ANNUAL REPORT 2016 OCTANEX NL
ABN 61 005 632 315
TABLE OF CONTENTS
Chairman’s Letter .................................................................................................................................................................. 2
Operational Review .............................................................................................................................................................. 4
Corporate Governance Statement ................................................................................................................................ 13
Auditor’s Independence Declaration .......................................................................................................................... 14
Annual Financial Statements .......................................................................................................................................... 16
Directors’ Report ................................................................................................................................................................. 16
Remuneration Report ........................................................................................................................................................ 23
Directors Declaration ......................................................................................................................................................... 26
Independent Auditor’s Report ....................................................................................................................................... 27
Additional Information (unaudited) ........................................................................................................................... 64
Glossary .................................................................................................................................................................................... 68
Directory .................................................................................................................................................................................. 69
Cover: Depicts various elements and stages of the Ophir wellhead platform fabrication
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OCTANEX NL
ABN 61 005 632 315
Chairman’s Letter
Dear Shareholders
2015/16 was a year in which Octanex increased its exposure to production and development
activities. Given the ongoing downturn in oil price, we continued to moderate exploration
activities. Quite simply, high risk exploration cannot be justified in the current oil price
environment.
Following the approval by PETRONAS of the revised field development plan for the Ophir oil field
(offshore Peninsular Malaysia) construction and development activities have accelerated. Octanex
has a 50% interest in the Ophir development which is expected to commence production in the
second half of next year.
During the year the contract for the engineering, procurement, construction, installation and
commissioning of the wellhead platform was tendered and awarded, and the fabrication phase is
now nearing completion. Photographs throughout this report show various stages of fabrication
of the wellhead platform.
Following completion of reservoir studies, drilling and completions design work was prepared for
the three proposed production wells. This resulted in increased estimates of oil production and
reduced capital cost estimates. The tender process for the drilling rig was commenced during the
year and the contract will soon be awarded for the drilling of three production wells in quarter
two 2017.
Both the wellhead platform and the drilling rig contracts attracted rates significantly below those
initially budgeted, and even below the reduced cost estimates adopted by the company in its
revised field development plan in August 2015. The current low oil price regime is enabling low
development costs to be captured.
We have also advanced our pre-development assets, being the Greater Cornea Fields and the
Ascalon Gas discovery. For Cornea, both technical and commercial work was carried out.
Technical work included drilling studies, particularly the use of technology to address key
uncertainties. However, economic modelling completed during the year demonstrated the
fundamental negative shift in the field’s commerciality in the current low oil price environment.
Accordingly, the Cornea Joint Venture has agreed to apply to vary the conditions of WA-54-R in
order that the work programme is focussed on the “oil price” barrier to development that we now
squarely face.
During the year we lodged applications for Retention Leases in respect to the Ascalon gas
discovery. This followed two Declaration of Locations during the year for an aggregate of 13
graticular blocks. The Ascalon gas discovery is a large gas field in the Bonaparte Basin which is
not presently commercial. However, its proximity to both the Bayu-Undan and Ichthys pipelines
may be significant to its future commerciality.
Consistent with our strategy of surrendering or divesting exploration acreage where results have
been unfavourable or which has held out little hope of farmout or with onerous work
commitments, we exited PEP51906 in New Zealand during the financial year, following
interpretation of the Kaka 3D seismic survey.
In prior years investments were made in Peako Limited, to assist Peako to fund seismic activities
at a time when a merger of Peako into Octanex was contemplated. The extent of these
investments reduced during the year. Following the receipt of a $440,000 partial loan repayment
in July 2015, we reached agreement with Peako in November 2015 whereby the balance of the
loan outstanding (which we had already fully impaired) was satisfied through a proceeds sharing
arrangement whereby Octanex will share in any proceeds that Peako might receive in connection
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OCTANEX NL
ABN 61 005 632 315
with its disputed Cadlao interests up until November 2017. Octanex did not participate in the
pro-rata non renounceable rights issue conducted by Peako during the year, and accordingly, its
shareholding was diluted.
A number of new venture opportunities were considered during the year with significant due
diligence activities undertaken. A substantial effort was made to acquire an existing operating oil
field in the offshore Carnarvon Basin which had been offered by industry for tender. Octanex
continues to seek development opportunities that are synergetic with its corporate strategy and
portfolio. Although the current industry cycle invariably results in an increased number of
acquisition opportunities, many of these opportunities require aggressive oil price forecasts in
order to generate attractive returns. Octanex will continue to review opportunities, seeking a risk
/ reward balance in assets that fit with its strategy and forward capacity.
Sabah International Petroleum (SIP), continued its support of Octanex and our involvement in the
Ophir project. Following the revision of the timetable for the Ophir development, SIP agreed to
extend the dates applicable to the convertible notes, commensurate with the new proposed first
oil production date. I extend my thanks to SIP for their ongoing support of Octanex and the Ophir
project.
We continued to maintain extreme fiscal discipline during the year. Directors have agreed to forgo
directors fees.
Having built an excellent team in Malaysia, captured attractive development costs, and developed
a robust geological model, Octanex is now placed to realise financial rewards from its Ophir
interest. Moreover, the lessons learned from Ophir are of benefit to our pre-development assets;
Cornea and Ascalon. I look forward to sharing with you the future progress of the development of
the Ophir oil field and Octanex, generally.
EG Albers
Melbourne
29 September 2016
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OCTANEX NL
ABN 61 005 632 315
Operational Review
Summary of Operations
Octanex’s focus in 2015/16 was in bringing the Ophir field closer to production, advancing its
pre-development asset interests (Cornea and Ascalon), while maintaining its interest in
exploration 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.
Under the terms of the RSC the Contractor (OPSB) is the service provider and Operator of the
field, while PETRONAS is the resource owner. Upfront investment of capital is contributed by the
Contractor with the Contractor compensated via the reimbursement of costs plus a remuneration
fee for services rendered. The remuneration fee is linked to production volumes and capital costs.
RSC terms provide that reimbursement of approved capital and operating costs is guaranteed 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
Note
Sabah
Agreement with
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
The Ophir development is now benefitting from current reduced industry costs and a low risk
development concept involving three production wells, a single wellhead platform and oil export
via a leased floating production storage and offloading (FPSO) unit.
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OCTANEX NL
ABN 61 005 632 315
FACILITIES)SCHEMATIC)
Floa%ng(Produc%on(Storage(
&(Offloading(Vessel((FPSO)(
Wellhead(
Pla;orm((WHP)(
73m))
Subsea(Pipeline(
Horizontal(Wells(
Figure 2 Ophir Development Schematic
“First Oil” from the Ophir field is scheduled to be produced in the second half of 2017, following
an agreement with Petronas to extend the project schedule. This timetable avoids risks associated
with the monsoon season, enabled greater cost savings to be realised and offers the project a
greater opportunity to realise higher oil prices.
During the year a contract for the Engineering, Procurement, Construction, Installation and
Commissioning (EPCIC) of a Wellhead Platform for the Ophir Oil field offshore Peninsular
Malaysia was awarded to Muhibbah Engineering (M) Bhd.
The contract award followed a successful tender by Muhibbah, a large Malaysian engineering
company with a track record of platform construction and installation. Significant progress was
made on both the jacket and topsides construction during the year.
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OCTANEX NL
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Significant work was completed in respect to Ophir drilling and completions, with the well basis
of design completed during the year. The drilling rig procurement process commenced during the
year, in preparation for the drilling of the three Ophir production wells in 2017.
