Octanex Limited Annual Report 2015

FY2015 Annual Report · Octanex Limited

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OCTANEX NL

ABN 61 005 632 315

TABLE OF CONTENTS

Chairman’s Letter ......................................................................................................................... 2

COO Report ..................................................................................................................................... 4

Operational Review ...................................................................................................................... 5

Corporate Governance Statement .......................................................................................... 11

Auditor’s Independence Declaration .................................................................................... 12

Annual Financial Statements ................................................................................................... 13

Directors’ Report ........................................................................................................................ 13

Remuneration Report ................................................................................................................ 20

Directors Declaration ................................................................................................................ 23

Independent Auditor’s Report ................................................................................................ 24

Additional Information (unaudited) ..................................................................................... 66

Glossary ......................................................................................................................................... 70

Directory ....................................................................................................................................... 71

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OCTANEX NL

ABN 61 005 632 315

Chairman’s Letter

Dear Shareholder,

I have previously highlighted the need for a change in strategy by Octanex to reduce our exposure
to exploration and to increase involvement in development projects. Over the past two years we
have made concerted efforts to broaden our strategy by the acquisition of production assets
which we considered to have the capacity to provide future cash flow generation.

Our original exploration strategy had relied upon our ability to continue to successfully farmout
or sell our exploration properties until such time as we made a game-changing discovery. Despite
being involved in the drilling of many potentially high impact wells over the years, so far, the
“company-maker” exploration discovery has eluded us. Headwinds facing the farmout/sale
strategy were apparent more than two years ago, even when oil prices were high. At current oil
prices that strategy is not viable.

While we saw the need for the change in strategy, what we did not foresee was the extent of the
dramatic fall in the price of oil that commenced in late May 2014. That the price of a barrel of
Brent crude , which had commanded about $110 in the last week of May 2014, would be worth
less than $50 some 15 months later, was not envisaged.

As part of our broadened strategy, a Risk Service Contract (RSC) with PETRONAS for the
development of the Ophir oil field, offshore Malaysia, was awarded in early June 2014 to an
Octanex led joint venture company. That project is the cornerstone of our new direction. The
Ophir oil development is fully funded and in the execution phase with senior project finance
approved by a consortium of banks. Mezzanine finance has been secured from Sabah
International Petroleum Ltd (SIP) for our 50% equity contribution to the joint venture. As a result
of the dramatic fall in oil price, development costs have reduced significantly.

Our portfolio now includes two appraisal projects located offshore from Western Australia; the
Greater Cornea Fields and the Ascalon Gas Discovery, both of which we have advanced from the
exploration stage. Cornea is located in the Browse Basin under a Retention Lease and is
potentially Australia’s largest undeveloped oil discovery, albeit with technical and now oil price
challenges. Our work program is designed to unlock the value inherent in Cornea.

Ascalon is located in the Bonaparte Basin in proximity to other known undeveloped gas
accumulations and to the Icythys-Darwin LNG pipeline, which is nearing completion. Ascalon
represents a significant gas discovery, well-located to be of future value in the emerging ex-
Darwin (two LNG plants) Australian LNG market. A Location has been declared over Ascalon,
which is an initial step in obtaining a Retention Lease over the discovery, an action we are now
pursuing.

At the time of writing in the Annual Report last year, we had entered into an implementation
agreement with Peak Oil & Gas Limited (Peak) that would have seen Peak merged into Octanex
by way of a Peak scheme of arrangement. It was envisaged that this would bring about an
enlarged group with further exposure to potential near-development assets. With the fall in the
price of oil accelerating, it became evident that the basis for the merger had been negatively
impacted, as important elements (such as the need for capital raising and project viability)
became unsupportable
Ultimately the agreed scheme
implementation did not proceed.

in the changed environment.

Last year we increased the size of our board, appointing Mrs Rae Clark as a director and Chief
Operating Officer of the Company. We also invited onto the board Mr Tino Guglielmo, a petroleum
engineer with wide development experience. At the same time, two representatives of our new
strategic shareholder, SIP, Datuk Kevin How and Ms Suhnylla Kler were appointed. SIP is
ultimately wholly owned by the Ministry of Finance of the Malaysian state of Sabah.

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OCTANEX NL

ABN 61 005 632 315

Having been involved in this industry since 1977, I have observed many oil market cycles. There
is no doubting that the current cycle is just as punishing as any I have seen. As a result, we have
been operating the Company on the basis of a reduction in outgoings to the bare minimum.
Exploration acreage where results have been unfavourable or which has held out little hope of
farmout or with onerous work commitments, has been surrendered. Amongst other matters,
directors are committed to reinvesting a large proportion of their fees in new shares of the
Company at a price of $0.10 per share, so that this aspect of our outgoings remains largely cash
neutral.

I want to record my gratitude to Mrs Rae Clark, our Chief Operating Officer, all my fellow
directors, our consultants and employees for their unwavering support during, what has been, a
most difficult period.

Octanex has previously made acquisitions on a counter-cyclical basis with great effect. Some of
the most attractive acreage, which was farmed out on generous terms, was acquired during
market downturns. This current cycle can be expected to present acquisition opportunities. Our
challenge is to identify and secure those opportunities that best complement our strategy to
successfully widen the development/production base of the company.

EG Albers
Melbourne
23 September 2015

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OCTANEX NL

ABN 61 005 632 315

COO Report

2015 was a year of significant change for Octanex. The year commenced with two newly awarded
permits, the Ophir oil development RSC in Malaysia and a Retention Lease for the Greater Cornea
Fields appraisal opportunity in the Browse Basin, offshore from Western Australia.

Consistent with its expanded strategy, Octanex’s participation in the development of Ophir was a
key focus during the year. The up to 60% decline in oil price during the year presented
opportunities to optimize the Ophir development. Significant concept optimization effort was
undertaken, identifying cost savings greater than 30%, and culminating in the submission of a
revised Field Development Plan, which was approved by PETRONAS in August.

During the year, Octanex formalised a strategic relationship with Sabah International Petroleum
(SIP), a company ultimately wholly owned by the Malaysian state of Sabah. The relationship was
formalized by a US$5million investment in Octanex by SIP and the provision of a US$12 million
convertible note facility. SIP is focused on expanding its production and development activities
and is a strategic partner for Octanex. Octanex and SIP look forward to pursuing upstream
projects together.

Octanex’s participation in the Ophir development is fully funded. 75% project financing for the
Ophir development was secured by Ophir Production Sdn Bhd (OPSB), the company formed by
Octanex with its joint venture partners Scomi and Vestigo to develop the Ophir field. Octanex’s
remaining expected equity contributions to OPSB will be met from the proceeds of Octanex’s SIP
funding.

In December, in response to the oil price decline, the Board conducted a strategic review with the
objective of equipping the Company to face the challenges posed by a low oil price environment.
As a result of this review cost reduction methods to reduce corporate overheads and expenditure
were implemented. The portfolio was reshaped with a number of exploration permits divested or
surrendered during the year. Prospectivity reviews were undertaken on most assets in the
portfolio, with reviews continuing such that in the next year, all permits will have been reviewed.

Additionally, the Board decided not to proceed with the proposed merger of Peak Oil & Gas
Limited (Peak) into Octanex. In June, following the sale by Peak of its interest in the South Block A
PSC, Octanex received a loan repayment of $700,000 from Peak.

Octanex’s portfolio now consists of its Ophir interest in Malaysia, interests in two appraisal assets
offshore Western Australia and interests in six offshore exploration assets in Australia

2015/16 will hopefully bring us close to First Oil from Ophir as well as new growth opportunities.

Rae Clark
Chief Operating Officer

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OCTANEX NL

ABN 61 005 632 315

Operational Review

Summary of operations

2015 was a significant year for Octanex in the implementation of its strategy, commenced in 2013,
to increase its exposure to production and development. Development activities commenced
through the company’s participation in the Ophir oil development offshore Malaysia and
appraisal work was conducted for the Greater Cornea Field in the Browse Basin offshore Western
Australia. Octanex’s exploration portfolio was reviewed with a number of permits surrendered or
sold, with the focus maintained on permits with potential for high-impact discoveries.

Strategy

We are focused on growing the value of our portfolio.

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OCTANEX NL

ABN 61 005 632 315

Development Interest

Ophir Oil Field, Malaysia, 50% Interest
Octanex has a 50% interest in Ophir Production Sdn Bhd (OPSB), the joint venture company that
holds the Risk Service Contract (RSC) for the development of the Ophir oil field, offshore
Peninsular Malaysia.

The Ophir oil field is being developed via three production wells, a single wellhead platform and
export via a leased floating production storage and offloading (FPSO) unit.

The decline in oil price allowed OPSB, in consultation with PETRONAS, to take advantage of
reduced costs for goods and services in the industry to enhance and confirm the commerciality of
the Ophir development in a low oil price environment. OPSB’s comprehensive project cost
optimization work has identified significant capital and operating cost savings. The oil price
decline provides opportunities for additional savings, as industry participants compete for
reduced work.

A revised Field Development Plan (FDP) incorporating cost savings of more than 30% has been
approved by PETRONAS.

OPSB was formed by Octanex together with its two Malaysian joint venturers, Scomi Energy
Services Bhd (Scomi) and Vestigo Petroleum Sdn Bhd (Vestigo). Octanex holds a 50% interest in
OPSB with Scomi 30% and Vestigo 20%. Scomi is a Malaysian upstream oil and gas services
company listed on the Main Board of Bursa Malaysia. Vestigo is a wholly owned subsidiary of
PETRONAS Carigali Sdn Bhd with a focus on marginal field development.

Octanex’s share of the Ophir project is
fully funded via OPSB’s 75% project
financing and Octanex’s $17Million
Share Placement and Convertible
Sabah
Agreement with
Note
International Petroleum (SIP). SIP is
wholly owned by Sabah Development
Bank Berhad ("SDB"). SDB itself is
wholly owned by the Ministry of
Finance Sabah.

Figure 1 Ophir Oil Field location map

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OCTANEX NL

ABN 61 005 632 315

Appraisal Interests
Greater Cornea Fields, Western Australia, 18.75% interest

The Greater Cornea Fields (being the Cornea (Central
and South), Focus and Sparkle Oil Fields and the
Cornea North (Tear) Gas Field) are located in the
Browse Basin, offshore from Western Australia and
held via a Retention Lease granted for an initial 5-year
term in 2014.

The oil volumes in the Greater Cornea Fields are such
that, if threshold production flow rates can be
demonstrated, but dependent on oil price, the
economics should be attractive and provide a
reasonable expectation of commercial development.

During the year the Year-1 studies program was
completed. Together with those to be completed in
the next two years, the studies are aimed at
overcoming technical and commercial challenges
likely to be faced in bringing the Greater Cornea Fields into commercial production and are a lead
up to the drilling of a production test well.

Figure 2 Greater Cornea Fields Retention Lease
location map

Middle Albian B & C Sands

P90

P10

Oil In-place mmbbl
Recovery Factor %
Cont. Oil Resources
Octanex 18.75%
Table 1 Cornea Central and South Fields - Probabilistic Contingent Oil Resources
(no development risk applied)

298.0
2
7.9
1.48

567.2
25
101.9
19.11

P50
411.7
7
28.8
5.40

Ascalon Gas Discovery, Bonaparte Basin 100% interest

Discovered in 1995 by Mobil, the Ascalon gas
accumulation is currently located mostly within
exploration permit WA-407-P and extending into
the adjacent WA-420-P. During the year Octanex
lodged an application for Declaration of Location
over the Ascalon gas accumulation in relation to
those blocks within WA-407-P. A Declaration of
Location was granted in July 2015. Octanex
intends to apply for a Retention Lease over the
Location area.

Octanex has now
lodged an application for
Declaration of Location over two blocks within
WA-420-P.

The gas is contained in a faulted horst structure

within shallow marine sandstones of the Late
Permian, Cape Hay Formation of the Hyland Bay
Subgroup. Mapping on modern 3D seismic database, which we acquired over the feature and
newly reprocessed 2D seismic, indicates a closure over an area of 260km2 with a maximum

Figure 3 Ascalon Gas Discovery Retention Lease
location map

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OCTANEX NL

ABN 61 005 632 315

closure height of 380m. The lowest closing contour appears coincident with lowest known gas
defined from logs in the Ascalon-1A well. Modern petrophysics indicates a 146m gross gas
column within the Cape Hay Formation in the Ascalon-1A well, which is located off the crest of the
structure. The reservoir sandstones within the Cape Hay Formation are tight, not unlike those in
the nearby Petrel and Tern gas discoveries.

The probabilistically determined contingent resources estimates for the Ascalon Gas Discovery
are shown in Table 2 below and a statement from a Qualified Petroleum Reserves and Resources
Estimator is provided on page 63 of this report.

gas

resource

Contingent
Octanex 100% (TCF)
Table 2 Ascalon gas discovery – Probabilistic Contingent Gas Resources
(no development risk applied)

P90
1.04

P50
3.01

P10
8.74

The key contingency that stands in the way of classification of the Contingent Resources of the
Ascalon gas accumulation as “Reserves”, is the distinction between commercial and sub-
commercial accumulations. On the basis of the SPE/WPC/AAPG Resource Classification System, it
is clear that the Ascalon accumulation must be assessed as commercial before any “Reserves”
classification should be assigned to it.

The commerciality of Ascalon is dependent on gas market factors; both gas market demand, and
pricing, as well as access to market. Located offshore from northern Australia, the most likely
market for Ascalon’s gas is LNG, which would necessitate access to pipeline and LNG
infrastructure. The P50 estimate of the contingent resource at Ascalon is 3 TCF of natural gas,
which at current LNG gas prices, is insufficient to support a standalone LNG development.

Ascalon is located in proximity to a number of gas discoveries some of which will, or may, be
commercialised in coming years, including the Icythys, Petrel and Tern discoveries. The
development of other nearby gas discoveries can be expected to provide opportunities for
Ascalon to be developed to tie-back to another development.

No further appraisal drilling or similar work is to be undertaken at this time. Instead; the
Company will seek a Retention Lease by which it would be able to retain the acreage until access
to LNG market develops.

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OCTANEX NL

ABN 61 005 632 315

Exploration Interests

Carnarvon Basin Exploration Interests

Octanex has various interests in five high impact permits in the Dampier sub-basin and the
Exmouth Plateau of the Northern Carnarvon Basin. Its participation in four of these permits is
presently fully carried.

Figure 5 Carnarvon Basin interests

Dampier Sub-Basin WA-323-P & WA-330-P
25% interest, free carried by Santos as Operator

Figure 6 Dampier Sub-basin permits

WA-323-P and WA-330-P comprise a discrete project area of 640 km² on the Parker Terrace, in
proximity to the onshore Devils Creek gas processing facility. The Winchester-1/ST1 discovery
well was drilled from a location within WA-323-P during 2013. The estimated size of the
Winchester discovery, by itself, is considered to be insufficient to be developed economically.
Further contributions from possible deeper or adjacent hydrocarbon zones to the Winchester
location would be required to augment the discovered resource. The Winchester discovery is
located near existing pipeline and processing infrastructure and likely future infrastructure
extensions.

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OCTANEX NL

ABN 61 005 632 315

There is considered to be further prospectivity in the Parker tilted fault block where the Parker-
1/ST1 well in WA-330-P, located 3.2 km to the northeast of Winchester-1/ST1, drilled a separate
structure and encountered gas shows in Triassic Mungaroo Formation sandstones over a 211m
gross interval.

During the year the 720 km² Winchester 3D seismic survey has been reprocessed with the
purpose of obtaining better resolution and definition of Triassic and Jurassic targets within both
the WA-323-P and WA-330-P permits. A large Triassic prospect remains untested below the TD
of the Winchester-1/ST1 well within the Winchester structure and AVO supported Triassic leads
exist in north western WA-323-P on the Wilcox/Lady Nora/Rankin Trend. In WA-330-P there are
Triassic and Jurassic targets that were poorly imaged on the original Winchester 3D. These
include the structure penetrated by the Parker-1/ST1 well that contained Triassic sandstones
with good gas shows over 211m gross interval and there is the potential for similar structures
along the Parker Terrace towards the Dixon oil and gas discovery.

The First phase of the Davros 3D BroadSeis™ and BroadSource™ multi-client survey was
completed in the Northern Carnarvon Basin during the year. The completed survey area includes
WA-323-P and WA-330-P and the Operator has licensed the data over these permits.

Octanex is currently being carried by Santos though exploration activity in each permit.

