
19,000,000
18,367,682
17,000,000
Percentage of
ordinary shares
8.19
4.94
4.39
3.19
1.91
1.77
1.66
1.16
1.16
0.99
0.99
0.93
0.80
0.79
0.77
0.76
0.65
0.63
0.61
0.57
1,107,803,902
36.86
49
(c) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(d) Options
The names of the security holders holding more than 20% or more of an unlisted class are listed below:
Holder
Mrs Shelley Robertson
3C Group IC Limited
Others (less than 20%)
Total
(f) Restricted Securities
$0.006 share options
Expiring 30-Jun-2020
10,000,000
$0.0024 share options
Expiring 10-Feb-2018
-
Various exercise prices
Expiring 30-Jun-2020
12,000,000
-
5,200,000
15,200,000
60,000,000
-
60,000,000
-
-
12,000,000
There is currently no restricted securities of the Company’s securities.
(g) On-Market Buy Back
There is currently no on-market buy-back of the Company’s securities.
50
Registered Office
Level 2, 6 Thelma Street
West Perth Western Australia 6005
Telephone: +61 8 9227 3240
Facsimile: +61 8 9227 3211
Email: info@norwestenergy.com.au
www.norwestenergy.com.au