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OCTANEX NL
ABN 61 005 632 315
Pre-Development Interests
Greater Cornea Fields, Western Australia, 18.75% interest
The company holds a 18.75% interest in the Cornea Joint Venture. The Cornea Joint Venture
ownership is the following:
Octanex
Enegex Limited (ASX: ENX)
Cornea Resources Pty Ltd (Operator)
Others
18.750%
14.875%
13.100%
53.275%
The assets of the Cornea Joint Venture being, The Greater Cornea Fields, comprising 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 (WA-
54-R) over 6 graticular blocks, amounting to an area of 497km2.
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 may provide a reasonable expectation
of commercial development.
Figure 3 Greater Cornea Fields Retention Lease
location map
P10
P90
P50
Middle Albian B & C
Sands
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
411.7
7
28.8
5.40
567.2
25
101.9
19.11
The WA-54-R work program is aimed at overcoming the various challenges likely to be faced in
bringing the Greater Cornea Fields into commercial production.
At the time the Retention Lease was granted, production uncertainty was considered to be the
greatest barrier to the development of the Greater Cornea Fields. Given the potential size of the oil
resource, and the oil price then prevailing (in the order of US$110/bbl), it was understood that
resolving the production uncertainty could provide a reasonable expectation for future
development.
Accordingly, the Retention Lease work program substantially addressed the technical challenges
of the Fields; with the first three years of the Lease designed to support the quantification of
drilling challenges, culminating in a Year-4 production test, with the Year-5 work programme
involving review of the Year-4 outcomes. The work programme was thus designed on the premise
that Cornea’s challenge was whether it would produce, rather than whether production would be
economic.
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OCTANEX NL
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An economic study was completed during the year which used assumptions based on present
date oil price, capex and opex assumptions. The economic modelling demonstrated the
fundamental shift in the field’s commerciality in the current sustained low oil price environment,
as well as demonstrating that the Greater Cornea Fields are not presently economic (even were
the production uncertainties resolved). “Oil price” was identified as the input to which the field is
now most sensitive, rather than “production”, which was the case in 2013.
Recent technical work has included drilling studies, particularly focusing on the use of technology
to address key uncertainties. Additional field development concept work has focussed on an
appropriate production system. The presently preferred configuration being a Mobile Drilling and
Production Unit (MODPU) and tanker.
Figure 4 Preferred Cornea Field Development Concept using MODPU and FSO
Our studies indicate that the material and sustained fall in the price of oil since the grant of the
Retention Lease has resulted in an assessment that a development of the Greater Cornea Fields
would not be presently commercial, even were the production uncertainties to be resolved.
Given the ~60% decline in oil price, the most significant hurdle to commerciality of the Greater
Cornea Fields is no longer producibility, but is “oil price”. As such, the WA-54-R work program no
longer appropriately addresses the Greater Cornea Fields’ most significant barrier to
development. Accordingly, the Cornea Joint Venture intends to apply to vary the conditions of
WA-54-R in order that the work programme is focussed on the “oil price” barrier to development
now faced by the Greater Cornea Fields.
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
received Declarations of Location in respect to the
Ascalon discovery
both
exploration permits over an aggregate 13
graticular blocks. Octanex lodged applications for
Retention Licences in respect to each Location in
March 2016.
extending
across
Figure 5 Ascalon Gas Discovery Retention Lease
location map
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OCTANEX NL
ABN 61 005 632 315
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 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 64 of this report.
Contingent
Octanex 100% (TCF)
gas
resource
P90
1.04
-
P50
3.01
P10
8.74
Table 2 Ascalon gas discovery – Probabilistic Contingent Gas Resources
(no development risk applied)
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 presently considered to be 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 would not 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. The development of other nearby gas discoveries can be
expected to provide opportunities for Ascalon to be developed to tie-back to another
development.
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OCTANEX NL
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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 6 Carnarvon Basin interests
Dampier Sub-Basin WA-323-P & WA-330-P
25% interest, free carried by Santos as Operator
Figure 7 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.
Interpretation of the reprocessed data Winchester 3D seismic survey by the operator is continuing
with the Prospects and Leads inventory being updated to incorporate prospects and leads
identified from the reprocessed Winchester 3D survey. Octanex is currently being carried by
Santos though exploration activity in each permit.
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OCTANEX NL
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Exmouth Plateau interests
Octanex has interests in three permits in the Exmouth Plateau area of the Carnarvon Basin as
shown.
Figure 8 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 reprocessing, interpretation and mapping of 2D data
together with a studies program, to be followed by a new 3D seismic survey and an exploration
well in the last two years of each permit’s term. A tender process for the seismic reprocessing
was conducted during the year with reprocessing work having recently commenced.
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.
Taranaki Basin, New Zealand PEP 51906
35% interest, divested
Octanex exited PEP 51906 offshore New Zealand during the year, following our interpretation of the
Kaka 3D seismic survey.
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OCTANEX NL
ABN 61 005 632 315
New Ventures
A number of new venture opportunities were considered during the year, with significant due
diligence activities undertaken. Octanex continues to seek opportunities that are synergetic with its
corporate strategy, experience and portfolio. Although the current industry cycle invariably results
in an increased number of acquisition opportunities, many of these opportunities require
aggressive oil price forecasts in order to generate attractive returns. Octanex will continue to review
opportunities, seeking a risk / reward balance in assets that fit with its portfolio and strategy.
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
Audit or’s I nde pe nde nc e De c la ra t ion
T o t he Dire c t ors of Oc t a ne x 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 2016, I declare that, to the
best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Brad Taylor
Partner - Audit & Assurance
Melbourne, 29 September 2016
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OCTANEX NL
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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.
Mr Albers founded Octanex NL and is a substantial shareholder in the company. On 1 October 2015
Mr Albers became a director in the ASX listed Enegex Limited (ASX: ENX). He is also a director in the
ASX listed Peako Limited (ASX: PKO). Mr Albers is a substantial shareholder in both of those
companies.
Mrs Rae Clark
Executive Director
Appointed 17 October 2014
B.Bus(dist), CA, MAICD, AGIA, ACIS
Mrs Clark has more than fifteen years experience focussed primarily on the natural resource
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 Peako Limited (ASX: PKO). On 12 October 2015 Mrs Clark became a
director in the ASX listed Enegex Limited (ASX: ENX).
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
Independent 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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OCTANEX NL
ABN 61 005 632 315
Mr Tino Guglielmo B.Eng(Mech), FIEAust, GAICD
Independent 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 a member of the Resources & Infrastructure
Task force and 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
Non-Executive director
Appointed 18 December 2014
FCCA, BSc (Hons) Monetary Economics
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
Independent 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.
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, and has been a director
of various public 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.
Principal Activities
The principal activities of the consolidated entity during the year were petroleum exploration and
development and investment in that sector.
Financial Results
The net loss of the consolidated entity for the financial year was $1,815,272 (2015: loss of
$11,524,294).
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.
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OCTANEX NL
ABN 61 005 632 315
Divestments and surrenders
During the year, Octanex divested its 35% interest in PEP 51906.
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 there have been no subsequent events.
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
Eligible
4
4
4
4
4
4
4
Attended
4
4
4
4
2
3
4
Audit Committee
Meetings
Eligible
2
2
2
2
2
2
2
Attended
2
2
2
2
-
1
1
Nomination &
Remuneration
Committee Meetings
Attended
Eligible
2
2
2
2
2
-
1
EG Albers
RL Clark
DC Coombes
G Guglielmo
KK How
S Kler
JMD Willis
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.
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OCTANEX NL
ABN 61 005 632 315
Share Capital
Ordinary Shares
During the year ended 30 June 2016, a voluntary payment of $720,000 was received, comprised
of $0.10 per share payment in respect of 7,200,000 partly paid shares, making each share fully
paid to $0.25. Accordingly, Octanex now has 7,200,000 fewer partly paid ordinary shares on issue
and 7,200,000 more fully paid ordinary shares on issue.