Exmouth Plateau interests

Octanex has interests in three permits in the Exmouth Plateau area of the Carnarvon Basin as
shown.

Figure 7 Exmouth Plateau Permits

Exmouth Plateau WA-362-P & WA-363
33.33% interest, free carried by Eni as Operator

The WA-362-P and WA-363-P permits are located on the northern margin of the Exmouth
Plateau, 300 – 400 km northwest of the Western Australian coastline and comprise a combined
exploration area of approximately 10,956 km². The work program in both permits calls for
seabed coring and studies to be followed by a new 3D seismic survey and an exploration well in
the last two years of each permit’s term.

The Operator’s exploration focus in these permits has expanded from focussing on a pure gas play
in the Upper Mungaroo to an early—Middle Triassic oil play within the deeper Mungaroo. Both
permits received Suspension and extensions for 6 months in August 2015.

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OCTANEX NL

ABN 61 005 632 315

Octanex is fully carried by Eni though all exploration activity, including the next well in each
permit, should a well be drilled in either or both of the permits.

Exmouth Plateau WA-387-P 100% interest

WA-387-P is considered to be prospective for gas within fluvial and deltaic sandstones of the
Triassic Mungaroo Formation. This play is the main reservoir in the Wheatstone and Pluto gas
fields located 35km and 45km due south of the permit respectively. The Mungaroo Formation is
also the reservoir for the giant Goodwyn gas field located 65km to the east of the permit. A
secondary play is the Late Jurassic, Oxfordian Jansz Sandstone, which is the reservoir for the giant
Jansz/Io gas discovery located 35km southwest of the permit.

The current work program calls for the acquisition of 2D seismic surveys and studies. Octanex is
seeking participation of other exploration and speculative seismic companies to join with it in this
work.

Bonaparte Basin WA-420-P 100% interest

is adjacent to WA-407-P
WA-420-P (Tamar)
(Ascalon). The Ascalon discovery mostly located in
WA-407-P permit extends into WA-420-P and an
application for a Declaration of Location over two
blocks in WA-420-P has been lodged.

Figure 8 WA-420-P location map

WA-420-P is also considered to be prospective for
both oil and gas within several plays. The northern
part of the permit is covered by 1,725km2 of new
and newly reprocessed 3D seismic data which has
enabled improved mapping of these plays. The
main oil play is in porous and permeable, shallow marine sandstones of the Early Cretaceous,
Sandpiper Sandstone Formation in the northern part of the permit. Oil shows were encountered
within a distal equivalent of this play in the Rambler-1 well, located 7km due north of the
permit. There is also potential for a stacked oil play within sandstones of the underlying
Elang/Plover Formations. The permit also contains a large structure (Tamar Deep) within the
Late Permian, Hyland Bay Subgroup that is prospective for gas.

Corporate Governance Statement

A corporate governance statement reporting on Octanex’s governance framework, principles and
practices is provided on the Octanex website www.octanex.com.au.

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The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000

Correspondence to:
GPO Box 4736
Melbourne Victoria 3001

T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au

Auditor’s Independence Declaration
To the Directors of Octanex N.L.

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Octanex N.L. for the year ended 30 June 2015, I declare that, to the
best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act

2001 in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the

audit.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

Adrian Nathanielsz
Partner - Audit & Assurance

Melbourne, 23 September 2015

Grant Thornton Audit Pty Ltd ACN 130 913 594
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is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
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scheme applies.

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OCTANEX NL

ABN 61 005 632 315

Annual Financial Statements
Directors’ Report
Directors

Mr Geoff Albers
Executive Chairman
Appointed 2 October 1984

LL.B, FAICD

Mr Albers has over thirty five years oil and gas industry experience, having first became involved
in oil exploration in 1977. Mr Albers is a law graduate of the University of Melbourne and
extensive experience as a director and administrator in corporate law, petroleum exploration and
resource sector investment. He is a member of the Petroleum Exploration Society of Australia.

Mr Albers founded Octanex NL and is a substantial shareholder in the company. On 4 February
2013 Mr Albers became a director in the ASX listed Peak Oil & Gas Limited. Mr Albers is also a
substantial shareholder in that company. Mr Albers is also a director of Moby Oil & Gas Pty Ltd
which was ASX listed until October 2013.

Mrs Rae Clark B.Bus(dist), CA, MAICD, AGIA, ACIS
Executive Director
Appointed 17 October 2014

Mrs Clark has more than fifteen years experience focussed primarily on the upstream oil and gas
sector. She has wide operational, commercial and project development knowledge and her
experience includes business development, financial modelling and analysis, capital raising and
mergers and acquisitions, as well as managing joint venture partners, government, regulator and
investor relations.

Mrs Clark was previously Commercial Manager of Octanex. Having commenced her career with
Deloitte in 1997, Mrs Clark has worked with oil and gas companies since 2005. She is a Director
and Company Secretary of Peak Oil & Gas Limited (ASX:PKO).

Mrs Clark holds a Bachelor of Business (with distinction), a Graduate Diploma (ICAA) and
Graduate Diploma in Applied Corporate Governance and is a member of the Australian Institute
of Company Directors, the Chartered Accountants Australia New Zealand and Governance
Institute of Australia.

Mr David Coombes LL.B, M Tax, CTA
Non-Executive Director
Appointed 15 May 2012

Mr Coombes is a partner in the law firm, Gadens Lawyers, and is a member of the firm’s corporate
advisory and tax group. His practice involves advising clients on a range of corporate, commercial
and taxation law matters, trusts and superannuation law and estate and succession planning. Mr
Coombes acts for a number of Australian and overseas listed and private clients in numerous
industry sectors.

Mr Coombes was admitted as a barrister and solicitor of the Supreme Court of Victoria in 1971 after
graduating from Melbourne University Law School in 1970. He has completed a postgraduate
degree in taxation law, is a Chartered Tax Advisor and has been accredited as a Tax Law specialist
by the Law Institute of Victoria.

Mr Coombes is a director of several charitable organisations including Wintringham Limited,
Wintringham Housing Limited and Newsboys Foundation Limited. He is also a director of the
Wynn Group of Companies.

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ABN 61 005 632 315

Mr Tino Guglielmo B.Eng(Mech), FIEAust, GAICD
Non-Executive director
Appointed 18 December 2014

Mr Guglielmo is a Petroleum Engineer with over thirty three years of technical, managerial and
senior executive experience in Australia and internationally.

Mr Guglielmo was the CEO and Managing Director of two successful ASX listed companies; Stuart
Petroleum Ltd for seven years and Ambassador Oil & Gas Ltd for three years. Both companies
merged with larger ASX listed companies generating significant value for shareholders following
the identification of compelling resource potential in their respective petroleum resource
portfolios.

Mr Guglielmo also worked at Santos Ltd, Delhi Petroleum Ltd, and internationally with NYSE
listed Schlumberger Corp. Mr Guglielmo is currently the Chair of the Resources and Infrastructure
Taskforce and member of the Minerals & Energy Advisory Council, both South Australian
Government advisory bodies. He is a Fellow of the Institution of Engineers, Australia, a member of
the Society of Petroleum Engineers and Australian Institute of Company Directors. Mr Guglielmo
is also a director of ASX listed Bass Strait Oil Company Limited and during the past three years
was a director of ASX listed Ambassador Oil & Gas Limited.

Datuk Kevin Kow How FCA
Non-Executive director
Appointed 18 December 2014

Datuk Kevin How Kow is a director of Sabah Development Bank. He is a member of the Malaysian
Institute of Accountants, the Malaysian Institute of Certified Public Accountants and a fellow
member of the Institute of Singapore Chartered Accountants and the Institute of Chartered
Accountants in England & Wales. He was made a partner of Ernst & Young (“EY”), Malaysia in 1984
and served as the partner-in-charge of EY’s offices in Sabah and Sarawak. Later, from 1996
onwards, he was the partner-in-charge of EY’s practice in Sabah and Labuan until his retirement at
the end of 2003. He also serves as a Director of Cahya Mata Sarawak Berhad, K&N Kenanga Holdings
Berhad, Kenanga Investment Bank Berhad, Saham Sabah Berhad, Sarawak Cable Berhad, M3nergy
Berhad and several private limited companies.

Ms Suhnylla Kler FCCA, BSc (Hons) Monetary Economics
Non-Executive director
Appointed 18 December 2014

Ms Kler has extensive experience in the financial services industry, having worked with the Arab-
Malaysian Banking Group, HSBC Bank (M) Berhad and ABN AMRO. She is currently an Executive
Director and CEO of Sabah Development Bank Asset Management and also serves as a Director of
M3nergy Berhad and Group.

Ms Kler is registered as Associate Member of Persatuan Kewangan Malaysia (PKM) or Forex
Association of Malaysia, and is a member of the Corporate Finance Faculty of the Institute of
Chartered Accountants of England & Wales (ICAEW). She received her Bachelor degree in Monetary
Economics from the London School of Economics and Political Sciences (LSE) and subsequently
studied Japanese at the School of Oriental and African Studies (SOAS), U.K. Having completed her
stint with KPMG Peat Marwick, she is additionally registered as a Chartered Accountant and fellow
of the Association of Chartered Certified Accountants (FCCA).

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OCTANEX NL

ABN 61 005 632 315

Mr James Willis
Non-Executive Director
Appointed 18 August 2009

LL.M (Hons), Dip Acc

Previously an executive director of Octanex (2009-2011) Mr Willis is an upstream petroleum
consultant who has held governance positions with and consulted to various participants in the oil
and gas exploration sector. Mr Willis is a former partner in the leading New Zealand law firm of Bell
Gully where his practice speciality was in the upstream oil and gas area, particularly relating to
issues concerning gas contracting and the development of oil and gas reserves, joint ventures and
upstream petroleum related acquisitions.

Mr Willis is a director of New Zealand Energy Corp, a company listed on the TSX Venture exchange.

Directors who resigned during the financial year

GA Menzies LL.B
Non-Executive Director
Resigned 18 December 2014

Mr Menzies is a barrister and solicitor. He graduated from Melbourne University in 1971 and
qualified for admission to the degree of Master of Laws in 1975. He was admitted to practice in
1972.

Since 1987 he has carried on practice as a sole practitioner under the name of Menzies & Partners.
In the course of his legal practice Mr Menzies has been involved in a wide range of activities,
including takeovers, litigation in respect thereof, numerous capital raisings and corporate
reconstructions. He has been involved as a lawyer in the listing of a large number of public
companies ranging from junior explorers to substantial mining companies. Over recent years his
activities have focused primarily on corporate reconstructions and capital raisings.

Mr Menzies is a director of Enegex NL, as well of a number of private and unlisted public companies.
He was a director of Octanex from 26 August 2003 until 18 December 2014.

Company Secretaries

Mr Jack Tuohy

BCA, CA

Mr Tuohy has almost thirty years experience of public and private company administration,
especially as this relates to the oil and gas exploration sector and to public listed company activities,
obligations and requirements.

He has acted as Company Secretary for a number of listed public companies, including Moby Oil &
Gas Limited and Exoil Limited, and has been a director of Bass Strait Oil Company Limited and of
various unlisted companies. Mr Tuohy is a chartered accountant in New Zealand.

Mr Robert Wright B Bus, CPA

Mr Wright is a senior financial professional with over 25 years commercial experience in the
resource, energy and manufacturing industries gained at various companies and locations,
including 14 years at BHP.

He is the Chief Financial Officer (CFO) and the Company Secretary of Octanex and CFO of several
listed and unlisted exploration companies. Mr Wright is a member of CPA Australia.

- 15 -

OCTANEX NL

ABN 61 005 632 315

Principal Activities

The principal activities of the consolidated entity during the year were petroleum exploration and
development and investment in that sector.

Directors’ interests (at the date of this report)

EG Albers
RL Clark
DC Coombes
G Guglielmo

K K How
S Kler
JMD Willis

Ordinary Shares

Fully Paid
114,045,934
57,551
165,000
-

50,000
50,000
2,398,130

Partly Paid
51,837,357
-
41,500
200,000

-
-
1,198,752

Options

-
2,000,000
500,000
-

-
-
500,000

The 2,000,000 options held by RL Clark were granted prior to her appointment as director on 18
October 2014.

Financial Results

The net loss of the consolidated entity for the financial year was $11,524,294 (2014: loss of
$3,445,907). $10,215,021(after tax) of this loss is non cash and mostly attributable to surrender
or impairment of exploration permits.

Dividends

No dividend was declared or paid during the year and to the date of this report.

Review of Operations

A review of the consolidated entity’s Operations during the financial year is provided in the
Operational review.

Divestments and surrenders

During the year, Octanex divested or surrendered the following interests:

WA-386-P Carnarvon Basin
The sale of Octanex’s interest in WA-386-P to Shell Australia Pty Ltd was completed in February
2015.

WA-421-P, WA-422-P, WA-440-P, WA-441-P Bonaparte Basin
indicated that
Assessment of the prospectivity of Octanex’s Bonaparte Basin permits
prospectivity was insufficient to justify further work in WA-421-P, WA-422-P, WA-440-P and WA-
441-P and these permits were accordingly surrendered during the year.

PEP 52593, PEP 53473, PEP 53537, PEP 55790, Taranaki Basin
During the year, the NZOG operated PEP 52593 and PEP 53473 permits were surrendered. The
joint decision to surrender followed recent nearby disappointing well results which rendered as
unsuccessful NZOG’s considerable farmout efforts. The decision was made to avoid a commitment
to drill an exploration well in each permit.

PEP 53537 and PEP55790 were surrendered following a prospectivity review of each permit.

- 16 -

OCTANEX NL

ABN 61 005 632 315
!
Change'in'State'of'Affairs'

Other!than!as!described!in!these!annual! financial!statements!there!have!been!no!changes!in!the!
state!of!affairs!of!the!company.!!
'
Subsequent'Events'

Since!the!end!of!the!financial!year!the!following!events!have!occurred:!
!

•

In! July! a! Declaration! of! Location! was! granted! over! the! Ascalon! gas! discovery,! specifically!
over!10!graticular!blocks!in!WA"407P.!!

• A!revised!FDP!for!the!development!of!the!Ophir!field!was!approved!by!Petronas!in!August.!!
The!revised!FDP!enhances!the!economic!potential!of!the!Ophir!development!reflecting!the!
reduced!costs!offered!by!the!current!low!oil!price!environment.!!

• 6!month!suspensions!and!extensions!were!granted!in!relation!to!WA"362"P!and!WA"363"P!
• An! application! for! a! Declaration! of! Location! for! two! blocks! in! WA"420"P! relating! to! the!

Ascalon!gas!discovery!was!lodged!in!September.!

• Following!preliminary!interpretation!of!the!Kaka!3D!seismic!survey!over!PEP51906!in!the!

•

Taranaki!Basin!offshore!New!Zealand,!a!decision!was!made!to!exit!the!permit.!!
In! September! the! board! resolved! that! no! call! will! be! made! in! relation! to! the! partly! paid!
shares! before! the! date! that! First! Oil! is! produced! at! the! Ophir! field,! or! 31! December! 2018,!
whichever!is!earlier.!

Directors’'Meetings'

The! table! below! sets! out! the! number! of! meetings! held! during! the! year! and! the! number! of! those!
meetings!that!were!attended!by!each!director.!
!

Board&Meetings&

!
EG&Albers!
RL&Clark!
DC&Coombes!
G&Guglielmo!
KK&How&!
S&Kler!
GA&Menzies!
JMD&Willis!

Eligible!
7!
6!
7!
3!
3!
3!
4!
7!

Attended!
7!
6!
7!
3!
1!
2!
4!
6!

Audit&Committee&
Meetings&

Eligible!
3!
2!
3!
1!
"!
1!
2!
1!

Attended!
3!
2!
3!
1!
"!
"!
2!
1!

Nomination&&&
Remuneration&
Committee&Meetings&
Attended!
Eligible!
1!
1!
1!
1!
1!
1!
"!
"!
"!
"!
"!
"!
1!
1!
1!
1!

Future'Developments'
!
Future!developments!in!the!company’s!operations!and!the!expected!result!from!those!operations!
are! dependent! on! exploration! and! development! success! in! the! permit! areas! in! which! the! group!
holds!interests!.!
'
!
!
!

"!17!"!

OCTANEX NL

ABN 61 005 632 315

Share Capital

Ordinary Shares
During the year ended 30 June 2015, 40,332,663 fully paid ordinary shares were issued, bringing
the total number of fully paid ordinary shares on issue at 30 June 2015 and at the date of this
report to 192,265,561 (excluding the 33,000,000 trustee shares also quoted as ordinary fully paid
shares).

As at 30 June 2015 and to the date of this report the number of partly paid ordinary shares on
issue is 74,278,910.

Trustee Stock Scheme
As at 30 June 2015, all of the 33,000,000 ordinary shares issued to the trustee pursuant to the
trustee stock scheme remained unsold. The trustee does not exercise voting rights in respect of
the shares held pursuant to the trustee stock scheme. During the year ended 30 June 2015, these
shares were quoted on the ASX as fully paid ordinary shares.

Unlisted Options
During the year the following options were granted and remained on issue at 30 June 2015 to
Octanex staff and other individuals. The option terms are summarized below:

Number
7,600,000
1,000,000
1,000,000
1,000,000
4,000,000
250,000
250,000

Expiry Date
15 October 2018
19 May 2018
11 June 2018
11 June 2018
11 June 2018
1 February 2018
1 February 2018

Exercise price Vesting criteria
$0.1534
$0.15
$0.15
$0.15
$0.15
$0.20
$0.25

Yes
Yes and expiry date adjustment

Unlisted Options
Balance at beginning of year
Options granted
Options surrendered/ cancelled
Options expired

Balance at end of year

Convertible Notes

2015
Options

2014
Options

4,850,000 4,350,000
18,100,000 3,850,000
(7,850,000) (2,350,000)
- (1,000,000)

15,100,000

==========

4,850,000
========

Octanex has a US$12Million convertible note facility (Notes) with Sabah International Petroleum
(SIP), a company ultimately wholly owned by Ministry of Finance of the Malaysian state of Sabah.
The facility was approved by shareholders in February 2015 and consists of three US$4million
tranches with rights of conversion into fully paid ordinary shares of the Company at prices of 15,
20 and 25 cents per share for each of the tranches.

In June 2015 SIP agreed to extend the facility term. The Notes now have a maturity date of 31
March 2018 when they may be redeemed or converted at SIP’s election.

Additionally, SIP has an alternative earlier conversion option, available until 30 June 2016,
whereby SIP may elect to convert the Notes into a 35% shareholding in Octanex Pte Ltd.

The facility is to be utilized to fund the Ophir development. As at 30 June 2015, and at the date of
this report, no amount has as yet been drawn under the facility.

- 18 -

OCTANEX NL

ABN 61 005 632 315

Indemnification of Directors and Officeholders

During the year and to the date of this report, the company did not pay premiums in respect of
contracts insuring officers or auditors of the company against liabilities arising from their
position of officers or auditor of the company.

The Company has entered into Deeds of Access and Indemnity with each of the Directors referred
to in this report who held office during the year indemnifying each against all liabilities incurred
in their capacity as directors of the Company to the full extent permitted by law.

Remuneration report

This remuneration report is set out on pages 20 to 22 and forms part of the Directors’ Report for
the financial year ended 30 June 2015.

Corporate Governance

The Board is responsible for the strategic direction of the Company, the identification and
implementation of corporate policies and goals, and the monitoring of the business and affairs of
the Company on behalf of its shareholders.

The Board delegates responsibility for the day-to-day management of Octanex to the Chief
Executive Officer. All Directors have unrestricted access to Company records and information
and receive detailed financial and operational reports.

The Board is currently comprised of five Non- Executive Directors and two Executive Directors. In
accordance with the Company’s Constitution and the ASX Listing Rules, the Directors (other than
the Chief Executive Officer) are subject to re-election by shareholders every three years.

The Board meets regularly throughout the year. Where appropriate, presentations are given to
the Board from management who may be questioned directly by Board members on technical,
operational and commercial issues.

Details of the Company’s corporate governance practices are included in the Corporate
Governance statement found on the Company’s website.

Auditor independence and non–audit services

A copy of the auditor’s independence declaration, as required under Section 307C of the
Corporations Act 2001, is attached and forms part of this Directors’ Report for the year ended 30
June 2015.

No fees were paid to the auditor for non-audit services.

This Directors’ Report is made in accordance with a resolution of the directors and forms part of
the financial statements.

On behalf of the Directors:

EG Albers
Director
23 September 2015

- 19 -

OCTANEX NL

ABN 61 005 632 315

Remuneration Report

This Remuneration Report for the year ended 30 June 2015 outlines the key management
personnel remuneration arrangements of the Company in accordance with the requirements of
the Corporations Act 2001 (Act) and its regulations. The disclosures in this Remuneration Report
have been audited as required by section 308(3C) of the Act.

Key Management Personnel

For the purpose of this report, Key Management Personnel (KMPs) of the Company are defined as
those persons having authority and responsibility for planning, directing and controlling the
major activities of the Company directly or indirectly.

The following have been identified as KMPs for the purpose of this Remuneration Report:

Executive Directors
EG Albers
RL Clark

Non-executive Directors
DC Coombes
G Guglielmo
KK How
SK Kler
GA Menzies
JMD Willis

Chairman & Chief Executive Officer
Chief Operating Officer (appointed 17 October 2014)

Director
Director (appointed 18 December 2014)
Director (appointed 18 December 2014)
Director (appointed 18 December 2014)
Director (resigned 18 December 2014)
Director

The board of directors is responsible for determining and reviewing compensation arrangements
for the directors and executives. The board assesses the appropriateness of the nature and
amount of emoluments on a periodic basis by reference to relevant employment market
conditions, with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high quality board and executives.

Remuneration levels for directors and executives of the company are competitively set to attract
and retain appropriately qualified and experienced directors and executives. The remuneration
structures explained below are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives and achieve the broader outcome of creation of value for
shareholders. The remuneration structure takes into account:

•
•
•

The capability and experience of the directors and executives;
The ability of directors and executives to control the entity’s performance; and
The requirement that directors apply a portion of their remuneration to the purchase of
shares in the company, at market price, so as to align the interests of directors with that of
shareholders.

In accordance with the company’s constitution, directors’ non-executive remuneration was
approved by shareholders on 28 November 2014 at $250,000 per annum.

During the year, non-executive director remuneration of $166,375 was paid and payable (2014:
$98,325). Total director remuneration (exclusive of consulting fees which are included at note 21)
of $395,759 was paid and payable during the year (2014: $140,308).

There is no performance related remuneration for directors. Remuneration paid to directors covers
all board activities, including serving on committees.

- 20 -

OCTANEX NL

ABN 61 005 632 315

Apart from a retirement benefit for the chairman and four weeks annual leave for RL Clark, the
other directors do not receive employee benefits such as annual leave and long service leave, but
remuneration may include the grant of options over shares of the company to align directors’
interests with that of the shareholders. There is no direct relationship between remuneration and
the company’s performance for the last five years.

Components of directors’ compensation paid and payable are disclosed below.

Short Term

Post Employment

Equity
Settled

Total

Directors
Fees

Salary

Super-
annuation

Retirement
Benefits

Options

Options
as % of
Total

30,000
30,000

-
-

20,959 150,000
-

30,000
32,775

15,945
-

17,460
-

13,993
30,000

32,850
32,775

-
-

2,850
2,775

16,241
-

2,850
-

1,515
-

-
-

1,329
2,775

-
-

9,334
9,208

-
-

42,184
41,983

-
-

- 187,200
-
-

10,991
-

-
-

10,991
-

43,841
32,775

17,460
-

26,313
32,775

43,841
32,775

-
-

25%
-

-
-

42%
-

25%
-

178,667 150,000
-
125,550

24,785
5,550

9,334
9,208

32,973 395,759
- 140,308

EG Albers (1)

RL Clark (2)

DC Coombes

G Guglielmo (3)

KK How (3)

SK Kler (3)

GA Menzies (4)

JMD Willis

TOTAL

2015
2014

(1) On 29 October 1997, a Deed of Appointment was signed with EG Albers. The deed detailed terms of continuation
of his appointment as chairman of Octanex NL. Among other things, it provides for a payment of a retirement
benefit to EG Albers as chairman.
(2) Appointed 17 October 2014
(3) All three directors appointed 18 December 2014
(4) Resigned 18 December 2014

- 21 -

OCTANEX NL

ABN 61 005 632 315

15 October 2018 Options granted as share based payments (exercisable at 15.34 cents)

Held at Granted as

Compensation Exercised

Other
Changes

Held at
30 June

Vested
Vested and
during exercisable at
30 June

The year

DC Coombes

1 July 2014
-

500,000

2015
500,000

GA Menzies

JMD Willis

500,000

1,500,000

- 1,500,000

2015
500,000

500,000

1,500,000

On 28 November 2014 the above 1,500,000 options were granted and approved by member at the
Annual General Meeting. The options have no performance conditions and were fully vested on
grant date. As part of the grant of the 1,500,000 options on that same date 1,500,000 32 cent 30
June 2015 options previously granted on 17 October 2012 were surrendered by the above
directors.

The options were valued using the Binomial Option Valuation model. The follow inputs were
used:

Exercise price: 15.34 cents
Share price at approval date: 7.5 cents
3.9 years
Maximum option life
69%
Expected volatility
2.5%
Risk free interest rate

Expected volatility was based on the average volatility of a peer group of eleven companies within
the oil and gas exploration industry. The implied volatility of the seven companies was in the
range of 31% to 105%. The fair value of this share based payment on the shareholder approval
date was $33,329 or $0.0222 per option. The value of the surrendered options was $356. This
reduced the share based expense and reserve to $32,973 in the year ended 30 June 2015.

30 June 2015 Options granted as share based payments (exercisable at 32 cents)
(surrendered during the year)

Held at Granted as

Compensation Exercised

Other
Changes

Held at
30 June

Vested
Vested and
during exercisable at
30 June

The year

1 July 2014
DC Coombes 500,000

GA Menzies 500,000

JMD Willis

500,000

1,500,000

- (500,000)

- (1,500,000)

2015
-

As part of the grant of the 1,500,000 15 October 2018 options on 28 November 2014 all of the
above 1,500,000 32 cent 30 June 2015 options were surrendered by the directors.

End of Remuneration Report.

- 22 -

OCTANEX NL

ABN 61 005 632 315

Directors Declaration
The directors of the company declare that:

The financial statements, comprising the statement of profit or

loss and other
1.
comprehensive income, statement of financial position, statement of cash flows, statement of
changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001
and:

(a)

(b)

(c)

comply with Accounting Standards and the Corporations Regulations 2001; and

give a true and fair view of the consolidated entity’s financial position as at 30 June
2015 and of its performance for the year ended on that date.

the financial report also complies with International Financial Reporting
Standards as disclosed in Note 1(a).

In the directors’ opinion, there are reasonable grounds to believe that the company will be

2.
able to pay its debts as and when they become due and payable.

3.
The remuneration disclosures included in pages 20 to 22 of the directors’ report, (as part of
audited Remuneration Report), for the year ended 30 June 2015, comply with section 300A of the
Corporations Act 2001.

The directors have been given the declarations by the chief executive officer and chief

4.
financial officer required by section 295A.

This declaration is made in accordance with a resolution of the Board of Directors and is signed
for and on behalf of the directors by:

EG Albers
Director
Melbourne, 23 September 2015

- 23 -

The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000

Correspondence to:
GPO Box 4736
Melbourne Victoria 3001

T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au

Independent Auditor’s Report
To the Members of Octanex N.L.

Report on the financial report

We have audited the accompanying financial report of Octanex N.L. (the “Company”),
which comprises the consolidated statement of financial position as at 30 June 2015, the
consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the consolidated entity comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.

- 24 -

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.

Auditor’s opinion

In our opinion:

the financial report of Octanex N.L. is in accordance with the Corporations Act 2001,
including:

giving a true and fair view of the consolidated entity’s financial position as at
30 June 2015 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations

Regulations 2001; and

the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.

- 25 -

Report on the remuneration report

We have audited the remuneration report included in pages 20 to 22 of the directors’ report
for the year ended 30 June 2015. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Octanex N.L. for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

Adrian Nathanielsz
Partner - Audit & Assurance

Melbourne, 23 September 2015

- 26 -

OCTANEX NL

ABN 61 005 632 315

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Year Ended 30 June 2015

Revenue - interest received
Other income
Finance costs
Expenses

Loss before tax
Income tax benefit

Net Loss after tax

NOTE

Other comprehensive income

Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operation

Income tax effect

Items that will not be reclassified subsequently to profit or loss

Changes in financial assets at fair value through other
comprehensive income

Income tax on items of comprehensive income

Other comprehensive income for the year net of tax

Total comprehensive income for the year

2015
$

2014
$

9,818

259,840
956,755 10,376,747
-
(371,039)

(15,005,740) (15,447,597)

____________

(14,410,206) (4,811,010)
1,365,103
__________

2,885,912
____________

(11,524,294) (3,445,907)
___________

____________

765,937

584,176

(161,195)

(145,139)

48,358
__________
653,100

43,542
________
482,579

__________

________
(10,871,194) (2,963,328)
=======
=========

Basic loss per share (cents per share)

26 (5.415) (1.752)

Diluted loss per share (cents per share)

26 (5.415) (1.752)

The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with
the accompanying notes.

- 27 -

OCTANEX NL

ABN 61 005 632 315

Consolidated Statement of Financial Position

As at 30 June 2015

CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS
Trade and other receivables
Financial assets at fair value through other
comprehensive income
Investments in an associate and a joint venture
Property, plant and equipment
Exploration and evaluation assets

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

CURRENT LIABILITIES
Trade and other payables
Provisions
Current tax liabilities

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES
Provisions
Deferred tax liabilities

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES

NET ASSETS

EQUITY
Issue capital
Reserves
Accumulated losses

NOTE

5
7

8
9,10
11
12

13
14

14
15

16
17

2015
$

2014
$

5,832,084
852,380
___________

8,506,574
303,173
___________

6,684,464
___________

8,809,747
___________

5,420,021

954,613

126,830
260,332
1,832

288,025
1,854,783
26,281
40,974,942 48,842,991
_____________ ______________

46,783,957 51,966,693
_____________ ______________

53,468,421 60,776,440
_____________ ______________

1,257,408
125,068
-
____________

1,107,819
-
33,605
____________

1,382,476
____________

1,141,424
____________

72,791
8,370,487 11,405,475
____________ _____________

8,370,487 11,478,266
____________ _____________

9,752,963 12,619,690
____________ _____________

43,715,458 48,156,750
========= =========

2,296,624

67,848,339 61,602,959
1,459,002
(26,429,505) (14,905,211)
______________ _____________

TOTAL EQUITY

43,715,458 48,156,750
======== ========
The above Statement of Financial Position is to be read in conjunction with the accompanying notes.