In September 2015 the directors resolved that no call would be made before the date that First Oil
is produced at the Ophir oil field, or 31 December 2018, whichever is earlier, on account of any
part of the unpaid amount of 10 cents per share on the partly paid shares.
3,000,000 ordinary fully paid shares were purchased from the Trustee of the Octanex Trustee
Share Scheme (Scheme) at a price of $0.10 per share pursuant to the Scheme. Octanex,
accordingly, received $300,000 before costs as proceeds from the Trustee in respect to these
shares.
As at 30 June 2016 and to the date of this report the number of fully paid ordinary shares on issue
is 202,465,561 (excluding the 30,000,000 trustee shares also quoted as ordinary fully paid
shares).
As at 30 June 2016 and to the date of this report the number of partly paid ordinary shares on
issue is 67,078,910.
Trustee Stock Scheme
As at 30 June 2016 and to the date of this report, 30,000,000 ordinary shares, previously issued to
the Trustee pursuant to the Scheme, remain unsold. The Trustee does not exercise voting rights
in respect of the shares held pursuant to the Scheme.
Unlisted Options
No options were granted during the year and to the date of this report. The following options
were granted in prior years and remained on issue at 30 June 2016 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
No
No
No
Yes
Yes and varying expiry dates
No
No
Unlisted Options
Balance at beginning of year
Options granted
Options surrendered/ cancelled
Options expired
Balance at end of year
2016
Options
2015
Options
15,100,000 4,850,000
- 18,100,000
- (7,285,000)
- ____________-
15,100,000
==========
15,100,000
========
- 20 -
OCTANEX NL
ABN 61 005 632 315
Convertible Notes
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.
The Notes have a maturity date of 31 December 2018 when they may be redeemed or converted
at SIP’s election.
The facility is primarily to be utilized to fund the Ophir development. As at 30 June 2016, and at
the date of this report, no amount has as yet been drawn under the facility.
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 23 to 25 and forms part of the Directors’ Report for
the financial year ended 30 June 2016.
Corporate Governance
The Board is responsible for the strategic(cid:1)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(cid:1)and information
and receive detailed financial(cid:1)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.
- 21 -
OCTANEX NL
ABN 61 005 632 315
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 2016.
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
29 September 2016
- 22 -
OCTANEX NL
ABN 61 005 632 315
Remuneration Report
This Remuneration Report for the year ended 30 June 2016 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
Chairman & Chief Executive Officer
Chief Operating Officer
Non-executive Directors
DC Coombes
G Guglielmo
KK How
SK Kler
JMD Willis
Director
Director
Director
Director
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 $nil was paid and payable (2015:
$166,375). Adjustments from the signing of deeds of release (see Note 1 to the remuneration
table on page 24) were $(95,305). Total director remuneration (exclusive of consulting fees which
are included at note 24) of $219,000 was paid and payable during the year (2015: $395,759).
Adjustments from the signing of deeds of release (see Note 1 to the remuneration table on page
24) were $(151,104).
There is no performance related remuneration for directors. Remuneration paid to directors covers
all board activities, including serving on committees.
- 23 -
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 otherwise payable (refer Note (1)) are disclosed
below.
Short Term
Post Employment
Equity
Settled
Total
Directors
Fees
Salary
Super-
annuation
Retirement
Benefits
Options
2,850
9,334
$
$
$
EG
(1)(2)
Albers
DC Coombes
(1)
2016
(30,000)
2015
30,000
2016
(15,000)
2015
30,000
JMD Willis (1)
2016
(32,850)
2015
32,850
GA Menzies
2016
-
2015
13,993
-
-
-
-
-
-
-
-
(2,850)
(1,425)
2,850
-
-
-
1,329
RL Clark (1)
2016
(20,959)
200,000
17,010
2015
20,959 150,000
16,241
S K Kler (1)
2016
(14,285)
2015
17,460
K K How (1)
2016
(14,285)
G Guglielmo
(1)
2015
17,460
2016
(15,945)
2015
15,945
-
-
-
-
-
-
TOTAL
2016
(143,324)
200,000
2015
178,667
150,000
-
-
-
-
(1,515)
1,515
11,220
24,785
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
$
(32,850)
42,184
(16,425)
10,991
43,841
-
(32,850)
10,991
43,841
-
-
10,991
26,313
-
-
-
-
-
-
-
-
-
196,051
187,200
(14,285)
17,460
(14,285)
17,460
(17,460)
17,460
67,896
9,334
32,973
395,759
(1) All seven directors have signed a deed of release effective 30 June 2016. This releases the Company from any
obligation to pay those Director’s Fees that have not been paid and would have otherwise been payable from 1 July
2014. All fees and related superannuation disclosed at 30 June 2015 were accrued but not declared or paid for each
director, with the exceptions being David Coombes, who was paid $16,425 (fee $15,000 and superannuation
$1,425) for the period 1 July 2014 to 31 December 2014, and Kevin How Kow and Suhnylla Kler, who were each
paid $3,175 in April 2015.
(2) 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.
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.
- 24 -
OCTANEX NL
ABN 61 005 632 315
Interests in fully paid ordinary shares
EG Albers
RL Clark
DC Coombes
G Guglielmo
KK How
SK Kler
JMD Willis
Balance Received as
Remuneration
Options Net Change
Other
Exercised
Balance
01/07/2015
113,963,757
57,551
165,000
-
50,000
50,000
2,398,130
-
-
-
-
-
-
-
30/06/2016
7,797,684 121,761,441
57,551
165,000
3,000,000
50,000
50,000
2,398,130
-
-
3,000,000
-
-
-
-
-
-
-
-
-
-
Interests in partly paid ordinary shares
EG Albers
RL Clark
DC Coombes
G Guglielmo
KK How
SK Kler
JMD Willis
Balance Received as
Remuneration
Options Net Change
Other
Exercised
Balance
01/07/2015
51,837,357
-
41,500
200,000
-
-
1,198,752
-
-
-
-
-
-
-
30/06/2016
-
-
-
-
-
-
-
(7,200,000) 44,637,357
-
41,500
200,000
-
-
1,198,752
-
-
-
-
-
-
Interests in unlisted options
Held at
Granted as
Compensation
Exercised
Other
Changes
Held at
30 June
Vested
during
the year
Vested and
exercisable at
30 June
1 July 2015
EG Albers
-
RL Clark
2,000,000
DC Coombes
500,000
JMD Willis
500,000
G Guglielmo
KH Kow
SK Kler
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2016
-
2,000,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
2016
-
2,000,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
End of Remuneration Report.
- 25 -
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 Australian 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
2016 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 23 to 25 of the directors’ report, (as part of
audited Remuneration Report), for the year ended 30 June 2016, 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, 29 September 2016
- 26 -
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
I nde pe nde nt Audit or’s Re port
T o t he M e m be rs of Oc t a ne x N .L.
Re port on t he fina nc ia l re port
We have audited the accompanying financial report of Octanex N.L. (the “Company”),
which comprises the statement of financial position as at 30 June 2016, the statement of
profit or loss and other comprehensive income, statement of changes in equity and
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 company .
Dire c t ors’ re sponsibilit y for t he fina nc ia l re port
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.
Audit or’s re sponsibilit y
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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as
the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each
member firm 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 are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited
ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
- 27 -
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.
I nde pe nde nc e
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Audit or’s opinion
In our opinion:
a
the financial report of Octanex NL is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the Company’s financial position as at
30 June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards
as disclosed in the notes to the financial statements.
Re port on t he re m une ra t ion re port
We have audited the remuneration report included in pages 23 to 25 of the directors’
report for the year ended 30 June 2016. 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.