- 28 -

OCTANEX NL

ABN 61 005 632 315

Consolidated Statement of Changes in Equity

Year Ended 30 June 2015

Contributed
equity

Accumulated
losses

Financial
assets at fair
value through
other
comprehensive
income

Foreign
currency
translation
reserve

Option
reserve

Total

CONSOLIDATED ENTITY

At 1 July 2014

61,602,959

(14,905,211)

111,332

584,176

763,494

48,156,750

(11,524,294)

-
-

- (11,524,294)

Loss after tax
Other comprehensive income

Exchange differences of translation of
foreign operations net of tax

Changes in fair value on financial assets at
fair value through other comprehensive
income net of tax

Total other comprehensive income

Total comprehensive income for the year
Transactions with owners in their
capacity as owners
Share Placement
Cost of issue
Share buy back
Share-based payments expense

765,937

(112,837)

765,937

(11,524,294)

(112,837)

765,937

-
-

653,100

(10,871,194)

6,393,860
(128,485)
(19,995)
184,522

-
-

- 184,522

6,393,860
(128,485)
(19,995)
-

-
-

At 30 June 2015

67,848,339

(26,429,505)

(1,505)

1,350,113 948,016

43,715,458

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

- 29 -

OCTANEX NL

ABN 61 005 632 315

Consolidated Statement of Changes in Equity

Year Ended 30 June 2014

CONSOLIDATED ENTITY

At 1 July 2013
Loss after tax

Other comprehensive income

Contributed
equity

Accumulated
losses

Financial
assets at fair
value through
other
comprehensive
income

Foreign
currency
translation
reserve

Option
reserve

Total

61,603,609
-

(11,459,304)
(3,445,907)

212,929
-

- 670,451 51,027,685
- (3,445,907)
-

Exchange differences of translation of foreign
operations net of tax

Changes in fair value on financial assets at fair value
through other comprehensive income net of tax

Total other comprehensive income

Total comprehensive income for the year

Transactions with owners in their capacity as owners

584,176

(101,597)

584,176

(3,445,907)

(101,597)

584,176

482,579

(2,963,328)

Share buy back

Share-based payments expense

(650)

93,043

At 30 June 2014

61,602,959

(14,905,211)

111,332

584,176 763,494 48,156,750

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

- 30 -

OCTANEX NL

ABN 61 005 632 315

Consolidated Statement of Cash Flows

Year Ended 30 June 2015

CASH FLOWS FROM OPERATING ACTIVITIES
Administration fees received
Interest received
Tax paid
Payments to suppliers

NOTE

Net cash outflow from operating activities

(i)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments to suppliers - exploration
Proceeds from sale of permit interest
Repayment of loan from Peak Oil & Gas Limited
Loan to Peak Oil & Gas Limited
Loans to Ophir Production Sdn Bhd
Payment for investments

Net cash outflow from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing
Cost of share issue
Share buy-back
Repayment of borrowing

Net inflow / (outflow) from financing activities

Net decrease in cash and cash equivalents
Exchange gains
Cash and cash equivalents at beginning of the year

6
7,10
7,10
9

13
16
16
13

CASH AND CASH EQUIVALENTS AT 30 JUNE

2015
$

2014
$

432,500
13,571
(34,566)

14,810
349,869
-
(2,806,587) (2,794,094)
___________
___________

(2,395,082) (2,429,415)
____________
___________

(996,475) (8,152,051)
350,000 10,266,615
-
260,000
(954,613)
(1,047,038)
(4,931,924)
-
(1,952,856)
-
___________
____________

(6,365,437)
____________

(792,905)
___________

-
6,637,991
-
(128,485)
(650)
(19,995)
-
(1,316,483)
___________
____________
(650)
5,173,028
____________
___________
(3,587,491) (3,222,970)
33,350
8,506,574 11,696,194
___________
___________
5,832,084
8,506,574
======== ========

913,001

(i) RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES WITH LOSS AFTER INCOME TAX

Loss after income tax
Non cash items:
Profit on sale of permit interest
Impairment of exploration assets
Borrowing Costs
Exchange rate changes on the balances held in a foreign currency
Employee Provisions expense
Depreciation
Loss of disposal of asset
Share based payments expense
Share of loss of Peak Oil & Gas Limited
Share of loss of Ophir Production Sdn Bhd
Impairment of loan receivable from Peak
OPSB transaction costs
Changes in assets and liabilities:
Decrease in receivables
Increase in payables
Decrease in tax liabilities

10
9
7

Net Cash outflow from Operating
Activities

(11,524,294) (3,445,907)

- (10,205,719)
8,487,470 11,757,478
-

381,040
(957,821)
52,277
4,510
19,939
184,522
1,074,973
1,738,234
1,274,381
(819,995)

(33,350)
9,208
7,191
-
93,043
8,891
89,182
-
-

13,155
653,876

42,155
544,264
(2,977,349) (1,295,851)
____________
____________

(2,395,082) (2,429,415)
======== ========

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.
- 31 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 June 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Octanex NL (“Octanex” or “the company”) is a for-profit company incorporated and domiciled in Australia with its
registered office and principal place of business located at Level 21, 500 Collins Street, Melbourne, Victoria 3000.
The consolidated financial report of the company for the year ended 30 June 2015 comprises the company and its
subsidiaries (together referred to as the “consolidated entity” or “the group”) and the consolidated entity’s interest
in joint operations.

Separate financial statements for Octanex NL as an individual entity are no longer presented as the consequence of a
change to the Corporations Act 2001, however, required financial information for Octanex NL as an individual entity
is included in Note 28.

The financial report was authorised by the directors for issue on 22 September 2015.

(a) Statement of compliance
The consolidated financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards, including the Accounting Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) and the Corporations Act 2001. The consolidated financial statements and notes comply
with International Financial Reporting Standards and Interpretations issued by the International Accounting
Standards Board.

(b) Basis of preparation
The financial report is presented in Australian dollars, which is the consolidated group’s functional currency,
rounded to the nearest dollar. It has been prepared under the historical cost convention as modified by the
revaluation of the available for sale investments at fair value.

The preparation of a financial report in conformity with Australian Accounting Standards requires management to
make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of Australian Accounting Standards that have a significant
effect on the financial report and estimates with a significant risk of material adjustment in the next year are
discussed in note 1(q).

The accounting policies set out below have been applied consistently to all periods presented in the financial report.

(c) Early adoption of standards
The group has elected to apply AASB 9 Financial Instruments (as issued in December 2009) and AASB 2009-11
Amendments to Australian Accounting Standards arising from AASB 9 from 1 July 2010, because the new accounting
policies provide more reliable and relevant information for users to assess the amounts, timing and uncertainty of
future cash flows. In accordance with the transition provisions, comparative figures have not been restated. Refer
Note 1(k) for further details on the impact of the change in accounting policy.

As permitted under the transitional provisions, the group has elected not to adopt the December 2010 revised
version of AASB 9, which addresses the accounting for financial liabilities and derecognition of financial assets and
liabilities.

Classification – from 1 July 2010
As from 1 July 2010, the group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value and those to be measured at amortised cost. The classification
depends on the entity’s business model for managing the financial assets and the contractual terms of the cash
flows.

(d) Principles of consolidation
The consolidated entity financial statements consolidate those of the company and all of its subsidiaries as at year
end.

- 32 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 June 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i) Subsidiaries
The company controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its power over the subsidiary. The financial
statements of the subsidiaries are prepared for the same reporting period as the parent company using consistent
accounting policies. The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control ceases. Investments in subsidiaries are carried at
their cost of acquisition in the parent entity note.

All transactions and balances between companies within the consolidated entity are eliminated on consolidation,
including unrealised gains and losses on transactions between group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
consolidated entity perspective. Amounts reported in the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting policies adopted by the consolidated entity.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

(ii) Investments in associates and joint ventures
Associates are those entities over which the consolidated entity is able to exert significant influence but which are
not subsidiaries. Peak Oil & Gas Limited is an Associate of Octanex for the purposes of these accounts.

A joint venture is an arrangement that the consolidated entity controls jointly with one or more other investors, and
over which the consolidated entity has rights to a share of the arrangement’s net assets rather than direct rights to
underlying assets and obligations for underlying liabilities. A joint arrangement in which the consolidated entity
has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation. Ophir
Production Sdn Bhd is treated as a joint venture company for the purposes of these accounts.

Investments in associates and joint ventures are accounted for using the equity method. Interests in joint
operations are accounted for by recognising the consolidated entity’s assets (including its share of any assets held
jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of
the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation
and its expenses (including its share of any expenses incurred jointly).

Any goodwill or fair value adjustment attributable to the consolidated entity’s share in the associate or joint venture
is not recognised separately and is included in the amount recognised as investment.

The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the
consolidated entity’s share of the profit or loss and other comprehensive income of the associate and joint venture,
adjusted where necessary to ensure consistency with the accounting policies of the consolidated entity.

When the consolidated entity’s share of losses exceeds its interest in the associate or joint venture the entity
discontinues recognising its share of further losses. The interest in an associate or joint venture is the carrying
amount of the investment in the associate or joint venture (refer Notes 9 and 10) together with long-term interests
that in substance form part of the entity’s net investment in the associate or joint venture (refer Note 7).

Unrealised gains and losses on transactions between the consolidated entity and its associates and joint ventures
are eliminated to the extent of the consolidated entity’s interest in those entities. Where unrealised losses are
eliminated, the underlying asset is also tested for impairment.

(iii) Joint operations
Jointly controlled operations and assets
The interest of the company and of the consolidated entity in unincorporated joint operations and jointly controlled
assets are brought to account by recognising in its financial statements the assets it controls, the liabilities that it
incurs, the expenses it incurs and its share of income that it earns from the sale of goods or services by the joint
operation.

The financial statements of the jointly controlled operations and assets are prepared for the same reporting period
as the parent company using consistent accounting policies.
- 33 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 June 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(iv) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with associates are eliminated to the extent of the consolidated entity’s interest in the entity with
adjustments made to the ‘Investment in associates’ and ‘Share of associates’ net profit accounts.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment. Gains and losses are recognised as the contributed assets are consumed or sold by the associates or,
if not consumed or sold by the associate, when the consolidated entity’s interest in such entities is disposed of.

(e) Taxes
Income Tax
Income taxes are accounted for using the comprehensive balance sheet liability method whereby:

(cid:1) The tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
(cid:1) Current and deferred tax is recognised as income or expense except to the extent that the tax related to equity

items or to a business combination;

(cid:1) A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to

realise the asset;

(cid:1) Deferred tax asset and liabilities are measured at the tax rates that are expected to apply to the period where

the asset is realised or the liability settled.

Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash
flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.

Tax Consolidation
The company and its wholly owned resident entities are part of a tax-consolidated group. As a consequence, all
members of the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated
group is Octanex NL.

Current tax expense / income, deferred tax liabilities and deferred tax assets arsing from temporary differences of
the members of the tax-consolidated group are recognised in the separate financial statements of the members of
the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying
amounts of the assets and liabilities in the separate financial statements of each entity and the tax values applying
under tax consolidation.

Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are
assumed by the head entity in the tax-consolidated group and are recognised by the Company as amounts payable
(receivable) to / (from) other entities in the tax-consolidated group in conjunction with any tax funding
arrangement amounts. Any difference between these amounts is recognised by the Company as an equity
contribution or distribution.

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the
extent that is probable that future taxable profits of the tax-consolidated group will be available against which the
asset can be utilised.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised
assessments of the probability of recoverability is recognised by the head entity only.

- 34 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f) Foreign Currency Translation
The functional and presentation currency of Octanex NL and its Australian subsidiaries is Australian dollars (A$).

Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the reporting date. Foreign exchange gains and losses resulting from settling foreign currency
transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised
in the income statement, except when they are deferred in equity as qualifying cash flow hedges or where they
relate to differences on foreign currency borrowings that provide a hedge against a net investment in a foreign
entity. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at
the date when fair value was determined.

Group companies
On consolidation, the assets and liabilities of foreign operations are translated into dollars at the rate of exchange
prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates
of the transactions. The exchange differences arising on translation for consolidation are recognised in other
comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating
to that particular foreign operation is recognised in profit or loss.

(g) Receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have
repayment terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts
which are known to be uncollectible are written off. An allowance is made for doubtful debts where there is
objective evidence (such as significant financial difficulties on the part of the counterparty or default) that the
company will not be able to collect all amounts due according to the original terms.

(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and at call bank deposits. Bank overdrafts that are repayable on
demand and form an integral part of the company’s cash management are included as a component of cash and cash
equivalents for the purpose of the cash flow statement.

(i) Payables
Trade, accruals and other payables are recorded initially at fair value and subsequently at amortised cost. Trade and
other payables are non-interest bearing and are normally settled on 60-day terms.

(j) Assets Held for sale
When the group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within 12
months is highly probable, the asset or disposal group is classified as ‘held for sale’ and presented separately in the
statement of financial position. Liabilities are classified as ‘held for sale’ and presented as such in the statement of
financial position if they are directly associated with a disposal group

Assets classified as ‘held for sale’ are measured at the lower of their carrying amounts immediately prior to their
classification as held for sale and their fair value less costs to sell. However, some ‘held for sale’ assets such as
financial assets or deferred tax assets, continue to be measured in accordance with the group's accounting policy for
those assets.

(k)Equity investments

All equity investments are measured at fair value. Equity investments that are held for trading are measured at fair
value through profit or loss. For all other equity investments, the group can make an irrevocable election at initial
recognition of each investment to recognise changes in fair value through other comprehensive income (“OCI”)
rather than profit or loss.

- 35 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(k) Equity investments (continued)
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed as profit or loss.

The group subsequently measures all equity investments at fair value. The directors have elected to present fair
value gains and losses on equity investments in OCI. There is no subsequent reclassification of fair value gains and
losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as other revenue
when the group’s right to receive payments is established and as long as they represent a return on investment.

(l) Property, plant and equipment
Computer and other equipment
Computer and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost or
manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition
necessary for it to be capable of operating in the manner intended by the Group’s management. Computer
equipment and other equipment are subsequently measured using the cost model, cost less subsequent
depreciation and impairment losses.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of computer
equipment and other equipment. The following useful lives are applied:

(cid:1) Computer equipment:
(cid:1) Other equipment:

4 years
10 years

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between
the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income
or other expenses.

(m) Share capital
Ordinary share capital is recognised at the fair value of the consideration received by the company. Transactions
costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the consideration
received, net of any income tax benefit. Ordinary shares are classified as equity.

Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds,
net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the
acquisition of a business are included as part of the purchase consideration

(n) Impairment

At each reporting date the Group assesses whether there is any indication that individual assets are impaired.
Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in the
profit or loss where the asset's carrying value exceeds its recoverable amount.

(i) Calculation of recoverable amount
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual
asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those from other groups or assets, in which case, the
recoverable amount is determined for the class of assets to which the asset belongs.

(ii) Reversals of impairment
Impairment losses are reversed when there is an indication that the impairment loss may no longer exist and there
has been a change in the estimate used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.

- 36 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(o) Restoration, rehabilitation and environment expenditure
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
provided for as part of the cost of those activities. Costs are estimated on the basis of current legal requirements,
anticipated technology and future costs that have been discounted to their present value. Estimates of future costs
are reassessed at each reporting date.

(p)Exploration and evaluation assets
Exploration and evaluation assets, including the costs of acquiring permits or licences, are capitalised as exploration
and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights
to tenure of the area of interest are current and either:

(i) the expenditures are expected to be recouped through successful development and exploitation of the area of
interest, or alternatively, by its sale or partial sale: or
(ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant operations
in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical
feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the
recoverable amount.

Proceeds from the sale of exploration permits or recoupment of exploration costs from farmin arrangements are
credited against exploration costs previously capitalised. Any excess of the proceeds overs costs recouped are
accounted for as a gain on disposal.

Farmouts in the exploration and evaluation phase
The group does not record any expenditure made by the farminee on its account. It also does not recognise any
gain or loss on its exploration and evaluation farmout arrangements, but redesignates any costs previously
capitalised in relation to the whole interest as relating to the partial interest retained. Any additional cash
consideration received directly from the farminee is credited against costs previously capitalised in relation to the
whole interest, with any excess accounted for as a gain on disposal.

(q) Accounting estimates and judgements
Management determine the development, selection and disclosure of the company’s critical accounting policies and
estimates and the application of these policies and estimates. There are no estimates and judgements that are
considered to have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.

There is, however, a risk that actual expenditure to achieve minimum work obligations could differ from estimates
disclosed in the notes to the financial statements (see Note 18). The estimated amounts represent the higher end of
possible future expenditure. Work requirements achieved by farm-ins materially reduce the level of expenditure
incurred by the company to comply with work program commitments.

Per Notes 1(p), management exercises judgement as to the recoverability of exploration expenditure. Any judgment
may change as new information becomes available. If, after having capitalised exploration and evaluation
expenditure, management concludes, once activities in the area of interest have reached a stage which permits a
reasonable assessment of technical feasibility and commercial viability, that the capitalised expenditure is unlikely
to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through the
statement of profit or loss and other comprehensive income.

The consolidated entity is subject to income taxes in numerous jurisdictions. The determination of the consolidated
entity's provision for current income tax as well as deferred tax assets and liabilities involves significant judgements
and estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. If the final
outcome differs from the consolidated entity's estimates, such differences will impact the current and deferred
income tax assets and liabilities in the period in which such determination is made.

- 37 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(q) Accounting estimates and judgements (continued)
Management has assessed the company’s investment in Ophir Production Sdn Bhd (OPSB) and Peak Oil & Gas
Limited (Peak). Management has concluded that OPSB is a joint venture company and that Peak meets the definition
of an associate. AASB 128 requires the use of equity accounting for investment in joint venture companies and
associates.

Management has assessed recoverability of the advance to Ophir Production Sdn Bhd (“OPSB’) and has decided its
carrying value to be appropriate (Refer Note 7). In determining the recoverable amount management have made
assumptions and estimates regarding the present value of future cashflows based on the latest data; including oil
prices, production levels, interest rates and an appropriate risk based discount rate. These cash flows are
particularly sensitive to future production and oil prices.

Management has assessed recoverability of the loan to Peak Oil & Gas Limited (“Peak’) and has impaired the loan to
an appropriate carrying value (Refer Note 7).

(r) Revenue
Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances and duties and taxes paid. The following specific recognition criteria must also be
met before revenue is recognised:

Interest
Revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the
effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected
life of the financial asset.

(s) Share-based payment transactions
Equity settled transactions
The fair value of options granted are recognised as an expense with a corresponding increase in equity. The fair
value is measured at grant date and recognised over the period during which the grantee become unconditionally
entitled to the options.

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 impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the
option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any
non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions
are included in assumptions about the number of options that are expected to become exercisable. At each reporting
date, the entity revises its estimate of the number of options that are expected to become exercisable. The expense
recognised each period takes into account the most recent estimate. The impact of the revision to original estimates,
if any, is recognised in the statement of profit or loss and other comprehensive income with a corresponding
adjustment to equity.

(t) Fair value
Fair values may be used for financial asset and liability measurement as well as for sundry disclosures.

Fair values for financial instruments traded in active markets are based on quoted market prices at reporting date.
The quoted market price for financial assets is the current bid price and the quoted market price.

The fair value of financial instruments that are not traded in an active market are determined using valuation
techniques. Assumptions used are based on observable market prices and rates at reporting date. Estimated
discounted cash flows are used to determine fair value of the remaining financial instruments.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their
fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated
by discounting the future contractual cash flows at the current market interest rate that is available to the company
for similar financial instruments.

- 38 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(u) Borrowing Costs
Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that it is
required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed when
incurred.

(v) Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of Octanex by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares during the year.

In calculating the weighted average number of ordinary shares outstanding, the partly paid shares are accounted for
on a pro-rata basis according to the amount of call outstanding in relation thereto.

Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax
effect of dividends and interest associated with dilutive potential ordinary shares. The weighted average number of
shares used is adjusted for the weighted average number of ordinary shares that would be issued on the conversion
of all the dilutive potential ordinary shares into ordinary shares.

(w) New and revised accounting standards issued not yet effective
The company has adopted all of the new and revised Accounting Standards issued by the Australian Accounting
Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1
July 2014.

The Directors do not believe that new and revised standards issued by AASB that are not yet effective will have any
material financial impact on the financial statements.

NOTE 2 OTHER INCOME

Profit on sale of permit interest
Sundry income – director related
Net foreign exchange gain
Sundry income - other

Total income

Consolidated
2014
$

2015
$

- 10,205,719
164,858
234,556
-
604,483
6,170
117,716
__________
___________
956,755 10,376,747
======= ========

NOTE

6
21

- 39 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE

NOTE 3 EXPENSES

Audit fees
Consulting
Directors’ remuneration
Directors’ retirement benefit
Exploration expensed
Foreign exchange losses
Legal fees
Management fees
Reporting, registry and stock exchange
Office expenses
Other expenses
Pre feasibility
Salaries
Share based payments: fair value of
16
- options at grant date - directors
16
- options at grant date – other individuals
9
Share of loss of Ophir Production Sdn Bhd
10
Share of loss of Peak Oil & Gas Limited
Impairment of exploration assets
27
Impairment of loan receivable from Peak Oil & Gas Limited 7

Total expenses

NOTE 4 INCOME TAX

Components of income tax benefit
Current tax expense
Current period
Adjustment for prior period
Deferred tax expense
Origination and reversal of temporary differences

Total

Reconciliation between tax benefit and pre-tax loss

Consolidated
2014
$

2015
$

79,292
534,824
189,203
9,334
6,031
-
11,343
96,500
90,113
459,809
416,591
-
353,120

66,988
565,379
131,100
9,208
239,448
315,367
3,461
130,778
55,937
195,470
289,336
1,297,734
198,707

-
32,973
93,043
151,549
8,981
1,738,234
89,182
1,074,973
8,487,470 11,757,478
-
1,274,381
_____________
____________
15,005,740 15,477,597
========= =========

(2,885,912) (1,380,255)

15,152

-
-
___________
___________
(2,885,912) (1,365,103)
=======

========

Loss before tax

(14,410,206) (4,811,010)

Income tax benefit using statutory income tax rate of 30%

(4,323,062) (1,443,303)

Tax effect of adjustment recognised in the period for:

Prospectus costs
Adjustment for prior periods
Non-assessable income
Other non–deductible expenses
Effect of different tax rates in foreign jurisdictions

Income tax benefit

Franking credit balance:
Franking account balance as at end of year

- 40 -

(70,722)
(12,152)
15,152
-
-
(304,421)
146,159
1,679,390
(12,389)
74,333
___________
___________
(2,885,912) (1,365,103)
=======
========

1,741,532
___________

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 5 CASH AND CASH EQUIVALENTS

Cash at bank and on hand

Bank deposits at call

NOTE

2015

Consolidated
2014
$

5,832,084

7,487,474

1,019,100
-
___________
____________
5,832,084
8,506,574
======== =========

Cash at bank and on hand includes $5,023,806 held with the OCBC Bank in Singapore (2014: Nil). As required by the
financing arrangement with Sabah International Petroleum Ltd (“SIP”), there are restrictions on the use of these
funds such that they are mostly to be used to fund cash calls for the Ophir project or to repay borrowings from SIP.

Cash and cash equivalents are subject to interest rate risk as they earn floating rates. In the year to 30 June 2015 the
average floating rate for the consolidated entity was 0.1% (2014: 0.4%). Details of interest rate risk and sensitivity
can be found in Note 22. At 30 June 2015 all bank deposits are at call.

NOTE 6 EXPLORATION ASSETS HELD FOR SALE

Carrying amount at beginning of year
Cost incurred during the year
Disposal costs

Carrying amount at end of year

-
-
-
__________
-
======== =======

32,101
28,795
(60,896)
________
-

On 27 November 2012, Octanex conditionally sold a 12.5% interest in PEP 51906 to NZOG for an aggregate
US$12,500,000. Proceeds of the sale were credited against the amount previously capitalised for the permit.

NOTE 7 TRADE AND OTHER RECEIVABLES

CURRENT
Other receivables
Loan to Peak Oil & Gas Limited 10, 21
21
Director-related entities - other receivables

NON CURRENT
Loan to Peak Oil & Gas Limited 10, 21
9
Advance to Ophir Production Sdn Bhd

375,013
440,000
37,367
__________
852,380
=======

-
5,420,021
___________
5,420,021
=======

303,173
-
-
__________
303,173
=======

954,613
-
_________
954,613
=======

The carrying amount of all receivables is equal to their fair value as they are short term. The non-current loan to
Peak Oil & Gas Limited (director-related entity) was impaired down from $1,714,381 to $440,000 at 30 June 2015;
an impairment loss of $1,274,381 (2014: Nil). The impaired value of $440,000 was received in full on 2 July 2015.
Aside from the loan no other receivables are impaired or past due. The maximum credit risk for the company is the
gross value of all receivables. All receivables are non-interest bearing except for the loan to Peak Oil & Gas Limited
(Note 21).

- 41 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 8 OTHER FINANCIAL ASSETS (NON-CURRENT)

Financial Assets at fair value through other
comprehensive income
Investment in director-related equities
Investment in other listed equities

At cost:
Shares in controlled entities

Consolidated
2014

2015

$ $

8(a)

8(b)

8(c)

57,744
69,085
________
126,829

57,744
230,280
________
288,024

1
________
126,830
=======

1
________
288,025
=======

(a)Director-related Entities:
Moby Oil & Gas Pty Ltd

Principal activity is oil and gas exploration (Note 21)

(b) Reconciliation of the carrying amount of

Financial Assets at fair value through other comprehensive income

Balance at beginning of year
Net revaluation (decrement) increment

Details of market price risk and sensitivity can be found in Note 22.

United Oil & Gas Pty Ltd

57,744
=======

288,025
(161,195)
________
126,830

433,162
(145,137)
________
288,025
======= ========

1
_______

United Oil & Gas Pty Ltd, a company incorporated in Australia, is owned 50% by Octanex and 50% by a fully owned
subsidiary of Octanex, Strata Resources Pty Ltd.

The consolidated entity did not consolidate United Oil & Gas Pty Ltd on the grounds that balances were not
considered material. Summary financial information is listed below:

Non-
Current Current
assets
$

assets
$
904
916

2015
2014

Non-
Total
Current
assets Liabilities Liabilities Liabilities Revenue

Current

Total

$
904
916

$
2,000
2,000

-
-

$
2,000
2,000

-
-

Expenses
$

12
12

Profit
(Loss)
$
(12)
(12)

NOTE 9 INVESTMENT IN A JOINT VENTURE COMPANY

The consolidated entity has a 50% (2014: 50%) interest in Ophir Production Sdn Bhd (OPSB), a jointly controlled
entity, incorporated in Malaysia and involved with offshore oilfield development in Malaysia.

The consolidated entity’s interest in OPSB is accounted for using the equity method in the consolidated financial
statements. Summarised financial information in the joint venture, based on Malaysian accounting standards, and a
reconciliation with the carrying amount of the investment in the consolidated financial statements are set out
below:

- 42 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 9 INVESTMENT IN A JOINT VENTURE COMPANY (Continued)

Note

Consolidated
2014

2015

Equity

Current Assets (including cash $3,769,319 (2014: $509,369)
Non-Current Assets
Current liabilities
Non-Current Liabilities

4,135,444
13,562,837
(2,722,212)
-
(16,395,509)
___________
__________
(1,419,440) 1,037,847
=======
Proportion of the consolidated entity’s ownership 50% 50%
=======
528,459
(8,981)
__________
519,478
=======

Cost of the investment
Share of equity accounted loss required by accounting standards

=======
1,458,920
(1,458,920)
___________
-
=======

Carrying amount of the investment

509,369
794,794
(266,316)

========

The investment is carried at nil cost at 30 June 2015 due to the application of accounting standards which requires
the company to apply its 50% share of OPSB’s losses to the carrying value of the investment in OPSB. Once that
investment value is extinguished to nil value, the losses then are applied to the advance made to OPSB to fund
Octanex share of OPSB’s development and related expenditure, as it represents part of the Group’s net investment in
OPSB. The cost of the investment in OPSB and the advance to OPSB are, however expected to be recovered from
capital return and revenue in the form of dividends from production following the development of the Ophir oil
field.

Advance to Ophir Production Sdn Bhd
Advance
Share of equity accounted loss required by accounting standards

Carrying amount of advance

5,699,335
(279,314)
___________
5,420,021
========

-
-
__________
-
=======

Summarised statement of profit or loss of Ophir Production Sdn Bhd
Revenue
Expenses

Loss before tax

Income tax benefit

Loss after tax

Consolidated entity’s share of loss for the year

There are no contingent liabilities in the joint venture.

13,031,461
(16,507,929)
____________
(3,476,468)
___________
-
____________
(3,476,468)

-
(17,781)
________
(17,781)
________
-
________
(17,781)
======= =======
(8,891)
======== =======

(1,738,234)

On 4 November 2014, OPSB executed a Facilities Agreement for syndicated term loan facilities of up to US$118.76
million for 75% of the planned capital expenditure for the development of the Ophir field, 75% of the first three
quarters of operating expenditure and a bank guarantee facility of US$13.5 million. The tenure of the term loan
facilities is up to four years and Octanex has provided a proportionate corporate guarantee and undertaking in
respect of the facilities. Octanex has also provided a proportionate corporate undertaking to PETRONAS for the
contract performance obligations of OPSB in relation to the Ophir Risk Service Contract.

Capital commitments are:
Payable not later than one year
Payable later than one year but not later than three years

- 43 -

847,666
-
_________

1,224,877
-
________

847,666
1,224,877
======= ========

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 10 INVESTMENT IN AN ASSOCIATE

The company has a 20.94% (2014: 20.94%) interest in Peak Oil & Gas Limited (“Peak”), an Australian Securities
Exchange listed company involved with petroleum exploration and production in the Asia Pacific region.

The company’s interest in Peak is accounted for using the equity method in the consolidated financial statements.
The following table illustrates the summarised financial information of the company’s investment in Peak:

NOTE

Consolidated
2014

2015

Current Assets
Non-Current Assets
Current liabilities

Equity

Cost of the investment
Share of equity accounted loss required by accounting standards

Carrying amount of the investment

There are no contingent liabilities in the associate

Exploration commitments are:
Payable not later than one year
Payable later than one year but not later than three years

NOTE 11 PROPERTY, PLANT & EQUIPMENT

Office Equipment
At cost
Accumulated depreciation

Balance at beginning of year
Additions
Depreciation
Disposal of Assets

Balance at end of year

NOTE 12 EXPLORATION AND EVALUATION ASSETS

620,022
10,201

558,707
4,830,872
(1,775,778) (1,401,547)
___________
___________
(1,145,555) 3,988,032
=======
1,424,487
(89,182)
___________
1,335,305
=======

=======
1,335,305
(1,074,973)
___________
260,332
=======

-
-
_________

284,606
-
________

284,606
======= ========

7,258
(5,426)
________
1,832
======
26,281
-
(4,469)
(19,980)
________
1,832
======

40,872
(14,591)
________
26,281
=======
33,472
-
(7,191)
-
________
26,281
=======

48,842,991 51,950,629
Carrying amount at beginning of year
Impairment of exploration assets
27 (8,487,470) (11,757,478)
Revaluation of NZD exploration and evaluation asset (156,885) 526,583
1,126,306 8,123,257
Cost incurred during the year
-
Costs recovered
____________
____________
40,974,942 48,842,991
======== =========

(350,000)

Carrying amount at end of year

- 44 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 12 EXPLORATION AND EVALUATION ASSETS Continued)

Exploration and evaluation assets relate to the areas of interest in the exploration phase for petroleum exploration
permits and a retention lease.

30/06/2015

30/06/2014

Permits
WA-323-P

WA-330-P
WA-362-P

WA-363-P
-

WA-387-P
WA-407-P

WA-420-P
-
PEP 51906(1)
-

Retention
Lease
WA-54-R

Permits
WA-323-P

WA-330-P
WA-362-P

WA-363-P
WA-386-P

WA-387-P
WA-407-P

WA-420-P
WA-421-P
PEP 51906
PEP 53537

PEP 55790

Retention
Lease
WA-54-R

(1) In September 2015, following preliminary interpretation of the Kaka 3D seismic survey over PEP51906 in the
Taranaki Basin offshore New Zealand, a decision was made to exit the permit (Note 25).

WA-54-R, WA-323-P, WA-330-P, WA-362-P and WA-363-P are held through joint operations and details of the
interests held in the retention lease and six the exploration permits can be found in Note 19.

WA-407-P and WA-421-P are 100% held by the wholly-subsidiary, Goldsborough Energy Pty Ltd. WA-386-P is held
100% by the wholly-owned subsidiary, Exmouth Exploration Pty Ltd.

WA-386-P was previously 100% held in joint operation by the wholly-subsidiary, Exmouth Exploration Pty Ltd, with
the permit sold to Shell in February 2015 (Notes 27). Proceeds of $350,000 were received.

WA-421-P was previously 100% held by the wholly-subsidiary, Goldsborough Energy Pty Ltd, with the permit
offered but not renewed, with effect from May 2015 (Note 27).

PEP 53537 was previously 35% held in joint operation by the wholly-subsidiary, Octanex NZ Limited, with the
permit surrendered in April 2015 (Note 27).

PEP 55790 previously 100% held by the wholly-subsidiary, Octanex NZ Limited, with the permit surrendered March
2015 (Note 27).

PEP51906 is held in joint operation by the wholly-subsidiary, Octanex NZ Limited, with a decision made to exit the
permit (Note 25).

Ultimate recovery of exploration and evaluation assets is dependent upon exploration success and/or the company
maintaining appropriate funding to support continued exploration activities.

- 45 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 13 TRADE AND OTHER PAYABLES

Financial liabilities at amortised cost

Current
Trade creditors and accruals
Director-related entities - other payables

NOTE

Consolidated
2014
$

2015
$

548,384
709,024
__________
1,257,408

741,763
366,056
__________
1,107,819
======== =======

Trade and other payables are current liabilities of which the fair value is equal to the current carrying amount.
Information about the company’s exposure to foreign exchange risk in relation to trade payables, including
sensitivities to changes in foreign exchange rates, is provided in Note 22.

On the 4th December 2014 the company signed a bridge loan facility with Sabah International Petroleum Ltd for an
amount of US$12,000,000. On 26 December 2014 the company drew down US$6,000,000 (A$7,315,289) from the
facility. After facility fees were deducted from the drawdown net cash of A$6,637,991 was received by the company.
US$5,000,000 of the bridge facility was satisfied by the issue of 40,332,663 shares to SIP on 4 February 2015 (Refer
Note 16). The balance of the bridge facility outstanding following the issue of shares, US$1,000,000 (A$1,316,483)
was repaid on 13 April 2015. Accrued interest on the loan at that date was A$87,900 and remains payable at 30 June
2015.