- 28 -
Audit or’s opinion on t he re m une ra t ion re port
In our opinion, the remuneration report of Octanex NL for the year ended
30 June 2016, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Brad Taylor
Partner - Audit & Assurance
Melbourne, 29 September 2016
- 29 -
OCTANEX NL
ABN 61 005 632 315
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Year Ended 30 June 2016
NOTE
2016
$
2015
$
Revenue - interest received
Other income
Finance costs
Expenses
Share of loss of Ophir Production Sdn Bhd
Share of profit / (loss) of Peako Limited
Impairment of investment in Peako Limited
Loss before tax
Income tax benefit
Net Loss after tax
2
3
8
9
9
4
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
4,867
339,786
-
9,818
956,755
(371,039)
(1,403,318) (12,192,533)
(1,261,490) (1,738,234)
(1,074,973)
-
____________
237,960
(355,842)
____________
(2,438,037) (14,410,206)
2,885,912
__________
622,765
____________
(1,815,272) (11,524,294)
___________
____________
101,884
765,937
-
-
(1,179,797)
(161,195)
353,938
__________
(723,975)
48,358
__________
653,100
____________
____________
(2,539,247) (10,871,194)
========= ========
Basic loss per share (cents per share)
25 (0.758) (5.415)
Diluted loss per share (cents per share)
25 (0.758) (5.415)
The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with
the accompanying notes.
- 30 -
OCTANEX NL
ABN 61 005 632 315
Consolidated Statement of Financial Position
As at 30 June 2016
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
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issue capital
Reserves
Accumulated losses
NOTE
5
6
6
7
8,9
10
11
12
13
14
15
16
2016
$
2015
$
3,147,294
382,323
___________
5,832,084
852,380
___________
3,529,617
___________
6,684,464
___________
6,568,663
5,420,021
21,235
142,449
-
126,830
260,332
1,832
41,208,791 40,974,942
_____________ ______________
47,941,138 46,783,957
_____________ ______________
51,470,755 53,468,421
_____________ ______________
634,419
130,176
____________
1,257,408
125,068
____________
764,595
____________
1,382,476
____________
8,521,949
8,370,487
____________ _____________
8,521,949
8,370,487
____________ _____________
9,286,544
9,752,963
____________ _____________
42,184,211 43,715,458
========= =========
1,572,649
68,856,339 67,848,339
2,296,624
(28,244,777) (26,429,505)
______________ _____________
TOTAL EQUITY
42,184,211 43,715,458
========= =========
The above Statement of Financial Position is to be read in conjunction with the accompanying notes.
- 31 -
OCTANEX NL
ABN 61 005 632 315
Consolidated Statement of Changes in Equity
Year Ended 30 June 2016
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 2015
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 issue
Cost of issue
67,848,339
(26,429,505)
(1,505)
-
(1,815,272)
-
1,350,113
-
-
948,016
43,715,458
-
(1,815,272)
-
-
-
-
-
-
101,884 -
101,884
-
(825,859)
- -
(825,859)
-
(825,859)
101,884
(1,815,272)
(825,859)
101,884
-
-
(723,975)
(2,539,247)
1,020,000
(12,000)
-
-
-
-
-
-
-
-
1,020,000
(12,000)
At 30 June 2016
68,856,339
(28,244,777)
(827,364)
1,451,997 948,016
42,184,211
The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
- 32 -
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
$
$
$
$
$
$
61,602,959
(14,905,211)
111,332
584,176
763,494
48,156,750
-
(11,524,294)
-
-
- (11,524,294)
-
-
-
-
-
-
765,937 -
765,937
-
(112,837)
- -
(112,837)
-
(112,837)
765,937
(11,524,294)
(112,837)
765,937
6,393,860
(128,485)
(19,995)
-
-
-
-
-
-
-
-
-
- 184,522
-
-
-
-
653,100
(10,871,194)
6,393,860
(128,485)
(19,995)
184,522
CONSOLIDATED ENTITY
At 1 July 2014
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
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.
- 33 -
OCTANEX NL
ABN 61 005 632 315
Consolidated Statement of Cash Flows
Year Ended 30 June 2016
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 Peako Limited
Loan to Peako Oil Limited
Loans to Ophir Production Sdn Bhd
Proceeds from sale of investments
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing
Proceeds from share issue
Cost of share issue
Share buy-back
Repayment of borrowing
Net inflow from financing activities
6,9
6,9
8
12
15
15
15
12
Net decrease in cash and cash equivalents
Exchange gains
Cash and cash equivalents at beginning of the year
CASH AND CASH EQUIVALENTS AT 30 JUNE
5
2016
$
2015
$
42,120
4,828
-
432,500
13,571
(34,566)
(1,948,108) (2,806,587)
___________
___________
(1,901,160) (2,395,082)
____________
___________
(206,949)
-
440,000
-
(996,475)
350,000
260,000
(1,047,038)
(2,268,364) (4,931,924)
-
___________
53,964
____________
(1,981,349) (6,365,437)
___________
____________
6,637,991
-
-
1,020,000
(128,485)
(12,000)
(19,995)
-
(1,316,483)
-
___________
____________
5,173,028
1,008,000
____________
___________
(2,874,509) (3,587,491)
913,001
189,719
8,506,574
5,832,084
___________
___________
3,147,294
5,832,084
======== ========
(i) RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES WITH LOSS AFTER INCOME TAX
Loss after income tax
Non cash items:
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 and impairment of Peako 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
9
8
6
Net Cash outflow from Operating
Activities
(1,815,272) (11,524,294)
-
-
(229,603)
5,108
1,832
-
-
117,883
1,261,490
-
-
8,487,470
381,040
(957,821)
52,277
4,510
19,939
184,522
1,074,973
1,738,234
1,274,381
(819,995)
13,155
30,056
653,876
(649,889)
(622,765) (2,977,349)
____________
____________
(1,901,160) (2,395,082)
======== ========
The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.
- 34 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2016
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 2016 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.
Financial information for Octanex NL as an individual entity is included in Note 26.
The financial report was authorised by the directors for issue on 29 September 2016.
(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
From 1 July 2010 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.
- 35 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2016
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 8 and 9) together with long-term interests
that in substance form part of the entity’s net investment in the associate or joint venture (refer Note 6).
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.
- 36 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2016
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:
• The tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
• 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;
• A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to
realise the asset;
• 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 arising 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.
- 37 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
(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 Statement of Profit or Loss and Other Comprehensive Income, 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 Statements of Profit or Loss and Other Comprehensive Income 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.
- 38 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
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:
• Computer equipment:
• 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.
- 39 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
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 17). 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.
- 40 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
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 Peako 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 6). 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.
(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.
- 41 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
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 2015.