NOTE 14 PROVISIONS

Current
Annual Leave
Directors’ retirement benefit (1)
Long service leave

Non - Current
Directors’ retirement benefit

15,207
82,125
27,736
________
125,068
=======

-
-
-
________
-
=======

-
=======

72,791
=======

(1) On the 29th October 1997 a deed of appointment was signed by EG Albers. The deed detailed terms of
continuation of his appointment as chairman of Octanex NL. Amongst other things, it provides for a payment of a
retirement benefit to EG Albers as chairman. The amount reflects the 22 years of service EG Albers has provided to
the company.

NOTE 15 DEFERRED TAX LIABILITIES

Consolidated

Investment
revaluations
Exploration costs
Interest receivable
Accrued expenses
Provisions
Carried forward tax
losses

Deferred Tax Assets Deferred Tax Liabilities

Net Deferred Tax

2015
$
(775,820)

2014
$
(727,462)

2015
$

2014
$

2015
$

(775,820)

-
-
(9,450)
(36,534)
(3,878,314)

-
-
(9,810)
(21,837)
(2,815,747)

13,046,016 14,979,205
1,126
-
-
-

24,589
-
-
-

13,046,016
24,589
(9,450)
(36,534)
(3,878,314)

2014
$
(727,462)

14,979,205
1,126
(9,810)
(21,837)
(2,815,747)

_____________
(4,700,118)
========

_____________
(3,574,856)
========

_____________
13,070,605
========

_____________
14,980,331
========

____________
8,370,487
========

_____________
11,405,475
========

- 46 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 15 DEFERRED TAX LIABILITIES (Continued)

Consolidated

Investment revaluations
Exploration costs
Interest receivable
Accrued expenses
Provision
Carried forward tax losses

Consolidated
Investment revaluations
Exploration costs
Interest receivable
Accrued expenses
Provision
Carried forward tax losses

Opening
Balance
At 1 July
2014
$

Charged/ Charged/
(credited) (credited)
to Income directly to
Equity
Statement
$
$

Closing
Balance
at June
2015
$

(727,462)
14,979,205
1,126
(9,810)
(21,837)
(2,815,747)

-
(1,933,189)
23,463
360
(14,697)
(1,062,567)

(48,358)
-
-
-
-
-

(775,820)
13,046,016
24,589
(9,450)
(36,534)
(3,878,314)

11,405,475

(2,986,630) (48,358)

8,370,487

Opening
Balance
At 1 July
2013
$

Charged/ Charged/
(credited) (credited)
to Income directly to
Equity
Statement
$
$

Closing
Balance
at June
2014
$

(683,920)
15,884,871
28,135
(12,562)
(19,075)
(2,418,975)

-
(905,666)
(27,009)
2,752
(2,762)
(396,772)

(43,542)
-
-
-
-
-

(727,462)
14,979,205
1,126
(9,810)
(21,837)
(2,815,747)

12,778,474

(1,329,457) (43,542)

11,405,475

NOTE 16 CONTRIBUTED EQUITY

Issued Capital

2015 Shares 2014 Shares

2015
$

2014
$

Ordinary shares fully paid (a)
Ordinary shares partly paid(b)
Ordinary shares issued pursuant to trustee
stock scheme(c)

Balance at end of year

192,265,561
74,278,910

152,122,898
74,278,910

56,806,364
11,041,975

50,560,984
11,041,975

33,000,000
_____________
299,544,471
=========

33,000,000
_____________
259,401,808
=========

-
____________
67,848,339
=========

-
____________
61,602,959
=========

- 47 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 16 CONTRIBUTED EQUITY (Continued)

(a) Ordinary shares fully paid

Movements during the year

Balance at beginning of year
Share placement (1)
Placement costs(1)
Share buy back

Balance at end of year

2015
Shares

2014
Shares

2015
$

2014
$

152,122,898
40,332,663
-
(190,000)
_______________
192,265,561
=========

152,127,398
-
-
(4,500)
______________
152,122,898
=========

50,560,984
6,393,860
(128,485)
(19,995)
______________
56,806,364
=========

50,561,634
-
-
(650)
______________
50,560,984
=========

(1) On the 4th December 2014 the company signed a bridge loan facility with Sabah International Petroleum Ltd for
an amount of US$12,000,000. On 26 December 2014 the company drew down US$6,000,000 from this facility. On
4 February 2015 US$5,000,000 of the bridge facility was satisfied by the issue of 40,332,663 shares to SIP (refer
Note 13). No cash was received by the company for this placement but costs of $128,485 were paid to SIP as part of
the placement arrangement.

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

(b) Ordinary shares partly paid(i)

No movements during the year.

(i) The partly paid shares are paid to 15 cents; with the balance of 10 cents due in one or more calls payable not before
the date that First Oil is produced at the Ophir field, or 31 December 2018, whichever is earlier.

No movements during the year.

In the year ended 30 June 2011, the members of Octanex voted to approve a new trustee stock scheme to replace
the existing such scheme and the Supreme Court of Victoria then gave its required approval to the new scheme at a
hearing on 17 November 2010. As a consequence of the company obtaining those necessary approvals, the
33,000,000 trustee shares held by the trustee under the then existing scheme were cancelled and 33,000,000 new
trustee shares were issued to the trustee under the new scheme. During the year those new trustee shares were
quoted as fully paid ordinary shares. When the trustee sells those shares the trustee must pass the net proceeds of
their sale to the company.

The company has unlimited authorised capital with no par value.

Terms and Conditions of Contributed Equity
Ordinary shares confer on the holder 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
(irrespective of the 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.

Trustee Stock Scheme
Octanex is party to a Trustee Stock Scheme, pursuant to which ordinary shares ranking equally with other ordinary
shares on issue were issued to a trustee. When those shares are sold by the trustee the net proceeds are paid to the
Company by way of subscription moneys. At reporting date all shares issued to the trustee remained unsold. The
trustee does not exercise voting rights in respect of shares held pursuant to the scheme.

Unlisted Options - (Share Based Payment)
On 16 October 2014, 2,000,000 options were granted to a consultant. The options are fully vested, had an expiry
date of 15 October 2018 and an exercise price of 15.34 cents.

- 48 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2014

NOTE 16 CONTRIBUTED EQUITY (Continued)
Unlisted Options - (Share Based Payment) – Continued

On 28 November 2014 1,500,000 options were granted to directors and approved by members at the annual
general meeting. As part of the grant of the 1,500,000 options on 28 November 2014 on the same day the 1,500,000
30 June 2015 32 cent options were surrendered by the directors.

On 28 November 2014 14,600,000 options were granted to Octanex staff and other individuals and approved by
members at the annual general meeting. As part of the grant of the 14,600,000 options on 28 November 2014 on
the same day the 3,350,000,000 21 May 2016 32 cent options were surrendered by the directors.

On 14 April 2015 3,000,000 of the 14,600,000 options that were granted to Octanex staff and other individuals and
approved by members at the annual general meeting were cancelled as vesting conditions were not met.

On 22 May 2014, 3,350,000 options were granted to Octanex staff and other individuals. The options were fully
vested, had an expiry date of 21 May 2016 and an exercise price of 15.34 cents. They were surrendered on 28
November 2014 per the above paragraph.

On 17 October 2012, 3,850,000 options were granted to the directors of Octanex and other individuals. The options
were fully vested, had an expiry date of 30 June 2015 and an exercise price of 32 cents. As part of the grant of the
3,350,000 options on 22 May 2014 on the same day 2,350,000 of the 30 June 2015 32 cent options were surrendered
by individuals. The remaining 1,500,000 options granted to directors were surrendered by those directors on 28
November 2014 per the preceding paragraphs.

On 8 September 2010, 500,000 options were granted to JG Tuohy, company secretary of Octanex. The options were
fully vested, had an exercise price of 45 cents and expired 30 September 2013. On 1 October 2013, JG Tuohy was
granted a further 500,000 options, fully vested with an exercise price also of 45 cents. These options expired on 31
March 2014.

Unlisted Options
Balance at beginning of year
Options granted
Options surrendered/ cancelled
Options expired

Balance at end of year

2015
Options

2014
Options

4,850,000 4,350,000
18,100,000 3,850,000
(7,850,000) (2,350,000)
- (1,000,000)

______________
15,100,000
==========

__________
4,850,000
========

The 2,000,000 options granted to the consultant on 16 October 2014 were valued using the Binomial Option
Valuation model. The following inputs were used:

Exercise price:
Share price at grant date:
Maximum option life
Expected volatility
Risk free interest rate

15.34 cents
9.0 cents
4.0 years
67%
2.75%

The 1,500,000 options granted to directors on 28 November 2014 were valued using the Binomial Option Valuation
model. The follow inputs were used:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15.34 cents
7.5 cents
3.9 years
69%
2.5%

- 49 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 16 CONTRIBUTED EQUITY (Continued)

Unlisted Options - (Share Based Payment) – Continued

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 4,100,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15.34 cents
7.5 cents
3.9 years
69%
2.5%

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 250,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

20 cents
7.5 cents
3.0 years
69%
2.5%

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 250,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

25 cents
7.5 cents
4.0 years
69%
2.5%

- 50 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 16 CONTRIBUTED EQUITY (Continued)

Unlisted Options - (Share Based Payment) – Continued

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 1,000,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15cents
7.5 cents
3.5 years
69%
2.5%

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 1,000,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15cents
7.5 cents
3.6 years
69%
2.5%

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 2,000,000 options
had vesting conditions attached that were unable to be met and so value was attributable to them.

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 1,000,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15cents
7.5 cents
4.1 years
69%
2.5%

Expected volatility was based on the average volatility of a peer group of eleven companies within the oil and gas
exploration industry. The implied volatility of the eleven companies was in the range of 31% to 105%. The fair
value of this share based payment at grant date was $16,463. The options have vesting conditions in relation to
OPSB oil production and capex at grant date with a 70% probability that those conditions will be met. The fair value
is recognised over the period during which the grantee become unconditionally entitled to the options so at 30 June
2015 $361 of the share based payment expense with a corresponding increase in equity of $361 has been
recognised.

- 51 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 16 CONTRIBUTED EQUITY (Continued)

Unlisted Options - (Share Based Payment) – Continued

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 1,000,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15cents
7.5 cents
4.1 years
69%
2.5%

Expected volatility was based on the average volatility of a peer group of eleven companies within the oil and gas
exploration industry. The implied volatility of the eleven companies was in the range of 31% to 105%. The fair
value of this share based payment at grant date was $11,760. The options have vesting conditions in relation to
OPSB oil production and capex at grant date with a 50% probability that those conditions will be met. The fair value
is recognised over the period during which the grantee become unconditionally entitled to the options so at 30 June
2015 $258 of the share based payment expense with a corresponding increase in equity of $258 has been
recognised.

Of the 14,600,000 options granted to Octanex staff and other individuals on 28 November 2014 1,000,000 were
valued using the Binomial Option Valuation model and the following inputs:

Exercise price:
Share price at approval date:
Maximum option life
Expected volatility
Risk free interest rate

15cents
7.5 cents
5.1 years
69%
2.5%

Expected volatility was based on the average volatility of a peer group of eleven companies within the oil and gas
exploration industry. The implied volatility of the eleven companies was in the range of 31% to 105%. The fair
value of this share based payment at grant date was $2,699. The options have vesting conditions in relation to OPSB
oil production and capex at grant date with a 10% probability that those conditions will be met. The fair value is
recognised over the period during which the grantee become unconditionally entitled to the options so at 30 June
2015 $48 of the share based payment expense with a corresponding increase in equity of $48 has been recognised.

NOTE 17 RESERVES

Financial assets at fair value through other
comprehensive income reserve
Option reserve
Foreign currency translation reserve

Financial assets at fair value through other
comprehensive income reserve
Balance at beginning of financial year
Changes in fair value on financial assets at fair value
through other comprehensive income
Income tax on other comprehensive income

- 52 -

2015
$

Consolidated
2014
$

(1,505)
111,332
948,016 763,494
584,176
1,350,113
_________
___________

2,296,624 1,459,002
=======
========

111,332 212,929

(161,195) (145,139)
43,542
48,358
_________
__________
111,332
(1,505)
=======
=======

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2014

The financial assets at fair value through other comprehensive income reserve represents the changes in fair value
on the group’s equity instruments including realised gains or losses on those investments. Further information on
the investments is set out in Notes 8 and 22.

Option reserve
Balance at beginning of financial year
Share based payment expense

763,494 670,451
93,043
184,522
________
__________

948,016
=======

763,494
=======

The options reserve relates to share options granted to the company secretary, the directors and individuals (Note
16).

Foreign currency translation reserve
Balance at beginning of financial year
Movement for the year

584,176
765,937
_________

-
584,176
________

1,350,113
=======

584,176
=======

The foreign currency translation reserve relates to the consolidation of foreign currency denominated fully owned
subsidiary entities. At 30 June 2015 the following companies and currencies held in those companies were
consolidated.

Octanex NZ Limited – New Zealand Dollars
Octanex Pte Ltd – United States Dollars
Octanex Malaysia Sdn Bhd – Malaysian Ringgits

NOTE 18 EXPLORATION EXPENDITURE COMMITMENTS

The consolidated entity share of minimum work requirements in exploration permit interests held by the
consolidated entity or in joint operations is estimated at reporting date:

Consolidated
2014
$

2015
$

Payable not later than one year
Payable later than one year but not later than three years

1,557,292
490,625
___________

2,689,489
481,250
___________

3,170,739
2,047,917
======== =========

- 53 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 19 INTEREST IN UNINCORPORATED JOINT OPERATIONS
The consolidated entity has an interest in the assets, liabilities and output of joint operations for the exploration and
development of petroleum in Australia. The consolidated entity has taken up its share of joint operations
transactions based on its contributions to the joint operations. The consolidated entity’s interests in the joint
operations:

Joint Venture

Winchester Project
Northern Deeps
Cornea
Matuku (1)
Stirling (2)
Hector (3)
Taranga (4)
Takapou (4)

2015
Interest

2014
Interest

Permits Held

25%
33.33%
18.75%

25% WA-323-P & WA-330-P
WA-362-P & WA-363-P
WA-54-R

33.33%
18.75%

22.5%
-
-
-
-

22.5% PEP 51906
60% WA-422-P
PEP 53537
35%
PEP 52593
50%
PEP 53473
50%

(1) In September 2015, following preliminary interpretation of the Kaka 3D seismic survey over PEP51906 in the
Taranaki Basin offshore New Zealand, a decision was made to exit the permit (Note 25).
(2) The decision was made to surrender the WA-422-P exploration permit with effect from the end of Year 5 (on 12
July 2014) and the requisite consent to surrender has been received from the Regulatory Authority (Note 12).
(3) PEP 53537 surrendered – effective 22 April 2015.
(4)The decision was made to surrender the PEP 53473 and PEP 52593 exploration permits with effect on 19 and 30
September 2014 respectively.

Assets and liabilities of the joint operations are included in the financial statements as follows:

CURRENT ASSETS
Cash and cash equivalents
Receivables

NON-CURRENT ASSETS
Exploration and evaluation assets

CURRENT LIABILITIES
Payables
Payables – director-related entity

NOTE

13
13, 21

2015
$

1,231
1,259

2014
$

29,130
2,409

30,664,632 33,822,913

728
17,854

112,442
15,656

Consolidated
2014
$

2015
$

There are no contingent liabilities in any of the joint operations. Minimum work requirements in exploration permit
interests held in joint operations is estimated at reporting date:

Payable not later than one year
Payable later than one year but not later than three years

103,125
140,625
_________
243,750

304,072
243,750
________
547,822
======== ========

- 54 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015
NOTE 20 KEY MANAGEMENT PERSONNEL

Executive Directors
EG Albers
RL Clark

Non-Executive Directors
DC Coombes
G Guglielmo
KK How

SK Kler
JMD Willis

On 18 December 2014 GA Menzies resigned as a director of the company and ceased to be key management
personnel.

Individual compensation disclosures
Information regarding individual director’s compensation is provided in the remuneration report section of the
directors’ report. There are no employees who meet the definition of key management personnel other than the
executive directors of the company. A summary of the remuneration report is shown below.

Short Term

Post Employment

Equity Settled

Total

Directors Fees

Salary

Super

Retirement Benefits

Options

TOTAL

2015

2014

$
178,667 150,000

$
24,785

$
9,334

$
32,973 395,759

125,550

5,550

9,208

- 140,308

Interests in Equity Instruments of Octanex N.L.
The disclosures relating to equity instruments of directors includes equity instruments of personally related
entities, being relatives and the spouses of relatives of the director and any entity under the joint or several control
or significant influence of the director.

All equity transactions with directors, other than options granted as remuneration, have been entered into under
terms and conditions, applicable to all shareholders.

Interests in fully paid ordinary shares

EG Albers
RL Clark
DC Coombes
G Guglielmo
KK How
SK Kler
GA Menzies
JMD Willis

EG Albers
DC Coombes
GA Menzies
JMD Willis

Balance Received as
Remuneration

Options Net Change
Other

Exercised

Balance

01/07/2014

113,146,172
-
165,000
-
-
-
-
2,302,367

-
-
-
-
-
-
-
-

30/06/2015

817,585 113,963,757
-
165,000
57,551
50,000
50,000
-
2,398,130

-
-
57,551
50,000
50,000
-
95,763

-
-
-
-
-
-
-
-

Balance Received as
Remuneration

Options Net Change
Other

Exercised

Balance

-
-
-
-

30/06/2014

- 113,146,172
165,000
-
-
-
2,302,367
-

01/07/2013

113,146,172
165,000
-
2,302,367

-
-
-
-

- 55 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 20 KEY MANAGEMENT PERSONNEL (Continued)

Interests in partly paid ordinary shares

Balance Received as
Remuneration

Options Net Change
Other

Exercised

Balance

01/07/2014

51,837,357
-
41,500
-
-
-
500,000
1,198,752

01/07/2013

51,837,357
41,500
500,000
1,198,752

-
-
-
-
-
-
-
-

-
-
-
-

30/06/2015

-
-
-
200,000
-
-
-
-

51,837,357
-
41,500
200,000
-
-
500,000
1,198,752

30/06/2014

-
-
-
-

51,837,357
41,500
500,000
1,198,752

-
-
-
-
-
-
-
-

-
-
-
-

EG Albers
RL Clark
DC Coombes
G Guglielmo
KK How
SK Kler
GA Menzies
JMD Willis

EG Albers
DC Coombes
GA Menzies
JMD Willis

Interests in unlisted options

Held at

Granted as

Other
Compensation(1) Exercised Changes(2)

1 July 2014

Held at
30 June

2015

RL Clark

DC Coombes

500,000

2,000,000

(500,000)

500,000

GA Menzies

500,000

- (1,000,000)

JMD Willis

500,000

(500,000)

500,000

1,500,000

3,000,000

Vested
during
the year

Vested and
exercisable at
30 June

2015

2,000,000

500,000

3,000,000

(1) On 28 November 2014 1,500,000 options were granted to directors and approved by members at the annual
general meeting. As part of the grant of the 1,500,000 options on 28 November 2014 on the same day the 1,500,000
30 June 2015 32 cent options were surrendered by the directors.

(2) On 18 December 2014 GA Menzies resigned as a director of the company as ceased to be key management
personnel. The 2,000,000 were held by RL Clark, prior to her appointment as director on 18 October 2015.

Held at

Granted as
compensation

Exercised

Other
Changes

Held at
30 June

Vested
during
the year

Vested and
exercisable at
30 June

1 July 2013

DC Coombes

500,000

GA Menzies

500,000

JMD Willis

500,000

1,500,000

2014

500,000

1,500,000

2014

500,000

1,500,000

- 56 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 21 RELATED PARTY DISCLOSURES

The consolidated financial statements of the Group include:

Name

Octanex Operations Pty Ltd
Strata Resources Pty Ltd
Exmouth Exploration Pty Ltd
United Oil & Gas Pty Ltd
Octanex NZ Limited
Goldsborough Pty Ltd
Goldsborough Energy Pty Ltd
Braveheart Energy Pty Ltd
Cornea Energy Pty Ltd
Winchester Resources Pty Ltd
Winchester Exploration Pty Ltd
Octanex Pte Ltd
Octanex Malaysia Sdn Bhd

2015
Interest

2014
Interest

Country of Incorporation

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Malaysia

Director-related Entities
Companies in which an Octanex director controls or significantly influences, that provide services to the group or to
a joint operation in which the group has an interest, or that also hold an interest in those joint operations or in
which the group holds an investment.

(i)Providers of Services by Related Party

During the year services and/or facilities were provided under normal commercial terms and conditions by:

Exoil Pty Ltd, (Exoil), a director-related entity of EG Albers
Gresham Management Pty Ltd (Gresham), a director-related entity of GA Menzies up to 18 Dec 2014
Natural Resources Group Pty Ltd (NRG), a director-related entity of EG Albers
Upstream Consulting Limited, (Upstream), a director-related entity of JMD Willis
Peak Oil & Gas Limited, (Peak), a director-related entity of EG Albers
Petroleum Advisors (PA), a director related entity of T Guglielmo

Consolidated

Service Provided

Exoil
Peak
NRG
NRG
NRG
Gresham
PA
Upstream
Upstream
Upstream
Upstream

Office services and amenities in Melbourne
Consulting services to Ophir project
Management and administration services to the Group
Management of exploration tenements
Management services to Ophir project
Management and consulting services to the Group
Management services to Ophir project
Management and consulting services to the Group
Management of exploration tenements
Management services to Ophir project
Provision of office services and amenities in NZ

2015
$

326,618
162,398
96,500
104,438
120,000
190,745
18,500
7,029
11,738
68,599
6,419

2014
$

151,835
238,490
150,000
154,750
140,000
289,092
-
57,331
237,462
19,000
19,646

- 57 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 21 RELATED PARTY DISCLOSURES (Continued)

The group holds interests in petroleum exploration joint operations with certain director-related entities:

As a participant of the Cornea Joint Venture with Cornea Petroleum Pty Ltd, Cornea Oil & Gas Pty Ltd, Coldron Pty
Ltd, Cornea Energy Pty Ltd, Moby Oil & Gas Limited, Enegex NL, Cornea Resources Pty Ltd and Auralandia Pty Ltd,
all director-related entities of EG Albers, except for Enegex NL..

Amounts payable to related parties including those under joint operation arrangements:

Consolidated

2015
$

2014
$

Payables
Exoil Pty Ltd
Natural Resources Group Pty Ltd
Petroleum Advisors
Upstream

83,230
623,044

2,750
-
_________
709,024
=======

53,656
293,400
-
19,000
__________
366,056
=======

(ii)Providers of Services to Related Party
During the year accounting services were provided under normal commercial terms and conditions to:

Cornea Resources Pty Ltd, a director-related entity of EG Albers
(ii)Providers of Services to Related Party Continued

Moby Oil and Gas Pty Ltd, a director-related entity of EG Albers
Auralandia Pty Ltd, a director-related entity of EG Albers
Seaquest Petroleum, a director-related entity of EG Albers
Alpha Natural Resources Pty Ltd, a director-related entity of EG Albers

Sundry Revenue
Auralandia Pty Ltd
Moby Oil & Gas Pty Ltd
Alpha Natural Resources Pty Ltd
Cornea Resources Pty Ltd – Operator Cornea JV
Seaquest Petroleum Pty Ltd
Ophir Production Sdn Bhd (Note 21 (iv)
Peak Oil & Gas Limited (Note 21 (iii) & (iv))

Receivables from related parties:

Cornea Resources Pty Ltd – Operator Cornea JV
Moby Oil & Gas Pty Ltd
Ophir Production Sdn Bhd

3,600
-
1,610
4,420
8,786
10,107
39,268
6,470
4,388
6,601
124,995
-
81,963 107,206
__________
_________
234,556 164,858
======
=======

572
4,862
31,933
________
37,367
=======

-
-
-
____________
-
========

- 58 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 21 RELATED PARTY DISCLOSURES (Continued)

(iii) Loan to Peak Oil & Gas Limited

Carrying amount at beginning of year
Drawdowns
Accrued interest
Application of trade payables to loan
Loan repayments
Impairment of loan

Carrying amount at end of year

Consolidated
2014
2015
$
$
954,613 -
1,047,038 944,586
81,963 10,027
(109,233)
(260,000)
(1,274,381)
____________
440,000
========

-
-
-
__________
954,613
======

Peak Oil & Gas Limited is a director-related entity of EG Albers. The impaired value of $440,000 was received in full
on 2 July 2015. The loan is secured by a charge over the assets of Peak Oil & Gas Limited.

In March 2015 Octanex executed an amended loan agreement and associated security documentation with Peak and
its subsidiary (Peak Oil & Gas (Australia) Pty Ltd) (POGA) (Peak Group) in relation to Peak’s debt due to Octanex.
The key principles of these documents are summarised below.

Peak Group’s indebtedness to Octanex was fixed as at 31 December 2014 at $1,952,815 which, from 1 January
2015, bears interest at the RBA cash rate from time to time. Unpaid interest will be capitalised.

The revised terms provide for extensions of the due date for payment of Peak Group’s debt to Octanex on a
recurring 60 day cycle with possible extensions on a rolling basis for a maximum of 18 months from 31
December 2014 to 30 June 2016, subject to Octanex not terminating the arrangement at any time during a 60
day period.

During each 60 day extension period Peak Group and Octanex will consult as to action being taken or steps
available to Peak Group to repay its indebtedness to Octanex.

Peak and POGA have assumed joint and several liability to Octanex repay all such moneys which were
advanced by Octanex to Peak Group and which were used substantially by POGA to fund its obligations in
relation to South Block A in Indonesia.

the loan documentation has been revised with an Amended and Restated Loan Agreement being entered into
and both Peak and POGA have, pursuant to a further ASX waiver granted on 27 February 2015, granted
charges over their assets to secure repayment of the Peak Group’s indebtedness.

(iv) Advance to Ophir Production Sdn Bhd
During the year ended 30 June 2015, the company advanced Ophir Production Sdn Bhd $5,420,021 (June 2014 $nil).
The funds have not been repaid at 30 June 2015 and are expected to be recovered from capital return and revenue
in the form of dividends from production from the development of the Ophir oil field.

(v) Investments in director-related companies
At 30 June 2015, the company carried an investment in an ASX listed company Peak Oil & Gas Limited, (Note 10),
which is a director-related entity of EG Albers.

It also held an investment in Moby Oil & Gas Pty Ltd, an unlisted private company in the petroleum industry which is
a director-related entity of EG Albers (Note 8(a)).

- 59 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 22 FINANCIAL INSTRUMENTS

Categories of Financial Instruments

Financial Assets
Cash & cash equivalents
At fair value through other comprehensive
income
Trade and other receivables – current ex
prepayments
Trade and other receivables – non current

Financial Liabilities at amortised cost
Trade and other
payables

Consolidated
2015 2014
$ $

5,832,084

8,506,574

126,830

288,025

556,121
5,420,021
11,935,056

292,173
954,613
10,041,385

1,257,408
1,257,408

1,107,819
1,107,819

Recognition and derecognition
Purchases and sales of financial assets and financial liabilities are recognised on trade date which is the date on
which the consolidated entity commits to purchase or sell the financial assets or financial liabilities. Financial assets
are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the group has transferred substantially all the risks and rewards of ownership. Exposure to credit,
interest rate, liquidity, foreign currency, market price and currency risks arises in the normal course of the
consolidated entity’s business. The consolidated entity’s overall risk management approach is to identify the risks
and implement safeguards which seek to minimise potential adverse effects on the financial performance of the
consolidated entity’s business.

The board of directors are responsible for monitoring and managing the financial risks of the consolidated entity.

Fair value
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.

AASB 13 requires disclosure of fair value measurements by level of the fair value hierarchy, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The consolidated entity’s financial assets measured and recognised at fair value at 30 June 2015 and 30 June 2014
on a recurring basis are as follows:

30 June 2015

Assets
Listed securities and
debentures
Unlisted securities and
debentures
Total
Net fair value

Level 1
$

Level 2
$

69,085

69,085
69,085

-
-

Level 3

Total
$

69,085

57,745

57,745
57,745

126,830
126,830

- 60 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 22 FINANCIAL INSTRUMENTS (Continued)

30 June 2014

Assets
Listed securities and
debentures
Unlisted securities and
debentures
Total
Net fair value

Level 1

Level 2

Level 3

Total

230,280

230,280
230,280

-
-

230,280

57,745

57,745
57,745

288,025
288,025

Credit risk
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. At the reporting date there were is no credit risk as the consolidated entity has no
trade sales or trade receivables.

Interest rate risk
All financial liabilities and financial assets at floating rates expose the company to cash flow interest rate risk The
consolidated entity has no exposure to interest rate risk at reporting date, other than in relation to cash and cash
equivalents which attract an interest rate.

Sensitivity Analysis
At reporting date a 1% (100 basis point) increase/decrease in the interest rate would increase/decrease the
consolidated entity by $10,824 (2014: $7,134).

Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. Liquidity risk
is monitored to ensure sufficient monies are available to meet contractual obligations as and when they fall due.

The following are the contractual maturities of the financial liabilities, including interest payments. Contractual
amounts have not been discounted.

Carrying
Amount
$

Contractual
cash flows
$

0-12
months
$

1-2 years

2-10
years
$

30 June 2015:

Consolidated
Non-derivative Financial
Liabilities
Trade and other payables
Non current payables

30 June 2014:

Consolidated
Non-derivative Financial
Liabilities
Trade and other payables
Non current payables

1,257,408
-
1,257,408

1,107,819
-
1,107,819

- 61 -

-
-
-

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 22 FINANCIAL INSTRUMENTS (Continued)

Foreign currency risk
The consolidated entity is exposed to foreign currency risk arising from purchases of goods and services that are
denominated in a currency other than the Australian dollar functional currency. The consolidated entity incurs
seismic, exploration, development and well drillings costs in US dollars. To this extent, the consolidated entity is
exposed to exchange rate fluctuations between the Australian and US dollar. At 30 June 2015 the consolidated entity
has a foreign currency exposure by holding US dollars in bank accounts totalling US$4,384,787 (2014: $6,857,118)
and an advance to Ophir Production Sdn Bhd of US$4,377,090. A one cent movement in the USD/AUD exchange rate
would move consolidated equity by AUD$102,649 (2014: $53,524).

Equity price risks
Equity price risk applies to at fair value through other comprehensive income investments. The portfolio of
investments is managed internally by Octanex management who buy and sell equities based on their own analyses
of returns. The investments are subject to movements in prices of the investment markets.

Financial Assets at fair value through other
comprehensive income

Investments in listed equities
Oil Basins Limited

Investments in unlisted equities
Moby Oil & Gas Pty Ltd

2015
$

2014
$

69,085
________
69,085

230,280
________
230,820

57,745
________
57,745
________
126,830

57,745
________
57,745
________
288,025
======= =======

The consolidated entity and company investments in listed equities are listed on the Australian Securities Exchange.
A 10% increase / decrease at the reporting date in closing share price of each share held would have
increased/decreased consolidated equity by $6,909 (2014: $23,082). There would have been no effect on profit.

Capital Management
When managing capital, the directors’ objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders.

It is the company’s plan that capital, as and when required, further, will be raised by any one or a combination of the
following manners: placement of shares to excluded offerees, pro-rata issue to shareholders, the exercise of
outstanding options, and/or a further issue of shares. Should these methods not be considered to be viable, or in the
best interests of shareholders, then it would be the consolidated entity’s intention to meet its exploration
obligations by either partial sale of its interests or farmout.

No company in the consolidated entity is subject to any externally imposed capital requirements.

- 62 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 23 AUDITOR’S REMUNERATION

Amounts received or due and receivable by:
Grant Thornton Audit Pty Ltd - Auditor of the consolidated entity and company
Related practices of the parent company auditor
Audit and review of the financial reports
SJ Grant Thornton – Auditor of Octanex Malaysia Sdn Bhd
Foo Kon Tan Grant Thornton – Auditor of Octanex Pte Ltd

Consolidated

2015
$

2014
$

67,863

66,988

2,802
8,627
________
79,292
=======

-
-
_______
66,988
=======

NOTE 24 SEGMENT INFORMATION

Under AASB 8 Operating Segments, segment information is presented using a 'management approach', i.e. segment
information is provided on the same basis as information used for internal reporting purposes by the board of
directors

At regular intervals the board is provided management information at a group level for the group’s cash position,
the carrying values of exploration permits and a group cash forecast for the next twelve months of operation. On
this basis, no segment information is included in these financial statements.