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
Sundry income – director related
Net foreign exchange gain
Sundry income - other
Total income
Consolidated
2015
$
2016
$
18,840
271,943
49,003
__________
339,786
234,556
604,483
117,716
___________
956,755
======= ========
NOTE
20
- 42 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE
Consolidated
2015
$
2016
$
22
19
15
15
6
NOTE 3 EXPENSES
Audit fees
Consulting
Directors’ remuneration
Directors’ retirement benefit
Exploration expensed
Legal fees
Management fees
Reporting, registry and stock exchange
Office expenses
Other expenses
Project costs
Salaries
Share based payments: fair value of
- options at grant date - directors
- options at grant date – other individuals
Impairment of exploration assets
Impairment of loan receivable from Peako Limited
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
66,955
191,246
(151,104)
-
575
-
75,000
41,383
234,622
200,069
206,939
412,100
79,292
534,824
189,203
9,334
6,031
11,343
96,500
90,113
459,809
416,591
-
353,120
-
-
125,533
-
_____________
32,973
151,549
8,487,470
1,274,381
____________
1,403,318 12,192,533
========= =========
(351,418) (2,885,912)
(271,347)
-
-
-
___________
___________
(622,765) (2,885,912)
=======
========
Loss before tax
(2,438,037) (14,410,206)
Income tax benefit using statutory income tax rate of 30%
(731,411) (4,323,062)
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
(3,005)
(12,152)
(271,347)
-
(108,220)
(304,421)
491,218
1,679,390
-
74,333
___________
___________
(622,765) (2,885,912)
=======
========
1,741,532
___________
1,741,532
___________
- 43 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 5 CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Bank deposits at call
NOTE
2016
Consolidated
2015
$
$
3,417,294
5,832,084
-
-
___________
____________
3,417,294
5,832,084
======== =========
Cash at bank and on hand includes $2,346,405 held with the OCBC Bank in Singapore (2015: $5,023,806l). 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 primarily 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 2016 the
average floating rate for the consolidated entity was 0.1% (2015: 0.1%). Details of interest rate risk and sensitivity
can be found in Note 21. At 30 June 2016 all bank deposits are at call.
NOTE 6 TRADE AND OTHER RECEIVABLES
CURRENT
Other receivables
Loan to Peako Limited 9, 20
20
Director-related entities - other receivables
NON CURRENT
Advance to Ophir Production Sdn Bhd
8
367,044
-
15,279
__________
382,323
=======
375,013
440,000
37,367
__________
303,173
=======
6,568,663
=======
5,420,021
=======
The carrying amount of all receivables is equal to their fair value as they are short term.
The current loan to Peako Limited was impaired down from $1,714,381 to $440,000 at 30 June 2015; an
impairment loss of $1,274,381 (2015: Nil). The impaired value of $440,000 was received in full on 2 July 2015.
Octanex reached agreement with Peako in November 2015 whereby the balance of the loan outstanding
($1,274,381 prior to impairment) was satisfied through a proceeds sharing arrangement whereby Octanex will
share in any proceeds that Peako might receive in connection with its Cadlao interests up until November 2017
(Note 28).
At 30 June 2016 no receivables are impaired or past due except for the impairment of the non-current advance to
Ophir Production Sdn Bhd (Note 8).
The maximum credit risk for the company is the gross value of all receivables. All receivables are non-interest
bearing.
- 44 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 7 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
7(a)
7(b)
7(c)
(a)Director-related Entities:
Moby Oil & Gas Pty Ltd
Principal activity is oil and gas exploration
Enegex Limited
Principal activity is oil and gas exploration (Note 20)
(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 21.
(c) Shares in Controlled Entities
United Oil & Gas Pty Ltd
Consolidated
2015
2016
$ $
21,234
-
________
21,234
57,744
69,085
________
126,829
1
________
21,235
=======
1
________
126,830
=======
-
=======
57,744
=======
21,234
=======
-
=======
126,830
(105,595)
________
21,235
288,025
(161,195)
________
126,830
======= ========
1
_______
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
$
2016
2015
-
904
-
Non-
Total
Current
assets Liabilities Liabilities Liabilities Revenue
Current
Total
$
-
904
$
2,000
2,000
$
-
-
$
2,000
2,000
$
-
-
Expenses
$
-
12
Profit
(Loss)
$
-
(12)
NOTE 8 INVESTMENT IN A JOINT VENTURE COMPANY
The consolidated entity has a 50% (2015: 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:
- 45 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 8 INVESTMENT IN A JOINT VENTURE COMPANY (Continued)
Note
Consolidated
2015
2016
Current Assets (including cash $2,582,720 (2015: $3,769,319)
Non-Current Assets
Current liabilities
Non-Current Liabilities
Equity
3,345,180
4,135,444
26,519,092 13,562,837
(2,712,944) (2,722,212)
(30,704,191) (16,395,509
__________
___________
(3,552,862) (1,419,440)
Cost of the investment
Share of equity accounted loss required by accounting standards
=======
Proportion of the consolidated entity’s ownership 50% 50%
=======
=======
1,458,920
1,458,920
(1,458,920) (1,458,920)
__________
___________
-
-
=======
=======
Carrying amount of the investment
========
The investment is carried at nil cost at 30 June 2016 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’s 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
6,20
Summarised statement of profit or loss of Ophir Production Sdn Bhd
Revenue
Expenses
8,109,467
(1,540,804)
___________
6,568,663
========
5,699,335
(279,314)
__________
5,420,021
=======
13,194,382 13,031,461
(15,717,362) (16,507,929)
___________
____________
(2,522,980) (3,476,468)
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.
___________
-
____________
___________
-
___________
(2,522,980) (3,476,468)
======= =========
(1,261,490) (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. On 4 January 2016 a
supplemental letter was signed reducing the facility to US$84.0 million and the bank guarantee facility to US$9.0
million. The loan term 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.
On 4 December 2014 Octanex executed a Share Placement and Convertible Note Facility with Sabah International
Petroleum Ltd for US$12 million. The Facility remains unused at 30 June 2016 and to the date of signing this report.
It is secured by a charge over the shares of Octanex Pte Ltd; the entity which holds the 50% interest in Ophir for the
group.
- 46 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 8 INVESTMENT IN A JOINT VENTURE COMPANY (Continued)
Note
Consolidated
2015
2016
Capital commitments are:
Payable not later than one year
Payable later than one year but not later than three years
20,243,839
-
_____________
847,666
-
________
20,243,839
847,666
========= ========
NOTE 9 INVESTMENT IN AN ASSOCIATE
The company has a 13.96% (2015: 20.94%) interest in Peako Limited (“Peako”), an Australian Securities Exchange
listed company involved with natural resources exploration.
The company’s interest in Peako 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 Peako:
Current Assets
Non-Current Assets
Current liabilities
Equity
Cost of the investment
Share of equity accounted loss required by accounting standards
Impairment of investment
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 10 PROPERTY, PLANT & EQUIPMENT
Office Equipment
At cost
Accumulated depreciation
Balance at beginning of year
Additions
Depreciation
Disposal of Assets
Balance at end of year
- 47 -
NOTE
Consolidated
2015
2016
279,606
6,850
620,022
10,201
(41,342) (1,775,778)
___________
245,114
=======
1,335,305
___________
(1,145,555)
=======
1,335,305
(837,013) (1,074,973)
-
(355,843)
___________
___________
260,332
142,449
=======
=======
-
-
_________
-
-
________
-
======= ========
-
7,258
(7,258)
________
-
======
1,832
-
(1,832)
-
________
-
======
7,258
(5,426)
________
1,832
=======
26,281
-
(4,469)
(19,980)
________
1,832
=======
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 11 EXPLORATION AND EVALUATION ASSETS
40,974,942 48,842,991
Carrying amount at beginning of year
Impairment of exploration assets
(125,533) (8,487,470)
Exchange revaluation of NZD exploration and evaluation asset - (156,885)
Cost incurred during the year
359,382 1,126,306
- (350,000)
Costs recovered
____________
____________
41,208,791 40,974,942
======== =========
Carrying amount at end of year
Exploration and evaluation assets relate to the areas of interest in the exploration phase for petroleum exploration
permits and a retention lease.
30/06/2016
30/06/2015
Permits
WA-323-P
WA-330-P
WA-362-P
WA-363-P
WA-387-P
WA-407-P
WA-420-P
-
Retention
Lease
WA-54-R
Permits
WA-323-P
WA-330-P
WA-362-P
WA-363-P
WA-387-P
WA-407-P
WA-420-P
PEP 51906
Retention
Lease
WA-54-R
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-420-P are 100% held by the wholly-subsidiary, Goldsborough Energy Pty Ltd. WA-387-P is held
100% by the wholly-owned subsidiary, Exmouth Exploration Pty Ltd.