All interest received has been derived in Australia, except for $579 from New Zealand. All exploration and
evaluation assets are held in Australia.

NOTE 25 EVENTS AFTER THE END OF THE REPORTING PERIOD

On 3 August 2015 the company announced that a location had been declared over the Ascalon gas discovery in the
Southern Bonaparte Basin, offshore from Western Australia covering 10 graticular blocks in exploration permit WA-
407-P.

On 1 September 2015 the Company announced that Petronas had approved a revised Field Development Plan for the
Ophir development.

In September 2015 the Company lodged an application for a Declaration of Location over two graticular blocks within
exploration permit WA-420-P into which the Ascalon gas discovery extends.

In September 2015, following preliminary interpretation of the Kaka 3D seismic survey over PEP51906 in the
Taranaki Basin offshore New Zealand, a decision was made to exit the permit (Note 27).

2015 2014

Consolidated

NOTE 26 LOSS PER SHARE
The following reflects the income and share data used in the
calculations of basic and diluted earnings per share:

Net loss

Weighted average number of shares

In calculating the weighted average number of shares for the purposes
of calculating basic and diluted earnings per share, the partly paid shares are
accounted for on a pro-rata basis according to the amount of call outstanding
in relation thereto.

(11,524,294)

(3,445,907)

Number of
Shares

212,827,246

Number of
Shares
196,694,744

Unlisted options outstanding during the year (Refer Note 16) are not dilutive at the 30th June 2015 as the exercise
price is higher than the average share price for the year then ended.

- 63 -

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 27 IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS

In February 2015 the WA-386-P permit was sold to Shell Australia Pty Ltd for $350,000. As a consequence, the
carrying value of $3,510,091 had previously been written down by $3,160,091 to $350,000 at 31 December 2014.

PEP 55790 was impaired and its carrying value of $181,565 written off following the surrender the permit, effective
March 2015.

PEP 53537 was impaired and its carrying value of $1,167,756 written off following the surrender of the permit,
effective April 2015.

Following the decision not to renew WA-421-P, effective May 2015, the carrying value of the permit (being
$1,628,218) was determined to be impaired and therefore written off at 30 June 2015.

Following the decision to exit PEP 51906 (Note 25), the carrying value of the permit (being $2,360,957) was
determined to be impaired and therefore written off at 30 June 2015.

The impairment writedowns were determined by analysing current year costs and the costs previously capitalised
with respect to the permits.

NOTE 28 PARENT ENTITY INFORMATION

The following details information related to the parent entity, Octanex NL at 30 June 2015. The information
presented here has been prepared using consistent accounting policies as presented in Note 1, except for the use of
the cost method for investment in subsidiary companies by the parent.

Current assets
Non-current assets

Total assets

Current liabilities
Non-current liabilities

Total liabilities

Contributed equity
Options reserve
Financial assets at fair value through other comprehensive income reserve
Accumulated losses

Total equity

(Loss) profit for the year
Other comprehensive income for the year

Total comprehensive income for the year

The company has no contingent liabilities.

No dividends were paid by the parent entity in 2015 (2014: Nil).

- 64 -

2015
$
6,407,769

2014
$
816,755
65,233,828 71,368,342
____________
____________
71,641,597 72,185,097
____________
____________

1,287,533

714,862
13,536,052 13,443,534
____________
____________
14,823,585 14,158,396
____________
____________

67,848,339 61,602,959
763,494
(347,100)
(11,543,180) (3,992,652)

948,016
(435,163)

____________

56,818,012 58,026,701
____________
____________

(7,550,528) (3,757,979)
(88,063) (83,903)
____________
____________

(7,638,591) (3,841,882)
____________

____________

OCTANEX NL

ABN 61 005 632 315

Notes to the Financial Statement
30 JUNE 2015

NOTE 28 PARENT ENTITY INFORMATION (Continued)

The company’s share of minimum work requirements contracted for under exploration permit interests held in
joint operation is estimated at reporting date:

Payable not later than one year
Payable later than one year but not later than
three years

2015
$

2014
$

56,375

46,125

76,875
________

133,250
________

179,375
________

NOTE 29 CONTINGENT LIABILITY
Consulting Agreement
In the half year report to 31 December 2014 the company disclosed that a former consultant engaged by Octanex
had commenced action against the company claiming that his termination of contract was null and void and in
breach of Octanex’s obligations to the consultant. The case has been settled and the complaint has been withdrawn.

- 65 -

OCTANEX NL

ABN 61 005 632 315
!
Additional)Information!(unaudited)!
!
As!at!15!September!2015!Octanex!holds!the!following!interests!in!Petroleum!Tenements:!
!
Octanex!Licences!!

Permit'
Ophir'
SFRSC'
WA13301P'

WA13231P'

WA13621P'

Location!
Malay!Basin.!Offshore!
Peninsular!Malaysia!
Dampier!Sub!Basin,!
Carnarvon!Basin,!Offshore!
Western!Australia!
Dampier!Sub!Basin,!
Carnarvon!Basin,!Offshore!
Western!Australia!
Exmouth!Plateau,!Carnarvon!
Basin,!Offshore!Western!
Australia!

WA13631P'

Exmouth!Plateau,!Carnarvon!
Basin,!Offshore!Western!
Australia!

WA13871P'

WA14201P'

WA14071P'

WA1541R'

Exmouth!Plateau,!Carnarvon!
Basin,!Offshore!Western!
Australia!
Bonaparte!Basin,!Offshore!
Western!Australia!
Bonaparte!Basin,!Offshore!
Western!Australia!
Browse!Basin,!Offshore!
Western!Australia!

!
Octanex!Resource!Statement!!

Octanex!interest!%!
50%!(via!Octanex!Pte!Ltd)!

25%!via!Winchester!Resources!NL!

33.33%!comprised!of:!
11.667%!via!Octanex!NL!
11.667%!via!Strata!Resources!
9.999%!via!Exmouth!Exploration!Pty!
Ltd!
33.33%!comprised!of:!
11.667%!via!Octanex!NL!
11.667%!via!Strata!Resources!
9.999%!via!Exmouth!Exploration!Pty!
Ltd!
100%!via!Exmouth!Exploration!Pty!Ltd!

100%!via!Goldsborough!Energy!Pty!Ltd!

18.75%!(10.25%!via!Octanex!NL!and!
8.5%!via!Cornea!Energy!Pty!Ltd)!!

Operator!
Ophir!Production!
Sdn!Bhd!
Santos!Offshore!!
Pty!Ltd!

Santos!Offshore!!
Pty!Ltd!

Eni!Australia!
Limited!

Exmouth!
Exploration!Pty!
Ltd!
Goldsborough!
Energy!Pty!Ltd!
Goldsborough!
Energy!Pty!Ltd!
Cornea!Resources!
Pty!Ltd!

!
Economic'Interest'Contingent'Resources'(probabilistic,'no'development'risk'applied)'
!
'
'

2C'

1C'

3C'

Oil'
(MMBBL)'
1.48!
!

Gas'
(TCF)'
!
1.04!

Oil'
(MMBBL)'
5.4!
!

Gas'
(TCF)'
!
3.01!

Oil'
(MMBBL)'
19.11!
!

Gas'
(TCF)'
!
8.74!

Cornea'
Ascalon'
!
Statement'of'a'Qualified'Petroleum'Reserves'and'Resources'Evaluator'
!
The! resources! information! in! this! statement! is! based! on,! and! fairly! represents,! information! and!
supporting! documentation! prepared! by! Mr! Tim! Morison,! a! director! and! principal! technician! of! Abraxas!
Petroleum!Pty!Ltd.!Abraxas!Petroleum!Pty!Ltd!is!a!geological!interpretation!consultancy!based!in!Vienna,!
Austria.! ! Mr! Morison! has! been! a! consultant! to! Octanex! since! 2007! and! has! sufficient! experience! to!
compile!that!information!as!a!Qualified!Petroleum!Reserves!and!Resources!Evaluator.!
!
The! resources! information! in! Octanex’s! 2015! annual! report! has! been! issued! with! the! prior! written!
consent!of!Mr!Morison!in!the!form!and!context!in!which!it!appears.!!
!
Mr! Morison! is! a! graduate! of! the! University! of! Adelaide! and! holds! a! Bachelor! of! Science,! majoring! in!
Geology!&!Geophysics.!!He!has!over!35!years!international!and!Australasian!exploration!and!development!
experience! in! the! oil! and! gas! industry,! including! over! 33! years! estimating! reserves! and! resources.!!!!!!!!

"!66!"!

OCTANEX NL

ABN 61 005 632 315
!
Mr! Morison! is! a! member! of! the! American! Association! of! Petroleum! Geologists! (AAPG),! Petroleum!
Exploration! Society! of! Australia! (PESA),! Formation! Evaluation! Society! of! Australia! (FESAus)! (ex!
President),! Petroleum! Exploration! Society! of! Great! Britain! (PESGB)! and! European! Association! of!
Geoscientists!and!Engineers!(EAGE).!
!

Shareholder!Information!

Compiled!as!at!11!September!2015!
!
1.!Ordinary!share!capital!
!
As!at!11!September!2015!the!company!had!on!issue!the!following!shares:!
!
Fully'Paid'Ordinary'
Shares'
192,265,561! held! by! 1,403!
shareholders!

Partly'Paid'Ordinary'
Shares'
74,278,910! held! by! 363!
shareholders'

Trustee'Shares'

fully!

issued!

All!
paid!
ordinary! shares! carry! one!
vote!per!share!

For! each! partly! paid! share,!
only! the! fraction! of! one!
vote!which!the!amount!paid!
(not! credited)! on! the! share!
bears! to! the! total! amounts!
paid! and! payable! on! the!
share! (excluding! amounts!
credited)!

held!

by!
33,000,000!
Doravale! Enterprises! Pty!
Ltd!(the!Trustee)1!!
Other! than!
in! extremely!
limited! circumstances,! the!
Trustee!has!bound!itself!by!
the! deed! of!
covenant!
entered! into! in! association!
with!the!Scheme!not!to!vote!
at!the!meetings!of!members!
of!Octanex.!!

!
2.!Options!
!
As! at! 11! September! 2015! the! company! had! on! issue! 15,100,000! options! held! by! 16! option! holders.!
Options!do!not!carry!any!voting!right!or!rights!to!dividends.!!
!
3.!Distribution!of!holders!
!
Holding'
September'2015'

Number'of'Holders'of'
Trustee'
Shares'

Options'

11'

as'

at'

Fully'paid'
ordinary'
shares'

Partly'
paid'
ordinary'
shares'
54!
62!
45!
138!
64!
363'
278!

"!
"!
"!
"!
1!
1'
"!

"!
"!
"!
"!
16!
16'
"!

1"1,000!
1,001"5,000!
5,001"10,000!
10,001"100,000!
Over!100,001!
Total!!
Number! holding! less! than!
marketable!parcel!
!
!

165!
660!
158!
344!
77!
1,404'
1,019!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1!These!ordinary!shares!were!issued!to!the!Trustee!on!trust!for!sale!in!accordance!with!a!scheme!of!arrangement!
approved!by!the!Supreme!Court!of!Victoria!on!17!November!2010!in!Matter!SCI!210!04962!(the!Scheme).!As!
previously!advised!to!the!ASX!and!to!members,!those!shares!are!ordinary!shares!held!on!trust!for!sale!by!the!trustee!
on!the!basis!that!the!net!proceeds!of!sale!will!present!the!subsection!moneys!thereof.!The!shares!may!be!sold!as!fully!
paid!up!or!as!partly!paid!up.!Until!sold,!by!the!terms!of!the!Scheme,!the!Trustee!will!not!participate!in!dividends!or!
distributions!are!to!the!account!of!the!members!of!Octanex!pro!rata!their!respective!shareholdings.!!

"!67!"!

OCTANEX NL

ABN 61 005 632 315

4. Substantial shareholders

Substantial shareholders as disclosed in substantial shareholding notices given to the Company are as
follows:

Shareholder

The Albers Group
Sabah International Petroleum

Interest in
number of
shares
147,938,046
40,332,663

%
of Shares

54.83
14.95

5. Twenty largest shareholders as at 11 September 2015

Fully paid ordinary shares

Holder

Sabah International Petroleum Ltd
Mr Ernest Geoffrey Albers
Great Missenden Holdings Pty Ltd
Great Australia Corporation Pty Ltd
Bass Strait Group Pty Ltd
The Albers Companies Incorporated Pty Ltd
Fugro Exploration Pty Ltd
Cue Petroleum Pty Ltd
Auralandia Pty Ltd
Mrs Pamela Joy Albers
Australis Finance Pty Ltd
Great Missenden Group Pty Ltd
Seaquest Petroleum Pty Ltd
Great Missenden Group Pty Ltd
Seaquest Petroleum Pty Ltd
Albers Family Custodian Pty Ltd
Seaquest Petroleum Pty Ltd
Albers Family Custodian Pty Ltd
Appledore Superannuation Pty Ltd
Wilstermere Corporation Pty Ltd
Australian Natural Gas Pty Ltd

% of Shares

Fully paid
ordinary
shares

40,332,663
8,837,858
6,918,568
5,265,000
4,033,058
3,780,491
3,691,721
3,511,634
3,152,603
3,062,500
3,046,250
2,765,060
2,248,000
2,765,060
2,248,000
2,152,500
2,248,000
2,152,500
2,125,010
1,760,000
1,650,000

20.98
17.16
16.09
10.97
6.27
4.60
3.60
2.74
2.10
1.97
1.92
1.83
1.64
1.59
1.58
1.44
1.17
1.12
1.11
0.92
0.86

- 68 -

OCTANEX NL

ABN 61 005 632 315

Partly paid ordinary shares

Holder

Great Missenden Holdings Pty Ltd
Mr Ernest Geoffrey Albers & Mrs Pamela Joy Albers
Gascorp Australia Pty Ltd
Bass Strait Group Pty Ltd
Sacrosanct Pty Ltd
Cue Petroleum Pty Ltd
Great Missenden Group Pty Ltd
Auralandia Pty Ltd
Mr Ernest Geoffrey Albers
Great Australia Corporation Pty Ltd
The Albers Companies Incorporated Pty Ltd
Troca Enterprises Pty Ltd
Australis Finance Pty Ltd
Appledore Superannuation Pty Ltd
Mr Neil Clifford Abbott & Gellert Ivanson Trustee Ltd
Seaquest Petroleum Pty Ltd
Mrs Pamela Joy Albers
Rivermore Pty Limited
Albers Family Custodian Pty Ltd
Mr David Hugo Rankin

Trustee ordinary shares

Holder

Partly paid
ordinary
shares

10,045,726
7,957,724
7,121,742
4,958,264
3,975,201
3,752,871
2,891,265
2,097,335
2,025,420
1,710,000
1,505,122
1,504,750
1,211,562
1,157,502
958,960
809,500
765,625
747,873
650,625
612,259

% of Shares

13.52
10.71
9.59
6.68
5.35
5.05
3.89
2.82
2.73
2.3
2.03
2.03
1.63
1.56
1.29
1.09
1.03
1.01
0.88
0.82

% of Shares

Fully paid
ordinary
shares

Doravale Enterprise Pty Ltd

33,000,000

100

- 69 -

OCTANEX NL

ABN 61 005 632 315

Glossary

ASX

Australian Securities Exchange

AUD/A$

Australian currency

Bbl(s)

Barrel(s), an oil barrel is equivalent to 0.159 cubic metres

BCF

BOE

One billion cubic feet of natural gas

Barrel of oil equivalent. The factor used to convert gas to oil equivalent is based
upon an approximate

energy value of 6,000 cubic feet per barrel and not price equivalence at the time

BOPD

Barrel of oil per day

Contingent
resources

Quantities of petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations, but the applied project(s) are not yet considered
mature enough for commercial development due to one or more contingencies

Economic
interest

The working interest share of production which is adjusted for production that is
delivered to host governments under the petroleum contracts

FDP

Field Development Plan

Group

Parent entity and its subsidiaries

GST

IFRS

Goods and services tax

International Financial Reporting Standards

MMBBL

One million barrels

MMBOE

One million barrels of oil equivalent

MMCFD

One million standard cubic feet of natural gas per day

Octanex or
company

Octanex NL and includes, where the context requires, its subsidiaries

PRMS

Petroleum Resources Management System

RSC

TCF

SPE

Risk Service Contract

One trillion cubic feet of natural gas

Society of Petroleum Engineers

USD/US$

United States currency

WI%

Working Interest Percentage

- 70 -

OCTANEX NL

ABN 61 005 632 315