Ultimate recovery of exploration and evaluation assets is dependent upon exploration success and/or the company
maintaining appropriate funding to support continued exploration activities.
- 48 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 12 TRADE AND OTHER PAYABLES
Financial liabilities at amortised cost
Current
Trade creditors and accruals
Director-related entities - other payables
NOTE
Consolidated
2015
$
2016
$
20
361,381
273,038
__________
634,419
548,384
709,024
__________
1,257,408
======== =======
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 21.
NOTE 13 PROVISIONS
Current
Annual Leave
Directors’ retirement benefit (1)
Long service leave
16,644
82,125
31,407
________
130,176
=======
15,207
82,125
27,736
________
125,068
=======
(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. A deed of variation was signed 16 August 2016, and effective 30 June
2016, that varied the terms of calculation of the Retirement Benefit under the original Deed. The amount reflects the
23 years of service EG Albers has provided to the company.
NOTE 14 DEFERRED TAX LIABILITIES
Deferred Tax Assets Deferred Tax Liabilities
Net Deferred Tax
Consolidated
Investment
revaluations
Exploration costs
Interest receivable
Accrued expenses
Provisions
Carried forward tax
losses
2016
$
(1,593)
2015
$
(775,820)
2016
$
2015
$
-
-
2016
$
(1,593)
2015
$
(775,820)
-
-
(9,000)
(39,053)
(4,272,716)
-
-
(9,450)
(36,534)
(3,878,314)
12,844,311 13,046,016
24,589
-
-
-
-
-
-
-
12,844,311
-
(9,000)
(39,053)
(4,272,716)
13,046,016
24,589
(9,450)
(36,534)
(3,878,314)
_____________
(4,322,362)
========
_____________
(4,700,118)
========
_____________
12,844,311
========
_____________
13,070,605
========
____________
8,521,949
========
____________
8,370,487
========
- 49 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 14 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
2015
$
Charged/
Charged/
(credited) (credited)
to Income directly to
Equity
Statement
$
$
Closing
Balance
at June
2016
$
(775,820)
13,046,016
24,589
(9.450)
(36,534)
(3,878,314)
-
(201,705)
(24,589)
450
(2,519)
(394,402)
774,227
-
-
-
-
-
(1,593)
12,844,311
-
(9,000)
(39,053)
(4,272,716)
8,370,487
(622,765) 774,227
8,521,949
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
NOTE 15 CONTRIBUTED EQUITY
Issued Capital
2016 Shares
2015 Shares
2016
$
2015
$
Ordinary shares fully paid (a)
Ordinary shares partly paid(b)
Ordinary shares issued pursuant to trustee
stock scheme(c)
Balance at end of year
202,465,561
67,078,910
192,265,561
74,278,910
58,894,364
9,961,975
56,806,364
11,041,975
30,000,000
_____________
299,544,471
=========
33,000,000
_____________
299,544,471
=========
-
____________
68,856,339
=========
-
____________
67,848,339
=========
- 50 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 15 CONTRIBUTED EQUITY (Continued)
(a) Ordinary shares fully paid
Movements during the year
Balance at beginning of year
Trustee share issue (1)
Issue costs
Share placement
Placement costs
Partly paid shares fully paid (2)
Share buy back
Balance at end of year
2016
Shares
2015
Shares
2016
$
2015
$
192,265,561
3,000,000
-
-
-
7,200,000
-
_______________
202,465,561
=========
152,122,898
-
-
40,332,663
-
-
(190,000)
_______________
192,265,561
=========
56,806,364
300,000
(12,000)
-
-
1,800,000
-
______________
58,894,364
=========
50,560,984
-
-
6,393,860
(128,485)
-
(19,995)
______________
56,806,364
=========
(1) 3,000,000 ordinary fully paid shares were acquired by an entity associated with Octanex director Mr Guistino
Guglielmo pursuant to the Octanex Trustee Share Scheme in accordance with approval of shareholders in general
meeting on 26 November 2015. The shares were issued on 29 January 2016.
(2) On 6 January 2016, the company’s share register was updated to reflect that in December 2015 National Gas
Australia Pty Ltd (NGA), a company associated with Octanex Chairman Mr Geoffrey Albers made a voluntary
payment of the unpaid amount of 10c per share on the partly paid shares (previously paid to 15c) making such
shares fully paid.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(b) Ordinary shares partly paid(i)
Movements during the year
Balance at beginning of year
Partly paid shares fully paid (1)
Balance at end of year
74,278,910
(7,200,000)
_______________
67,078,910
=========
74,278,910
-
_______________
74,278,910
=========
11,041,975
(1,080,000)
______________
9,961,975
=========
11,041,975
-
______________
11,041,975
=========
(1) On 6 January 2016, the company’s share register was updated to reflect that in December 2015 National Gas
Australia Pty Ltd (NGA), a company associated with Octanex Chairman Mr Geoffrey Albers made a voluntary
payment of the unpaid amount of 10c per share on the partly paid shares (previously paid to 15c) making such
shares fully paid.
(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.
(c) Ordinary Shares Issued Pursuant to Trustee Stock Scheme
Movements during the year
Balance at beginning of year
Trustee share issue (1)
Balance at end of year
33,000,000
(3,000,000)
_______________
30,000,000
=========
33,000,000
-
_______________
33,000,000
=========
-
-
______________
-
=========
-
-
______________
-
=========
- 51 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 15 CONTRIBUTED EQUITY (Continued)
(1) 3,000,000 ordinary fully paid shares were acquired by an entity associated with Octanex director Mr Guistino
Guglielmo pursuant to the Octanex Trustee Share Scheme in accordance with approval of shareholders in general
meeting on 26 November 2015. The shares were issued on 29 January 2016.
In November 2015, the members of Octanex voted to extend the existing trustee stock scheme by five years. 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)
No options were granted during the year. Existing options are
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
$0.1534
$0.15
$0.15
$0.15
$0.15
$0.20
$0.25
Vesting criteria
No
No
No
Yes
Yes and varying expiry dates
No
No
Unlisted Options
Balance at beginning of year
Options granted
Options surrendered/ cancelled
Balance at end of year
NOTE 16 RESERVES
Financial assets at fair value through other
comprehensive income reserve
Option reserve
Foreign currency translation reserve
2016
Options
2015
Options
15,100,000 4,850,000
- 18,100,000
- (7,850,000)
______________
15,100,000 15,100,000
___________
==========
========
2016
$
Consolidated
2015
$
(1,505)
(827,364)
948,016 948,016
1,451,997 1,350,113
__________
___________
1,572,649 2,296,624
=======
========
- 52 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 16 RESERVES (Continued)
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
2016
$
Consolidated
2015
$
(1,505)
111,332
(1,179,797) (161,195)
48,358
_________
(1,505)
=======
353,938
___________
(827,364)
========
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 7 and 21.
Option reserve
Balance at beginning of financial year
Share based payment expense
948,016 763,964
184,522
-
________
__________
948,016
=======
948,016
=======
The options reserve relates to share options granted to the company secretary, the directors and individuals (Note
15).
Foreign currency translation reserve
Balance at beginning of financial year
Movement for the year
1,350,113
101,884
__________
584,176
765,937
__________
1,451,997 1,350,113
=======
=======
The foreign currency translation reserve relates to the consolidation of foreign currency denominated fully owned
subsidiary entities. At 30 June 2016 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 17 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:
Payable not later than one year
Payable later than one year but not later than three years
116,406
1,758,594
___________
1,557,292
490,625
___________
1,875,000
2,047,917
======== =========
- 53 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 18 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 Operation
Winchester Project
Northern Deeps
Cornea
Matuku (1)
2016
Interest
2015
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% PEP 51906
(1) During the year, following preliminary interpretation of the Kaka 3D seismic survey over PEP51906 in the Taranaki
Basin offshore New Zealand, Octanex exitted the permit.
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
6
11
12
12, 20
2016
$
12,411
249
2015
$
1,231
1,259
30,731,805 30,664,632
5738
11,968
728
17,854
Consolidated
2015
$
2016
$
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
116,406
58,594
_________
175,000
103,125
140,625
________
243,750
======== ========
- 54 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 19 KEY MANAGEMENT PERSONNEL
Executive Directors
EG Albers
RL Clark
Non-Executive Directors
DC Coombes
G Guglielmo
KK How
SK Kler
JMD Willis
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
2016
2015
$
$
(143,324) 200,000
150,000
178,667
$
11,220
24,785
$
-
9,334
$
-
$
67,896
32,973 395,759
NOTE 20 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
2016
Interest
2015
Interest
Country of Incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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
Peako Limited, (Peak), a director-related entity of EG Albers and RL Clark
Petroleum Advisors (PA), a director related entity of G Guglielmo
- 55 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 20 RELATED PARTY DISCLOSURES (Continued)
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
2016
$
234,875
-
80,000
59,000
120,000
-
28,000
-
7,188
3,000
-
2015
$
326,618
162,398
96,500
104,438
120,000
190,745
18,500
7,029
11,738
68,599
6,419
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 Pty Ltd, Enegex Limited, Cornea Resources Pty Ltd and Auralandia Pty
Ltd, all director-related entities of EG Albers..
Amounts payable to related parties including those under joint operation arrangements:
Consolidated
2016
$
2015
$
Payables
Exoil Pty Ltd
Natural Resources Group Pty Ltd
Petroleum Advisors
72,288
83,230
195,750 623,044
2,750
__________
709,024
=======
5,000
_________
273,038
=======
(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
Enegex Limited, a director-related entity of EG Albers
Peako Limited, a director-related entity of EG Albers
Sundry Revenue
Moby Oil & Gas Pty Ltd
Alpha Natural Resources Pty Ltd
Enegex Limited
Cornea Resources Pty Ltd – Operator Cornea JV
Seaquest Petroleum Pty Ltd
Ophir Production Sdn Bhd (Note 20 (iv)
Peako (Note 20 (iii) & (iv))
4,420
-
10,107
-
-
11,210
6,470
520
-
6,601
- 124,995
7,110 81,963
_________
__________
18,840 234,556
======
=======
- 56 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 20 RELATED PARTY DISCLOSURES (Continued)
Receivables from related parties:
Cornea Resources Pty Ltd – Operator Cornea JV
Moby Oil & Gas Pty Ltd
Enegex Limited
Peako Limited
Ophir Production Sdn Bhd
(iii) Loan to Peako 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
2016
$
Consolidated
2015
$
572
-
6,886
7,821
-
_________
15,279
=======
572
4,862
-
-
31,933
__________
37,367
=======
440,000 954,613
- 1,047,038
- 81,963
- (109,233)
(440,000) (260,000)
- (1,274,381)
__________
440,000
=======
____________
-
========
Peako Limited is a director-related entity of EG Albers. The impaired value of $440,000 was received in full on 2 July
2015. Octanex reached agreement with Peako in November 2015 whereby the balance of the loan outstanding
($1,274,381 prior to impairment) was satisfied through a proceeds sharing arrangement whereby Octanex will
share in any proceeds that Peako might receive in connection with its Cadlao interests up until November 2017
(Note 28).
(iv) Advance to Ophir Production Sdn Bhd
At 30 June 2016, the company has a gross advance to Ophir Production Sdn Bhd of $8,109,467 (2015 $5,699,335).
After impairment, the advance is $6,568,663 (2015 $5,420,021) (Note 8). The advance is expected to be recovered
from capital return and revenue in the form of dividends from production from the development of the Ophir oil
field. The group holds 50% of Ophir Production Sdn Bhd.
(v) Investments in director-related companies
At 30 June 2016, the company carried an investment in an ASX listed company Peako (formerly name Peak Oil &
Gas) Limited, (Note 9), which is a director-related entity of EG Albers.
At 30 June 2016, the company carried an investment in an ASX listed company Enegex Limited, (Note 7), which is a
director-related entity of EG Albers.
- 57 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 21 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
2016 2015
$ $
3,147,294
5,832,084
21,235
126,830
86,064
6,568,663
9,823,256
556,121
5,420,021
11,935,056
634,419
634,419
1,257,408
1,257,408
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 2016 and 30 June 2015
on a recurring basis are as follows:
30 June 2016
Assets
Listed securities and
debentures
Unlisted securities and
debentures
Total
Net fair value
Level 1
$
Level 2
$
Level 3
$
Total
$
21,235
-
21,235
21,235
-
-
-
-
-
-
-
-
21,235
-
21,235
21,235
- 58 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 21 FINANCIAL INSTRUMENTS (Continued)
Level 1
Level 2
Level 3
Total
30 June 2015
Assets
Listed securities and debentures
Unlisted securities and
debentures
Total
Net fair value
$
69,085
69,085
69,085
$
-
-
-
$
-
$
69,085
57,745
57,745
57,745
57,745
126,830
126,830
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 $22,031 (2015: $10,824).
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 2016:
Financial
Consolidated
Non-derivative
Liabilities
Trade and other payables
Non current payables
30 June 2015:
Financial
Consolidated
Non-derivative
Liabilities
Trade and other payables
Non current payables
634,419
-
634,419
634,419
-
634,419
634,419
-
634,419
1,257,408
-
1,257,408
1,257,408
-
1,257,408
1,257,408
-
1,257,408
- 59 -
-
-
-
-
-
-
-
-
-
-
-
-
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 21 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 2016 the consolidated entity
has a foreign currency exposure by holding US dollars in bank accounts totalling US$2,237,216 (2015: $4,384,787)
and an advance to Ophir Production Sdn Bhd of US$6,022,090 (2015: $4,377,090). A one cent movement in the
USD/AUD exchange rate would move consolidated equity by AUD$103,448 (2015: $102,649). Loans to Ophir
Production Sdn Bhd are in USD and future profit in the Ophir investment will be in USD.
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
Enegex Limited
Investments in unlisted equities
Moby Oil & Gas Pty Ltd
2016
$
2015
$
-
21,235
________
21,235
69,085
-
________
69,085
-
________
-
________
21,235
57,745
________
57,745
________
126,830
======= =======
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 $2,123 (2015: $6,909). 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.
- 60 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 22 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
Grant Thornton Singapore – Auditor of Octanex Pte Ltd
Tax services
SJ Grant Thornton - Octanex Malaysia Sdn Bhd
Consolidated
2016
$
2015
$
56,730
67,863
1,652
-
8,573
2,802
8,627
-
1,324
________
68,279
=======
-
_______
79,292
=======
NOTE 23 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 24 EVENTS AFTER THE END OF THE REPORTING PERIOD
There are no significant after balance date events to the date of signing of this report.
Consolidated
2016 2015
$
$
NOTE 25 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.
(1,815,272)
(11,524,294)
Number of
Shares
239,487,044
Number of
Shares
212,827,246
Unlisted options outstanding during the year (Refer Note 15) are not dilutive at the 30th June 2016 as the exercise
price is higher than the average share price for the year then ended.
- 61 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 26 PARENT ENTITY INFORMATION
The following details information related to the parent entity, Octanex NL at 30 June 2016. 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 for the year
Other comprehensive income for the year
Total comprehensive income for the year
The company has no contingent liabilities.
2016
$
3,510,120
2015
$
6,407,769
67,579,803 65,233,828
____________
____________
71,089,923 71,641,597
____________
____________
654,535
1,287,533
13,115,577 13,536,052
____________
____________
13,770,112 14,823,585
____________
____________
68,856,339 67,848,339
948,016
(435,163)
(11,845,431) (11,543,180)
948,016
(639,113)
____________
____________
57,319,811 56,818,012
____________
____________
(302,251) (7,550,528)
(203,950) (88,063)
____________
____________
(506,201) (7,638,591)
____________
____________
No dividends were paid by the parent entity in 2016 (2015: Nil).
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
2016
$
2015
$
63,635
56,375
32,031
________
76,875
________
95,666
________
133,250
________
- 62 -
OCTANEX NL
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2016
NOTE 27 CONTINGENT LIABILITIES
Performance Guarantee
Octanex has provided a proportionate corporate undertaking to PETRONAS for the contract performance
obligations of OPSB in relation to the Ophir RSC.
Corporate Guarantee
Octanex has provided a proportionate corporate guarantee to OPSB’s lenders in connection with OPSB’s term loan
facilities. The facilities are held with a syndicate of three banks (Malayan Banking Berhad (Maybank), RHB Bank (L)
Ltd and United Overseas Bank Limited Offer) for 75% of the planned capital expenditure for the development of the
Ophir Oil Field as well as 75% of the first three quarters of the planned operating expenditure, and a bank guarantee
in favour of PETRONAS.
NOTE 28 CONTINGENT ASSET
Peako Limited Loan – Proceeds Sharing Agreement
In lieu of the balance of monies of $1,284,744 owing on the Peako Limited (“Peako”) loan (Note 6), Octanex has
agreed to accept a proceeds sharing arrangement with Peako whereby Octanex will share proportionately in any
proceeds received by Peako in relation to any of its Cadlao interests in the period to 26 November 2017 up to a limit
of $1,603,683. The loan was fully impaired at 30 June 2015.
- 63 -
OCTANEX NL
ABN 61 005 632 315
Additional Information (unaudited)
As at 15 September 2016 Octanex holds the following interests in Petroleum Tenements:
Octanex Licences
Permit
Ophir
SFRSC
WA-330-P
WA-323-P
WA-362-P
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
WA-363-P
Exmouth Plateau, Carnarvon
Basin, Offshore Western
Australia
WA-387-P
WA-420-P
WA-407-P
WA-54-R
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
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
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
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)
1C
Oil
(MMBBL)
1.48
Gas
(TCF)
1.04
2C
Oil
(MMBBL)
5.4
Gas
(TCF)
3.01
3C
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 2016 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
- 64 -
OCTANEX NL
ABN 61 005 632 315
experience in the oil and gas industry, including over 33 years estimating reserves and resources.
Mr Morison is a member of the American Association of Petroleum Geologists (AAPG), Formation
Evaluation Society of Australia (FESAus) (ex President) and European Association of Geoscientists and
Engineers (EAGE).
Shareholder Information
Compiled as at 22 September 2016
1. Ordinary share capital
As at 22 September 2016 the company had on issue the following shares:
Fully Paid Ordinary
Shares
202,465,561 held by 1,369
shareholders
Partly Paid Ordinary
Shares
67,078,910 held by 344
shareholders
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)
Trustee Shares
held
by
30,000,000
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 22 September 2016 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.
Number of Holders of
Trustee
Shares
3. Distribution of holders
Holding
September 2016
as
at
22
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
Fully paid
ordinary
shares
165
650
146
331
77
1,369
1,033
Partly
paid
ordinary
shares
53
62
43
126
60
344
310
Options
-
-
-
-
16
16
-
-
-
-
-
1
1
-
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.
- 65 -
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
voting rights
%
of Voting
Rights
152,260,730
40,332,663
55.83
14.95
5. Twenty largest shareholders as at 22 September 2016
Fully paid ordinary shares
Holder
Sabah International Petroleum Ltd
Gascorp Australia Pty Ltd
Mr Ernest Geoffrey Albers & Mrs Pamela Joy Albers
Sacrosanct Pty Ltd
Mr Ernest Geoffrey Albers
National Gas Australia Pty Ltd
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
Miller Anderson Pty Ltd
Great Missenden Group Pty Ltd
Seaquest Petroleum Pty Ltd
Albers Family Custodian Pty Ltd
Bond Street Custodians Limited
Total
Fully paid
ordinary shares
40,332,663
30,926,968
21,093,399
12,050,960
9,593,765
7,200,000
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
3,000,000
2,765,060
2,248,000
2,152,500
2,125,010
169,950,150
% of Fully
Paid Shares
19.92
15.28
10.42
5.95
4.74
3.56
3.42
2.60
1.99
1.87
1.82
1.73
1.56
1.51
1.50
1.48
1.37
1.11
1.06
1.05
83.94
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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
Sacrosanct Pty Ltd
Cue Petroleum Pty Ltd
Bass Strait Group Pty Ltd
Auralandia Pty Ltd
Mr Ernest Geoffrey Albers
Great Australia Corporation Pty Ltd
Troca Enterprises Pty Ltd
Australis Finance Pty Ltd
Appledore Superannuation Pty Ltd
Rivermore Pty Limited
Mr Neil Clifford Massey Abbott
Mrs Pamela Joy Albers
Albers Family Custodian Pty Ltd
Mr John Cumming
Mr David Hugo Rankin
Wilstermere Corporation Pty Ltd
Dr Paul Mark Halley
Total
Trustee ordinary shares
Holder
Doravale Enterprise Pty Ltd
Partly paid
ordinary
shares
10,045,726
7,957,724
7,121,742
3,975,201
3,752,871
3,376,651
2,097,335
2,025,420
1,710,000
1,504,750
1,211,562
1,157,502
1,055,969
958,960
765,625
650,625
618,221
612,259
577,500
565,914
51,741,557
% of Partly
Paid Shares
14.98
11.86
10.62
5.93
5.59
5.03
3.13
3.02
2.55
2.24
1.81
1.73
1.57
1.43
1.14
0.97
0.92
0.91
0.86
0.84
77.14
Fully paid
ordinary
shares
33,000,000
% of
Trustee
Shares
100
- 67 -
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
- 68 -
OCTANEX NL
ABN 61 005 632 315
Directory
Board of directors
Share Registry
Mr Geoffrey Albers
Chairman & Chief Executive Officer
Mrs Raewyn Clark
Executive Director
Mr David Coombes
Independent Non Executive Director
Mr Guistino Guglielmo
Independent Non Executive Director
Datuk Kevin Kow How
Non-executive Director
Ms Suhnylla Kler
Non-executive Director
Mr James Willis
Independent Non Executive Director
Company Secretaries
Mr Robert Wright
Mr John Tuohy
Link Market Service Limited
Tower 4, 727 Collins Street
Melbourne, Victoria 3008 Australia
61 (03) 9615 9947
Auditor
Grant Thornton Audit Pty Ltd
Level 30, 525 Collins Street
Melbourne, Victoria 3000 Australia
Stock Exchange
ASX Limited
Level 45, South Tower, Rialto,
525 Collins Street,
Melbourne Victoria 3000 Australia
ASX Codes:
OXX
OXXCB
Fully Paid
Partly Paid
Registered office
Level 21,
500 Collins Street,
Melbourne, Victoria 3000
Telephone: +61 (03) 8610 4702
Facsimile: +61 (03) 8610 4799
E-mail: admin@octanex.com.au
Website: www.octanex.com.au
Incorporation
Incorporated in Victoria on 13 March
1980.
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